author: PATRICK F. KELLY, District Judge.

text:
    PETROLEUM DATA SERVICES, INC., Plaintiff, v. FIRST CITY BANCORPORATION OF TEXAS, INC., d/b/a First City National Bank of Midland, Defendant.
    No. 85-1628-K.
    United States District Court, D. Kansas.
    Dec. 2, 1985.

      Andrea M. Ramsay, Wichita, Kan., for plaintiff.
    Jeff C. Spahn, Wichita, Kan., for defendant.
   MEMORANDUM AND ORDER

PATRICK F. KELLY, District Judge.

Plaintiff Petroleum Data Services, Inc. (PDS) is a Kansas corporation suing in its capacity as a general partner of Petroleum Data Services, a limited partnership which entered into certain contracts with First City National Bank of Midland, Texas. PDS seeks to recover for breach of those contracts resulting from defendant’s nonpayment for services rendered. Defendant First City Bancorporation, the parent company of First City National Bank of Midland, now seeks to dismiss or have transferred this case, arguing the Court lacks personal jurisdiction over the defendant and lacks subject matter jurisdiction over the action; plaintiff fails to state a claim on which relief can be granted; and venue of the parties and claims is not proper in this Court. For the reasons which follow, defendant’s motion is denied. The only relief to which defendant is entitled is the amendment of plaintiff’s complaint by deletion of First City Bancorporation as named defendant; henceforth, plaintiff’s claims will proceed only against First City National Bank of Midland, the original contracting party.

Turning to the question of this Court’s personal jurisdiction over defendant under the provisions of the Kansas long-arm statute, K.S.A. 60-308(b)(5), a two-step analysis is involved in considering jurisdictional questions. First, it must be determined whether defendant’s conduct falls within the scope of any of the enumerated provisions of that statute. It must then be determined whether defendant’s contacts with the State of Kansas are sufficient to meet the requirements of due process. Both the statutory and constitutional requirements must be met for this Court to assert personal jurisdiction over the defendant. Thermal Insulation Systems v. Ark-Seal Corp., 508 F.Supp. 434, 436 (D.Kan.1980). When the existence of personal jurisdiction is challenged, plaintiff need only establish a prima facie case that these constitutional and statutory requirements for the assumption of personal jurisdiction are satisfied. A court may consider affidavits and documentary evidence in determining whether such a showing has been made, and plaintiff must receive the benefit of all factual doubts. Thermal Insulation, id. at 437.

The Kansas Supreme Court has repeatedly held the legislative intent behind K.S.A. 60-308(b) is to exert judicial jurisdiction over nonresidents to the full extent permitted by the due process clause of the Fourteenth Amendment. Whisenant v. Whisenant, 219 Kan. 387, 392, 548 P.2d 470 (1976). K.S.A. 60-308(b)(5) provides in part:

Any person, whether or not a citizen or resident of this state, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits said person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of said acts:
(5) Entering into an express or implied contract, by mail or otherwise, with a resident of this state, to be performed in whole or in part by either party in this state; ____

If this statute is to reach as far as due process permits, a broad statutory interpretation is necessary. J.E.M. Corporation v. McClellan, 462 F.Supp. 1246, 1250 (D.Kan.1978). The exercise of personal jurisdiction is proper under this statute where defendant’s conduct is such that it “ ‘purposefully avails itself’ ” of the privilege of acting within the forum state and invoking its laws. The act or acts must have “ ‘reasonably foreseeable consequences within the [forum] state.’ ” Pedi Bares, Inc. v. P & C Food Markets, Inc., 567 F.2d 933, 937 (10th Cir.1977).

Turning to the facts of this case defendant, in its motion to dismiss, points out the contracts at issue were originally entered into in Texas, the negotiations occurred there, and the services required to be performed under the contract took place either in Texas or in Oklahoma City; in short, there has been no act occurring in Kansas sufficient to subject defendant to jurisdiction under the long-arm statute. While true the contracts were entered into as defendant describes and the parties’ original intention may have been for performance other than in Kansas, plaintiff has shown, in the affidavit of David Webb, Vice President of PDS, that its Oklahoma City office was closed in 1984 and the services provided there were transferred to plaintiff’s Wichita office. Defendant First City National Bank was informed of that change and made no objection to it. The majority of services to be performed by plaintiff under the contract were actually performed in Wichita after 1984 without any objection on the part of defendant. First City National Bank voluntarily participated in those changes by agreeing to send data for processing directly to Wichita. Further, the contract itself called for payment by defendant to be sent to plaintiff’s Wichita office.

Resolving in plaintiff’s favor the factual questions, as we must for purposes of defendant’s motion, clearly there is more here than simple unilateral action on the part of plaintiff. In Continental American Corp. v. Camera Controls Corp., 692 F.2d 1309 (10th Cir.1982), this Court exercised personal jurisdiction under K.S.A. 60-308(b)(5) solely because defendants had made 13 payments, due under a purchase contract, in Wichita. Our determination was upheld on appeal, where the Tenth Circuit said:

These ... payments ... provide circumstantial proof that the parties agreed some performance would be rendered in the forum state. We hold, therefore, that the present events created a contract to be performed in part in Kansas, and that these events satisfy the terms of K.S.A. 60-308(b)(5).

692 F.2d at 1312. Turning to the due process analysis of whether the exercise of personal jurisdiction under those circumstances was proper, the Court of Appeals said:

It is fundamental that the mere quantum of contacts between the forum and the defendant is not determinative of [the due process] issue. “Whether due process is satisfied,” it has been said, “must depend rather on the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.” ...
We recognize that modern commercial transactions often involve little contact with the forum beyond that of mail and telephone communications____
Nonetheless, we believe that on the present facts the “maintenance of the suit does not offend the ‘traditional notions of fair play and substantial justice.’ ” ... [H]ere part performance of the contract, e.g., partial payments of the contractual amount, did take place in Kansas____ [I]t can fairly be said that the defendant here availed itself of the privilege of business contacts with Kansas offices____
Further, by ceasing to make partial payments, defendant should certainly have foreseen the possibility of being haled into court in Kansas____

Continental American Corp., 692 F.2d at 1314 (citations omitted).

In this case we have not only payments made to plaintiffs Wichita offices and the cessation of those payments by defendant, but as well defendant’s additional activities of sending financial and other data to plaintiff’s offices here, and the attendant communications by telephone and otherwise. Certainly, when the facts are resolved in plaintiff’s favor, there is even more of a basis for exercising personal jurisdiction in this case than there was in Continental American Corp., and defendant’s arguments to the contrary are rejected.

Defendant next claims this Court lacks subject matter jurisdiction because plaintiff, a limited partnership, has failed to establish that the citizenship of each of its limited partners is different from that of defendant bank, and therefore the necessary diversity of citizenship under 28 U.S.C. § 1332 is not present. The issue presented is whether the citizenship of a limited partnership is determined by reference to the citizenship of its general partner alone, or whether it is determined by reference to the citizenship of both the general and limited partners.

In support of defendant’s contentions it relies on Carlsberg Resources Corp. v. Cambria Savings & Loan Assoc., 554 F.2d 1254 (3d Cir.1977), holding that the citizenship of limited partners must be considered in determining whether the requisite diversity exists. See also New York State Teachers Retirement System v. Kalkus, 764 F.2d 1015 (4th Cir.1985).

However, that is by no means a unanimous rule. In Colonial Realty Corp. v. Bache & Co., 358 F.2d 178 (2nd Cir.1966), cert. denied 385 U.S. 817, 87 S.Ct. 40, 17 L.Ed.2d 56 (1966), the Court concluded that the citizenship of limited partners need not be considered in determining the diversity question if, under state law, a limited partner is not a proper party to a suit by or against the partnership.

This split of authority has not been resolved by the Supreme Court, nor has it been addressed by the Tenth Circuit Court of Appeals. However, the Carlsberg decision has been subject to rather intense criticism. See Note, Limited Partnerships and Federal Diversity Jurisdiction, 45 U. of Chi.L.Rev. 384, 405, 418 (1978); Note, Diversity Jurisdiction and Limited Partnerships, 1977 B.Y.L.Rev. 661, 672 (1977) (suggesting that the “real parties” rule enunciated in Colonial Realty is more consistent both with the corpus of diversity precedents and the policy underlying the diversity requirement); Note, Federal Jurisdiction — Diversity of Citizenship — The Citizenship of Limited Partners Must be Considered in Determining Whether Diversity Jurisdiction Exists, 46 Geo.Wash.L.Rev. 657, 671 (1978) (noting that the practical effect of the Carlsberg case will be to bar limited partnerships from the federal courts, and that the absence of an impartial forum may restrict the use of a currently valuable form of business organization); Note, Federal Courts — Diversity of Citizenship Jurisdiction — Limited Partnerships, 16 Duq.L.Rev. 221, 234 (1977-78) (also noting the negative impact of the Carlsberg decision on the development of these multi-party, multi-state business entities because the parties involved often desire the availability of a federal forum); and Note, Federal Civil Procedure — Diversity Jurisdiction — Identity of Citizenship Between Defendants and Some Limited Partners in Plaintiff Partnership Precludes Federal Jurisdiction Based on Diversity, 27 Emory L.J. 165, 183-84 (1978) (praising Colonial Realty as the logical result of the Fed.R.Civ.Proc. 17(b) directive to look at state law to determine capacity to sue in suits involving neither a corporation nor an individual suing or being sued as such).

The division of authority on this issue was also reviewed by Judge Brett in Sixth Geostratic Energy Drilling Program 1980 v. Ancor Exploration Co., 544 F.Supp. 297 (N.D.Okla.1982). In that case the Court said:

The question ultimately must be determined by the modern-day realities attending limited partnerships. It is clear a limited partner stands in a legal position more closely analogous to that of a corporate shareholder than to that of a partner in a general partnership or that of a member of an unincorporated association. The limited partner, similar to a shareholder, is generally liable only to the extent of his or her capital contribution. In addition, the limited partner may be said to have even less voice than the shareholder in managing or controlling the activites of the business entity because he or she lacks voting rights. The underlying rationale of Section 26 of the Uniform Limited Partnership Act, that is restricting the right of the limited partner to sue or be sued on. behalf of the limited partnership, is an extension of the shareholder parallel____ Ultimately the question of whose citizenship is to be considered in determining whether diversity exists must be resolved with reference to the basic purposes of diversity jurisdiction. As Judge Hunter noted in his dissent in Carlsberg Resources, diversity jurisdiction is designed to provide “the assurance of impartiality to out-of-state litigants”, and this Court agrees with Judge Hunter’s further statement that
the policies behind the congressional grant of diversity are well served by allowing these limited partnerships access to federal courts when all the general partners are diverse in citizenship from all the opposing parties.

Ancor, 544 F.Supp. at 303 (citations omitted).

After fully reviewing the foregoing authorities, this Court is persuaded Colonial Realty is a better-reasoned decision, and therefore concludes plaintiff PDS need not prove citizenship of its limited partners is different from that of defendant to establish diversity jurisdiction. PDS is a limited partnership whose general partner is PDS, Inc., a corporation organized under the laws of the State of Kansas. Defendant First City National Bank is a corporation organized under, and doing business in, Texas. Consistent with Colonial Really, adequate diversity exists in this case to vest the Court with subject matter jurisdiction.

Parenthetically, the Court would add that even under defendant’s contention that the citizenship of plaintiff’s limited partners needs to be taken into account to establish diversity, plaintiff has in fact established that none of its limited partners resides or does business in Texas. Thus, even were the Carlsberg rationale declared to be the law of the case, diversity jurisdiction would exist.

Defendant next complains that because plaintiff named First City Bancorporation of Texas as primary defendant rather than First City National Bank of Midland, the party actually entering the contracts at issue, the complaint should be dismissed for failing to state a claim upon which relief can be granted. First City Bancorporation is the parent holding company of, and does business as, First City National Bank. Plaintiff properly responds that under F.R.Civ.P. 21 misjoinder of parties is not ground for dismissal, but that the Court may order the addition or deletion of any party on such terms as are just. At oral argument on defendant’s motion, the parties agreed First City Bancorporation was not a necessary party to this action. Plaintiff’s complaint will be amended by deletion of that party and all claims will henceforth proceed against First City National Bank of Midland, Texas.

Defendant also challenges venue in this Court on the grounds plaintiff has failed to establish the residence of the individual partners of PDS. That argument is based on the premise plaintiff must allege the citizenship of each limited partner to establish proper venue. Consistent with the Court’s previous ruling that the controlling citizenship for purposes of this case is only that of the general partner, however, venue in this case is likewise determined on that basis. Here, that citizenship is Kansas, and there is accordingly no difficulty with venue in this Court.

Lastly, defendant requests that for considerations of convenience this Court exercise its discretion to transfer the case to Texas, where witnesses and evidence are located. Plaintiff cogently responds there are numerous witnesses and evidence located here in Kansas, and in this regard the “inconvenience” appears roughly equal between the parties. Under these circumstances, the Court declines to exercise its discretion to transfer the case, consistent with the principle that plaintiffs choice of forum should not be disturbed absent compelling reasons.

IT IS THEREFORE ORDERED this 2 day of December, 1985, that plaintiff’s complaint be amended by the deletion of First City Bancorporation of Texas, Inc. as a named defendant, and that defendant’s motion to dismiss is otherwise denied in its entirety.


source: Caselaw Access Project

author: McCURN, District Judge.

license: Public Domain

text:
    Robert J. CHASE, Plaintiff, v. CASSIAR MINING CORPORATION and Raybestos-Manhattan, Defendants.
    No. 81-CV-1119.
    United States District Court, N.D. New York.
    Dec. 3, 1985.
    Zwiebel & Brody, P.C., Kingston, N.Y., for plaintiff; Alan S. Zwiebel, of counsel.
    O’Connell & Aronowitz, P.C., Albany, N.Y., for defendant Cassiar; Thomas F. Gleason, of counsel.
    Morgan, Melhuish, Monaghan, Meyer, Arvidson, Abrutyn & Lisowski, New York City, for defendant Raymark Industries, Inc. [successor in interest to RAYBESTOSMANHATTAN]; Franklin N. Meyer, of counsel.
   MEMORANDUM-DECISION & ORDER

McCURN, District Judge.

Presently before the court is defendant Cassiar Mining Corporation’s motion for partial summary judgment limiting its potential liability to those damages attributable to plaintiff’s asbestos exposure within three years of commencing this action. For the reasons discussed below defendant’s motion is denied.

BACKGROUND

The present suit is a diversity action for personal injury arising from plaintiff’s exposure to asbestos. Plaintiff Robert Chase worked for Beaver Industries, Inc. from .1954 until April 10,1979. His job for twenty-five years involved grinding asbestos rock into powder. During his employment, Beaver Industries purchased asbestos from defendants Brinco Mining, Ltd., now Cassiar Mining Corporation, and RaybestosManhattan, now Raymark Industries. Plaintiff is totally disabled from asbestosis and related respiratory problems.

Plaintiff served defendant Cassiar with the present complaint on December 10, 1981. The complaint alleges claims in strict liability, breach of warranty, and negligence. Plaintiff seeks $3 million compensatory damages and $10 million punitive damages. On July 26, 1984, the court granted Cassiar Mining Corporation’s motion to assert a cross claim for contribution against co-defendant Raymark Industries. Cassiar now moves for partial summary judgment limiting its potential liability to those' damages attributable to plaintiff’s exposure within the statute of limitations.

DISCUSSION

In a diversity action the federal court must apply state substantive law including the state statute of limitations. Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945); Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The statute of limitations for personal injury actions in New York is three years. N.Y.Civ.Prac.Law § 214(5) (McKinney 1972 & Supp.1984-85). In an “asbestos case” the action accrues on the date of last exposure. Steinhardt v. Johns-Manville Corp., 54 N.Y.2d 1008, 446 N.Y.S.2d 244, 430 N.E.2d 1297 (1981), cert. denied, 456 U.S. 967, 102 S.Ct. 2226, 72 L.Ed.2d 840 (1982).

Cassiar Mining Corporation contends that under New York law its liability is limited to those damages caused by plaintiff’s exposure to defendant’s asbestos within the three-year limitation period. For this proposition defendant relies on Steinhardt and Schmidt v. Merchants Despatch Transportation Co., 270 N.Y. 287, 200 N.E. 824 (1936). Like the present action, Steinhardt involved the inhalation of asbestos fibers. Schmidt involved the inhalation of dust. In both cases the New York Court of Appeals held that the cause of action accrued at the time that the plaintiff’s body was invaded; ie., “from the last date of exposure to the invading substance”. Steinhardt, 54 N.Y.2d at 1010-11, 446 N.Y.S.2d 244, 430 N.E.2d 1297. Cassiar focuses on the language in Schmidt that injury occurred each moment the dust was inhaled and that the “plaintiff might have begun an action against the defendant immediately after he inhaled the dust which caused the disease”. Schmidt, 270 N.Y. at 301, 200 N.E. 824. Defendant reads the above cases to mean that each successive exposure to the asbestos creates a separate, actionable injury that begins its own limitation period. According to Cassiar, it can only be held liable for injuries that were caused by exposures during the three years before the present suit was commenced because the limitations period has run on all previous inhalations. Defendant analogizes the present case to New York nuisance actions where damages are limited to the three-year period prior to service of the complaint. See State of New York v. Schenectady Chemicals, Inc., 103 A.D.2d 33, 479 N.Y.S.2d 1010 (3d Dep’t 1984); Kearney v. Atlantic Cement Co., 33 A.D.2d 848, 306 N.Y.S.2d 45 (3d Dep’t 1969). Cassiar Mining Corporation also cites Alabama case law applying the rule that Cassiar advocates. See Minyard v. Woodward Iron Co., 81 F.Supp. 414 (N.D.Ala.), aff'd, 170 F.2d 508 (5th Cir.1948) (dust inhalation); Garrett v. Raytheon Co., Inc., 368 So.2d 516 (Ala.1979) (radiation exposure); American Mutual Liability Insurance Co. v. Agricola Furnace Co., 236 Ala. 535, 183 So. 677 (1938) (dust inhalation).

This court declines to interpret the New York case law as espoused by defendant. Neither Steinhardt nor Schmidt stand for the proposition which defendant urges this court to adopt. These cases hold only that for purposes of the statute of limitations the action accrues on the date of the last exposure. The New York Court of Appeals never reached the question of damages in either Steinhardt or Schmidt because it found that the plaintiffs were time barred from asserting an action against the defendants.

The policy for allowing recovery in tort is to make the injured party whole. In a products liability case, the manufacturer that puts an unreasonably dangerous product into commerce is held liable for the injuries caused by its product because the manufacturer is better able than the innocent victim to control its product’s safety and it can spread the cost of damages over society. Allowing recovery also serves as an impetus to the defendant and other manufacturers and sellers to act with reasonable care and to ensure that the products they introduce into commerce are reasonably safe. Codling v. Paglia, 32 N.Y.2d 330, 340-41, 345, 345 N.Y.S.2d 461, 298 N.E.2d 622 (1973).

The purpose behind a statute of limitations is to give defendants repose at some specified point in time. A defendant thus knows that at some point he cannot be sued for his previous tortious conduct. The statute of limitations is designed to prevent the problem of having to defend a stale claim where the witnesses and evidence may have long since been lost or destroyed or are simply no longer available. See 35 N.YJur. Limitations and Laches § 2 (1964). This problem is not present where the tortious conduct is continuous and the action is commenced within the statutory period.

By adopting what has been called a harsh rule concerning the statute of limitations in asbestos cases, New York did not intend to deny asbestos victims recovery for their injuries as long as their actions are timely commenced. The rule in New York is that where the plaintiff sustained injury within the statutory period, he “may recover for any cumulative effect on such injuries that may have resulted from inhalations occurring prior to the three-year period.” Ward v. The Desachem Co., 771 F.2d 663, 667 (2dCir.1985), citing Aranoff v. Winthrop Laboratories, 102 A.D.2d 736, 476 N.Y.S.2d 571 (1st Dep’t 1984).

Exposure to asbestos is generally recognized to have a cummulative effect. Often the injury is not apparent until years later, and it becomes more severe with time. In the present action plaintiff claims that he was exposed to defendant’s asbestos for over twenty-five years including the three years prior to commencing the present action. He contends that he is totally disabled as a result. If plaintiff’s exposure within the statutory period caused him injury and aggravated a previous injury from his exposure prior to the three-year period, he is entitled to recover for the cummulative effect.

Defendant’s analogy to New York nuisance law is unpersuasive. Nuisance has its roots in “trespass” and traditionally involves injury to property. In the court’s opinion, New York’s medical malpractice cases, which allow recovery for injury sustained prior to the statutory period if the patient was under continuous treatment by the doctor within the statutory period, provides a closer analogy to the asbestos cases. See generally McDermott v. Torre, 56 N.Y.2d 399, 452 N.Y.S.2d 351, 437 N.E.2d 1108 (1982).

Defendant’s reliance on outdated Alabama law is also misplaced. Obviously, Alabama law is not controlling in New York, and this court cannot create New York law. Moreover, the Alabama legislature and courts have subsequently rejected the rule defendant advocates. See No. 80-566, Acts of Alabama 1980, Ala.Code § 6-2-30 (1975) (adopting date of discovery rule); Cazatas v. Johns-Manville Sales Corp., 435 So.2d 55 (Ala.1983).

Accordingly, defendant’s motion for partial summary judgment is denied.

IT IS SO ORDERED.

      . The rule that defendant proposes would further restrict inhalation actions and effectively deny victims any cause of action in many cases. For example, in the present action plaintiffs rule would limit defendant's liability to the injury sustained within the four months which plaintiff contends fall within the statute of limitations even though plaintiff claims that he was exposed to defendant's asbestos for over twenty-five years. Moreover, defendant would require plaintiff to prove what injury was attributable to the four-month period. As a practical matter this would be virtually impossible.


author: GESELL, District Judge.

text:
    Clifford ROWE, et al., Plaintiffs, v. Samuel PIERCE, et al., Defendants.
    Civ. A. No. 85-2455.
    United States District Court, District of Columbia.
    Dec. 4, 1985.
    Richard C. Eisen, Washington, D.C., for plaintiffs.
    Patricia D. Carter, Asst. U.S. Atty., Washington, D.C., for defendants.
   MEMORANDUM

GESELL, District Judge.

This case requires the Court to determine whether tenants who have entered into an agreement with their landlord for a fixed rental charge and, under local laws, cannot be evicted for refusing to sign a written lease, lose those rights if the landlord’s property is transferred to the Secretary for Housing and Urban Development (HUD) under of regulations that HUD claims preempt local law. The case is before the Court on cross-motions for summary judgment after the parties stipulated that plaintiffs’ motion for a preliminary injunction should be treated as a motion for summary judgment. Finding that there are no material facts in dispute, the Court proceeds to rule on the merits following receipt of briefs and full oral argument.

Plaintiffs are tenants in single-family dwellings located in the District of Columbia. In January of 1985 plaintiff entered into a settlement agreement with their landlord in which they agreed to dismiss a landlord-tenant suit and the landlord agreed to set their rent at $300 per month for the next three years. The agreement provides that the rent levels shall be binding on all future owners of the property.

The owners of plaintiffs property had a mortgage with a private lender and the mortgage was insured by the Department of Housing and Urban Development pursuant to the National Housing Act. 12 U.S.C. § 1701-1750g. The owners defaulted on the mortgage and it was sold to the mortgagee at a foreclosure sale. The mortgagee sought to exercise his option to receive the benefit of the HUD insurance by conveying the property to HUD, id. § 1710(a), and HUD determined that it was in the interest of the Secretary to accept occupied conveyance of the property, based on its regulations. 24 C.F.R. § 203.670. After accepting ownership of the property, HUD notified the plaintiff that HUD regulations required that they sign a HUD lease as a condition of continued occupancy. The lease offered by HUD provided for a rent of $300 per month only through the end of 1985. Plaintiffs, citing their settlement agreement with the prior owner, refused to execute a lease. In July, 1985 HUD issued a 30 day notice that required plaintiffs to sign the HUD lease or vacate the property. Plaintiffs promptly brought this action to enjoin HUD’s efforts to evict them.

If HUD were a private party and local laws were the only relevant law, HUD could not evict plaintiffs for refusing to sign the lease offered by HUD. The District of Columbia’s landlord tenant law provides that “Except as provided in this section, no tenant shall be evicted from a rental unit ... so long as he or she continues to pay the rent to which the landlord is entitled for such rental unit.” D.C.Code § 45-1561(a); D.C. Rental Housing Act of 1985, § 501(a), 32 D.C.Reg. 3089 (June 7, 1985). Refusal to sign a lease is not among the grounds for eviction provided under the statute. The local courts have recently and repeatedly decided that this restriction on eviction applies to an insurer who takes ownership of the property after a default on the mortgage just as if the insurer was the original landlord. Administrator of Veterans Affairs v. Valentine, 490 A.2d 1165 (D.C.App.1985); Washington Federal Savings & Loan v. District of Columbia Housing Commission, 492 A.2d 279 (D.C.App.1985); Merriweather v. D.C. Building Corp., 494 A.2d 1276 (D.C.App.1985).

HUD claims that its regulations governing the conveyance of occupied property preempt this local law. The regulations provide that HUD will only accept conveyance of occupied property if it is satisfied that (1) it it is in the Secretary’s interest to accept conveyance of the property occupied, as determined by specified criteria, see 24 C.F.R. § 203.671; (2) the property is habitable; and (3) the occupant meets the eligibility criteria set forth in § 203.674, which include agreeing to execute a lease at fair market rental on a form prescribed by HUD. 24 C.F.R. § 203.670. In an ordinary conveyance, HUD notifies the tenants or the conveyance before acquiring the property in order to determine if the conditions for occupied conveyance can be met, and permit the occupants to appeal for reconsideration of an adverse decision. 24 C.F.R. §§ 203.676, 203.677, 203.678. However, the Secretary may accept occupied conveyance without notice to the occupants, as was done in this case. 24 C.F.R. §§ 203.679, 203.683. The regulations provide that the tenants’ continued occupancy is “temporary in all cases and subject to termination to facilitate preparing the property for sale” and “appropriate eviction action” may be taken if a tenant fails to execute a HUD lease at fair market rental. 24 C.F.R. § 203.680.

HUD’s interpretation of these regulations presents a direct conflict with the local housing law that requires determining whether the local law has been preempted. The question of preemption is guided by “familiar and well-established principles: ”

[T]he enforcement of a state regulation may be pre-empted by federal law in several circumstances: first, when Congress, in enacting a federal statue has expressed a clear intent to pre-empt state law, ... second, when it is clear, despite the absence of explicit pre-emptive language, that Congress has intended, by legislating comprehensively, to occupy an entire field of regulation and has thereby “left no room for the states to supplement” federal law, ... and, finally, when compliance with both state and federal law is impossible, or when the state law “stands as an obstacle to the accomplishment of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941).

Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 104 S.Ct. 2694, 2700, 81 L.Ed.2d 580 (1984) (citations omitted).

Congress’s actions in passing the National Housing Act do not satisfy any of these conditions. The relevant statutory language provides that “Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, the Secretary shall have power to deal with, complete, rent, renovate, modernize, insure, or sell for cash or credit any properties conveyed to him ...” 12 U.S.C. § 1710(g). This section provides a general authorization for the Secretary to manage and dispose of property acquired through the insurance program and avoid the complex procedures and restrictions imposed on disposing other types of federal property. Nothing in the statute or the legislative history indicates any congressional intent to preempt state property and contract law. Indeed, where Congress felt it might be necessary to preempt state law it did so explicitly. See 12 U.S.C. § 1709-la (preempting state constitutional and legal limits on interest chargeable on loans, mortgages and other financing arrangements).

Far from compelling preemption, the nature of the HUD insurance program suggests a presumption against preemption. Through HUD mortgages and insurance the federal government acts within existing housing markets and exiting state law to promote the development of housing through private business. “[Wjhen an agency of the federal government insinuates itself into the local business world, as HUD does here under the mortgage insurance and foreclosure provisions of the NHA, it should as a general rule, be held to the same legal obligations as a private property owner.” Burroughs v. Hills, 564 F.Supp. 1007, 1018 (N.D.Ill.1983); accord City of Philadelphia v. Page, 363 F.Supp. 148 (E.D.Pa.1973).

Recognizing that the statute does not by its terms preempt local law, HUD argues that the Secretary, pursuant to his authority to “deal with” acquired property, has preempted. The guidelines for determining if regulations preempt state law have also been clearly set out:

“Federal regulations have no less preemptive effect than federal statutes... When the administrator promulgates regulations intended to pre-empt state law, the court’s inquiry is similarly limited: ‘If [h]is choice represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statue, we should not disturb it unless it appears from the statue or its legislative history that the accommodation is one that Congress would not have sanctioned.’ ”

Capital Cities Cable, Inc. v. Crisp, 104 S.Ct. at 2701, quoting, Fidelity Federal Savings and Loan Association v. De La Cuesta, 458 U.S. 141, 153-54, 102 S.Ct. 3014, 3022-23, 73 L.Ed.2d 664 (1982), quoting, United States v. Shimer, 367 U.S. 374, 383, 81 S.Ct. 1554, 1560, 6 L.Ed.2d 908 (1961).

In this instance the Court cannot accept the defendant’s argument that the regulation is a “reasonable accommodation of conflicting policies” because there is absolutely no indication that the Secretary intended to preempt state law. Displacing state law ordinarily should be a deliberate, not an inadvertant act. When the Secretary specifically confronts the problem of conflicting state law, and explicitly con-

eludes that matters within his authority must be exclusively regulated by federal regulations, the courts will uphold his actions. See City of Boston v. Harris, 619 F.2d 87, 97 (1st Cir.1980) (upholding explicit preemption of local rent control by HUD, see 24 C.F.R. §§ 246.1-246.31); Fidelity Federal Savings & Loan Association v. De La Cuesta, 458 U.S. 141, 146-47, 102 S.Ct. 3014, 3018-19, 73 L.Ed.2d 664 (1982) (upholding Federal Home Loan Bank Board’s intentional preemption of state law). But this is not like “a case where a national administrator surveys the problem of varying state approaches and concludes a national policy is necessary.” Kargman v. Sullivan, 552 F.2d 2, 6 (1st Cir.1977). Nowhere in the statement of purpose for the regulations or the Secretary’s response to rulemaking comments is there any indication that HUD considered the issue of preemption or believed that these regulations might have that effect. See 44 Fed. Reg. 23800 (1979); 45 Fed.Reg. 59561 (1980). The rules are primarily directed at giving local HUD administrators guidance on the procedures and criteria for accepting occupied property. The regulations appear to assume that the background law provides for tenancy-at-will. Their effect is to provide a decisionmaking process that provides tenants with notice and appeal procedures before acting on evictions. There is no indication that HUD intended to erase the contractual rights tenants enjoyed under the previous owner or displace local landlord-tenant laws.

In the absence of any intent to preempt, any consideration of preemption, and any reason provided in the regulations for preempting local law the Court cannot accept HUD’s present gloss on the regulations. “[PJreemption of state law by federal statute or regulation is not favored in the absence of any persuasive reasons — either in that nature of the regulated subject matter permits no other conclusion, or that Congress has unmistakably so ordained.” Commonwealth Edison v. Montana, 453 U.S. 609, 634, 101 S.Ct. 2946, 2962, 69 L.Ed.2d 884 (1981), quoting Florida Lime and Avocado Growers v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963). The present expressions of opinion by HUD officials that the regulations should be interpreted to preempt do not constitute sufficient grounds for preemption. See Arkansas Electric Cooperative Corp. v. Arkansas Public Commission, 461 U.S. 375, 386 n. 10, 103 S.Ct. 1905, 1913 n. 10, 76 L.Ed.2d 1 (1983).

In this case every other indication is against preemption. First it must be recognized that landlord-tenant law is an area traditionally left to the states. In such areas, the intent to preempt must be particularly “ ‘clear and manifest.’ ” Douglas v. Seacoast Products, 431 U.S. 265, 272, 97 S.Ct. 1740, 1745, 52 L.Ed.2d 304 (1977), quoting, Rice v. Sante Fe Elevator, 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947). Moreover, the federal housing laws do not constitute a comprehensive federal regulatory scheme. Housing is an area where Congress intended, and the Secretary permits two complimentary systems of regulations to supplement each other with local law providing the general background law and federal law intervening only where federal involvement is deemed necessary. Federal preemption is not to be lightly assumed and the two schemes should be interpreted to allow both to operate. See New York State Department of Social Services v. Dublino, 413 U.S. 405, 93 S.Ct. 2507, 37 L.Ed.2d 688 (1973). Finally, absent a clear necessity a Court may not lightly conclude that the federal government should be permitted to enhance the value of its property for quick sale by frustrating local law, extinguishing the tenants’ protections against eviction, and ignoring contract rights negotiated in a settlement with the prior landlord. The Court will not assume the Secretary has so drastically displaced local law without even considering the consequences.

HUD’s regulations do not preempt local law and must be interpreted as providing the grounds and procedures for eviction only where no contradictory local law exists. The “appropriate eviction action” authorized by the regulations is an action which is also appropriate under local law— nothing more. Defendant’s efforts to evict the plaintiffs for refusing to sign a lease must be enjoined. An appropriate order is filed contemporaneous with this opinion.

      . Or, alternatively, the occupants suffer from a temporary illness or injury which would be aggravated by the process of moving from the property.


author: GONZALEZ, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. Alejandro SIERRA & Maria Norha Perez-Zuluaga, Defendants.
    No. 85-8115-CR-GONZALEZ.
    United States District Court, S.D. Florida, N.D.
    Dec. 4, 1985.
    Robert Cornell, Asst. U.S. Atty., Ft. Lauderdale, Fla., for plaintiff.
    Stephen J. Golembe, Miami, Fla., for defendant Alejandro Sierra.
    Lawrence M. Malman, Coral Gables, Fla., for defendant Perez-Zuluaga.
   ORDER

GONZALEZ, District Judge.

Defendants Alejandro Sierra a/k/a Alejandro Sierra-Jerez and Maria Norha PerezZuluaga were indicted by a grand jury for conspiracy to possess cocaine with the intent to distribute cocaine, in violation of 21 U.S.C. section 846; possession with the intent to distribute cocaine, in violation of 21 U.S.C. section 841(a)(1); and with acting as principals to commit an offense against the United States, in violation of 18 U.S.C. section 2. A bond hearing was held for both defendants before a United States magistrate, and the magistrate entered a written order detailing the reasons why pretrial detention was deemed necessary.

PROCEDURE

Both defendants have filed separate motions for review of the magistrate’s pretrial detention order (sic). Such motions are more properly styled “motion for revocation or amendment of the [magistrate’s detention] order.” 18 U.S.C. § 3145(b) (1985).

STANDARD OF REVIEW

[1,2] Under the Bail Reform Act of 1984, (“Act”), the appropriate standard to be employed by the district court on review of the magistrate’s order of pretrial detention is de novo. United States v. Medina, 775 F.2d 1398 (11th Cir.1985); see also United States v. Maull, 773 F.2d 1479 (8th Cir.1985) (The district court is free to make an independent determination). The method to be employed by the district court involves applying the relevant statutory considerations contained in the Act to the particular facts of each defendant. In making this analysis the district court is free to consider those facts available to the magistrate at the original pretrial detention hearing and any additional facts raised by the parties in their respective motions to amend. United States v. Smith, 87 F.R.D. 693, 699 (E.D.Calif.1980).

DE NOVO REVIEW OF THE MAGISTRATE’S ORDER OF DETENTION

The standard for determining whether pretrial detention shall be ordered is contained in the Act.

Subject to rebuttal by the person, it shall be presumed that no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of the community if the judicial officer finds that there is probable cause to believe that the person committed an offense for which a maximum term of imprisonment of ten years or more is prescribed in the Controlled Substances Act (21 U.S.C. 801 et seq.)....

18 U.S.C. § 3142(e) (1985); see also United States v. Jessup, 757 F.2d 378, 380 (1st Cir.1985).

A rebuttable presumption is raised if there is probable cause to believe that the defendant(s) committed a certain class of offense. The defendants, Alejandro Sierra and Maria Norha Perez-Zuluaga, were indicted for violations of 21 U.S.C. § 846 and § 841(a)(1). The magistrate found that there was probable cause as to defendant Perez-Zuluaga. Transcript, Part II at 17. The record does not reflect a similar argument by the government as to defendant Sierra. The magistrate, however, made her own determination and found that probable cause existed as to defendant Sierra, as well.

Rebuttal has been offered by defendant Sierra’s counsel who denies any connection between defendant Sierra and the crimes for which he is indicted. Counsel for defendant Sierra asserts that the government has failed to connect his client with the cocaine found in the car in which defendant Sierra was sitting. An attempt at rebuttal has also been offered by defendant PerezZuluaga who states that “[t]here are no allegations that the defendant made any statements to anyone concerning cocaine or that she knew that cocaine was in the car in which she was a passenger.” Motion for Review filed by Defendant Perez-Zuluaga at 5.

After reviewing the testimony of Special Agent William Watson, Jr., given at the detention hearing, and considering the statement of the defendants’ in their respective motions to amend, this court finds that probable cause exists to believe that both defendants committed acts in violation of 21 U.S.C. § 801 et seq. Hence, a rebut-table presumption has arisen that “no condition or combination of conditions will reasonably assure the appearance of the persons] as required and the safety the community. ...” 18 U.S.C. § 3142(e).

The presumption, having arisen, the burden now shifts to the defendants to offer evidence and argument to rebut the presumption. Jessup, 757 F.2d at 380. The additional statutory factors which must now be considered to rebut the presumption or to serve as final justification supporting pretrial detention are as follows:

(1) the nature and circumstances of the offense charged, including whether the offense is a crime of violence and involves a narcotic drug;
(2) the weight of the evidence against the person;
(3) the history and characteristics of the person, including
(A) his character, physical and mental condition, family ties, employment, financial resources, length of residence in the community, community ties, past conduct, history relating to drug or alcohol abuse, criminal history and record concerning appearance at court proceedings; and
(B) whether, at the time of the current offense or arrest he was on probation, or parole, or on other release pending trial, sentencing, appeal, or completion of sentence for an offense under Federal, State or local law; and
(4) the nature and seriousness of the danger to any person or the community that would be posed by the person’s release.

18 U.S.C. § 3142(g).

The court will engage in de novo review of these factors with respect to each of the defendants, based on evidence provided to the magistrate, together with the additional information raised by the defendants in their individual motions. The nature of the factors contained in subsection (g) requires that each defendant be given individual consideration.

DEFENDANT ALEJANDRO SIERRA

1. Factors

a) The nature and circumstances of the offense charged, including whether the offense is a crime of violence or involves a narcotic drug.

Defendant Sierra is charged with violation of 18 U.S.C. § 2 and 21 U.S.C. § 841(a)(1) and § 846. Defendant Sierra was found to be in a car which contained three kilograms of cocaine enclosed in a paper bag. Affidavit of Michael P. Wigginton Jr., Government Special Agent. Defendant Sierra has not disputed this allegation.

b) The weight of the evidence against the person.

The magistrate did not make such a finding, nor does the record indicate that the government informed the court of its belief as to weight of the evidence. Defendant Sierra’s counsel has challenged defendant’s detention by arguing that there were no facts produced at the hearing concerning how the cocaine got into the defendant’s vehicle or defendant’s knowledge concerning the cocaine. Such arguments might prove relevant if the government had the burden at this point. Furthermore, counsel for defendant Sierra misperceives the significance of the presumption which now exists as to his client. The presumption having been raised, it is the defendant’s burden to rebut it. At this point the burden no longer rests with the government. See infra note 1. Here the defendant has provided no basis to rebut the presumption against pretrial release.

c) The history and characteristics of the person.

Included in this factor are still further variables such as the defendant’s “character, physical and mental condition, family ties, employment, community ties, past conduct, history related to drug or alcohol abuse, criminal history and record concerning appearance at court proceedings.” 18 U.S.C. § 3142(g)(3)(A). Also included for consideration under this factor is whether the accused is on parole or probation, or on bond for another offense. 18 U.S.C. § 3142(g)(3)(B).

It is with this factor and the additional variables that the defendant Sierra has the most difficulty. Defendant Sierra is an illegal alien. He is a citizen of Colombia. Furthermore, the defendant has family residing in Colombia, although he claims to be afraid to return to Colombia because of political problems. The defendant’s only family tie in the United States is a common-law wife (codefendant Perez-Zuluaga). Defendant and his wife claim to have a nine year old daughter who apparently resides in Colombia. More significantly, defendant Sierra has prior arrests for narcotics offenses, both in Colombia and in the United States. There is no information available as to the status of these arrests. The court has not been advised whether the defendant has been tried and convicted or pled, and whether he is on probation or parole for these offenses.

There is some dispute concerning the defendant’s financial situation. It appears that although the defendant owns part interest in a family ranch and winery in Colombia, this concern is not currently income producing. The defendant is presently making approximately $1,500.00 a month in mortgage payments on an apartment which he owns in Miami. He is also paying off a car loan. The defendant receives some income, less than $5,000.00 a year, from his common law wife. He is unemployed and claims to be in poor health.. The magistrate found that there was substantial likelihood of flight if the defendant was released.

This court concurs with that finding, based upon its own independent judgment. Counsel for defendant Sierra has not persuaded this court otherwise.

d) The nature and seriousness of the danger to any person or the community that would be posed by the person’s release.

Defendant Sierra admits to prior arrests for narcotics related offenses in other jurisdictions. Clearly, such behavior places the community at risk. The defendant has failed to carry his burden with respect to this factor.

2. Finding As To Whether Pretrial Detention Is Warranted

This court finds, based on the record of the hearing before the magistrate, the additional information raised by counsel in his motion to amend and considering all the factors contained in 18 U.S.C. § 3142(g) as a whole, that there are no conditions of release which will reasonably assure the appearance of the accused at trial and the safety of the community.

Counsel for defendant Sierra has argued that certain statements in the pretrial services report are incorrect, are hearsay and that the pretrial services officer did not explain the defendant’s Miranda rights to him. Subsection (f) to 18 U.S.C. § 3142 states that “[t]he rules concerning admissibility of evidence in criminal trials do not apply to the presentation and consideration of information at the hearing.” Hearsay is admissible at pretrial detention hearings. United States v. Golding, 742 F.2d 840 (5th Cir.1984).

In making the finding that pretrial detention is warranted, this court has found it unnecessary to consider the statements given to pretrial services and has made its determination on testimony given at the hearing and argument of counsel in his motion.

Accordingly, the finding of the magistrate that pretrial detention of defendant Sierra is warranted is hereby

AFFIRMED and defendant Sierra’s motion for review (sic) is DENIED. The conditions of detention set forth in the magistrate’s order of October 17, 1985, shall continue to be in effect.

DEFENDANT MARIA NORHA PEREZ-ZULUAGA

1. Factors

a) The nature and circumstances of the offense charged, including whether the offense is a crime of violence or involves a narcotic drug.

Defendant Perez-Zuluaga is charged with violation of 18 U.S.C. § 2 and 21 U.S.C. § 841(a)(1) and § 846. Defendant Perez-Zuluaga was found in a car which contained three kilograms of cocaine enclosed in a paper bag. Affidavit of Michael P. Wigginton Jr., Government Special Agent. Defendant Perez-Zuluaga has not disputed this allegation.

b) The weight of the evidence against the accused.

Defendant Perez-Zuluaga’s counsel has challenged the strength of the government’s case stating that the case against the defendant is “slim” and that there is no evidence that defendant knew that the cocaine was in the car in which she was a passenger. Again, as with defendant Sierra, the burden at this juncture (once the presumption has arisen), lies with the defendant and not with the government. Accordingly, the defendant has failed to rebut the presumption against pretrial release as to this factor.

c) The history and characteristics of the person.

Defendant Perez-Zuluaga testified at the pretrial detention hearing that her occupation is bringing clothes from the United States to Colombia for sale and that she reconditions old cars in Colombia for resale. She is a Colombian national and claims to be in the United States on a visa. She apparently gave her passport to a friend and failed to produce it at her hearing. Defendant Perez-Zuluaga claims to have a common-law husband who lives in the United States. This person is codefendant Sierra, who is an illegal alien. Defendant Perez-Zuluaga was uncertain at the hearing about basic details concerning certain property that she claims to own, such as the name of the bank which holds the mortgage and the name of the person who holds the second mortgage. All of defendant’s ties are with Colombia, with the exception that she claims to be the common-law wife of codefendant Sierra. There appears to be significant risk of flight and the magistrate so found. Defendant Perez-Zuluaga has failed to convince this court otherwise.

d) The nature and seriousness of the danger to any person or the community that would be posed by the person’s release.

Counsel for defendant Perez-Zuluaga claims that the defendant has never been arrested before. While this may be true and while it may also be true that defendant Perez-Zuluaga poses no threat to any person or the community as a whole, this is only one factor to be considered in making a determination of whether pretrial detention is appropriate.

2. Finding As To Whether Pretrial Detention Is Warranted

This court finds, based on the record of the hearing before the magistrate, the additional information raised by counsel in his motion to amend and considering all the factors contained in 18 U.S.C. § 3142(g) as a whole, that there are no conditions of release which will reasonably assure the appearance of the accused at trial and the safety of the community.

As with defendant Sierra, counsel for defendant Perez-Zuluaga argued that certain statements given to Pretrial Services are incorrect, are hearsay and were taken in absence of Miranda rights having been explained. Again, subsection (f) to 18 U.S.C. § 3142 states that rules regarding “admissibility of evidence in criminal trials do not apply____” in the setting of the detention hearing. Golding, 742 F.2d at 840. However, this court does not find it necessary to rely on any discrepancies between statements given to Pretrial Services and statements made at the hearing, in order to make this finding. Accordingly, the finding of the magistrate that pretrial detention of defendant Perez-Zuluaga is warranted is hereby

AFFIRMED and defendant Perez-Zuluaga’s motion for review (sic) is DENIED. The conditions of detention set forth in the magistrate’s order of October 17, 1985, shall continue to be in effect.

      . Although 18 U.S.C. § 3142(e) could be interpreted as making further inquiry unnecessary (in those cases falling under the rebuttable presumption), by shifting the burden of production to the defendant, this court will nonetheless conduct de novo review of the remaining factors contained in subsection (f) to 18 U.S.C. § 3142. See United States v. Jessup, 757 F.2d 378 (1st Cir.1985), in which the court determined the type of burden shifting that occurs. The Eleventh Circuit has recently indicated that "a probable cause determination may alone be sufficient to justify detention pending trial.” United States v. Medina, 775 F.2d 1398 (11th Cir.1985); see also Gerstein v. Pugh, 420 U.S. 103, 114, 95 S.Ct. 854, 863, 43 L.Ed.2d 54 (1975).
      The Second Circuit has extended this rationale and has held that it is unnecessary for a magistrate to make an independent finding of probable cause at the detention hearing because the return of an indictment by a grand jury is sufficient to raise the rebuttable presumption against bail for certain offenses. (”[A]n indictment ‘fair upon its face’ and returned by a properly constituted grand jury conclusively determines the existence of probable cause.”) United States v. Contreras, 776 F.2d 51, 52 (2d Cir.1985).


author: CALDWELL, District Judge.

text:
    Thomas C. PEALER, Plaintiff, v. Secretary of Agriculture, Penrose HALLOWELL, et al., Defendants.
    Civ. A. No. 84-1327.
    United States District Court, M.D. Pennsylvania.
    Dec. 4, 1985.

      Alberto Roldan, Harrisburg, Pa., for plaintiff.
    Michael B. Sutton, Allen C. Warshaw, Deputy Attys. Gen., Harrisburg, Pa., for defendants.
   MEMORANDUM

CALDWELL, District Judge.

I. Introduction.

The remaining defendants in this action, Penrose Hallowell, the former Pennsylvania Secretary of Agriculture, and other officials and employees of the Department of Agriculture, have filed a motion for summary judgment. Also pending is plaintiff’s motion to file a reply brief to defendants’ reply brief in support of defendants’ motion. Plaintiff, Thomas C. Pealer’s, complaint under 42 U.S.C. § 1983 alleges violations of his first amendment rights to freedom of speech and of association as well as violations of his fourteenth amendment rights to due process and equal protection. The complaint arises from Peal-er’s discharge from his employment as a supervisor of a Department maintenance crew. Pealer claims he was fired because he refused to make contributions to the Republican party and because he reported the improper use of state property.

II. Background.

From the pleadings, depositions and affidavits of record, the following is the background of this litigation. The Department hired plaintiff on August 5, 1981, as a building maintenance foreman in charge of an eight man crew responsible for maintaining the Summerdale Laboratories and Region VI office of the Department of Agriculture. Pealer was an at-will employee. He was not protected by a union contract or civil service. (Hallowell affidavit, ¶ 13; Defendants’ Statement of Undisputed Material Fact and plaintiff’s Answer thereto, ¶ 13).

During the course of plaintiff’s employment defendant Wingert asked him to make political contributions three times. First, on May 18, 1982, Wingert requested a $100 contribution for a dinner sponsored by the Governor Thornburgh committee. Pealer refused to make this donation. (Complaint, ¶ 85). Second, in the Summer of 1982, Wingert asked for a $25 contribution to another campaign. Pealer complied this time. (Complaint, ¶¶183-84). Finally, in October of 1982, Wingert sought another $40 contribution which Pealer refused to make. (Complaint, ¶¶ 89-90).

During the Summer of 1982 Pealer also complained to certain of the defendants that defendant Brown had moved into a stone house at the Summerdale Laboratories. Plaintiff believed that only someone associated with the Laboratories should have been permitted to live in the stone house. At the same time he observed defendant Norris taking some state furniture, apparently abandoned at a dump, for his personal use. (Complaint, ¶ 72; Pealer Affidavit, ¶ 19). He reported his concern to some of the defendants.

Based upon the foregoing, Pealer argues that his discharge on May 26, 1984 was politically motivated since he refused to contribute to Republican party politics and was a whistle blower. He contends that at all times his work performance was good. (Pealer Affidavit, II13). He asserts that two of his work crew were not replaced because defendants wished to set him up for discharge by making it more difficult for him to accomplish his assignment.

Defendants assert that Pealer’s discharge was not motivated by political considerations at all. (Hallowell affidavit, ¶ 5; Wingert affidavit, ¶ 6; Moyer affidavit, ¶ 4; Hubert affidavit, ¶ 5; Brigham affidavit, ¶ 4; Van Buskirk affidavit, II5; Clark affidavit, ¶ 5; Klinger affidavit, ÍÍ 5; Brown affidavit, 114; Norris affidavit, 114). Moreover, they point out that plaintiff has admitted that he lacks any evidence to tie his discharge to his failure to contribute. (Pealer Deposition, 48, 88-109, 112-13, 119, 215-25). Pealer was fired simply because he was not a good supervisor. (Hallowell affidavit, 114).

III. Discussion.

Summary judgment under Federal Rule of Civil Procedure 56 is appropriate only where the moving party establishes that no genuine issue exists as to any of the material facts in the case, and that he is entitled to judgment as a matter of law. See, e.g., Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir.1981). Courts should resolve any doubts as to the existence of issues of material fact against the moving party, and view all inference in the light most favorable to the nonmoving party, [citation omitted].

Fragale & Sons Beverage Co. v. Dill, 760 F.2d 469, 472 (3d Cir.1985) (brackets added). Bearing in mind the foregoing standard, we will dispose of defendants’ motion as follows.

A. The Due Process Claim.

Plaintiff claims that the defendants violated his right to due process by discharging him without a hearing. He claims that the “stigma” attached to him by branding him incompetent in connection with discharge from employment violated a liberty interest he possessed under the fourteenth amendment. In Scarnati v. Washington, 599 F.Supp. 1554 (M.D.Pa. 1985), we considered the same issue and noted as follows:

The “liberty interest” is the interest an individual has in being free to move about, live, and practice his profession without the burden of an unjustified label of infamy. Board of Regents v. Roth, 408 U.S. [564] at 572, 92 S.Ct. [2701] at 2706, 33 L.Ed.2d [548] at 557 (1972). In the context of Roth-type cases, a charge which infringes one’s liberty can be characterized as an accusation or label given the individual by his employer which belittles his worth and dignity as an individual and, as a consequence is likely to have severe repercussions outside of professional life. Liberty is not infringed by a label of incompetence, the repercussions of which primarily affect professional life, and which may well force the individual down one or more notches in the professional hierarchy. The distinction is not perfect; our utility affects our dignity and worth whether viewed from within or without. However, implicit in such a distinction is the notion that the constitutional need for procedural protection is not strong when the charge (e.g., incompetence) involves a matter which is peculiarly within the scope of employer-employee relations and when the likely results of even a false charge are reduced economic returns and diminished prestige, but not permanent exclusion from, or protracted interruption of, gainful employment within the trade or profession.

Id. at 1556 (quoting Stretten v. Wadsworth Veterans Hospital, 537 F.2d 361, 366 (9th Cir.1976)) (footnote omitted).

In Stretten, the court went on to note that employers “have a strong interest in conserving resources and dealing expeditiously with incompetent employees.” 537 F.2d at 366.

These principles apply to the case at bar. Plaintiff was informed that he was discharged because his superiors had concluded that he was incompetent. But the Commonwealth:

did not make any charge against him that might seriously damage his standing and associations in his community. It did not base the nonrenewal of his contract on a charge, for example, that he had been guilty of dishonesty, or immorality. Had it done so, this would be a different case.

Board of Regents v. Roth, 408 U.S. 564, 573, 92 S.Ct. 2701, 2707, 33 L.Ed.2d 548, 558 (1972).

Accordingly, plaintiffs due process claim must fail because the state did not violate his federally protected liberty interests.

In any event, we also note that the reason for plaintiffs discharge was not revealed to the public. Plaintiff was informed by a letter from defendant Hallo-well, dated June 19, 1984, that he was being fired as a result of “unsatisfactory job performance” but that information was not disseminated to the public. Plaintiff argues that “other people were told.” To support that contention, however, he relies upon paragraphs 11 and 12 of his affidavit in which he only alleges that defendants Moyer and Van Buskirk informed defendant Hallowell of their opinions of Pealer’s competence. Communication between the defendants alone is obviously not public disclosure and could not have damaged plaintiff’s standing in the community. See Scamati, supra.

In apparent further support of a due process claim plaintiff has also set forth two arguments which would properly only support state law claims for breach of an employment contract. First, citing Bruffett v. Warner Communications, Inc., 692 F.2d 910 (3d Cir.1982), plaintiff contends that a memo, dated April 21,1983, sent by defendant Van Buskirk to Pealer, created an implied term of fair dealing and good faith in Pealer’s employment agreement. Plaintiff does not quote from the memo the language he believes supports this contention and a review of that document reveals no specific language dealing with fair dealing or good faith. It merely recites Van Buskirk’s view of Pealer’s responsibilities as building maintenance foreman. Plaintiff’s position on the length of his employment is contradictory but there has been some admissions that his employment was at-will. (Defendants’ statement of undisputed material fact, and plaintiff’s answer thereto, ¶ 11; Pealer’s deposition at p. 148). The discharge of an at-will employee cannot violate any implied term of fair dealing and good faith since in those circumstances it is understood that discharge can occur at anytime and for any or no reason.

Despite the above admissions, plaintiff next argues that the term of his contract was until he reached retirement age and that the Department’s custom and practice was not to discharge good, efficient and dependable employees unless it was for just cause. Citing Novosel v. Nationwide Insurance Co., 721 F.2d 894 (3d Cir.1983) and Adams v. Budd Co., 583 F.Supp. 711 (E.D.Pa.1984), plaintiff claims that Pennsylvania law holds that an employer’s custom or policy can create contractual just cause requirements or procedures by which employers must abide.

Putting aside for the moment that plaintiff has failed to articulate how this alleged state law claim supports his federal constitutional claims, plaintiff has not set forth facts which would support the state law claim. In an affidavit submitted in opposition to the defendants’ motion plaintiff concludes in paragraph 10 as follows:

The custom and practice within the Department of Agriculture was not to dismiss good, efficient, and dependable employees unless it was for just cause. Good and dependable employees are allowed to keep their position until they reach retirement age.

These statements contradict testimony Pealer gave at his deposition. When he was deposed in these areas, Pealer stated that no one in the Department ever told him that he could keep his job as long as his performance was satisfactory. He did testify that he “sort of felt” that that would be the case, (Pealer deposition at 237) , and that it was “more or less assumed when you get a job,” (Pealer deposition at 238) , that discharge was contingent upon unsatisfactory work. But this evidences only an expectancy of continued employment, not a right to it. Thus, there was no mutually explicit understanding that would have taken him out of the general rule that employment at will can end at any time and Novosel is inapplicable here. See Wolk v. Saks Fifth Avenue Inc., 728 F.2d 221 (3d Cir.1984).

Pealer’s affidavit does not create any issues of material fact. It contains only conclusional allegations, and a party resisting a motion for summary judgment cannot expect to rely merely upon bare assertions, eonclusory allegations, or suspicions. Ness v. Marshall, 660 F.2d 517 (3d Cir.1981). See also Barwick v. Celotex Corp., 736 F.2d 946 (4th Cir.1984).

We conclude that Pealer has failed to show a violation of his right to due process.

B. The First Amendment Claims.

Plaintiff claims his first amendment right to freedom of association was violated because he was discharged for refusing to contribute to the Republican party. He also asserts that defendants punished him for exercising his first amendment right to freedom of speech when he complained about the personal use of government property, including Brown’s use of the stone house.

Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977) sets forth the burden that plaintiff must satisfy to assert these claims successfully. Plaintiff must show: (1) that his conduct was constitutionally protected; and (2) that it was a substantial or motivating factor behind his discharge. Plaintiff’s conduct may have been constitutionally protected but he has failed to show it had anything to do with his discharge.

Plaintiff relies heavily upon his own affidavit to carry his burden here. His reliance is misplaced because once again the affidavit sets forth only conclusional allegations concerning the reason for plaintiff’s discharge. Paragraph 14 alleges that “I was terminated from my job as a Building Maintenance Supervisor because I refused to contribute to political fundraisers, and to the political campaigns or aims which all the defendants were involved in.” Paragraph 8 asserts that the “reason that defendants did not help me obtain replacement workers and to manage the taking of leave by the maintenance crew was to interfere with my job performance.” Paragraph 18 asserts that defendants “through a common agreement or understanding, refused to hire replacement workers because I refused to contribute to their political campaigns or aims.” Paragraph 24 claims that “One of Dave Brown’s political aims was to obtain a good place to live and pay a rate that would be substantially lower than if he would be leasing in the open market.” Finally, paragraph 25 asserts “My refusal to cooperate with Dave Brown’s aim was what motivated him to make unsatisfactory remarks about my job performance.”

Nowhere are these conclusions supported by facts. When questioned about these claims at his deposition, Pealer admitted that he had no information to back up these charges and that, essentially, he was relying upon the allegations of his complaint. (Pealer deposition, 88-109, 112-20, 215-25).

Plaintiff submits his last employment evaluation before his discharge as evidence that he was fired for pretextual reasons. In that report of July 1983, defendant Clark, then plaintiffs immediate supervisor, rated plaintiff “very good” in dependability and “good” in all the other categories of evaluation.

This evidence must be evaluated in the context of plaintiffs claim. Plaintiff did not sue, nor could he have, for wrongful discharge in violation of an employment agreement. He was an at-will employee and hence could have been discharged at any time even if his work was perfectly satisfactory. Plaintiffs claims are based upon violations of his constitutional rights and to succeed in those claims, as we noted previously, plaintiff must show that his discharge resulted in substantial part because of his exercise of those rights. Plaintiff has failed to do that. This isolated evaluation, made approximately one year before plaintiffs discharge, and considered in light of the many reports made by defendants over 1982-1984 concerning the work related problems of plaintiff and his maintenance crew, cannot carry plaintiffs burden in opposing defendants’ motion for summary judgment.

Plaintiff argues that if we were to grant defendants’ motion, we would be deciding issues of credibility which should be left to the factfinder. We disagree. In our view, plaintiff has simply not made out a case of retaliatory discharge for the exercise of federal constitutional rights. He has shown that he was solicited for political contributions three times in 1982, but his termination in June of 1984 hardly comports with plaintiff’s charge that defendants, as a result of his failure to cooperate fully in that fundraising, had an “over anxious desire” (plaintiff’s brief in opposition to defendants’ motion for summary judgment at 4), to terminate him. The same conclusion applies to plaintiff’s claim concerning his 1982 “whistle blowing.” This “whistle blowing” was de minimus, involving plaintiff’s complaint that defendant Brown should not have rented the stone house at the Summerdale Laboratories and that defendant Norris should not have taken a desk from the stone house for his own use.

Plaintiff has failed to set forth any facts to support his claim and we will issue an appropriate order dismissing his claims.

      . By stipulation of the parties, filed March 5, 1985, Chester Heim, the Deputy Secretary of Agriculture, and Jay Uhler, personnel director of the Department, were dismissed from the case.

      . Pendent state claims were also alleged but plaintiff has elected not to pursue those.

      . Plaintiff also failed to plead the state claim and, despite the logic of doing so, failed to explore it at Hallowell’s deposition.

      . Plaintiff refers us to attachment A-3 to defendant Van Buskirk’s answers to interrogatories. That exhibit, however, was not a performance evaluation report of Pealer but the memo by defendant Van Buskirk discussed above. Based upon defendant Clark’s deposition, (N.T. 6), we believe that plaintiff is referring to an evaluation performed by Clark, filed with the Department of Agriculture on July 21, 1983, and which we located among the voluminous documents plaintiff filed in support of his motion to reopen his lawsuit.

      . This includes the equal protection claim since plaintiff did not address this issue in his brief and has failed to articulate how this right was violated.


author: LA PLATA, District Judge.

text:
    Clarence STUDAWAY, Plaintiff, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant.
    No. 85-CV-70644-DT.
    United States District Court, E.D. Michigan, S.D.
    Dec. 4, 1985.

      William M. Crawforth, Detroit, Mich., for plaintiff.
    Roy C. Hayes, U.S. Atty., Detroit, Mich., for defendant.
   ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND AFFIRMING DEFENDANT’S DENIAL OF PLAINTIFF’S APPLICATION FOR SOCIAL SECURITY BENEFITS

LA PLATA, District Judge.

On January 24, 1984, Plaintiff, Clarence Studaway, filed an application for Social Security disability insurance benefits. Born in Memphis, Tennessee, in 1928, Plaintiff claimed that as of October 20, 1983, he had not been able to return to his position as a custodian at Wayne State University, as a result of several impairments: high blood pressure, bladder surgery, leg problems, and an injured back. Following two administrative denials of his application, Plaintiff requested a de novo hearing, which was held on September 25, 1984.

Granted a medical disability by his employer, Plaintiff testified that his custodial position involved various tasks, including the daily lifting of articles weighing forty to fifty pounds. He claimed that he has difficulty standing for more than forty minutes and walking more than two blocks. Unable to operate an automobile because of intermittent seizures, his daily activities consist of watching television and cleaning his first story apartment.

In a medical report dated April 4, 1984, Plaintiff’s treating physician, Michael Kelly, M.D., indicated that he had received treatment for numerous maladies, including hypertension, heart disease, cirrhosis of the liver, and chronic obstructive pulmonary disease. Stating that Plaintiff smoked cigarettes over a thirty year period and was a frequent imbiber of alcohol, Dr. Kelly expressed an opinion that Plaintiff is permanently and totally disabled:

Mr. Studaway is permanently and totally disabled by his medical problems. All of these problems are chronic and progressive in nature. The etiology must consider smoking and alcohol as primary. Certainly exposures from Dodge Main with respect to assembly line production, stress and the pulmonary irritants associated with spot welding have played a role both in his pulmonary and cardiovascular disease. Those, however, are likely secondary to the alcohol and cigarette usage. In as much as these problems are chronic and progressive, I don’t believe that rehabilitation of either physical or vocational nature will be effective or appropriate.

A consulting physician of Defendant, A. Smiley, M.D., who found that Plaintiff’s symtomatology was extensively related to cigarette and alcohol usage, determined that Plaintiff was able to squat, bend, and walk for fifty feet without assistance. Based on a physical examination, Dr. Smiley determined that Plaintiff’s spine, chest, and joints were relatively normal, but that his high blood pressure was not well controlled.

Also testifying at the administrative hearing was a vocational expert, Don Harrison. The expert noted that janitorial positions vary from light to heavy in exertional levels. He expressed an opinion that, assuming Plaintiff’s testimony were credible, no employment positions existed that Plaintiff could assume. In the event Plaintiff could perform light work, he estimated that 3,000 light custodial positions existed in the Detroit area, which would not involve operating a motor vehicle or working with moving machinery.

In a decision dated September 27, 1984, the administrative law judge (AU) concluded that, since custodians are able to function in working environments involving light levels of exertion, only, Plaintiff was capable of performing his previous relevant work. Determining that Plaintiff was not disabled within the framework of the Social Security Act, the AU based his decision on a Social Security ruling, 82-61, which prescribes that even though a claimant may not be able to resume his former position, he will not be deemed to be disabled if the duties of that position are significantly greater than the duties required by other employers.

In Jock v. Harris, the Plaintiff, formerly a supermarket cashier, claimed that she was disabled as a result of several maladies that precluded her from standing or walking for prolonged periods. In denying the application for benefits, the administrative law judge considered the fact that a cashier may perform her tasks in a sedentary position. Approving the reasoning and decision of the administrative agency, the Jock Court stated:

Appellant contends that it was improper for the AU to take administrative notice of the existence of “sedentary” cashier positions. We disagree. Appellant’s argument appears to rest on an assumption that her initial burden, in making a prima facie case of disability, was merely to show an inability to return to her prior job as a “supermarket cashier.” But this view rests on too narrow a construction of the standard of eligibility for benefits. The relevant provision of the Social Security Act requires that an applicant for disability benefits demonstrates that “his physical or mental impairment or impairments are of such severity that he is ... unable to do his previous work ...” In this case, appellant’s burden was to show an inability to return to her “previous work” as a cashier, not simply to her former job as a “supermarket cashier.”

In the matter at bar, premised on the testimony of the vocational expert that 3,000 positions exist in the Detroit area for light custodial work, the AU noted that Plaintiff, formerly involved in a custodial environment requiring the daily lifting of heavy articles, could perform janitorial tasks (1) involving light levels of exertion and (2) excluding the operation of a motor vehicle or the working with heavy machinery. Governed by the standard of review enunciated in 42 U.S.C. § 405(g) and a myriad of cases, including Sherrill v. Secretary of Health and Human Services, this Court determines that substantive, competent evidence existed on the entire record to support Defendant’s denial of Plaintiff’s application for disability insurance benefits.

Consequently, Plaintiff’s Motion for Summary Judgment is DENIED and Defendant’s final decision denying disability insurance benefits to Plaintiff is AFFIRMED.

      . On January 10, 1985, the Appeals Council declined to grant Plaintiffs request for review. Plaintiff filed a Complaint for judicial review in this court on February 11, 1985.

      . 651 F.2d 133 (2d Cir.1981).

      . Jock at 135.

      . 757 F.2d 803, 804 (6th Cir.1985).


author: DONALD J. PORTER, Chief Judge.

text:
    Vernon BROWN, Plaintiff, v. The UNITED STATES of America, acting By and Through the FARMERS HOME ADMINISTRATION OF the DEPARTMENT OF AGRICULTURE, Defendant.
    Civ. No. 84-1036.
    United States District Court, D. South Dakota, N.D.
    Dec. 5, 1985.
    William J. Pfeiffer, Forrest C. Allred, Aberdeen, S.D., for plaintiff.
    Ray P. Murley, Asst. U.S. Atty., Sioux Falls, S.D., for defendant.
   MEMORANDUM OPINION

DONALD J. PORTER, Chief Judge.

FACTUAL BACKGROUND

In connection with loans Donald M. Markuson (hereinafter Markuson) received from the Farmers Home Administration (FmHA) in the late 1970’s and early 1980’s, Markuson executed a series of security agreements with the FmHA. Each of these agreements, which were dated April 24, 1978; May 27, 1980'; November 13, 1980; and May 21, 1981, granted FmHA, in identical language, a security interest in “All livestock ... now owned or hereafter acquired by Debtor, together with all increases, replacements, substitutions, and additions thereto, including but not limited to the following.” The April 24, 1978 agreement specifically listed a one-half interest in 25 cows and the calves of those cows, four yearlings, one Holstein cow, and one Holstein bull. The May 27,1980 agreement specifically listed 96 “mixed” cows, two Hereford bulls, and one Angus bull. The November 13, 1980 agreement specifically listed 94 mixed beef cows, 88 mixed calves, and two Hereford bulls. The May 21, 1981 agreement specifically listed 127 mixed cows and eight Limousin bulls.

In December, 1981, Markuson proposed to plaintiff that Markuson knew of fifty “Black Baldy” cattle that Markuson would buy with plaintiffs money, then re-sell at a higher price. Plaintiff would then recover the purchase price, and plaintiff and Markuson would split the profit. On or about December 24, 1981, plaintiff mailed a check for $20,000 to Markuson. Markuson put the check in his account, and bought the fifty cattle, none of which ever carried a brand. Plaintiff never filed a financing statement on the cattle or made any attempt to put notice of this transaction in the public records.

In January, 1982, plaintiff went to Markuson’s ranch, near Ipswich, South Dakota, and viewed the cattle which were in a lot separate from other cattle in Markuson’s possession. Plaintiff then went on a trip to California, and apparently had nothing more to do with the cattle. Markuson testified that shortly after plaintiff’s visit, the occurrence of a blizzard required that he put the fifty cattle in a field with his other cattle. Although Markuson’s recollection at trial was hazy at best, it appears that some of plaintiff’s cows were then given to a third party in Mobridge, South Dakota, who had also been keeping cattle on Markuson’s ranch. The rest of the cattle on Markuson’s property, including all of plaintiff’s cows, were sold in February, 1982, apparently at the urging of an FmHA official who, after a visit to Markuson’s ranch on February 17, 1982, sought to liquidate Markuson’s cattle operation. Markuson never told FmHA of the arrangement with plaintiff, and gave FmHA the checks from the sale of the cattle, totalling $34,298.54.

When plaintiff returned to South Dakota in March, 1982, he discovered the sale of the fifty cattle, and eventually contacted FmHA, seeking a return of the $20,000. FmHA refused, and plaintiff thereafter commenced this action under the Federal Tort Claims Act, 28 U.S.C. § 1346(b), alleging conversion.

Initially, this court entered judgment for the defendant but vacated its order in consideration of the Eighth Circuit’s decision in Rohweder v. Aberdeen Production Credit Ass’n., 765 F.2d 109 (8th Cir.1985). Having considered the significance of Rohweder in relation to the facts of this case, this Court reaffirms its judgment for the defendant.

DISCUSSION

I.

The issue is whether the fifty cattle became subject to the FmHA security agreements by operation of SDCL 57A-9-203(l) (1984 Supp.). This statute provides that a security agreement attaches when (1) there is an agreement that it attach; (2) value is given by the secured party; and (3) the debtor has rights in the collateral. Here there were agreements between FmHA and Markuson providing for the attachment of the security interest to after-acquired livestock, and value has been given by FmHA, the secured party. The question before this court is whether Markuson had adequate rights in the fifty cattle for the security interest to attach.

In Rohweder, the court held that a debtor would not have sufficient rights in the collateral for attachment of a security interest “if the parties intended to create a bailment, with [the bailor] retaining complete ownership of the [property] and relinquishing only possession.” 765 F.2d at 113. Plaintiff alleges that the oral agreement between himself and Markuson constituted a bailment and therefore Markuson had no rights in the collateral for FmHA’s security interest to attach. Under South Dakota law, a bailment constitutes the delivery of personal property to another in trust for a specific purpose with an express or implied contract that the trust be faithfully executed and the property returned or accounted for when that purpose is accomplished or kept until reclaimed by the bailor. Johnson v. Hanna, 78 S.D. 324, 101 N.W.2d 830, 835 (1960).

Due to the lack of evidence of delivery of the cattle to Markuson, this court concludes there was no bailment as to preclude attachment of the security interest. Delivery necessary to establish the existence of bailment turns on whether possession and control is retained by the owner or delivered to the bailee. Nelson v. Schroeder Aerosports, Inc., 280 N.W.2d 107, 109 (S.D.1979). Unlike in Rohweder, no evidence was offered in this case of any actual delivery of the cattle to the bailee, Markuson, for the purpose of a sale. Moreover, no constructive delivery can be established since the $20,000 check received by Markuson was placed in his own account. (T.32). Since Brown’s check was commingled with Markuson’s funds and was in no way traceable to the cattle purchased by Markuson, Brown retained no ownership interest in the cattle sufficient to establish a bailment.

The plaintiff offered testimony by both plaintiff and Markuson that plaintiff was to “own the cattle.” Such testimony is nevertheless outweighed by evidence of almost unbridled discretion allowed and exercised by Markuson in the purchase and sale of the cattle. In Rohweder, 765 F.2d at 113, the court suggested that “factors of control over the cattle ... are relevant evidence for the jury in determining the parties’ intent to transfer an ownership interest to [the bailee].” Here the plaintiff never saw the cattle before purchase. Markuson was given total discretion on the sale. While for a time the cattle were kept separate on Markuson’s land, testimony suggested that the separation was left to Markuson’s judgment and was based upon opinion that to do so would facilitate the sale of the cattle (T.43). No attempt was made on the part of either party prior to sale to inform outsiders of the alleged ownership interests of the plaintiff. This court concludes that the evidence has failed to establish the retention of an ownership interest in the plaintiff or any relinquishment of possession necessary to establish a bailment.

II.

Even if the plaintiff had established ownership of the cattle, the court is unconvinced that a third party’s ownership interest in collateral bears any substantial weight in determining a debtor’s “rights in collateral” for purposes of attachment of a security interest. The official comment to § 9-202 states unequivocally that “[t]he rights and duties of parties to a security transaction and of third parties are stated in this Article without reference to the location of ‘title’ to the collateral.” Even if a party retains ownership interest in a piece of collateral, a debtor who retains that collateral is still able to mislead potential creditors by exercising his “rights” of possession and control over the collateral. It is the outward appearance of a debtor’s rights of ownership and control in the collateral that determines whether attachment of a security interest is effective and not the right of a party who may have title to the collateral.

It is the task of this court, therefore, to determine whether Markuson had sufficient “rights” in the cattle for FmHA’s security interest to attach under the after-acquired property clause. While the UCC provides no definition of “rights in the collateral” under § 9-203, the “mere possession of collateral or an unexercised option to purchase does not give the debtor sufficient rights for a security interest to attach.” Rohweder v. Aberdeen Production Credit Ass’n., 765 F.2d 109, 112 (8th Cir.1985) (citing Pontchartrain State Bank v. Poulson, 684 F.2d 704, 707 (10th Cir.1982)). Similarly, a possessory interest for a limited purpose such as repair of property does not constitute “rights in the collateral.” Matter of Chicago, Madison & Northwestern Ry. Co., 36 B.R. 292, 298 (Bankr.D.Wis.1984); Chrysler Corp. v. Adamatic, Inc., 59 Wis.2d 219, 235, 208 N.W.2d 97 (1973).

The debtor must have some ownership interest in the collateral before a security interest arises. Northwestern Bank v. First Virginia Bank of Damascus, 585 F.Supp. 425, 429 (W.D.Va.1984). In Kinetics Technology Corp. v. Fourth National Bank of Tulsa, 705 F.2d 396, 398 (10th Cir.1983), the Tenth Circuit noted, however, that a debtor need not have full ownership rights for attachment to occur. Addressing the question of the sufficiency of rights that need be demonstrated, the court wrote as follows:

Thus, it is clear that for a security interest to attach, a debtor must have some degree of control or authority over collateral placed in the debtor’s possession. The Oklahoma Supreme Court, in a case factually similar to the case before us, has said that the requisite authority exists “where a debtor gains possession of collateral pursuant to an agreement endowing him with any interest other than naked possession.” Morton Booth Co. v. Tiara Furniture, Inc., 564 P.2d 210, 214 (Okl.1977).

705 F.2d at 399. In Kenetics, Oklahoma Heat Transfer (OHT) manufactured heat exchangers to specifications supplied by customers. The Bank had a perfected security interest in OHT’s inventory, including after-acquired inventory. Kenetics designed and supplied process furnaces for the petrochemical industry. OHT contracted with Kenetics to build certain furnaces, using OHT inventory and specially designed parts furnished by Kenetics and to deliver the completed products to Kenetics for the agreed sum. The issue was whether the parts owned by Kenetics and delivered to OHT were covered by the Bank’s security agreement with debtor OHT. Kenetics contended it was a bailor and OHT a bailee as to the parts delivered to OHT. The Bank contended that the parts in OHT’s possession were inventory covered by its security interest. The court rejected OHT’s bailment argument and held that the security interest attached since the debtor’s rights exceeded the “naked possession” standard.

In the present case, the evidence is clear that Markuson’s interests and authority over the fifty cattle significantly exceed the “naked possession” standard as stated in Kenetics. Plaintiff and Markuson entered into an oral agreement whereby plaintiff was to advance the price of the cattle and Markuson was to select, purchase, feed, shelter and sell the cattle at a profit, at which time the purchase price and one-half the profit was to be returned to plaintiff. Although apparently approval was needed on the purchase, plaintiff never saw the cattle before they were purchased. Evidence also indicates that Markuson was given complete discretion on the sale of the cattle, as plaintiff was out of state at the time. Plaintiff testified that the re-sale of the fifty cattle was intended to have been within a few days of the original purchase of the cattle, with the apparently preferred place of sale to be at Mobridge, South Dakota. Yet, in response to the question of whether plaintiff had to approve the sale, plaintiff testified, “No. I just turned them over to [Markuson]. He told me what he was doing with his cattle and I said all right and it was left up to him.” (T.129). Plaintiff further testified that there was no limitation on the place of sale. Markuson could have sold them anywhere “if he could have found a place. That was the object to sell the cattle and sell them where the best money was.” (T.130).

The cattle in controversy were kept on Markuson’s ranch. Although they were initially kept separate from Markuson’s herd, there was no agreement that the cattle not be commingled. (T.44). Markuson testified that the purpose of the separation was to facilitate the sale of the cattle. (T.43). At no time did plaintiff call attention to any objection, or assert his interest in the cattle to any third party. (T.19). The first time FmHA had knowledge of plaintiff’s interest was after the sale. Since the cattle acquired by Markuson fit the description of the cattle under the security agreements, FmHA had no reason to know of any outside interest in the collateral.

This court has no difficulty in finding that, under the prevailing case law, Markuson had sufficient rights in the cattle to allow attachment of FmHA’s security interests. The discretion given Markuson by the plaintiff allowed Markuson to treat the cattle as if they belonged to him. It is significant that while the cattle were in his possession, Markuson allowed some of them to be used to satisfy a personal debt to a third party. Such authority clearly goes beyond a “naked possession” of the cattle. FmHA was therefore well within its rights to appropriate the proceeds from the sale of the cattle and plaintiff has no claim against defendant.

While such a result may appear harsh, the reason for the rule is clear. As explained by the court in Kenetics:

if a debtor received collateral from a third party under an agreement giving the debtor authority to exercise any outward indicia or manifestations of ownership or control, a would-be creditor could easily be misled into making a loan under an ineffective security agreement____ [A] buyer-lender could easily protect itself from after-acquired property creditors ... by filing an Article Nine purchase money security interest in the goods____ Requiring buyers ... to take this additional step — done easily and at minimal cost — thoroughly advances the Code policy of providing notice and certainly to inventory lenders.

705 F.2d at 399-400.

Accordingly, judgment is rendered for the defendant.

This opinion constitutes the findings of fact and conclusions of law of this Court.

      . The court cited In re Sitkin Smelting & Refining, Inc., 639 F.2d 1213, 1216 (5th Cir.1981) for the proposition that "the security interest of a bailee’s creditor does not attach to goods which are the subject of a bailment.” 765 F.2d at 112. In Sitkin, Kodak had entrusted the goods in question to the debtor, Sitkin Smelting & Refining, Inc. Equating the concepts of entrustment and bailment, the court applied the Code’s entrustment provision, U.C.C. § 2-403(2), to defeat the interest of the debtor’s secured creditor. That section provides that one who turns over possession of goods to a merchant who deals in goods of that kind is deemed to empower the entrustee to sell the goods to a buyer in the ordinary course of business. Since the debtor’s creditor as a holder of a security interest did not constitute a "buyer in the ordinary course of business”, the interests of the entruster prevailed. 639 F.2d at 1215-16. In the present case, however, there was no entrustment since there was no transfer of the cattle from plaintiff to Markuson. See infra. Therefore, U.C.C. § 2-403(2) would not operate in this instance to protect the interests of plaintiff over the security interest of FmHA. Although the lack of transfer of collateral makes it unnecessary in this case to consider the status of Markuson as a merchant, the absence of a finding that entrustee is a merchant would also preclude applicability of the entrustment provision. See Toyomenka, Inc. v. Mount Hope Finishing Co., 432 F.2d 722, 727-28 (4th Cir.1970).