author: SCHATZ, District Judge.

text:
    Pinkie GROTH, Plaintiff, v. SANDOZ, INC., a corporation, Defendant.
    No. CV. 83-0-694.
    United States District Court, D. Nebraska.
    Dec. 26, 1984.
    James R. Welsh, Omaha, Neb., for plaintiff.
    John E. Hubbard, Omaha, Neb., for defendant.
   MEMORANDUM OPINION

SCHATZ, District Judge.

This matter is before the Court on defendant’s motion for summary judgment (Filing No. 16). On October 30, 1984, a hearing was conducted on such motion at which oral argument was presented by the respective parties. After review of the pleadings, briefs and other documents filed in support of and in opposition to said motion, the Court concludes that defendant’s motion for summary judgment is well taken and should be granted.

The facts are these. In January 1971, plaintiff began taking Fiorinal, a pharmaceutical manufactured and distributed by defendant. As prescribed by her physician for relief from recurring migraine headaches, plaintiff used Fiorinal on a daily basis, ingesting up to eight tablets per day from January 1971 until January 1980. In February 1981, plaintiff was diagnosed as having end stage renal failure. As a result of the renal failure, plaintiff is routinely required to undergo kidney dialysis.

The present action was originally commenced on August 25, 1983, in the District Court of Douglas County, Nebraska, by plaintiff, a resident of Nebraska, against defendant, a corporation incorporated under the laws of New Jersey with its principal place of business in that state. Subsequently, the action was removed by defendant to this Court.

In her petition, plaintiff alleges four causes of action. The first cause is premised on negligence on the part of defendant in testing, researching, manufacturing, marketing and selling Fiorinal. The second cause is based on strict liability in tort for testing, researching, manufacturing, promoting, distributing, supplying, marketing and selling such drug. Plaintiff alleges as a third cause of action that defendant expressly and impliedly warranted that Fiorinal was safe, fit, and suitable for the intended purposes for which it was designed. Finally, plaintiff alleges that defendant engaged in fraudulent misrepresentations and concealed information from the medical profession and the lay public regarding the safety and effectiveness of Fiorinal.

Defendant’s motion for summary judgment claims that plaintiff’s complaint against it is barred by the Nebraska product liability statute of limitations and repose, Neb.Rev.Stat. § 25-224 (Cum.Supp. 1984). That statute provides in pertinent part:

(1) All product liability actions, except one governed by subsection (5) of this section, shall be commenced within four-years next after the date on which the death, injury, or damage complained of occurs.
(2) Notwithstanding subsection (1) of this section or any other statutory provision to the contrary, any product liability action, except one governed by Section 2-725, Uniform Commercial Code or by subsection (5) of this section, shall be commenced within ten years after the date when the product which allegedly caused the personal injury, death, or damage was first sold or leased for use or consumption.

Furthermore, Neb.Rev.Stat. § 25-21,180 (1979) defines a product liability action as:

[A]ny action brought against a manufacturer, seller, or lessor of a product, regardless of the substantive legal theory or theories upon which the action is brought, for or on account of personal injury, death, or property damage caused by or resulting from the manufacture, construction, design, formulation, installation, preparation, assembly, testing, packaging or labeling of any product, or the failure to warn or protect against a danger or hazard in the use, misuse or intended use of any product, or the failure to provide proper instructions for the use of any product.

Defendant alleges that all of plaintiff’s claims are derived entirely from product liability theory as defined in Section 25-21,-180 and are, therefore, barred by the ten-year statute of repose of Section 25-224(2). However, in opposition thereto, plaintiff makes two arguments. First, she challenges the statute of repose as unconstitutional because it denies access to the courts in contradiction to Article I, Section 13 of the Nebraska constitution, and because it violates equal protection rights under the Fourteenth Amendment to the United States Constitution. Second, and in the alternative, plaintiff alleges that her fourth cause of action, which alleges that defendant fraudulently withheld information which would have warned members of the medical profession or lay public, raises an issue of fraudulent concealment and es-tops defendant from asserting the statute of repose as a defense.

Although the Nebraska Supreme Court has not addressed the constitutionality of the product liability ten-year statute of repose, it has upheld the validity of the professional negligence ten-year statute of repose. In Colton v. Dewey, 212 Neb. 126, 321 N.W.2d 913 (1982), plaintiff therein argued that the ten-year statute of repose for medical malpractice, Neb.Rev.Stat. § 25-222 (1979), was unconstitutional in that it violated the equal protection clause of the United States Constitution and denied the right of access to courts under the Nebraska constitution. The Nebraska Supreme Court rejected both arguments. In discussing a statute of repose in general terms, the court quoted with approval language from Rosenberg v. Town of North Bergen, 61 N.J. 190, 199-200, 293 A.2d 662, 667 (1972):

It does not bar a cause of action; its effect, rather, is to prevent what might otherwise be a cause of action, from ever arising. Thus injury occurring more than ten years after the negligent act allegedly responsible for the harm, forms no basis for recovery. The injured party literally has no ■ cause of action. The harm that has been done is damnum absque injuria —a wrong for which the law affords no redress. The function of the statute is thus rather to define substantive rights than to alter or modify a remedy. The Legislature is entirely at liberty to create new rights or abolish old ones as long as no vested right is disturbed. (Emphasis in original).
212 Neb. at 130, 321 N.W.2d at 916.

Since the Nebraska Supreme Court has upheld the professional negligence statute of repose in the face of challenges of unconstitutionality identical to those alleged in this case, and since this Court must determine what it believes the state court would declare the law to be if the claims of unconstitutionality of the product liability statute of repose were before the state court, this Court determines as a matter of law that Section 25-224 is not unconstitutional, and the Court rejects plaintiffs argument in this regard.

Plaintiff designates her causes of action as negligence, strict liability, warranty and fraud. Clearly, under Nebraska law, the first three causes are in the nature of product liability actions, Morris v. Chrysler Corp., 208 Neb. 341, 303 N.W.2d 500 (1981), and are barred by the ten-year statute of repose of Section 25-224. The drug Fiorinal was first marketed in October, 1952, some thirty-one years before plaintiffs complaint was filed. Furthermore, plaintiff began ingesting such drug in January 1971, more than ten years before she discovered her kidney damage in February 1981, and approximately twelve and a half years before she filed the present lawsuit.

It is plaintiffs fourth cause of action, denominated as fraud, which she claims is not barred by the statute of repose since defendant allegedly fraudulently concealed information which would warn members of the medical profession or lay public, including plaintiff, that ingestion of Fiorinal could cause kidney damage to the user thereof. Therefore, plaintiff argues that defendant should be prevented from raising the bar of the statute by the theory of equitable estoppel. In support thereof, plaintiff relies upon the decision of the Nebraska Supreme Court in MacMillen v. A.H. Robins Co., Inc., 217 Neb. 338, 348 N.W.2d 869 (1984).

In MacMillen, plaintiffs first petition based upon product liability theory was filed within four years after the injury occurred, but more than ten years after the date of the sale of the intrauterine device in issue. The trial court sustained a demurrer to that petition because it had been filed more than ten years after the date of the sale of that product. Plaintiff then filed an amended petition alleging that defendant had intentionally withheld information from the public regarding the dangers inherent in the use of its product. The trial court sustained another demurrer, but the Nebraska Supreme Court reversed. The Supreme Court’s rationale on reversal is important in two notable respects. First, under Nebraska law, a demurrer admits all well-pleaded facts for the purpose of determining whether a cause of action is stated. Almarez v. Hartmann, 211 Neb. 243, 318 N.W.2d 98 (1982). Therefore, the Supreme Court took plaintiff’s allegations with regard to fraudulent concealment as true for purposes of the motion. Second, the court held that a defendant is estopped from utilizing the statute of limitations and repose as a defense where such defendant wrongfully conceals a material fact necessary to the accrual of the cause of action and where such concealment causes the plaintiff to delay the filing of suit beyond the running of the statutory time period. In MacMillen, plaintiff learned of her injury within the ten-year period of the statute of repose. However, she claimed that defendant’s fraudulent concealment of information caused her to postpone the filing of suit until after that period had run.

MacMillen is clearly distinguishable from the present case. First, plaintiff herein did not even learn of any kidney injury until more than ten years after first ingesting Fiorinal and more than twenty-eight years after the drug was first marketed. In other words, the ten-year statute of repose ' had already extinguished any cause of action which plaintiff may have had. Unlike the situation in which an individual is injured prior to the effective date of the statute of repose, but is fraudulently prevented from filing a lawsuit for redress prior to the expiration of the ten-year period, the very injuries for which plaintiff herein seeks redress did not manifest until such time had expired.

MacMillen was also decided on the basis of a demurrer, which is significantly procedurally different than the present motion for summary judgment. Summary judgment does not admit all well-pleaded facts, but examines whether any material facts are in dispute and whether the moving party is entitled to judgment as a matter of law. In the present case, plaintiff’s fraud cause of action alleges misrepresentation and failure to warn. The allegations themselves are the same as those generally pled in product liability actions based upon strict liability, breach of warranty and negligence. Furthermore, in response to Interrogatory No. 16 of defendant’s second set of interrogatories to plaintiff, a question which sought identification of each fraudulent misrepresentation regarding Fiorinal and any documents which support such misrepresentations, plaintiff responded “Plaintiff was never told Fiorinal would cause kidney damage until February of. 1981.” Therefore, plaintiff’s “fraud” cause of action is unsupported in the record by any specific allegations of fraudulent conduct and is substantively nothing more than a restatement of plaintiff’s strict liability, negligence and breach of warranty causes of action grounded in product liability.

Based upon the foregoing, the court finds that plaintiff’s fourth cause of action does not equitably estop defendant from relying on the ten-year statute of repose of Section 25-224(2). Therefore, such cause of action is similarly time-barred.

Accordingly, a separate order will be filed this date granting defendant’s motion for summary judgment and dismissing the complaint.

      . The exceptions to the ten-year statute of repose noted in subsection (2) of § 25-224, namely, actions governed by Uniform Commercial Code § 2-725 and actions based upon exposure to asbestos, are not applicable to the facts of this case.


source: Caselaw Access Project

author: ARONOVITZ, District Judge.

license: Public Domain

text:
    SEA LIFT, INC., a Florida Corporation, Plaintiff, v. REFINADORA COSTARRICENSE DE PETROLEO, S.A., a foreign corporation, a/k/a RECOPE, Defendant.
    No. 81-2744-Civ.
    United States District Court, S.D. Florida.
    Dec. 27, 1984.

      C. Douglas Skinner, Miami, Fla., for plaintiff.
    Arthur Roth, Miami, Fla., for defendant.
   MEMORANDUM OPINION CONTAINING FINDINGS OF FACT AND CONCLUSIONS OF LAW

ARONOVITZ, District Judge.

NATURE OF THE CASE

THIS CAUSE was tried to the Court non-jury on October 9-10, 1984. The case arises from a marine salvage contract which was executed in 1980 by the Plaintiff, Sea Lift, Inc. (hereinafter “Sea Lift”), and the Defendant, Refinadora Costarricense de Petróleo, S.A. (hereinafter “RE-COPE”). Federal jurisdiction is based upon the general admiralty jurisdiction of the Court, 28 U.S.C. § 1333, and in the alternative, diversity of citizenship, 28 U.S.C. § 1332. The Court has heard the testimony of lay and expert witnesses, received several exhibits, examined the entire court record, and has heard Oral Argument by respective counsel. Accordingly, there is herewith entered this Court’s Findings of Fact and Conclusions of Law based upon the aforegoing.

FINDINGS OF FACT

1. Plaintiff Sea Lift is a Florida corporation with a principal place of business in Dade County, Florida. Sea Lift is primarily engaged in the marine salvage business, and at the time that it performed the salvage operation which gave rise to this lawsuit, Sea Lift operated the tugboat HERMES and the S/V SALVAGER.

2. Defendant RECOPE is a Costa Rican company that owned the booster barge HC-24. At the time that it capsized, the HC-24 was being used in a dredging operation at Port Moin, Costa Rica where RE-COPE was expanding the harbor and building a new port facility.

3. On June 20, 1980, while it was moored adjacent to a pier at Port Moin, the HC-24 began taking on water during a storm. Employees of RECOPE towed the sinking barge around the jetty and out to sea. By the next morning the vessel had capsized and “turned turtle,” so that a portion of the vessel’s hull peered above the surface of the water.

4: RECOPE had insured the vessel with the Instituto Nacional de Seguros (hereinafter “Seguros”), which reinsured part of the value of the vessel with Lloyds Underwriters (hereinafter “Lloyds”).

5. Between June and August, 1980, officials of London Salvage, an affiliate of Lloyds which is located in New York, contacted the Plaintiff in Miami, Florida, and solicited Sea Lift’s services to salvage the booster barge HC-24. Agents of London Salvage journeyed from New York to Miami to discuss the salvage operation and to solicit the contract with Sea Lift. At all times material hereto, these representatives of Lloyds were acting for, and in behalf of, RECOPE and RECOPE’s underwriters.

6. During these negotiations, certain Sea Lift officials traveled to Costa Rica to survey the barge and to determine a reasonable price for the salvage operation. A price was eventually agreed upon by the parties.

7. On August 5, 1980, José Antonio Lara Eduarte, a RECOPE official, signed the salvage contract which is at issue in this case. Shortly thereafter, the contract was sent to Miami where it was executed on behalf of Sea Lift. The salvage agreement therefore became a binding contractual agreement when executed in and at Miami, Florida, and was thus the ultimate product of the visit of London Salvage to Miami and its solicitation of Sea Lift.

8. The contract is a Lloyds standard form Salvage Agreement/No Cure — No Pay, which has been modified by the parties. The Lloyds standard agreement is the most widely used salvage contract in the world. Usually, a fixed price is not stated in the contract, and the parties rely upon an elaborate arbitration procedure to determine the amount which is owing. Gilmore and Black, The Law of Admiralty (2d ed.) 583; Kennedy, The Law of Civil Salvage (4th ed.) 302. In the case sub judice, however, the parties have fixed and stipulated to a sum certain for the “no cure — no pay” salvage of the booster barge. While apparently there is a version of the Lloyds standard form which leaves a blank or space to fill in a fixed sum, the form used by the parties has no such designated space, and the parties amended the form by stating the agreed sum in a footnote on the first page of the document.

9. In addition, the parties agreed to an entirely separate and distinct amount for refurbishing the vessel, should the salvage operation be successful. This second amount would be part and parcel of a second and separate contract.

10. The agreed sum for Sea Lift’s “no cure — no pay” salvage services, which is stated in English and in Spanish on the front page of the contract, was $265,000.00. The second sum which would have been fixed in a separate, refurbishing and restoration contract, was $105,000.00. This second fixed amount appears in a note in English and in Spanish on the last page of the contract.

11. The existence of this additional agreement to negotiate a second contract for restoring and refurbishing the booster barge clearly bears on the intent of the parties vis-a-vis the primary, “no cure — no pay” salvage contract. Specifically, the intent of the parties with respect to the meaning of the phrase “no cure — no pay” can better be inferred, as it is clear that neither restoration nor refurbishing of the vessel was contemplated by the parties as included in the task of “cure” or “curing the vessel” by “salvaging” it, per se.

12. The contract does not in so many words specify the place at which payment should be made, but the fact that the parties agreed that payment was to be made in United States currency also has some bearing on the parties’ intent in this regard.

13. The sunken booster barge was a marine peril, especially in light of RE-COPE’s plans to expand the harbor at Port Moin. Apart from the further damage to the barge which would have resulted if it were not salvaged, for other reasons it thus behooved RECOPE to have the barge righted and taken from the waters around the jetty and port facility.

14. Before it capsized in the storm, the booster barge had a large centrifugal pump which was driven by a 16 cylinder diesel engine through a reduction gear. There is a strong possibility that the engine had been removed from the vessel prior to the storm on June 20, 1980. After the barge was righted, the engine could not be found, and there was no sign of stress in the area where the engine had been lodged. The pump and the reduction gear have been located either on the vessel, or near the spot where it flipped and sank.

15. Shortly after the contract was executed, the S/V Salvager and the tugboat Hermes embarked for Costa Rica. The two vessels arrived at Port Moin and commenced the salvage operation in September, 1980.

16. From September to November, 1980, employees of Sea Lift prepared the booster barge for “righting,” i.e., turning it rightside up, by applying apoxy to the vessel’s hull. The barge was substantially rusted and the hull was riddled with pores and holes.

17. During the months of November— December, 1980, severe storms impaired the salvage operation. At one point in December, 1980, the S/V Salvager was severely damaged, and Sea Lift expended approximately $200,000.00 to repair its vessel.

18. After the bad weather passed, the salvage operation continued. In March, 1981, the booster barge was finally righted.

19. While the contract indicates that the barge was to be taken to Port Limón, Sea Lift was directed to leave the barge on the jetty at Port Moin due to its condition.

20. The booster barge is still beached on the jetty at Port Moin. In its present state, the booster barge is worthless as an operating vessel, and apparently cannot be used for scrap.

21. RECOPE has failed and has refused to pay any amount to Sea Lift for the salvage operation, and RECOPE has ignored Sea Lift’s demands to pay on the basis that the barge is worthless.

CONCLUSIONS OF LAW

Background

22. Before submitting its responsive pleading in this case, Defendant RECOPE filed three motions to dismiss raising issues of insufficiency of service of process, lack of in personam jurisdiction, and forum non conveniens.

23. Plaintiff Sea Lift’s first attempt to serve process was insufficient under Rule 4(i), Fed.R.Civ.P., and §§ 48.181, 48.161, Fla.Stat., and the Court granted Defendant’s first motion to quash on January 28, 1983. The affidavit of Plaintiff’s process server failed to demonstrate that he was qualified to serve process in Costa Rica, and did not mention who the individual was who accepted service on behalf of RE-COPE.

24. Plaintiff’s second attempt to serve process on RECOPE was also deficient, failing to meet the requirements of Rule 4(i)(C) and (D), Fed.R.Civ.P., and Defendant’s second motion to quash was granted on August 4, 1983.

25. Finally, in August and September, 1983, Plaintiff submitted sufficient evidence of service of process complying with the applicable rules of civil procedure, and Defendant did not renew its objection on grounds of insufficient service of process.

26. After submitting its responsive pleadings, however, in January, 1984, Defendant RECOPE filed a renewed motion to dismiss on grounds of lack of in person-am jurisdiction and forum non conveniens. In addition, RECOPE alleged that the Court did not have jurisdiction over the subject matter of the lawsuit.

27. Although the Defendant’s renewed motion to dismiss was denied, it raised several important issues which deserve further consideration by the Court.

Subject Matter Jurisdiction

28. In its pretrial motions Defendant was not as precise as it might have been regarding the basis for its claim of lack of subject matter jurisdiction, but such a claim is a serious allegation which may be raised at any time, even by a mere “suggestion of the parties.” Rule 12(h)(3), Fed.R.Civ.P.

29. Plaintiff has attempted to invoke both 28 U.S.C. § 1332 and § 1333 as independent bases for federal jurisdiction, and indeed, the claim herein is cognizable both in admiralty and under grounds of diversity of citizenship.

A. Diversity Jurisdiction

30. In 28 U.S.C. § 1332, Congress vests original jurisdiction in the federal courts in cases where the amount in controversy ex-eeeds $10,000.00, and involve one of four categories of parties.

31. There is no question that the amount in controversy exceeds $10,000.00, and the parties have stipulated that RE-COPE is a foreign corporation, while Sea Lift was incorporated under the laws of Florida.

32. 28 U.S.C. § 1332(e) states that for purposes of diversity of citizenship, a corporation is deemed a “citizen of any state by which it has been incorporated and of the state where it has its principal place of business.”

33. As this is a lawsuit between a citizen of a State and a citizen of a foreign state, involving an amount in controversy in excess of $10,000.00, it is clear that this Court has jurisdiction over the subject matter under 28 U.S.C. § 1332(a)(2).

B. Admiralty Jurisdiction

34. In 28 U.S.C. § 1333, Congress vests original and exclusive jurisdiction in the district courts of “any civil case of admiralty or maritime jurisdiction ...”

35. In Treasure Salvors, Inc. v. Unidentified Wrecked and Abandoned Sailing Vessel, 640 F.2d 560 (5th Cir.1981), the Court stated, “claims arising out of salvage operations ... are, unquestionably, within the admiralty jurisdiction of the federal courts.”

36. The point was elaborated in a footnote in Treasure Salvors: “It seems that there was never any serious doubt that salvage claims fell within the compass of federal admiralty jurisdiction. The Supreme Court assumed that the admiralty jurisdiction included salvage actions as early as 1804.” Id. at 566, citing Mason v. The Blaireau, 6 U.S. (2 Cranch) 240, 2 L.Ed. 266 (1804).

37. While it is difficult to characterize the case sub judice as anything but a “claim arising out of a salvage operation,” it is important to distinguish two types of marine salvage claims.

38. Treasure Salvors, for example, involved a non-contractual salvage operation. There was no agreement with the vessel’s owner when Treasure Salvors, Inc. undertook to recover the Eighteenth century treasure ship, the Atocha.

39. The instant case arises from a marine salvage contract and, as with the situation in Treasure Salvors, there is little question that contract salvage cases also are encompassed by the admiralty jurisdiction conferred under 28 U.S.C. § 1333. Gilmore and Black, The Law of Admiralty (2d ed.) 578-585; see also Norris, 3A Benedict on Admiralty (7th ed.) Ch. 12, and cases discussed therein.

40. The more difficult question which might have been presented in this case is whether the subject matter jurisdiction granted in 28 U.S.C. § 1333 extends to in rem claims arising from events or occurrences within the territorial waters of a foreign sovereign.

41. It has long been clear that the federal courts’ admiralty jurisdiction is not limited to causes of action which accrue within the territorial waters of the United States and embraces claims arising from events, including salvage operations, which occur on the high seas. Treasure Salvors, supra, 640 F.2d at 567.

42. The instant case, however, did not arise from a salvage operation on the high seas but immediately off the coast of Port Moin, Costa Rica, and squarely within the territorial waters of that foreign sovereign.

43. For whatever reason, however, Plaintiff Sea Lift has not asserted an in rem claim against the barge, but has sued only the vessel’s owner, RECOPE, in personam. The question whether the Court’s admiralty jurisdiction would extend to an in rem action against a salved vessel which is located within the territory of a foreign sovereign thus need not be reached.

44. As will be discussed more fully below, the Court has clear jurisdiction over RECOPE as a party to this action. As the subject matter of the case is a claim arising from a marine salvage contract, it is clear that federal jurisdiction was validly asserted pursuant to 28 U.S.C. § 1333.

Applicable Law

45. While Plaintiff’s comment at opening statement was therefore correct that both § 1332 and § 1333 provide independent bases for federal subject matter jurisdiction, it should be noted that the same rules of decision would be applied under either jurisdictional basis.

46. On first blush, it might appear that if the Court relied upon both diversity and admiralty as coexisting bases for jurisdiction, it would be confronted with a situation where two separate bodies of law simultaneously provide the governing rules of decision in the case.

47. Wearing its diversity hat, it would appear that the Court should apply Florida law under Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

48. Wearing its admiralty hat, the Court would be bound to apply the ancient body of maritime law, and an entirely separate set of admiralty rules of procedure. Rule 9(h), Fed.R.Civ.P.

49. Since Pope & Talbot, Inc. v. Hawn, 346 U.S. 406, 74 S.Ct. 202, 204, 98 L.Ed. 143 (1953), and Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625, 79 S.Ct. 406, 3 L.Ed.2d 550 (1959), however, it has been clear that where a case involves legal rights and liabilities which are cognizable in admiralty, the general admiralty law governs the case, no matter what forum is chosen. See also, Branch v. Schumann, 445 F.2d 175, 177-178 (5th Cir.1971).

50. It bears emphasis, then, that this is a marine salvage case and as stated above, at least since 1804 it has been assumed that marine salvage cases are quintessentially admiralty eases encompassed by the exclusive admiralty jurisdiction of the federal courts. Mason v. The Blaireau, 6 U.S. (2 Cranch) 240, 2 L.Ed. 266 (1804).

51. The Court finds, then, that even if the Plaintiff had never mentioned the issue of subject matter jurisdiction under 28 U.S.C. § 1333, and relied throughout on the diversity character of the litigation as the sole ground for federal jurisdiction, the Court would still have looked to the ancient corpus of maritime law and principles to find the governing rules of decision in the case.

52. Indeed, if this action had been brought in a Florida state court, reference to admiralty law would have been necessary to determine the rights and liabilities of the parties. Kermarec, supra, 79 S.Ct. at 408.

In Personam Jurisdiction

53. In this Circuit the law is clear that in a diversity action, a federal court may exercise personal jurisdiction over a nonresident defendant only to the extent permitted by the long-arm statute of the forum state. Oriental Imports and Exports, Inc. v. Maduro & Curiel’s Bank, 701 F.2d 889 (11th Cir.1983); Rubaii v. Lakewood Pipe of Texas, Inc., 695 F.2d 541 (11th Cir.1983).

54. Since this is primarily an admiralty case wherein maritime law provides the rules of decision, however, Florida’s long-arm statute is not immediately called into play. The considerations that determine federal in personam jurisdiction are essentially different in non-diversity cases. It is clear, however, that in non-diversity cases, the same fundamental principles of in personam jurisdiction govern whether the court is applying admiralty law, federal common law, or other laws of the United States. H & F Barge Co. v. Garber Brothers, Inc., 65 F.R.D. 399, 407 (E.D.La.1974).

55. When considering the issue of in personam jurisdiction in admiralty cases, the starting point, of course, is with Rule 4, Fed.R.Civ.P., because “a court sitting in admiralty has personal jurisdiction over any defendant sued in personam whom the Court can reach with process.” Id. at 404.

56. With respect to out of state inhabitants, the courts and commentators are in agreement that the provisions of Rule 4(e) are applicable to admiralty cases. Id. at 405 and cases cited therein.

57. Since Rule 4(e) allows service on out of state inhabitants in the manner prescribed by the forum state’s long-arm statute, service under Rule 4(e) extends federal in personam jurisdiction much further than the provisions for effective service under Rule 4(f).

58. Applying Rule 4(e) to the case sub judice, it is clear that the Court has jurisdiction over the parties under Florida’s long-arm statute, § 48.193, Fla.Stat., which more than meets the minimum requirements for personal jurisdiction under the Due Process Clause, as set forth in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), and their progeny.

59. § 48.193(l)(g) provides that any person, whether or not a resident or citizen of the state of Florida, who personally or through an agent breaches a contract in Florida by failing to perform acts required by the contract to be performed in Florida, thereby submits himself to the jurisdiction of the courts of Florida for any cause of action arising from the “doing” of this act, i.e., breaching the contract in the State.

60. While Defendant RECOPE does not generally conduct business in Florida or maintain an office in the State, its agents came to Florida to actively solicit Plaintiff’s services.

61. The salvage contract was signed by a RECOPE official in Costa Rica but was sent to Miami where it was executed by a Sea Lift official.

62. Although the contract does not provide for a specific place of payment, as the agreed currency for payment was United States dollars it is reasonable to infer that payment was to be made to Sea Lift at its headquarters in Miami, and not in Costa Rica.

63. Moreover, the Florida courts are almost in unanimous agreement that in the absence of an express designation of place of payment, the legal presumption that a debt is to be paid at the creditor’s place of business is sufficient to satisfy the language of Florida’s long-arm provision, § 48.193(l)(g). Kane v. American Bank of Merritt Island, 449 So.2d 974 (Fla. 5th DCA 1984); Engineered Storage Systems Inc. v. National Partitions and Interiors, Inc., 415 So.2d 114 (Fla. 3d DCA 1982).

64. Plaintiff’s claim has therefore fulfilled three important elements required by § 48.193(l)(g):

a. Sea Lift’s claim satisfies the terms of § 48.193(l)(g), as Sea Lift alleges that RE-COPE failed to “perform an act required to be performed” in Florida, i.e., payment of $265,000.00;

b. Sea Lift’s claim fulfills the requirement of “connexity,” as Sea Lift’s cause of action arises from the “doing” of this act, i.e., failing to pay Sea Lift, in Florida, the amount of $265,000.00 on a contract which was solicited in Florida and which became binding in Florida; and

c. The assertion of personal jurisdiction over RECOPE under 48.193(l)(g) satisfies the requirements of the Due Process Clause, as the solicitation in Florida of Sea Lift by RECOPE’s agents, and the presumption that RECOPE was to pay Sea Lift in Florida, are prima facie significant and substantial contacts with the State. In International Shoe, supra, the Supreme Court made clear that the starting point for the “minimum contacts” inquiry is whether the Defendant’s acts in the State were deliberate and intentional, or merely fortuitous. In coming to Florida to solicit Sea Lift’s services, in sending the contract to Florida to be signed and executed there, and in “failing to perform an act required by the contract to be performed in Florida,” RECOPE was put on reasonable notice that it was subject to being sued in the State, for a claim arising from these contacts with Florida. In considering the issue of in personam jurisdiction under a similar set of facts, the federal district court for the Middle District of Florida came to the same conclusion that § 48.-193(l)(g), as applied, meets the requirements of the Due Process Clause. Thompson v. King, 523 F.Supp. 180, 185 (M.D.Fla. 1981).

65. To summarize, then, in Admiralty cases the Plaintiff may, under Rule 4(e), effect service of process “upon a party not an inhabitant of or found within the state” in any manner prescribed by “a statute or rule of court of the state in which the district is held.”

66. The manner in which Sea Lift met the terms of § 48.193, Fla.Stat. was discussed, supra.

67. Where service of process is authorized by Rule 4(e), i.e., by statute or rule of court in the forum state, Rule 4(i) prescribes alternative methods for effecting service in a foreign country.

68. As RECOPE did not renew its Motion to Quash after Plaintiffs third attempt to serve process upon it, the Defendant was obviously satisfied that there was finally compliance by the Plaintiff with Rule 4(i), and Defendant made a general appearance in the case by submitting its responsive pleading.

69. Sea Lift’s third attempt to serve process on RECOPE thus conferred in personam jurisdiction over the Defendant.

Venue

70. The renewed motion to dismiss which RECOPE submitted in January, 1984, several months after filing its responsive pleading, also raised an issue of improper venue on grounds of forum non conveniens.

71. RECOPE alleged that it should not have been required to undertake the expenditures of preparing for a trial and bringing witnesses to Miami, since the most convenient forum for this case would be the courts of Costa Rica.

72. In February, 1984, the Court denied RECOPE’s Motion to Dismiss on grounds of forum non conveniens, citing as authority C.A. La Seguridad v. Transytur Line, 707 F.2d 1304 (11th Cir.1983).

73. La Seguridad holds that when an adequate, alternative forum is available, the Court must weigh the relative advantages and obstacles to a fair trial in each forum.

74. When the Defendant’s renewed Motion to Dismiss was denied, this Court carefully considered all of the relevant factors, including Sea Lift’s opportunity for a fair trial in Costa Rica against an entity which allegedly was owned by the Costa Rican government. The Court also considered ease of access to sources of proof, ability to obtain witnesses, and other practical problems that make trial of a case easy, expeditious and inexpensive. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 842, 91 L.Ed.2d 1055 (1947).

75. With the clarity provided by hindsight, and upon further consideration of the factors set forth in Gilbert, supra, and Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981), the Court is satisfied that the Southern District of Florida was the proper and most convenient forum for the trial of this case.

Sovereign Immunity

76. In its pretrial motions and in closing argument, Defendant RECOPE asserted that it is wholly owned by the government of Costa Rica. Until closing argument, however, RECOPE never raised sovereign immunity as an affirmative defense or in any responsive pleading.

77. In addition, RECOPE has never sought to show, through an evidentiary hearing or otherwise, that it is an “agent or instrumentality” of a foreign state, and thereby immune from the jurisdiction of this Court by virtue of the Foreign Sovereign Immunities Act (hereinafter “FSIA”), 28 U.S.C. § 1602, et seq.

78. Even if RECOPE had made such a showing, it is clear that it waived any defense of sovereign immunity it might have had when it submitted its responsive pleadings in September, 1983.

79. Although sovereign immunity is an issue of subject matter jurisdiction— Congress having divested the federal courts of jurisdiction over foreign sovereigns in certain cases under the FSIA — the fact that sovereign immunity may be waived clearly modifies the rule that lack of subject matter jurisdiction can be asserted at any time. Rule 12(h)(3), Fed.R.Civ.P.; Canadian Overseas Ores Limited v. Compania de Acero Del Pacifico, S.A., 727 F.2d 274, 278 (2d Cir.1984).

80. A foreign sovereign waives its immunity when it fails to assert the defense in an answer or other responsive pleading. Id. at 278; see also, Richardson v. Fajardo Sugar Company, 241 U.S. 44, 36 S.Ct. 476, 60 L.Ed. 879 (1916).

81. In its several motions to dismiss which were filed before it submitted its responsive pleading, RECOPE did not mention, suggest, or imply that it intended to assert sovereign immunity as a defense. Instead, RECOPE relied solely on its claim of lack of in personam jurisdiction and improper venue as the legal bases for its motions to dismiss.

82. The vague allegation in its responsive pleading that “the Court does not have jurisdiction ... of the subject matter of the lawsuit” cannot be read as an assertion by RECOPE of the defense of sovereign immunity under the FSIA, especially in light of the issues addressed in its pretrial motions to dismiss. As stated above, RECOPE maintained throughout that the courts of Costa Rica did have jurisdiction over the parties and subject matter of the instant case.

83. The Court therefore concludes that even if RECOPE were an agent or instrumentality of the government of Costa Rica, it waived the defense of sovereign immunity by failing to raise the issue before it made a general appearance in the case by submitting its responsive pleading.

Liability Under the Contract: “No Cure — No Pay”

84. Having established that the Court properly exercised its in personam and subject matter jurisdiction, and that the Southern District of Florida was the proper venue for the case, the question whether Sea Lift fulfilled its obligations under the contract can now be addressed.

85. Although the Lloyds standard form agreement executed by the parties is recognized as the most widely used salvage contract worldwide, Gilmore & Black, The Law of Admiralty (2d ed.) 582, the particular contract at issue in this case is not abundantly clear and entirely without interpretive difficulties.

86. One such difficulty might have been the choice of law provision at paragraph 1(d) of the form: “This agreement shall, be governed by and arbitration thereunder shall be in accordance with English law.”

87. In fact, however, the choice of English law does not present any special difficulties because a choice of American law would have invoked an identical corpus of maritime principles.

88. In the absence of a federal statute which covers the field involved in a particular case, it has long been assumed that the substantive law to be applied in admiralty cases finds its origins in the ancient corpus of maritime law. Gilmore and Black, The Law of Admiralty (2d ed.) 45.

89. As the law of salvage is often said to be part of the jus gentium, American courts deciding marine salvage cases have generally taken “a relaxed attitude toward foreign law and choice of law problems, on the assumption that the law of the United States and the law of other maritime countries are the same.” Id. at 533.

90. In the marine salvage area, American courts have been willing to be guided particularly by English precedents. Id. at 533, footnote 4.

91. For example, the leading American case on the subject of contract salvage, The Elfrida, 19 S.Ct. 146, 43 L.Ed. 413 (1898), draws heavily on English law and precedents.

92. As stated above in the Findings of Fact, the parties have modified the standard form agreement by adding two footnotes. One of these addenda does present an interpretive difficulty:

93. While paragraph 1(b) of the contract states that “the contractor’s remuneration shall be fixed by arbitration in London,” the parties have added a footnote which states that they had agreed to a fixed sum of $265,000.00 under the principle of “no cure — no pay.”

94. Although the parties did not strike out the provision for arbitration to fix a sum, given the facts that (1) the Defendant concedes that were there “cure” the amount owing would be $265,000.00, and (2) the parties have not sought arbitration in London, it is reasonable to infer that the fixed sum agreed upon by the parties supercedes the arbitration procedure.

95. Such an interpretation of the contract is in line with maritime salvage custom and usage. Gilmore and Black, The Law of Admiralty (2d ed.) 583 (“The [Lloyds standard form] provides in elaborate detail for arbitration in London to determine the amount of the award if no fixed sum has been written into the agreement.”)] see also Norris, 3A Benedict on Admiralty (7th ed.) § 159.

96. The principle to be applied where the parties have agreed upon a price for the salvage operation, enunciated by the Supreme Court in The Elfrida, supra, might be stated as follows:

97. It is not within the discretion of a court of admiralty to set aside salvage contracts in cases where, after the service is performed, the stipulated compensation may appear to be unreasonable.

98. Gilmore and Black explain that “under ‘no cure — no pay’ the salvor gambles on his ability to complete the job successfully, short of which he gets nothing.” The Law of Admiralty (2d ed.) 582.

99. Thus as the Supreme Court explained in Florida Dep’t. of State v. Treasure Salvors, Inc., 458 U.S. 670, 102 S.Ct. 3304, 3329, 73 L.Ed.2d 1057 (1982) (citing The Elfrida, supra), “the inherent uncertainty in contracts for salvage have lead admiralty courts to find few reasons that would justify reformation of a contract.”

100. The Court therefore concludes, as a matter of law, that it may not modify the $265,000.00 figure to take into account Sea Lift’s actual costs, or the actual ultimate value of the salved barge, because, when the contract was executed, “the price agreed to be paid appeared to be just and reasonable, in view of the value of the property at stake, the danger from which it (was) to be rescued, the risk to the salvors and salving property, etc.,” The Elfrida, supra, 19 S.Ct. at 150.

101. The final question to be decided, then, is whether there was “cure,” i.e., whether the salvage operation was a “success” as intended by the parties.

102. Unfortunately, the long line of salvage contract cases provide little assistance in determining whether, as a matter of law, Sea Lift “cured” the booster barge by patching its hull, righting it, and leaving it on a jetty at Port Moin. As Gilmore and Black observe, “the widespread use of the Lloyds form, with disputes to be settled in the London arbitration, has naturally resulted in a considerable decrease in the volume of [contract] salvage litigation. To judge by the latest edition of [Kennedy’s treatise on the law of civil salvage], salvage cases have virtually disappeared from the English reports in this century.” The Law of Admiralty (2d ed.) 583.

103. The Elfrida, supra, is not helpful because in that case there was no dispute that the salvors lived up to their contractual obligations; the issue was whether the salvage operation was worth the stipulated price.

104. In the non-contractual situation, a number of “traditional,” and more recently “treasure salvors” cases have been reported. The “traditional” non-contractual salvage case typically involves a ship in danger on the high seas. The salvor is simply a volunteer who arrives on the scene to render aid. While on land he might be considered an “officious intermeddler” whom even equity will not aid, on the high seas the voluntary salvor is entitled to a reward, but only if three oft-stated elements are met. Gilmore and Black, The Law of Admiralty (2d ed.) 532.

105. First, there must be a marine peril from which the ship or property could not have escaped without the salvor’s assistance. Second, the salvor’s aid must have been voluntarily rendered, and not required as a pre-existing duty. And third, the salvor must have been successful, in whole or in part, of recovery of the imperilled ship or property. Legnos v. M/V Olga Jacob, 498 F.2d 666, 669 (5th Cir. 1974); see also Gilmore and Black, The Law of Admiralty (2d ed.) 534-535.

106. In the case sub judice, RECOPE contends that since the barge turned out to be worthless, and since it was left on a nearby jetty unable even to be scrapped, there was no “cure,” and the salvage operation was not successful in whole or in part.

107. The evidence, however, leads the court to a different conclusion. Certain facts stand out when considering the issue of “cure” including, (1) the engine might have been taken from the barge before it capsized, (2) the barge was rusted and its hull riddled with gaps, holes and pores before the storm in June, 1980 which caused the boat to capsize, (3) the barge was clearly a marine peril after it flipped over and remained near the harbor floating freely, and (4) Sea Lift attempted to obtain permission to leave the barge at several locations other then on the jetty at Port Moin.

108. Moreover, the parties in using the term “cure” clearly did not intend refurbishing or restoration of the vessel, as a second contract was to be executed for those specific and distinct tasks.

109. The Court therefore concludes that in righting, refloating and transporting the barge ultimately to the jetty at Port Moin, Sea Lift satisfied and fulfilled the obligations which it undertook in executing the contract.

110. As emphasized above in the discussion of the law to be applied to this case, if this matter were before the Court on the basis of diversity of citizenship, 28 U.S.C. § 1332, the same conclusion would be reached. Under the rules of decision to be applied in both diversity and admiralty cases, Sea Lift is entitled to recover under the contract.

111. Thereupon, it is ORDERED AND ADJUDGED that a final judgment shall be entered in favor of Plaintiff Sea Lift and against Defendant RECOPE in the amount TWO HUNDRED SIXTY FIVE THOUSAND DOLLARS ($265,000.00).

       Initially, Lloyds was named as a Defendant, and raised as its principal defense the issue of sovereign immunity. Lloyds, however, was voluntarily dismissed before RECOPE was effectively served with process and made its first appearance in the case. RECOPE never adopted Lloyds’ sovereign immunity argument and, as stated above, never asserted it in its own behalf until closing argument.


author: LAFFITTE, District Judge.

text:
    UNITED STATES of America, v. Amilcar CACERES-PRADO, aka Esteban Matias, Jr., and Maria I. Garces-Patarroyo, Defendants.
    Cr. No. 84-379.
    United States District Court, D. Puerto Rico.
    Dec. 28, 1984.

      Nydia Díaz Buxó, Caguas, P.R., for defendants.
    Daniel Lopez Romo, U.S. Atty. (Crim. Div.), San Juan, P.R., and José A. Quiles, Hato Rey, P.R., for the United States.
   OPINION AND ORDER

LAFFITTE, District Judge.

Present before this Court is defendant María I. Garcés-Patarroyo’s motion to dismiss the two-count indictment returned against her on November 21, 1984, charging her with violations of 18 U.S.C. §§ 2, 1542, and 911. Defendant essentially makes three arguments to support her motion. First, she argues that the Government has insufficient evidence to prove the violations charged. Second, she argues that relevant and important facts were not presented to the Grand Jury, and therefore the Grand Jury had insufficient facts to properly return the indictment. And, third, she maintains that the indictment, particularly Count One, is duplicitous in that more than one crime has been charged in that one count. The Government opposed the motion on all grounds.

For the reasons stated below, the defendant’s motion to dismiss shall be denied.

A. INSUFFICIENCY OF EVIDENCE TO CONVICT

A challenge to the sufficiency of Government evidence is more properly made by motion for judgment of acquittal, after the Government presents its evidence at trial. U.S. v. Ambers, 416 F.2d 942 (5th Cir.1969). Questions of fact, credibility of witnesses and weight of the evidence is for the jury to decide. U.S. v. Tane, 329 F.2d 848 (2d Cir.1964); U.S. v. Medows, 540 F.Supp. 490 (S.D.N.Y.1982). If a motion to dismiss raises a question of law, rather than fact, then the motion would be properly considered. U.S. v. Korn, 557 F.2d 1089, 1090 (5th Cir.1977); U.S. v. Jones, 542 F.2d 661, 664 (6th Cir.1976).

The instant motion raises only the sufficiency of the evidence, not an issue of law, and must therefore be denied, as premature.

B. INSUFFICIENCY OF EVIDENCE TO INDICT

Defendant María I. Garcés-Patarroyo also moves to dismiss the indictment on the grounds that the Grand Jury was not presented with sufficient facts to have properly returned the indictment. There is a presumption of regularity attached to grand jury proceedings, U.S. v. Costello, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956), that is not easily overcome. Defendant’s vague and conclusory allegations of insufficient evidence is not enough to do so in this case. Compare Ostrer v. Aronwald, 567 F.2d 551 (2d Cir. 1977). See also, U.S. v. Leverage Funding Systems, Inc., 637 F.2d 645 (9th Cir.1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3110, 69 L.Ed.2d 972 (1981). It is not proper to litigate the sufficiency of evidence presented to Grand Jury on a motion to dismiss. U.S. v. Martinez, 466 F.2d 679 (5th Cir. 1972), citing U.S. v. Costello, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956); U.S. v. Ambers, 416 F.2d 942, 943 (5th Cir.1969).

C. DUPLICITOUS INDICTMENT

Defendant finally argues that the charges against her should be dismissed because the indictment is duplicitous. The Government responds by stating that it must charge a defendant with the violation of both the substantive crime statute, and the aiding and abetting statute.

However, the defendant argues not only that she has been charged with violating 18 U.S.C. § 2 (the aiding and abetting statute), and 18 U.S.C. § 1542, but that the wording of the indictment allows for two charges under 18 U.S.C. § 1542, the substantive statute.

After a close reading of Count 1 of the indictment the Court concludes that it is in fact duplicitous. That is, it charges defendant Maria I. Garcés-Patarroyo with two substantive violations, in one count. The indictment charges that:

On or about November 11, 1982, in the District of Puerto Rico and within this jurisdiction, Almicar Caceres Prado aka Esteban Matías jr. and Maria I. Garces Pattarroyo the defendants herein did aiding and abetting each other knowingly and willfully and for the purpose of boarding passage to New York did use and attempt to use Passport No. C2646143 issued under the authority of the United States, the issuance of which they had secured by reason of a false statement in an application therefore by Almicar Caceres Prado at a passport agency of the Department of State, on or about December 9, 1982 at Brooklyn, New York State of New York ... All in violation of Title 18 United States Code 2, 1542.

A reading of 18 U.S.C. § 1542 reveals that it contains at least two separate and distinct crimes. This Section contains two paragraphs, separated by the conjunction “or.” The first paragraph makes it unlawful for a person to induce or secure the issuance of a passport under the authority of the United States by' making a false statement. The second paragraph makes it unlawful for a person to use or attempt to use, or furnish to another for use any passport the issuance of which was secured in any way by reason of any false statement.

This reading of the statute is supported by U.S. v. Gabriner, 571 F.2d 48 (1st Cir. 1978), involving an indictment charging defendant with violation of 18 U.S.C. 1542 for having made a false statement in an application for a passport and for conspiring to do so. Although the conviction was overturned on other grounds, the indictment for having only made a false statement, not for having used the ill-gotten passport, was not held insufficient.

Charging defendant with aiding and abetting the securing of a passport by making a false statement, and also with aiding and abetting the use of that passport in one count, is duplicitous.

The danger of an indictment that charges more than one substantive crime in a single count is that there is no way in which the jury can convict on one offense and acquit on another offense contained in the same count. 1 Wright & Miller, Criminal, Section 142 at p. 475 (1982). A general verdict of guilty will not reveal whether the jury found the defendant guilty of one crime and not guilty of the others, or guilty of all. Id. See also, U.S. v. Pavloski, 574 F.2d 933 (7th Cir.1978); U.S. v. UCO Oil Co., 546 F.2d 833 (9th Cir.1976).

Duplicity is not fatal to an indictment, and does not require dismissal. 1 Wright & Miller, supra, at p. 474-475. Charges improperly joined in a single count may be segregated into a single count, or the Government may be ordered to elect on which count it will proceed. See, U.S. v. UCO Oil Co., supra, 546 F.2d at 835, where the District Court below only dismissed after the Government refused to elect upon a finding of duplicity.

WHEREFORE, defendant’s motion to dismiss is hereby DENIED. The Government is hereby granted ten days to elect on which violation of 18 U.S.C. § 1542, charged in Count One of the Indictment, it shall proceed. Failure to do so shall result in dismissal of count one of the indictment.

IT IS SO ORDERED.


author: ASPEN, District Judge:

text:
    Loyd THOMPSON, d/b/a Spring Green Landscaping, Plaintiff, v. Harry ASHNER, d/b/a Spring Green Lawn Care and Tree Care; Edward Bunzol, d/b/a Spring Green Lawn Care; Armand D’Agostino, d/b/a Spring Green Lawn Care; John Eckhart, d/b/a Spring Green Lawn Care; Robert Edman, d/b/a Spring Green Lawn Care; William Gundlach, d/b/a Spring Green Lawn Care; Robert Hess, d/b/a Spring Green Lawn Care; Thomas Hofer, d/b/a Spring Green Lawn Care; Robert Lubenow, d/b/a Spring Green Lawn Care; and Thomas Reidy, d/b/a Spring Green Lawn and Tree Care, Defendants.
    No. 84 C 7211.
    United States District Court, N.D. Illinois, E.D.
    Jan. 2, 1985.

      Marvin Benn, Wayne Michaels, George Hamman, Dawn Cassie, Hamman, Benn & Miller, Chicago, 111., for plaintiff.
    Theodore A. Shapero, Thomas F. Geselbracht, Diane Fields Geocaris, Rudnick & Wolfe, Chicago, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

This is a suit alleging trademark infringement and unfair competition under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and under various state law theories. Plaintiff, Loyd Thompson (“Thompson”) has moved for preliminary injunctive relief, while the various defendants have moved to dismiss or stay the case. For the reasons stated below, we grant defendants’ motion for a stay under the abstention doctrine set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), and its progeny. Accordingly, we do not reach Thompson’s motion for a preliminary injunction.

I

The following uncontested facts have been gleaned from the complaint, from the exhibits attached to the motion to dismiss and from undisputed assertions of fact in the parties’ briefs. Because we have looked beyond the pleadings in ruling on this motion, we shall treat it as a motion for summary judgment as provided under Rule 56. See Fed.R.Civ.P. 12(b).

In July, 1978, Thompson filed a trademark infringement suit in state court (“the state court suit”), one which, as we shall see, is nearly identical to this suit. The suit names as defendants Spring-Green Lawn Care Corp., a Delaware corporation, William R. Fischer, the corporation’s president, and Edward Carroll, a franchisee of the corporation doing business in Illinois. An amended complaint, filed in 1979, added HRM Enterprises, another franchisee, as a defendant. Although not listing them as defendants, the amended complaint named all of the defendants to this federal suit (except defendant Ashner) as franchisees of the corporation using the name “Spring Green Lawn Care.” The state-court complaints alleged infringement of Thompson’s state-registered service mark, common law trademark infringement, trademark dilution under Ill.Rev.Stat. ch. 140, § 22, and unfair competition under Ill.Rev.Stat. ch. 121V2, § 312. A second amended eomplaint, filed in early 1982, added a claim under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).

The gist of the state court complaint is the same as that of the complaint before us. Essentially, both allege the following facts: Thompson is a landscaping contractor, doing business under the trade name “Spring Green Landscaping.” Thompson and a partner acquired this business in 1974. The business had been operating continuously under the “Spring Green” trade name since 1968. Thompson bought out his partner in 1975, and continued to use the “Spring Green” name. Defendant “Spring-Green Lawn Care Corporation” is also in the lawn care business, franchising others to use its “Spring-Green” mark. This corporation did not organize until 1977 and only began franchising then. Thompson registered his “Spring Green” mark in May, 1978. He claims in both suits that the defendants’ use of their “Spring-Green” mark confuses the public, dilutes his own mark, and therefore warrants relief under the various statutory and common law theories mentioned above. Both complaints seek injunctive and declaratory relief, and damages. The only significant difference between the two complaints is that the Federal complaint names the individual franchisees, but not the franchisor, as party-defendants.

Having compared Thompson’s state and federal complaints, we now summarize how Thompson progressed from state to federal court. The state court case proceeded through discovery, and the trial court denied cross-motions for summary judgment. In December, 1982, the case was tried. At the close of Thompson’s case, the trial court directed a verdict against Thompson. He appealed, and on June 7, 1984 the Illinois Appellate Court reversed and remanded, holding that Thompson had made out a prima facie case on most of his theories. 126 Ill.App.3d 99, 81 Ill.Dec. 202, 466 N.E.2d 1004 (1984). The defendants in that case sought review in the Illinois Supreme Court on August 20,1984, shortly after the instant suit was filed. The Supreme Court denied leave to appeal on November 30, 1984, while the present cross-motions were pending.

Thompson filed this federal suit on August 20, 1984, just over two months after emerging as victor from the Illinois Appellate Court. Thompson moved for a preliminary injunction on September 14, 1984, and defendants moved to dismiss the same day. The motion to dismiss raises the defense of laches, and the doctrine of abstention of the Colorado River case. We turn now to abstention doctrine, which alone disposes of the case.

II

In rare circumstances a federal court should decline to exercise jurisdiction even though a statute gives it power to hear the case. The “abstention doctrine” sets out the criteria for these rare circumstances, and it comes in several forms, usually premised upon notions of state-federal comity or other important policies. For example, where resolution of an unclear and difficult issue of state law might moot a federal constitutional issue, a federal court will stay its jurisdiction pending a state court decision on the issue. See Railroad Com’n of Texas v. Pullman, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). Federal courts will also abstain where state law questions bear on important policy problems, or implicate an elaborate state administrative review mechanism. See Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058 (1959); Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 S.Ct. 1424 (1943). Abstention may also be proper where a plaintiff seeks to enjoin pending state criminal proceedings. See, e.g., Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971).

This case does not fall within any of these traditional categories of abstention, but does come within another variant of the abstention doctrine, dubbed “type four abstention” or “abstention to avoid duplicative litigation.” See 17 C. Wright, A. Miller, & E. Cooper, Federal Practice & Procedure, §§ 4241, 4247 (1978). The Supreme Court first articulated this type of abstention in the Colorado River case, setting forth several criteria for a federal court to use in deciding whether to decline to exercise jurisdiction because of a pending, parallel state proceeding. Recognizing that abstention can be justified “only in ... exceptional circumstances,” 424 U.S. at 813, 96 S.Ct. at 1244, and that federal courts have a “virtually unflagging obligation ... to exercise the jurisdiction given them,” id. at 818, 96 S.Ct. at 1246, the Court nevertheless held that the combination of certain extraordinary factors would warrant abstention. The relevant factors are: (1) the order in which jurisdiction was obtained by the concurrent forums; (2) the desireability of avoiding piecemeal litigation; (3) the inconvenience of the federal forum; and (4) the absence of progress in the federal suit. 424 U.S. at 818-19; 96 S.Ct. at 1246-47. None of these factors is necessarily determinative. Id. In 1983 the Supreme Court reaffirmed the Colorado River approach, and added two factors to the list: (a) whether state or federal law provides the rule of decision on the merits; and (b) whether the state court can adequately protect the plaintiffs federal rights. See Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 23-27, 103 S.Ct. 927, 941-43, 74 L.Ed.2d 765 (1983). The Colorado River and Cone approaches have been followed in this circuit. See Board of Education of Valley View v. Bosworth, 713 F.2d 1316, 1321-22 (7th Cir.1983) (affirming abstention because of parallel state proceedings); Evans Transp. Co. v. Scullin Steel Co., 693 F.2d 715, 719-20 (7th Cir.1982) (vacating district court dismissal); Microsoftware Computer Systems, Inc. v. Ontel Corp., 686 F.2d 531, 537-8 (7th Cir.1982) (reversing district court denial of abstention); see generally 17 C. Wright, A. Miller, & E. Cooper, supra, § 4247. With the tests created by those cases in mind, we consider the facts of this case.

Ill

This case presents the type of “exceptional circumstances” justifying a stay. Almost every Colorado River and Cone factor points strongly toward abstention. Probably the most powerful factor is the “desireability of avoiding piecemeal litigation.” It is hard to imagine a case which overlaps a pending state case more. The legal issues in this case are identical to those in the state court case. The causes of action are the same. The facts are the same. Over the past six years, the state trial, appellate, and Supreme Courts have each had a look at these facts and issues. The case is awaiting retrial in the state trial court. It would be enormously wasteful, and downright foolish, for this court to litigate virtually the same case at the same time the state court tries the case again.

The only real difference between the two suits is the party defendants. But that difference in this context is only one of nomenclature. The defendants in this case are franchisees of the main defendant in the state case. Their rights to use the “Spring-Green” name derive from the franchisor’s rights. The state court case will determine those rights. Thompson does not dispute this. He contends, however, that he needs preliminary injunctive relief in this court “because of the delays in obtaining relief against Spring Green Corp.,” and of the refusal of the franchisees to stop using the service mark in the interim. Plaintiff’s Memorandum Opposing Motion to Dismiss, at 12. He adds that his case on the merits is quite powerful, as evidenced by the Appellate Court’s strong reversal of the state trial court’s directed verdict. But Thompson does not really address the issue of piecemeal litigation, or any of the other Colorado River factors which are controlling. He does not say why he cannot ask the state court for emergency injunctive relief at this point, especially if he is correct that the Appellate Court opinion makes his success on the merits very likely and that the franchisees are harming him irreparably. He does not say why he has not named the franchisees as defendants to the state court suit. In sum, regardless of the merits of his case, Thompson has not given any reason for fragmenting the case, by having two courts litigating the issues at the same time.

The other Colorado River and Cone factors also counsel abstention. The state court obtained jurisdiction six years ago, and still retains it. Moreover, the federal suit is in its infancy, while the six year old state suit has been tried on the merits and has climbed and descended the appellate ladder. In affirming one district court’s decision to abstain, the Seventh Circuit in Bosworth, supra, found it prudent to abstain where parallel state proceedings have progressed substantially. 713 F.2d at 1322. Such is obviously the case here. It is also apparent that state law governs extensive rights in both suits. From 1978 to 1982, only state law issues were involved in the state case. Thompson added the Lanham Act claim in 1982, and that claim is the only federal claim in the case at bar. As the Appellate Court opinion recognizes, 126 Ill.App.3d at 104, 81 Ill.Dec. at 208, 466 N.E.2d at 1010, the Lanham Act analysis and the state law trademark analyses are very similar. Thus, the federal claim is not predominant or even very significant in this suit. For this reason, the last Cone factor also favors abstention. State court proceedings will be fully adequate to protect Thompson’s federal rights.

In bringing this federal suit, Thompson has created the possibility of a race to judgment. The Seventh Circuit has wisely frowned upon such races:

Since the first court to decide the dispute will bind the other, the maintenance of an extra action will have a perceptible effect upon proceedings in the original action if the parties there attempt to accelerate or stall the proceedings in order to influence which court finishes first. The result would be quite similar to forum shopping, and is just as unseemly.

Microsoftware, 686 F.2d at 538. In seeking preliminary injunctive relief, Thompson is asking this Court to short-circuit a parallel six-year old state court suit. We decline to do so. In so declining, we are not prejudicing Thompson’s federal rights, as we pointed out above. We add, moreover, that Thompson chose the state court forum six years ago. This is not a case where one party won a close footrace to the state courthouse, thereby depriving his adversary of a federal forum to vindicate federal rights. Because of the Colorado River and Cone factors, Thompson must live with his original choice of forum.

IV

Although we are granting defendants’ request to abstain, at this time we must deny without prejudice their request to dismiss the case. In Cone the Supreme Court reserved decision on whether a dismissal or stay would be the preffered course of action when Colorado River counsels abstention. 103 S.Ct. at 943. The Court added in dictum that the difference is largely academic, id., and at least one commentator has agreed. See 17 C. Wright, A. Miller, & E. Cooper, supra, § 4247, at 517-19. However, the Seventh Circuit has held that a stay is the preferred choice in this Circuit. See Bosworth, 713 F.2d at 1322; Evans, 693 F.2d at 717-18. Accordingly, we will stay these proceedings pending resolution of the state court suit. We will place this case on the Court’s status call for June 28, 1985, at 10:00 a.m. At such time we will determine whether to continue the stay or reconsider defendants’ motion to dismiss.

V

Thompson’s motion for a preliminary injunction is denied. Defendants’ motion to dismiss is denied at this time, but their alternative motion to stay these proceedings is granted. The status hearing is continued to June 28, 1985, at 10:00 a.m. It is so ordered.

      . Fed.R.Civ.P. 12(b) provides in relevant part:
      If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

      . Thompson d/b/a Spring Green Landscaping v. Spring-Green Lawn Care Corp., William R. Fisher, Edward Carroll, and HRM Enterprises, Inc., No. 78 CH 4773 (Cir.Ct. of Cook County).

      . See generally Colorado River, 424 U.S. at 813—17, 96 S.Ct. at 1244-46; Field, The Uncertain Nature of Federal Jurisdiction, 22 Wm. & Mary L.Rev. 683 (1981); Field, Abstention in Constitutional Cases: The Scope of the Pullman Abstention Doctrine, 122 U.Pa.L.Rev. 1071 (1974).

      . In so holding, we express no opinion on the merits of Thompson's claim or on the defendants’ defense of laches.


author: McMILLAN, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. ONE (1) LOT OF APPROXIMATELY TWENTY THOUSAND (20,000) PAIRS OF COUNTERFEIT BLUE JEANS BEARING THE JORDACHE TRADEMARK, Defendant.
    No. C-C-83-936-M.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Jan. 2, 1985.

      Richard S. Poe, Asst. U.S. Atty., Charlotte, N.C., for plaintiff.
    W. Thad Adams, III, Charlotte, N.C., for Jordache Enterprises, Inc.
    Robert A. Izard, Jr., Moore, Van Allen, Allen & Thigpen, Charlotte, N.C., for Seibo, S.A. de C.V.
    Ronald E. Bogle, Hickory, N.C., intervenor, CMI, Inc.
   ORDER

McMILLAN, District Judge.

On December 13, 1983, the government filed a complaint for forfeiture in rem of twenty thousand (20,000) pairs of allegedly counterfeit blue jeans bearing the Jordache trademark. These jeans had been seized by the United States Customs Service in Charlotte on August 4, 1983. On January 18, 1984, CMI, Incorporated (“CMI”), a Charlotte-based trading company, informed the court of its claim for the jeans. On February 13, 1983, Seibo, S.A. de C.V. (“Seibo”), a Mexican wholesaler, made a claim for the jeans. A third claim was made by Jordache Enterprises, Incorporated (“Jordache”), on February 27, 1984.

This case was heard on November 19, 1983, on cross-motions for summary judgment filed by the government, by CMI, and by Seibo. Jordache joined in the government’s motion for summary judgment.

By verified claims and affidavits of the parties, the court finds the uncontested facts to be as follows:

1. Seibo, S.A. de C.V. is a Mexican corporation engaged in the exportation and importation of goods from and to the Republic of Mexico. CMI, Incorporated is a North Carolina corporation engaged in buying wearing apparel in bulk quantities from manufacturers and other vendors and selling those goods to other wholesalers.

2. On or about July 7, 1983, Seibo and CMI entered into an agreement in which Seibo agreed to sell and CMI agreed to buy thirty thousand (30,000) pairs of jeans bearing the Jordache label. The sale price of the jeans was six dollars, sixty-seven cents ($6.67) each. Under the terms of the agreement, the jeans were to be delivered by Seibo to CMI, F.O.B. Mexico City.

3. On or about July 27, 1983, Seibo, in order to fulfill its contractual obligations to CMI, purchased twenty thousand (20,000) pairs of jeans from Terrífico, a Mexican corporation engaged in the manufacture of clothing. At the time of the purchase, Terrífico provided Seibo with a certified copy of a document showing that Celine, S.A., an affiliate of Terrífico, was the registered owner and authorized user of the trademark “Jordache” in Mexico.

4. Previously, Seibo had assured CMI that Terrifico’s trademark was valid. The vice president of CMI met with Mexican government officials who verified that Terrífico had the lawful trademark for Jordache in Mexico and provided him with a copy of that trademark. CMI also asserts that Seibo represented to it that the jeans could be lawfully imported in the United States.

5. Neither CMI nor Seibo made any attempt to contact Jordache directly, either at its corporate office in New York or through its Mexico City attorney, to confirm the authenticity of Terrifico’s trademark or to discover if the trademark rights they had been assured were owned by Terrífico in Mexico allowed the importation of the jeans into the United States.

6. According to Seibo, just prior to delivery, and at the express request of and as an accommodation to CMI, Seibo agreed to deliver the jeans to CMI at Charlotte, North Carolina.

7. Prior to shipment, CMI paid Seibo for ten thousand (10,000) pair of jeans with a cashier’s check for $66,700. The second ten thousand (10,000) pair were to be paid for with a letter of credit.

8. On or about August 3, 1983, representatives of Seibo had the jeans placed on an airplane for shipment to the United States.

9. When the jeans reached the United States, a customs agent determined through reference to the customs manual that “Jordache” is a registered trademark of Jordache Enterprises, Incorporated.

10. Local customs officials contacted Mr. Robert A. Spiegelman, attorney for Jordache, who advised them that Jordache did not have and never did have a licensee and manufacturer of Jordache jeans in Mexico and that all jeans exported from Mexico were, therefore, counterfeit and unauthorized.

11. Pursuant to this investigation and under the authority of 19 U.S.C. § 1526 and 15 U.S.C. § 1124 prohibiting the importation and introduction into commerce of the United States items bearing a registered United States trademark by persons other than owners, assignees or licensees of the trademark, the government seized the jeans as a “prohibited importation” under 19 C.F.R. § 133.21(a).

12. Pursuant to 19 U.S.C. § 1606, the District Director of Customs in Wilmington, North Carolina has appraised the blue jeans and determined their domestic value to be $306,200.

13. Jordache represents, through its New York attorney, that the minimum wholesale price of this particular type of Jordache jeans is nineteen dollars ($19) a pair. Retail value for genuine Jordache jeans is about forty dollars ($40) a pair.

CONCLUSIONS OF LAW

1. The relevant importation restrictions state that,

... [I]t shall be unlawful to import into the United States any merchandise of foreign manufacture if such merchandise, or the label, sign, print, package, wrapper, or receptacle, bears a trademark owned by a ... corporation or association created or organized within, the United States, and registered in the Patent and Trademark Office ... and if a copy of the certificate of registration of such trademark is filed with the Secretary of Treasury, ... unless written consent of the owner of such trademark is produced at the time of making entry.

19 U.S.C. § 1526(a). Merchandise imported into the United States in violation of this section “shall be subject to seizure and forfeiture for violation of the customs laws.” 19 U.S.C. § 1526(b).

2. The court concludes, on the basis of uncontroverted evidence, that the merchandise in question (twenty thousand (20,000) pair of blue jeans bearing the Jordache label) bears a trademark owned by a corporation organized with the United States and whose trademark is registered in the Patent and Trademark office and that no written consent of the owner of such trademark was produced at the time of making entry into the United States.

3. The merchandise in question is therefore, as a matter of law, subject to seizure and forfeiture. 19 U.S.C. § 1526(e) states in pertinent part:

Any such merchandise bearing a counterfeit mark ... imported into the United States ... shall be seized and, in the absence of the written consent of the trademark owner, forfeited for violations of the customs laws.

4. In order to secure forfeiture under 19 U.S.C. § 1526(b), the United States must show the existence of facts sufficient to establish probable cause that merchandise, bearing a trademark owned by a United States corporation and manufactured in a foreign country, was introduced into the United States without the permission of the trademark owner. The court finds that on the basis of the uncontroverted sworn evidence, the government has made such a showing.

5. Once probable cause is shown, the burden of proof is upon the claimant “in all suits or actions brought for the forfeiture of any ... merchandise ... where the property is claimed by any person...” 19 U.S.C. § 1615.

6. Claimants Seibo and CMI state that in all matters pertaining to sale and purchase of the blue jeans, they acted “innocently, prudently and under the reasonable good faith belief that Terrífico was the owner and authorized user of the Jordache trademark and that Terrífico assigned to Seibo the right to resell the jeans to CMI in the United States.” (Selbo’s verified petition for remission, filed February 13, 1983, at paragraph 18.)

7. The law provides that, as a general rule, innocence is no defense to a forfeiture action. J.W. Goldsmith-Grant Co. v. United States, 254 U.S. 505, 41 S.Ct. 189, 65 L.Ed. 376 (1921).

8. The Supreme Court, in Calero-Toledo v. Pearson, 416 U.S. 663, 94 S.Ct. 2080, 40 L.Ed.2d 452 (1974), indicated in dicta that in some circumstances due process might be offended by a forfeiture. In order to make out a claim of violation of due process, an owner of property would have to show both that he was innocent of any wrongdoing and that either (a) the property was either taken without his consent, or (b) he not only was uninvolved in and unaware of wrongdoing but also he had done all he reasonably could have done to prevent proscribed use of the property. In Calero-Toledo, the court found that even though the two yacht owners/elaimants were innocent of any wrongdoing themselves in lending their boat to two men who left one marijuana cigarette on the boat, they had not shown that they had done all that reasonably could be expected to prevent the proscribed use of the property. Therefore, due process did not prevent forfeiture of the entire yacht to the government.

9. Claimants cite two cases where courts found that such a showing had been made. In United States v. One Tintoretto Painting, 691 F.2d 603 (2d Cir.1982), an art dealer attempted to smuggle a valuable painting into the United States under false pretenses. The court found that the owner of the painting had raised sufficient factual issues to preclude the granting of summary judgment by showing that he not only was innocent of wrongdoing but also had done all that reasonably could be expected to determine that the art dealer was reputable and that the painting was being handled legally. In United States v. One 1976 Lincoln Mark IV, 462 F.Supp. 1383 (W.D. Pa.1979), the brother-in-law of the claimant (who lived in the same house) borrowed the owner’s automobile to transport heroin. The court held that forfeiture statutes are intended to penalize only those who are significantly involved in criminal activity and that the claimant both was innocent of illegal activity and had done all that reasonably could have been expected to prevent the proscribed use of his property.

10. The above-cited cases are not applicable to the case before the court. In those cases, the owner of the defendant property was a third party admitted by all not to have been involved in any even questionable, much less illegal, activity. The claimant in One Tintoretto Painting entrusted his painting to an art dealer who, in turn, tried to import the painting without declaration of its true value. In the 1976 Lincoln Mark TV case, the only activity of the claimant was to lend his car to his brother-in-law. In contrast, claimants here are the parties which engaged in the very act which resulted in seizure of the defendant property, that is, their attempt to import the defendant blue jeans into the United States.

11. Even if the standards set out in Calero-Toledo did apply in this case, claimants have not made a showing that they did all that reasonably could be expected to prevent proscribed use of the property. What claimants did do was to rely on the verbal representations of the manufacturer and Mexican government officials and on certain certified Mexican government documents that purported to show that Terrífico, through its affiliate, Celine, held a valid Mexican trademark and the concomitant rights to manufacture and sell jeans bearing the Jordache trademark in Mexico. Additionally, CMI relied on representations by Seibo of Selbo’s right to sell CMI the jeans and of CMI’s right to sell the jeans in the United States. What the claimants did not do was to check with the Customs Office, with Jordache offices in the United States or with Jordache counsel in Mexico, or to look at the United States Patent and Trademark registrations to verify Terrifico’s rights in Mexico and, more pertinently, to ascertain Selbo’s and CMI’s rights to import the jeans into the United States.

12. Claimants’ arguments center on the reasonableness of their belief that Terrífico held the Jordache trademark rights in Mexico. Reasonable or not, that belief is irrelevant to a determination of this case on summary judgment. Claimants provide no evidence nor forecast that they would be able to provide any evidence to support a finding that a right, through Terrífico, to buy and sell the jeans in Mexico would translate in any fashion into a right to export the jeans to the United States for sale in this country.

13. The court finds that there is no genuine issue of material fact raised by the evidence presented on the crucial issue in this case, that is, did the claimants both act innocently and do all that reasonably could have been expected to prevent the proscribed use of their property. As a matter of law, the court finds that even if innocent of any wrongdoing, neither CMI nor Seibo did all that reasonably could have been expected to determine, before attempting to import the jeans into the United States, that those jeans bore a valid trademark and that they were entitled, as assignees of Terrífico, to sell jeans bearing that trademark in the United States. The United States is, therefore, entitled to summary judgment on its claim for forfeiture of the jeans.

14. The only remaining issue is what is to be done with the blue jeans. The statute providing for the forfeiture of merchandise bearing a counterfeit mark provides as follows for its disposition:

Upon seizure of such merchandise, the Secretary [of the Treasury] shall notify the owner of the trademark, and shall, after forfeiture, obliterate the trademark where feasible and dispose of the goods seized—
(1) by delivery to such Federal, State and local government agencies as in the opinion of the Secretary have a need for such merchandise,
(2) by gift to such eleemosynary institutions as in the opinion of the Secretary have a need for such merchandise,
(3) more than 1 year after the date of forfeiture, by sale by appropriate customs officers at public auction under such regulations as the Secretary prescribes, except that before making any sale the Secretary shall determine that no Federal, State or local government agency or eleemosynary institution has established a need for such merchandise under paragraph (1) or (2), or
(4) if the merchandise is unsafe or a hazard to health, by destruction.

19 U.S.C. § 1526(e) (emphasis added).

15. The applicable regulations, entitled “Disposition of Forfeited Merchandise,” trace the language of the statute:

(c) Articles bearing a counterfeit trademark. The Commissioner of Customs or his designee shall dispose of forfeited articles bearing a counterfeit trademark after obliteration of the trademark, where feasible, in the following manner:
(1) Government use. By delivery to any Federal, State or local government agency which, in the opinion of the Commissioner or his designee, has established a need for the article.
(2) Gifts to charities. By delivery to any charitable institution which, in the opinion of the Commissioner or his designee, has established a need for the article(s).
(3) Sale. If more than 1 year has passed since the forfeiture, the article^) may be sold at public auction by the Commissioner or his designee. Prior to the sale, the Commissioner or his designee shall determine that a need for the article has not been established by any government organization or charitable institution under paragraph (c)(1) or (c)(2) of this section.
(4) Destruction. If the article is unsafe or a health hazard, it shall be destroyed.

19 C.F.R. § 133.52 (emphasis added except as to section titles).

16. Although this court has been unable to locate any applicable case law, it appears from the language of the statute and regulations that the responsibility for deciding on the ultimate disposition of the merchandise is with the Executive Branch, either through the Secretary of the Treasury, as provided for in the statute, or through the Commissioner of Customs or his designee, as provided for in the regulations. Therefore, the ultimate decision on disposition of the jeans must be left to the government to be made within the bounds of the statute and regulations.

17. It is clear, however, that the alternative of destruction of the jeans, promoted by Jordache, is only to be exercised “if the merchandise is unsafe or a hazard to health.” Otherwise, the government shall, after obliterating the trademark “where feasible”, deliver the jeans to a government agency, give them to a charitable institution or sell them at public auction. The phrase “where feasible” clearly modifies “obliterate the trademark” and not disposal by means other than destruction.

18. The government, through the United States Attorney, has indicated to the court that it has received requests for the jeans from at least one state agency and from charitable institutions. The court takes this statement as a good-faith commitment on the part of the government to dispose of the jeans in a manner comporting with the language and intent of the statute, i.e., not by destroying them but by giving them to such agencies or charitable institutions “as in the opinion of the Secretary have a need for such merchandise.”

IT IS THEREFORE ORDERED, that plaintiffs motion for summary judgment is GRANTED.

Counsel for the United States is directed to draft and tender a judgment appropriate to the findings and conclusions made in this order.