author: RICE, District Judge.

text:
    Roy C. DAY, et al., Plaintiffs, v. CITY OF DAYTON, OHIO, et al., Defendants.
    No. C-3-80-438.
    United States District Court, S.D. Ohio, W.D.
    Oct. 23, 1984.

      William D. Forbes, Miamisburg, Ohio, Robert F. Jeffries, Dayton, Ohio, for plaintiffs.
    Thomas P. Randolph, Deputy Director of Law, Dayton, Ohio, for defendant, City of Dayton.
    Gerald F. Kaminski, Asst. U.S. Atty., Dayton, Ohio, for defendant, U.S. Dept, of Transp., F.A.A.
   DECISION AND ENTRY OVERRULING DEFENDANTS’ MOTION TO DISMISS; FINDINGS OF FACT AND CONCLUSIONS OF LAW; JUDGMENT TO BE ENTERED FOR DEFENDANTS; ENTRY OF JUDGMENT; TERMINATION ENTRY

RICE, District Judge.

This action arises out of the purchase of certain real property, near the James M. Cox Dayton International Airport (“Airport”), by the Defendant City of Dayton (“Dayton”), from Plaintiffs Roy C. Day and Mary M. Day (“Days”). Plaintiffs Donald B. Allen and Jean R. Allen (“Allens”), also owned real property near the Airport which they sold to Dayton. Plaintiffs Kenneth D. Lawson and Janet L. Lawson (“Lawsons”), were tenants on the real property which the Allens sold to Dayton. In this action, Plaintiffs seek compensation for certain relocation expenses arising out of the sale of their properties. The Plaintiffs base their claims on alternative theories: 1) the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“Uniform Relocation Act”), 42 U.S.C. § 4601 et seq.; 2) promissory or equitable estoppel. The Plaintiffs assert the second theory against only Defendant Dayton. Both Defendants, Dayton and the United States Department of Transportation, Federal Aviation Administration (“FAA”) deny liability.

The Court heard this case without a jury. At the conclusion of Plaintiffs’ case in chief, Defendants moved to dismiss Plaintiffs’ Complaint, pursuant to Rule 41(b), Fed.R.Civ.P. The Court took Defendants’ motions under advisement and informed the parties that it would rule on this motion before ruling on the merits of Plaintiffs’ claims. The Court, having considered Defendants’ motions, overrules same. Accordingly, the Court now states its Findings of Fact separate from its Conclusions of Law, pursuant to Rule 52, Fed.R.Civ.P.

I. FINDINGS OF FACT

1. Plaintiffs Roy C. Day and Mary M. Day (“Days”), husband and wife, owned and occupied residential property (“Day property”), located on the north side of State Route 40, west of Dog Leg Road, in Montgomery County, Ohio. The Day property is southwest of the terminus of the Airport’s Runway 6L. An extension of the centerline of Runway 6L would run through the Day property. The Day property is more than one mile beyond the end of Runway 6L. . When the Days acquired their property in June, 1972, Runway 6L was in operation, a fact of which the Days were aware.

2. Plaintiffs Donald B. Allen and Jean R. Allen (“Allens”), husband and wife, owned and occupied residential property (“Allen property”), located on the north side of State Route 40, west of Dog Leg Road in Montgomery County, Ohio. The Allen property abuts and is just to the west of the Day property. The Allen property is southwest of the terminus of the Airport’s Runway 6L. An extension of the center-line of Runway 6L would run through the Allen property. The Allen property is located more than one mile beyond the terminus of Runway 6L. When the Allens purchased their property in March, 1971, Runway 6L was in operation, a fact of which the Allens were aware.

3. In 1978 and 1979, a one bedroom cottage was located on the Allen property. In May, 1978, Plaintiffs Kenneth D. Lawson and Janet L. Lawson (“Lawsons”), husband and wife, began occupying the cottage as month-to-month tenants. Before beginning their tenancy, the Lawsons knew that Runway 6L was in operation.

4. Defendant City of Dayton (“Dayton”), is a political subdivision of the State of Ohio and is incorporated under the laws of Ohio. Dayton owns and operates the Airport.

5. Defendant, United States Department of Transportation, Federal Aviation Administration, is an Executive Department of the United States Government. It was established by Congress and is administered by an Administrator who is appointed by the President with the advice and consent of the United States Senate. The United States Department of Transportation, Federal Aviation Administration and its Administrator will be collectively referred to as “FAA”.

6. In 1969, Runway 6L at the Airport was constructed with federal financial assistance under the Airport Development Assistant Program (“ADAP”). At least half of the funds necessary to construct Runway 6L were provided under this federal grant. Between 1970 and 1980, Dayton received no federal financial assistance for the maintenance or improvement of Runway 6L. However, since 1969, FAA has provided federal financial assistance, under ADAP, to Dayton for various other Airport projects. Additionally, FAA air traffic controllers have directed all air traffic using Runway 6L throughout its existence.

7. Dayton and the FAA entered into a grant agreement on August 15, 1979, which was amended July 7, 1980, for the purpose of providing federal assistance for improvements to Runway 6L. The FAA did not approve any land acquisitions as part of this agreement.

8. Planes which took off from and landed on Runway 6L flew directly over the Day and Allen properties.

9. At some point after 1975, the noise from aircraft landing on and taking off from Runway 6L became intolerable for the Days and the Allens. Because of the proximity of Runway 6L and its concomitant noise, the Allens and Days felt they were not able to enjoy their yards, and they felt unable to have overnight guests. As a result of the noise, the Days and Allens decided that they would have to sell their houses and move.

10. During 1978, the Days put their house on the market by listing it with a real estate broker. The Days listed first for $73,000, then for $70,000. While the house was on the market, six or seven people looked through it, and the Days received only one offer for it. That offer was refused because of the short time given for acceptance. Had the Days sold their house on the open market, they would not have received relocation monies or expenses from the Defendant, and 5% to 6% would have been deducted from any amount they received for real estate commission.

11. In early 1978, Mr. Day contacted Ellsworth Szkudlarek, Aviation Engineer at the Airport, and asked him if Dayton would purchase the Day property. Szkudlarek wrote the FAA’s James Opatrnz to find out whether the cost of acquiring the Day property would be eligible for ADAP participation. The FAA orally informed Dayton that it would receive no federal financial assistance in acquiring the Day property. Subsequently, in April, 1978, Szkudlarek wrote the Days and informed them that the FAA would not participate in the Airport’s acquisition of their property.

12. In January, 1979, Mr. Allen contacted James R. Wood, Director of Aviation at the Airport, to ask him whether Dayton would purchase his house. As a result of this initial contact and, at Plaintiffs’ request, Wood met Messrs. Allen and Day to discuss the purchase of their properties. At that meeting, Mr. Allen said that he would sue Dayton to force it to purchase his house if Dayton did not willingly do so. Although Wood did not indicate that the Airport needed either property, he did indicate that the Airport would make every effort to have Dayton purchase the properties. Wood suggested that they obtain two independent appraisals of each property. Dayton would then offer them the higher appraisal for their properties. At that meeting, Wood made no representations or statements about the availability of relocation benefits. Wood wanted Dayton to buy the Day and Allen properties because he felt that the Airport had a moral obligation to purchase the properties since he believed the properties were adversely effected by noise and since he felt purchasing them would avoid a possible inverse condemnation suit.

13. The Allens and Days willingly and voluntarily initiated the negotiations which led to the eventual sale of their respective houses to Dayton. Neither Dayton, the Airport, nor the FAA intimated to the Plaintiffs that condemnation proceedings would be instituted if they did not voluntarily sell their properties to Dayton.

14. Subsequent to the meeting with Wood, the Days received a letter from James C. Hall, Superintendent of the Dayton Redevelopment Department. In the letter, Hall told the Days that Dayton has a relocation office and that the relocation office, “will determine the amount of relocation benefits and moving expenses that owner/occupants and tenants will receive.” Plaintiffs’ Exhibit # 5. The Allens received a similar letter from Hall.

15. William Kirshe, a representative of Dayton, informed the Allens and the Days that they were eligible for relocation benefits, including moving expenses. Kirshe told them that they were eligible to receive up to $15,000. Kirshe did not put a dollar figure on what either the Days or the Al-lens would receive; rather, he merely informed them what was the maximum amount for which they were eligible.

16. On April 17, 1979, the Days executed an offer to sell their property to Dayton. Plaintiffs’ Exhibit # 6. The offer was for $70,000, and it did not refer to relocation benefits. The Allens executed a similar offer, which likewise did not mention relocation benefits.

17. After the Days executed the offer and before the closing, the Days received a letter, Plaintiffs’ Exhibit # 10, from Gail Lawson, a relocation counselor with Dayton. The letter said that the Days may be eligible for a relocation payment up to a maximum of $15,000.

18. When the Days had their closing on June 1, 1979, Ed Roe, an attorney for Dayton, informed them that they might be eligible for up to $15,000 relocation benefits. Roe made a similar statement to the Allens at their closing.

19. From the initial meeting between Day, Allen and Wood, to the closings on the Allen and Day properties, no employee, agent or representative of Dayton informed either the Days or the Allens that they would receive a specific sum of relocation benefits. Likewise, no such person ever told either the Days or the Allens generally what amount, if any, of relocation benefits they would receive. Rather, in those instances when such a person informed either the Days or the Allens that they would receive relocation benefits, the amount was recited as up to a maximum of $15,000, with or without moving expenses.

20. The Days and Allens did not decide to execute offers to sell their properties, to close the sale of their properties or to purchase new houses on any statements regarding the availability of relocation benefits.

21. The Lawsons voluntarily quit their tenancy in the cottage on the Allen property in order to move to Tennessee, where Mr. Lawson had secured a job. The Law-sons did not receive a written order from Dayton to vacate the cottage.

22. Dayton received no federal assistance for the purchase of the Day and Allen properties.

23. In 1967, Dayton filed a 20-year master plan for the Airport with the FAA. This plan has been updated every five years since then. In part, the master plan sets forth a layout of the property owned by the Airport and the property that it intends to acquire. Neither the master plan, nor any five-year supplementations, included plans for the acquisition of the Day property, the Allen property or any other property west of Dog Leg Road. Neither the master plan, nor any of the five-year supplementations, included plans for the expansion of Runway 6L in the direction of the Day and Allen properties.

24. The Airport has never conducted a detailed noise study, either in connection with the development of the master plan and its five-year supplementations or for any other purpose.

25. The Day and Allen properties are located approximately 3,000 feet beyond the clear zone for Runway 6L. The clear zone extends approximately one mile beyond the terminus of Runway 6L.

26. The Airport did not need to acquire either the Day and Allen properties for safety reasons. Indeed, at the time of trial, the Day and Allen properties were occupied by tenants of Dayton. Also, Dayton was considering selling the properties.

27. The Days and the Allens owned and occupied their homes for more than six months prior to commencing negotiations for the sale of their homes to Dayton. The Lawsons were tenants of the Allens for more than six months prior to the Allens commencing negotiations for the sale of their property.

28. Plaintiffs purchased or rented replacement homes which were decent, safe and sanitary within one year after they moved. They submitted claims for relocation benefits within 18 months after the dates of their moves.

29. In September, 1979, Dayton informed the Plaintiffs that they were not eligible for relocation benefits. None of the Plaintiffs has received any relocation benefits.

II. DISCUSSION

The Plaintiffs support their claims for the recovery of relocation benefits with two independent theories. First, the Plaintiffs claim that they are entitled benefits under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“Uniform Relocation Act”), 42 U.S.C. § 4601 et seq. See Doc. #28 at 1. Second, the Plaintiffs allege that they relied, to their detriment, upon assurances from Dayton that relocation benefits would be forthcoming. See Id. The Plaintiffs assert their second theory against only Dayton. The Court will discuss these theories in order.

A. Uniform Relocation Act

The Plaintiffs contend that they are “displaced persons” under the Uniform Relocation Act. Once it is determined that someone is a “displaced person” within the meaning of that Act, it provides for the payment of relocation benefits. See e.g. §§ 202 and 203 of the Uniform Relocation Act, 42 U.S.C. §§ 4622-23. Section 101(6) of the Uniform Relocation Act, 42 U.S.C. § 4601(6), defines “displaced person” as, “any person who ... moves from real property ... as a result of the acquisition of such real property ... for a program or project undertaken by a Federal agency, or with Federal financial assistance____”

The Court rejects Plaintiffs’ contention that because Runway 6L is a federally assisted project, built with federal financial assistance and operated in part by federal employees, that any property acquisitions related to Runway 6L are ipso facto acquired for a program or project undertaken with Federal assistance. In making their argument, Plaintiffs rely on Lake Park Home Owners’ v. United States Dept. of H.U.D., 443 F.Supp. 6 (S.D.Ohio 1976). In Lake Park Home Owners’, the Defendant, HUD, argued that in order to be a displaced person under the Uniform Relocation Act, “ ‘a person must have his property ... directly acquired [either] by the federal government (§ 4622) or by a state agency (§ 4630) receiving federal financial assistance for the specific acquisition.’ ” Id. at 8. In rejecting this assertion, Judge Duncan said:

The pertinent question arising from [the statutory definition of displaced person] is not whether federal monies directly funded the acquisition of the real property involved, but whether the state program or project which resulted in the acquisition was federally assisted. Under HUD’s construction of the section, the “displaced person” status of a tenant or homeowner would be dependent upon whether the federal funding agency agreed to participate directly in the acquisition of the real estate involved in a state program or project. The federal participation in a given state project might be quite substantial, but if federal dollars were funneled to program or project costs other than land acquisition, no one moving as a result of the program or project would, under HUD’s construction of the section, be a displaced person. The statutory definition plainly runs contrary to such an analysis. The statute turns on whether there is federal funding of the program or project, not whether federal funds can be traced directly to the acquisition of a particular parcel of real estate.

Id. at 8-9 (emphasis in the original).

This Court concurs with Judge Duncan’s construction of § 101(6), 42 U.S.C. § 4601(6). It is not necessary for Plaintiffs to prove that Dayton received federal financial assistance for the acquisition of their specific properties. However, this does not mean that Plaintiffs are displaced persons merely because Dayton received federal assistance for the construction of the Airport and Runway 6L. The Court does not read either § 101(6) or Lake Park Home Owners ’ that broadly. Rather, in order for someone to be a displaced person, there must be some present nexus between a federally assisted program or project and the acquisition of that person’s property. Lake Park Home Owners’ supports this conclusion. Therein, Judge Duncan found that the Plaintiffs were not displaced persons because the city, Coshocton, acquired Plaintiffs’ properties long before federal funding for the state project entered the picture. Here, the converse is true. The FAA provided Dayton with financial assistance for the construction of Runway 6L, long before Dayton acquired Plaintiffs’ properties. The decision to purchase the Plaintiffs’ properties was not influenced in any aspect by the possible existence or non-existence of federal funding, either as an aid in such purchase or as an aid in the construction of Runway 6L in the first instance. Finally, giving the Uniform Relocation Act the expansive reading which Plaintiffs suggest would be contrary to the practical construction placed on the Act by the Supreme Court. See Norfolk Redevelopment and Housing Authority v. Chesapeake and Potomac Telephone Company of Virginia, 464 U.S. 30, 104 S.Ct. 304, 78 L.Ed.2d 29 (1983). (Utilities forced to relocate by federally assisted projects, are not “displaced persons” within the meaning of the Uniform Relocation Act); Alexander v. U.S. Dept. of H.U.D., 441 U.S. 39, 99 S.Ct. 1572, 60 L.Ed.2d 28 (1979) (Tenants forced to relocate by foreclosure on housing project with federally guaranteed financing, are not “displaced persons”).

However, Plaintiffs argue that there was sufficient evidence before the Court to support a conclusion that Plaintiffs’ properties were acquired to further a federally assisted project, and that the federally assisted project caused Dayton to acquire Plaintiffs’ properties thereby displacing them. Plaintiffs’ Post Trial Memorandum (Doc. # 36), at 6. To support this contention, Plaintiffs assert that the acquisition of their properties furthered Airport purposes because their properties are noise impacted and because the acquisition was necessary for safety reasons. This, the Plaintiffs argue, was all part of a federally assisted project. In the Court’s view, either of these purposes would provide a nexus between the acquisition of Plaintiffs’ properties and a federally assisted program or project, if there were sufficient evidence before the Court for it to find that the acquisition of Plaintiffs’ properties came within the federal programs for acquisition of land for safety or noise reasons.

As the Plaintiffs argue, two federally assisted projects are implicated by the acquisition of their properties. However, an examination of each of these projects reveals that the acquisition of Plaintiffs’ properties does not qualify for federal assistance under either program. Thus, Plaintiffs’ properties were not acquired in furtherance of a federally assisted project, and the Court concludes that there is not a nexus between the acquisition of Plaintiffs’ properties and a federally assisted project.

First, FAA Regulation 5100.33, Interim Instructions For Processing ADAP Requests For Land Purchase For Noise Compatibility Purposes, is a federally assisted project by which airports can acquire interests in land. However, the acquisition of Plaintiffs’ properties does not qualify under this program because neither Dayton, nor the Airport has developed the comprehensive noise control and land-use compatibility plan. Such a study is necessary to initially trigger eligibility for ADAP participation in land acquisitions for noise purposes. There was testimony that a noise study (ASDS noise study) had been conducted at the Airport; however, the uncontroverted testimony was that Dayton and the FAA deemed that study to be inadequate. Consequently, neither ever accepted that study. Additionally, Plaintiffs reliance on testimony by Wood, that he recommended the purchase of their properties because the properties were noise impacted, is misplaced. In the absence of the requisite noise study, Regulation 5100.33 is not available for ADAP grants.

Second, § 604 of the ADAP Handbook, FAA Order 5100.36, provides for ADAP grants for acquisition of certain land beyond the terminus of a runway. For instance, it provides for ADAP participation in acquisition of land in the clear zone. However, the Court has found, based on uncontroverted evidence, that Plaintiffs’ properties were outside the clear zone. Section 604c says that land in the approach area meeting certain criteria is eligible for ADAP participation. Defendants’ Exhibit C at 107. Plaintiffs’ properties are unquestionably within the approach area to Runway 6L. However, Plaintiffs properties do not meet the criteria for ADAP participation because the properties are more than 5000 feet beyond the end of Runway 6L and because the acquisition of the properties is not necessary to satisfy forecast Airport needs. Accordingly, the Court concludes that the acquisition of Plaintiffs’ properties is not eligible for ADAP participation under Order 5100.33. Consequently, the acquisition of Plaintiffs’ properties was not, in this regard, in furtherance of a federally assisted project.

Plaintiffs also argue that acquisition of their properties furthered an airport purpose by making Runway 6L more safe. In making this argument, Plaintiffs contend that Runway 6L is a federally assisted project because it was built with an ADAP grant and it is operated with FAA employed air traffic controllers. Accepting Plaintiffs’ basic premise that Runway 6L is a federally assisted project, the acquisition of Plaintiffs properties did not further that project by enhancing its safety. Based on the evidence before it, the Court found that the acquisition of Plaintiffs’ properties was not required for safety reasons.

Based on the foregoing, the Court concludes that Plaintiffs are not “displaced persons” as that term is used in the Uniform Relocation Act. Consequently, Plaintiffs are not entitled to relocation benefits under the Uniform Relocation Act.

B. Promissory Estoppel

Under the independent theory of promissory or equitable estoppel, Plaintiffs contend that Dayton should be estopped from denying the fact that Plaintiffs are entitled to relocation benefits. Plaintiffs assert that they relied on representations made by employees and agents of Dayton that they were eligible for relocation benefits. Plaintiffs argue that the Days and Allens either would not have entered into contracts for the sales of their properties, or closed the sales without the representations. Further, Plaintiffs argue that the Days would not have purchased their new house without such representations, and that the Law-sons would not have moved without the representations that they were eligible for relocation benefits.

The concept of promissory estoppel is now embodied in § 90(1) of the Restatement (2d) of Contracts, which provides:

A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted' for breach may be limited as justice requires.

Section 90 has been adopted by the Ohio Supreme Court. McCroskey v. Ohio, 8 Ohio St.3d 29, 456 N.E.2d 1204 (1983); Talley v. Teamsters Local No. 377, 48 Ohio St.2d 142, 357 N.E.2d 44 (1976).

Based upon the evidence before it, the Court concludes that the Plaintiffs have not proved their claims for promissory estoppel. The Plaintiffs have failed to prove that any promise concerning the availability of relocation benefits induced any action or forebearance by any Plaintiff. An essential element of the Plaintiffs’ claim based on a theory of promissory estoppel is that a promise by an employee or agent of Dayton induced such an action or forebearance. See § 90(1), supra.

As stated above, the Plaintiffs claim that representations about their eligibility for relocation benefits induced them to enter into contracts for the sale of their properties and to close those sales, that the representations induced the Days to purchase a new, more expensive house and that the representations induced the Lawsons to move. Indeed, there was testimony to this effect. See Transcript (“Tr.”) at 29, 36-37, 75, 91-94, 122. However, when these statements are viewed in context with the other evidence presented to the Court, the statements lose all credibility.

Addressing the Lawsons first, the Court has found, as a matter of fact, that they did not move from the cottage on the Allen property because of promises or representations that they would receive relocation benefits. Rather, they moved from the cottage because Mr. Lawson was able to find a job in Tennessee. The Lawsons moved from the cottage to Tennessee.

Neither the Days nor the Allens was induced into any act because of promises of relocation benefits. The Days and Allens approached Dayton, the buyer of last resort, because life beyond the terminus of Runway 6L had become intolerable for them. The noise and vibrations associated with jets taking off and landing had made it impossible for them to enjoy their homes. At their meeting with Wood, Mr. Day and Mr. Allen told him that if Dayton did not buy their properties, they would file a lawsuit to force such a purchase. At some point subsequent to the meeting with Wood, the Days and Allens were told that they were eligible for relocation benefits. However, the quality of these representations is not such that induces persons to act; nor did they induce the Plaintiffs to act in this case. See e.g., Plaintiffs Exhibit # 5 (“The Relocation Office will determine the eligible amount of relocation benefits and moving expenses that owner occupants and tenants will receive.”); Plaintiffs’ Exhibit # 10 (“the Bureau of Relocation has determined that you may be eligible for a payment of up to a maximum of $15,000”). More importantly, neither the Days nor the Allens was ever told even generally how much they would receive in relocation benefits. All they were told was that they could receive up to $15,000.

There is an additional reason to conclude that the Days’ actions were not induced by representations about relocation benefits. Dayton paid $70,000 for the Days’ house. That is the same amount for which the Days had previously listed their house on the open market. If the Days had managed to sell their house for that amount on the open market, a 5% to 6% real estate commission would have been deducted from the amount the Days received. No such real estate commission was deducted from the amount the Days received from Dayton. The Days actually received, therefore, a greater net amount from the sale of their property to Dayton than they would have received had they sold their home on the open market for the $70,000 figure. Thus, it is implausible to argue that promises of eligibility for some unstated amount of relocation benefits induced the Days to enter into a contract for the sale of their house to Dayton and ultimately to close that sale.

III. CONCLUSIONS OF LAW

1. The Court has jurisdiction over Plaintiffs’ claims under the Uniform Relocation Act pursuant to 28 U.S.C. § 1331. See Lake Park Home Owners Association v. HUD, supra at 7.

2. The Plaintiffs promissory estoppel claims and their claims under the Uniform Relocation Act “derive from a common nucleus of operative fact.” United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). Accordingly, the Court has pendent jurisdiction over the promissory estoppel claims. Id.

3. The acquisition of Plaintiffs’ properties did not qualify for ADAP grants under either 5100.33 or 5100.36.

4. Plaintiffs are not “displaced persons” within the meaning of § 101(6) of the Uniform Relocation Act, 42 U.S.C. § 4601(6).

5. Plaintiffs are not entitled to relocation benefits under the Uniform Relocation Act, 42 U.S.C. § 4601 et seq.

6. Since the Plaintiffs were not induced into any action by representations about the availability of relocation benefits, Plaintiffs are not entitled to recover under a theory of promissory estoppel.

Based on the foregoing, the Court hereby orders that judgment be entered for the Defendants and against the Plaintiffs herein. The Clerk of Courts will enter judgment on behalf of the Defendants.

The captioned cause is hereby ordered terminated upon the docket records of the United States District Court for the Southern District of Ohio, Western Division, at Dayton.

      . Charles Lewis, a neighbor of the Days and Allens, was also present at the meeting.

      . There is no evidence before the Court from which it could infer that the Plaintiffs, collectively or individually, had contact with the FAA or any of its employees regarding the sale of their properties. Plaintiffs do not claim otherwise.

      . Plaintiffs' Amended Complaint (Doc. # 13), contains three claims for relief. In the second claim for relief, Plaintiffs allege that Dayton failed to properly notify the Allens that they would have to move into a more expensive home in order to get maximum benefits. This claim is dependent on the availability or relocation benefits under the Uniform Relocation Act. Even assuming arguendo that Dayton had a duty to properly inform the Allens of how to maximize their relocation benefits, that duty was not breached if such benefits were not legally available.

      . Although neither of these decisions is directly on point, they nevertheless shed considerable light on the meaning of the term "displaced person.” Each case has stressed the importance of construing this term in light of the purposes of the Act. See Norfolk Redevelopment and Housing Authority, supra 104 S.Ct. at 307-08. The two major purposes of the Uniform Relocation Act were to bring uniformity to myriad federal programs providing for the payment of relocation benefits and to alleviate the injuries of those who are forced to move by federal and federally assisted programs. Id. Neither of these purposes will be enhanced by requiring the payment of relocation benefits to anyone whose property is acquired by a program or project which once received federal assistance.

      . The regulations governing payment of relocation benefits by the FAA are in 49 C.F.R. Pt. 25. These regulations provide for the payment of relocation benefits to persons who are displaced by federally assisted projects. See e.g. 49 C.F.R. §§ 25.111, 25.171. "Federally-assisted" is defined, therein, as “assisted by a grant, loan or contribution by the United States____” Id. at § 25.3. In the present case the acquisition of Plaintiffs’ properties received no federal assistance.

        . Regulation 5100.33 is Plaintiffs’ Exhibit #34.

      . Order 5100.36 is Defendants’ Exhibit C.

      . The relevant portion of § 604c provides:
      (1) Land necessary to restrict the use of areas adjacent to, or in the immediate vicinity of the airport as defined below to activities and purposes compatible with normal airport operations as well as to meet current and anticipated development at the airport. Where sponsors have the capability to acquire property which will satisfy the total ultimate forecast needs of their airport based on an approved master plan they should be encouraged to do so. The dimensions cited below are to be considered as desirable mínimums.
      (a) At airports serving or anticipated to serve turbojet aircraft, such areas of land may extend up to 1250 feet laterally from the runway centerline, extending 5000 feet beyond the end of the primary surface.

        . The mere fact that Plaintiffs were incorrectly informed that they were eligible for relocation benefits, without more, does not establish their estoppel claim. See e.g. Jensen v. United States, 721 F.2d 692 (10th Cir.1983).


source: Caselaw Access Project

author: SCOTT O. WRIGHT, Chief Judge.

license: Public Domain

text:
    William Ray RUSSELL, Plaintiff, v. SHELTER FINANCIAL SERVICES, et al., Defendants.
    No. 83-4448-CV-C-5.
    United States District Court, W.D. Missouri, Central Division.
    Oct. 24, 1984.
    Timothy C. Harlan, Columbia, Mo., D. Eric Sowers, Kennedy. & Sowers, St. Charles, Mo:, for plaintiff.

      Richard S. Brownlee, III, John E. Burruss, Jr., Jefferson City, Mo., for defendants Shelter Financial and Shelter Insurance.
    Dale C. Doerhoff, Jefferson City, Mo., for defendant Murfreesboro.
   ORDER

SCOTT O. WRIGHT, Chief Judge.

Defendant Shelter Financial Services, Inc. (Shelter Financial) is a consumer loan company and a frequent user of consumer reports as defined in the Fair Credit Reporting Act (FCRA). 15 U.S.C. § 1681a(d). The Credit Bureau of Murfreesboro, Inc. (Murfreesboro) is a consumer reporting agency as defined in the FCRA. Id. § 1681a(f). Shelter Financial and Murfreesboro had a working relationship whereby the loan company would request and obtain consumer reports concerning prospective borrowers.

Plaintiff worked for Shelter Financial as its Murfreesboro, Tennessee branch manager until April 4, 1983. On that date, plaintiff voluntarily announced his resignation. On April 5, 1984, Shelter Financial requested and obtained from Murfreesboro a consumer report summarizing plaintiffs recent credit history. Shelter Financial did not represent to Murfreesboro the specific purposes for which the report was requested; instead, Shelter Financial and Murfreesboro operated under a pre-existing agreement by which the loan company certified that all requests for consumer reports would be for one of the purposes authorized by the FCRA.

There can be no dispute but that the report provided by Murfreesboro to Shelter Financial was a consumer report. The information contained in the report bore directly on plaintiffs credit standing and undoubtedly was both “expected to be used ” and “collected [by Murfreesboro] for the purpose of” evaluating plaintiffs creditworthiness.' See 15 U.S.C; § 1681a(d); Heath v. Credit Bureau Service of Sheridan, Inc., 618 F.2d 693, 696 (10th Cir.1980); Boothe v. TRW Credit Data, 523 F.Supp. 631, 634 (S.D.N.Y.1981). Nor is there any dispute but that Shelter Financial intentionally obtained the report from Murfreesboro. Thus, the crucial issue is whether Shelter Financial arguably had a proper purpose in requesting the report.

The FCRA set's forth an exclusive list of permissible purposes for which consumer reports may be obtained. See 15 U.S.C. § 1681b. Only two of these permissible purposes are at issue in the instant case. First, Shelter Financial asserts that it obtained the report on plaintiff “for employment purposes.” See 15 U.S.C. § 1681b(3)(B). That purpose cannot justify defendant’s actions in the instant case, however, because the undisputed facts of the case contradict the statutory definition of “employment purposes.”

The term “employment purposes” when used in connection with a consumer report means a report for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.

15 U.S.C. § 1681a(h). Here, it is uncontradicted that defendant requested the consumer report after plaintiff had announced his resignation from Shelter Financial. Consequently, defendant cannot invoke the “employment purposes” provision to justify its actions; there is simply no evidence that the company obtained plaintiffs consumer report in connection with any employment decision.

Shelter Financial’s second argument in justification of its actions is that it had “a legitimate business need for the information” in the consumer report. See 15 U.S.C. § 1681b(3)(E). Specifically, defendant contends that it obtained the report becausq it was surprised when plaintiff suddenly announced his resignation and wanted to ascertain if plaintiff had been embezzling funds from the company. Assuming arguendo that the evidence conclusively establishes that this was defendant’s motivation for obtaining the consumer report, the Court holds that this defense is insufficient as a matter of law. The FCRA does not authorize the use of consumer reports whenever a user has a legitimate business need for the information; instead, the user must have a “legitimate business need for the information in connection with a business transaction involving the consumer.” 15 U.S.C. § 1681b(3)(E) (emphasis added). Defendant has not adduced a shred of evidence indicating that it requested plaintiff’s consumer report “in connection with” a business arrangement involving plaintiff. Therefore, the Court holds that the evidence in this case establishes that Shelter Financial willfully violated the FCRA as a matter of law. See Heath v. Credit Bureau of Sheridan, Inc., 618 F.2d at 696 (“Congress meant to prevent intrusions into consumers’ private affairs when no legitimate transaction was actually imminent”); Boothe v. TRW Credit Data, 557 F.Supp. 66, 70 (S.D.N.Y.1982) (absent “consumer relationship” between requesting party and subject of consumer report, investigation of suspected counterfeiter is not a proper purpose under FCRA); Henry v. Forbes, 433 F.Supp. 5, 9 (D.Minn.1976) (§ 1681b(3)(E) justifies acquisition of consumer report only if there is a “consumer relationship” between requesting party and subject of report). Consequently, although he has not shown any actual injury resulting from Shelter Financial’s violation of the FCRA, plaintiff is entitled to nominal damages in the sum of one dollar and punitive damages in an amount to be determined by the jury. See 15 U.S.C. § 1681n; Boothe v. TRW Credit Data, 557 F.Supp. at 71-72.

In accordance with the foregoing, it is hereby

ORDERED that plaintiff’s motion for a directed verdict is sustained. It is further

ORDERED that defendant’s motion for a directed verdict is overruled.


author: TURK, Chief Judge.

text:
    In re RAY DOBBINS LINCOLN-MERCURY, INC., Debtor. RAY DOBBINS LINCOLN-MERCURY, INC., Plaintiff, v. FORD MOTOR COMPANY, et al., Defendants. In re Rayfeal Condread DOBBINS, aka Ray C. Dobbins, and Mary Ellen Dobbins, aka Mary E. Dobbins, Debtors. Rayfeal Condread DOBBINS and Mary Ellen Dobbins, Plaintiffs, v. FORD MOTOR COMPANY, et al., Defendants.
    Bankruptcy Nos. 7-81-00242, 7-81-00243.
    Adv. Nos. 7-82-0206, 7-82-0207.
    Misc. Nos. 83-M-10-R, 83-M-9-R.
    United States District Court, W.D. Virginia, Roanoke Division.
    Oct. 25, 1984.

      Jonathan M. Apgar, Salem, Va., Gordon H. Shapiro, Roanoke, Va., for plaintiff.
    James F. Douthat, Roanoke, Va., E. Milton Farley, III, Washington, D.C., for defendants.
   MEMORANDUM OPINION

TURK, Chief Judge.

On April 7, 1982, Plaintiffs Rayfeal Condread Dobbins and mary Ellen Dobbins brought their action against Ford Motor Company (Ford Motor) and its wholly owned subsidiaries, Ford Motor Credit Company (Ford Credit) and Ford Leasing Development Company (Ford Leasing), for allegedly conspiring against Plaintiffs in violation of Va.Code § 18.2-500. (Dobbins Complaint, U 17). The object of the alleged conspiracy was, Plaintiffs claim, to prevent them from subleasing the premises occupied by Ray Dobbins Lincoln-Mercury, Inc. By an Amended Complaint of January 31, 1983, Plaintiff Ray Dobbins Lincoln-Mercury, Inc. (the Dealership), sought from Ford Motor and Ford Credit damages resulting from an alleged further conspiracy against the Dealership.

The court’s summary judgment order of August 16, 1984, operated as a dismissal of the case as to Ford Motor and disposed altogether of five of the six counts in the Amended Complaint. Surviving that order are only those portions of the Dobbins’ Complaint and Count VI of the Amended Complaint asserting the involvement of Ford Leasing and Ford Credit in conspiracies with Ford Motor against Plaintiffs. The two subsidiaries have now moved the court to dismiss these remaining causes of action for failure to state a claim upon which relief can be granted.

Defendants argue, and the court agrees in part, that the Supreme Court’s recent decision in Copperweld Corp. v. Independence Tube Corp., — U.S. -, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984), is dispositive of the remaining claims. The Court held there that a parent corporation and its wholly owned subsidiary — though separately incorporated — are incapable of conspiring in violation of § 1 of the Sherman Act. 15 U.S.C. § 1. The intra-enterprise conspiracy doctrine, the court reasoned, affords undue significance to the mere fact of separate incorporation while ignoring the common objectives of parent and subsidiary. 104 S.Ct. at 2743. It is the very nature of their relationship that “the subsidiary acts for the benefit of the parent ____ If a parent and a wholly owned subsidiary do ‘agree’ to a course of action, there is no sudden joining of economic resources that had previously served different interests.” Id. 104 S.Ct. at 2742. Rather, the parent’s control over its subsidiary, whether or not actually manifested, ensures their unity. Id. 104 S.Ct. at 2742. The mere coordinated activity of a parent and its wholly owned subsidiary is completely unilateral, never susceptible of the “conspiracy” label.

While admitting that Ford Credit and Ford Leasing are wholly owned subsidiaries of Ford Motor, (Dobbins Complaint, ¶¶ 2 and 3), Plaintiffs contend that Copper-weld is inapposite simply because it addressed specifically conspiracy under the Sherman Act; Plaintiffs in the instant case allege, on the other hand, violation of a state conspiracy statute. The court is unpersuaded by this superficial distinction. Contrary to Plaintiffs’ assertions, Copper-weld is not so discretely framed as to preclude its application in all but Sherman Act cases. The Supreme Court’s guidance being uncontradicted by any authority regarding the particular Virginia statute, the Copperweld logic must control. Consequently, a parent corporation and its wholly owned subsidiary are equally incapable of conspiring under each of the two statutes.

Defendants’ reliance on Copper-weld is ill-placed, however, as to any allegation of conspiracy between the two subsidiaries. Such a conspiracy in no way implicates the rejected intra-enterprise conspiracy doctrine, which applies only where the parent is an alleged co-conspirator. It is unclear from the Complaint whether the Dobbins allege a conspiracy not only between Ford Motor and each of its wholly owned subsidiaries, but also between the two subsidiaries, Ford Credit and Ford Leasing. To the extent that they allege the latter, Copperweld is of no effect.

Because Copperweld has made it impossible for Plaintiff Ray Dobbins Lincoln-Mercury, Inc., to prove the existence of a conspiracy between Ford Motor and its wholly owned subsidiary, Ford Credit, Count VI of the Amended Complaint — now comprising all of the Dealership’s claims— is properly dismissed. This same reasoning supports dismissal of that portion of the Dobbins’ claims alleging that Ford Credit and Ford Leasing conspired with their parent, Ford Motor. Insofar as the Dobbins allege a conspiracy between Ford Credit and Ford Leasing, Copperweld is inapplicable and the claim should not be dismissed.

The clerk is directed to send a certified copy of this Memorandum Opinion and Order to counsel of record.

      . In its order accompanying this opinion, the court denies the Dealership’s motion for relief from the August 16 order. Grant of that motion would also have preserved Count IV of the Amended Complaint.


author: BISSELL, District Judge.

text:
    Dora M. RAYNOR, Plaintiff, v. UNITED STATES of America, Secretary of Housing and Urban Development, John Doe, Town and Country Realty, Inc., a corporation, Stanton Slocum, Clarion Mortgage Company, jointly and severally, Defendants.
    Civ. A. No. 84-951.
    United States District Court, D. New Jersey.
    Oct. 29, 1984.

      Paul R. Melletz, P.A., Cherry Hill, N.J., for plaintiff Dora M. Raynor.
    Mary Gibbons Whipple, Asst. U.S. Atty., Trenton, N.J., for defendant United States, Secretary of Housing and Urban Development.
    Carl L. Taraschi, Burlington, N.J., for defendants-third party plaintiffs Town and Country Realty, Inc. and Stanford Slovin.
    Joseph A. McCormick, Jr., Weinberg & McCormick, P.A., Haddonfield, N.J., for defendant Clarion Mortg. Co.
   OPINION

BISSELL, District Judge.

The present lawsuit arises out of a complaint filed on March 7, 1984 by Dora M. Raynor, charging defendants with negligence and negligent misrepresentations. Defendants named in this action are the United States of America, the Secretary of Housing and Urban Development, John Doe, an unknown individual retained by HUD to properly maintain the subject property, Town and Country Realty, Inc., Stanford Slovin, and the Clarion Mortgage Company. As relief, plaintiff seeks compensatory damages of $4,060.31 together with interest, costs of suit and attorney’s fees.

The matter was before the Court on September 10, 1984 pursuant to the motions of defendant Clarion Mortgage Company for summary judgment, and defendants the United States of America and Secretary of Housing and Urban Development for dismissal of the complaint. At that time the Court had a question concerning the jurisdictional basis upon which plaintiff’s claim was based and ordered plaintiff to amend the complaint so as to set forth the basis of jurisdiction. On September 12, 1984, plaintiff filed an amended complaint asserting jurisdiction under 28 U.S.C. §§ 1346(a)(2) and (b) and setting forth in detail the attempts to exhaust all administrative remedies.

The relevant facts surrounding these motions are not in material dispute. On November 8, 1982 plaintiff entered into an Agreement of Sale with the Secretary of the United States Department of Housing and Urban Development for the purchase of a single-family residence located at 20 Beechfern Lane in Willingboro, New Jersey. Stanford Slovin, of Town and Country Realty, acted as the realtor for the transaction, while Clarion Mortgage Company provided plaintiff with financing. The property in question had been unoccupied for several years when, in October of 1982, it was shown by Slovin to plaintiff as a prospective buyer. In November of 1982 plaintiff placed a bid with HUD for the purchase of the house, which led to the November 8, 1982 Agreement of Sale. This Agreement, signed by plaintiff, specifically provided that the property was to be bought “as is.” Furthermore, it stated that the home may not meet the requirements of the local building code. Plaintiff reviewed and acquiesced in these provisions, as is evinced by her initials beside them. Thereafter, on November 9, 1982, plaintiff applied to Clarion for a residential mortgage. In response thereto, Clarion initiated its processing and hired an independent fee appraiser to determine the value of the property. The appraiser, Lee Romm, placed the market value of the structure at $34,000, prompting Clarion to approve a mortgage to plaintiff of $24,000. As a result of this appraisal, Clarion requested that plaintiff repair and install bathroom and floor tiles, replace a downspout, and reinstall storm sashes and screens. $960 was held in escrow to cover the cost of these repairs. Subsequently, a commitment was issued and the closing took place on either March 31 or April 1 of 1983.

Following the closing, plaintiff hired workmen to make repairs on the home. During the course of this repair, plaintiff was informed by the workmen that the house had been improperly “winterized,” that all of the water pipes in the house had burst, and that the furnace had been damaged beyond repair. In response to this information, plaintiff filed the instant complaint.

Based upon the foregoing, Clarion moves for summary judgment and for dismissal of the cross-claims of co-defendants Slovin and Town and Country. The United States of America and the Secretary of Housing and Urban Development move for dismissal of the complaint. Clarion argues that plaintiffs charges against it, contained in Count IV of the complaint, are insufficient and fail to specify facts establishing that Clarion owed a duty to her. Moreover, it asserts that plaintiff fails to state a claim against it because she has not made out a prima facie case of negligence by Clarion. Furthermore, it claims that since plaintiff bought the property “as is," she is barred from bringing this suit by the doctrine of caveat emptor. Finally, Clarion contends that the cross-claims of its co-defendants should be dismissed since it owed no duty to them. Plaintiff counters, arguing that the doctrine of caveat emptor has been abrogated in large part and is inapplicable to the instant case. Additionally, she claims that Clarion breached its fiduciary and contractual duty to her by misrepresenting that it had conducted a thorough inspection of the property in question. Finally, she asserts that Clarion’s motion should be denied due to insufficient opportunity for discovery.

A review of the record before the Court demonstrates that Clarions’ motion must be granted. Plaintiff has failed to establish that Clarion breached any duty that it owed to plaintiff. Plaintiff and Clarion were in a mortgagor-mortgagee relationship, one of contract, not fiduciary. In its capacity as potential mortgagee, Clarion inspected the house in question. Clarion’s inspection was solely for the purpose of determining the adequacy of the property as collateral. It did not inspect the property for the purpose of certifying to plaintiff the condition of the property. As Clarion has violated no duty owed to plaintiff, plaintiff has failed to establish a prima facie case of negligence. Accordingly, Clarion’s motion for summary judgment is granted.

Clarion’s motion to dismiss the cross-claims of co-defendants Slovin and Town and Country will also be granted. Clarion has no relationship with either of those defendants nor does it owe either of them any duty.

Defendants United States of America and the Secretary of Housing and Urban Development move to dismiss plaintiff’s complaint for lack of jurisdiction over the person and insufficiency of service of process pursuant to Fed.R.Civ.P. 12(b)(2) and (4), and failure to state a claim upon which relief can be granted, pursuant to Fed.R. Civ.P. 12(b)(6).

Defendants argue that this Court lacks personal jurisdiction over the defendants due to improper service of process upon the Secretary of HUD. Moreover, they assert that plaintiff cannot sustain a tort claim for either a negligent breach of an established duty, a negligent breach of an accepted duty, the tort of misrepresentation, or the negligent breach of a duty created by an implied warranty of habitability. Finally, defendants contend that plaintiff’s complaint is actually a contract claim which must be dismissed because plaintiff expressly contracted to purchase the property “as is.”

Defendants’ contention that this Court lacks personal jurisdiction is unfounded. Federal Rule 4 requires service by certified mail to be made on the agency of the United States in question and the Attorney General. Personal service is required to be made on the United States Attorney. The Secretary of Housing and Urban Development has designated the Associate General Counsel for Litigation as his agent to receive service. 46 Fed.Reg. 2389 (1981); 36 Fed.Reg. 11052 (1971). In the present action plaintiff properly served the United States Attorney and the Attorney General. However, the Secretary of HUD was served by delivering process to Secretary of Housing and Urban Development, Walter Johnson, 60 Park Place, Newark, New Jersey, 07102, rather than to the Associate General Counsel for Litigation. If any infirmity in the service of process exists, it is in this discrepancy.

By serving the Secretary of HUD directly, rather than through his designated agent, plaintiff complied with the literal wording of Fed.R.Civ.P. 4(d)(5). Not serving the Secretary’s designated agent is harmless error. The necessary parties in the Government had actual notice of the suit and suffered no prejudice from the technical defect in service. Jordan v. United States, 694 F.2d 833 (D.C.Cir.1982). Accordingly, defendants’ motion to dismiss for lack of personal jurisdiction and/or insufficient service of process is denied.

Defendants next argue that plaintiff’s complaint should be dismissed because she cannot sustain a tort claim for a negligent breach of an established duty, a negligent breach of an accepted duty, the tort of misrepresentation or the negligent breach of a duty created by an implied warranty of habitability. In response, plaintiff does not dispute that the defendants had no established duty and concedes that the Tort Claims Act, 28 U.S.C. § 2680(h), bars any tort claim arising from misrepresentation. Plaintiff argues, however, that the United States and HUD assumed the duty of inspecting the house and the negligent performance of that duty creates liability under the “Good Samaritan” rule of Neal v. Bergland, 646 F.2d 1178 (6th Cir.1981). Moreover, plaintiff contends that the term “as is” in the sale contract, while negating the implied warranty of merchantability, does not negate express warranties. Finally, plaintiff asserts the “as is” clause should not release a party from liability where that party has acted in such a way as to induce reasonable reliance on the circumstances as they appear to be.

A review of the record before this Court reveals that defendants’ motion to dismiss for failure to state a claim should be granted. Count I of plaintiff’s complaint alleges that “the defendant Secretary of the United States Department of Housing and Urban Development negligently failed to winterize the premises at 20 Beechfern Lane, Willingboro, New Jersey or had same winterized in a negligent manner by a person unknown at the present time by plaintiff ____” Therefore, the inquiry of this motion must begin and end with the question of whether HUD negligently winterized or had the premises negligently winterized.

Defendants argue, and plaintiff does not appear to disagree, that HUD had no existing duty to winterize the house. Defendants contend that HUD merely entered into a contract of sale and that it never made, nor did it ever agree to make, any repairs, thereby making reliance on the “Good Samaritan” rule inappropriate. Defendants distinguish this case from Neal v. Berg-land, supra, by noting that in the present case HUD undertook no performance and, in fact, sold the house “as is.” In Neal, HUD assumed the duty to make an appraisal in order for the plaintiff to obtain an F.H.A. mortgage and thereby became liable for the negligent performance of that duty.

In response, plaintiff argues that by inspecting the house HUD assumed a duty, the negligent performance of which creates liability. Whether or not meritorious, plaintiffs argument does not follow the allegations contained in her complaint. The complaint alleges only that the defendant Secretary of Housing and Urban Development failed to winterize or had the winterization done in a negligent manner. Nowhere in the complaint is it alleged that the defendants are liable to the plaintiff due to their failure to inspect the premises properly. Plaintiff’s reliance on this argument is therefore inappropriate. The plaintiff has failed to demonstrate that the defendants assumed the duty of winterizing the home. Accordingly, there can be no liability under the “Good Samaritan” rule.

Defendants next contend that there is no liability arising from an implied warranty of habitability. While noting that the New Jersey Supreme Court in McDonald v. Mianecki, 79 N.J. 275, 398 A.2d 1283 (1979), ruled that an implied warranty of habitability running from builder-vendor to new home owners was consonant with the Legislature’s express purpose of protecting new homeowners, defendants argue that the policies behind these implied warranties do not suggest extending them to vendors such as HUD. In order to resolve this issue one need not look solely to the policies behind the implied warranties. The question raised herein is very similar to the caveat emptor issue raised in Clarion’s motion for summary judgment. As this Court stated in resolving that issue:

Although not expressly stated in McDonald, it appears that [the doctrine of caveat emptor] does retain a measure of viability where, as here, the sale being scrutinized is of a previously owned home. However, even in the sale of an older home, caveat emptor applies only in the absence of fraud or misrepresentation by a vendor.

McDonald, supra, at 282, n. 1, 398 A.2d 1283.

Plaintiff’s complaint does not allege that defendants United States of America or Secretary of Housing and Urban Development committed fraud or misrepresented the true condition of the house.

Accordingly, the Court finds that as to these two defendants the doctrine of caveat emptor applies. As such, these defendants breached no duty arising from an implied warranty of habitability.

Plaintiff has failed to establish that defendants United States of America and Secretary of Housing and Urban Development owed a duty to plaintiff under any relevant theory of liability. Accordingly, plaintiff’s complaint is dismissed as to those defendants.


author: MORTON, Senior District Judge.

text:
    TENNESSEE BAPTIST CHILDREN’S HOMES, INC., and Dr. Evans B. Bowen, Executive Director-Treasurer of the Tennessee Baptist Children’s Homes, Inc. v. UNITED STATES of America.
    No. 2-83-0016.
    United States District Court, M.D. Tennessee, Northeastern Division.
    Nov. 14, 1984.
    On Motion to Amend Dec. 10, 1984.
    Frank C. Ingraham, Nashville, Tenn., John Stophel, Richard Bethea, Chattanooga, Tenn., for plaintiffs. •
    Joe B. Brown, U.S. Atty., Nashville, Tenn., Gregory L. Nelson, Tax Div., Civil Trial Section, Southern Region Dept, of Justice, Washington, D.C., for defendant.
   MEMORANDUM

MORTON, Senior District Judge.

Prior to 1969, all tax exempt organizations “operated, supervised, or controlled by or in connection with a religious organization,” were excused from filing information return Form 990. Rev. Act of 1943, Ch. 63, § 117(f), 58 Stat. 37 (1944). In a letter dated July 20, 1956, Tennessee Baptist Children’s Homes, Inc. (TBCH) was informed by the IRS that it would not be required to file Form 990 because it fell within one of the then-existing exemptions of I.R.C. § 6033(a). In 1969, however, Congress narrowed I.R.C. § 6033 so as to provide mandatory exemption only for “churches, their integrated auxiliaries, and conventions or associations of churches,” certain “exempt organizations with gross annual receipts of less than $5,000,” and “the exclusively religious activities of any religious order.” I.R.C. § 6033(a)(2)(A).

It took the government six years to promulgate the regulations interpreting that amendment. When it did so, it defined an “integrated auxiliary” of a church as a 501(c)(3) organization, affiliated with a church, whose principal activity is exclusively religious. Treas.Reg. § 1.6033-2(g)(5)(i). The regulations further provided that “[a]n organization’s principal activity [would] not be considered to be exclusively religious if that activity is educational, literary, charitable, or of another nature (other than religious) that would serve as a basis for exemption under section 501(c)(3).” Id. at (5)(ii).

By letter dated December 8, 1978, Dr. Evans Bowen informed the IRS that TBCH’s Board of Trustees had voted that TBCH would not file Form 990 because its principal activity was exclusively religious; or, in the alternative, that requiring it to file would violate the religion clauses of the First Amendment to the United States Constitution. A series of exchanges between the IRS and TBCH ensued. The IRS maintained that TBCH’s principal activity was child care, and since child care would be deemed a charitable enterprise if undertaken by a secular organization, TBCH’s principal activity was not exclusively religious. See id. TBCH asserted that its principal activity was persuading the children in its charge to accept Jesus Christ as their Saviour. When TBCH remained adamant in its refusal to file Form 990, penalties were assessed against it and Dr. Bowen for the tax years 1977 to 1982. See I.R.C. § 6652(d).

After paying the penalties and interest due and exhausting their administrative remedies to recover the same, the plaintiffs filed the present action. The court assumed jurisdiction pursuant to 28 U.S.C. § 1346(a)(1). The Government moved for summary judgment. The court withheld its ruling on that motion until trial. That motion was obviously denied in part by the submission of a genuine issue of fact to the jury: that is, whether the principal activity of TBCH was exclusively religious. The jury found that it was and judgment was entered for the plaintiffs accordingly. Following the entry of judgment, the Government filed a motion J.N.O.V. which was denied. The plaintiffs have applied for an award of costs and attorneys’ fees pursuant to the Equal Access to Justice Act. 28 U.S.C. § 2412. As the order accompanying this memorandum states, the application for attorneys’ fees and costs is denied. The purpose of this memorandum is to explicate the legal basis for the rulings mentioned above.

I.

Most of the facts of this case were undisputed. TBCH is the separately incorporated child care facility of the Tennessee Baptist Convention. The Tennessee Baptist Convention governs TBCH by appointing TBCH’s Board of Trustees. It also appropriates funds for TBCH’s operation. TBCH does not receive government funding of any kind. It accounts for its expenditures by filing a certified audit with the Tennessee Baptist Convention annually.

TBCH operates four campuses scattered across the State of Tennessee. The children on these campuses live in cottages. Each cottage houses two houseparents and several children (usually eight). Essentially, each cottage functions as a family. Daily activities such as eating, sleeping, cleaning, etc., are performed in the cottage. The children attend public schools during the day.

To say that religious indoctrination permeates TBCH is an understatement. TBCH accepts children on a nonsectarian basis, but thereafter every effort is made to convert the children to the Baptist faith. Each day begins with a devotional period that usually involves some form of Bible study. There are no churches on campus. Instead, children attend local Baptist churches three times a week in an effort to integrate them into the Baptist community at large. Most importantly, every effort is made to relate experiences to Baptist tenets and beliefs.

To insure that these tenets and beliefs are accurately communicated to the children, membership in a Baptist church is a prerequisite to employment with TBCH. All TBCH administrative officers are ordained Baptist ministers. Houseparents must be members in good standing of their churches and be recommended for the position by their pastor. In addition, houseparents receive religious training before assuming their posts.

II.

Given the facts of this case, it is not surprising that the jury found TBCH’s principal activity was exclusively religious. The Government did not contest the religious motivation for TBCH’s actions. Its theory was that TBCH’s principal activity was child care. Obviously, the jury disagreed. Considering the fact that the regulations speak in terms of “principal” activity as opposed to any substantial activity, the court cannot say that reasonable men could only have reached a decision contrary to that rendered by the jury in this case. The jury could have easily decided that TBCH’s child care services were only rendered in an effort to achieve its principal purpose of converting children to the Baptist religion.

In the alternative, the jury could have found that the rendering of child care services was itself an exclusively religious act. The Government’s argument that act and motivation must be separated in determining whether an activity is exclusively religious is impracticable. Indeed, the court is at a loss to determine what distinguishes religious acts from other acts if it is not the motivation for action. The taking of bread and wine, for instance, may be an act of simple sustenance or the most profound sacrament depending on the participant’s motivation. In short, the particular facts of this case were sufficient to support the jury’s verdict.

The Government also objected to the court’s failure to instruct the jury as to Example 3 of Treas.Reg. § 1.6033-2(g). In the court’s opinion, to instruct on an illustration as closely analogous to the facts of a case as Example 3 was to the facts of this one, would be an invasion of the province of the jury. The rules of law that were read to the jury were clear and straightforward. It was the jury’s duty to apply those rules to the facts — not the court’s.

Given the fact that the plaintiffs were found to be exempt from filing Form 990 under the regulations, the court need not discuss the numerous challenges they raised to those regulations. In passing, the court will say it found those challenges unpersuasive. The regulations are a well-crafted attempt to effectuate the intent of Congress without violating citizens’ constitutional rights. In the 1969 amendments to I.R.C. § 6033, Congress drastically reduced the types of organizations exempt from filing Form 990. In fact, excluding those organizations with de minimis revenues, Congress limited exemptions solely to religious entities organized in the orthodox forms of orders and churches. Compare Rev.Act. of 1943, Ch. 63, § 117(f), 58 Stat. 37 (1944) with I.R.C. § 6033(a)(2). It was wholly rational for the IRS to conclude that it was the purely or exclusively religious nature of these institutions which Congress felt justified their exemption; otherwise, why would Congress not have retained the far broader exemption for organizations “operated, supervised, or controlled by or in connection with a religious organization ... ?” See Rev.Act of 1943, Ch. 63, § 117(f)(4), 58 Stat. 37 (1944). As for the constitutional challenges raised by the plaintiffs, if I.R.C. § 6033 and its progeny are unconstitutional it is because they establish all orthodox religious forms — not just hierarchical ones. See NLRB v. Catholic Bishop of Chicago, 440 U.S. 490, 518 n. 11, 99 S.Ct. 1313, 1327 n. 11, 59 L.Ed.2d 533, 552 n. 11 (1979) (Brennan, J., dissenting).

From the foregoing discussion it should be clear that this was a very close case. It turned on the facts peculiar to it. To suggest that the Government was not substantially justified in litigating this matter borders on the frivolous. In fact, the plaintiffs’ behavior regarding this case was somewhat contumacious. It is the court’s understanding that Dr. Bowen sent his noncompliance letter to the IRS before it had even notified TBCH that it would be required to file Form 990. In other words, the plaintiffs went looking for a fight and found it. In our litigation-clogged society, that is not the kind of behavior that should be encouraged. Consequently, not only shall the plaintiffs’ motion for attorneys’ fees be denied, they shall also be required to bear their costs assessable under 28 U.S.C. § 1920 themselves.

Finally, the plaintiffs have requested the court to award them prejudgment interest on this judgment. As the Government points out, however, interest cannot be properly calculated until the refund is paid. On that date, the parties themselves should be able to calculate and agree upon the interest due. If they cannot, they may submit their calculations to the court, and it will order payment of the proper amount of interest. Both parties agree that the amount of penalties and interest paid by the plaintiffs to the defendant was $29,-665.12.

An appropriate order shall be entered.

ON MOTION TO AMEND

The plaintiffs have moved the court to amend its memorandum of November 14, 1984. Their motion shall be granted in part and denied in part.

The plaintiffs first request the court to amend footnote six of its memorandum to read that the acts of messengers to the Tennessee Baptist Convention are binding on the Convention, its programs and its agencies. Plaintiffs’ request is denied. There was no proof that the Tennessee Baptist Convention was a separately incorporated entity. To the contrary, the plaintiffs stressed that the Tennessee Baptist Convention was a voluntary association. If. the members that make up an association are not bound by their agents’ actions, a fortiori the association is not bound. Indeed, the court was of the opinion that the nonbinding nature of the messengers’ actions coupled with the corporate shield interposed between the Tennessee Baptist Convention’s agencies and its members were reasonable justifications for the government’s desire to examine those agencies more closely than those that were not incorporated separately from their sponsoring churches.

The plaintiffs also request the court to strike the language in its opinion characterizing their litigation of this suit as contumacious. After reflecting upon the arguments in the plaintiffs’ brief, the court is of the opinion that beginning at the bottom of page nine and continuing through page ten the following language should be stricken from its opinion:

In fact, the plaintiffs’ behavior regarding this case was somewhat contumacious. It is the court’s understanding that Dr. Bowen sent his noncompliance letter to the IRS before it had even notified TBCH that it would be required to file Form 990. In other words, the plaintiff went looking for a fight and found it. In our litigation-clogged society, that is not the kind of behavior that should be encouraged. Consequently, not only shall the plaintiffs’ motion for attorneys’ fees be denied, they shall also be required to bear their costs assessable under 28 U.S.C. § 1920 themselves.

In its place, the following sentence shall be substituted:

Considering the closeness of the legal issues involved in this matter and the good faith with which the government litigated those issues, the parties shall bear their own costs.

An appropriate order shall be entered.

      . The 1943 amendment to § 117 provided in full as follows:
      (f) Every organization, except as hereinafter provided, exempt from taxation under section 101 shall file an annual return, which shall contain or be verified by a written declaration that it is made under the penalties of perjury, stating specifically the items of gross income, receipts, and disbursements, and such other information for the purpose of carrying out the provisions of this chapter as the Commissioner, with the approval of the Secretary, may by regulations prescribe, and shall keep such records, render under oath such statements, make such other returns, and comply with such rules and regulations as the Commissioner, with the approval of the Secretary, may from time to time prescribe. No such annual return need be filed under this subsection by any organization exempt from taxation under the provisions of section 101—
      (1) which is a religious organization exempt under section 101(6); or
      (2) which is an educational organization exempt under section 101(6), if such organization normally maintains a regular faculty and curriculum and normally has a regularly organized body of pupils or students in attendance at the place where its educational activities are regularly carried on; or
      (3) which is a charitable organization, or an organization for the prevention of cruelty to children or animals, exempt under section 101(6), if such organization is supported, in whole or in part, by funds contributed by the United States or any State or political subdivision thereof, or is primarily supported by contributions of the general public; or
      (4) which is an organization exempt under section 101(6), if such organization is operated, supervised, or controlled by or in connection with a religious organization described in paragraph (1); or
      (5) which is an organization exempt solely under section 101(3); or
      (6) which is an organization exempt under section 101(15), if such organization is a corporation wholly owned by the United States or any agency or an instrumentality thereof, or a wholly owned subsidiary of such a corporation.
      (b) YEARS TO WHICH APPLICABLE. — The amendments made by subsection (a) shall be applicable with respect to taxable years beginning after December 31, 1942.

      . The Secretary has the discretion to exempt an organization from filing an information return whenever he determines "such filing is not necessary to the efficient administration of the internal revenue laws." I.R.C. § 6033(a)(2)(B).

      . The Government conceded that TBCH was a 501(c)(3) organization "affiliated” with a church or a convention or association of churches. See Treas.Reg. § 1.6033-2(g)(5).

      . The court also asked the jury to decide whether TBCH was a church. It found that it was not. Had the result been otherwise, the court would have been compelled to enter judgment J.N.O.V. The evidence at trial clearly proved that TBCH was not considered a church by the Baptists themselves, because, among other things, it was subservient to a human institution. The court agrees with the Government that the 14 factors, See e.g. Williams and Miller Homes v. United States, 540 F.Supp. 310, 317-18 (W.D.Va.1982); Treas.Reg. § 1.511-2(a)(3)(ii) (1984), used by the IRS and the courts to determine whether an entity is a church should only be considered when a party claims that an entity is a church according to its own tenets and beliefs. The courts have enough to do without deciding if an organization is something its members admit it is not.

      . This result was mandated by the Government’s concessions that TBCH was a 501(c)(3) organization "affiliated” with an association of churches. See Treas.Reg. § 1.6033-2(g)(5).

      . The Tennessee Baptist Convention is a voluntary association of Baptist churches located in Tennessee. The business of the Convention is carried on by “messengers” sent by the individual churches. Although the messengers vote on projects, budgets, and officers of the Convention, none of their actions are binding until ratified by the churches they represent.

      . Baptists refer to this process as “witnessing.” It usually involves explication of a Christian doctrine, explanation of how the doctrine applies to the situation at hand, and prayer that the person witnessed to will grow in the Christian faith.


author: MIHM, District Judge.

text:
    Samuel H. WALTON, Plaintiff, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant.
    No. 84-4020.
    United States District Court, C.D. Illinois, Rock Island Division.
    Nov. 19, 1984.
    As Amended Feb. 19, 1985.

      Glenn F. Ruud, Rock Island, 111., for plaintiff.
    Michael J. O’Leary, Asst. U.S. Atty., Peoria, 111., Donna Morros Weinstein, Regional Atty., Dept, of Health and Human Services, Chicago, 111., for defendant.
   ORDER

MIHM, District Judge.

The Plaintiff Samuel H. Walton filed suit against the Secretary of the United States Department of Health and Human Services (“the Secretary”) seeking review under 42 U.S.C. § 405(g) of a final decision by the Secretary which denied Walton entitlement to a disability period and disability insurance benefits.

In order to qualify for a period of disability insurance benefits under the Social Security Act (“Act”), an individual must meet the insured status requirements under the Act, be under the age of sixty-five, file an application for disability insurance benefits and a period of disability, and be under a disability as defined in the Act. 42 U.S.C. §§ 416(i), 423; Griffin v. Weinberger, 407 F.Supp. 1388, 1392 (N.D.Ill.1975), aff’d. 539 F.2d 712 (7th Cir.1976). The determination of a disability which entitles a claimant to benefits under the Act is a two-step process: (1) there must be a medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than twelve months, and (2) there must be a factual determination that the impairment renders the plaintiff unable to engage in any substantial gainful employment. McNeil v. Califano, 614 F.2d 142, 143 (7th Cir.1980); Lieberman v. Califano, 592 F.2d 986 (7th Cir.1979); 42 U.S.C. 423(d)(1)(A).

The burden of proof is on the claimant to establish his or her entitlement to disability insurance benefits. Jeralds v. Richardson, 445 F.2d 36 (7th Cir.1971). However, once a showing has been made that the Plaintiff can no longer perform the kind of work in which he or she was previously engaged, the burden shifts to the Secretary to prove that there exists other substantial gainful employment which the claimant could perform. Stark v. Weinberger, 497 F.2d 1092 (7th Cir.1974). Judicial review of an Administrative Law Judge’s findings pursuant to these standards is limited to a determination of whether the findings are supported by substantial evidence. 42 U.S.C. § 405(g); Lechelt v. Cohen, 428 F.2d 214 (7th Cir.1970). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971).

If there is a conflict in the evidence, the burden is upon the claimant to prove that he or she meets the requirements of eligibility. Johnson v. Weinberger, 525 F.2d 403, 407 (7th Cir.1975). In addition, an Administrative Law Judge’s credibility determination regarding subjective evidence should be given considerable weight by the court. Bibbs v. Secretary of Health, Education & Welfare, 626 F.2d 526, 528 (7th Cir.1980).

The district court must consider four elements of proof in determining whether a claimant is disabled under the Act: (1) objective medical facts or clinical findings; (2) diagnosis of examining physicians; (3) subjective evidence of pain and disability as testified to by the claimant and as observed by others; and (4) the claimant’s age, education, and work history. Johnson v. Weinberger, 525 F.2d at 407.

Plaintiff filed an application for a period of disability and disability insurance benefits on April 21, 1982, alleging that he became unable to work on October 6, 1981, at age 35. His application was denied initially and on reconsideration after the Illinois State Agency, upon evaluation of the evidence by a physician and disability examiner, found that the Plaintiff was not under a disability. The Administrative Law Judge (“ALJ”) before whom Plaintiff and his attorney appeared considered the ease de novo and found that the Plaintiff was not under a disability. The ALJ’s decision became the final decision of the Secretary when the Appeals Council approved it.

Plaintiff was 36 years old at the time of the administrative hearing. He has completed high school and has done some course work beyond the high school level. He has worked primarily as a truck driver and a machinist. He alleges disability due to back problems.

The following facts are taken largely from the Administrative Law Judge’s opinion. They will be supplemented by statements and arguments of the Defendant and the Plaintiff.

Plaintiff last worked on October 6, 1981, and claims that he became disabled on that date due to injuries resulting in back surgery, as well as bursitis of the left hip and back. He is 74 inches tall and at the time of the hearing weighed 212 pounds. On October 6, 1981, he lifted a heavy object at work and developed severe pain in his back with radiation down the left leg. He was unable to straighten his leg without severe pain. He was hospitalized for four weeks for evaluation. He was referred to the University of Iowa where x-rays of the cervical and thoracic spines were completely negative and films of the lumbar spine revealed only minimal arthritis at L5. X-rays of the pelvis and left hip revealed no positive findings and a lumbar myelogram showed no abnormality. Physical examination revealed the absence of an ankle jerk on the left with diminished pain perception on the medical aspect of the left foot. At the time of his discharge, a diagnosis was deferred.

The claimant underwent physical therapy on a outpatient basis until early January of 1982 with some improvement and lessening of pain. He was rehospitalized on January 14,1982, and underwent a laminectomy and removal of herniated disc at L5-S1. His leg pain was gone almost immediately after surgery, but he developed pain over the greater trochanter of the left extremity when attempting to stand. This was relieved by an injection of the "extremely tender trochanteric bursa. The claimant recovered except for a slight antalgic list to the left. By the time of discharge, he was ambulatory with a walker and needed no narcotics.

Examination in February of 1982 showed marked improvement and the Plaintiff indicated that his back felt fine. During March and April of 1982, however, Plaintiff presented himself on a number of occasions at the emergency room of his local hospital for treatment of post-laminectomy pain. On each occasion, he was treated with demerol and vistaril. On a couple of occasions, it was noted that malingering could be a problem. It was also noted that functional overlay might be involved in the claimant’s symptoms. On April 29, 1982, the emergency room record states that he had been seen on numerous occasions for recurrent back pain and was “always seeking IM (intramuscular) narcotic injection”. The physicians otherwise noted no objective evidence of Plaintiff’s symptoms. On May 7, 1982, the claimant’s treating physician anticipated further surgery.

On May 17, 1982, a state agency reviewing physician examined the medical information in the file and projected that by October of 1982 the claimant would have the ability to engage in a full range of light work activities.

On May 27, 1982, Plaintiff was admitted to the Mayo Clinic for evaluation. He complained of pain and weakness with intermittent episodes of numbness in his left leg. Physical examination revealed some reflex changes of L2-3. X-rays showed partial laminectomies of the lower lumbar spine. Plaintiff was evaluated in the department of psychiatry. There, a reactive depression with no evidence of psychosis was noted. It was believed that there was evidence of drug-induced behavioral changes from the analgesics, and the psychiatrist recommended a reduction or discontinuance of analgesic medication. At the time of his discharge, Plaintiff had improved but still had some muscular weakness and discomfort in his left hip. On July 1, 1982, Dr. Charles Reed of the Mayo Clinic indicated that there was no reason why the Plaintiff could not return to an ordinary job as soon as he desired, although the doctor recommended that the Plaintiff avoid heavy lifting.

In August of 1982, Plaintiff returned to the Mayo Clinic with reports of back pain and some left leg radiation. Neurological examination revealed no objective abnormalities other than a slight reduction in the left ankle reflex. Although the claimant had some giving away on manual muscle testing, the physician felt he was able to contract each muscle maximally when given the opportunity to do so. A reduction in sensation in the left perianal region and lower left extremity were noted which were not felt to be typical of dermatomal distribution. X-rays of the lumbar spine were normal except for evidence of the previous laminectomy. A subsequent myelogram showed only minimal anterior extra dural defect at the lumbosacral interspace which was felt to be post-operative in nature. Spinal fluid obtained showed no significant abnormalities. The neurosurgeon did not believe that surgical intervention was indicated. The claimant was advised that there was no objective impairment of neurologic function upon which the physicians could make a recommendation for disability.

On October 18, 1982, claimant was hospitalized at Northwestern Memorial Hospital. Examination showed subjective decreased sensation to light touch in the entire lower left extremity. However, there was no muscle atrophy or reflex or motor changes. A CT scan revealed suspect minimal bulging of the annulus with no evidence suggesting herniation or encroachment upon the nerve routes or phecal sac at that level. An electromyogram was positive for left SI radiculopathy. In a report dated October 28, 1981, one of Plaintiff’s physicians stated that the electromyographic study consisted of an old radiculopathy of the left L5 nerve route but that a CT scan revealed that the previous surgery had given the Plaintiff adequate decompression of the spinal canal. There was evidence that the spinal cord itself was completely free, as well as the nerve routes. It was believed that the Plaintiff has a sacralization of the lumbar vertebra which, it was pointed out, can frequently cause low back pain. The physicians concluded that the Plaintiff was not a candidate for future surgery.

On October 22, 1982, the medical information in the file was reviewed by a state agency physician who agreed with the previous assessment that the Plaintiff could perform a full range of light work activities.

On January 3, 1983, the claimant was referred to the University of Iowa orthopedic clinic. The examining orthopedist agreed that spinal fusion was not indicated and that a body cast would not be helpful. It was noted that the Plaintiff’s healing period was over and he was considered to have a 10% total body impairment. He was instructed to attempt further training through vocational rehabilitation.

A report from the Department of Rehabilitation Services, dated March 3, 1983, indicated that the Plaintiffs condition was “too severe” to benefit from rehabilitation services and training. A report dated April 4, 1983, was submitted by Dr. Reinwein, an orthopedic surgeon, stating that return to work as a truck driver was not recommended for the claimant but that the Plaintiff should be managed with vocational rehabilitation for employment other than truck driving. Dr. Reinwein also noted that the Plaintiff had undergone epidural blocks which were helpful and effective in relieving attacks of pain in the left leg.

At the hearing before the AU, the Plaintiff testified that it was difficult for him to go up and down stairs, in part because it is difficult to maintain his balance and because his left leg drags. He has fallen on more than one occasion. He stated that he can stand for five to ten minutes, sit about 15 minutes, and walk about 40 feet. He testified that he experiences severe back pain and muscle spasms and that his pain medication causes him to be drowsy. He experiences shooting pain down his left leg of such severity that it “brings tears to (his) eyes.” He currently wears a TENS unit which helps to relieve pain. He is unable to bend or stoop at all. He uses crutches at all times and feels fairly well about two or three days a month. He has severe pain when attempting to defecate or void. He does not sleep well and naps throughout the day. His activities include reading, watching television, visiting occasionally in his home, and attending church functions when feeling well.

In his evaluation of the evidence, the AU stated that the intensity of symptoms and allegations of the Plaintiff far exceed that suggested by the specific clinical findings contained in the record. The AU believed that the claimant does experience some degree of pain and discomfort, but that there was no evidence to support the intensity and degree of pain alleged. The AU suggested that the claimant’s demean- or as the hearing progressed and his general appearance suggested no significant observable physical signs which could be attributed to severe pain. The AU concluded that the claimant had the ability to perform a full range of sedentary work.

PLAINTIFF’S ARGUMENTS

The Plaintiff argues that subjective testimony as to pain and suffering is not only probative on the issue of disability, but may serve as the basis for establishing disability even when unaccompanied by positive clinical findings or other objective medical evidence. Velez v. Schweiker, Unempl.Ins.Rep. (CCH), ¶ 17, 822 (S.D.N.Y.1981), Rosario v. Secretary of Health and Human Services, 512 F.Supp. 874 (S.D.N.Y.1981), Curtin v. Harris, 508 F.Supp. 791 (D.C.N.J.1981). A finding of disability is not limited to cases where the individual involved is in intense pain every day. See Olson v. Schweiker, 663 F.2d 593 (5th Cir.1981). The ability to work only a few hours a day or only on an intermittent basis is not the ability to engage in substantial gainful activity. Cornett v. Califano, 590 F.2d 91 (4th Cir.1978). The inability to perform residual light housework is an insufficient basis for deciding a claimant is able to perform substantial gainful activity. Burnett v. Harris, 512 F.Supp. 98 (D.C.Pa.1981).

In making a determination regarding ability to perform work, a judge must consider the side-effects of medication, i.e., those prescribed for pain which may make the claimant sleepy. English v. Harris, Unempl.Ins.Rep. (CCH), ¶ 17, 376 (N.D.Ala.1980). An AU must present clear and convincing reasons for rejecting medical or vocational testimony. Wolf v. Schweiker, Unempl.Ins.Rep. (CCH), ¶ 17, 782 (D.C.Ida.1981). An AU’s lay opinion based solely on his own observations that the claimant does not exhibit outward signs of disabling pain is not substantial evidence sufficient to rebut uncontroverted testimony and medical evidence of disabling pain. See Garland v. Secretary of Health and Human Services, 528 F.Supp. 415 (E.D.Mich.1981).

Plaintiff urges the Court to weigh all of the evidence in this record against the legal standards set forth above. Plaintiff argues that he may, through his own testimony, establish a disabling impairment. Plaintiff notes, in addition to the facts stated above, that he cannot drive a car, he cannot ride in a car for long periods and sit for very long, his TENS machine provides only marginal relief from pain, the pain does not go away even if he sits down to relieve pain when standing, the medications he takes to control pain make him drowsy all of the time, he cannot help with housework, his treatment has not helped over the past one and one-half years in that he basically has the same pain that he had at the time of his injury, and vocational rehabilitation indicated that they could not help him.

Plaintiff argues that even if he must produce convincing factual or clinical findings to support a conclusion that he has a disabling impairment, such medical evidence is in the record. All of his doctors agree that he has low back pain, and all note difficulties with radiation of that pain primarily into the lower left extremity. With respect to some of the physicians’ belief that Mr. Walton could have been malingering, Plaintiff points to the psychiatric evaluation performed at Mayo Clinic which ruled out malingering and functional overlay as a problem.

Plaintiff argues that the fact that all of his doctors make specific findings of back pain with radiation down the left leg would of itself lead to a conclusion that Plaintiff is unable to return to work. Plaintiff contests the analysis by a state agency physician who found, on May 17, 1982, that the Plaintiff could handle light work. Plaintiff states that at that time, he had continued to experience severe pain since his injury, Mayo Clinic had found that he was in a great deal of pain, his myelogram showed a slight defect at L5-S1 and one doctor at Mayo Clinic indicated that “prudence would suggest a limited work schedule.” Plaintiff points out that the myelogram findings are an objective finding.

Plaintiff refers to additional evidence constituting objective medical findings supporting his testimony. The report from Northwestern Memorial Hospital revealed an S-l radiculopathy and decreased sensation to light touch in the lower left extremity. The report of Dr. Perlmutter on May 7, 1982 indicated that he did not feel the Plaintiff would be able to do any work for at least six months. Dr. Shaefer stated that the Plaintiff is qualified for a disability from the time when he first saw him in October of 1982. Dr. Shaefer noted sacralizations of the lumbar vertebra which he thought could be a cause of pain in the lower back. Plaintiff again states that this is an objective medical finding. Dr. Malvitz on January 6, 1983 found that Plaintiff is “unable to work” and recommended further training through vocational rehabilitation. The University of Iowa hospital found cog wheel weakness in the major lower muscle groups of the left leg and a decreased left ankle jerk.

Plaintiff also points to the March 3, 1983 report of the State of Illinois Department of Rehabilitation Services which found that the Plaintiff was not a good candidate for rehabilitation training. The report stated that the Plaintiff’s condition was “too severe” to benefit from rehabilitation services. This report, Plaintiff argues, was completely ignored by the AU and neither the AU nor the Secretary present clear and convincing reasons for rejecting the vocational evidence. Finally, Plaintiff notes that the AU felt that his own observations of the Plaintiff did not support the severity of pain of which the Plaintiff complains. However, Garland, supra, specifically rejected the use of the “sit and squirm index” in evaluating the credibility of the Plaintiff.

SECRETARY’S ARGUMENTS

The Secretary argues that substantial evidence supports the Secretary’s decision that minimally, the Plaintiff has the residual functional capacity for sedentary work and is therefore not disabled. The Secretary refers to the history of the Plaintiff’s illness. She points out that subsequent to his surgery, his leg pain disappeared and he had a complete recovery of objective peripheral signs. Examination in February of 1982 revealed marked improvement in the Plaintiffs condition. In April of 1982, his examination was entirely normal and Plaintiff stated that his back and leg pain were gone. Defendant notes that on July 1, 1982, Dr. Reed from the Mayo Clinic stated that with the exception of heavy lifting, there was no reason why the Plaintiff could not return to an ordinary job. Again, in August of 1982 when Plaintiff saw Dr. Sandok at the Mayo Clinic, the doctor found that the Plaintiff had no objective impairment of neurologic function upon which disability could be recommended. The Secretary refers to assessments by other doctors finding an absence of abnormalities in the Plaintiffs condition.

The Secretary argues that taken as a whole, the medical evidence establishes consistently and overwhelmingly that Plaintiff is able to perform work at the sedentary exertional level. Defendant further maintains that the Plaintiff has failed to even minimally objectify his complaints of severe and disabling pain.

ANALYSIS

Plaintiffs argument that subjective testimony as to pain and suffering may serve as a basis for establishing disability even when unaccompanied by objective medical evidence must be rejected based on the Social Security Disability Benefits Reform Act of 1984. Section 3(a)(1) of that Act amends § 223(d)(5) of the Social Security Act, 42 U.S.C. § 423(d)(5), by adding that:

“An individual’s statement as to pain or other symptoms shall not alone be conclusive evidence of disability as defined in this section; there must be medical signs and findings, established by medically acceptable clinical or laboratory diagnostic techniques, which show the existence of a medical impairment which results from anatomical, physiological, or psychological abnormalities which could reasonably be expected to produce the pain or other symptoms alleged and which, when considered with all evidence required to be furnished under this paragraph (including statements of the individual or his physician as to the intensity and persistence of such pain or other symptoms which may reasonably be accepted as consistent with the medical signs and findings), would lead to a conclusion that the individual is under a disability. Objective medical evidence of pain or other symptoms established by medically acceptable clinical or laboratory techniques (for example, deteriorating nerve or muscle tissue) must be considered in reaching a conclusion as to whether the individual is under a disability.”

Under the standard established by the statute and based on the evidence in this case, the Court concludes that the Secretary’s findings are supported by substantial evidence. There do not exist medical findings showing the existence of a medical impairment which could reasonably be expected to produce the pain alleged and which, when considered with all evidence furnished, leads to the conclusion that the Plaintiff is under a disability. Further, while there are statements in the record by a couple of physicians that the Plaintiff is under a disability, there are also findings by a number of both treating and reviewing physicians that the Plaintiff is under no disability or is only slightly disabled and can return to work.

Accordingly,

1. The Plaintiff’s Motion for Summary Judgment is DENIED.

2. The Defendant’s Motion for Summary Judgment is GRANTED.

3. The decision of the Secretary is AFFIRMED.