author: CAFFREY, Chief Judge.

text:
    Hyman SHICK and Mona Shick, Plaintiffs, v. FARMERS HOME ADMINISTRATION OF the UNITED STATES DEPARTMENT OF AGRICULTURE; John Block, in his official capacity as Secretary of the United States Department of Agriculture, and the United States of America, Defendants.
    Civ. A. No. 83-1523-C.
    United States District Court, D. Massachusetts.
    June 24, 1985.

      Shaprio & Grace, Carolyn Grace, Deborah Hiatt, Boston, Mass., for plaintiffs.
    Joan Milstein, Asst. U.S. Atty., Boston, Mass., for defendants.
   MEMORANDUM

CAFFREY, Chief Judge.

This is a civil action in which the plaintiffs’ amended complaint sought to state claims under the Consolidated Farm and Rural Development Act (“CFRDA”), 7 U.S.C. § 1921 et seq., the Agricultural Credit Act (“ACA”), 7 U.S.C. § 1981a, and the Fifth Amendment to the United States Constitution. On the defendant’s motion, this complaint was dismissed for failure to exhaust administrative remedies, 583 F.Supp. 534. The Court of Appeals, affirming in part and reversing in part, vacated this court’s dismissal of the Agricultural Credit Act count but affirmed the dismissal of the remaining counts. Shick v. Farmers Home Administration, 748 F.2d 35 (1st Cir.1984). The matter is now before the court on the plaintiffs’ motion to further amend the complaint by filing a second amended complaint.

The facts surrounding this controversy have been stated both in this court’s previous memorandum and the Court of Appeals opinion. For purposes of this memorandum, it is sufficient to say that Hyman and Mona Shick were the owners of a dairy farm in Wayland, Massachusetts; that they received a series of loans from the Farmers Home Administration (FmHA), and that FmHA accelerated the loans, foreclosed, forced a sale, and bought the farm. During the course of their dealings with the agency, the Shicks were advised that they could appeal the acceleration decision to the FmHA area coordinator. The Shicks did not take advantage of this appeal procedure.

The crux of the Court of Appeals decision was that because of their failure to exhaust administrative remedies, the plaintiffs were barred from this civil action unless the claims stated in the complaint fell within one or more exceptions to that doctrine. At 39. The Court of Appeals ruled that although the other claims were so barred, the § 1981a claim was not barred because the Shicks had not been informed of the special appeals procedure set forth in § 1981a. At 41. The Court of Appeals went on to say that the § 1981a claim failed to state a claim pursuant to the ACA and would fall before a Rule 12(b)(6) motion to dismiss. At 42.

Together with their motion to amend, the plaintiffs have tendered a proposed second amended complaint. By means of this motion and complaint, the plaintiffs seek to accomplish two objectives: (1) allege facts sufficient to state a claim pursuant to § 1981a; and (2) allege facts sufficient to except certain additional counts from the exhaustion doctrine.

Count II

The Agricultural Credit Act, 7 U.S.C. § 1981a, provides that:

In addition to any other authority that the Secretary may have to defer principal and interest and forego foreclosure, the Secretary may permit, at the request of the borrower, the deferral of principal and interest on any outstanding loan made, insured, or held by the Secretary under this chapter, or under the provisions of any other law administered by the Farmers Home Administration, and may forego foreclosure of any such loan, for such period as the Secretary deems necessary upon a showing by the borrower that due to circumstances beyond the borrower’s control, the borrower is temporarily unable to continue making payments of such principal and interest when due without unduly impairing the standard of living of the borrower.

The first amended complaint was defective with respect to § 1981a in that it failed to allege certain facts necessary for relief; i.e. that due to: “(1) circumstances beyond the borrower’s control, (2) the borrower is temporarily unable to continue making payments ..., (3) without unduly impairing his standard of living.” At 41.

In their second amended complaint, the plaintiffs allege, inter alia, that due to a temporary market aberration which raised the cost of dairy cows while reducing the price of milk, the plaintiffs were unable to meet scheduled debt payments. The plaintiffs further allege that they were unable to pay “essential family living expenses,” thereby unduly impairing their standard of living.

The defendants contend that the plaintiffs’ motion to amend this count should be denied because the complaint does not sufficiently allege a temporary condition. Based upon financial information contained in the second amended complaint and attached documents, the defendants calculate that plaintiffs could not have met their obligations even after the adverse market conditions ceased. These calculations, however, fail to consider the full beneficial effect of a moratorium on the payment of principal and interest as provided for in the statute. Once relieved of the burden of these payments, the plaintiffs might have been able to increase the size of the dairy herd by purchasing additional livestock. Naturally, an increased herd would result in increased revenues after the moratorium period, possibly enabling the plaintiffs to meet their obligations. Because these calculations may involve matters extraneous to the complaint such as farm practices, FmHA procedures, and alternative sources of income and/or financing; the matter would not be appropriate for resolution on a 12(b)(6) motion. By the same token, these concerns are not an adequate cause to deny the motion for leave to amend.

The defendants also argue that plaintiffs’ allegations are deficient with regard to the unduly impaired standard of living requirement of § 1981a, in that the allegations are conclusory. I note, however, that the plaintiffs have specifically alleged that they were “unable to pay essential family living expenses, unable to pay normal farm operating expenses, [and] unable to maintain essential chattels and real estate.” I rule that these allegations satisfy the requirements of Rule 8(a) of the Federal Rules of Civil Procedure. Accordingly, the plaintiffs motion to amend should be allowed as to this count.

Counts I, III, IV, V

In that the remaining counts present several different legal issues, they are best dealt with seriatum.

Count I of the second amended complaint, purporting to state a claim under the CFRDA and the ACA, is substantially the same as Count I of the first amended complaint.' To avoid the exhaustion doctrine, the plaintiffs have now added an allegation that all administrative remedies were exhausted in that the “decision of the District Director, was approved by the Director of the Emergency Loan Division ... and by the highest officials in the FmHA.” The plaintiffs further allege that due to “FmHA’s illegal practice and policy of refusing to implement the provisions of 7 U.S.C. § 1981a, any further request to the administration for relief would be futile.”

Despite these allegations, it is apparent that the plaintiffs failed to follow the appeals procedure set forth in 7 C.F.R. § 1900, Subpart B, which provides that the District Director’s decision may be appealed to the State Director or his designee. The fact that the acceleration decision may have been approved by another FmHA official does not eliminate this deficiency. Furthermore, the plaintiffs’ allegation of FmHA’s “illegal practice and policy” is conclusory and does not support their allegation that further administrative appeal would have been futile. On this basis, I rule that count I of the second amended complaint would be barred by the exhaustion of administrative remedies doctrine, as was count I of the first amended complaint.

Count III purports to state a claim under the Fifth Amendment to the United States Constitution. Because the allegations in Count III challenge the constitutionality of particular FmHA procedures, it adequately states a constitutional claim. See at 39. Consequently, this Count is excepted from the requirements of the exhaustion doctrine and amendment should be allowed. See Califano v. Sanders, 430 U.S. 99, 109, 97 S.Ct. 980, 986, 51 L.Ed.2d 192 (1977).

Counts IV and V present similar issues and may be dealt with simultaneously. Count IV purports to state a claim under the Administrative Procedures Act for judicial review of administrative action which is “arbitrary, capricious, an abuse of discretion, and not otherwise in accordance with law.” 5 U.S.C. § 701 et seq. Count V purports to state a claim for adjudication of title to real property pursuant to 28 U.S.C. § 2409a. Both counts are substantially identical to counts in the first amended complaint which were dismissed. Neither count alleges facts which would indicate that it should be wholly exempt from the requirements of the exemption doctrine. Counts IV and V are, however, now before the court in a different light due to the Appeals Court’s ruling that plaintiffs § 1981a claim is not barred by the doctrine.

The doctrine of exhaustion of administrative remedies should be applied to a case with consideration of its purposes and an understanding of the administrative scheme being challenged. McKart v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194 (1969). The § 1981a procedure is distinct from other avenues of administrative remedy, and therefore comprises a separate administrative scheme. In that the purposes of the doctrine do not require that the § 1981a claim be barred, claims based on alternate theories which challenge the same administrative conduct should not be barred. Nevertheless, there is no reason why the plaintiffs should be exempted from the doctrine with respect to all of FmHA’s actions when only claims relating to the moratorium issue are properly exempt. Consequently, I rule that amendment of Counts IV and V should be allowed only insofar as they relate to FmHA’s failure to give notice and an opportunity to request a moratorium under § 1981a. See Aleknagik Natives Ltd. v. Andrus, 648 F.2d 496 (9th Cir.1980) (exhaustion of administrative remedies required in quiet title action except where the particular administrative scheme renders administrative remedies futile or inadequate.)

Order accordingly.


source: Caselaw Access Project

author: FRANK A. KAUFMAN, Chief Judge.

license: Public Domain

text:
    Benjamin EDENTON v. Margaret M. HECKLER, Secretary, Department of Health and Human Services.
    Civ. A. No. M-84-556.
    United States District Court, D. Maryland.
    June 24, 1985.
    Stanley Silverman and Silverman and Silverman, Baltimore, Md., for plaintiff.
    J. Frederick Motz, U.S. Atty., D. Md., and Larry D. Adams, Asst. U.S. Atty., Baltimore, Md., for defendant.
   OPINION

FRANK A. KAUFMAN, Chief Judge.

The attorney for plaintiff Benjamin Edenton, who successfully challenged in this court the Secretary’s denial of Social Security benefits for the plaintiff, has petitioned this court to approve his request for a fee of $6,493.52, representing 25% of the plaintiff’s past due benefits plus $61.72 for court costs (Paper No. 14). In support of this petition, the attorney has submitted an itemization for services rendered to the plaintiff.

An attorney may receive up to 25% of the total past due benefits as a fee under 42 U.S.C. § 406(b)(1). However, approval of the amount of an attorney’s fee in Social Security cases is within the reasonable discretion of the District Court. See, e.g., Blankenship v. Schweiker, 676 F.2d 116, 118 (4th Cir.1982). And in Redden v. Celebrezze, 370 F.2d 373, 376 (4th Cir.1966), then Chief Judge Haynsworth wrote that:

judges should constantly remind themselves that, while the lawyer is entitled to a reasonable compensation for the services rendered by him in the judicial proceeding, these benefits are provided for the support and maintenance of the claimant and his dependents and not for the enrichment of members of the bar. Routine approval of the statutory maximum allowable fee should be avoided in all cases. In a great majority of the cases, perhaps, a reasonable fee will be much less than the statutory maximum. The statute directs a determination and allowance of a reasonable fee and the courts are responsible under the Act for seeing that unreasonably large fees in these Social Security cases are not charged or collected by lawyers.

Again, in McKittrick v. Gardner, 378 F.2d 872, 874 (4th Cir.1967), Judge Haynsworth emphasized that the amount of fee awarded should be related to “the quantity and the quality of the services.” See also Redden v. Gardner, 391 F.2d 670 (4th Cir.1968); Robinson v. Gardner, 374 F.2d 949, 952 (4th Cir.1967).

In Blankenship v. Schweiker, supra, at 117-18, Judge Ervin noted that in connection with awards of attorney’s fees in black lung cases the twelve factors set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), are applicable and listed those as:

time and labor required; novelty and difficulty of questions; preclusion of other employment due to the acceptance of this case; skill required; customary fee; whether fee is contingent or fixed; time limitations imposed upon attorney; amount involved and result attained; experience, reputation, and ability of attorney; undesirability of case; nature and length of professional relationship with client; and awards in similar cases.

In the within case, plaintiff’s counsel states that he expended a total of 25 hours. Assuming arguendo even the reasonableness of that total expenditure of time, the requested hourly rate {i.e., $6,431.80 divided by 25) exceeds $250.00. That rate, even in a case involving contingencies, is not, under the standards set forth in the above-cited opinion of the Fourth Circuit, appropriate.

In addition, counsel for plaintiff has asked this Court to award compensation to him for services performed by counsel for plaintiff in proceedings before the Secretary. A district court is empowered to consider only services which the attorney has performed before it; only the Secretary is authorized to make awards for services rendered in agency proceedings. Morris v. Social Security Administration, 689 F.2d 495, 497 (4th Cir.1982); Whitt v. Califano, 601 F.2d 160, 161-62 (4th Cir.1979). Accordingly, this Court cannot grant any fee award for work performed by plaintiff’s attorney at the agency level.

Under the circumstances, counsel for plaintiff is hereby required to submit to this Court on or before July 8, 1985 in writing a revised petition, supporting his request with specific detailed factual proffers. In that regard, the factors set forth in Johnson v. Georgia Highway Express, Inc. are applicable. See, e.g., Vaughns v. Bd. of Education of Prince George’s County, 598 F.Supp. 1262 (D.Md.1984). Counsel for the Secretary may file written comments, if he so desires, on or before July 22, 1985 and if he so does, counsel for plaintiff may file written rebuttal, if he so desires, on or before August 1, 1985.

      . 42 U.S.C. § 406(b)(1) states:
      Whenever a court renders a judgment favorable to a claimant under this title who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment, and the Secretary may, notwithstanding the provisions of section 205(i) [42 USC § 405(i) ], certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits. In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph.


text:
    Ann M. DOSTERT, Plaintiff, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 83-2143-C.
    United States District Court, D. Massachusetts.
    June 27, 1985.

      Mark Bronstein, Kehoe, Doyle, Playter, Novick & Strimaitis, Boston, Mass., for plaintiff.
    Richard E. Welch, III, Asst. U.S. Atty., Boston, Mass., for defendant.
   MEMORANDUM

CAFFREY, Chief Judge.

This is a civil action in which plaintiff, Ann M. Dostert, seeks judicial review of a final decision of the Secretary of Health and Human Services denying plaintiff’s application for Social Security disability benefits. Plaintiff has exhausted her administrative remedies, and the case is now before the Court, pursuant to 42 U.S.C. § 405(g), on plaintiff’s motion for summary judgment and the Government’s motion for an order affirming the decision of the Secretary.

Plaintiff is a 30 year old woman who presently suffers from allergies, respiratory problems and gynecological disorders. She alleges that prior to September 30, 1975, the date she was last insured for Social Security disability benefits, the severity of her gynecological problems rendered her disabled within the meaning of the Social Security Act, 42 U.S.C. § 423(d)(1)(A). After considering both documentary evidence and the testimony of plaintiff and her husband, the Administrative Law Judge (“ALJ”) made the following findings:

1. The claimant met the special earnings requirements of the Act on January 7, 1974, the date that she stated she became unable to work, and continues to meet them at least through September 30, 1975.
2. The claimant has the following impairments; bronchial problems under control with medication, gynecological problems and allergies.
3. Prior to the date the claimant was last insured she no doubt suffered some discomfort from her pregnancy and related side effects. However, her disability was not so severe as to have prevented her from all substantial gainful activity for a period of 12 consecutive months on or before the date she was last insured September 30, 1975.
4. The claimant did not have any impairment or impairments which significantly limited the ability to perform basic work-related functions prior to the date she was last insured, therefore, the claimant does not have a severe impairment.
5. Since the claimant does not have a severe impairment, she was not under a “disability,” as defined in the Social Security Act, at any time through the date of this decision.

Plaintiff’s first contention is that the AU misapplied the twelve month disability duration requirement by evaluating plaintiff’s claim according to whether her impairment had been of disabling severity for a twelve month period prior to the date she was last insured. This contention has no merit. The ALJ noted in her opinion that “[mjedically acceptable laboratory and clinical techniques must demonstrate that the claimant’s alleged impairments ... were sufficiently severe as to have precluded all substantial work activity for a period of twelve consecutive months beginning prior to the date last insured.” (Tr. 12) (emphasis added). This statement is an accurate summation of the law. Although the AU, in the course of her opinion, used a variety of phrases to describe the duration requirement, nothing in the opinion suggests that she misinterpreted the requirement or failed to apply it to the proper time frame in this case.

Plaintiff also maintains that the AU improperly considered evidence that plaintiff has not sought employment since her health problems began. Plaintiff’s assertions are based on the following portions of the AU’s opinion:

At the hearing on August 23, 1982, the claimant presented a statment [sic] of a Ruth Moses, M.D____ This doctor treated the claimant in Canada in 1975 for complaint which varied in severity from mild, which she could ignore, to moderate and severe. She stated that since September of 1975 to November of 1976 she was seen every month or so for one complaint or another. This doctor stated that she did not believe that the claimant was actively looking for work but with her various complaints she would have difficulty working. This doctor crossed out “September” 1975 and inserted “March” of 1975 as the date of the claimant’s first visit. (Exhibit 29)
In summary, the medical evidence of record prior to the date the claimant was last insured September 30,1975 indicates that the claimant was treated for headaches, dizziness and anxiety related to pregnancy. She gave birth to a healthy child in February of 1975. Her treating physician at that time indicated that she was not actively looking for work (Exhibit No. 29). In September of 1981 the Norfolk County Hospital records indicate that the claimant had been unemployed for seven years, partly due to child-rearing responsibilities (Exhibit No. 20).

Tr. 13, 14.

The Court of Appeals for the First Circuit has noted that “ ‘[disability’, as provided in the Act, although defined by reference to concepts similar to employability, is actually a term of art looking to the physical and mental capacity to engage in certain activities, regardless of whether the opportunity for any such activity actually exists.” Lopez Lopez v. Secretary of Health, Education and Welfare, 512 F.2d 1155, 1157 (1st Cir.1975). Like the availability of employment, the issue of whether a claimant has looked for a job has no bearing on that individual’s ability to perform some type of substantial gainful activity. I therefore rule that the AU erred in giving weight to evidence of plaintiff’s failure to seek employment after the commencement of her alleged disability.

Plaintiff’s final contention is that the AU’s finding with respect to the date on which plaintiff began to receive medical treatment for her gynecological disorders is unsupported by the evidence. As shown in the excerpts of the transcript set forth above, the AU found that plaintiff was first treated for gynecological disorders by Dr. Ruth Moses in September, 1975, the month in which plaintiff’s disability insurance expired. Other portions of the AU’s opinion suggest, however, that plaintiff saw Dr. Moses for pregnancy related problems prior to the birth of her child in February, 1975. Dr. Moses’ office notes, which are contained in the record, clearly show that the doctor first examined plaintiff on March 13, 1975. The AU’s finding that treatment began at some other time is not, therefore, supported by substantial evidence.

As a result of this factual error, the AU made no specific findings regarding the nature or severity of the gynecological problems which plaintiff experienced after her pregnancy but prior to the expiration of her disability insurance. It is well recognized that “[t]he Secretary has an obligation both to claimants and to reviewing courts to make full and detailed findings in support of his [or her] ultimate conclusion.” Small v. Califano, 565 F.2d 797, 801 (1st Cir.1977). Because I find that plaintiff’s condition from February through September, 1975, is a critical issue in this case, I rule that the ALJ’s failure to make specific findings with respect to this matter constitutes reversible error.

For the reasons set forth above, I further rule that the ease should be reversed and remanded to the Secretary for further consideration.

Order accordingly.


author: La PLATA, District Judge.

text:
    BOURNE COMPANY, et. al., Plaintiffs, v. Fayez KHALIL, Defendant.
    No. 84-CV-5171-DT.
    United States District Court, E.D. Michigan, S.D.
    June 28, 1985.
    Lawrence A. Nathanson, Detroit, Mich., for plaintiffs.
    James A. Tucker, Detroit, Mich., for defendant.
   OPINION AND ORDER GRANTING LIMITED SUMMARY JUDGMENT TO PLAINTIFFS

La PLATA, District Judge.

In a copyright infringement action filed on November 25, 1983, Plaintiffs alleged that Defendant, Fayez Khalil, committed eight violative acts on August 17 and 18, 1983, in regard to licensed, original musical compositions, for which Plaintiffs were the copyright owners. According to Plaintiffs’ Complaint, Defendant was the owner and manager of the Starlite Lounge in Flat Rock, Michigan, the establishment at which the infringements allegedly occurred. Plaintiffs seek statutory damages, injunctive relief, and attorneys’ fees against Defendant, under 17 U.S.C. §§ 504(c), 502(a), and 505, respectively.

Plaintiffs are members of the American Society of Composers, Authors, and Publishers (ASCAP), an organization consisting of approximately 3,500 members, to which Plaintiffs have granted nonexclusive rights to license nondramatic public performances of their copyrighted musical compositions. In support of their cause of action, Plaintiffs claim that (1) Defendant does not possess a license agreement from Plaintiffs or ASCAP regarding the compositions; (2) they were the proprietors of the compositions at the time the infringements were committed; and (3) despite having notice of the protected nature of the musical compositions, Defendant continues to permit the protected songs to be publicly performed at the Starlite Lounge.

On May 31, 1984, Plaintiffs filed a Motion for Summary Judgment, contending that no issues of material fact exist regarding their ownership of the musical works and that unauthorized public performances of the compositions occurred at the Starlite Lounge in August, 1983. Appended to Plaintiffs’ Motion are Affidavits of Sheryl Schiff and Cynthia Weisberg, who were employed by ASCAP for the limited purpose of visiting the Starlite Lounge on August 17 and 18, 1983, to prepare compilations of musical compositions that were publicly performed. On those dates, the affiants recorded the names of the songs performed by a five-piece musical group known as “Bob Sanderson and the Porcupine Mountain Band.” Among the songs performed were those that are the subject of the lawsuit.

While opposing Plaintiffs’ Motion for Summary Judgment, the individual Defendant, Khalil, does not seriously contest that the eight allegedly protected songs were performed at his establishment. Rather, he asserts that, even if the songs were performed, he is not liable for copyright infringement, for the following reasons: (1) the daily activities of the Starlite Lounge are overseen by his managers; (2) he was not aware that Starlite Lounge may have been in violation of United States Copyright laws; (3) assuming that a copyright infringement occurred, it did not take place under his direction or with his permission; (4) his violations of the copyright laws, if any, were not willful.

For a claimant to prevail in an, infringement action involving copyrighted musical compositions, he must prove that five elements coexist:

1. The originality and authorship of the compositions involved;
2. Compliance with all _ formalities required to procure a copyright under 17 U.S.C. § 101, et seq.;
3. That he is the proprietor of the copyrights of the compositions involved in the case;
4. The compositions were performed publicly for profit; and
5. The Defendant had not received permission from the claimant or his representative for the performance. See Chess Music, Inc. v. Tadych, 467 F.Supp. 819, 821 (E.D.Wis.1979).

17 U.S.C. § 501(a) prescribes that anyone who violates an exclusive right of a copyright owner is an infringer of the copyright. As applied to musical works, Section 106 of the Copyright Act provides that the owner of the copyright has the exclusive rights both to perform the copyrighted composition publicly and to authorize the performance of a copyrighted work. A benefit derived by the copyright owner is the power to lease or license performances by others on stipulated terms. See Westway Theatre v. Twentieth Century-Fox Film Corp., 30 F.Supp. 830 (D.Md.1940), aff'd 113 F.2d 932 (4th Cir.1940).

In the matter at bar, the Court determines, as a matter of law, based on the uncontroverted affidavits of Schiff and Weisberg, that the eight allegedly protected musical compositions were publicly performed at the Starlite Lounge on August 17-18, 1981.

The Court declines, at least at this juncture, to hold that Plaintiffs were the copyright owners of the eight musical compositions. Under the Copyright Act, certificates of registration issue by the Copyright Office constitute prima facie evidence of the Plaintiffs’ copyright. 17 U.S.C. § 410(c); Williams Electronics, Inc. v. Artic International Inc., 685 F.2d 870, 873 (3rd Cir.1982). While Plaintiffs have attached copyright registration certificates for the subject songs to their Motion for Summary Judgment, only a nonconclusive presumption of copyrightability arises, shifting the burden of proof on that issue at trial to the Defendant. Goldman-Morgen, Inc. v. Dan Brechner & Co., Inc., 411 F.Supp. 382, 387 (S.D.N.Y.1976).

As to the liability of Khalil, the individual defendant, this Court holds that a question of fact exists as to whether he is individually liable for any copyright infringements. Contrary to Plaintiffs’ assertions, Khalil, as the sole shareholder and manager of Starlite Lounge, Inc., is not ipso facto liable for the allegedly wrongful appropriation of the works. In Shapiro, Bernstein & Co. v. Gabor, 266 F.Supp. 613, 61 (S.D.N.Y.1966), the District Court held that it was a question of fact as to whether the corporation’s president personally participated in infringement violations committed by the corporation. In the case of Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 913-14 (D.Conn.1980), the Court delineated guidelines for determining the liability of a corporate officer in a copyright infringement action concerning musical compositions.

WHEREFORE, the Court DENIES Plaintiffs’ Motion for Summary Judgment. The case will proceed to trial against two Defendants: Starlite Lounge, Inc. and its sole shareholder, Fayez Khalil. The Court GRANTS a partial summary judgment in favor of Plaintiffs solely on the issue of whether the eight allegedly protected compositions were performed at the Starlite Lounge on August 17 and 18, 1983.

So Ordered.

      . On June 24, 1985, this Court granted Plaintiffs’ Motion to Add Starlite Lounge, Inc. as a Defendant.


author: ELFYIN, District Judge.

text:
    Bertha WORTHY, Plaintiff, v. Margaret HECKLER, as Secretary of the United States Department of Health and Human Services, Defendant.
    No. CIV-83-987E.
    United States District Court, W.D. New York.
    June 30, 1985.

      James R. Sheldon, Jr., Buffalo, N.Y., for plaintiff.
    Donald P. Simet, Asst. U.S. Atty., Buffalo, N.Y., for defendant.
   MEMORANDUM and ORDER

ELFYIN, District Judge.

In this action under 42 U.S.C. §§ 405(g) and 1383(c)(3) to review a final determination of the Secretary of Health and Human Services (“the Secretary”) which had denied plaintiff’s applications for Social Security disability and Supplemental Security Income benefits, defendant has moved to dismiss the Complaint as untimely under the applicable statute of limitations.

Plaintiff does not dispute the facts that she had received in the latter'part of March 1983 a copy of the Appeals Council’s letter dated March 17th denying her applications for benefits, that such letter had constituted the final determination of the Secretary and that this suit was not commenced until September 8, 1983. However, plaintiff had been represented by counsel before the agency with respect to her applications since September 1, 1982 and her attorney has submitted his affidavit indicating that he did not receive a copy of the Appeals Council’s decision until July 8, 1983, thereby tolling the statute of limitations until such date. Counsel has argued that this action should therefore be deemed timely.

Plaintiff’s argument fails to address the fact that, even if such contention were to be accepted, the Complaint was not filed until September 8, 1983, 62 days after his receipt of the Secretary’s final decision. Counsel has misconstrued the applicable limitations period to be 65 days due to his misinterpretation of 20 C.F.R. § 422.210(c). Such section provides in pertinent part

“(c) Time for instituting civil action. Any civil action described in paragraph
(a) of this section must be instituted within 60 days after the Appeals Council’s notice of denial of request for review of the presiding officer’s decision or notice of the decision by the Appeals Council is received by the individual * *. For purposes of this section, the date of receipt of notice of denial * * * shall be presumed to be 5 days after the date of such notice, unless there is a reasonable showing to the contrary. * * * ” (Emphasis supplied.)

This regulation, in altering the commencement date of the statutory period under section 405(g) in which to file suit from the day the decision is mailed to the date such notice is actually received by the claimant — see Matsibekker v. Heckler, 738 F.2d 79 (2d Cir.1984) — creates a rebuttable presumption that the Appeals Council’s notice was received five days after the date set forth on the notice itself. However the rule clearly does not purport to change the basic limitations period from 60 to 65 days, and the presumption regarding the date of receipt is not applicable, where as in the case at bar, the date of receipt is not in dispute.

Inasmuch as the instant Complaint was filed more than sixty days after the receipt of the Secretary’s final determination and in view of the strictness with which the sixty day period has been consistently enforced — see Chiaradonna v. Schweiker, 569 F.Supp. 1471,1474 (E.D.Pa.1983) — , defendant’s motion to dismiss this action as time-barred is hereby ORDERED granted.

      . 42 U.S.C. § 405(g) provides in pertinent part "Any individual, after any final decision of the Secretary made after a hearing to which he is a party, * * * may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of such decision * * (Emphasis added).
      42 U.S.C. § 1383(c)(3) provides for judicial review to the same extent as available under Section 405(g).

      . I do not now decide whether notice of the denial must be mailed to the applicant’s attorney or other representative. See Copeland v. Brennan, 414 F.Supp. 644 (D.D.C.1975); 5 U.S.C. § 500(f).

      . I need not and do not explore the rationale by which an agency's regulations can change — not merely interpret — the clear language of the governing statute. Probably, in view of Matsibekker v. Heckler, supra, and this circuit’s hierarchy, I am not free to do so as to this particular scenario.


author: REYNOLDS, Chief Judge.

text:
    William P. KOPKE and Marguerite A. Kopke, Plaintiffs, v. Matthew MILLER, Waidelich & Associates, Inc., and Tower Insurance Company, Inc., Defendants.
    Civ. A. No. 84-C-1149.
    United States District Court, E.D. Wisconsin.
    July 2, 1985.

      Howard M. Lang, Robert J. Long, Libertyville, 111., for plaintiffs.
    Charles H. Bohl, Milwaukee, Wis., for defendant Waidelich & Assoc.
    Ned J. Czajkowski, Milwaukee, Wis., for defendant Tower Ins.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

The issue before the Court in this diversity action is the plaintiffs’ motion for partial summary judgment on Count IY of the complaint, which alleges that defendant Tower Insurance Company, Inc. (“Tower”) is liable to the plaintiffs on an insurance policy covering a dwelling in Antigo, Wisconsin, which was destroyed by fire on January 10, 1984. The essential facts necessary to determine Tower’s liability to the plaintiffs on the policy are not in dispute.

Tower admits in its answer to the complaint that the insurance policy covering the Antigo property, which was initially issued to the plaintiffs, remained in full force and effect at the time of the fire, but alleges that the policy was amended effective September 23, 1983, by deleting William P. Kopke and substituting defendant Matthew Miller as the named insured. As a result of this amendment, Tower denied the plaintiffs’ claim for loss under the policy. The plaintiffs argue that Tower’s amendment of the policy amounted to an actual or constructive cancellation of the policy as to the plaintiffs, and that Tower failed to comply with the policy provisions requiring written notice of cancellation.

Tower states that the policy was amended at the request of plaintiff Marguerite Kopke who phoned an employee of defendant insurance agent Waidelich & Associates, Inc. in September of 1983 and stated:

“(T)hat the covered residence was being sold through a land contract sale on September 24, 1983 to a Matthew Miller; that Mr. Miller wanted to retain Waidelich & Tower to secure his appropriate insurance coverage on the property, and that he would be contacting Waidelich to this effect prior to the sale; that upon the advice of their counsel, Jerry McCormack, she was by way of said phone call notifying Waidelich of said sale so that Waidelich could take the appropriate steps to see to it that coverage would be appropriately placed. Waidelich’s agent indicated that she would relay the message to the appropriate Waidelich employee. Plaintiff Marguerite A. Kopke asked if there was anything further she and her spouse needed to do. Waidelich’s agent indicated that there wasn’t.”

Plaintiffs’ answer to interrogatory No. l.e. (After the Court notified the parties that the initial motion for judgment on the pleadings would be treated as one for summary judgment and invited additional submissions, Tower reserved the right to file Marguerite Kopke’s deposition transcript, but subsequently notified the Court that the transcript would not be filed.)

It is undisputed that the policy provisions requiring written notice of cancellation by the insured or the insurer were not complied with, and that no premiums were refunded to the plaintiffs. Cancellation provisions in insurance contracts must be strictly complied with. Suennen v. Evrard, 254 Wis. 565, 36 N.W.2d 685 (1949) (insured’s written notice of cancellation was ineffective for failure to indicate effective date). In this case, however, the insurance policy was not cancelled in the sense of termination prior to the end of the policy period, Peterson v. Truck Insurance Exchange, 65 Wis.2d 542, 223 N.W.2d 579 (1974), since it remained in full effect after the amendment. Nor was the policy unilaterally amended as in Schlosser v. Allis- Chalmers Corp., 86 Wis.2d 226, 271 N.W.2d 879 (1978), since the plaintiffs arguably requested a modification of the policy-

There are no provisions in the policy governing amendments as alleged herein. The effect of amending the policy to make Miller the named insured, however, is the same as an assignment of the policy from the plaintiffs to Miller. The clause governing assignment of the policy does not require written notice of intent by the insured, but it does state that: “Assignment of this policy shall not be valid unless we give our written consent.” Section 1(7) page 12. It is not necessary for purposes of deciding this motion to resolve the factual question of whether Marguerite Kopke requested an assignment of the policy in the September 1983 phone call, since it is undisputed that Tower never gave the plaintiffs written consent. As a result, the assignment was ineffective as a matter of law and the policy remained in effect with William P. Kopke as the named insured.

Tower contends that summary judgment is inappropriate at this stage of the proceedings, since it has asserted various affirmative defenses and cross-claims in its answer. Only the issue of whether Count IV states a claim for relief is relevant to this motion, and it is clear that it does state a claim for breach of the insurance contract. The remaining defenses relate to the plaintiffs’ damages which must be proved at trial in any event, and the issues surrounding Tower’s claim for contribution from its co-defendants has no effect on its liability to the plaintiffs under the terms of the policy. Consequently, the plaintiffs are entitled to summary judgment on Tower’s liability under the insurance policy. This decision leaves open the question of whether Tower’s actions constitute bad faith as alleged in ¶ 24 of Count IV.

One other matter remains for discussion concerning the status of defendant Matthew Miller. Both plaintiffs and Tower have asserted claims against Miller. The file contains no proof of service on this defendant and he has not answered or otherwise appeared in this action. More than 6 months have elapsed since the claims against Miller were filed. Consequently, all claims against defendant Miller will be dismissed without prejudice twenty days from the entry of this order pursuant to Fed.R.Civ.P. 4(j) and Local Rule 10.01 unless good cause for the failure to obtain service is demonstrated before that time.

IT IS THEREFORE ORDERED that the plaintiffs’ motion for partial summary judgment is granted.

IT IS FURTHER ORDERED that all claims against defendant Matthew Miller are dismissed without prejudice effective twenty days from the entry of this order.


text:
    Norbert TILIDETZKE, et al., Plaintiffs, v. Linwood Rubin PREISS, et al., Defendants.
    Civ. A. No. 84-C-1209.
    United States District Court, E.D. Wisconsin.
    July 2, 1985.

      T. Michael Schober, New Berlin, Wis., for plaintiffs.
    John M. Swietlik, Milwaukee, Wis., for defendants.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

This is a diversity action arising out of a highway collision which occurred in the City of George West, Texas, on February 10, 1983. The collision involved a vehicle driven by plaintiff Norbert Tilidetzke, a Wisconsin resident, and a truck operated by defendant Linwood Rubin Preiss, a Texas resident. At the time of the accident, the truck operated by Preiss was owned by his employer, defendant Blake Dunn, and was covered by a liability insurance policy issued by defendant State Farm Mutual Automobile Insurance Company (“State Farm”) which was issued and delivered in the State of Texas. These facts are taken from the complaint and the submissions of the parties and are not in dispute.

Currently before the Court is the defendants’ motion to dismiss the complaint for lack of personal jurisdiction. Since all parties have submitted affidavits or documentary exhibits in support of their positions, the motion will be treated as one for summary judgment.

Applying Wisconsin’s long-arm statute, § 801.05 Wis.Stats., the plaintiffs concede that this Court does not have personal jurisdiction over the individual defendants, who have no contacts with the State of Wisconsin. The issue with respect to State Farm is not one of personal jurisdiction, since the defendants do not seriously contend that State Farm is not engaged in substantial activities in Wisconsin, but rather is a question of whether the company may be sued pursuant to Wisconsin’s direct action statute, § 632.24 Wis.Stats.

The court has been provided with a copy of the relevant insurance policy which contains a “no-action” clause providing that no action may be brought against the insurer unless a judgment is first obtained against the insured. This provision must be given effect, since the accident occurred outside Wisconsin and the insurance policy was issued and delivered outside the state, unless the plaintiffs can show that State Farm should be equitably estopped from asserting this defense. Kirchen v. Orth, 390 F.Supp. 313 (E.D.Wis.1975).

In Kirchen, the Court found that the defendant insurance company through its conduct during extensive and ongoing settlement negotiations with the plaintiffs’ attorney had consistently misled him into believing that the insurance policy would be available to them in their suit in Wisconsin. The plaintiffs contend that State Farm has similarly misled them into believing the insurance would be available in a Wisconsin action, and have filed copies of correspondence between the plaintiffs’ attorneys and the company in support of this contention.

The correspondence establishes that the plaintiffs’ attorneys wrote to the State Farm office in Texas and requested that the file in this matter be transferred to State Farm’s Milwaukee office, and offered to compile and forward to whichever office State Farm designates all relevant data respecting injuries and special damages. After the file was transferred to Milwaukee, the plaintiffs requested and received reimbursement for their air fare from Texas following the accident. State Farm also complied with the plaintiffs’ request for information on the applicable insurance policy, and the plaintiffs forwarded medical reports and specials and requested an appointment to discuss settlement. The plaintiffs agreed to submit to an independent medical exam at State Farm’s request and requested financial information on the Texas insured (Blake Dunn) in contemplation of an action for damages in excess of the policy limits. Finally the plaintiff forwarded a written settlement offer, to which State Farm replied with a counter offer after this action was filed.

Under the rationale set forth in Kirchen and subsequent cases cited by the parties, State Farm has not misled the plaintiffs into believing that they could sue on the insurance policy in Wisconsin. In Kirchen, the defendant insurance company contacted the plaintiffs’ attorney in Wisconsin through a Wisconsin agent, and initiated settlement discussions. In this case, the plaintiffs requested that negotiations be conducted in Wisconsin and the plaintiffs initiated settlement discussions. In addition, prior to the filing of this lawsuit, State Farm only accumulated medical information that it was in the plaintiffs’ interest to provide in Wisconsin. Since all of these activities were conducted in Wisconsin at the plaintiffs’ request, no activity of the defendants can be said to have “lulled plaintiffs’ attorney into a false sense of security____” Kirchen at 318.

The plaintiffs never indicated that they would rely solely on the insurance policy in this action, and instead requested financial information on the insured in contemplation of an action for damages in excess of the policy limits. Finally, giving effect to the no-action clause in this case will not completely defeat the plaintiffs’ action, since they have filed a timely state court action in Texas, and have requested in the alternative that this action be transferred to the Federal District Court in Texas under 28 U.S.C. § 1404(a). Accordingly, Kirchen doesn’t apply, and the no-action clause must be given effect.

The defendants also agree that under the factors set forth in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947), this action should be transferred to Texas since all investigatory witnesses, eyewitnesses and certain medical witnesses are Texas residents. The Court agrees, and also finds that because this Court does not have personal jurisdiction over the individual defendants, and State Farm is not a proper party due to the no-action clause, it would be in the interests of justice to transfer this action to Texas where all defendants are amenable to suit. Consequently, this action will be transferred to the U.S. District Court for the Southern District of Texas, Victoria Division, to preserve the plaintiffs' choice of a federal forum.

IT IS THEREFORE ORDERED that the defendants’ alternative motion to transfer this action to the United States District Court for the Southern District of Texas, Victoria Division, is granted.


text:
    Felix DELGADO, Plaintiff, v. MILWAUKEE COUNTY, et al., Defendants.
    C. A. No. 85-C-31.
    United States District Court, E.D. Wisconsin.
    July 2, 1985.

      Martin Elliot Rosenthal, Milwaukee, Wis., for plaintiff.
    Robert A. McKnight, Principal Asst. Corp. Counsel, Milwaukee, Wis., for defendants.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

Plaintiff pro se, Felix Delgado, challenges the constitutionality of Milwaukee County’s work relief program for able bodied general relief recipients and seeks declaratory, injunctive and monetary relief. Delgado contends that the County’s work relief program is punitive, and places him in a condition of peonage contrary to 42 U.S.C. § 1994. Delgado was granted leave to proceed in forma pauperis on January 10, 1985, and the Court held a hearing on stipulated facts to consider his motion for a preliminary injunction. Based upon the facts developed at that hearing, and on the subsequent pleadings of the parties, the Court has determined that this action is frivolous and it will be dismissed without prejudice pursuant to 28 U.S.C. § 1915(d). Wartman v. Branch 7, Civil Division, County Court, Milwaukee County, State of Wise., 510 F.2d 130 (7th Cir.1975).

The Court initially granted the plaintiff leave to proceed in forma pauperis due to his allegation that he had been denied benefits without notice and an opportunity to be heard as to whether he had good cause for failing to comply with the work relief rules. The defendants appended to their answer a copy of the plaintiff’s administrative hearing decision which rejected Delgado’s claims and notified him of his right to appeal the decision in circuit court pursuant to § 49.037 Wis.Stats. Whether or not Delgado appealed that decision, he can not obtain collateral review of the merits in federal court.

For purposes of hearing the plaintiff’s motion for a preliminary injunction, the parties stipulated that Delgado has been on work relief and general assistance for 26 months, that general assistance of $175 per month and food stamps are Delgado’s sole means of support, that the plaintiff was required to work a sufficient number of hours each month to equal $175 at the federal minimum wage of $3.35 per hour and that Delgado was terminated from the program for 30 days after notice and hearing for failure to appear at a work relief assignment. The Court denied the plaintiff’s motion for a preliminary injunction since he had demonstrated no likelihood of success on the merits, and gave the plaintiff 30 days to file additional submissions before his case would be dismissed.

With the assistance of counsel, the plaintiff filed an amended complaint which added nothing to the stipulated facts, but sought leave to proceed as a class action on behalf of all work relief participants and to join a claim for unlawful arrest arising out of Delgado’s twenty minute detention by Milwaukee County Sheriff’s deputies on December 24, 1984. The defendants answered the amended complaint, alleging that Delgado’s subsequent incarceration pending trial on an unrelated offense meant he was no longer entitled to general relief and not a proper class representative, and that the 20 minute detention was a permissible investigative stop and not an arrest. The plaintiff subsequently filed a motion to further amend by joining another work relief participant as a named plaintiff.

The plaintiff’s initial amended complaint does not constitute “further submissions” as authorized by the Court’s order denying a preliminary injunction. The plaintiff was granted leave to file additional materials in support of his initial complaint, and did not request leave to file an amended complaint. Fed.R.Civ.P. 15(a). The amended complaint adds nothing but class allegations to the original complaint, and the unlawful arrest claim is not sufficiently related to the class action claim to justify joinder. Joining a proper class representative would not alter the frivolous nature of the plaintiffs initial complaint.

The plaintiff cannot state a claim for relief under 42 U.S.C. § 1994 which abolishes peonage. General assistance in Wisconsin is a voluntary program open to any dependent person as defined by the state, which provides benefits under conditions established by the state. § 49.001 Wis.Stats. et seq. Since 1945, the state has permitted counties to condition the receipt of general assistance benefits on participation in a work relief program. § 49.05. For failure to comply with established work relief rules, a relief agency may deny general relief benefits for a period not to exceed 30 days. § 49.05(8). The plaintiff is under no compulsion to participate in Wisconsin’s general relief program. Moreover, because there is no threat of penal sanction for failure to abide by the work relief rules, the program does not constitute peonage under 42 U.S.C. § 1994. Taylor v. Georgia, 315 U.S. 25, 29, 62 S.Ct. 415, 417, 86 L.Ed. 615 (1942).

The plaintiff cites no authority for the proposition that he is entitled to general assistance under the Constitution and federal law, and the Court is not aware of any such federal entitlement. On the contrary, poor relief is solely a matter of state legislative grace. Holland v. Cedar Grove, 230 Wis. 177, 189, 282 N.W. 111 (1939). Delgado’s claims that the state law requires Milwaukee County to provide him with meaningful work commensurate with his abilities have never been addressed by the state courts. The plaintiff had the opportunity to raise these state law issues on appeal of the administrative decision in his case, and this Court will not exercise pendent jurisdiction to hear these claims in the first instance.

IT IS THEREFORE ORDERED that the plaintiff is denied leave to proceed in forma pauperis and this case is dismissed without prejudice pursuant to 28 U.S.C. § 1915(d).


text:
    Sandra BENNETT, Plaintiff, v. Steve CHARLES, M.D. and Mid-South Hospital, Inc., Defendants.
    Civ. A. No. 83-3541-C.
    United States District Court, D. Massachusetts.
    July 2, 1985.

      Sandra Bennett, pro se.
    Kenneth A. Behar, O’Leary, Behar and Kalman, Boston, Mass., for defendants Steve Charles, M.D. & Mid-South Hosp.
   MEMORANDUM

CAFFREY, Chief Judge.

This is a diversity action arising out of medical treatment rendered to plaintiff by defendants in Memphis, Tennessee. The matter is now before the Court on defendants’ motion to transfer the case to the Western District of Tennessee, Western Division. 28 U.S.C. § 1404(a), the statute on which this motion is based, provides:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

The transferral of an action to another district is a matter committed to the discretion of the trial court, which should carefully consider all factors bearing upon the appropriateness of each of the contending forums. E.g., Spound v. Action Industries, Inc., 369 F.Supp. 1066 (N.D.Ill.1974). In this regard, I note that the cause of action arose in Tennessee and that the substantive issues in the case will be determined according to Tennessee law. Furthermore, both defendants reside in Tennessee, and their contacts with Massachusetts are limited. It is therefore uncertain that this Court could exercise personal jurisdiction over the defendants if the case were to proceed in this district. Finally, and importantly, the record reveals that plaintiff has already begun an identical action against these same defendants in federal court in Memphis, Tennessee. The United States District Court for the Western District of Tennessee has stayed that action pending this Court’s resolution of the issue of personal jurisdiction over the defendants, both of whom are residents of Tennessee, and are not doing business in Massachusetts. Defendants have raised this matter in a separate motion.

Plaintiff, who appears pro se, alleges that her poverty, her diabetes, and her visual impairment will adversely affect her ability to litigate her case in Tennessee. Although the Court is sensitive to plaintiff’s problems, her difficulties do not outweigh the compelling facts set forth above which clearly demonstrate that the existence of jurisdiction in this Court is gravely doubtful at best and the desirability of transferring this case to Tennessee. I therefore rule that defendants’ motion to transfer this action to the Western District of Tennessee, Western Division, should be granted.

Order accordingly.


author: EDELSTEIN, District Judge:

text:
    WM. PASSALACQUA BUILDERS, INC., Safeco Insurance Company of America and General Insurance Company of America, Plaintiffs, v. RESNICK DEVELOPERS SOUTH, INC., Jack Resnick, Burton Resnick, 90079, Inc., Jack Resnick & Sons, Inc., Sunrise Builders of Florida, Inc., Resnick of Boca, Inc., PJFAM Investments, Inc., Resnick Development Corporation, Pearl Resnick, Judith Resnick, Ira Resnick, Marylin Katz, Stanley Katz, Susan Abrams, John Doe and John Doe, Inc., Defendants.
    No. 82 Civ. 3954 (DNE).
    United States District Court, S.D. New York.
    July 12, 1985.

      Peterson Young Self & Asselin, Atlanta, Ga. (David J. Larson, Atlanta, Ga., of counsel), and Frank J. Franzino, New York City, for plaintiffs.
    Kronish, Lieb, Shainswit, 'Weiner & Hellman, New York City (Brian J. Gallagher and Richard L. Wynne, New York City, of counsel), for defendants other than Resnick Developers South, Inc.
   OPINION AND ORDER

EDELSTEIN, District Judge:

Defendants other than Resnick Developers South, Inc. (“Defendants”) have filed a motion for reargument of this court’s May 16, 1985 Opinion and Order (“Opinion”), 608 F.Supp. 1261, pursuant to Rule 3(j) of the Civil Rules of the United States District Courts for the Southern and Eastern Districts of New York (“Local Rules”) and seek appellate certification of legal issues pursuant to 28 U.S.C. § 1292(b). Defendants have also moved to dismiss the amended complaint filed as a result of the Opinion. Familiarity with the Opinion is assumed.

MOTION FOR REARGUMENT Defendants seek reargument of the Opinion arguing that the court overlooked three points:

(i) the effect of the constitutional prohibition against enforcing a judgment against an “alter ego” of the judgment debtor unless that “alter ego” was a properly served party to the underlying action ...;
(ii) the proper application of [the] analysis [in Conklin v. Furman, 48 N.Y. 527 (1872) ] of the nature and accrual of the statute of limitations applicable to suits against corporate principals for corporate debts; and
(iii) [The] limited holding [of Port Chester Electric Construction Co. v. Atlas, 40 N.Y.2d 652, 389 N.Y.S.2d 327, 357 N.E.2d 983 (1976)] which permits only the enforcement of judgments by levy upon debts owed to the judgment debtor.

Memorandum Supporting Defendants’ Motion for: (1) Reargument Pursuant to Rule 3(j) of the Civil Rules of this Court and (2) Appellate Certification of a Controlling, Dispositive Legal Issue Pursuant to 28 U.S.C. § 1292(b) at 2-3.

The “ ‘only proper ground for a motion for reargument is that the court has overlooked “matters or controlling decisions” which, had they been considered, might reasonably have altered the result reached by the court.’ ” United States v. International Business Machines Corp., 79 F.R.D. 412, 414 (S.D.N.Y.1978) (quoting United States v. International Business Machines Corp., No. 69 Civ. 200 (DNE), slip op. at 2 (S.D.N.Y. Oct. 10, 1975)); see Civil Rule 3(j) of the Local Rules. Only one of Defendants’ points satisfies this standard.

The court has considered the application of Conklin and Port Chester to the facts of this case, 608 F.Supp. at 1264; thus the court did not overlook these decisions and they are not proper grounds for a motion for reargument. The first point raised by Defendants satisfies this standard; however, the court’s decision would not be altered.

Defendants contend that a judgment cannot be enforced against an “alter ego” who was not a party to the underlying action. The principal case relied upon to support this contention is Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969). In Zenith, the Supreme Court refused to enforce a judgment against a corporation that was found by the trial court to be the “alter ego” of a defendant corporation. The Court noted that one is not bound by a judgment in personam “resulting from a litigation in which he is not designated as a party or to which he has not been made a party by service of process.” Id. at 110, 89 S.Ct. at 1569. The Court’s holding, however, does not preclude the enforcement of the judgment in this case. In fact, enforcement of the judgment would be consistent with Zenith.

The crux of Zenith is that a judgment cannot be enforced against an alleged “alter ego” who has not had a day in court to litigate whether or not there is such a relationship. In Zenith, the alleged “alter ego” was not a party to-the lawsuit. A stipulation was entered into between the parties to the suit that such an “alter ego” relationship did exist. The Court noted that “[i]t was error to enter the injunction against [the ‘alter ego’], without having made this determination in a proceeding to which [the ‘alter ego’] was a party.” Id. at 112, 89 S.Ct. at 1570. Courts have followed this reasoning by refusing to enforce court orders against unserved alleged “alter egos.” E.g., Panther Pumps & Equipment v. Hydrocraft, Inc., 566 F.2d 8, 23 (7th Cir.1977) (court did not direct order to show cause to alleged “alter ego” of party which the court did not have jurisdiction over), cert. denied, 435 U.S. 1013, 98 S.Ct. 1887, 56 L.Ed.2d 395 (1978). On the other hand, courts have enforced judgments against “alter egos” where the court had jurisdiction over the alleged “alter ego.” E.g. Dudley v. Smith, 504 F.2d 979, 982-83 (5th Cir.1974); Eagle Transport Ltd. v. O’Connor, 470 F.Supp. 731, 733-34 (S.D.N.Y.1979). The court, in this case, has personal jurisdiction over the alleged “alter egos.”

When the alleged “alter ego” is a party to the action where the “alter ego” status is litigated, due process will be satisfied. This determination need not be made as part of the underlying action in order to enforce a judgment. If the court has jurisdiction over the alleged “alter egos,” the court is determining the alter ego issue in a proceeding to which Defendants are parties, Zenith, supra, 395 U.S. at 112 & n. 6, 89 S.Ct. at 1570 & n. 6, so that Defendants have an opportunity to be heard. Further, if the court finds that there is an “alter ego” relationship, the judgment, in essence, will be enforced against parties to the underlying action. This is consistent with the notion that “alter egos” are treated as one person so that the actions of one, including those that subject one of them to the jurisdiction of the court, may be attributed to the other. See Dudley v. Smith, supra, 504 F.2d at 982; Shamrock Oil & Gas Co. v. Ethridge, 159 F.Supp. 693, 697 (D.Colo.1958). Therefore, although Defendants were not named parties to the underlying action, if they are found to be “alter egos” of Developers, the judgment may be enforced against them, as if they were named parties to that action.

MOTION TO CERTIFY APPELLATE QUESTION

Defendants seek to have the issues raised in their motions certified for appellate review pursuant to 28 U.S.C. § 1292(b). The court declines to exercise its discretion to do so because this case does not satisfy the standards for such certification. In order to certify a case for immediate appellate review the court must find that the opinion “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b). The court finds that appellate certification will not “materially advance the ultimate termination of [this] litigation” because the case is almost ready for trial and most of the pretrial preparation is complete. This action has been pending since June, 1982. During the past three years a number of pre-trial motions have been made and decisions filed. Further, a pretrial order and requests to charge have been submitted. There is not a great deal left to do in order to go to trial on this case. Thus, an immediate appeal will not avoid a great deal of pretrial effort.

It must also be noted that certification is to be used sparingly. “Section 1292(b) [should] ‘be used only in exceptional cases where an immediate appeal may avoid protracted and expensive litigation and is not intended to open the floodgates to a vast number of appeals from interlocutory orders in ordinary litigation.’ ” Mazzella v. Stineman, 472 F.Supp. 432, 436 (E.D.Pa.1979) (quoting Milbert v. Bison Laboratories, 260 F.2d 431, 433 (3d Cir.1958)). The parties estimate that the trial will last three weeks. Proposed Pre-trial Order, § X. This is certainly not a “protracted” litigation. Based on these considerations, Defendants’ motion for certification is denied.

MOTION TO DISMISS

Defendants have also filed a motion to dismiss the amended complaint filed pursuant to the Opinion. Plaintiffs have argued that the motion to dismiss is duplicative of the Motion for Reargument. The court agrees. The motion to dismiss raises no new issues that were not raised in the motion for reargument. In fact, the mo? tion to dismiss contains the identical section on a motion for certification contained in the motion for reargument. For the reasons stated above in denying the motion for reargument, the motion to dismiss is denied.

Plaintiff seeks costs and reasonable attorneys’ fees incurred in connection with the motion to dismiss because it was an unnecessary motion. The court agrees. As noted above, the motion to dismiss was virtually identical to point i) of the motion for reargument. Further, there was no need to file the additional motion to preserve any defenses because they were part of the record in the motion for reargument. The motion to dismiss is clearly the type of abuse of motion practice that Rule 11 of the Federal Rules of Civil Procedure was intended to discourage. Therefore, as a sanction against Defendants pursuant to Rule 11, the court awards plaintiffs the reasonable costs and attorneys’ fees incurred in responding to Defendants’ motion to dismiss. Plaintiffs are to submit, within ten (10) days of this opinion, an affidavit detailing the costs and fees incurred.

CONCLUSION

Defendants’ motions for reargument and appellate certification are denied. Defendants’ motion to dismiss is also denied and Defendants, as a sanction pursuant to Fed. R.Civ.P. 11, are to pay plaintiffs their costs and reasonable attorneys’ fees incurred in responding to Defendants’ motion to dismiss. Plaintiffs are to submit an affidavit detailing these costs and attorneys’ fees within ten (10) days.

SO ORDERED

      . Plaintiffs may not relitigate the issues raised in the underlying action as part of the determination of the “alter ego” issue. These actions would be time barred. The only action is for the enforcement of the judgment.

        . Even if the criteria for certification are present, it is within the court's discretion to utilize the certification procedure. Bachowski v. Usery, 545 F.2d 363, 368 (3d Cir.1976).

      . Apparently, Defendants’ word processors neglected to erase the certification section when the motion for reargument was recycled into the motion to dismiss.

      . In their Reply, Defendants have not contested plaintiffs’ assertions regarding the duplicative nature of the motion, nor have they offered any basis for the submission of the motion to dismiss that would not be accomplished by the motion for reargument.


author: FRIENDLY, Presiding Judge:

text:
    PENN CENTRAL CORPORATION, Plaintiff-Counterclaim Defendant, v. CONSOLIDATED RAIL CORPORATION, Defendant-Counterclaim Plaintiff, v. METROPOLITAN TRANSPORTATION AUTHORITY and Connecticut Department of Transportation, Counterclaim Defendants.
    Civ. A. No. 77-34.
    Special Court, Regional Rail Reorganization Act.
    June 10, 1985.

      S. William Livingston, Jr., Arvid E. Roach II, Covington & Burling, Washington, D.C., for Penn Cent. Corp.
    Laurence Z. Shiekman, M. Duncan Grant, James M. Beck, Pepper, Hamilton & Scheetz, Philadelphia, Pa. (Donald A. Brinkworth, Consol. Rail Corp., Philadelphia, Pa., of counsel), for counterclaimant, Consol. Rail Corp.
    Robert R. Prince, Stamford, Conn., for counterclaim defendant, Metropolitan Transp. Authority.
    Mark S. Shipman, Robert R. Prince, Schatz & Schatz, Ribicoff & Kotkin, Stamford, Conn., for counterclaim defendant, Connecticut Dept. of Transp.
    Before FRIENDLY, Presiding Judge, and WISDOM and THOMSEN, Judges.
   FRIENDLY, Presiding Judge:

The issue dealt with in this opinion has arisen in an action brought by the Trustees of the Penn Central Railroad (Penn Central) to clarify the conveyance to the Consolidated Rail Corporation (Conrail) of certain trackage rights. Conrail asserted a counterclaim seeking a declaratory judgment that Penn Central remained obligated to fulfill several obligations under two agreements made by Penn Central and the transportation authorities of New York and Connecticut. On March 9, 1978, the court granted judgment on the pleadings to Penn Central on its claim and dismissed Conrail’s counterclaim with leave to replead. Conrail’s amended counterclaim stated four separate counts in some of which the transportation authorities were named as defendants; all but one of these have been settled by agreement of the parties. The sole remaining issue is whether the burden of an annual credit of $1,837 million (the Credit) against the expenses of Penn Central’s operating and maintaining the Grand Central Terminal (GCT) for commuter services for the account of the authorities remained with Penn Central in the period between April 1, 1976, the date on which a large part of Penn Central’s transportation properties were conveyed to Conrail, and December 31, 1982, when Conrail ceased providing commuter service pursuant to the Northeast Rail Service Act of 1981, 45 U.S.C. § 744a. All parties, including the transportation authorities, have moved for summary judgment with respect to this issue and have submitted voluminous briefs, affidavits and exhibits. We grant the motions of Penn Central and the transportation authorities and deny Conrail’s motion.

The disputed Credit is part of the complex arrangements made by Penn Central with the transportation authorities of New York and Connecticut in two Suburban Passenger Train Service Agreements relating to commuter and passenger operations into and out of GCT in New York City. We recently considered these agreements in Consolidated Rail Corp. v. Metro-North Commuter R.R., 598 F.Supp. 1571 (Regional Rail Reorg.Ct.1984) (Metro-North). Familiarity with that opinion is assumed; we repeat only such facts as are pertinent to the issues here.

The first agreement, the West End Agreement, dated October 27, 1970, was made with the New York Metropolitan Transportation Authority (MTA) and the Connecticut Department of Transportation (CDOT), acting through the Connecticut Transportation Authority (CTA), and related to the commuter service to and from GCT in New York City formerly conducted by the New York, New Haven & Hartford Railroad Company (the New Haven). It consisted of four separate agreements. Under the first, MTA purchased the New Haven’s former properties between Wood-lawn Junction and the New York-Connecticut boundary. In the second, Penn Central leased to CTA for a term of 60 years the New Haven’s former properties between the boundary and New Haven and three other Connecticut cities. A third, entitled the GCT Joint Facilities Agreement (JFA), the one here at issue, gave MTA/CTA service access to GCT on terms stated below. The fourth was a service contract under which Penn Central agreed to operate commuting services between New York and Connecticut for the account of MTA and CTA.

The other agreement, the Harlem-Hudson Agreement, dated June 1, 1972, dealt in a similar manner with suburban passenger service from GCT to Poughkeepsie, New York on what had been the New York Central’s Hudson Division, and Dover, New York on what had been its Harlem Division. Penn Central leased GCT and Penn Central’s other transportation properties used to provide this service to MTA for a term of 60 years, and agreed to operate the commuting service for MTA’s account. Such provisions as are pertinent to the present controversy will be described as they become relevant.

The JFA assured the MTA/CTA service access to GCT, which was necessary because the line conveyed to MTA under the West End Agreement originated at Wood-lawn Junction rather than at GCT. In addition, and more important for present purposes, the JFA allocated the expenses of operating and maintaining GCT between expenses attributable to the West End commuter service, for which MTA/CTA were responsible, and other uses, for which Penn Central remained responsible. Section 301 of the JFA provided that Penn Central should send MTA and CTA a quarterly statement “setting forth as a credit or debit as the case may be Proportionate GCT Net Revenues and as debits the Harlem Toll, Special Charges and any amount payable to Penn Central pursuant to the provisions of Section 405 hereof.” MTA and CTA each were entitled to half the net credits and bore half of the net debits. However, as long as the service contracts remained in effect, net credits and net debits were not to be paid separately but were to be treated respectively as a revenue or a cost of running the commuter service.

Section 302 defined “Proportionate GCT Net Revenues” as follows:

Proportionate GCT Net Revenues shall be the amount which results when concession revenues from GCT minus the cost of the operation, maintenance and repair of GCT ... is multiplied by a fraction of which the numerator is the number of Car and Locomotive Entrances of the Service and the denominator is the total number of Car and Locomotive Entrances, and the product thereof is adjusted by an annual $2,000,000 credit____ MTA/CTA shall consider reducing the amount of the annual $2,000,000 credit referred to above if either on an annual or monthly cumulative basis such credit exceeds 34% of Penn Central’s then current “Income — Land & Building” account ... and in such consideration shall take into account the level of income available, the amount of usage and other appropriate considerations.

The Harlem-Hudson Agreement resulted in MTA’s taking responsibility for the remaining rail operations into and out of GCT except those provided by Amtrak, although Penn Central continued to provide the services for MTA’s account. GCT was leased to MTA, which assumed all of Penn Central’s obligations under the JFA except that Penn Central was to “remain liable for the annual $2,000,000 credit referred to in Section 302 of the GCT Joint Facilities Agreement____” This provision left the West End Agreement intact, since Penn Central continued to keep the accounts established in that agreement, and subsidy payments for GCT expenses under the JFA were included as part of the overall subsidy obligations of MTA/CTA under the service contract; the Credit was accounted for by reducing Penn Central’s reimbursable costs of running the overall service.

On June 2, 1975, the Penn Central Trustees, MTA and CTA agreed to reduce the Credit to $1,837 million. This was not done pursuant to the reconsideration clause contained in § 302 of the JFA, however, since this event triggering its applicability had not occurred. Rather, this reduction was part of an agreement whereby MTA and CTA were freed from their obligation to pay certain real estate taxes assessed against nontransportation properties in the GCT area.

The gist of Conrail’s argument is that the Credit reflected a long antecedent understanding that the operator of the West End commuter service was entitled to have the share of GCT expenses attributable to this service defrayed by a share of the net income (which we will follow the parties in calling “ground rents”) from the nontransportation properties erected over the tracks leading to GCT, and that the burden of the Credit should pass to Penn Central since such properties were not conveyed to Conrail. While denying that the history is as conclusive as claimed by Conrail, Penn Central defends primarily on the basis that the Regional Rail Reorganization Act (Rail Act), the Final System Plan (FSP) and the conveyance documents contemplated that the burdens as well as the benefits of the various agreements between Penn Central and the transportation authorities of New York and Connecticut should pass to Conrail.

The history of the agreements between the New York Central and the New Haven with respect to the GCT properties up to the conveyance of the New Haven’s property to Penn Central on January 1, 1969, is set forth in the New Haven Inclusion Cases, 399 U.S. 392, 438-51, 90 S.Ct. 2054, 2082-89, 26 L.Ed.2d 691 (1970). See also New York C.R.R. v. New York, N.H. & H.R.R., 24 Misc.2d 414, 208 N.Y.S.2d 605 (1960), aff'd as modified, 13 A.D.2d 309, 216 N.Y.S.2d 928 (1st Dept. 1961), aff'd mem., 11 N.Y.2d 1077, 230 N.Y.S.2d 226, 184 N.E.2d 194 (1962). We state only the essentials. In the early years of the century, the State of New York passed legislation requiring that the railroad tracks for 15 blocks north of 42d Street be placed underground. This left the New York Central, which owned the land, with a large tract of midtown Manhattan suitable for realty development. In 1907, the New York Central made an agreement with the New Haven, which had acquired the right to run trains into Manhattan in an 1848 agreement with the New York Central’s predecessor and in state legislation, to construct the present GCT. Each railroad was to contribute to the costs of maintenance and operation in accordance with its respective usage of the terminal, and all rentals and other compensation received from use of the terminal properties were to be credited against the cost of operating and maintaining the terminal. In 1913 they entered into a supplemental agreement which provided for sharing construction and maintenance costs of other buildings as well as the terminal and which reaffirmed that all rentals should be credited to the terminal enterprise. No provision was made in either of these agreements for the eventuality, which occurred in 1964 and continued thereafter, that the income from these properties might exceed the terminal costs. The trustees of the New Haven, which had filed a petition for reorganization in 1961, demanded a share of this excess income; the New York Central refused, and the trustees filed suit. Later, when the trustees of the New Haven began negotiations for its inclusion in the New York Central-Pennsylvania merger, Penn Central insisted as a condition of the New Haven’s inclusion that absolute title to the terminal properties should be vested in Penn Central. The New Haven trustees agreed, but bondholders of the New Haven pressed the claim to a portion of the excess income as compensation. A special master appointed by the New Haven reorganization court concluded, and the court found, that the New Haven was entitled to half of the excess income. The Interstate Commerce Commission found that half of the excess income amounted to $2,225,000 per annum, which, capitalized at 8%, amounted to $28,-438,000, and this sum was incorporated in the price Penn Central was required to pay the New Haven. The bondholders’ claim was limited, however, to the excess income after the costs of operating GCT had been reduced to zero. The reorganization court found that the New York Central/New Haven arrangement was predicated on first applying the ground rents from the non-transportation properties to offset GCT expenses and that Penn Central rather than the New Haven was entitled to the benefit of this since it had assumed the burden of operating rail services formerly provided by the New Haven. This holding was affirmed by the Supreme Court. New Haven Inclusion Cases, supra, 399 U.S. at 446-51, 90 S.Ct. at 2086-89.

Conrail has collected an impressive array of memoranda and drafts of the West End Agreement, together with statements by agents of Penn Central and MTA made subsequent to the execution of the West End and Harlem-Hudson Agreements, which tend to show that the Credit was exacted by the transportation authorities in negotiating the West End Agreement in order to preserve the long standing arrangement whereby net income from the nontransportation properties was first applied to reduce the expense of operating and maintaining GCT. The Penn Central negotiators did not resist this in principle, although they were careful not to surrender their recently acquired property rights to all of the excess income from the non-transportation properties; such disagreement as existed concerned the determination of the amount by which GCT expenses were to be reduced. That disagreement was resolved by a decision to use a figure derived from a calculation made for MTA/CTA in November, 1968 by L.E. Peabody & Associates. Peabody determined that the proportionate use of GCT made by the New Haven in 1967, the last full year for which figures apparently were available, was 34%, and, based on this, that the amount of GCT terminal expenses chargeable to the West End commuter service in 1967 was $2,056,674, which was then rounded off to $2,000,000. The 34% figure also formed the basis for the reconsideration clause in § 302 of the JFA: since $2,000,000 from nontransportation revenues were first applied to offset operating expenses of GCT, a decline in the former to a degree that would cause $2,000,000 to exceed the 34% share of the operating expenses on which the Credit was based would cause the Credit to erode the “excess income” from the nontransportation properties for which Penn Central had already “paid” the New Haven. Penn Central notes that its negotiators resisted attempts by MTA/CTA to obtain a proportional share of ground rents from the non-transportation properties, proposing a fixed credit instead. They note further that, once the Credit was fixed as such, the authorities added the requirement that the Credit be an unqualified obligation of Penn Central, not one payable solely out of non-transportation revenues. None of this, however, is inconsistent with the fact that the reason for the Credit was to preserve for the authorities, which had assumed the burden of the commuter services, the historic right of the original operator, the New Haven, to be relieved of its share of the operating expenses of the GCT by application of nontransportation revenues against such expenses.

However, it is one thing to agree with Conrail that the Credit had its source in earlier agreements concerning the application of ground rents from the nontransportation properties against GCT expenses, and quite another thing to say that the Credit was so linked with these revenues that the burden of the Credit after April 1, 1976 should rest on Penn Central simply because it retained ownership of these properties. After April 1, 1976, Penn Central ceased to have any connection with commuter rail services into and out of GCT, which were operated by Conrail under subsidy arrangements whereby the transportation authorities paid all the operating expenses as defined in the agreements less the Credit. Answering the question whether the burden of paying the Credit stayed with Penn Central or was transferred to Conrail requires an examination of the Rail Act, the FSP and the conveyance documents.

As noted in Metro-North, supra, 598 F.Supp. at 1576 & n. 2, the Rail Act took specific account of the West End and Harlem-Hudson agreements. Section 303(b)(2) provided:

All rail properties conveyed to the Corporation or any subsidiary thereof, the respective profitable railroads operating in the region, States, and responsible persons under this section shall be conveyed free and clear of any liens or encumbrances, but subject to such leases and agreements as shall have previously burdened such properties or bound the owner or operator thereof in pursuance of an arrangement with any State, or local or regional transportation authority under which financial support from such State, or local or regional transportation authority was being provided at the time of enactment of this Act for the continuance of rail passenger service or any lien or encumbrance of no greater than 5 years’ duration which is necessary for the contractual performance by any person of duties related to public health or sanitation. Such conveyances shall not be restrained or enjoined by any court.

45 U.S.C. § 743(b)(2); see also id. § 744(e)(3) (providing that passenger service arrangements described in § 303(b)(2) should continue as provided in such arrangements rather than by the general provisions of § 304(c)(2)(A) and (C)). Although § 303(b)(2) specifically refers only to rail properties conveyed, which did not include the properties used in providing the West End service since the state authorities already owned or leased these properties, the legislative history cited in Metro North, supra, 598 F.Supp. at 1576 n. 2, shows that by adding § 303(b)(2) Congress meant to preserve the West End and Harlem-Hudson agreements undisturbed except that Conrail would replace Penn Central as operator of the commuter service. Congress’ intentions in this regard were implemented in the FSP, which noted at Volume I, page 45, that the Rail Act “requires ConRail to honor” the commuter service contracts with MTA and CDOT covering Penn Central’s “services in New York and Connecticut radiating from Grand Central Terminal____” Accordingly, the FSP directed at the same page that Conrail “will assume these contracts and will operate ... [a]ll commuter services operated by [Penn Central] radiating from Grand Central Terminal over former New York Central and New Haven lines.” Nothing in this provision suggests that the bulk of the contracts should pass to Conrail but that Penn Central should remain saddled with an obligation to the transportation authorities of $2 million a year. Rather, both the legislative history of the Rail Act and the FSP indicate that Conrail was to assume these contracts in toto.

Penn Central relies also on the Bill of Sale and Assignment from the Penn Central Trustees to Conrail, identified as Special Court Document PC-CRC-AA, which was annexed to this court’s conveyance order of March 25, 1976, but this hardly advances its case. The instrument provided in Schedule E for the Trustees to convey all their rights to all contracts “used or useful in the provision of rail services to be assumed by [Conrail] in connection with the properties conveyed to [Conrail] by this Bill of Sale and Assignment____” It provided further that Conrail assumed “the foregoing contracts and the obligation to pérform and observe all covenants and conditions therein contained ... including the obligation to make required payments thereunder,” except as otherwise provided. Conrail argues that these provisions do not apply since property interests in GCT and the commuter lines sufficient to provide the service were already held by MTA and CDOT and were not conveyed. Still, the conveyance documents must be construed in light of the provisions of the FSP, which, as we have seen, evidences the intention that Conrail assume the rights and obligations established in the West End and Harlem-Hudson Agreements. We have previously noted that “what is ultimately controlling is designation in the FSP, its errata sheets and supplements, rather than the conveyance documents____” Stratford Land & Improvement Co. v. Blanchette, 448 F.Supp. 279, 284 (Regional Rail Reorg. Ct. 1978) (quoting In re Regional Rail Reorganization Proceedings, 421 F.Supp. 1076, 1081 (Regional Rail Reorg. Ct. 1976) {VRD)). While in Stratford and VRD we did not apply this principle, both those cases dealt with general designations of property which the FSP expressly anticipated would be refined in the later Bill of Sale. I FSP at 256. In this case, on the other hand, the statement in the FSP that Conrail must honor the West End and Harlem-Hudson Agreements is specific and unambiguous, see I FSP at 45, and we thus do not consider the failure of the Bill of Sale to cover the West End Agreement by its express terms as leading to a contrary conclusion. In addition, the conveyance documents should be read in light 'of their practical construction by the parties. Conrail’s actions after the conveyance make clear that it regarded the bundle of contracts with the authorities as having been conveyed. After April 1, 1976, it continued to operate the same commuter services into and out of GCT as the Penn Central had done, and it received the same subsidy payments as Penn Central had received except for its refusal to allow the Credit, which the authorities nonetheless recouped by deducting it from the subsidy payments, see, supra, note 1, and three other disputes concerning provisions of the West End and Harlem-Hudson Agreements that were subsequently settled by the parties. When the JFA was amended in 1979, the amendment was executed by Conrail — not Penn Central — and the authorities.

Conrail argues that Congress did not concern itself with the particulars of the arrangements embodied in the West End and Harlem-Hudson Agreements, and that the inference from the provisions of the FSP quoted above, that Conrail should be substituted in all respects for Penn Central under the Agreements, is overcome by other provisions in the FSP. Executory contracts, it correctly says, fall within the category of “administrative assets” under the FSP, which also recognized that such assets may have to be divided. I FSP at 252-55. More particularly, Conrail points to a passage in Volume I at page 256 for the principle of designation relating to ex-ecutory contracts:

Executory contracts and agreements are designated in accordance with their subject matter: contracts relating to property to go with the property, contracts relating to personnel to go with the individuals and contracts relating to services to go with the service obligation.

Conrail would have us draw the conclusion that since the obligation to provide the $2,000,000 Credit against the operating expenses of GCT had its source in the non-transportation properties, it therefore should “go” with them.

Even if we deemed the provisions of the FSP directing Conrail to honor the West End Agreement sufficiently ambiguous to require resort to this principle of designation, we would not draw the conclusion that Conrail would have us. The JFA was a “contract relating to services” that went with the service obligation to Conrail; the Credit, which was an integral part of the JFA, went with it. To be sure, it might not have been inequitable for Congress or the United States Railway Association (USRA) to have provided that Penn Central's revenues from the nontransportation properties in the GCT project should be devoted in the first instance, up to the amount of $1,837,-000, to the purpose for which they had historically been devoted, namely, subsidizing the GCT operating expenses, and relief from this obligation was a distinct benefit to Penn Central. But it was equally rational for Congress and the USRA, and in greater accordance with the general plan of the Rail Act which provides only for the conveyance of assets or rights used or useful in transportation, § 102(12), 45 U.S.C. § 702(14), to have provided that when Penn Central was obliged to convey the bulk of its transportation assets to Conrail and others, it should retain its nontransportation assets free and clear of any burdens with respect to transportation service. This, as we read § 303(b)(2) of the Rail Act and the FSP, was what Congress and the USRA intended to do. Although the historical origin of the Credit doubtless was the right of the New Haven to have its contributions to the development of the nontransportation properties recompensed by applying the revenues therefrom to the GCT expenses, nothing in the JFA or elsewhere linked the Credit with receipt of the ground rents in any significant legal sense. Apart from the reconsideration clause, Penn Central was liable for the Credit even if no ground rents whatever were received. This was the contract which Conrail admittedly assumed in most respects, and we see no sufficient legal basis for ordering that its obligation in respect of the Credit should be transferred to Penn Central.

"Of the decisions of this court cited by the parties, only a few require discussion. Conrail relies on Stratford Land & Improvement Co. v. Blanchette, supra, 448 F.Supp. 279. That case dealt with sidetracks constructed by Stratford, pursuant to an agreement whereby Stratford would convey the sidetracks to Penn Central in return for reimbursement of its construction costs of $689,000 at a rate dependent upon the revenue yielded by each car traveling over the new tracks. When these tracks were conveyed by the Penn Central Trustees to Conrail under the FSP, $431,-490 of this obligation remained to be paid. We did hold that, although the conveyance to Conrail stood Conrail had no obligation to refund Stratford’s construction costs, but we did this because Schedule E to the Bill of Sale and Assignment between the Trustees and Conrail expressly excepted all industrial sidetracks agreements or track construction agreements which required the payment of refunds on a per car basis — an exception which we found to be “wholly consistent” with the general scheme of the Rail Act and of the FSP. Id. at 282-85. Conrail can point to no similar provision in the conveyance documents expressly excepting the Credit from transfer, even though certain agreements between Penn Central and the transportation authorities of several states were specifically excepted from conveyance. What might have happened if Conrail had presented the point now urged to the USRA in 1976 is mere speculation. More nearly analogous to this case is Consolidated Rail Corp. v. Penn Central Corp., 543 F.Supp. 457 (Regional Rail Reorg. Ct. 1982), where Penn Central made a 20-year lease for the use of rolling stock and equipment that called for the lessor to sell the cars and equipment at the end of the lease term and divide the proceeds among itself, a financing party and Penn Central. Penn Central’s interest in this lease was conveyed to Conrail. Penn Central claimed that its right to part of this payment had already accrued and was not conveyed. We declined to divorce the right to share in the proceeds from the sale of rolling stock and equipment from the rolling stock and equipment itself. Id. at 459-61. The other cases relied upon by Conrail, In re Regional Rail Reorganization Proceedings (VRD), supra, 421 F.Supp. 1076, and Metro-North, supra, 598 F.Supp. 1571, dealt with questions too remote from the issue here presented to warrant detailed distinction.

The motions for summary judgment of Penn Central and the transportation authorities are granted and Conrail’s motion is denied.

      . The Harlem Toll was defined in § 303 as a share of the costs of operating and maintaining the facilities between 59th Street in Manhattan and Woodlawn Junction and the four central tracks between 59th Street and GCT; this share consisted of an annual payment of the greater of $2.9 million or $2.4 million multiplied by the ratio of Penn Central’s total service costs (as defined in § 404 of the service contract) for the preceding calendar year to the total service costs in 1971. Special Charges were defined in § 304 of the JFA as (1) accounts which accumulated certain net service costs incurred by Penn Central in the area between Woodlawn Junction and GCT, and (2) the costs of special studies required by the JFA. Section 405 of the JFA provided for payments by MTA/CTA to Penn Central in the event that the authorities exercised their right to refuse to permit Penn Central to convert a portion of GCT to a nontransportation use, and the space to be converted was not reasonably required to operate the commuting service. The meaning of "Proportionate GCT Net Revenues” is discussed in the text below.

      . All parties agree that MTA and CDOT were entitled to the Credit from someone. Conrail in effect paid the Credit, while disclaiming liability, during the relevant period, since MTA and CTA deducted the amount of the Credit from the subsidy payments otherwise due to Conrail under the service contract, see Metro-North, supra, 598 F.Supp. at 1579.

      . The portion of GCT expenses attributable to the West End commuting service was relevant because MTA/CTA were then to take responsibility only for those services and Penn Central had "paid” for the New Haven's share of the excess income above operating expenses in connection with the New Haven’s inclusion.

      . To whatever extent Conrail was required to make up the Credit from other revenues, this expressed intention to substitute Conrail for Penn Central under the West End Agreement overrides the general principle relied on by Conrail that passenger operations were not to be subsidized by revenue from other Conrail operations. See I FSP at 40-41.

      . As pointed out in New York Dock Ry. v. Consolidated Rail Corp., 434 F.Supp. 1245, 1248 (Regional Rail Reorg. Ct. 1977), the FSP was approved by Congress and has the force of law, Rail Act § 208(d)(1), 45 U.S.C. § 718(d)(1).