author: CURTIN, Chief Judge.

text:
    UNITED STATES of America; The State of New York, and UDC-Love Canal, Inc., Plaintiffs, v. OCCIDENTAL CHEMICAL CORPORATION; Occidental Chemical Holding Corporation; Occidental Petroleum Investment Company; Occidental Petroleum Corporation; the City of Niagara Falls, New York; Niagara County Health Department; and the Board of Education of the City of Niagara Falls, Defendants.
    No. CIV-79-990C.
    United States District Court, W.D. New York.
    April 19, 1985.

      U.S. Dept, of Justice, Environmental Enforcement Section, Land and Natural Resources Div., Washington, D.C. (Albert M. Cohen, Washington, D.C., of counsel), and Robert Abrams, Atty. Gen. of the State of N.Y., New York City (Edith Holleman, Asst. N.Y. State Atty. Gen., New York City, of counsel), for plaintiffs.
    Wald, Harkrader & Ross, Washington, D.C. (Thomas H. Truitt, Washington, D.C., of counsel), and Phillips, Lytle, Blaine, Hitchcock & Huber, Buffalo, N.Y. (David K. Floyd, and Robert E. Glanville, Buffalo, N.Y., of counsel), for defendants Occidental.
    Gellman, Brydges, Schroff & Schweitzer, Niagara Falls, N.Y. (Earl W. Brydges, Niagara Falls, N.Y., of counsel), for defendant City of Niagara Falls.
   CURTIN, Chief Judge.

Order #1

I.

This is a dispute which has arisen during the process of taking non-party depositions of former employees of defendant Occidental Chemical Corporation [Occidental]. These depositions relate to activities which took place several years ago and which may be highly relevant to a major environmental lawsuit brought by the federal and state governments against Occidental.

Counsel for Occidental have already provided legal assistance to one former Occidental employee, and the company plans on sending letters to other former employees extending offers to absorb the costs of

having Occidental’s present counsel provide legal assistance to any ex-worker who is asked to appear for a deposition. The United States, the State of New York, and defendant City of Niagara Falls have asked the court to enter an order prohibiting Occidental’s attorneys from representing any former Occidental employee during these discovery proceedings.

Occidental’s attorneys in this case are the law firms of Wald, Harkrader & Ross of Washington, D.C., and Phillips, Lytle, Hitchcock, Blaine & Huber of Buffalo, New York. For the reasons stated below, the court will not enjoin these firms from representing former Occidental employees. However, neither Phillips/Wald nor Occidental shall send these people any notice of the offer to retain Phillips/Wald as their attorneys.

II.

Since the relief sought here is rather sweeping, it is necessary to state the facts in some detail. Non-party depositions of persons who lived or worked at Love Canal in the 1940s and 1950s were commenced in November 1984. Depositions of three former residents were completed in November. On December 10,1984, counsel met in Niagara Falls, New York, to take the deposition of John W. Gibson, who worked for Occidental for 33 years before retiring in 1980. In the course of his employment with Occidental, Mr. Gibson took part in the disposal of chemical wastes at Love Canal between 1947 and 1952.

December 12, 1984, was the third day of Mr. Gibson’s deposition. The day began with questioning by an attorney from the United States Department of Justice. Mr. Gibson testified about various chemical dumping activities for about an hour before Occidental’s attorney (David K. Floyd) suggested that a recess be taken. Tr. Ill, p. 263.

When the deposition resumed, Mr. Floyd informed counsel that Mr. Gibson had mentioned during the recess that, in his testimony, he had omitted a detail not material to the present motion. Mr. Floyd suggested that Mr. Gibson offer to correct the omission. The attorney representing the United States agreed to pursue this, but first he wanted to inquire into the conversation Mr. Gibson had with Mr. Floyd during the recess. Floyd claimed that the conversation was privileged, citing Upjohn Co. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981). As the lawyers debated this issue, Gibson was asked to leave the room “briefly.” The attorneys’ inability to resolve the problem raised by the objection prevented Mr. Gibson from returning. The deposition did not resume until almost a month later on January 7, 1985. Tr. Ill, pp. 263-66.

Floyd stated during the December 12 deposition that he had never advised Gibson about the possibility of obtaining an attorney, and he indicated that Gibson was not his client. Tr. Ill, pp. 275, 279.

Gibson became a client of the law firms representing Occidental on the morning of January 7, 1985, the day he resumed his deposition testimony. Floyd, who is a member of the Phillips, Lytle firm representing Occidental, stated that it was he who suggested to Gibson that Gibson might utilize the services of Occidental’s attorneys during the deposition. Mr. Floyd requested Occidental’s assent to the proposition that the corporation absorb the legal costs of having its counsel represent Mr. Gibson at the deposition. Occidental agreed to this. Floyd then offered this arrangement to Gibson, and he accepted. Tr. IV, p. 301.

As the proceedings began on January 7, Floyd announced that he was withdrawing his objection to the inquiry into the conversation he had with Gibson on December 12. This was consistent with what he had stated in a letter he sent to the other attorneys on January 2. However, counsel were surprised when they heard Floyd announce that Gibson was now his client.

The Justice Department lawyer asked Gibson about the conversation he had with Floyd during the recess of the proceedings of December 12. Gibson answered without any objections. He was then asked how the arrangement with Occidental’s lawyers had come about. Floyd objected and then advised Gibson that the answer sought was privileged. After he advised Gibson that he could waive the privilege if he wished, Gibson waived his privilege. Tr. IV, pp. 305-08.

Gibson reiterated the substance of what Floyd had previously told counsel. He said that Floyd telephoned him sometime during the week of January 1 and for the first time told him that his firm might represent Gibson during the deposition free of charge. He told Gibson that this had to be approved by Occidental but that such an arrangement would probably be acceptable and said that he could get another lawyer if he wished. Tr. IV, pp. 308-11.

Gibson did not think he “needed” a lawyer. However, “as we went along and ... I thought about that and then when they talked to me, they [told] me that there was a probability that they could represent me so I said, yes, okay. Let’s do that.” Id. at 308.

The attorney-client relationship between Phillips/Wald and Gibson was finalized on the morning of January 7, after Floyd received final approval from Occidental. Floyd handed a letter to Gibson when Gibson gave his final assent to the arrangement. The contents of the letter, written on Phillips, Lytle stationery, are set forth in the margin. Among other things, Gibson was informed that if the interests of himself and Occidental conflicted, Occidental’s attorneys would no longer represent him.

Gibson was questioned further about his agreement with the Phillips/Wald firms. Counsel for New York State brought out the fact that Gibson never told Floyd or anyone else that he needed a lawyer. However, Mr. Gibson had an interesting response to the next question asked by the Assistant Attorney General.

Q. And you had been through three days of depositions without an attorney, is that right, in December?
A. Not exactly right, I felt as though I was being represented by these people here because they — they represent Occidental Chemicals [sic], the people that I worked for and that I was being treated as a client ... and I was being represented and they would protect my interests if there was a problem that I had to be protected for and that’s the way I looked at it.

Tr. IY, pp. 311-312.

Asked if there had been any need for “extra protection,” Mr. Gibson said that “I just thought that there was some point in some of the conversations that I needed to get some advice for how to answer these questions.” Id. at 312.

These remarks by Mr. Gibson are not surprising when it is noted that Floyd appeared with Gibson at a deposition in 1979, when Gibson was an active employee of Occidental. Mr. Gibson emphasized that he had nothing to hide, “was not here to tell lies” and, therefore, did not “need” a lawyer. “But,” he added,

I feel much better now that they came forward and told me this because it looked like Mr. Cohen [the Department of Justice attorney] was getting into some areas that I didn’t think that I should be talking about and I’m glad I’m being represented now, although I still maintain that I don’t need a lawyer because I’m not here to protect anybody or down anybody.

Id.

Occidental has informed the court and counsel that it intends to notify some of its former employees that it has authorized its attorneys to represent them during the Love Canal proceedings. Legal fees attributable to such representation would be absorbed by Occidental. The proposed notice would advise the ex-employees that they are not required to be represented by counsel, but that representation by Phillips/Wald is a no-cost option. The notice would also state that the former workers could obtain independent counsel at their own expense. Finally, the addressees would be told that no conflict of interest is known to exist, and none is expected, but if a conflict arises, the ex-employees will be notified and have the opportunity to obtain other counsel.

Occidental’s decision to offer to pay for legal representation to its ex-employees in these proceedings resulted, in part, from “the situation which arose during the deposition of John W. Gibson.” Affidavit of Norman Alpert, Item 213, ¶ 5. Mr. Alpert, the company’s Vice President for Corporate Environmental Affairs, also suggested that the decision was partially a continuation of Occidental’s practice of informing its employees that they were not obligated to submit to informal interviews relating to the discovery proceedings in this lawsuit. He also noted that some employees had called Occidental to seek advice in connection with requests for informal interviews. See, Alpert affidavit and attached exhibits. Occidental has agreed not to send the notice to the former employees until the court decides the instant motion.

III.

With respect to Mr. Gibson, the court declines to issue an order disqualifying Phillips/Wald from acting as his counsel. In reaching this decision, the court does not place its imprimatur upon the methods used by those firms in reaching their arrangement with him. However, the facts of this case do not warrant disqualification.

Motions to disqualify attorneys are generally disfavored. Board of Education of New York City v. Nyquist, 590 F.2d 1241 (2d Cir.1979); Guthrie Aircraft Co. v. Genesee County, New York, 597 F.Supp. 1097 (W.D.N.Y.1984). The movants complain that Mr. Floyd improperly solicited Mr. Gibson. They also suggest that there are potential conflicts between the interests of Mr. Gibson and those of Occidental, Phillips/Wald’s main client.

No conflict of interest has been demonstrated here, and there is nothing to indicate that one is imminent. Mr. Gibson is not a defendant in this case, and he never will be. There is no chance that he will be subjected to any liability.

There is a possibility that he will give testimony adverse to Occidental. The movants argue that Phillips/Wald’s loyalty to its primary client may impair their ability to give independent advice to him.

The court is not persuaded that the dual representation of Gibson and Occidental creates a likelihood of a significant conflict. Indeed, it is the alleged improper solicitation, not conflict of interest, which is the primary basis of this motion. Gibson’s only interest in these proceedings is to be protected from unwarranted inquiries and to be able to consult with counsel during questioning when doubts arise. This is not a case where there is a significant risk that an attorney will gain confidential information from one client and disclose it to another client whose interests are adverse. See, e.g., Glueck v. Jonathan Logan, Inc., 653 F.2d 746 (2d Cir.1981).

The interests of Gibson and Occidental are not adverse. Moreover, it is clear from the record in this case that he has some notion that Floyd has always been his lawyer and that he wants the existing arrangement to continue. The court does not perceive any conflict of interest in violation of the canons of the Code of Professional Responsibility, and there is no indication that potential conflicts pose a significant risk of trial taint. Accordingly, the court declines to exercise its discretionary authority to disqualify the Phillips, Lytle and Wald, Harkrader firms from continued representation of Mr. Gibson on grounds of conflict of interest.

The solicitation issue presents a closer question. The court starts from the premise that rules discouraging solicitation of prospective clients by lawyers are intended primarily to protect the prospective client. In Ohralik v. Ohio State Bar Assn., 436 U.S. 447, 98 S.Ct. 1912, 56 L.Ed.2d 444 (1978), the Supreme Court recognized that the state’s interest in protecting lay persons from overreaching by professionals was strong enough to justify state regulation of in-person solicitation by lawyers. Unlike Ohralik, the instant case does not present an example of a professional exerting undue influence upon a layman.

It is true that the idea of obtaining legal representation did not originate with Mr. Gibson. Indeed, it appears that his only conception of an attorney-client relationship was that of a professional coming to the aid of a person who faced the risk of a criminal or civil penalty. It was Floyd who informed Gibson that he could obtain counsel for the purpose of advising him during the deposition. Not being aware that attorneys provided such services for persons who were not “in trouble,” it did not occur to Gibson that the services of a lawyer would be helpful.

Floyd did not advise Mr. Gibson that there may be conflicts when he first brought up the idea that he could act as Gibson’s attorney. This defect was corrected to some extent when the relationship between Floyd and Gibson was being finalized on January 7, 1985. At that time, Floyd handed Mr. Gibson the letter mentioned previously. Ante, 1472.

Floyd should have spelled out the possibility of conflicts sooner, but since I have found that potential conflicts are not material here, this defect is not serious enough to warrant disqualification. Floyd’s failure to advise more completely about potential conflicts is significant only to the extent that it sheds light on the solicitation question. Under some circumstances, this could be an indication of the kind of overreaching and pressure tactics which the ban on solicitation is designed to prevent.

In the case of Mr. Gibson, the record is bereft of any evidence that there was overreaching here. Mr. Floyd’s conduct is not at all comparable to cases in which unprincipled attorneys prey upon distraught victims of recent accidents. Compare, Okralik, supra.

The fact that some tactical advantage might be gained by representing both Gibson and Occidental is not lost upon the court. Being a client of Phillips/Wald, counsel for the other parties in this case cannot interview Mr. Gibson on an informal basis without first contacting Phillips/Wald. This consideration is conspicuously present in the movants’ arguments, and the court does not doubt that Phillips/Wald and Occidental are aware of it as well. It is this factor which suggests to the court that, while the conduct of Phillips/Wald was not unethical, it was not charitable either.

The State invokes two specific provisions of the New York State Code of Professional responsibility. Disciplinary Rule 2-103(A) discourages attorneys from soliciting employment from a person who has not sought legal advice if such conduct violates a statute or court rule. Similarly, DR 2-104 provides that a lawyer who has volunteered advice to a person that he should obtain counsel shall not accept employment from the person so advised. The pertinent statute is section 479 of New York’s Judiciary Law, which prohibits the solicitation of legal business.

These rules do not compel the result sought by the movants on the issue of Phillips/Wald’s representation of Gibson. There is no indication that he was mistreated or exploited, and the attorneys who filed this motion have not accused Floyd or anyone else of deliberately overbearing Gibson’s will. Floyd solicited Gibson in the sense that he endeavored to represent him when Gibson would not have sought counsel. The suggestion that there would be no cost for legal services no doubt influenced Gibson to make the decision he made. But Floyd’s past relationship with Gibson (e.g., at the 1979 deposition), Gibson’s sense that Floyd had always represented him, and his voluntary agreement to this arrangement make disqualification improper here.

The movants rely heavily upon United States v. RMI Co., 467 F.Supp. 915 (W.D.Pa.1979). That case involved dual representation of a defendant corporation and its current employees in a criminal proceeding. The court disqualified counsel from representing the employees (who were neither defendants nor suspects but who were to be called by the government as trial witnesses), because it perceived a conflict of interest and a risk that the corporation’s sixth amendment rights might be compromised. The RMI case is distinguishable, because the present case does not involve the sixth amendment and no significant conflict of interest is apparent.

More apposite here is In Re Coordinated Proceedings in Petroleum Products Antitrust Litigation, 658 F.2d 1355 (9th Cir.1981), cited by Phillips/Wald. There, the Ninth Circuit vacated the district court’s order disqualifying a corporation’s counsel from representing former employees during depositions. The court stated that the Supreme Court’s decision in Upjohn modified rules regarding solicitation when the objects of the “solicitation” are former employees. Id. at 1361. The court also stated that “pre-deposition insulation” of deponents was an “inconvenience” to opposing counsel which was not a basis for disqualification. Id.

This court need not decide, as the Ninth Circuit did, that the attorney-client privilege applies to communications between a corporation’s attorney and its ex-employees concerning activities during their period of employment. See id., n. 7. Phillips/Wald’s direct representation of Gibson avoids that issue. Still, the Ninth Circuit’s decision supports the view that initiating contact with former employees regarding representation at depositions should not result in disqualification.

Two other points should be noted. First, Mr. Gibson is a man whose health requires that deposition sessions be brief and non-strenuous. Having an attorney whom he trusts and with whom he has had prior contact may well make the process easier. If Mr. Gibson thinks otherwise, he will terminate the relationship which, as he knows, is his prerogative.

Second, the Gibson deposition has already been through four sessions. During the first three, he was not represented by Phillips/Wald. Mr. Floyd stated at oral argument that the attorney-client privilege would not be invoked to frustrate discovery and that Mr. Gibson would always be advised that he could waive the privilege. The court finds no reason to believe Mr. Floyd will not act in accordance with this statement. Under these circumstances, the court concludes that it would be inappropriate to disqualify Phillips/Wald from representing Mr. Gibson. Accordingly, the motion to disqualify Phillips/Wald from representing Mr. Gibson during his deposition is denied.

IV.

For the foregoing reasons, the court also declines to issue an order prohibiting Phillips/Wald from representing other former employees in connection with any depositions at which they may be called to testify. However, the court will grant the movants’ request for an order enjoining Occidental from sending any notice containing an offer of legal assistance from Phillips/Wald.

The idea of sending a- letter conveying such an offer arose, in large part, from the situation involving Mr. Gibson. Thus, it is clear that the idea essentially originated with Floyd and Phillips/Wald. The court does not question Mr. Floyd’s integrity or that of his co-counsel. However, if Occidental sends offers to the former employees, it will be doing so upon behalf of Phillips/Wald, thus doing indirectly what Floyd did directly with Gibson.

I have stated that I do not believe Floyd’s conduct relating to the arrangement with Gibson was unethical or wrong under the circumstances. However, I believe there is an appearance of impropriety when a law firm directly or indirectly mails an offer of legal services to future witnesses. It would have been better if Gibson’s arrangement with Phillips/Wald had been initiated by Mr. Gibson. Whatever appearance of impropriety resulted from the Gibson matter was not great enough to warrant disqualification. But the court believes that if it is possible to avoid a negative appearance, conduct giving rise to it should be prevented.

The best way to avoid an appearance of impropriety is to enjoin the mailing of the notice. Phillips/Wald may still represent the former employees, but the attorney-client relationship must, if it is established at all, come about at the initial request of the former employees. Phillips/Wald may contact the former employees about the depositions and advise them that they are entitled to be deposed with or without counsel, but no offer to represent any prospective deponent shall be made unless the deponent specifically asks an attorney from Phillips/Wald to represent him. No one associated with Phillips/Wald or Occidental shall mention any fee arrangement unless the prospective client inquires about fees. Phillips/Wald or Occidental may mention the fee arrangement only if they are asked about fees first.

The court believes that such an order is justified to ensure that no overreaching, or the appearance thereof, occurs. See Aspgren v. Montgomery Ward, No. 82C7277 (N.D.Ill. Nov. 19, 1984). Counsel for Phillips/Wald maintain that the motive of pecuniary gain is negligible and that the appearance of impropriety is illusory. The court is not prepared to speculate on the amount of additional attorneys’ fees that would result from dual representation. However, it is certain that there would be at least some additional income to the firms. Moreover, the court is unwilling to provide unnecessary encouragement for a method of obtaining legal work which results in one side gaining even a minor tactical advantage.

It is not improper for Phillips/Wald to represent these people, but it appears improper to permit the firms, through their primary client, to give unsolicited notice of their availability at no cost to prospective clients. Koffler v. Joint Bar Ass’n, 51 N.Y.2d 140, 432 N.Y.S.2d 872, 412 N.E.2d 927 (1980), does not suggest a different result. Koffler reiterated the view announced by the Supreme Court in Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977), that advertising to the general public was permissible. However, the “solicitation” issue in Koffler did not involve persons who were targeted for depositions .in a currently pending lawsuit. The letter Occidental proposes to send is not the kind of advertising that Bates and Koffler meant to protect.

The court is aware that its decision in this case is a public document which can be read by former employees. The issues before the court on this motion involve past and future conduct of defense counsel and their client, acting on their behalf. So long as defense counsel and Occidental comply with the spirit and letter of the Code of Professional Responsibility and of this order, the court will not interfere with the discovery proceedings in this case.

Y.

Conclusion

The motion to disqualify Occidental’s present counsel from representing Mr. Gibson is denied. The motion for an order enjoining Occidental’s counsel from representing other former Occidental employees is also denied.

The request for an order enjoining Occidental from sending notices offering the legal services of Phillips/Wald is granted. Phillips/Wald may represent former Occidental employees only if the attorney-client relationship results from conduct consistent with part IV of this opinion.

So ordered.

      . The same relief is requested by a group of individuals who are not parties to the case on this court’s docket. These people are plaintiffs in an action pending in New York State Supreme Court (Niagara County). Counsel for the governmental parties are participating in both lawsuits, which are somewhat related in subject matter. Depositions of former Occidental employees are part of the discovery for both actions. The instant motion was filed in this court, and the parties have apparently agreed (without any direction from this court) to accept this court’s decision as the rule governing this matter in both lawsuits. This arrangement has been approved by the Honorable Joseph P. Kuszynski, who is presiding over the state court action.

      . Numbers following "Tr." and Roman numerals denote the page numbers of the transcript of the Gibson deposition. Five volumes of Mr. Gibson's testimony were filed with the court on February 1, 1985, as Docket Item 214, Vols. I-V.

      . Dear Mr. Gibson:
      This letter confirms your retention of our Firm and the Wald, Harkrader Firm in Washington as your personal counsel in conjunction with matters concerning the pending and any future Niagara Frontier landfill litigation against Occidental.
      You recognize that we are, at the same time, serving as attorneys for the Hooker/Occidental defendants in that litigation. We see no present conflict in serving as counsel for both you and Hooker/Occidental. Should a conflict arise, it is understood that we would have to terminate our joint representation and would be free to continue as counsel for Hooker/Occidental.
      We further confirm that Occidental Chemical Corporation has approved of our joint representation and has agreed to absorb any legal fees and disbursements that might be incurred as a result of our representation of you.
      Very truly yours,
      PHILLIPS, LYTLE, HITCHOCK, BLAINE & HUBER
      [/s/ David K. Floyd]
      David K. Floyd

      . The 1979 deposition was part of the proceedings in a private state court lawsuit involving Love Canal.

      . At the oral argument of this motion, there was some indication of what Mr. Gibson meant by his reference to the “areas" he did not wish to discuss. Apparently, Mr. Gibson had been asked the amount of his pension.

      . DR 2-103 provides, in part, as follows:
      (A) A lawyer shall not solicit employment as a private practitioner of himself or herself, a partner or an associate to a person who has not sought advice regarding employment of a lawyer in violation of any statute or court rule. Actions permitted by DR 2-104 and advertising in accordance with DR 2-101 shall not be deemed solicitation in violation of this provision.
      (B) A lawyer shall not compensate or give anything of value to a person or organization to recommend or obtain employment by a client, or as a reward for having made a recommendation resulting in employment by a client, except by any of the organizations listed in DR 2-103(D).
      (C) A lawyer shall not request a person or organization to recommend or promote the use of the lawyer’s services or those of the lawyer’s partner or associate, or any other affiliated lawyer as a private practitioner, except as authorized in DR 2-101, and except that:
      (1) The lawyer may request referrals from a lawyer referral service operated, sponsored, or approved by a bar association and may pay its fees incident thereto.
      (2) The lawyer may cooperate with the legal service activities of any of the offices or organizations enumerated in DR 2-103(D)(l) through (4) and may perform legal services for those to whom he was recommended by it to do such work if:
      (a) The person to whom the recommendation is made is a member or beneficiary of such office or organization; and
      (b) The lawyer remains free to exercise his independent professional judgment on behalf of his client. ******
      (E) A lawyer shall not accept employment when he knows or it is obvious that the person who seeks his services does so as a result of conduct prohibited under this' Disciplinary Rule.
      DR 2-104 provides, in part, as follows:
      Suggestion of Need of Legal Services
      (A) A lawyer who has given unsolicited advice to an individual to obtain counsel or take legal action shall not accept employment resulting from that advice, in violation of any statute or court rule.
      (B) A lawyer may accept employment by a close friend, relative, former client (if the advice is germane to the former employment) or one whom the lawyer reasonably believes to be a client.


source: Caselaw Access Project

author: ROVNER, District Judge.

license: Public Domain

text:
    UNITED STATES of America ex rel. Americo NIEVES, Petitioner, v. Michael O’LEARY and Neil F. Hartigan, Respondents.
    No. 84 C 734.
    United States District Court, N.D. Illinois, E.D.
    April 19, 1985.

      Petitioner, Americo Nieves, pro se.
    Marcia L. Friedl, Asst. Atty. Gen., Chicago, 111., Neil F. Hartigan, Atty. Gen., State of 111., for respondents.
   MEMORANDUM OPINION AND ORDER

ROVNER, District Judge.

Petitioner Americo Nieves seeks a writ of habeas corpus pursuant to 28 U.S.C. § 2254. Respondents are Michael O’Leary, warden of Stateville Correctional Center, Joliet, Illinois and Neil F. Hartigan, Attorney General of Illinois. This action arises out of petitioner’s August, 1978 conviction for the unlawful delivery of more than 15 grams of a substance containing heroin. Petitioner is presently serving a thirty year sentence for this conviction. During both the trial and the sentencing hearing petitioner proceeded pro se. Petitioner argues that the writ should be granted because (1) certain tape recorded evidence introduced at trial should have been suppressed, and (2) his waiver of the right to counsel was not knowing, intelligent, and voluntary. Petitioner has exhausted his state remedies.

Presently before this Court are cross motions for summary judgment pursuant to Fed.R.Civ.P. 56. For the reasons stated below, respondents’ motion for summary judgment is granted. Petitioner’s motion for summary judgment is denied.

Factual and Procedural Background

The facts are uncontroverted. Petitioner’s indictment and conviction arose out of a sale of heroin to an undercover narcotics officer, Joseph Andalina, on January 13, 1978. Pursuant to a court order, officer Andalina tape recorded conversations with petitioner on January 12 and again on January 13,1978. In these conversations, petitioner agreed to sell Andalina five to eight ounces of heroin. After officer Andalina paid petitioner $1,300 in marked currency at the agreed time and place, other officers arrested petitioner and recovered an additional 99.5 grams of heroin in bags hidden near a garbage can.

Petitioner was indicted on four charges which arose out of the series of events culminating in his arrest on January 13, 1978. Petitioner was tried separately on each charge, with the present case tried last. Prior to the first trial, petitioner’s motion to suppress the tape recorded conversations on which these cases rested was denied.

In petitioner’s first three trials, he was represented by Mr. Kielian of the public defender’s office. On April 26, 1978, petitioner was convicted of unlawful delivery of less than 15 grams of a substance containing heroin, a Class 2 felony. On May II, 1978, petitioner was convicted of unlawful delivery of more than 15 grams of a substance containing heroin, a Class 1 felony. Ill.Rev.Stat. ch. 56V2, ¶¶ 1401(a)(1), (b) (1977). The May 11, 1978 conviction concerned the same type of offense as that in the instant case. Petitioner was acquitted of the third related charge.

On June 26, 1978, petitioner asked to proceed pro se in this case, and the trial court granted petitioner’s request. At the time petitioner requested permission to proceed pro se, the judge did not recite the specific litany required under Illinois law. III. Rev.Stat. ch. 110A, ¶ 401(a) (1977). Instead, the court explained that petitioner would have to abide by the rules of the court, and that he could lose his right to be present in the courtroom if his conduct did not conform to the rules. The judge stated that based on the first three trials he was convinced petitioner was fully competent to conduct his defense, but he nonetheless recommended against it. The judge permitted petitioner to proceed pro se only after he appointed Mr. Kielian as stand-by counsel.

Prior to his trial in the instant case, petitioner was sentenced to ten years for the Class 2 felony, and thirty years for the Class 1 felony. At the time of sentencing, the trial judge fully explained the minimum and maximum sentencing possibilities for the two convictions. Before the trial in this case, the judge again acknowledged petitioner’s knowledge of courtroom procedure, but nonetheless recommended that petitioner be represented by counsel. Petitioner, with the court’s encouragement, agreed to have Mr. Kielian sit at counsel table in order to act as a technical advisor. In August, 1978, petitioner was convicted in a jury trial. On October 16, 1978 petitioner was sentenced to thirty years in prison for the fourth charge.

Petitioner appealed his conviction to the Illinois Appellate Court on two grounds. First, he claimed that suppression of the recorded conversations between petitioner and an undercover police officer was required by the Illinois Code of Criminal Procedure, Ill.Rev.Stat. ch. 38,11108A-1 et seq. (1977), because the tapes in question were not turned over to the trial judge for sixteen days. Second, petitioner claimed that he did not effectively waive his right to counsel because the trial judge failed to give him the specific admonishments required by Illinois Supreme Court Rule 401(a). Ill.Rev.Stat. ch. 110A, 11401(a) (1977).

The Illinois Appellate Court reversed and remanded petitioner’s conviction holding that the admission into evidence of the tape recorded phone conversations was error. People v. Nieves, 99 Ill.App.3d 447, 54 Ill.Dec. 695, 425 N.E.2d 560 (1981). The Illinois Supreme Court reversed on the suppression issue. People v. Nieves, 92 Ill.2d 452, 65 Ill.Dec. 917, 442 N.E.2d 228 (1982). In addition, the Illinois Supreme Court held that under the facts of this case, the specific admonishments of Supreme Court Rule 401(a) were not required. Id. In his petition for a writ of habeas corpus, petitioner again raises these issues.

Tape Recorded Conversations as Evidence

Petitioner claims that the tape recorded conversations between himself and Officer Andalina should have been suppressed because the tapes were obtained by unlawful eavesdropping, which he asserts was an unconstitutional search and seizure in violation of the fourth amendment. Respondents assert that petitioner has waived any constitutional claim because at no time pri- or to this federal habeas petition did he suggest that introduction of the tapes into evidence violated the fourth amendment. Rather, in his initial motion to suppress and subsequent state court appeals, petitioner argued only that the tapes were inadmissible because they were not turned over to the trial judge “immediately,” as required by Ill.Rev.Stat. ch. 38, § 108A-7(b).

The Seventh Circuit has established that a state prisoner is barred from bringing a federal habeas petition on any claim that was not brought on direct appeal in the state court, unless the petitioner presents an adequate explanation for his action and shows an injustice which would result from the preclusive effect given to the procedural default. United States ex rel. Spurlark v. Wolff, 699 F.2d 354 (7th Cir.1983) (en banc). Petitioner has made no attempt in his habeas petition to present any explanation of why he did not raise a fourth amendment claim in the state court appeals.

It is possible, however, for a federal constitutional claim to be preserved for purposes of a writ of habeas corpus without being characterized as such. A habeas petitioner must provide the state courts with a fair opportunity to apply constitutional principles and correct any constitutional error committed by the trial court. Anderson v. Harless, 459 U.S. 4, 103 S.Ct. 276, 74 L.Ed.2d 3 (1982). The Seventh Circuit, however, has refused to apply a per se rule requiring a petitioner to use certain magic words to alert the state court to the constitutional ramifications of the alleged trial error. United States ex rel. Sullivan v. Fairman, 731 F.2d 450 (7th Cir.1984). The court identified four alternate means of doing so:

... where the argument presented to the state court does not: “(a) rel[y] on pertinent federal cases employing constitutional analysis; (b) rel[y] on state cases employing constitutional analysis in like fact situations, (c) assert[] the claim in terms so particular as to call to mind a specific right protected by the Constitution, ... [or] (d) alleg[e] a pattern of facts that is well within the mainstream of constitutional litigation,” Daye v. Attorney General of New York, 696 F.2d 186, 194 (2d Cir.1982) (en bane), we cannot say that the state court has considered or had a fair opportunity to consider and correct the subsequently alleged constitutional violations.

Id. at 454.

In his argument to the state courts, petitioner never relied on federal or state cases applying constitutional analysis to similar fact situations. And neither the claim asserted nor the pattern of facts alleged bring to mind a fourth amendment violation. In his state court appeals, petitioner claimed only a violation of Ill.Rev. Stat., ch. 38, ¶ 108A-5(a)(3). Section 108A-5(a)(3) requires that immediately after the expiration of the period of a judicial order allowing eavesdropping, all recordings shall be made available to the judge issuing the order; the judge shall listen to the tapes, determine if the conversations thereon are within his order, and seal the recordings. Because there was a sixteen day delay in turning over the tapes, petitioner claimed that the State failed to adhere to the Section 108A-7 “immediacy” requirement and that this violation required suppression.

The Illinois Supreme Court extensively analyzed the immediacy issue, employing federal appellate court analysis of the similarly worded federal counterpart to the Illinois act, 18 U.S.C. § 2518(8)(a). People v. Nieves, 92 Ill. at 457-61, 65 Ill.Dec. at 920-22, 442 N.E.2d at 231-33. The court held that in the absence of any challenge to the integrity of the tapes, and with the lack of any indication that tampering had occurred, the legislative purpose of preserving the integrity of the tapes had been achieved, despite the delay. Because the legislative purpose had been fulfilled and because there was no evidence of bad faith by the State or prejudice to Nieves by the delay in review and sealing, the Illinois Supreme Court held that the tapes were admitted properly at trial. Id. at 463, 65 Ill.Dec. at 922-23, 442 N.E.2d at 233-34.

The opinion of the state supreme court indicates that it discerned no fourth amendment implications. The state court focused its inquiry on whether, despite the delay in judicial review and sealing, the tapes remained reliable evidence. Conversely, fourth amendment analysis asks whether, regardless of the reliability of the evidence, it should be suppressed as the product of an unreasonable search and seizure. The focus of the inquiry is whether the method of obtaining the evidence violated the defendant’s legitimate expectations of privacy. Therefore, it cannot be said that petitioner in any way alerted the state court to his fourth amendment claim.

This Court holds that petitioner has waived any constitutional claim with regard to the tape recorded evidence. Thus, respondents’ motion for summary judgment as to petitioner’s fourth amendment claim is granted.

Waiver of Counsel

Petitioner claims that he proceeded to trial pro se without knowingly and intelligently waiving his right to counsel, in violation of the sixth and fourteenth amendments. Petitioner bases his claim on the trial judge’s failure to admonish him of the nature of the charge against him and the minimum and maximum sentences prescribed by law, including the impact of his prior convictions, in violation of Illinois Supreme Court Rule 401(a), Ill.Rev.Stat. ch. 110A, ¶ 401(a).

The Illinois Supreme Court has held that, under the facts and circumstances of this case, it was unnecessary for the trial court to give the specific admonishments set forth in Rule 401(a). People v. Nieves, 92 Ill.2d at 467, 54 Ill.Dec. at 925, 442 N.E.2d at 236 (1982). The court found that the record revealed: that defendant recently had been tried on three related charges; that prior to the fourth trial, the same trial judge fully explained to defendant the minimum and maximum sentencing possibilities for the other two convictions, one of which was for a charge identical to that in the fourth trial; that the defendant did not lack legal sophistication; and that defendant sought and was granted the “technical assistance” of stand-by counsel. Id. at 466, 54 Ill.Dec. at 924-25, 442 N.E.2d at 235-36. On that basis, the court held that the record disclosed that Nieves was fully cognizant of the charge, the possible penalties to be imposed, and his right to counsel. Id., 54 Ill.Dec. at 925, 442 N.E.2d at 236.

In his state court appeals, petitioner never specifically raised a federal constitutional claim; rather, he argued solely that the trial judge violated Illinois Supreme Court Rule 401(a). The Illinois Supreme Court’s interpretation of this state law is, of course, binding on this Court, absent a showing that the law conflicts with the Constitution or federal law. Herb v. Pitcairn, 324 U.S. 117, 125-26, 65 S.Ct. 459, 463, 89 L.Ed. 789 (1945). This Court finds, however, that petitioner preserved his federal constitutional claim for purposes of this petition for a writ of habeas corpus, although the claim was not characterized as such, because he alleged “a pattern of facts that is well within the mainstream of constitutional litigation.” Sullivan, 731 F.2d at 454 (citation omitted).

It is well established in United States Supreme Court cases that

... waivers of counsel must not only be voluntary, but must also constitute a knowing and intelligent relinquishment or abandonment of a known right or privilege, a matter which depends in each case ‘upon the particular facts and circumstances surrounding that case, in-eluding the background, experience, and conduct of the accused.’

Edwards v. Arizona, 451 U.S. 477, 482,101 S.Ct. 1880, 1884, 68 L.Ed.2d 378 (1981), quoting Johnson v. Zerbst, 304 U.S. 458, 464, 58 S.Ct. 1019, 1023, 82 L.Ed. 1461 (1938). The Supreme Court has set forth certain information that a defendant should be aware of in relinquishing his right to counsel:

To be valid such waiver must be made with an apprehension o/the nature of the charges, the statutory offenses included within them, the range of allowable punishments thereunder, possible defenses to the charge and circumstances in mitigation thereof, and all other facts essential to a broad understanding of the whole matter.

Von Moltke v. Gillies, 332 U.S. 708, 723-24, 68 S.Ct. 316, 323, 92 L.Ed. 309 (1948) (emphasis added). The language of these Supreme Court guidelines indicates that there is no per se rule that failure to expressly inform a defendant of the nature of the charge and the minimum and maximum sentence renders his waiver of counsel unconstitutional. Rather, the constitutionality of a waiver of counsel turns on the particular facts and circumstances of the case, including defendant’s awareness of the consequences of his decision. The case law bears out this conclusion.

The Seventh Circuit has held on several occasions that where a defendant was acquainted with the criminal process, had past experience with the consequences of a conviction, had knowledge of the benefits of counsel from prior criminal trials, and knew of the seriousness of the charge, that that defendant’s waiver of counsel was intelligently made despite the fact that no one had expressly told him of the nature of the charge and the range of possible punishments. Creighbaum v. Burke, 398 F.2d 822 (7th Cir.), cert. denied, 393 U.S. 955, 89 5. Ct. 386, 21 L.Ed.2d 368 (1968) and Cox v. Burke, 361 F.2d 183 (7th Cir.), cert. denied, 385 U.S. 939, 87 S.Ct. 304, 17 L.Ed.2d 218 (1966).

As the court stated in Creighbaum: “It was reasonable for the state trial court to conclude, under the circumstances, that the petitioner fully appreciated the implications of his waiver of counsel ... without having been expressly reminded of the precise range of punishment awaiting him____ A decision to the contrary would represent a triumph of form over substance.” Creighbaum, 398 F.2d at 823, quoting Creighbaum v. Burke, 287 F.Supp. 463 (E.D.Wis.1967). Accord Aiken v. United States, 296 F.2d 604 (4th Cir.1961).

In the instant case, too, the circumstances indicate that petitioner Nieves was fully cognizant of the implications of his waiver of counsel, despite the absence of an express warning of the possible sentence for the charge. He recently had gone through three criminal trials on related charges, involving many of the same witnesses and possible defenses, represented by a public defender. Thus, Nieves had knowledge of both the criminal process and the benefits of counsel. Further, petitioner was fully aware of the nature and seriousness of the charge: he had just been convicted of an identical statutory offense. At the sentencing for that charge, which was prior to his pro se trial, the minimum and maximum sentences were fully explained to him. As for petitioner’s claim that his waiver of counsel could not be voluntary unless the trial judge explained to him whether his sentences would be concurrent or consecutive and the effect of his prior convictions on his possible sentence, at least one court has held that a defendant is not entitled to such knowledge. Burch v. United States, 359 F.2d 69 (8th Cir.1966). In Burch, the Eighth Circuit held that the petitioner was entitled to know only the range of potential penalties, which fact, as here, petitioner “undoubtedly knew.” Id. at 73. In addition, it is interesting to note that petitioner received an identical sentence for each of his convictions for unlawful delivery of more than 15 grams of a substance containing heroin: 30 years. It would indeed be exalting form over substance to find that, because the trial judge omitted several express statements, petitioner was unaware of the nature of the charge or the range of possible sentences, and this Court declines to do so.

Furthermore, while courts in several circuits have held petitioners’ waivers of counsel unconstitutional due to the trial judges’ failure to inform them of sentencing possibilities, these cases are all distinguishable from the instant petition. For example, in Evans v. Raines, 705 F.2d 1479 (9th Cir.1983), the court held: “In the absence of some knowledge of Evans’ understanding of the seriousness of the charges, it cannot be said that he intelligently waived counsel.” Id. at 1480 (emphasis added). In Evans, there was no record evidence to indicate that petitioner would know the seriousness of the charge without an express judicial warning.

Similarly, in Molignaro v. Smith, 408 F.2d 795 (5th Cir.1969), the fifth circuit held that Molignaro’s waiver of counsel was not knowing because there was no evidence that he was aware of the twenty year maximum sentence for his charge of child molesting. The court took care to note: “We rule only upon the specific circumstances of Molignaro’s plea: his lack of education, lack of previous criminal record, and the unlikelihood that a layman would be able to anticipate the length of the sentence for the crime of which he was accused.” Id. at 802.

In the instant case, unlike in Molignaro and Evans, the record abounds with evidence that Nieves was fully aware of his potential sentence. This Court finds that petitioner’s waiver was made with an apprehension of the nature of the charge and the range of potential penalties. Therefore, this Court holds that petitioner’s waiver of counsel was voluntary, knowing, and intelligent and grants summary judgment to respondents on petitioner’s sixth amendment claim.

For the reasons stated above, this Court grants respondents’ motion for summary judgment on Americo Nieves’ petition for a writ of habeas corpus. Petitioner’s motion for summary, judgment is denied.

      . The Illinois Appellate Court did not reach the waiver of counsel issue.

      . Similarly, in United States ex rel. Sullivan v. Fairman, 731 F.2d 450 (7th Cir.1984), the state court, presented with a claim that the trial judge erroneously denied a motion for a new trial based on newly discovered evidence, had focused on whether the state law requirements for granting a new trial had been met. The Seventh Circuit held that the state court had not been alerted to the habeas petitioner’s constitutional due process claim because a due process inquiry, which looks at the question of fundamental fairness, is substantively different from that presented to the state court.

      . Even if petitioner had not waived his constitutional claim, respondents would still be entitled to summary judgment as a matter of law. It is firmly established that sound recordings made by a government agent who is a party to a recorded conversation are not a violation of the fourth amendment. E.g., United States v. Caceres, 440 U.S. 741, 99 S.Ct. 1465, 59 L.Ed.2d 733 (1979); United States v. White, 401 U.S. 745, 91 S.Ct. 1122, 28 L.Ed.2d 453 (1971); United States v. Haimowitz, 725 F.2d 1561 (11th Cir.), cert. denied, — U.S.-, 105 S.Ct. 563, 83 L.Ed.2d 504 (1984); United States v. Miller, 720 F.2d 227 (1st Cir.1983), cert. denied, 457 U.S. 1107, 104 S.Ct. 984, 79 L.Ed.2d 220 (1984). Courts reason that "an individual has no legitimate expectation that the person to whom he is speaking will not relate the conversation to the legal authorities, either by repetition or by the recording of the conversation.” Haimowitz, 725 F.2d at 1582. See also Caceres, 440 U.S. at 750-51, 99 S.Ct. at 1470-71.

      . A criminal defendant's sixth amendment right to assistance of counsel is made applicable to the states by the fourteenth amendment. Argersinger v. Hamlin, 407 U.S. 25, 92 S.Ct. 2006, 32 L.Ed.2d 530 (1972); Gideon v. Wainwright, 372 U.S. 335, 83 S.Ct. 792, 9 L.Ed.2d 799 (1963).

      . Illinois Supreme Court Rule 401(a), provides:
      Any waiver of counsel shall be in open court. The court shall not permit a waiver of counsel by a person accused of an offense punishable by imprisonment without first, by addressing the defendant personally in open court, informing him of and determining that he understands the following:
      (1) the nature of the charge;
      (2) the minimum and maximum sentence prescribed by law, including, when applicable, the penalty to which the defendant may be subjected because of prior convictions or consecutive sentences; and
      (3) that he has a right to counsel and, if he is indigent, to have counsel appointed for him by the court.
      Petitioner does not deny that he was aware of his right to have an attorney. “Although it may fairly be said that the petitioner knew of his right to appointed counsel, the trial court, in no way, informed him of and determined that he understood the nature of the charge against him or the potential sentence he could be subjected to." Petition for Writ of Habeas Corpus at 13.
      Petitioner has complained further that he was not aware that he had a right to appointed counsel other than the Public Defender. There is no such right, however, in the absence of a showing by a defendant of incompetence or conflict of interest. United States v. Ely, 719 F.2d 902 (7th Cir.1983), cert. denied, - U.S. -, 104 S.Ct. 1313, 79 L.Ed.2d 710 (1984).

      . The Von Moltke formulation is frequently cited as a starting point in waiver of counsel analysis. See, e.g., United States v. Gaines, 416 F.Supp. 1047, 1050 (N.D.Ind.1976) (defendant’s motion to represent self in new trial); United States v. King, 582 F.2d 888, 890 (4th Cir.1978) (decided on competency grounds).


author: BARBOUR, District Judge.

text:
    FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff, v. Jackie GARDNER and Gardner Land Company, Inc., Defendants, v. Lawrence E. STATON and Joe Siebenmorgen (Third Party Defendants).
    Civ. A. No. J82-0666(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    April 19, 1985.

      Paul J. Stephens, Jamie G. Houston, III, Watkins & Eager, Jackson, Miss., for plaintiff.
    Roy D. Powell; Michael S. Allred, Edwin Y. Hannan, Thomas L. Kirkland, Jr., Satterfield & Allred, Jackson, Miss., for defendants.
    Robert McHenry, Little Rock, Ark., for Joe Siebenmorgan.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter came before this Court on three Motions for Summary Judgment. Federal Deposit Insurance Corporation (“FDIC”) was substituted as party plaintiff in place of the Bank of Quitman, Quitman, Arkansas, an Arkansas State Bank (“Bank”). The Bank had originally filed a “Declaration” (hereinafter “Complaint”) against two Mississippi Defendants, Jackie Gardner and Gardner Land Company, Inc. (“Defendants”), seeking recovery of $80,-000 plus interest and other costs as provided in the certain promissory note executed by Defendants in favor of Bank.

The subject note is one of several documents evidencing a three-way lending transaction. Apparently Lawrence Staton (a non-pleading, third-party Defendant) was over the credit limit which Bank could properly maintain. In addressing this situation, the Bank agreed to and did loan to Defendants the sum of $80,000.00 on a secured basis. Defendants, in turn, accepted an unsecured note in the sum of $80,000.00 from Staton. Defendants also agreed to apply most of the proceeds received from Bank to the credit of Staton at the Bank. Joe Siebenmorgen (a third-party Defendant), then President and Chairman of the Board of Bank, apparently with full authority of Bank and on its behalf, executed a written agreement whereby Bank would release Defendants’ pledged realty (Bank did, in fact, abide by the agreement to the extent that it released the pledged property) and would never seek collection of the subject promissory note from Defendants but would look solely to Staton for its repayment.

Defendants admit that the note exists and that they executed the note. Defendants fail to adequately deny the occurrence of all conditions precedent to the FDIC’s recovery of the note. Defendants do, however, deny that the note is due and payable and further deny that they are liable for the amounts evidenced by the note on the basis of Defendants’ affirmative allegation that the Bank had agreed in writing to look solely to Staton and never to Defendants for repayment of such note. Defendants attach to their answer a document which purports to be a copy of this alleged side agreement.

The FDIC seeks summary judgment against Defendants on the promissory note. Defendants seek summary judgment against the FDIC based on the affirmatively alleged side agreement.

Defendants filed a third-party complaint for fraud or fraudulent inducement against Joe Siebenmorgen, the President and Chairman of the Board of Directors of Bank at the time the referenced transactions took place. Siebenmorgen, evidently in his capacity as an officer of and with the authority of Bank, signed the side agreement which allegedly negates Defendants’ obligations to Bank under the subject note. Defendants also claim that they are entitled to indemnification for any such judgment from Staton, and that they are entitled to recover on the promissory note executed by Staton to Defendants which contains terms identical to the terms of the note Defendants executed to Bank (except that Staton’s note to Defendants is unsecured). Defendants attach a copy of this identical note to their Third-Party Complaint. Staton has failed to answer or otherwise defend the Third-Party Complaint exhibited against him.

Defendants only seek summary judgment against Siebenmorgen for fraud and seek damages therefor in the amount of any judgment which this Court may enter against Defendants in favor of the FDIC on the subject note. Defendants also seek leave to amend their answer to the Complaint to assert the defenses of lack or failure of consideration.

I. MOTION FOR SUMMARY JUDGMENT BETWEEN FDIC AND DEFENDANTS

The pleadings, depositions, answers to interrogatories and admissions on file, and stipulations of record together with the affidavits and other materials outside the pleadings submitted to this Court in support of, and in opposition to, the various Rule 56 Motions establish that the FDIC did acquire the subject note under 12 U.S.C. § 1823. The FDIC is not pursuing this action in its capacity as receiver of Bank, rather, it is pursuing this action as the owner of an asset of a failed bank acquired by it under 12 U.S.C. § 1823.

(a) SECTION 1823(e)

The FDIC counters the Defendants’ affirmatively asserted “side agreement” by citation to 12 U.S.C. § 1823(e) which provides as follows:

No agreement which tends to diminish or defeat the right, title or interest of the Corporation in any asset acquired by it under this Section, either as security for a loan or by purchase, shall be valid against the Corporation unless such agreement (1) shall be in writing (2) shall have been executed by the bank and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the bank, (3) shall have been approved by the board of directors of the bank or its loan committee, which approval shall be reflected in the minutes of said board or committee, and (4) shall have been, continuously, from the time of its execution, an official record of the bank.

Requirements numbered 1 and 2, for purposes of this Rule 56 determination, appear to be established or, at least, their establishment is not disputed. With regard to requirement numbered 4 there appears to be an arguable dispute as to whether the side agreement was “an official record of the bank.” On one hand, the FDIC has presented evidence which supports the fact that the agreement between Defendants and Siebenmorgen was not an official record of the Bank: A federal bank examiner who reviewed the official records of the bank, Robert C. Barber, testified that he had never seen the agreement between Defendants and Siebenmorgen during his examinations of the records of the Bank. Deposition of Robert C. Barber, p. 117. The argument of Defendants that there were bank examiners other than Robert C. Barber does not controvert Barber’s testimony that the agreement was not presented for his examination of the official records of the Bank and, more importantly does not establish that the agreement was an official record of the Bank. However, Defendants do argue that the side agreement was produced by the FDIC to Defendants during discovery. This argument, if not otherwise explicable, casts a certain doubt as to whether the agreement was “an official record of the Bank.” Further inquiry into this question is unnecessary because of the following deficiency.

With regard to requirement numbered 3, it is undisputed that the minutes of the Board of Directors of the Bank dated February 15, 1978, are the applicable minutes with regard to the subject note, and that such minutes reveal only the following:

Board reviewed the Commercial and Installment Loans made by the Officers for the months of December and January. A motion was made by J.A. Bailey and seconded by Ben F. Clark to approve the loans as presented. Motion carried.

Defendants’ Exhibit “F” to their Motion for Summary Judgment against FDIC. This entry on the minutes of the meeting of the Board of Directors of the Bank establishes that the affirmatively asserted side agreement was not specifically “approved by the Board of Directors of the Bank or its loan committee.” The entry manifests that specific approval of the subject side agreement is not “reflected in the minutes of said board or committee.” The side agreement itself must be referenced or its existence must be affirmatively and directly acknowledged by the Bank’s board of directors or loan committee, and such reference to, or acknowledgment of the side agreement must be specifically reflected in the minutes of the board or committee. 12 U.S.C. § 1823(e). Since the written agreement between Siebenmorgen (presumably for the Bank) and the Defendants is not evidenced in the subject promissory note, § 1823(e) is applicable. Federal Deposit Insurance Corporation v. Kucera Builders, Inc., 503 F.Supp. 967, 971 (N.D.Ga.1980).

Because at least one of the four requirements of § 1823(e) is shown to be unsatisfied, and since Defendants have failed to present any contrary evidence, the agreement between Seibenmorgan (for the Bank) and Defendants is not enforceable against the FDIC in this case. See Federal Deposit Insurance Corporation v. de Jesus Velez, 678 F.2d 371, 375 (1st Cir.1982); Federal Deposit Insurance Corporation v. Hoover-Morris Enterprises, 642 F.2d 785, 787-88 (5th Cir.1981). See also D’Oench, Duhme & Co. v. Federal Deposit Insurance Corporation, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed.2d 956 (1942) (an agreement which is designed to or does mislead the FDIC and other creditors is not enforceable against the FDIC even if that agreement is innocently entered into by the maker of the otherwise enforceable note); Chatham Ventures, Inc. v. Federal Deposit Insurance Corporation, 651 F.2d 355, 360-61 (5th Cir.1981).

If Section 1823(e) is applicable to an agreement, it is applied regardless of any knowledge, actual or imputed, which the FDIC may have had regarding the terms of the side agreement. See Federal Deposit Insurance Corporation v. Merchants National Bank of Mobile, 725 F.2d 634, 640 (11th Cir.1984); Federal Deposit Insurance Corporation v. de Jesus Velez, 678 F.2d at 375 (holder in due course provisions of Uniform Commercial Code do not override provisions of § 1823(e)). The Eleventh Circuit recently held as follows:

If a side agreement does not meet the requirements of Sec. 1823(e), FDIC’s knowledge of the terms of that side agreement does not render it valid against FDIC or estop FDIC from enforcing the agreement as contained in failed bank’s records.

Federal Deposit Insurance Corporation v. Merchants National Bank of Mobile, 725 F.2d at 640.

(b) MOTION TO AMEND

Further, this Court finds that the defenses of lack of or no consideration, which defenses have or have not existed from the date the original declaration was filed on January 20, 1982, are not only not timely presented but are also fruitless under the facts and law of this case. In D’Oench, Duhme & Co. v. Federal Deposit Insurance Corporation, 315 U.S. at 457-60, 62 S.Ct. at 679-680, the Supreme Court was faced with an appeal by a borrower (petitioner) from a federally insured bank whose assets had been acquired by the Federal Deposit Insurance Corporation as part of the collateral securing a loan made in connection with the assumption of the banks deposit liability by another bank. The FDIC (respondent) instituted suit to collect the note in the sum of $5,000, and petitioner alleged that the note was given without any consideration whatever and with the understanding that no suit would be brought thereon. In upholding the district court’s holding that petitioner was es-topped to assert want of consideration as a defense, the Supreme Court held as follows:

But the reach of the rule which prevents an accommodation maker of a note from setting up the defense of no consideration against a bank or its receiver or creditors is not delimited to those instances where he has committed a statutory offense. [A]n accommodation maker is not allowed that defense as against the receiver of the bank and its creditors, or at times even as against the bank itself, where his act contravenes a general policy to protect the institution of banking from such secret agreements. In some of those cases, the accommodation maker was party to the scheme of deception, in the sense that he had full knowledge of the intended use of the paper____“The defendant may not have intended to deceive any person, but when she executed and delivered to the plaintiff bank an instrument in the form of a note, she was chargeable with knowledge that, for the accommodation of the bank, she was aiding the bank to conceal the actual transaction. Public policy requires that a person who, for the accommodation of the bank executes an instrument which is in form a binding obligation, should be estopped from thereafter asserting that simultaneously the parties agreed that the instrument should not be enforced.” [Quoting Mount Vernon Trust Co. v. Bergoff, 272 N.Y. 192, 196, 5 N.E.2d 196, 197.]
Furthermore, the fact that creditors may not have been deceived or specifically injured is irrelevant. [I]t is the ‘evil tendency’ of the acts to contravene the policy governing banking transaction which lies at the root of the rule.
Those principles are applicable here, because of the federal policy evidenced in this Act to protect respondent, a federal corporation, from misrepresentations made to induce or influence the action of respondent, including misstatements as to the genuineness or integrity of securities in the portfolios of banks which it insures or to which it makes loans. Those principles call for an affirmance of the judgment below.
Clearly respondent is a member of the creditor class which the banking authorities were intended to protect. Plainly one who gives such a note to a bank with a secret agreement that it will not be enforced must be presumed to know that it will conceal the truth from the vigilant eyes of the bank examiners____ Moreover, as we have seen, the inability of an accommodation maker to plead the defense of no consideration does not depend on his commission of a penal offense. The test is whether the note was designed to deceive the creditors or the public authority, or would tend to have that effect. It would be sufficient in this type of case that the maker lent himself to a scheme or arrangement whereby the banking authority on which respondent relied in insuring the bank was or was likely to be misled____ If the secret agreement were allowed as a defense in this case the maker of the note would be enabled to defeat the purpose of the statute by taking advantage of an undisclosed and fraudulent arrangement which the statute condemns and which the maker of the note made possible.

D’Oench, Duhme & Co. v. Federal Deposit Insurance Corporation, 315 U.S. 458-61, 62 S.Ct. 679-681. (citations omitted).

Accordingly, Defendants’ Motion to amend should be denied.

While Defendants argue that the FDIC had actual knowledge that the proceeds of the loan transaction were used for the benefit of Lawrence Staton and not for the benefit of Defendants, the documents upon which Defendants rely to support this argument, Exhibits “D” & “E” to their Motion for Summary Judgment, negate the fact that the FDIC had knowledge of the side agreement. In fact, said exhibits tend to prove that the FDIC was misled regarding Siebenmorgen’s and the Bank’s intention to collect the indebtedness from Defendants and of the Bank’s continued interest in Defendants’ Mississippi real property as collateral for the subject note. Said documents further tend to prove that the FDIC relied on the Bank’s representations that legal action would be instituted against Defendants for collection of the indebtedness.

It thus appears undisputed, even if it were relevant once the provisions of § 1823(e) attach, that the FDIC had no knowledge of the secret arrangement between the other parties in this action and Bank. In the absence of the FDIC’s actual knowledge of the side agreement, the holding of United States Supreme Court in D’Oench, Duhme & Co. or, despite any such actual knowledge, the provisions of 12 U.S.C. § 1823(e) control the issues in this case and dictate that summary judgment should be granted in favor of the FDIC. Accordingly, as a matter of law, summary judgment should not be granted in favor of Defendants as against the FDIC.

II. SUMMARY JUDGMENT MOTION AGAINST SIEBENMORGEN

Defendants, Jackie Gardner and Gardner Land Company, Inc., also seek summary judgment against Joe Siebenmorgen on state law fraud claims. In their Motion, Defendants assert that if summary judgment is granted in favor of the FDIC against them, then they will have been injured as a result of the fraud of Siebenmorgen. This Court, however, finds that while it may be that there is no genuine issue of any material fact, Defendants, nevertheless, are not entitled to judgment as a matter of law against Siebenmorgen on their fraud theories. Furthermore, the viability vel non of Defendants’ fraud claims in this case does not affect the appropriateness of entering a summary judgment against Defendants on the note in favor of FDIC. See Federal Deposit Insurance Corporation v. Kucera Builders, Inc., 503 F.Supp. 967, 971-73 (N.D.Ga.1980).

III. DIRECTION FOR THE ENTRY OF JUDGMENT

The above opinion of this Court and the judgment to be entered thereon will finally decide all questions arising under federal law and will leave unresolved only Defendants’ state law third-party claims against Siebenmorgen and Staton. If Defendants have any legitimate claim against either third-party Defendant the existence of which was contingent upon Defendants’ liability to the FDIC as corporate purchaser and enforcer of the subject note, then that contingency has been removed. Since the Defendants’ estates are now subject to the provisions of the United States Bankruptcy Act, the collection of any damages as a result of Siebenmorgen’s or Staton’s alleged fraud or breach of contract and any amount due from Staton to Defendants pursuant to the alleged promissory note allegedly executed by Staton are matters which are separate and apart from Defendants’ liability to the FDIC under the subject promissory note. Accordingly, this Court expressly determines that there is no just reason to delay entry of a final judgment in favor of the FDIC against Defendants Jackie Gardner and Gardner Land Company, Inc., and this Court hereby makes an express direction for the entry of such judgment in accordance with Rule 54(b) of the Federal Rules of Civil Procedure. In accordance with the opinion and holding hereinabove expressed, a separate, final judgment should and will be entered as to the liability and damages of Defendants to the FDIC.

IV. AMOUNT OF JUDGMENT

With regard to the amount of damages to which the FDIC is entitled under the allegations in its complaint and under the provisions of the note and in accordance with the material submitted to the Court in these Rule 56 motion determinations, judgment should be rendered and entered in favor of Plaintiff, Federal Deposit Insurance Corporation, in its corporate capacity, against Defendants Jackie Gardner and Gardner Land Company, Inc., jointly and severally, in the total amount of $149,-359.84, plus all costs of this action together with interest on the total amount of the judgment from and after the date hereof until paid in accordance with 28 U.S.C. § 1961. Said judgment amount represents the principal of the subject promissory note which is due in the amount of Eighty Thousand Dollars ($80,000.00) together with accrued interest on that principal amount calculated at the contract rate of nine and one half percent (9V2%) per annum from and after December 16, 1977, to the date hereof, such accrued interest being in the aggregate amount of $55,781.68; plus the stipulated attorney’s fees of ten percent (10%) of the combined principal and interest amounts due on the note, said collection fee award being in the sum of $13,578.16.

      . Jackie Gardner and Gardner Land Company, Inc., filed Petitions (numbered respectively 8401479JC and 8401486JC) in the United States Bankruptcy Court for the Southern District of Mississippi on October 16, 1984; however, Honorable Barney E. Eaton, Chief Bankruptcy Judge, entered Orders dated January 24, 1985, in said causes which modified the stay provisions of 11 U.S.C. § 362 to allow the Motions for Summary Judgment in this action to be resolved and judgments to be entered in accordance therewith.

      . While ordering the substitution of FDIC as proper party plaintiff for Bank in this action, Honorable Harold Cox, United States District Judge for the Southern District of Mississippi, in this action, pursuant to an agreed order rendered in this action on February 17, 1983, found that the parties were in agreement and further that
      Federal Deposit Insurance Corporation, in its corporate capacity ("FDIC”), has properly intervened as a party to this suit, and, by virtue of its purchase of certain assets formerly owned by Bank of Quitman, including the certain promissory note at issue in this suit, is the successor in interest to the Bank of Quit-man, the original plaintiff herein, and should be substituted as the only plaintiff herein. The Court finds further that, pursuant to 12 U.S.C. § 1819, FDIC has properly removed this suit from the Circuit Court of Rankin County, Mississippi to this Court and that this Court has jurisdiction over the parties and the subject matter hereof.
      Agreed Order dated February 17, 1983, p. 1. The Court also determined that this Court has subject matter jurisdiction, inter alia, pursuant to 12 U.S.C. § 1819.

      . See Rule 9(c) F.R.Civ.P.

      . See Note 2 Supra. Furthermore, Defendants’ mere assertion that the record is silent regarding the method by which the FDIC acquired the subject note is insufficient to dispute or recant Defendants’ previous stipulation that the FDIC purchased the subject note under Section 1823. Defendants failed to come forward with any evidentiary matter to indicate that the FDIC did not acquire the subject note under § 1823.

      . See Jack Cole-Dixie Highway Co. v. Redball Motor Freight, Inc., 254 So.2d 734, 741 (Miss.1971) (holder of promissory note setting forth a stipulated percentage of the amount due as a reasonable collection expense or attorney’s fee in the event of a default under the note is entitled to apply such stipulated percentage to the total amount due under the note; i.e., principal plus accrued interest).