author: CURRAN, District Judge.

text:
    PROFESSIONAL SERVICES GROUP, INC., Plaintiff, v. CH2M HILL CENTRAL, INC., Defendant.
    No. 83-C-934.
    United States District Court, E.D. Wisconsin.
    Aug. 2, 1985.
    David A. Schaefer, Benesch, Friedlander, Coplan & Aronoff, Cleveland, Ohio and Michael Ash, Godfrey & Kahn, Milwaukee, Wis., for plaintiff.
    Ronald L. Wallenfang, Quarles & Brady, Milwaukee, Wis., for defendant.
   DECISION AND ORDER

CURRAN, District Judge.

The present action was commenced on July 26,1983, invoking the court’s diversity jurisdiction. The three count complaint alleges that the defendant breached its contract with the plaintiff, damaging it in the amount of $60,968.00; that' such breach caused the plaintiff to under-utilize its capacity, resulting in lost profits of $242,-602.50 and that the defendant’s conduct constituted a breach of its covenant of good faith, resulting in damages of $303,-570.50. Presently before the court are the defendant’s motion for summary judgment on all counts and the plaintiff’s motion for partial summary judgment on count 1.

BACKGROUND

On August 3, 1977, the defendant, CH2M Hill, Inc. contracted with the Metropolitan Sewerage District of the County of Milwaukee to provide management and engineering services on a pollution abatement project. This project is an on-going one which may not be completed until the next decade.

An early phase of the project involved a sewer system evaluation survey which was intended to provide CH2M Hill and the Sewerage District with an analysis of the specific deficiencies of the Milwaukee area sewer system. According to the Master Agreement between CH2M Hill and the District, CH2M Hill was authorized to contract with consultants, including Professional Services Group, Inc. (PSG), among others. This $16,000,000 program began in 1978 and was completed in 1981 and utilized up to 250 trained technical personnel provided by the consulting firms.

The contractual relationship between the plaintiff and the defendant is embodied primarily in two documents. The master sub-consultant agreement provided the general framework for the legal relationship between the two and Task Order 4-37 specifies the services which the plaintiff was to provide to the defendant on the sewer system evaluation survey. Task Order No. 4-37 provided that the plaintiff was to perform the following services as part of the team effort for the following tasks: organization and coordination, physical survey — manhole inspection and ground water monitoring, physical survey — flow monitoring, physical survey — building inspection, smoke testing, dye water flooding, internal inspection of sewer system and sewer system evaluation survey summary. The Task Order further provided that the workdays of labor to be provided by PSG were 7,078 work days at an estimated direct labor cost of $393,980.00.

In August of 1980, the Program Management Office, which was, according to the contract, responsible for the day-to-day supervision and management of the program, announced that it would begin down staffing by returning 17 people on August 22, 1980 and 18 people on August 29, 1980 to their respective companies. Four PSG personnel were part of this initial reduction. Further reductions were announced in late August and in September. At the time of the initial reductions, PSG had accumulated approximately two-thirds of the 7,078 workdays contemplated by the contract. The court has been unable to ascertain exactly how many workdays were performed by PSG; however, it does appear to be uncon-troverted that the actual direct labor performed by PSG totaled $296,645.38 or 75.2% of the $393,980 direct labor cost ceiling.

As the project wound down, it appeared that there were differences between the level of effort reflected in the estimated cost ceilings and the actual work performed by the various consultants. Frank Jenes of CH2M Hill developed a formula for recalculating the fixed dollar profits due under the various associate contracts. The following table represents the contractual fixed fee with its proposed revision under the Jenes formula:

Associate Zimmerman Madison CRS Howard, Needles DKI Linton & Company Donohue & Associates Polytech, Inc. Graef, Anhalt Globetrotters, Inc. PSG Proposed CH2M Hill's Revision as Total Proposed % of Total Fixed Fee Revision Fixed Fee $261,573.00 135,012.00 64,686.00 196,803.00 90,168.00 1,355.00 518,392.00 144,463.00 302,701.00 88,092.00 222,977.00 $251,097.00 128,790.00 58,669.00 186,478.00 88,071.00 1,331.00 486,969.00 145,339.00 299,746.00 77,284.00 161,849.00 95.99% 95.39% 90.69% 94.75% 97.67% 98.23% 93.94% 100.61% 99.02% 87.73% 72.58%

All of the Associate firms, with the exception of PSG, accepted the revised fee. Although CH2M Hill maintains that PSG refused to negotiate the reduction in the fixed fee, it does appear froga the record before the court that negotiations were ongoing from July 1981 until this action was filed on July 27, 1983. These negotiations included a request from PSG that the parties submit to binding arbitration pursuant to Article 7 of the Master Agreement between PSG and CH2M Hill. On its cross motion for summary judgment as to claim 1, PSG argues that it is entitled to the entire fixed dollar profit specified in the contract, whereas CH2M Hill maintains that the proposed revised, fixed dollar profit figure is equitable and that PSG breached the contract by failing to negotiate the figure.

DISCUSSION

The court finds the following contractual provisions relevant in resolving this controversy.

AGREEMENT BETWEEN CH2M HILL CENTRAL, INC. AND PROFESSIONAL SERVICES GROUP

ARTICLE 1. PROGRAM MANAGEMENT

A. That, the day-to-day supervision and management of the work called for by the CONTRACT and any and all matters relating thereto shall be the responsibility of the CH2M Program Director, or his delegate.

ARTICLE 3. SCOPE

A. That, specific material and services to be provided by the ASSOCIATE under this AGREEMENT will be detailed in Associate Task Orders to be issued from time to time. Such Associate Task Orders will describe the work to be performed, basis of payment, and time for completion. Assignments will include work to be accomplished in the ASSOCIATE’S office(s) and/or personnel to be assigned to CH2M’s PROGRAM office.

B. That, the ASSOCIATE will not begin work on any of the services of an Associate Task Order until CH2M directs him in writing to proceed.

C. The ASSOCIATE shall, upon mutual agreement, accept assignments of Associate Task Orders that are within the capability of the ASSOCIATE’S staff. These assignments will provide that time allotments and fee arrangements will be consistent with values for this type of work negotiated by CH2M with other ASSOCIATES and the DISTRICT.

ARTICLE 4. COMPENSATION

A. As consideration for providing the services enumerated in the individual Associate Task Orders, CH2M shall pay the ASSOCIATE the amount of the ASSOCIATE’S Direct Salary expended for each service, plus a percentage of Direct Salary for total Overhead (Salary and General), plus Direct Expenses in connection therewith, plus a Fixed Dollar Profit for each service.

Said payment for each service shall be negotiated by the parties at the time each service is authorized and authorization to proceed shall be in the form of an Associate Task Order specifying the work to be performed, basis of payment and time for completion or the period of time for 'Which the service is to be provided. Each Associate Task Order shall become a supplement to and part of this AGREEMENT. On cost plus fixed dollar profit types of fees, the Cost Ceiling represented by Direct Salary, plus Total Overheads (Salary and General) and Direct Expenses shall not be exceeded without a formal amendment of this AGREEMENT. At such times as the ASSOCIATE determines that the total reimbursable costs for a defined work element will exceed or be significantly less than the Cost Ceiling established, the ASSOCIATE will notify the ENGINEER so that applicable Associate Task Orders can be amended as mutually agreeable to modify the scope of work or to increase the Cost Ceiling. The ASSOCIATE shall continue with any or all parts of the work for which an amended Cost Ceiling is established or a Cost Ceiling overrun is not anticipated.

The Fixed Dollar Profit may not be changed except in the case of an amendment to this AGREEMENT. The change in Fixed Dollar Profit will generally be in proportion to the change in the scope of work.

ARTICLE 7. REMEDIES

A. That, all claims, counter-claims, disputes, and other matters in question between CH2M and the ASSOCIATE will be first reviewed by the Consultant Advisory Committee for a recommended solution. If no solution or resolution is forthcoming, such disputes will be decided by arbitration if the parties mutually agree, or in a court of competent jurisdiction.

Associate Task Order No. 4-37

I. PURPOSE

A. This section enumerates the services detailed above.

C. The attached workdays of effort by classification which are attached to the EPA Form 5700-41 referenced in Item B above. The workdays of labor to be provided by the ASSOCIATE under this Associate Task Order No. 4-37 are 7,078 workdays at an estimated direct labor cost of $393,980.

IV. COMPENSATION

As consideration for providing the services enumerated in this Associate Task Order, Article II, CH2M shall pay the ASSOCIATE in accordance with the cost plus fixed dollar profit provisions of Article 4 of the Basic Agreement. The Total Overhead Rate (Salary and General) used for this Agreement and indicated on the referenced Form 5700-41 for the ASSOCIATE is the provisional rate of 250.0%. Upon completion of a final audit for any calendar year, a credit or payment may be made to correct the payment for work performed during said calendar year.
The Cost Ceiling for services in this Associate Task Order 4-37 shall be One million eight hundred sixty five thousand two hundred dollars ($1,865,200.).
The Fixed Dollar Profit for such services in this Associate Task Order No. 4-37 shall be Two hundred twenty two thousand nine hundred seventy seven dollars ($222,977.).
The Cost Ceiling and Fixed Dollar Profit above are based on salary and expense levels for completing the services on or before 31 December 1981.

V. COMPLETION DATE

The work contained in this Associate Task Order shall be completed on or before 12 April 1981.

VI. AMENDMENTS

This Associate Task Order may be amended as mutually deemed necessary by CH2M and the ASSOCIATE; such amendment shall be made a part of this Associate Task Order.

The issue, as the court sees it, is whether CH2M Hill, given the fact that it was unable to assign all of the workdays contemplated under the Agreement, was justified in lowering the fixed dollar profit amount. I think not, at least not in the manner it elected to do so. It is horn book law that a contract cannot be modified absent the assent of all parties. See for example Nelson v. Farmers Mutual Automobile Insurance Company, 4 Wis.2d 36, 54, 90 N.W.2d 123 (1958). Under the terms of the contract the plaintiff agreed to furnish 7,078 workdays, although the direct labor cost was estimated. The cost ceiling was specified, as was the fixed dollar profit. Both contracts contemplated a procedure for modification. Task Order 4, requiring amendments “as mutually deemed necessary” and the Master Agreement specifying that the fixed dollar profit “may not be changed except in the case of an amendment to this Agreement.”

In this situation PSG committed certain of its personnel to this project which was to, and apparently did, last until spring of 1981. The fact that several of the PSG technicians were dismissed in August and September of 1980 without, at that time, any indication that PSG would not be allowed to provide the contracted for workdays and receive the fixed dollar profit was insufficient to trigger any duty on the part of PSG to attempt to amend the contract. PSG has submitted evidence to the fact that CH2M Hill, on other projects, routinely amended the Task Orders to reflect a change in required workdays. It is also important to recognize that CH2M Hill was in total control of the project. PSG could reasonably have believed that assignments would be given to its men after the initial reduction to fill out the promises made in the contract.

If this court were to grant summary judgment to CH2M Hill, it would be tantamount to finding that the contract itself was illusory. PSG would be required to make its people available for over a two year period and to provide over 7,000 workdays unless CH2M Hill decided at the last hour that the men were not needed after all. This is clearly not what the parties intended. If the facts were different and CH2M Hill informed PSG in, for example, April of 1980 that fewer manhours would be required due to a change in the scope of the work, it is entirely possible that I would be constrained to hold, under the contract, that PSG would be required to negotiate a reduction in the fixed dollar profit. But these were not the facts. CH2M Hill kept PSG dangling and then offered the Jenes formula reduction on a take it or leave it basis. The defendant did not allow PSG to provide the workdays, it did not follow the procedure for amendment and it did not pay PSG the fixed dollar profit. In short, CH2M Hill breached the contract.

CH2M Hill’s reliance on Fattore Company v. Metropolitan Sewerage Commission of the County of Milwaukee, 454 F.2d 537 (7th Cir.1971), cert. denied, 406 U.S. 921, 92 S.Ct. 1779, 32 L.Ed.2d 120 (1972) is not only misplaced but actually lends support to the plaintiffs position. The Court of Appeals for the Seventh Circuit found that the district court erred in failing to give effect to the “changed circumstances” provision in the contract which would require the defendant to adjust the compensation if it was found that the subsurface in a sewer project materially differed from conditions shown on the defendant’s drawings or as indicated in its specifications. I have carefully considered those portions of the contract which recognize or anticipate the possibility of amendment and have found that the defendant failed to follow the agreed upon procedure. To ignore those provisions would be to violate fundamental principles of contract construction. See, for example, American Motorists Insurance Company v. Trane Company, 544 F.Supp. 669 (W.D.Wis.1982), aff'd., 718 F.2d 842 (7th Cir.1983).

I have, however, reached an opposite conclusion on claims 2 and 3 of the complaint. Claim 2 alleges that the plaintiff, in reliance upon both written and oral representations and agreements, incurred under utilization of capacity and lost profits in the amount of $242,602.50. The plaintiff is here apparently attempting to realize the full amount of compensation which might conceivably have been due him under the direct salary, indirect costs and direct expenses portion of the compensation scheme. The plaintiff argues that had the defendant not misallocated the work, it would have received additional gross profit under those provisions. I can find no provision in the contract which creates an entitlement on the part of PSG to provide a level of service equal to the cost ceiling provided by the contract. The inescapable fact is that PSG did not incur the costs and is thus not entitled to the profit on them.

Count 3 alleges that the “defendant’s conduct constitutes a breach of its implied and/or required covenant of good faith” and seeks damages in the amount of $303,-570.50 which is the sum of the damages sought in the first two counts. Since I have already determined that the plaintiff should prevail on count 1, but not on count 2, I feel that further discussion is unwarranted and the plaintiff’s count 3 will be dismissed. Accordingly,

IT IS ORDERED that summary judgment IS GRANTED to the plaintiff on count 1 and to the defendant on counts 2 and 3. Judgment is to be entered in favor of the plaintiff in the amount of $60,968, costs to be borne by the defendant.


source: Caselaw Access Project

author: ASPEN, District Judge:

license: Public Domain

text:
    UNITED STATES of America v. Daniel F. MARRINSON.
    No. 85 CR 225.
    United States District Court, N.D. Illinois, E.D.
    Aug. 7, 1985.

      Phillip A. Turner, Asst. U.S. Atty., Chicago, Ill., for the U.S.
    James Shellow, Milwaukee, Wis., for Marrinson.
   MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

On April 12, 1985, an indictment was returned against defendant Daniel Marrin-son (“Marrinson”) charging him with four counts of filing a false income tax return in violation of 26 U.S.C. § 7206(1). Presently before the Court is Marrinson’s motion to dismiss the indictment. For the reasons set forth below, the motion to dismiss is denied.

I.

As an initial matter, we must address the failure of Marrinson’s counsel to comply with certain Local Rules of the United States District Court for the Northern District of Illinois. First, although Milwaukee attorneys James M. Shellow (“Shel-low”) and Susan W. Brenner (“Brenner”) have submitted various pretrial motions on behalf of Marrinson, they have not yet filed an appearance form. This violates Criminal Rule 2.01, which provides in relevant part:

An attorney representing a defendant in any criminal proceeding in this Court or before a United States Magistrate shall file an appearance. This appearance must be filed prior to or simultaneously with the filing of any motion, brief or other document with the Court, or initial Court appearance, whichever occurs first.

Under General Rule 3.14(E), “[a]n attorney who fails to file an appearance form where required to do so by this Rule will be found to be in contempt of this Court and may be fined an amount not to exceed fifty dollars ($50).” Accordingly, we order Shellow and Brenner to file an appearance form within five days; moreover, at the conclusion of Marrinson’s trial we will decide whether to conduct a hearing to determine what, if any, sanctions should be imposed upon Shellow and Brenner for violating this Rule.

Marrinson’s attorneys have also failed to designate as local counsel “a member of the bar of this Court having an office within this District upon whom service of papers may be made,” as required by General Rule 3.13(A). Penalties for failing to designate local counsel are set out in General Rule 3.13(B): the Clerk of the Court is to notify the attorney in writing that the designation must be made within thirty days, and if the attorney still fails to file the designation within that time, any documents filed by the attorney may be stricken by the court. In this case, it does not appear that the Clerk of the Court has notified Marrinson’s lawyers to designate local counsel within thirty days. Therefore, we hereby order Shellow and Brenner to file their designation on or before September 6, 1985. Assuming that they will comply with this order, we now proceed to consider the motion on its merits.

II.

Each reason Marrinson offers for dismissing the indictment is based on a single premise — that the income tax returns upon which Marrinson allegedly made false statements advised him that his entries were made “under penalties of perjury,” but the statute under which he is charged, 26 U.S.C. § 7206(1), permits the imposition of penalties different from those provided by the general federal perjury statute, 18 U.S.C. § 1621. Indeed, § 7206(1) and § 1621 not only provide for different penalties, but they also have different statutes of limitations and require different burdens or modes of proof. Because of these differences, Marrinson argues that the tax form actually misleads taxpayers as to the consequences of making false statements, and that his indictment must be dismissed for three reasons: (1) the indictment does not apprise Marrin-son of the charges against him with the specificity required by the Sixth Amendment; (2) the provisions of § 7206(1) are so vague as to deny due process; and (3) the indictment’s construction of § 7206(1) creates an unconstitutional ex post facto law.

To better understand Marrinson’s argument, it is helpful to review the development of § 7206(1) over the years. Under the earliest versions of the Internal Revenue Code (“the Code”), taxpayers were required to make their income tax returns under oath. Persons making false statements on their returns were punished under the general perjury statute, § 125 of the Criminal Code. See, e.g., United States v. Noveck, 273 U.S. 202, 47 S.Ct. 341, 71 L.Ed. 610 (1927); Levin v. United States, 5 F.2d 598, 599-600 (9th Cir.1925).

In 1942, the requirement that individual returns be made under oath was eliminated. Instead, returns were required to “contain or be verified by a written declaration that [they were] made under the penalties of perjury.” Revenue Act of 1942, § 136(a), Pub.L. No. 753, 56 Stat. 798, 836. Also in 1942, a new penalty provision was added to the Code, expressly adopting the penalties established for perjury in § 125. Section 145(c) stated:

Any individual who willfully makes and subscribes a return which he does not believe to be true and correct as to every material matter, shall be guilty of a felony and, upon conviction thereof, shall be subject to the penalties prescribed for perjury in section 125 of the Criminal Code.

This penalty section was replaced in 1949 by a new provision, codified as 26 U.S.C. § 3809, which stated:

Any person who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter, shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $2,000 or imprisoned not more than five years, or both.

The penalties outlined in § 3809 were identical to those imposed in the general perjury statute then in force (as well as to the penalties imposed in § 1621 today). However, because § 3809 specified the penalties for making false statements on tax returns rather than simply adopting the penalties provided under the general perjury statute, the two statutes arguably moved a step apart.

The next step occurred in 1954, when the penalties for making a false statement on a tax return first diverged from the penalties in § 1621. Section 3809 was recodified as § 7206(1), and its penalty provisions were altered. The maximum permissible fine was increased from $2,000 to $5,000, and the maximum prison term was lowered from five years to three years. Section 7206’s fine provision changed again in 1982, when the maximum fine rose from $5,000 to $100,000 for individuals.

Considered together, Marrinson argues, these statutory changes demonstrate that § 7206 punishes something other than perjury. He claims that the reference to “the penalties of perjury” is not only anachronistic and useless but also impairs the validity and enforceability of § 7206 because it is misleading.

We disagree with this proposition. As the Fifth Circuit explained in Escobar v. United States, 388 F.2d 661 (5th Cir.1967), cert. denied, 390 U.S. 1024, 88 S.Ct. 1411, 20 L.Ed.2d 282 (1968):

Under the “plain meaning rule” of statutory construction it is clear that appellant was not charged with perjury. The statute does not say that one who willfully makes a false return “shall be guilty of perjury.” In fact, it contains no language indicating that the crime of perjury is involved at all. The language “made under the penalties of perjury” is of purely historical significance. The phrase remains in the present statute as a “catch phrase” or “signpost” to indicate what types of documents are covered by the statute. Without this phrase any document would come within the purview of the statute and it would be identical (except for penalty) to 26 U.S. C.A. § 7207, which is a misdemeanor statute.
When viewed in this light it is understandable that Congress left the phrase in the statute and that the Internal Revenue Service left the statement in its return forms after the statute requiring the returns to be sworn to was repealed. The phrase, outdated though it was, remained to provide an easily discernible limit to the application of § 7206(1) and its predecessors. It relieved Congress from having to substitute some new phrase. That it serves no other purpose is evidenced by the fact that perjury requires an oath, and no oath is required in an income tax return. Furthermore, in spite of the “penalties for perjury” language, Congress went on to provide another and much lighter penalty for the offense proscribed by § 7206(1), (3 years) than that provided for perjury under 18 U.S.C.A. § 1621 (5 years).

Id., 388 F.2d at 664-65 (footnotes and citation omitted).

Marrinson’s argument is largely a matter of semantics. The courts which have considered this matter are far from unanimous in their conclusions — some have labelled § 7206 “a perjury statute,” United States v. Levy, 533 F.2d 969, 973 (5th Cir.1976); Kolaski v. United States, 362 F.2d 847, 848 (5th Cir.1966); but others have declared that filing a false return is “similar in nature” to perjury, Hoover v. United States, 358 F.2d 87, 89 (5th Cir.1966), cert. denied, 385 U.S. 822, 87 S.Ct. 50, 17 L.Ed.2d 59 (1966), or is simply “not perjury,” United States v. Tamura, 694 F.2d 591, 602 (9th Cir.1982). One court has stated that “it is unnecessary to resolve this dispute in semantics,” Siravo v. United States, 377 F.2d 469, 472 (1st Cir.1967), an opinion we share. Like the Fifth Circuit in Escobar, we believe that the phrase “the penalties of perjury” could not reasonably confuse a taxpayer concerning the consequences of filing a false tax return.

Our belief is strengthened by the wording of a portion of the general perjury statute that Marrinson has ignored throughout his arguments. Section 1621 punishes acts of perjury “except as otherwise expressly provided by law.” The Reviser’s Note to the statute explains that this phrase was inserted “to avoid conflict with perjury provisions in other titles where the punishment and application vary.” the Note goes on to state that “[mjore than 25 additional provisions are in the code.” This indicates that Congress has not adopted the narrow definition of perjury suggested by Marrinson, and it provides ample warning to taxpayers that § 1621 is not the only statute which might be applied to the filing of false statements on income tax returns.

Thus, we find the premise upon which Marrinson bases each of his arguments to be flawed. Moreover, even when considered separately, none of the arguments appear meritorious. Contrary to Marrinson’s assertions, the indictment does sufficiently apprise him of the charges against him. E.g., United States v. Grayson, 416 F.2d 1073, 1076 (5th Cir.1969), cert. denied, 396 U.S. 1059, 90 S.Ct. 754, 24 L.Ed.2d 753 (1970). Similarly, § 7206(1) is not so vague that it fails to give fair notice of what conduct is prohibited; to the contrary, it quite clearly forbids a person from intentionally falsifying his tax return as to any material matter. See, e.g., United States v. DiVarco, 343 F.Supp. 101 (N.D. Ill.1972), aff'd, 484 F.2d 670 (7th Cir.1973), cert. denied, 415 U.S. 916, 94 S.Ct. 1412, 39 L.Ed.2d 470 (1974). Finally, the interpretation of § 7206(1) contained in the indictment does not create any ex post facto law; the penalties imposed by § 7206(1) — and not § 1621 — have applied to Marrinson’s alleged actions at all times.

Accordingly, Marrinson’s motion to dismiss the indictment is denied. It is so ordered.

      . General Rule 3.14(D) also establishes this filing requirement.

      . General Rule 3.14(B) provides that where more than one attorney represents the same party, only one appearance form shall be filed.

      .No criminal rule deals specifically with the designation of local counsel for service. But Criminal Rule 1.02 provides that “[i]n all criminal proceedings, the General Rules of this Court shall be followed insofar as they are applicable."

      . Section 125 provided, in part:
      Whoever, having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, shall willfully and contrary to such oath state or subscribe any material matter which he does not believe to be true, is guilty of perjury.
      This provision is virtually identical to the first part of the present general perjury statute, 18 U.S.C. § 1621(1).

      . A person convicted under § 7206 could also be charged with the costs of prosecution.

      . This most recent change does not apply to Marrinson because the 1982 amendment became effective after all the acts alleged in the indictment.

      . See also Hensley v. United States, 406 F.2d 481, 485-86 (10th Cir.1968) (denying the premise that § 7206(1) “punishes for perjury without providing for the varying procedural and substantive burdens existent in a prosecution for the traditional crime of perjury").


author: DIANA E. MURPHY, District Judge.

text:
    TRUSTEES OF GRAPHIC COMMUNICATIONS INTERNATIONAL UNION LOCAL 229 HEALTH AND WELFARE FUND, Plaintiff, v. RAPID COPY, INC., a Minnesota corporation, Defendant.
    Civ. No. 4-84-1090.
    United States District Court, D. Minnesota, Fourth Division.
    Aug. 14, 1985.

      Carolyn S. Nestingen, St. Paul, Minn., and Ann M. Spencer, and Samuel D. Heins, Tanick & Heins, Minneapolis, Minn., for plaintiff.
    Frederick E. Finch, Fredrikson & Byron, Minneapolis, Minn., for defendant.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Plaintiff, Trustees of Graphic Communications International Union Local 229 Health and Welfare Fund (Trustees 229), brought this action for damages against defendant, Rapid Copy, Inc. (Rapid Copy), claiming defendant breached an oral contract when it refused to pay the full employer contributions due the Health and Welfare Fund that it had allegedly promised to pay. Trustees 229 alleges violation of the Employee Retirement Income Security Act of 1974 (ERISA) as amended, 29 U.S.C. § 1132(a)(3) and the Labor Management Relations Act of 1974 (LMRA), 29 U.S.C. § 186(c)(5) and seeks reimbursement for the full employer contributions due from June 1983 to July 31,1984, plus attorney’s fees and costs. Jurisdiction is alleged under 29 U.S.C. § 1132(e)(1), 29 U.S.C. § 185(a), and 28 U.S.C. § 1331. This matter is now before the court upon the plaintiff's motion for leave to amend the complaint further and to compel arbitration.

Background

This case arises out of agreements made between Trustees 229, Graphic Communications International Union Local 229 (Local 229), Rapid Copy, and Daily Printing, Inc. (Daily Printing). Local 229 is an unincorporated labor association engaged in an industry affecting commerce that represents some of Rapid Copy’s employees. Rapid Copy is a Minnesota corporation engaged in commercial printing in Golden Valley, Minnesota. Daily Printing is a Minnesota corporation engaged in commercial printing in Plymouth, Minnesota. Trustees 229 administers a joint union and employer health and welfare fund pursuant to Article 24 of the collective bargaining agreement between Local 229 and Rapid Copy (the agreement). The term of the agreement between Local 229 and Rapid Copy expired on April 30, 1983.

In October 1984, Trustees 229 filed this complaint to recover the alleged Health and Welfare Fund accrued deficit. Trustees 229 claims Tom Sicora, an officer of defendant Rapid Copy, orally agreed with Bruce Danielson, President of Local 229 and a trustee of the Health and Welfare Fund, to repay the difference between the monthly contributions defendant had paid and the increased amount established by Trustees 229. Such repayment was contingent upon the Fund continuing coverage for Rapid Copy’s Local 229 employees during contract negotiations. Rapid Copy denies it orally agreed to pay the increased amount. The events giving rise to plaintiff’s motion now before the court are as follows.

On March 27, 1985, Local 229 received notice that Rapid Copy intended to sell its business to Daily Printing, a non-union company. In early April 1985, pursuant to Article 39 of the expired agreement, Local 229 filed a grievance with Rapid Copy and Daily Printing, requesting arbitration over the alleged violation of the contract’s successor clause. It asserted that Rapid Copy breached the agreement when it sold its business to Daily Printing without giving effect to the agreement’s successor clause. Local 229 maintained that Daily Printing as a successor to Rapid Copy is obligated to submit to arbitration. Rapid Copy and Daily Printing have refused to take part in arbitration of the grievance.

Trustees 229 moved to amend its October 1984 complaint, for an order directing arbitration of its grievance pending against Rapid Copy and Daily Printing, and for a preliminary injunction prohibiting Rapid Copy from any acts in furtherance of the sale, transfer, lease or assignment of defendant to Daily Printing.

Motion to Amend

Trustees 229 proposes to add Daily Printing as a defendant and Local 229 and the Graphic Communications Local IB Health and Welfare Fund A and Fund B (IB Health and Welfare Fund) as plaintiffs. IB Health and Welfare Fund administers a health and welfare fund for Graphic Communications International Union Local IB (Local IB) members employed by Rapid Copy and it claims that defendant also owes IB Health and Welfare fund amounts due from March 1, 1984 to the present.

Defendant Rapid Copy argues that amendment would be futile. It states that the agreement with Local 229 is not in force so it and Daily Printing have no duty to arbitrate the successorship issue. It denies that Sicora agreed to extend non-economic provisions of the expired agreement; it only agreed to extend the contract’s wage rates, work rules, and fringe benefits pending the negotiation of a new agreement. Rapid Copy further claims that Local 229 cancelled the contract when it unequivocally stated in Danielson’s letter of August 24, 1984, “there is no contract.” It also points out that Local 229 denied Rapid Copy the right to use the Union label under Article 31 of the expired agreement.

Rapid Copy additionally argues that only the National Labor Relations Board (NLRB) has jurisdiction to consider claims based on a contract that is not in force. Rapid Copy states that when an agreement has expired the parties are obligated under 29 U.S.C. § 158(a)(5) to maintain the status quo pending a new contract. Rapid Copy alleges that any unilateral change in the terms of employment is a possible unfair labor practice over which the NLRB has exclusive jurisdiction. It claims that the cases cited by plaintiff in support of jurisdiction in this court are distinguishable: either the disputes were over rights that had accrued and vested to employees during the term of the contract or the disputed contract had not expired. Defendant maintains the contract language in this case expired with the contract.

Trustees 229 maintains that the court has jurisdiction to compel arbitration, that amendment is not futile, and that the agreement that expired on April 30, 1983 remains in full force and effect. Bruce Danielson, Local 229’s president, states that not only did he and Sicora orally agree to extend the contract, but that practice has bound the parties to all of the agreement’s terms. Trustees 229 asserts that even if the agreement were not still in effect, the court has jurisdiction. It cites authorities where parties were compelled to comply with an arbitration contract clause after the contract had expired. Plaintiff relies in particular on Nolde Brothers, Inc. v. Local 358, 430 U.S. 243, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977), where the union can-celled the contract and the employer then closed the business. The union sought to arbitrate whether the employees were entitled to severance pay under the cancelled agreement; the employer refused. The Court ordered arbitration for the severance pay dispute because it arose under the collective bargaining agreement and the parties had not expressly negated the presumption favoring arbitration. Plaintiff maintains that the arbitration clause here has also survived the contract’s expiration and is consistent with federal labor policy favoring arbitration to resolve disputes over a contract’s meaning and effect.

Trustees 229 argues the court has jurisdiction to compel arbitration even if there is a possible unfair labor practice in allegedly changing the status quo. It agrees the NLRB has jurisdiction to require an employer during contract negotiations to maintain the status quo after a contract has expired. It says, however, that it is not asking the court to compel defendant and Daily Printing to maintain the status quo. Rather, it only asks the court to order Rapid Copy and Daily Printing to comply with the contract’s arbitration clause. It relies on a recent Ninth Circuit case that held a district court has concurrent jurisdiction with the NLRB when a labor dispute involves both a breach of an expired contract and an unfair labor practice charge. Hotel Employees Local 703 v. Williams, 752 F.2d 1476 (9th Cir.1985). Plaintiff also notes an opinion in this district holding the NLRB did not have exclusive jurisdiction over a contract dispute arising out of successorship clauses. Graphic Arts Int’l Union Local 1B, Twin Cities, & Twin Cities Local 229, Graphic Arts Int’l Union v. Martin Podany Associates, Inc. & Printing Unlimited, Inc., 531 F.Supp. 169 (Minn.1982).

The court concludes that amendment is not futile. This court has jurisdiction independent of the NLRB and can decide whether to compel arbitration even though the particular action may constitute an unfair labor practice, so long as the action may also constitute a breach of the collective bargaining agreement. Local Union 204, Intern. Brotherhood of Electrical Workers v. Iowa Electric Light & Power Co., 668 F.2d 413, 416 (8th Cir.1982); Laborers Health & Welfare Fund v. Hess, 594 F.Supp. 273, 117 LRRM 2816 (N.D.Cal.1984). See also, Carpenters & Joiners v. Peter Dukinfield Co., 323 N.W.2d 45, 48 (Minn.1982) (a representational issue is not raised merely because one party denies the contract’s existence).

Local 229 alleges defendant orally agreed to extend the agreement, and defendant denies the allegation. This primary dispute is thus contractual and is the basis for this court’s jurisdiction. When amendment is not futile and the court is persuaded that no undue prejudice will accrue, amendment will be allowed. Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); Bruno Wine & Spirits, Inc. v. Guimarra Vineyards, 573 F.Supp. 337 (D.C.Wis.1983); Davis v. Piper Aircraft Corp., 615 F.2d 606, 613 (4th Cir.), cert. dismissed, 448 U.S. 911, 101 S.Ct. 25, 65 L.Ed.2d 1141 (1980).

Rapid Copy maintains that additional claims would result in undue prejudice. Discovery should be complete, and it claims new parties would frustrate the speedy and efficient resolution of the original case. Defendant argues that the claims do not raise common questions of fact or law common to all parties and that there is no common transaction or occurrence between the two actions. It maintains the two claims are unrelated because the first complaint alleges breach of an oral contract while the proposed amended complaint claims the agreement was extended.

Trustees 229, however, argues that leave to amend should be freely given in order to protect the employees’ rights. It points out that Daily Printing could not have been named earlier since Local 229 did not know of the planned sale until the end of March. It claims a single proceeding to resolve the issues would be a more efficient and economical use of judicial resources. In addition, Trustees 229 maintains that the requirements of Fed.R.Civ.P. 20(a) are met by joining the two plaintiffs and one defendant because the claims share common questions of law and arise out of the same transaction — the sale of Rapid Copy to Daily Printing. It states that the common questions of law are whether Daily Printing must arbitrate the successorship issue.

Fed.R.Civ.P. 15(a) provides that leave to amend a complaint “shall be freely given when justice so requires.” Even though addition of plaintiffs IB Health and Welfare Fund and Local 229 and claims regarding a second accrued deficit and the contract’s extension would add issues and may require further pretrial proceedings, these are insufficient bases to deny the amendment. See, e.g., Intern. Bank v. Price Waterhouse & Co., 85 F.R.D. 140, 142 (S.D.N.Y.1980). Defendant’s allegations of prejudice must be specific and compelling to deny amendment. Lerman v. Chuckleberry Pub., Inc., 544 F.Supp. 966, 968 (S.D.N.Y.1982). See also, Boileau v. Bethlehem Steel Corp., 730 F.2d 929, 939 (3d Cir.1984). The function of Rule 15(a) “is to enable a party to assert matters ... that were unknown to him at the time he interposed his original complaint or answer.” C. Wright & A. Miller, Federal Practice & Procedure, § 1473, at 375 (1972). See also, Johnson v. Sales Consultants, Inc., 61 F.R.D. 369 (N.D.Ill.1973). Plaintiff timely filed the motion to amend after Local 229 received notice of the intended sale. Amendment would not prejudice defendants because they knew from the outset of the sale of the events giving rise to the claims for the alleged accrued health care fund deficits and the successor clause dispute. See Davis v. Piper Aircraft Corp., 615 F.2d at 613.

One of the basic policies of the federal rules is that pleadings are to enable a case to be decided on the merits, and are not an end in themselves. C. Wright & A. Miller, Federal Practice & Procedure, § 1473, at 376 (1972). The court will only look to the merits of a new claim if the claim is clearly frivolous or legally insufficient on its face. Alloy Cast Steel Co. v. United Steel Workers of America, 70 F.R.D. 687 (N.D.Ohio 1976); Nyscoseal, Inc. v. Parke, Davis & Co., 28 F.R.D. 24, 25 (S.D.N.Y.1961). Motion to Compel Arbitration

Local 229 moves to compel arbitration of its April grievance against Rapid Copy and Daily Printing regarding their alleged violation of the successorship clause of the agreement. Courts are not to weigh the merits of the grievance when asked to determine its arbitrability. United Steelworkers v. American Mfg. Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 1346, 4 L.Ed.2d 1403 (1960). In cases concerning alleged post-contract termination arbitration, resolution of the arbitrability issue must not be confused with resolution of the merits. The arbitrator is the proper party to look to the merits of a claim. See, e.g., Merrill Lynch, Pierce, Fenner & Smith v. Hovey, 726 F.2d 1286 (8th Cir.1984). The arbitrator can also make a threshold determination whether the parties agreed to extend an agreement. See Maas v. Dubuque Packing Co., 754 F.2d 287 (8th Cir.1985); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967).

Basic national labor policy is to promote industrial peace between parties who have a continuing relationship. 29 U.S.C. § 151 (1970). Congress provided that the court shall determine whether a party has breached its promise to arbitrate. United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409 (1960). The intent of Congress was “to move the parties to an arbi-trable dispute out of court and into arbitration as quickly and easily as possible....” Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927, 940, 74 L.Ed.2d 765 (1983). The presumption of arbitrability is generally applicable to any disputes between a union and an employer, Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364, 104 S.Ct. 1844, 1849 n. 14, 80 L.Ed.2d 366 (1984) aff'g., 700 F.2d 433 (8th Cir.1983), and that presumption “fully accords with the probable intent of the parties.” Id.

The presumption of arbitrability is more solidly established since Nolde Bros., Inc. v. Bakery Workers, 430 U.S. 243, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977). Termination of a collective bargaining agreement does not automatically extinguish a party’s duty to arbitrate grievances arising under the contract. Id. If the dispute is over an obligation arguably created by the expired agreement, the parties’ obligation under their arbitration clause survives the contract’s termination. Id. at 252, 97 S.Ct. at 1072. In the present ease, violation of the successorship clause could be an obligation arguably created by the expired agreement, if indeed the agreement is still not in force.

Nolde places upon the party resisting arbitration the burden of showing it expressly meant to exclude arbitration in particular disputes after the contract term has expired.

[T]he parties’ failure to exclude from ar-bitrability contract disputes arising after termination, far from manifesting an intent to have arbitration obligations cease with the agreement, affords a basis for concluding that they intended to arbitrate all grievances arising out of the contractual relationship. In short, where the dispute is over a provision of the expired agreement, the presumption favoring arbitrability must be negated expressly or by clear implication.

Id. at 255, 97 S.Ct. at 1074. See also, Garland Coal & Mining Co. v. United Mine Workers, 596 F.Supp. 747, 752 (W.D.Ark.1984).

Before this action commenced, Rapid Copy and Local 229 had not expressly negated their intention to arbitrate grievances arising out of their contractual relationship. The court, therefore, must compel arbitration.

ORDER

Accordingly, based on the above and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. Plaintiffs motion to amend the complaint is granted. Local 229 and IB Health and Welfare Fund are added as plaintiffs with their claims and Daily Printing is added as a defendant.

2. Plaintiff’s motion to compel Rapid Copy and Daily Printing to arbitrate the April grievance regarding the alleged violation of the successor clause is granted.

8. Plaintiff’s motion for a preliminary injunction is dismissed as moot.

      . Subsequently, the parties stipulated to amend the complaint with the claims that Rapid Copy misrepresented the amount paid to the Fund and that Rapid Copy was estopped from reneging on its oral promise.

      . Pursuant to the collective bargaining agreement between Local 229 and defendant, as of October 1, 1982, Rapid Copy was to contribute $152 per month for each Local 229 employee. The cost of health care coverage increased, and in 1983 Trustees 229 raised Rapid Copy's monthly employee contribution to $200 for June, July, August, and September, and to $250 per month beginning October 1, 1983. Rapid Copy continued to pay only $152 per month from June 1983 to July 31, 1984. It then increased its monthly contribution to $225 per month beginning August 1984.

      . Apparently Local 229 represented Daily Printing’s employees at one time, but Local 229 members decertified the union. Chelberg Aff. ¶ 17.

      . Article 39 of the agreement requires the parties to submit to binding arbitration "any dispute with reference to the interpretation, application or breach of any of the terms contained in this agreement ..."

      . “Article 36 — Continuity of Agreement
      Section 1. The Employer agrees that all obligations under this contract, and the performance thereof, by the buyer, lessee, transferee or assignee, becomes a condition of sale, transfer, lease or assignment."

      . Local 229 states that Daily Printing’s business enterprise is an uninterrupted and identical continuation of Rapid Copy. Affiant stated on April 9, 1985, that the wages, fringe benefits, working conditions, employees, jobs and equipment have remained the same since the sale. King Aff. ¶ 4.

      . At the hearing Trustees 229 withdrew its motion for a preliminary injunction because the sale was completed. Rapid Copy is now wholly owned and operated as a subsidiary of Daily Printing. During the hearing, the court granted the parties leave to submit additional briefs.

      . The proposed amended complaint states Rapid Copy and Local IB are parties to a collective bargaining agreement. Apparently that contract term also expired April 30, 1983. Chelberg Aff., Ex. A., Schedule 6.

      . Local 229 states the comment refers to the parties’ failure to reach an agreement on a new contract during negotiations and has no bearing on the continued validity of the former contract.

      . "Article 31 — Identification of Work
      Section 1. The Union Label is the exclusive property of the GAIU upon execution of, and compliance with, the standard Union Label License Agreement.”

      . On March 26, 1985, Magistrate Floyd E. Bo-line ordered that discovery was to be completed by June 3, 1985.

      . Rule 20(a) provides:
      All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action.... A plaintiff or defendant need not be interested in obtaining or defending against all the relief demanded.


text:
    Ronnie L. STACKHOUSE, Plaintiff, v. Donald DeSITTER, Defendant.
    No. 82 C 6039.
    United States District Court, N.D. Illinois, E.D.
    Aug. 19, 1985.

      F. Willis Caruso, Isham, Lincoln & Beale, Chicago, Ill., for plaintiff.
    Hope F. Keefe, Keefe & Ehemann, Chicago, Ill., for defendant.
   MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Plaintiff Ronnie L. Stackhouse (“Stack-house”) brings this action against defendant Donald DeSitter (“DeSitter”), alleging violations of his civil rights under 42 U.S.C. §§ 1981, 1982 and 3617. Stackhouse, a black resident of Cicero, Illinois, claims that DeSitter, a white Cicero resident, “interfered with and intimidated him with respect to his housing rights” by firebombing and otherwise damaging his automobile. On the parties’ cross-motions for summary judgment, which neither party supported with the citation of any case law, the Court granted DeSitter’s motion and denied Stackhouse’s motion. Stackhouse v. DeSitter, 566 F.Supp. 856 (N.D.Ill.1983). Presently before the Court is Stackhouse’s motion to reconsider that decision. For the reasons set forth below, Stackhouse’s motion to reconsider is denied in part and granted in part.

Sections 1981 and 1982

Although Stackhouse has now cited some legal authority to bolster his claims, we decline to modify our ruling that §§ 1981 and 1982 should not be read so broadly as to encompass the acts complained of in Stackhouse’s complaint. The Supreme Court has held that § 1982 bars all racial discrimination, private as well as public, in the sale or rental of property. Jones v. Alfred H. Mayer Co., 392 U.S. 409, 413, 88 S.Ct. 2186, 2189, 20 L.Ed.2d 1189 (1968). But the Jones Court also noted that “[w]hatever else it may be, 42 U.S.C. § 1982 is not a comprehensive open housing law,” and the Court stressed the “sharp contrast” between § 1982 and the much more expansive Fair Housing Act (“the Act”), codified at 42 U.S.C. §§ 3601-3631. Id., 392 U.S. at 413-14, 88 S.Ct. at 2189-90; see also Cornelius v. City of Parma, 374 F.Supp. 730, 743 (N.D.Ohio 1974). Thus, although the language of § 1982 should not be construed too narrowly, Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 237, 90 S.Ct. 400, 404, 24 L.Ed.2d 386 (1969), it clearly does not reach every act of racial discrimination that is somehow related to housing. Stackhouse contends that the courts have applied the same tests for housing violations under

§ 1981 as under § 1982; as with the latter section, we believe § 1981 should not be read so broadly as to apply to this case. According y, Stackhouse's motion to reconsider is denied with respect to his §§ 1981 and 1982 claims.

Section 3617

Stackhouse’s claim under the Fair Housing Act is a different matter.

Congress has declared that the purpose of the Act is “to provide, within constitutional limitations, for fair housing throughout the United States.” 42 U.S.C. § 3601. The Act establishes a strong and unquestionable congressional intent to use every available means to limit public and private conduct which prevents racial minorities from escaping urban ghettos and obtaining housing in the suburbs. Metropolitan Housing Development Corp. v. Village of Arlington Heights, 469 F.Supp. 836, 845 (N.D.Ill.1979), aff'd, 616 F.2d 1006 (7th Cir.1980). The language of the Act is “broad and inclusive” and subject to “generous construction.” Id., 616 F.2d at 1011, quoting Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 209, 212, 93 S.Ct. 364, 367, 368, 34 L.Ed.2d 415 (1972).

Stackhouse claims that DeSitter violated § 3617 of the Act. Section 3617 provides that:

It shall be unlawful to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title. This section may be enforced by appropriate civil action.

Section 3617 refers to rights granted or protected by §§ 3603-3606 of the Act. As noted in our previous opinion, § 3604 is the only one of these sections arguably applicable to Stackhouse’s suit; it makes unlawful various practices including, inter alia: refusing to sell or rent a dwelling, or otherwise making it unavailable, because of race; discrimination in providing services or facilities connected with sales or rentals; publishing statements which indicate a preference or limitation based upon race; and falsely representing that a dwelling is not available because of race. We also observed that it was unsettled whether § 3617 could be violated by conduct which did not also violate one of the other enumerated sections. The Seventh Circuit has expressly declined to decide this question, Metropolitan Housing Development Corp. v. Arlington Heights, 558 F.2d 1283, 1288 n. 5 (7th Cir.1977), cert. denied, 434 U.S. 1025, 98 S.Ct. 752, 54 L.Ed.2d 772 (1978), and the court in Laufman v. Oakley Building & Loan Co., 408 F.Supp. 489 (S.D.Ohio 1976), addressed the issue in dicta.

We now hold that § 3617 may be violated absent a violation of § 3603, 3604, 3605 or 3606. In the first place, we agree with the Laufman court — reading § 3617 as dependent on a violation of the enumerated sections would render § 3617 superfluous. Whenever possible, each provision of a legislative enactment is to be interpreted as meaningful and not as surplusage. Id., 408 F.Supp. at 498.

Second, the wording of the statute itself indicates that a violation of §§ 3603-3606 will sometimes, but not always, be involved. Section 3617 makes it “unlawful to coerce, intimidate, threaten, or interfere with any person” in three distinct circumstances: (1) in the exercise or enjoyment of any right protected by §§ 3603-3606; (2) on account of the person’s having exercised or enjoyed such a right; and (3) on account of his having aided or encouraged any other person in the exercise or enjoyment of such a right. In the first situation, the prohibited coercive conduct might well interrupt the exercise of some enumerated right, resulting, in violations of both § 3617 and another statutory section. In the second and third circumstances, however, the coercive or threatening conduct which violates § 3617 occurs after the enumerated rights have been exercised, and these rights might not be violated themselves. One example of a situation falling within the scope of the third phrase is when an apartment building owner fires or otherwise retaliates against a building manager who has rented a unit to a black (or other minority member) against the owner’s wishes. Courts in these cases have had no difficulty in finding a violation of § 3617, even when §§ 3603-3606 have been complied with. E.g., Smith v. Stechel, 510 F.2d 1162 (9th Cir.1975); Tokaji v. Toth, P.H.E.O.H. Rptr. ¶ 13,679 (N.D.Ohio 1974). Similarly, the second phrase prohibits coercive acts taken against persons who already have exercised their rights to fair housing.

This is precisely what Stackhouse has alleged. He claims that after he and his family exercised their right to rent an apartment free of racial discrimination, as protected by § 3604, DeSitter attempted to frighten and drive them away from the previously all-white neighborhood through acts of violence and property damage. Such conduct is squarely within the range of actions prohibited by § 3617, whether or not any other section of the Act was violated. Thus, Stackhouse’s motion to reconsider with respect to § 3617 is granted.

At this time, both parties’ motions for summary judgment on the § 3617 claim must be denied. It is clear that DeSitter did in fact firebomb Stackhouse’s car; on June 13, 1983, DeSitter was convicted of arson under Ill.Rev.Stat. eh. 38, § 20-1 for doing so. However, Stackhouse has not yet demonstrated that DeSitter’s action was motivated by racial animus. Stack-house is entitled to present his case to the trier of fact, and DeSitter may explain his actions if he so desires.

Accordingly, Stackhouse’s motion to reconsider is denied in part and granted in part. A status hearing will be held on August 23, 1985, at 10:30 a.m. It is so ordered.

      . 42 U.S.C. § 1981 declares that:
      All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.
      42 U.S.C. § 1982 provides that:
      All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.

      . One court has found a § 1982 cause of action in a situation similar to that faced by Stack-house, based on the right to hold real property. Pina v. Township of Ahington, P.H.E.O.H. Rptr. 1115, 257 (E.D.Pa.1978). Other courts, however, have declined to expand the reach of §§ 1981 and 1982 in cases which involved valid fair housing claims under the Act. E.g., Smith v. Stechel, 510 F.2d 1162 (9th Cir.1975); Tokaji v. Toth, P.H.E.O.H. Rptr. ¶ 13,679 (N.D.Ohio 1974).

      . Section 3603 defines certain terms, sets forth exemptions to § 3604 and provides effective dates for the prohibitions in the statute. Section 3605 involves discrimination in the financing of housing, while § 3606 covers brokerage services.

      . The Laufman court found that a § 3617 violation could be stated independently of a violation of another enumerated section, because a contrary interpretation would make § 3617 redundant. 408 F.Supp. at 497-98.

        . See also United States v. Menasche, 348 U.S. 528, 538-39, 75 S.Ct. 513, 520, 99 L.Ed. 615 (1955) (a court must give effect, if possible, to every clause and word of a statute).

      . Even if it were necessary that there be a violation of § 3603, 3604, 3605 or 3606, it could be argued that DeSitter’s alleged acts violated § 3604(a) by "otherwise mak[ing] unavailable or deny[ing] a dwelling” to Stackhouse. This phrase appears to be as broad a prohibition as Congress could have made, and all practices which have the effect of making dwellings unavailable on the basis of race are therefore unlawful. United States v. Housing Authority of the City of Chickasaw, 504 F.Supp. 716, 726-27 (S.D.Ala.1980); United States v. Hughes Memorial Home, 396 F.Supp. 544, 549 (W.D.Va.1975); United States v. City of Parma, P.H.E.O.H. Rptr. ¶ 13,616 (N.D.Ohio 1973); United States v. Youritan Construction Co., 370 F.Supp. 643, 648 (N.D.Cal.1973), aff’d in relevant part, 509 F.2d 623 (9th Cir.1975); Zuch v. Hussey, 366 F.Supp. 553, 556-57 (E.D.Mich.1973); see also Laufman, 408 F.Supp. at 492-93. However, given our interpretation of § 3617, we need not find a violation of § 3604(a) here.

      . When DeSitter was deposed, the criminal charge was pending against him, and he refused to answer questions regarding the facts of this case.

      . Given this-ruling, DeSitter is not a prevailing party, and his motion for attorney’s fees is denied.


author: NORMA HOLLOWAY JOHNSON, District Judge.

text:
    Thomas Robert STIMAC, Plaintiff, v. UNITED STATES DEPARTMENT OF JUSTICE, et al., Defendants.
    Civ. A. No. 84-0031.
    United States District Court, District of Columbia.
    Aug. 30, 1985.
    Thomas Robert Stimac, pro se.
    Melanie Ann Pustay, Office of Information and Privacy, U.S. Dept, of Justice, Washington, D.C., for defendants.
   MEMORANDUM OPINION

NORMA HOLLOWAY JOHNSON, District Judge.

Plaintiff, Thomas Robert Stimac, brings this pro se action under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as amended, and seeks access to records pertaining to Rita M. Stimac, maintained by four components of the Department of Justice: the Federal Bureau of Investigation (FBI), the Executive Office for United States Attorneys (EOUSA), the Criminal Division, and the Bureau of Prisons. By Memorandum Order dated October 25, 1984, the complaint was dismissed as to the Criminal Division and the Bureau of Prisons, leaving only plaintiffs claims against the FBI and EOUSA. This matter is presently before the Court on the following motions: plaintiffs motion for orders compelling discovery; plaintiffs request for production of documents; defendant's motion for a protective order; plaintiffs motion for access to Brady material; plaintiffs motion to compel preparation of a Vaughn Index; plaintiffs motions for summary judgment; and defendant’s cross-motion for partial summary judgment with respect to the claim against the FBI. After an exhaustive review of the numerous matters pending in this case, the Court makes the following determinations.

The Court first turns its attention to the plaintiff’s discovery motions and the defendants’ motion for a protective order. After a review of the motions, the supporting and opposing memoranda, the Court determines that plaintiff’s discovery motions must be denied and that defendants’ motion for a protective order must be granted.

The Court next considers plaintiff’s motion for access to Brady material. Plaintiff’s reliance on Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963) is obviously misplaced and provides no authority for releasing material under FOIA. Such a motion is proper only in connection with a criminal proceeding. The FOIA statute is not intended to serve as a substitute for criminal discovery. Fruehauf Corp. v. Thornton, 507 F.2d 1253, 1254 (6th Cir.1974). Therefore, the Court determines that plaintiff’s motion for access to Brady material must be denied.

Plaintiff has also filed a motion to compel preparation of a Vaughn Index. On September 18, 1984, defendants filed under seal the declaration of FBI Special Agent D.F. Martell which recounts the chronology of the administrative processing of the FBI records responsive to plaintiff’s FOIA request and sets forth a full explanation and justification for defendants’ invocation of exemptions in accordance with the requirements of Vaughn v. Rosen, 484 F.2d 820, 827 (D.C.Cir.1973), cert. denied 415 U.S. 977, 94 S.Ct. 1564, 39 L.Ed.2d 873 (1974). Therefore, plaintiff’s motion to compel preparation of a Vaughn Index must be denied as moot with respect to plaintiff’s claim against the FBI, such index having already been filed with the Court. With respect to a Vaughn Index in connection with plaintiff’s claims against EOUSA, the Court determines that at this juncture of the instant litigation, the preparation of a Vaughn Index would be premature before the filing of dispositive motions. Because the court’s resolution of any dispositive motions and affidavits which might be filed with regard to plaintiff’s claim against EOUSA could moot a Vaughn Index motion, plaintiff’s motion for preparation of a Vaughn Index will be denied without prejudice as untimely and premature. British Airports Authority v. Civil Aeronautics Board, 2 Gov’t Disclosure Serv. (P-H) § 81,332 at 81,886 (D.D.C. Apr. 3, 1980). The filing of a dispositive motion, along with detailed affidavits, may obviate the need for indexing the withheld documents.

The Court next turns its attention to the cross motions for summary judgment. Plaintiff’s motions contain only his arguments that defendants have had ample time to locate the requested documents. In opposition, defendants have moved for partial summary judgment with respect to plaintiff’s claims against the FBI. After giving careful consideration to the motions, the Court determines that defendants’ motion for summary judgment with respect to the FBI must be granted. The Declaration of FBI Agent D.F. Martell sets forth a full explanation and justification for the FBI’s invocation of Exemptions 3, 7(A), 7(C), 7(D), 7(E), and 7(F) of FOIA to withhold certain FBI records responsive to plaintiff’s request. Based upon the Declaration and the entire record herein, the Court determines that there exists no genuine issue of material fact and that defendant FBI is entitled to judgment as a matter of law with regard to the FBI records at issue. Therefore, the Court will enter partial summary judgment in favor of the FBI, leaving only plaintiff’s claim against EOUSA.

Turning to plaintiff’s claim against EOUSA, in defendants’ memorandum of points and authorities in support of its motion for partial summary judgment, at footnote 1, defendants advised the Court that a motion to stay proceedings will be filed to enable EOUSA to process plaintiff’s request in a timely and equitable fashion given the backlog of other FOIA requests received by EOUSA prior to plaintiff’s request. The Court notes that this motion to stay has not been filed. In view of the length of time that has passed since plaintiff’s original request for these documents, the Court is of the opinion that EOUSA has had ample time to process plaintiff’s request.

Therefore, based upon the foregoing, and upon consideration of the various motions, the supporting and opposing memoranda, and after a full review of the entire record, the Court will enter a separate order ordering the following actions:

1. that plaintiffs discovery motions be denied;

2. that defendant’s motion for protective order be granted;

3. that plaintiff’s motion for access to Brady material be denied;

4. that plaintiff’s motion to compel preparation of a Vaughn Index with respect to plaintiff’s claims against the FBI be denied as moot;

5. that plaintiff’s motion to compel preparation of a Vaughn Index with respect to plaintiff’s claims against EOUSA be, and it hereby is, denied without prejudice as untimely and premature;

6. that plaintiff’s motion for summary judgment be denied;

7. that defendants’ motion for summary judgment with respect to plaintiff’s claims against the FBI be granted;

8. that judgment be entered in favor of defendant FBI .on that portion of plaintiff’s claim against the FBI;

9. that within twenty (20) days of the date of this order, defendant shall file any dispositive motions and supporting affidavits with respect to plaintiff’s one remaining claim against EOUSA;

10. that within twenty (20) days of the filing of defendant’s motion, plaintiff shall file his opposition and any appropriate cross motion with respect to his one remaining claim against EOUSA;

11. that within ten (10) days after the filing of plaintiff’s motion, defendant shall file any memorandum in opposition to plaintiff’s motion or in further support of its own motion.