author: NICKERSON, District Judge.

text:
    VITABIOTICS, LTD., Plaintiff, v. Karl J. KRUPKA, C.T.R. International, Inc., Moor Natural Products, Inc., Omega Biologicals, Inc., Communication Trade Research International, Inc., and Moor Life Products, Inc., Defendants.
    No. 83 C 2782.
    United States District Court, E.D. New York.
    July 11, 1984.

      Ladas & Parry, New York City, for plaintiff; Robert Alpert, Sarah Sprung, New York City, of counsel.
    Harold Kerner, New York City, for defendants.
   MEMORANDUM AND ORDER

NICKERSON, District Judge.

The complaint alleges the following. Plaintiff Vitabiotics, Ltd. (Vitabiotics) is a British company engaged in the manufacture, sale and marketing of vitamins and defendant Karl J. Krupka is a resident of New York and the principal officer of the corporate defendants, all five of which were incorporated in New York. Communication Trade Research International, Inc. and Moor Life Products, Inc. have been dissolved. Since 1979, Vitabiotics has sold certain vitamins under the name “OMEGA-ZIII” in a distinctive trade dress consisting of a red and gold package and label. Defendants distributed OMEGA-ZIII vitamins in the United States under authority from Vitabiotics. Although Vitabiotics terminated that relationship in July 1981, defendants Krupka, C.T.R. International, Inc. and Omega Biologicals, Inc. continued to use the OMEGA-ZIII trade name and trade dress and are currently using them in connection with vitamins not manufactured, authorized or controlled by Vitabiotics. Defendants’ vitamins allegedly contain unlawful substances and are promoted through false and/or misleading statements.

The complaint seeks injunctive relief, an accounting of defendants’ profits, and damages pursuant to Section 43(a) of the Trademark Act of 1946, 15 U.S.C. § 1125(a) (Lanham Act), common law unfair competition, and state statutes prohibiting dilution, N.Y.Gen.Bus.Law § 368-d, deceptive trade practices, N.Y.Gen.Bus.Law § 349, and false advertising, N.Y.Gen.Bus.Law § 350. The sixth count of the' complaint is for breach of contract and seeks to recover $11,806.08 for an unpaid quantity of vitamins.

By an order dated November 29, 1983, this court preliminarily restrained defendants from using the “OMEGA-ZIII” trademark and trade dress and ordered them to serve notice of the injunction on defendants’ customers and suppliers, comply with plaintiff’s demand for addresses of parties and names and addresses of principal officers of parties, and to file a written report of compliance with the order.

On March 8,1984, following an evidentiary hearing, the court adjudged defendants in contempt of the order dated November 29, 1983 and referred the matter to a magistrate for an accounting.

Plaintiff now moves for summary judgment on the first five counts of the complaint and for a second order adjudging defendants in contempt. Defendants move to file an amended answer and counterclaims and for the return of certain documents.

Motion for Partial Summary Judgment

Defendants have not filed the statement required by Rule 3(g) of the Civil Rules of this district. That rule directs the party opposing a motion for summary judgment to submit a statement of the material facts as to which it is contended that there exists a genuine issue to be tried, and provides further that:

All material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by the statement required to be served by the opposing party.

If the facts set out in plaintiff’s statement of material facts as to which there is no genuine issue are taken as admitted, plaintiff is entitled to summary judgment. Accordingly, defendants’ noncompliance with Rule 3(g) is sufficient reason for the court to grant the motion. However, in the interest of justice the court will consider the motion on the merits and accordingly inquire whether defendants have at any point in their papers opposing the motion “set forth specific facts showing that there is a genuine issue for trial.” Federal Rule of Civil Procedure 56(e).

I

Plaintiff argues that defendants’ unauthorized sale of vitamins under exactly the same unregistered “OMEGA-ZIII” trademark and trade dress constitutes a “false designation of origin” in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Defendants admit to deliberately using the same trademark and trade dress. Indeed, they maintain that as a result of their creating the trademark and loaning Vitabiotics $50,000.00 for packaging, they and not plaintiff own the trademark and trade dress. Finally, defendant Karl J. Krupka asserts in his affidavit that even if his use of the trademark and trade dress does violate the Lanham Act, he ought not to be prohibited from selling vitamins identical in appearance to plaintiff’s because vitamin supplements in brown gelatin capsules are commonplace and because it is his understanding that dark capsules are needed to prevent exposure of certain ingredients to the light.

It is established that “[a] defendant who deliberately passes off his goods as those of the plaintiff by means of a similar or identical trademark has used a ‘false designation of origin’ within Section 43(a).” 1 J. Gilson, Trademark Protection and Practice, § 7.02[1] (1982), citing Sutton Cosmetics (P.R.) Inc. v. Lander Co., 455 F.2d 285 (2d Cir.1972). Except when a mark is suggestive or arbitrary and fanciful (as opposed to generic or descriptive) the plaintiff must demonstrate secondary meaning. See, e.g., DCA Food Industries, Inc. v. Hawthorn Mellody, Inc., 470 F.Supp. 574, 581 n. 3 (S.D.N.Y.1979). While the mark “OMEGA-ZIII” as applied to vitamins hardly seems generic or descriptive, plaintiff has sufficiently shown secondary meaning in this case. It is undisputed that from 1979 to 1981 “OMEGAZIII” vitamins were sold in the United States in packaging indicating that they were manufactured by Vitabiotics and imported by defendant C.T.R. International, Inc. Complaint, Exhibit B. After terminating its relations with defendants, Vitabiotics began to sell substantial quantities of the product through another American distributor and continues to do so. Affidavit of Charles Joseph Abbott, ¶ 30. Moreover, conscious imitation is strong evidence of secondary meaning. Harlequin Enterprises, Ltd. v. Gulf & Western Corp., 644 F.2d 946, 950 (2d Cir.1981).

Trade dress, packaging, and other product features are also protected provided plaintiff demonstrates secondary meaning and non-functionality. See, e.g., Vibrant Sales, Inc. v. New Body Boutique, Inc., 652 F.2d 299, 303 (2d Cir.1981). The particular red-and-gold packaging at issue here, like the “OMEGA-ZIII” trademark itself, possesses secondary meaning in the marketplace. That unique configuration of colors is entirely non-functional. As for the shape, color, and texture of the vitamins themselves, however, the affidavit of Karl J. Krupka is sufficient to raise triable issues both of secondary meaning and non-functionality. Even if a dark brown capsule is not necessary to protect ingredients from the light, consumers of a certain category of vitamins might associate color with therapeutic effect as did patients taking the drug capsules at issue in Ives Laboratories, Inc. v. Darby Drug Co., 488 F.Supp. 394, 399-401 (E.D.N.Y.1980), rev’d, 638 F.2d 538 (2d Cir.1981), rev’d sub nom. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982).

Defendants’ former status as an authorized United States distributor of plaintiff’s product does not entitle them to use the OMEGA-ZIII trademark and trade dress now. Nor would either their alleged loan to Vitabiotics or their alleged role in creating the OMEGA-ZIII name. Cuisinarts, Inc. v. Robot-Coupe Intemat’l Corp., 509 F.Supp. 1036 (S.D.N.Y.1981), the only case defendants cite, is entirely inapposite because it involved an American distributor which applied its own preexisting, registered trademark to a foreign manufacturer’s food processors.

Summary judgment will be granted on the Lanham Act claim as to the trademark and trade dress and denied as to the color, size or texture of the vitamins themselves.

II

The same undisputed facts entitle plaintiff to summary judgment on the second count, for common law unfair competition under the law of New York. The first user of a distinctive trademark and trade dress may obtain relief under this theory as long as the public is likely to be confused, and need not demonstrate sec-, ondary meaning. Perfect Fit Industries, Inc. v. Acme Quilting Co., Inc., 618 F.2d 950, 954 (2d Cir.1980), cert. denied, 459 U.S. 832, 103 S.Ct. 73, 74 L.Ed.2d 71 (1982). Because misappropriation of another’s commercial efforts is the essence of the tort, intentional copying gives rise to a presumption that the imitator has succeeded in creating a confusing similarity of appearance. Id. See also Flexitized, Inc. v. National Flexitized Corp., 335 F.2d 774, 781-82 (2d Cir.1964), cert. denied, 380 U.S. 913, 85 S.Ct. 899, 13 L.Ed.2d 799 (1965).

III

The third count of the complaint claims a violation of New York’s anti-dilution statute, which allows injunctive relief from conduct resulting in a “likelihood of injury to business reputation or of dilution of the distinctive quality of a mark or trade name.” N.Y.Gen.Bus.Law § 368-d. The statute’s reach includes dilution involving products in direct competition. See Bally-Midway Mfg. Co. v. American Postage Machine, Inc., No. 82 C 2700, at 9 (E.D.N.Y. August 22, 1983). Plaintiff claims that defendants’ use of the “OMEGA-ZIII” trademark tarnishes the mark because defendants’ vitamins contain two unlawful ingredients, lysine and methionine. It is undisputed that in 1977 and 1978 Vitabiotics, through a distributor, sold vitamins containing lysine and methionine in the United States under the name “OMEGA-H3,” and that in 1979 Vitabiotics removed those ingredients and renamed the product “OMEGA-ZIII” to satisfy Food and Drug Administration objections. Defendants’ infringing packaging, Exhibit KK to Affidavit of Charles Joseph Abbott, lists lysine and methionine as ingredients and states that the product was “developed” by defendant Omega Biologicals, Inc. A piece of defendants’ promotional literature, Exhibit E to Affidavit of Jorge Rodriguez, touts an “improved OMEGA-ZIII formula” containing “L-Lysine and Methionine as it did in 1978-1980” but says nothing about the reason for the elimination of the ingredients.

While Exhibits I and J to the Affidavit of Charles Joseph Abbott clearly establish that in 1978 the Food and Drug Administration treated lysine and methionine as unsafe food additives in a product such as “OMEGA-H3,” plaintiff has not shown as undisputed facts that that agency would do so today nor that the inclusion of those ingredients in defendants’ product is likely to tarnish plaintiff’s reputation. Plaintiff may still seek relief under the anti-dilution statute, however, on the separate ground that defendants’ use of the “OMEGA-ZIII” trademark on a different and purportedly “improved” formula will likely blur the mark’s product identification. See Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621, 625 (2d Cir.1983).

The undisputed facts establish the elements of an anti-dilution claim as set out in the Sally Gee decision. Vitabiotics possesses a distinctive trademark; defendants’ actions have created a likelihood of dilution; and, because defendant Krupka knew of Vitabiotics’ opposition to his unauthorized use of the trademark and trade dress, defendants have acted with predatory intent. Therefore the court will grant summary judgment on the anti-dilution claim.

IV

The statute that forms the basis of the fourth count provides: “Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful.” N.Y.Gen.Bus.Law § 349(a). “Any person who has been injured” by reason of a violation may seek injunctive relief and recover his actual damages or fifty dollars, whichever is greater. N.Y.Gen.Bus.Law § 349(h). While defendants have apparently added some ingredients, the representation on defendants’ packaging that the “OMEGAZIII” formula was “developed by” defendant Omega Biologicals, Inc. is plainly deceptive. Defendant Karl J. Krupka’s admission in ¶ 5 of his affidavit that he sold approximately 1500 cartons of the infringing product establishes injury to Vitabiotics. The court will grant summary judgment for the plaintiff on the fourth count.

V

For the same reasons that warrant relief on the fourth count, the court will grant the motion as to the fifth count, for “false advertising” prohibited by N.Y.Gen. Bus.Law § 350. That statute, at Section 350-d(3), provides for the same remedies as the “deceptive acts or practices” statute.

VI

Defendant Krupka does not dispute that he controls the corporate defendants. Further, he conceded at the contempt hearing on March 8, 1984 that no one but he has been involved personally in selling and promoting “OMEGA-ZIII.” (Tr. 28). Therefore defendant Krupka is personally jointly liable with the three corporations active in the marketing of the infringing materials: C.T.R. International, Inc., Omega Biologicals, Inc., and Moor Natural Products, Inc. There is no basis, however, upon which to grant summary judgment against the two dissolved corporations, C.T.R. International, Inc. and Moor Life Products, Inc.

The court will grant appropriate injunctive relief as plaintiff has shown the requisite likelihood of public confusion under the Lanham Act, Warner Bros. v. Gay Toys, Inc., 658 F.2d 76, 79 (2d Cir.1981), and has prevailed on the state law claims. In addition, plaintiff seeks an accounting of defendants’ profits, damages, costs, attorneys’ fees, punitive damages, and an order permitting the destruction of infringing materials.

To obtain summary judgment for damages under the Lanham Act or the New York law of unfair competition “plaintiff must demonstrate by undisputed or indisputable evidence that there was actual confusion.” Bally Midway, supra, at 8, citing Perfect Fit Industries v. Acme Quilting Co., 618 F.2d 950, 955 (2d Cir.1980). Plaintiff has not satisfied this stringent standard. Plaintiff is entitled to damages under the New York statutes prohibiting false advertising and deceptive practices, but has not proven the amount of those damages on this motion.

Defendants’ deliberate and willful behavior warrants an award of attorneys’ fees under the provision for such relief in “exceptional” Lanham Act cases. 15 U.S.C. § 1117. In addition, plaintiff is entitled to attorneys’ fees under the New York false advertising and deceptive practices statutes.

Defendants’ conduct, while willful, has not been so outrageous as to warrant the extreme sanction of punitive damages under New York law.

The court will order the delivery up and destruction of all infringing materials, but not of unlabelled capsules.

Motion to File Amended Answer and Counterclaims

Until the United States Marshal arrived at defendants’ offices pursuant to this court’s seizure order dated February 17, 1984, defendants willfully ignored court processes, this court’s preliminary injunction dated November 29, 1983, and repeated urgings of the court and opposing counsel that defendants retain counsel. Through recently retained counsel defendants now move to file an amended answer and two counterclaims.

As nothing in the proposed amended answer would alter the court’s disposition of the summary judgment motion, the amendment would be largely futile. Undue delay, undue prejudice to the opposing side, and futility of amendment are proper reasons to deny leave to amend under Federal Rule of Civil Procedure 15(a). Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). The motion to file the amended answer is denied.

The first proposed counterclaim asserts that at the time of the creation of the “OMEGA-ZIII” mark, defendants “Krupka and CTR ... lent Vitabiotics $50,000 to manufacture the new OMEGA-ZIII packaging” and that “Vitabiotics agreed to repay the $50,000 in one year.” Defendants refer to no written contract. Defendant C.T.R. International, Inc. was not incorporated until 1983 and therefore could not have done anything in 1978 or 1979. Defendant Karl J. Krupka stated in the Answer he filed pro se on August 22, 1983 that “As a private person I, Karl J. Krupka, was never engaged in business with Vitabiotics, Ltd.” The second counterclaim, which claims ownership of the trademark, is equally meritless. Accordingly, the motion to file counterclaims is denied.

Second Motion for Contempt

Plaintiff moves for an order adjudging the defendants in contempt and imposing sanctions pursuant to Federal Rule of Civil Procedure 37 on the ground that defendants have failed to produce certain “OMEGA-ZIII”-related documents and a sworn statement of the residences of defendants’ principals, in defiance of a subpoena and court orders.

Defendants ignored a subpoena directing them to produce on August 31, 1983 all documents pertaining to the “OMEGAZIII” trademark and trade dress. This court’s order dated February 17, 1984 directed the United States Marshal to seize and impound all “OMEGA-ZIII”-related books and records and directed defendants to cooperate. According to the affidavit of plaintiff’s counsel Robert Alpert, Mr. Krupka was present at that seizure and never suggested it was less than complete. At the contempt hearing on March 8,1984 the court again directed the defendants to disclose the location of all “OMEGA-ZIII”-related materials to the United States Marshal. According to the Alpert affidavit, during the implementation of that seizure order on March 15, 1984 Mr. Krupka was not present and defendants’ counsel represented that he was unaware of any additional documents. Nonetheless, in response to a letter from plaintiff’s counsel stating that certain documents appeared to be missing, defendants produced on April 23, 1984 about 261 pages of documents concerning “OMEGA-ZIII”. However, defendants refused to produce the originals of those documents and refused to produce a customer list on the grounds of confidentiality despite plaintiff’s counsel’s having undertaken to preserve confidentiality. In addition, despite a subpoena in August 1983 and two court orders of November 29, 1983 and March 8, 1984, defendants have not yet complied with the court’s order of March 8, 1984 that they disclose the names and addresses of all persons who should have received notice of the preliminary injunction order dated November 29, 1983 as directed by the terms of that order.

Defendants’ counsel Harold Kerner has untimely filed a declaration in opposition to the motion dated June 8, 1984 in which he does not deny having failed to produce the materials in question. He asserts that his client has been willing to supply copies with the right to examine originals at a mutually acceptable time and place; that he has offered to provide access to the customer list provided plaintiffs counsel not divulge the contents to his client; and that plaintiff’s counsel never asked for a sworn statement of principals.

Although the court will not at this time impose contempt sanctions, the court will award plaintiff the costs of this second motion for contempt and hereby directs defendants to produce within ten days of the filing of this order the following: all original documents still in its possession relating to the “OMEGA-ZIII” trademark and trade dress and to its sales of vitamins under that mark; a sworn statement of the residences of defendants’ principals; and the names and addresses of all persons who should have received notice of the preliminary injunction order dated November 29, 1983.

Motion for Return of Documents

Defendants move for an order directing plaintiff to return all original documents seized pursuant to this court’s order dated February 17, 1984 on the grounds that some do not relate to “OMEGA-ZIII”; that defendants need the documents to respond to plaintiff’s claim for contempt-related profits in the accounting now before Magistrate Chrein of this court; and that plaintiff no longer needs the use of the documents. Plaintiff’s counsel stated at argument of the motion that he would return the originals and retain copies provided that defendants stipulate that the copies plaintiff retains exactly conform in quantity and order to the originals. In light of defendants’ past conduct this arrangement seems reasonable and the court will deny the motion on the condition that plaintiff’s counsel carries out the representation made at argument.

Conclusion

Plaintiff’s motion for summary judgment as to liability on the first through fifth counts is granted against defendants Karl J. Krupka, C.T.R. International, Inc., Moor Natural Products, Inc. and Omega Biologicals, Inc. and denied against defendants Communication Trade Research International, Inc. and Moor Life Products, Inc. The court will sign an appropriate order enjoining the use of the “OMEGA-ZIII” trademark and trade dress and representations that the “OMEGA-ZIII” formula was developed by Omega Biologicals, Inc. The court will further order the destruction of infringing materials and will award attorneys’ fees. The summary judgment motion is otherwise denied. Defendants’ motion to file an amended answer and counterclaims is denied. Plaintiff’s second motion for contempt is denied at this time, but defendants are directed to produce within ten days of filing of this order the documents and statements specified on p. 15 of this order, and the court will award plaintiff the costs of the motion. Defendants’ motion for return of documents is denied on the condition that plaintiff’s counsel carries out the representation made at oral argument.

Submit order.

So ordered.


source: Caselaw Access Project

author: CLARKE, District Judge.

license: Public Domain

text:
    W.W. REASOR, Jerry W. Adams, Michael W. McCabe, and Harry T. Lester, Individually and as Partners of Raml Associates, a Virginia General Partnership, and, with respect to Jerry W. Adams, Michael W. McCabe and Harry T. Lester, as Partners of Adams, McCabe & Lester, a Virginia General Partnership, Plaintiffs, v. The CITY OF NORFOLK, VIRGINIA, A Virginia Municipal Corporation, and Norfolk Redevelopment and Housing Authority, a Virginia Redevelopment and Housing Authority, and Goodman-Segar-Hogan, Incorporated, a Virginia Corporation, Defendants.
    Civ. A. No. 84-3-N.
    United States District Court, E.D. Virginia, Norfolk Division.
    July 18, 1984.
    Supplemental Order Oct. 5, 1984.

      Everette G. Allen, Jr., Hirschler, Fleischer, Weinberg, Cox & Allen, Richmond, Va., for plaintiffs.
    William T. Prince, Norfolk, Va., for City.
    Walkley E. Johnson, Jr., Norfolk, Va., for NRHA.
    Hunter W. Sims, Jr., Norfolk, Va., for Goodman-Segar.
   OPINION AND ORDER

CLARKE, District Judge.

This matter comes before the Court on the motion to dismiss and for summary judgment filed by the defendant, City (“City”). The plaintiffs have filed a brief in opposition to the City’s motion, the City then filed reply briefs, and oral argument was heard on the motion. Accordingly, the issues are ripe for disposition.

The plaintiffs, partners of a realty firm, filed this suit against the City, Norfolk Redevelopment and Housing Authority, and Goodman-Segar-Hogan, Inc., a rival realty corporation, on January 4, 1984. The forty-two page complaint asserted thirteen different grounds for relief. The background of the dispute is that the City acquired part of a tract of land owned by the plaintiffs and constructed a parking garage, Garage Site I, on that land. At the time of the sale, the plaintiffs negotiated with the City concerning the City’s desire to acquire a second parcel of the plaintiffs’ land and the plaintiffs’ desire to erect an office building in the airspace over the proposed parking garage on the second parcel of land (Garage Site II A). Those negotiations fell through and eventually resulted in this suit in which plaintiffs allege, in part, violations of state and federal antitrust statutes, relocation statutes, and breach of contract.

The Court begins its analysis by observing that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts” which would entitle him to relief. See, Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Summary judgment can only be granted “where it is perfectly clear that there is no dispute about either the facts of the controversy or the inferences to be drawn from such facts.” Morrison v. Nissan Motor Co., 601 F.2d 139 (4th Cir.1979). The plaintiffs have filed an affidavit stating they are unable to produce affidavits on several issues. Fed.R.Civ.P. 56(f). The Court will consider that proposition when it deals with the affected counts of the complaint.

The Court will examine the motion to dismiss and for summary judgment on each count separately in the same order and grouping as they appear in the City’s brief.

Contract Claims — Counts 1, 2, h and 6

Counts 1, 2 and 4 of the complaint each request the Court to enforce the “Condemnation Agreement” which allegedly allowed the City to buy the plaintiffs’ property and construct a parking garage, Garage Site I, and in return required the City to allow the plaintiffs to construct an office building over the parking garage on Garage Site IIA.

Count 6 seeks a recision of the sale of Garage Site I because the City allegedly failed to meet its obligations under the “Condemnation Agreement.” The City has moved for summary judgment on Counts 1, 2, 4 and 6 contending that there is no “Condemnation Agreement.” The plaintiffs allege that the “Condemnation Agreement” consists of two written documents, the Statement of Principles and the Memorandum of Understanding, along with various oral representations and agreements made by the parties.

The Court DENIES the motion to dismiss and for summary judgment on Counts 1, 2, 4, and 6 of the complaint. The complaint alleges that the parties had agreed to a “condemnation agreement” which allowed the City to acquire Garage Site I without the use of condemnation proceedings. Whether the parties’ minds had met is a disputed question of fact on the record before the Court at this time. Charbonnages de France v. Smith, 597 F.2d 406 (4th Cir.1979). Thus summary judgment is not appropriate on Counts 1, 2, 4, and 6 at this time because the existence of a “condemnation agreement” is an unresolved question of fact.

Relocation Benefits — Counts 3 and k

In Counts 3 and 4, the plaintiffs seek relocation assistance pursuant to the Housing Act of 1949, 42 U.S.C. § 1455(c), and Section 25-235 et seq. of the Virginia Code. The City has moved to dismiss Counts Three and Four on the grounds that the plaintiffs are not “displaced persons,” the project was not federally funded and plaintiffs have failed to exhaust administrative remedies. The plaintiffs Reasor, Adams, McCabe and Lester, trading as RAML Associates, have failed to state a claim for relief in Count 3 or 4 because they are not displaced persons. The relocation benefits are afforded to “displaced” persons. A displaced person is a person who “moves” as a result of an acquisition or written order to vacate. See, 42 U.S.C. § 4601(6); Va.Code § 25-238(c). “Displaced” persons include occupants, but not owners. City of Mishawaka v. Knights of Columbus Home Association of Mishawaka, 396 N.E.2d 948, 950 (Ind.Ct.App.1980). RAML has never even alleged that they were occupants of the property thus RAML’s claims under Counts 3 and 4 are DISMISSED for failure to state a claim. The plaintiffs, Adams, McCabe and Lester, partners of Adams, McCabe and Lester (“AML”) have alleged that they were forced to move as a result of the City’s agreement to purchase the property where AML was located. Thus, AML, unlike RAML, may have a valid cause of action because AML’s occupancy was terminated. Whether AML moved as a result of the City’s acquisition or written order to vacate is a disputed question of fact.

The defendants assert that AML, the sole surviving plaintiff in Counts 3 and 4, must exhaust its administrative remedies before bringing this suit.

Federal statutes provide for payment of benefits to displaced persons upon application for relocation benefits. 42 U.S.C. § 4622. The Virginia statute implies that the displaced person must seek payment of benefits. Va.Code § 25-239; Boston v. United States, 424 F.Supp. 259 (E.D.Mo.1976). AML has not alleged that they have applied for benefits. AML’s claim for moving expenses has not been presented to any administrative agency. Thus, AML’s claim for relocation benefits is DISMISSED without prejudice for failure to exhaust administrative remedies. 42 U.S.C. § 4633(b)(3), 24 C.F.R. §§ 42.225(h), 42.703(a)(b), 42.711; Olivares v. Martin, 555 F.2d 1192, 1196 (5th Cir.1977). The plaintiffs’ reliance on M.M. Crockin Co. v. Portsmouth Redevelopment & Housing Authority, 437 F.2d 784 (4th Cir.1971), is misplaced because the plaintiff in that case challenged the agency’s approval of a relocation plan. In this case, the plaintiff complains of the City’s failure to award the plaintiff moving expenses and other relocation benefits, yet such a claim is obviously dependent upon a request by the plaintiff and no such request has been alleged.

The plaintiffs, Adams, McCabe and Lester, have also asked this Court to enforce the “Condemnation Agreement” as effective relocation assistance in Counts 3 and 4. To the extent AML seeks damages for the defendants’ allegedly wrongful denial of relocation assistance, AML need not exhaust administrative remedies. M.M. Crockin Co. v. Portsmouth Redevelopment & Housing Authority, supra. Unlike relocation benefits, e.g., moving expenses, denial of relocation assistance may not be reviewable by an administrative agency. 24 C.F.R. § 42.703(a). Thus, the Court refuses to require exhaustion on the claims for relocation assistance, as distinguished from relocation benefits.

The City has also urged dismissal on the ground that no federal funds were used in the acquisition and construction of the garage on Garage Site I. The plaintiffs have filed an affidavit under Rule 56(f) stating they are unable, at this time, to produce affidavits concerning the use of federal funds. Accordingly, the Court DENIES the motion for summary judgment and to dismiss at this time. The plaintiffs are advised to make a timely compliance with the requirements of the newly revised Rule 11. Fed.R.Civ.P. The plaintiffs should further be on notice from the number of attorneys present at the hearing on this motion as well as the length of the briefs in this case, that plaintiffs’ counsel may also expose themselves to extensive liability if they fail to comply with the requirements of this rule.

Thus, the Court has dismissed Reasor, Adams, McCabe and Lester as plaintiffs from Counts 3 and 4 with prejudice, has dismissed Adams, McCabe and Lester’s claim for relocation benefits, such as moving expenses, without prejudice, and has declined to dismiss the claims of AML alleging denial of relocation assistance under Counts 3 and 4.

Declaratory Judgment — Count 5

In Count Five, plaintiffs seek a declaratory judgment that if the City uses condemnation to acquire RAML’s property, Garage Site IIA, that the City be limited to the amount of airspace above the property as is necessary to construct a garage and that the City provide for ingress and egress to a building site to be titled in RAML, above the proposed parking garage. The City contends that it cannot be ordered to limit its acquisition of property by eminent domain to accommodate the development by plaintiffs. In their brief in opposition the plaintiffs state “plaintiffs merely seek a declaration that should RAML’s property be condemned by the City, it do so in a constitutional manner.” This Court will not enter a declaratory judgment that a party must act in a “constitutional manner” because such a judgment would not resolve any controversy between the parties. See McGraw-Edison Co. v. Preformed Line Products Co., 362 F.2d 339, 342 (9th Cir.), cert. denied, 385 U.S. 919, 87 S.Ct. 229, 17 L.Ed.2d 143 (1966). The City and the plaintiffs agree that the City must act in a constitutional manner. The controversy is whether it is unconstitutional for the City to obtain fee simple interest, including rights to the airspace, in the plaintiffs property through eminent domain.

In an action for declaratory judgment, the burden of proof is not put on the plaintiff merely because he has filed the action, rather the Court must examine the underlying issues to determine the burden of proof. See Royal Indemnity Co. v. Wingate, 353 F.Supp. 1002, 1004 (D.Md.), aff'd. 487 F.2d 1398 (4th Cir.1973). In its brief the City concedes that the City bears the burden of establishing the necessity of the condemnation in a condemnation proceeding. By analogy, the City bears the burden in this declaratory judgment action because the underlying issue involves the propriety of a condemnation. The City’s motion for summary judgment and to dismiss Count 5 of the complaint is DENIED because Count 5 states a colorable claim for relief and the City has failed to establish, at this point, the necessity of the challenged condemnation.

Antitrust Claims — Counts 7 through 11

In Counts 7 through 11, the plaintiffs have alleged that the City has violated the Sherman Act and the Virginia Antitrust Act. 15 U.S.C. §§ 1 and 2; Va.Code §§ 59.1-9.5, 9.6; § 18.2-500.

The City contends that it is immune to antitrust liability under the Parker doctrine. Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). Although the parties are in dispute as to the law, there is no real controversy as to the applicable facts in this case. Therefore, the Court will examine the applicable caselaw.

1. State Action Doctrine

The state action doctrine was established by the Supreme Court in Parker v. Brown, supra. The rationale for Parker was that the Sherman Act did not restrain state legislative action. The Supreme Court and the Courts of Appeals are currently grappling with the question of when state action immunity is available to actors other than the state itself. In City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978) the plurality held that a municipality acquired antitrust immunity when it acted pursuant to a “clearly articulated and affirmatively expressed” state policy to displace competition. Id. at 410, 98 S.Ct. at 1135.

The second prong of the state action immunity test requires state supervision of the challenged activities allegedly performed by the non-state actor. California Retail Liquor Dealers Association v. Mid-cal Aluminum, Inc., 445 U.S. 97, 99, 100 S.Ct. 937, 940, 63 L.Ed.2d 233 (1980); Cantor v. Detroit Edison Co., 428 U.S. 579, 582, 96 S.Ct. 3110, 3113, 49 L.Ed.2d 1141 (1976). The City contends that the supervision prong applies only to private actors but does not apply to municipalities. The Supreme Court in Boulder, expressly reserved the question of whether a local municipality must satisfy the “active state supervision” requirement. Community Communications Co. v. Boulder, 455 U.S. 40, 51-52 n. 14 (majority), 71 n. 6 (dissent), 102 S.Ct. 835, 840-841 n. 14, 851 n. 6, 70 L.Ed.2d 810. Neither party has cited any Supreme Court case which has resolved this issue. In Hoover v. Ronwin, — U.S. -, 104 S.Ct. 1989, 80 L.Ed.2d 590 (1984) the defendant was a state actor so the Supreme Court did not need to reach the supervision prong.

A number of Circuit Courts have concluded that the state supervision prong should not be required of municipalities. See, e.g., Scott v. City of Sioux City, 736 F.2d 1207, 1984-1 Trade Cases paragraph 66050, June 8, 1984 (8th Cir.1984); Golden State Transit Corp. v. City of Los Ange les, 726 F.2d 1430 (9th Cir.1984); Town of Hallie v. City of Eau Claire, 700 F.2d 376 (7th Cir.1983).

The Court HOLDS that the state supervision need not be proved by a municipality to establish Parker immunity. As the United States Court of Appeals for the Eighth Circuit observed in Sioux City, supra, municipal officials are supervised by the citizens they represent thus state supervision is less necessary to prevent abuse of power. Sioux City, supra, at 1214. Moreover, the state supervision prong tests whether an activity is truly state action yet this test is already performed for a municipality when the Court examines whether the action was authorized. Id. Accordingly, the Court turns to the issue of whether the state authorized the City to act in that area and whether the state legislature contemplated the anticompetitive acts complained of.

2. State Authorization

The plaintiffs have supported their antitrust claims with 126 paragraphs of allegations. When the wheat is separated from the chaff, the plaintiffs allege that the City conspired with Goodman-Segar-Hogan and others to prevent the plaintiffs from erecting an office building in downtown Norfolk.

In the agreement filed with the Court, Goodman-Segar-Hogan agreed to erect an office building in downtown Norfolk and the City agreed not to construct, permit the construction of, or provide any financial support for the construction of a certain size office building in a specified area of downtown Norfolk for up to two years after completion of the Goodman-Segar-Hogan building. The plaintiffs argue that this “blackout” agreement and the City’s subsequent failure to aid the plaintiffs in constructing an office building, violates the Sherman Act and the Virginia Antitrust Act.

In enacting the housing and redevelopment sections of the Virginia Code, the state legislature made express findings and declarations. Va.Code §§ 36-48, 36-48.1. In those sections the legislature expressly stated that clearance, replanning, rehabilitation and reconstruction of blighted areas in accordance with locally approved redevelopment plans are governmental functions of grave concern to the Commonwealth. Va.Code § 36.48. The legislature created housing and redevelopment authorities to accomplish the redevelopment. Va. Code §§ 36-49 through 36-51.1, 36-52.1 through 36-55. The legislature also contemplated that the cities would be inexorably tied into the redevelopment.

The redevelopment authorities were not allowed to initiate a conservation or redevelopment plan until the city approved the plan. Va.Code §§ 36-51, 36-51.1, 36-52.1. The redevelopment authorities were not allowed to exercise certain powers until the city adopted a resolution declaring that an area was deteriorating. Va.Code § 36-49.-1. Further, the city was the entity empowered to declare an area to be a rehabilitation district. Va.Code § 36-52.3. Most importantly, the legislature authorized the city to have the same rights and powers to cooperate with and assist the authorites in redevelopment that the city has under the Housing Law. Va.Code § 36-52, 36-6, 36-7, 36-7.1, 36-8. Thus, the City was empowered to do anything convenient to aid and cooperate in the planning, undertaking, construction or operation of a redevelopment project. Va.Code §§ 36-6(h), 36-52. Therefore, the “blackout” agreement and each of the other challenged actions, undertaken in an approved conservation district, were authorized by the legislature. Va. Code §§ 36-52, 36-6(h), (i), 36-53.

In their brief in opposition to the motion for summary judgment, the plaintiffs contend that even if the legislature authorized the anticompetitive acts challenged here, that the authorization violates the credit clause of the Virginia Constitution and the Virginia Constitution and statutes on public bidding.

The plaintiffs’ conclusory claim of unconstitutionality is irrelevant or without merit. To the extent the plaintiffs challenge the City’s potential power to violate the credit clause, such a contention is irrelevant as to whether the specific anticompetitive acts alleged in the complaint were authorized by the legislature. The specific activities alleged to be anticompetitive do not violate the credit clause because they do not involve the loaning of credit. Under the section dealing with Count 13 of the complaint the Court concludes that the credit clause only applies to “credit” in the popular sense of that term. Accordingly, the Court FINDS that none of the allegedly anticompetitive activities involve a violation of the credit clause.

The Court likewise rejects the plaintiffs’ contention that the City activities violate Virginia Constitutional and statutory provisions on public bidding. The plaintiffs’ brief states in conclusory fashion that the City does not have all the power that it claims to have. The only relevant issue, however, is whether the challenged activities were forbidden by constitutional or statutory provisions. As the plaintiffs have failed to raise specific violations of constitutional or statutory provisions, this Court refuses to consider which of the City’s potential powers may be limited by the Virginia Constitution and its executory statutes. Such a broad inquiry into the constitutionality of potential exercises of power by the City is directly in conflict with the principles of Ashwander. Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 346-48, 56 S.Ct. 466, 482-84, 80 L.Ed. 688 (1936).

Accordingly, the Court HOLDS that the challenged activities were authorized by the state legislature. Unlike the neutral grant of home rule power at issue in Community Communications Co. v. City of Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), the above cited statutes required the City to become involved in redevelopment projects. The Court FINDS that the legislature has clearly articulated and affirmatively expressed its intent that the City engage in redevelopment and conservation activities. Boulder, supra at 51, 102 S.Ct. at 840. The next question is whether the state contemplated the anti-competitive activities alleged in the instant case. Lafayette, supra 435 U.S. at 415, 98 S.Ct. at 1138 (plurality opinion).

3. Contemplation of Anticompetitive Activities

The State authorized the City to make loans and donations to the redevelopment authority and to purchase the bonds of such an authority. Va.Code §§ 36-52, 36-6(g), 36-7. Further, the legislature authorized the City to enter into agreements with redevelopment authorities as to action to be taken by the city and authorized the authority to make land available to private enterprise on any conditions necessary to carry out the purposes of redevelopment. Va.Code § 36-52, 36-6(i), 36-53. Once the City became financially legally obligated to the redevelopment, the state must have anticipated that the city would use its powers to protect its investment. See, Scott v. City of Sioux City, supra, at 1212. Further, it is clear that the reconstruction of an area pursuant to a redevelopment plan would necessitate some anticompetitive activities.

In its declarations, the state legislature expressly stated that the problems of urban blight required governmental action. Thus the state concluded that private enterprise alone could not solve the problem. Accordingly, the state gave Housing and Redevelopment Authorities and cities vast powers to acquire land, clear it, determine appropriate land use for different parcels, impose conditions and limitations under which property may be redeveloped by public or private enterprise, and generally plan the redevelopment of an entire area. Va. Code §§ 36-48 through 36-55. Clearly the legislature contemplated that the redevelopment plan would contain anticompetitive measures similar to the challenged “blackout” agreement. The legislature must have contemplated that the City would try to encourage private developers to invest heavily in redevelopment and that as part of that encouragement the City would agree not to aid in building competing structures. For example, the City may desire a large hotel to be built in the downtown area. A private investor would build such a building based on the present office needs of the area, which would be low, due to blight. However, the City’s redevelopment plan may be more farsighted and thus require a hotel that would not be fully occupied until a number of years after its constructions. In order to induce the private investor to construct a much larger building than is presently required the City would reasonably be expected to promise some limited form of protection from competition in the first few years after construction of the building. Thus, the challenged “blackout” agreement and the City’s alleged refusal to cooperate with the plaintiffs is a form of limited protection from competition that the legislature must have contemplated when it authorized the City to become involved in redevelopment projects.

Accordingly, the Court FINDS that the legislature contemplated the allegedly anti-competitive activities challenged in this case when it authorized the City to become involved in redevelopment projects. Therefore, the Court HOLDS that the City was acting pursuant to a clearly articulated and affirmatively expressed state policy to displace competition in redevelopment projects. Lafayette, supra.

As the City has met the requirements of the Parker doctrine, Counts 7 and 8 are DISMISSED and summary judgment is GRANTED in favor of the City on those two counts.

In its brief in support of its motion for summary judgment, the City felt obliged to reply to the possible allegation that the City conspired to refuse to deal with the plaintiffs at any time under any circumstances. The plaintiffs have seized upon the City’s discussion of that issue as an admission by the City that the City’s activities would not be protected by state action immunity if the City conspired with a private actor. The Court is not sure that any claim of perversion of municipal activities was made in Count 7 or 8 of the complaint though it seems such a claim would be more appropriate under Count 12. Further, the plaintiffs have abandoned any claim of perversion of municipal activities, under Count 7 or 8, in their brief in opposition to the motion for summary judgment.

The plaintiffs’ brief is woefully devoid of authority for the proposition that the Parker doctrine is inapplicable if the municipality conspires with a private actor. See Community Communications Co. v. Boulder, 455 U.S. 40, 44, 47, 102 S.Ct. 835, 837, 838, 70 L.Ed.2d 810 (1982) (In Section 1 of Sherman Act challenge to City’s grant of monopoly to private actor Supreme Court did not discuss combination with private actor as basis for its decision.) Further, the Court has expressly found that the City’s actions were authorized by the state, thus barring any ultra vires claim.

Counts 9 and 10 of the complaint assert violations of the Virginia Antitrust Act. Va.Code § 59.1-9.1, et seq. The Court GRANTS the City’s motion for summary judgment on both Counts 9 and 10. The Parker immunity which foreclosed liability under the federal anti-trust act forecloses liability under the State Antitrust Act. Moreover, the Virginia Antitrust Act excludes any activity which is authorized by a Virginia statute. Va.Code § 59.1-9.4(b)(l). As this Court has already concluded that the City’s action was authorized under the Parker analysis, the statutory exclusion, which is broader, because it does not require “clearly articulated and affirmatively expressed policy”, must also apply.

Thus, the Court has dismissed the plaintiffs’ claims under the Sherman Act and under the Virginia Antitrust Act.

Virginia Conspiracy Act — Count 11

In Count 11, the plaintiffs have incorporated by reference the 126 preceding paragraphs of the complaint and add the allegation that the City has violated the Virginia Conspiracy Act. Virginia Code § 18.2-499. The City has moved for summary judgment on the grounds that the Virginia Conspiracy Act does not apply to cities, the city is not a person, the city’s actions were not malicious, and that the statute only supplements the Antitrust Act. The Court is not persuaded by the City’s contention that a City is not a person within the meaning of the Virginia Conspiracy Act. Va.Code § 18.2-501. Nor is the Court convinced that the Virginia Conspiracy Act is solely supplemental to, and only governs conduct beyond, the Virginia Antitrust Act. Va.Code §§ 18.2-499 through 501; 59.1-9.1, et seq. However, Virginia case law is to the effect that the City is deserving of sovereign immunity while performing a governmental function. Virginia Electric & Power Co. v. Hampton Redevelopment and Housing Authority, 217 Va. 30, 225 S.E.2d 364 (1976). The legislature’s opinion is not conclusive on the issue of whether the activity is a proprietary or governmental function. Id. In addition, a City may be beyond the scope of the Conspiracy Act if the challenged activities were performed by public officials within the scope of their employment. See Fowler v. Department of Education, 472 F.Supp. 121 (D.C.Va.1978). However, on the basis of the record at this time, the Court is unable to find that either defense has been proved as a matter of law, thus the motion for summary judgment is DENIED.

Tortious Conspiracy — Count 12

In Count 12, the plaintiffs allege that the City willfully and maliciously conspired with others to hinder the plaintiff in the development of its property. See Gallop v. Sharp, 179 Va. 335, 19 S.E.2d 84 (1942). The City has submitted affidavits disclaiming any malice or ill will on the part of the City. The plaintiffs have replied by stating that they are unable to reply to the City’s affidavits at this time. Fed.R.Civ.P. 56(f). As malice is one of the dispositive issues in Count 12, the Court DENIES the City’s motions to dismiss and for summary judgment at this time.

The plaintiffs and plaintiffs’ counsel are again advised to take note of the requirements of the newly revised Rule 11. Fed. R.Civ.P.

Unconstitutional Contract — Count 13

In Count 13, the plaintiffs challenge the constitutionality of the contract between the City and Goodman-Segar-Hogan as a violation of the Virginia Constitution and Virginia statutes. Va. Const, art. 7, § 9, art. 10, § 10; Va.Code §§ 15.1-307 through 316.

The plaintiffs have alleged that the City violated the credit clause of the Virginia Constitution in paragraphs 2, 5, 6, 7, 12 and 14 of the agreement with Goodman-SegarHogan. Va. Const., art. 10, § 10. The City agrees that it granted incentives to Goodman-Segar-Hogan, but denies that those incentives can be termed credit. The City cites Almond v. Day, 197 Va. 782, 91 S.E.2d 660 (1956), as authority for the proposition that the term “credit” refers to the relation of borrower and lender, in which money is borrowed to be repaid at a later date with interest. The plaintiffs argue for a more expansive reading of the word “credit” but only cite Troy v. Walker, 218 Va. 739, 241 S.E.2d 420 (1978). Troy, supra, involved the City of Newport News’ guarantee to pay the principal, interest and redemption premiums of certain bonds if other sources of payment were insufficient. Such a guarantee is certainly “credit” within the definition proposed by the City. Thus, in determining whether the challenged activities violated the credit clause of the Virginia Constitution the Court will be guided by the definition of “credit” in Almond v. Day, supra. See, e.g., Button v. Day, 208 Va. 494, 498, 158 S.E.2d 735, 738 (1968).

The plaintiffs contention that paragraphs 2, 5, 6, 12 and 14 of the Goodman-SegarHogan Agreement with the City violate the credit clause is wholly without merit. Those paragraphs do include certain economic inducements promised by the City but they are certainly not within the Virginia courts interpretation of the term “credit” which we have adopted above. Paragraph 7 of the agreement requires the City to construct a parking garage, which is not either of the garages mentioned earlier in this opinion, and lease a number of spaces to Goodman-Segar-Hogan. This Court’s interpretation of the term “credit” is not blind to the fact that credit can often be disguised as a lease. However, from an examination of the agreement the Court concludes that the lease in question is not a sham lease designed to disguise an extention of credit. The Court bases its conclusion on the absence of an option in Goodman-Segar-Hogan to buy those parking spaces for a nominal sum at the lease and the fact that the rental payments are to be fixed at the market rate. Accordingly, the Court HOLDS that the challenged provisions of the Goodman-Segar-Hogan Agreement do not violate the credit clause of the Virginia Constitution. Va. Const., art. 10, § 10.

The plaintiffs have challenged the Goodman-Segar-Hogan Agreement with the City on the ground that it violates Virginia constitutional and statutory provisions on public bidding. Va. Const. Art. 7, § 9, Va.Code § 15.1-307, et seq. The City has filed an affidavit which purports to demonstrate that several of the challenged provisions are now moot. The plaintiffs have responded, pursuant to Rule 56(f) Fed.R. Civ.P., by filing an affidavit stating that they are unable to respond at this time. The resolution of whether these provisions are still in effect may moot several constitutional issues. Accordingly, the Court, at this time, DENIES the motion to dismiss and for summary judgment on the claim that the Goodman-Segar-Hogan contract violates the constitutional and statutory provisions on public bidding. See Ashwander, supra.

SUPPLEMENTAL ORDER

This matter comes before the Court on the motion for summary judgment filed by the defendant, Goodman-Segar-Hogan, Inc. (“GSH”). The plaintiffs have filed a brief in opposition to GSH’s motion, GSH then filed reply briefs, and oral argument was heard on the motion. Accordingly, the issue is ripe for disposition.

The plaintiffs, partners of a realty firm, filed this suit against the City of Norfolk, Norfolk Redevelopment & Housing Authority (NRHA) and GSH, a rival realty corporation, on January 4, 1984. The background of the dispute is as follows. The City acquired part of a tract of land owned by the plaintiffs and constructed a parking garage, Garage Site I, on that land. At the time of the sale, the plaintiffs negotiated with the City concerning the City’s desire to acquire a second parcel of the plaintiffs’ land on which to build additional parking facilities and the plaintiffs’ desire to erect an office building in the airspace over the proposed parking garage on the second parcel of land (Garage Site II-A). Those negotiations fell through and eventually resulted in the suit in which the plaintiffs allege, in part, violations of state and federal antitrust statutes.

In Counts 7 through 10, the plaintiffs have alleged that GSH has violated the Sherman Act and the Virginia Antitrust Act. The alleged violations were said to be brought about when the City entered into an agreement with GSH (the “GSH/City Agreement”) for the development of a new office building known as the Virginia World Trade Center. The economic inducement or “blackout” agreement embodied in paragraph 15 of the GSH/City Agreement provided that for a period of time not to exceed two years from the start of construction, the City would not construct, permit the construction of, or provide financial support for the construction of any hotel or office building of a certain size on land or within air space owned by either the City or the NRHA within a certain portion of downtown Norfolk.

GSH supports their motion for summary judgment with two separate and distinct doctrines. These two doctrines are the State Action Doctrine and the Noerr-Pennington Doctrine.

FEDERAL ANTITRUST CLAIMS— COUNTS 7 AND 8

In Counts 7 and 8, the plaintiffs have alleged that GSH has violated the Sherman Act. 15 U.S.C. §§ 1 and 2. GSH supports their motion for summary judgment with two separate and distinct doctrines. These two doctrines are the State Action Doctrine and the Noerr-Pennington Doctrine. This Court would only have to find one of the doctrines applicable to grant GSH’s motion for summary judgment. Although the parties are in dispute as to the law, there is no real controversy as to the facts in this case. Therefore, the Court will limit the scope of its examination to the applicable case law.

The state action doctrine was established by the Supreme Court in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). The rationale for Parker was that the Sherman Act was not intended to apply to actions undertaken by the state legislature. Until recently, it was questionable whether state action immunity was available to actors other than the state itself. However, through elaboration in recent caselaw, the right of a private entity to claim state action immunity is indisputable. State of North Carolina v. P.I.A.. Asheville, Inc., 740 F.2d 274, 276-77 (4th Cir.1984); citing Bates v. State Bar of Arizona, 433 U.S. 350, 362, 97 S.Ct. 2691, 2698, 53 L.Ed.2d 810 (1977) and California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980). Furthermore, a private entity is able to claim state immunity even when the state does not compel, but only authorizes the activity. Hoover v. Ronwin, — U.S.-, 104 S.Ct. 1989, 80 L.Ed.2d 590 (1984).

For a private entity to qualify for state action immunity, they must show two things. First, there must be a “clearly articulated state policy.” 740 F.2d at 277. Second, there must be active or “ongoing state supervision.” Id.

The first stage of this two-part test, a clearly articulated state policy, has already been decided by this Court in its opinion filed July 18, 1984. In that opinion concerning a summary judgment motion filed by the City of Norfolk in this same action, this Court found the following:

In its declarations, the state legislature expressly stated that the problems of urban blight required governmental action. Thus the state concluded that private enterprise alone could not solve the problem. Accordingly, the state gave Housing and Redevelopment Authorities and cities vast powers to acquire land, clear it, determine appropriate land use for different parcels, impose conditions and limitations under which property may be redeveloped by public or private enterprise, and generally plan the redevelopment of an entire area. Ya.Code §§ 36-48 through 36-55. Clearly the legislature contemplated that the redevelopment plan would contain anticompetitive measures similar to the challenged “blackout” agreement. The legislature must have contemplated that the City would try to encourage private developers to invest heavily in redevelopment and that as part of that encouragement the City would agree not to aid in building competing structures.
Accordingly, the Court FINDS that the legislature contemplated the allegedly anticompetitive activities challenged in this case when it authorized the City to become involved in redevelopment projects. Therefore, the Court HOLDS that the City was acting pursuant to a clearly articulated and affirmatively expressed state policy to displace competition in redevelopment projects.

This leads this Court to examine the second stage of the test, active state supervision. The purpose of state supervision is to monitor the conduct of the private entity to assure that its activity is in harmony with the expressed goals of the state. It is the contention of the plaintiffs that the state must actively supervise the activity and that responsibility cannot be delegated to a city. The plaintiffs cite as authority to this proposition the case of City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978). However, it is the opinion of this Court that the fact situation surrounding Lafayette is completely different and distinguishable from the case before this Court. Furthermore, this Court is of the opinion that even if Lafayette was not distinguishable, it does not stand for the proposition of law which the plaintiffs contend.

In Lafayette, the state did not articulate or affirmatively express any state policy which authorized or empowered the city to displace competition. In other words, no power was ever transferred from the state to the city. However, in the case before this Court, the state has clearly articulated its policy and empowered the city to carry out that policy. It would make little sense to require a state to invest its limited resources in supervisory functions that are best left to the city, especially after the state has given the city other powers to carry out state policy. Accordingly, this Court holds that city supervision is synonymous with state supervision in this fact scenario.

This leaves the Court to determine whether the City actively supervised the activity of GSH. Since the economic inducement or “blackout” agreement was only in operation for a two-year period, that is the time period in which active supervision by the City was required. In deciding if there was active supervision by the City, this Court looks to the agreement entered into by the City and GSH. In the agreement, there are numerous references to supervisory functions which are carried out by the City. Specifically, paragraphs 1, 2, and 15 set out construction deadlines, leasing conditions and square footage requirements which the City enforces. With these facts in mind, this Court finds that the active state supervision requirement, the second step, was satisfied by the City’s involvement under the agreement. Accordingly, this Court FINDS that GSH has met the requirements set out in P.I.A. Asheville and is entitled to state action immunity. This finding is in harmony with the reasoning of this Court that there would be little point in the legislature authorizing activities by the City to encourage private developers to engage in urban renewal activities, when those very activities can subject the private developer to antitrust liability.

2. NOERR-PENNINGTON DOCTRINE

In the cases of Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) and United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965), the United States Supreme Court held that genuine efforts by private parties to influence governmental action constitute immune activity under the federal antitrust laws. Furthermore, private entities can inform and attempt to influence the government of their wishes with regard to actions which the government has the power to take, even though the actions taken by the private entities are intended to restrain competition. 365 U.S. at 137, 81 S.Ct. at 529. As noted earlier in this opinion, this Court has found that the City had the power to take the actions challenged in the antitrust counts, and that those actions constituted state action under the Parker doctrine.

Put in the proper prospective, the challenged activities of GSH are essentially successful efforts to induce the City to take lawful state action. Under the NoerrPennington doctrine, such activities are beyond the scope of the Sherman Act. Hopkinsville Cable T.V. v. Pennroyal Cablevision, Inc., 562 F.Supp. 543 (D.Ky.1982) involved a similar fact situation. In that case, the court held the actions of the city to be within the scope of the Parker doctrine, and then held that the “[defendant] and its shareholders are similarly shielded from antitrust liability by the Noerr-Pennington doctrine.” Id. at 546. The court went on to say that “construing the allegations of Hopkinsville Cable’s complaint liberally, it asserts nothing more than Pennyroyal sought to obtain a monopoly from city. This is precisely the type of conduct that Noerr-Pennington protects. Id. Accordingly, this Court FINDS that GSH has met the criteria to fall within the Noerr-Pennington doctrine and is therefore shielded from antitrust liability.

As GSH has met the requirements of both the Parker doctrine and the NoerrPennington doctrine, summary judgment is GRANTED in favor of Goodman-SegarHogan, Inc. on Counts 7 and 8.

VIRGINIA ANTITRUST CLAIMS-Counts 9 and 10

In Counts 9 and 10, the plaintiffs have alleged that GSH has violated the Virginia Antitrust Act. Va.Code § 59.1-9.1, et seq. The Parker and Noerr-Pennington doctrines which foreclosed liability under the federal antitrust act forecloses liability under the Virginia antitrust act. Moreover, the Virginia antitrust act excludes any activity which is authorized by a Virginia statute. Va.Code § 59.1-9.4(b)(l). As this Court has already concluded that the activities of GSH and the City were authorized, the statutory exclusion, which is broader because it does not require a clearly articulated and affirmatively expressed state policy, must also apply. Therefore, the Court GRANTS the motion of Goodman-SegarHogan, Inc. for summary judgment on both Counts 9 and 10.

CONCLUSION

This Court, having dismissed all of the federal antitrust claims, invites counsel to brief the issue of whether this Court now has jurisdiction over the remaining claims. Counsel should file simultaneous briefs within fifteen days of the date of this Order.

IT IS SO ORDERED.


author: EDENFIELD, District Judge.

text:
    Frank CHANCE, Paul Chance and David Topper, Plaintiffs, v. CERTAIN ARTIFACTS FOUND AND SALVAGED FROM THE NASHVILLE a/k/a the Rattlesnake, Her Engines, Boilers, Tackle, etc., in rem., Defendant, State of Georgia, Claimant.
    No. CV483-391.
    United States District Court, S.D. Georgia, Savannah Division.
    Aug. 16, 1984.

      Harold B. Yellin, Savannah, Ga., for plaintiffs.
    Robert S. Bomar, Sr. Asst. Atty. Gen., Dept, of Law, State of Georgia, Atlanta, Ga., Gustave R. Dubus, III, Savannah, Ga., for defendant.
   ORDER

EDENFIELD, District Judge.

Plaintiffs brought this admiralty action to determine their rights, if any, to artifacts salvaged from a sunken ship located on state property at the bottom of the Ogeechee River. The State of Georgia has intervened as claimant.

I. Background

THE NASHVILLE, a side-wheel steamer, was built in 1853. The Confederate government seized THE NASHVILLE during the Civil War and deployed the vessel to destroy northern ships. Subsequently, private investors purchased THE NASHVILLE and rechristened her THE RATTLESNAKE. It was THE RATTLESNAKE’S mission to raid and plunder Union merchant ships so that her owners could sell the captured ships and cargo. On February 28, 1863, THE RATTLESNAKE ran aground at Seven Mile Bend in the Ogeechee River just above Fort McAllister. A Union ship, the USS MONTAUK, steamed up the Ogeechee River and fired on THE RATTLESNAKE; the vessel exploded and sank. It came to rest on the sand bar below.

For over a century, the vessel has remained in the location where it ran aground in 1863. The evidence submitted at trial shows that THE NASHVILLE is firmly affixed to the river bottom. The parties do not dispute the fact that the vessel rests on State property. In 1974, Bill Kinsey sought to excavate THE NASHVILLE. In his report, Diving: The CSS NASHVILLE, Kinsey wrote, “[t]he first thing observed was the large buildup of sand on the [upjriver side ...” He further noted that in one location on the upriver side “only a few inches of the ribs” were visible. This characterization is consistent with the testimony offered at trial. The extent to which the hull is exposed varies; the downriver portions are much more exposed than the upriver portions. Towards the midship section the river bottom has crept over the vessel, filling it with approximately five to eight feet of sand.

Plaintiffs applied for a state permit to excavate THE NASHVILLE. The state denied that request. Nevertheless, plaintiffs began diving operations in 1979 and since that time have recovered various artifacts from the wreckage. The Georgia Department of Natural Resources (DNR) was unaware of plaintiffs’ diving operations until August, 1983. Upon learning of the plaintiffs’ activities, the DNR immediately ordered plaintiffs to cease diving and to turn over all recovered artifacts.

Plaintiffs brought this action in September, 1983, seeking title to the artifacts or, alternatively, a salvage award. The state has consented to this Court’s adjudication of title to the artifacts. However, it invokes an Eleventh Amendment immunity defense to plaintiffs’ claim for a salvage award.

II. Conclusion

A. Jurisdiction

This Court has jurisdiction pursuant to 28 U.S.C. § 1333. The United States Supreme Court has recently held that once a state asserts a colorable claim to property, a federal court does not have the authority to adjudicate the state’s interest in that property without the state’s consent. Florida Dept, of State v. Treasure Salvors, Inc., 458 U.S. 670, 682, 102 S.Ct. 3304, 3313, 73 L.Ed.2d 1057 (1982). That principle does not pose a bar to the instant proceedings, however, because the state has consented to this action.

B. Maritime Law of Finds or Salvage

The first issue this Court must resolve is whether to apply the maritime law of finds or salvage. The law of finds and the law of salvage are not always distinguished by admiralty courts. In the instant case, however, the distinctions are noteworthy.

1. Salvage Law

The emphasis in maritime salvage law is on the salvage of imperiled property. The doctrine of salvage assumes title to the property rests in some individual. Thus, even though a vessel is abandoned without the hope of recovery or return, the title of the vessel remains in her owner. 3A Benedict at 11-1 (1983). The salvor of property has a right to an award or a lien against the property. 3A Benedict at 10-1 (1983). The property is sold by the court and the proceeds of the sale are used to satisfy the salvor’s award. The sale is also a means of clearing title to the property or a means of giving the owner the opportunity to regain possession of the property. See Wiggins v. 1100 Tons More or Less, of Italian Marble, 186 F.Supp. 452, 457 (E.D.Va.1960). Any stranded, sunken, or otherwise imperiled vessel is the proper subject of a salvage award. 3A Benedict at 3-16 (1983).

2. The Law of Finds

Modern courts, however, have rejected the salvage law theory that title to property can never be lost. They have instead applied the law of finds under the doctrine of “animus revertendi” (the owner has no intention of returning). Klien v. Unident., Wrecked & Aban. Sailing Vessel, 568 F.Supp. 1562, 1565 (S.D.Fla.1983). The property is considered the equivalent of a plant or a fish. Hener v. United States, 525 F.Supp. 350, 354 (S.D.N.Y.1981). Under the law of finds, the inference of abandonment may arise from lapse of time and nonuse of the property. Wiggins, 186 F.Supp. at 456; see also Erickson v. Sinykin, 223 Minn. 232, 26 N.W.2d 172 (1947), 170 A.L.R. 697. Unlike salvors who are granted a monetary award for their efforts, a finder acquires title to the salvage property. Since THE NASHVILLE has rested at the bottom of the Ogeechee, unclaimed by its owner since 1863, this Court concludes that the law of finds applies.

a) Embeddedness

Under general finds principles, it is well settled that in a suit between competing salvors the first finder to take possession of lost or abandoned property with the intention to exercise control over it acquires title. Klien v. Unident., Wrecked & Aban. Sailing Vessel, 568 F.Supp. 1562, 1565 (S.D.Fla.1983); see also Rickard v. Pringle, 293 F.Supp. 981 (S.D.N.Y.1968); Brady v. S.S. African Queen, 179 F.Supp. 321 (E.D.Va.1960); Wiggins v. 1100 Tons, More Or Less, Of Italian Marble, 186 F.Supp. 452 (E.D.Va.1960); Eads v. Brazelton, 22 Ark. 499 (1861). In the instant case, however, the state does not assert a claim as a competing salvor; rather, the state maintains that under the “embeddedness” exception to the law of finds, (i.e., because THE NASHVILLE is embedded on state property), title to the vessel rests with the state.

In Klien v. Unident., Wrecked & Aban. Sailing Vessel, 568 F.Supp. 1562, 1565 (S.D.Fla.1983), the court confronted a situation similar to that in the instant case. In Klien, an action was brought by an alleged “finder” for title to an abandoned shipwreck; alternatively, plaintiffs asserted a salvage claim. Id. at 1564. The ship was located on United States property in Biscayne National Park. The United States was aware of the vessel’s existence and its approximate location since at least 1975. Id. The plaintiff discovered the actual location of the ship in 1978; the United States discovered it in 1980. Id.

In resolving the title dispute between the United States and the alleged finders the Klien court applied the common law of finds. According to Judge Atkins, “[t]he general rule in the law of finds is that the determination of the finder’s right to abandoned property is unaffected by the ownership of the land on which the property is found.” Id. at 1565. When personalty is found embedded in land however, title to that personalty rests with the owner of the land. Id. at 1565, citing 36A C.J.S. Finding Lost Goods § 5c (1961); 1 Am Jur 2d Abandoned, Lost Property §§ 3, 4, 22 (1962); see also Groover v. Tippins, 51 Ga.App. 47, 179 S.E. 634 (1935). The Klien court found that the vessel was embedded in land owned in fee simple by the United States and thus concluded that title to the vessel properly rests with the United States.

The Klien court next considered whether plaintiff was nevertheless entitled to an award for his salvage efforts. Because the plaintiff failed to satisfy all the requirements for a salvage award, the court denied his claim. Thus, under Klien and the common law of finds, the State of Georgia must show that the vessel is “embedded in or attached to” the river bottom in order to assert a valid claim for title. Klien, 568 F.Supp. at 1566; see also, 36A C.J.S. Finding Lost Goods § 5 (1961).

At trial, the parties disputed whether THE NASHVILLE was actually “embedded” in the river bottom. To a great extent, plaintiffs relied on the fact that there is a deep crevice underneath the stern to support their conclusion that the wreck is not embedded. Plaintiffs seemed to suggest that the vessel must be totally buried in order to be deemed “embedded.” It is true that many of the cases employing the embeddedness exception concern personalty actually buried in the land. See, e.g., Klien, 568 F.Supp. 1562, 1565 (S.D.Fla.1983); Favorite v. Miller, 176 Conn. 310, 407 A.2d 974 (1978); Schley v. Couch, 155 Tex. 195, 284 S.W.2d 333 (1955); Burdick v. Chesebrough, 88 N.Y.S. 13, 94 App.Div. 532 (1904); Goodard v. Winchell, 86 Iowa 71, 52 N.W. 1124 (1892); see also, 170 A.L.R. 708. However, plaintiffs have not cited nor has this Court found any case which requires that the property be totally buried in order to satisfy the embeddedness requirement. In fact, case precedent is to the contrary.

In Allred v. Biegel, 240 Mo.App. 818; 219 S.W.2d 665 (1949), for example, swimmers in the Charition River discovered what they first thought was a log. However, further investigation revealed that they had found an old Indian canoe. “When found, about one-third of the canoe was embedded in the river bank, from 15-25 feet below the surface of the land. It extended about six inches above the water for a distance of a few feet, and the remainder was submerged in the water. In order to remove it the soil around the embedded portion was excavated, and then it was pulled out with the aid of a tractor and a block and tackle.” Id. at 666. The court found that the canoe was embedded in the soil and concluded that title to the personalty properly belonged to the owner of the locus in qou. Id. at 666. The court reasoned:

The leading case is on all fours with the case at bar. It is the English case of Elwes v. Briggs Gas Company, 33 Ch. 562, where an ancient ship, some 2,000 years old, hollowed out of a single oak log and retaining its character of wood (not fossilized), was discovered, embedded in the soil, by the lessee of the land, while lawfully excavating thereon. Chitty, J., held that whether the ship was to be regarded as mineral, or as a part of the realty under the maxim “Quicquid plantatur” [whatever is affixed to the soil belongs to the soil] or “fixatur solo, solo, cedit,” or merely as a chattel embedded in the soil, its existence completely unknown to the owner of the land, the title thereto was in the owner of the land. It was said that the original owners were long since dead, that it is inconceivable that their title could be established, and that the owner of the land claimed not only the surface thereof but everything within the soil, to the center of the earth including the ship that was embedded therein.

Id. at 666.

At trial, plaintiffs’ witness, Howard Tower, testified as an expert diver. Tower had conducted diving operations on THE NASHVILLE independent of and pri- or to the instant action. Tower is also a journalist. On cross examination, he testified that both journalism and archeology require a great deal of accuracy. Although Tower was unable at trial to recall what portions of the hull were buried, in an article written for the August, 1979 issue of Treasure Magazine he wrote, “[f]rom this exploratory dive I learned that two-thirds of THE RATTLESNAKE’S hull is buried in the sandbar.” In describing the embeddedness of THE NASHVILLE’s artifacts he wrote the relics are “sealed and beyond our grasp under tons of sand.” On cross, Frank Chance testified that a large portion of the hull is intact. Plaintiffs testified further that an airlift was required to remove sand for the discovery of artifacts found in the engine room of the vessel. Under the Allred rationale, the fact that a portion of THE NASHVILLE stern is not touching the river bottom is insufficient to preclude this Court’s finding that the vessel is “embedded” in state land.

The court’s decision in Ferguson v. Ray, 44 Or. 557, 77 P. 600 (1904) further supports this Court’s conclusion that THE NASHVILLE is embedded in the river bottom. In Furguson, plaintiff was leasing the premises from the defendant owner. One afternoon while chopping wood, the plaintiff noticed a rich specimen of gold-bearing quartz lying on top of the ground. Upon scraping the leaves away plaintiff found one or two other small pieces “on top, or almost on top of the ground, sticking through the ground.” Id. at 601. By digging through the surface of the ground, plaintiff discovered more quartz extending to a depth of approximately ten to twelve inches. In all, plaintiff recovered specimens of quartz weighing about seventeen and one-half pounds. The Furguson court noted that, “the possession of the land carries with it in general, by our law, possession of everything which is attached to or under that land, and in absence of better title elsewhere, the right to possess it also.” (Emphasis added) 77 P. at 603. The court awarded the owner of the property title to the quartz. In the instant case, therefore, even those artifacts found resting in “loose surface soil” satisfy the embeddedness requirement as anticipated by common law.

Finally, in Bishop v. Ellsworth, 91 Ill.App.2d 386; 234 N.E.2d 49 (1968), three small boys, while playing in a salvage yard without the owner’s permission, discovered a bottle “partially imbedded in the loose earth on top of a landfill.” Id. at 50. The bottle contained $12,590. The lower court dismissed the plaintiff owner’s action for possession of the money because the complaint failed to state a claim. The plaintiff’s request for leave to amend was denied and plaintiff appealed that ruling. On appeal, the court reversed the lower court decision reasoning:

There is a presumption that the owner or occupant of land or premises has custody of property found on it or actually imbedded in the land, [cits] The ownership or possession of the locus in quo is related to the right to possession of property discovered thereon or imbedded therein____ It would also appear that if the discoverer is a trespasser such trespasser can have no claim to possession of such property even if it might otherwise be considered lost, [cit]

The Allred, Furguson and Bishop cases all show that property need not be totally buried to satisfy the embeddedness requirement. What is affixed to the land belongs to the owner of that land. The Furguson case in particular suggests that where a portion of the find is firmly affixed to the land, then even though other portions of it lie in loose surface soil, title to the entire find nevertheless rests with the land owner. In the instant case, while testimony concerning the amount of sand coverage is important, perhaps the degree of embeddedness is best illuminated by the fact that THE NASHVILLE has remained in its current location for over 120 years. Throughout that period it has held its ground despite strong tidal currents. Violent storms which have swept across the river in the past century have failed to wrest the vessel from the sand that firmly grasps its hull. Not even dynamite operations conducted by the state in the 1960’s were successful in dislodging the sunken vessel. While the evidence may be unclear as to whether the hull is exposed twelve feet in one area, or only one foot in another, the evidence does show that the vessel is firmly attached to the river bottom.

This Court’s conclusion is also supported by policy considerations underlying the embeddedness requirement. First, courts reason that a trespasser should not benefit from his wrongdoing. See, e.g., Favorite v. Miller, 176 Conn. 310; 407 A.2d 974 (1978). Second, courts seek to protect against the spoil and waste of the owner’s property interest. Elwes v. Briggs Gas Co., 33 Chancery Division English Law Reports, 562. Thus, in Elwes, noted above, Judge Chitty explained that:

[t]he chattel was vested in the plaintiff for the following reasons: Being entitled to the inheritance, and in lawful possession, he was in possession of the ground; not merely of the surface, but of everything that lay beneath the surface down to the center of the earth; and consequently in possession of the boat * * * The boat was embedded in the land. A mere trespasser could not have taken possession of it. He could only have come at it by further acts of trespass involving spoil and waste of inheritance. The plaintiff then being in possession of the chattel, it follows then that the property in the chattel was vested in him.”

Similarly, in the instant case, the plaintiffs’ diving has involved continuous acts of trespass. Further, their use of an airlift resulted in the type of waste anticipated by the Elwes ruling.

Although it may have been plaintiffs’ love of history and their desire to share the precious NASHVILLE relics with the public that inspired their efforts to excavate THE NASHVILLE, under finds principles, their good intentions are not sufficient to bring their actions within the ambit of the law. In Favorite v. Miller, 176 Conn. 310; 407 A.2d 974 (1978), the court considered the rights of a defendant who knowingly trespassed upon the plaintiff’s land to recover a piece of the historic statute of King George III. With the aid of a metal detector the defendant located the relic which was found buried ten inches beneath the surface of plaintiff’s soil. At trial, defendant argued that because his efforts led to the discovery of an artifact of great historical value, his actions should be encouraged and therefore rewarded. In response to this assertion the Favorite court noted:

[E]ven if we assume his motive to be that of historical research alone, that fact will not justify his entering upon the property of another without permission. It is unquestioned that in today’s world even archeologists must obtain permission from owners of property and the government of the country involved before they can conduct their explorations____ On a more familiar level, backpackers and hikers must often obtain permits before being allowed access to certain of our national parks and forests, even though that land is public and not private.

The Favorite court awarded the owner of the realty title to the res.

In the instant case, despite plaintiffs’ testimony to the contrary, their application to the state for permit to excavate THE NASHVILLE suggests that plaintiffs were aware that the land belonged to the state. However, whether they in fact knew that title to the ship was in the state is irrelevant to the disposition of this case. The evidence presented at trial reveals that the ship is “embedded in or attached to” the bottom of the Ogeechee River. As a result, title to the vessel properly rests with the state.

C. Plaintiffs’ Salvage Award Claim

Although this Court concludes that title to the res properly rests with the state, the Klien rationale permits consideration of whether plaintiffs have asserted a valid claim for a salvage award. In the instant case, however, plaintiffs salvage claim must be denied for at least two reasons. First, the state asserts an Eleventh Amendment defense with respect to this claim. As noted earlier, in Treasure Salvors, 458 U.S. at 684, 102 S.Ct. at 3314, the Supreme Court held that “[a] suit may not be maintained directly against the State itself, ... unless the State has waived its sovereign immunity.” Plaintiffs maintain that the Eleventh Amendment does not bar their salvage claim because the award would not constitute a money judgment against the state. As argued by plaintiffs in their brief, “[njormally salvaged items are sold to satisfy the salvor’s judgment. However, where the ‘proceeds of the salvor’s find are items uniquely and intrinsically valuable beyond their monetary worth, an award in specie is more appropriate____ [Since] any recovery in this case would be in the form of the objects which the Plaintiffs have brought before the Court; there would be no money judgment to be expended from the State’s Treasury.’ ” Plaintiff’s Brief at 1 quoting from Cobb Coin I, 525 F.Supp. 186 at 198 (S.D.Fla.1981).

The in specie award noted by the plaintiffs was first advanced in Cobb Coin I, 525 F-Supp. at 198. However, the Fifth Circuit has since rejected this approach in Platoro Ltd. Inc. v. Unidentified Remains, Etc., 695 F.2d 893, 904 (5th Cir. 1983) wherein the court stated: “[w]e cannot find a case where the salvage award was expressed in terms of the res rather than in dollars, except where the salvage award was made alternatively with an award of title to the res under the law of finds.” The Fifth Circuit therefore vacated the district court’s award of the res and remanded the case for a determination of a dollar amount not to exceed the value of the res. This Court likewise concludes that only under the law of finds may title to the res be granted. This Court has discovered no case in which a court has awarded title to the res as a reward in a salvage law claim. In fact, to do so would be violative of the underlying salvage law principles since salvage law assumes that title to the personalty remains in its owner. Therefore, this Court declines to accept the in specie award as a valid award in a salvage action.

Further, even if consideration of plaintiffs’ salvage law claim were warranted, plaintiffs have nevertheless failed to fulfill all the elements of a valid salvage claim. To state such a claim, plaintiffs must prove:

(1) Their services were voluntary.
(2) They successfully salvaged the articles.
(3) The artifacts are in marine peril.

See e.g., Klien, 568 F.Supp. at 1568. Testimony at trial revealed that plaintiffs’ salvage efforts created a greater peril than that which previously existed on the river bottom. Dr. Wright, Associate Professor of Anthropology at Valdosta State College, explained that when a vessel sinks, “[t]here is an initial state of rapid deterioration. It [the vessel] adjusts to the environment in which it is, and then it reaches a state of equilibrium. The deterioration continues at a much, much slower rate. It will remain in a state of equilibrium, or approximate equilibrium, until it is once again disturbed.” (Tr. at 11). See also Arnold III, J.B. & Wendorf, F., Treasure Hunting: Fact and Fiction, (1983) at 5. Disturbance of the equilibrium by taking artifacts from the site, for example, exposes the timbers to new environmental stimuli, which, if allowed to continue, could increase the deterioration process. (Tr. 11, 12). Although experts at trial could not agree on whether THE NASHVILLE was in a state of equilibrium, this Court credits Dr. Wright’s testimony that equilibrium does in fact exist.

Furthermore, plaintiffs have not taken adequate steps to ensure conservation of the artifacts. While some artifacts have been placed in holding bins, the water in these bins has remained unchanged, which is detrimental to the artifacts. Further, uncontradicted testimony revealed that many items not currently stored in holding cells are piled in the plaintiffs’ backyard where they are subject to random and deleterious exposure to the various elements. In other words, the artifacts are now subject to a much greater rate of deterioration than if they had remained on the river bottom. (Tr. at 45). In light of these facts, plaintiffs’ claim for a salvage award must be denied.

After considering the testimony of all the witnesses and after examining all the evidence submitted, this Court concludes that THE NASHVILLE is embedded in the Ogeechee River bottom. Title to the vessel therefore rests with the state. Under the Eleventh Amendment, and alternatively due to plaintiffs’ failure to prove all the elements required to assert a valid salvage claim, plaintiffs’ claim for a salvage award must be denied.

The Clerk is directed to enter a judgment on all issues for the State of Georgia-.

      . As noted by Rudyard Kipling in City of the Dreadful Night,

      When a ship sinks in mud or quicksand she regularly digs her own grave and wriggles herself into it deeper and deeper till she reaches moderately solid stuff. Then she sticks.