author: DAUGHERTY, District Judge.

text:
    Boardman G. BARBY, Plaintiff, v. CABOT CORPORATION, Defendant.
    No. CIV-80-842-D.
    United States District Court, W.D. Oklahoma.
    March 24, 1983.

      Donald L. Liles, Woodward, Okl., for plaintiff.
    C. Harold Thweatt and Arlen E. Fielden, Oklahoma City, Okl., for defendant.
   OPINION

DAUGHERTY, District Judge.

Plaintiff owns certain mineral interests under six producing oil and gas leases in which he is one of the lessors and the Defendant is the lessee/operator. All producing wells on the six leases are gas wells. None are oil wells. A number of the gas wells also produce condensate. The gas is delivered to gas pipe lines. After going through separators, the condensate is stored in tanks erected by the lessee and is then removed from them for marketing separate from the gas.

Plaintiff has been receiving cash royalty for the said condensate (and the gas) for several years. On March 26, 1980, Plaintiff demanded delivery in kind to him by Defendant as lessee/operator of his share of the condensate produced under all the oil and gas leases rather than further receipt of cash royalty therefor. In said demand Plaintiff did not designate a specific number of wells from which he desired to receive his share of the condensate, but during the trial Plaintiff designated 13 of a larger number of gas wells on the leases involved which produced condensate from which he wanted to receive all his share of the condensate in kind. The record is not entirely clear as to Plaintiff’s willingness to install at his expense his own storage facilities for receiving and storing his share of the condensate from the 13 wells he has selected. Plaintiff did not offer or agree to provide such facilities in his said demand of March 26, 1980. At the trial, Plaintiff was of the opinion that he was entitled to use Defendant’s storage facilities serving the 13 wells he designated and periodically draw his share of the condensate therefrom as the condensate was stored therein. Plaintiff wishes to continue receiving cash royalty on his share of the natural gas production under the six oil and gas leases. Defendant rejected Plaintiff’s said demand for in kind delivery of condensate under the leases involved.

Plaintiff then brought this suit in specific performance requesting an order of the Court directing Defendant in accordance with provisions in said leases to make in kind delivery to Plaintiff of his share of the condensate produced under all of said leases. Plaintiff also seeks herein damages resulting from Defendant’s failure to accede to his said demand of March 26, 1980. It is Plaintiff’s contention herein that condensate is oil or other liquid hydrocarbons saved at the wells and by the terms of the oil and gas leases between the parties he is entitled to in kind delivery of said condensate at the wells free of cost as demanded by his letter of March 26, 1980.

Defendant defends herein claiming: (1) Plaintiff is not entitled to delivery of condensate in kind under the terms and provisions of the contracts (oil and gas leases) between the parties, and, alternatively, (2) Plaintiff waived any right to in kind delivery of condensate by taking cash royalty therefor for many years from the start of production, (3) Plaintiff may not elect to take condensate from fewer than all wells under the leases which produce condensate, (4) Plaintiff has never agreed to provide or has provided his own facilities at his expense for the receipt and storage of his share of the condensate from the wells, (5) Plaintiff’s suit for specific performance and action for damages are barred by statutes of limitations, (6) Plaintiff is barred from seeking relief herein by reason of laches, (7) Plaintiff is barred from seeking relief herein by the doctrines of res adjudieata or estoppel by judgment by the decision in Barby v. Cabot Corporation, 465 F.2d 11 (Tenth Cir.1972), (8) Plaintiff did not mitigate his alleged damages by purchasing condensate elsewhere, and, (9) Plaintiff waived damages by taking cash royalty for his share of the condensate after Defendant rejected his demand for in kind delivery of said condensate made on March 26,1980.

The Court has conducted a nonjury trial herein and has the benefit of several briefs filed herein by the parties.

Plaintiffs said demand for in kind delivery of condensate is based on the terms and provisions of the several contracts between the parties or the several oil and gas leases between them covering the gas wells involved. Six separate oil and gas leases between the parties have been placed in evidence before the Court.

One of the oil and gas leases between the parties, which will be identified for reference as Lease 1, provides in pertinent part as follows:

LEASE 1

3. The royalties to be paid by Lessee are:

A. On oil, and on other liquid hydrocarbons saved at the well, one-eighth of that produced and saved from said land, same to be delivered free of cost at the wells or to the credit of Lessors in the pipeline to which the wells may be connected;
B. On gas, including casinghead gas and all gaseous substances, produced from said land and sold or used off the premises or in the manufacture of gasoline or other products therefrom, the market value at the mouth of the well of one-eighth of the gas so sold or used, provided that on gas sold at the wells the royalty shall be one-eighth of the amount realized from such sale; and
C. If for any period or periods of time, either during or after the primary term hereof, there is located on any Tract described in Exhibit “A” or on lands with which all or any portion of any Tract described in Exhibit “A” may be consolidated, pooled, or unitized, a gas well (and for the purposes of this clause “gas well” shall include wells capable of producing natural gas, condensate, distillate, or any gaseous substance and wells classified as gas wells by any governmental authority) ____

LEASES 2, 3, 5 AND 6

Oil and gas Leases 2, 3, 5 and 6 between the parties, so identified for reference, each provide in pertinent part as follows:

3. The lessee shall deliver to lessor as royalty, free of cost, on the lease, or into the pipe line to which lessee may connect its wells the equal one-eighth part of all oil produced and saved from the leased premises, or at the lessee’s option may pay to the lessor for such one-eighth royalty the market price for oil of like grade and gravity prevailing on the day such oil is run into the pipe line or into storage tanks.

4. The lessee shall pay to lessor for gas produced from any oil well and used by the lessee for the manufacture of gasoline or any other product as royalty Vs of the market value of such gas at the mouth of the well; if said gas is sold by the lessee, then as royalty Vs of the proceeds of the sale thereof at the mouth of the well. The lessee shall pay lessor as royalty Vs of the proceeds from the sale of gas as such at the mouth of the well where gas only is found and where such gas is not sold or used, lessee shall pay or tender annually at the end of each yearly period during which such gas is not sold or used, as royalty, an amount equal to the delay rental provided in paragraph 5 hereof, and while said royalty is so paid or tendered this lease shall be held as a producing lease under paragraph 2 hereof; the lessor to have gas free of charge from any gas well on the leased premises for stoves and inside lights in the principal dwelling house on said land by making his own connection with the well, the use of such gas to be at the lessor’s sole risk and expense.

LEASE 4

Oil and gas Lease 4 between the parties, so identified for reference, provides in pertinent part as follows:

3. The lessee shall deliver to lessor as royalty, free of cost, on the lease, or into the pipe line to which lessee may connect its wells the equal one-eighth part of all oil produced and saved from the leased premises, or at the lessee’s option may pay to the lessor for such one-eighth royalty the market price for oil of like grade and gravity prevailing on the day such oil is run into the pipe line or into storage tanks.
4. The lessee shall monthly pay lessor as royalty on gas marketed from each well where gas only is found, one-eighth {Vs) of the proceeds if sold at the well, or if marketed by lessee off the leased premises, then one-eighth (Vs) of its market value at the well. The lessee shall pay the lessor: (a) one-eighth (Vs) of the proceeds received by the lessee from the sale of casinghead gas produced from any oil well; (b) one-eighth (Vs) of the value at the mouth of the well, computed at the prevailing market price of the casinghead gas, produced from any oil well and used by lessee off the leased premises for any purpose or used on the leased premises by the lessor for purposes other than the development and operation thereof. Lessor shall have the privilege at his own risk and expense of using gas from any gas well on said land for stoves and inside lights in the principal dwelling located on the leased premises by making his own connections thereto.
Where gas from a well or wells, capable of producing gas only, is not sold or used for a period of one year, lessee shall pay or tender as royalty, an amount equal to the delay rental as provided in paragraph (5) hereof, payable annually at the end of each year during which such gas is not sold or used, and while said royalty is so paid or tendered this lease shall be held as a producing property under paragraph numbered two hereof.

Thus, there are three different types of royalty payment provisions in the six oil and gas leases between the parties, each type employing different language. The evidence discloses that each well on the leaseholds is individually produced and accounted for to the royalty owners.

LEASE PROVISIONS RE IN KIND DELIVERY OF CONDENSATE

The first issue for the Court to decide is whether the parties have contracted and agreed by their oil and gas leases, or any of them, that Plaintiff is entitled bn demand to receive in kind delivery of condensate produced from the gas wells on the leaseholds. It is not disputed that condensate is produced only from gas wells and not oil wells, and that all wells on all six leases involved herein are gas wells and not oil wells.

Generally it is Plaintiff’s contention that condensate produced from the gas wells involved herein is a liquid hydrocarbon, as is oil, and he is entitled on demand to in kind delivery of his share of the condensate by and under the royalty payment clauses in the oil and gas leases which pertain to oil. To the contrary, Defendant contends that as the oil and gas leases each have separate paragraphs and provisions for the payment of royalty to lessors, one for oil and one for gas, and as condensate is produced from only a gas well, that royalty payments for it fall under the gas royalty payment paragraphs and provisions and not those for oil royalty payments.

An examination of all the oil and gas leases involved reveals that royalty payment provisions are indeed separated generally as between oil and gas. Such examination further reveals that as to oil royalty, all of said leases appear to provide for either in kind delivery of the lessor’s share of oil or cash royalty therefor at the option of the lessor. However, none of the six leases provide as to gas royalty for in kind delivery of gas — only cash royalty. This differentiation is not surprising. In Southwestern Legal Foundation, Tenth Annual Institute on Oil and Gas Law and Taxation, page 156, author Clayton Heare states:

A provision for the lessee to deliver to the lessor as royalty a fractional part of the gas produced has not been common. This stems from the difficulty the lessor would encounter in taking his royalty gas in kind.

As condensate is produced from only gas wells and is considered a component of natural gas with the royalty provision for gas applying in the absence of a special provision, see Kuntz, supra, footnote 1, the gas royalty payment clauses in Leases 2 through 6 which provide for only cash royalty to lessors for gas with no provision for in kind delivery of gas or condensate to lessors, Plaintiff is not entitled to in kind deliveries of condensate under any of said leases.

It thus appears that by Leases 2 through 6 the parties did not contract for in kind delivery of a lessor’s share of gas and did not contract specially for condensate as a liquid hydrocarbon — they only contracted for cash royalty payments for gas and its component parts including condensate.

It is not believed therefore that Plaintiff is entitled to demand in kind delivery of the gas produced under Leases 2 through 6 or the condensate recovered with the gas. Plaintiff’s demand of March 26, 1980 is therefore found to be without a complete contractual basis between the parties and is improper in demanding in kind delivery of condensate produced under Leases 2 through 6.

A different situation would seem to exist as to Lease 1. Though said lease does contain separate royalty payment clauses for oil and for gas, it appears that the intent of said contract (oil and gas lease) between the parties, as clearly shown by the language employed, was to provide for in kind delivery or cash royalty payments for oil and “other liquid hydrocarbons” and to provide for only cash royalty payments for gas “including casing-head gas and all gaseous substances”. But see Note 2, supra. Condensate produced from a gas well is certainly a liquid hydrocarbon (the experts so testified herein) and would be included within such language in the royalty payment paragraph of Lease 1. Lease 1 therefore contains a special provision which includes condensate, treating it differently from gas for royalty payment purposes. Casinghead gas is produced from an oil well and is specifically by name included in the gas royalty payment clause in Lease 1 with gas and all gaseous substances. Thus, the parties contracted specially to put oil and other liquid hydrocarbons, which includes condensate, in one category for in kind delivery or cash royalty payments to lessors, and contracted specially to put gas, casinghead gas and all gaseous substances in another category for only cash royalty payments to lessors.

The Court therefore finds and concludes that the parties specially contracted for in kind delivery of condensate only in Lease 1. They did not contract for in kind delivery of condensate in Leases 2 through 6.. Plaintiff’s demand of March 26, 1980 ignored this contractual distinction and demanded in kind delivery of condensate under all six leases between the parties. Said demand is therefore defective, as it does not conform to all the agreements of the parties.

WAIVER DEFENSE

The defense of Defendant that Plaintiff waived any right he had to in kind delivery of condensate by receiving cash royalty for the same at the start of production and for several years thereafter until Plaintiff’s demand of March 26, 1980, is found to be without merit. Plaintiff’s previous executions of Division Orders pertaining to the oil and gas leases are each revocable. Defendant acknowledges this in a brief. Said Division Orders being revocable at will by Plaintiff cannot amount to a waiver. They may be considered as impliedly revoked by said demand. Nothing has been presented to the Court to show that Plaintiff has done anything which would constitute a waiver or abandonment of any in kind royalty rights he may possess, such as by executing a communitization or pooling agreement which contains a provision deemed to amount to a waiver of any in kind royalty rights he might possess or supersede the same. See Phillips Petroleum Company v. Ham, 228 F.2d 217 (Fifth Cir.1956). In Clark v. Slick Oil Company, 88 Okl. 55, 211 P. 496 (1922), where the lessor had in kind royalty rights, the Oklahoma Supreme Court said:

“The fact that [the Lessor] makes a settlement for certain ‘oil runs’ on a different basis than that provided for in the contract does not preclude him from demanding a settlement under the terms of the written contract on any subsequent ‘oil runs’ that he has not already accepted settlement for. Having declined to accept further settlements on this basis and demanding of the company that the terms of the lease govern the settlement, it was the duty of the company to make settlement in accordance with the terms of the written contract.”

Also see Wolfe v. Texas Company, 83 F.2d 425 (Tenth Cir.1936) and Wolfe v. Prairie Oil and Gas Company, 83 F.2d 434 (Tenth Cir.1936) and Wolfe v. Shell Petroleum Corporation, 83 F.2d 438 (Tenth Cir.1936), to the effect that a lessor may waive in kind delivery until he makes arrangement for the receipt and storage of his share but not beyond. A waiver or abandonment by the lessor in not taking his share is more easily found in gas in kind delivery leases in view of the long-term gas contracts prevalent in the industry and particularly when the lessee has entered into a long-term gas contract before in kind delivery is demanded.

Under the evidence herein and the applicable law, the Court finds and concludes that Plaintiff has not waived any in kind delivery rights he has as to condensate under Lease 1.

PLAINTIFF’S ELECTION TO OBTAIN CONDENSATE FROM ONLY 13 GAS WELLS

No case law is presented or has been found on this specific point. Lease 1 does not prohibit this. An unfair or unreasonable selection of certain wells might be found prohibitive if the same would impose an unreasonable burden on a lessee over what the burden would be if in kind delivery were to be made from all wells. No evidence indicates such an unreasonable burden. Defendant’s argument that Plaintiff may not select only certain wells to the exclusion of all is not persuasive. This defense is deemed to be without merit under the evidence before the Court. However, Plaintiffs selection of wells is limited to those producing under Lease 1. He may not select wells producing under any of the other leases.

FACILITIES TO RECEIVE AND STORE PLAINTIFF’S SHARE OF CONDENSATE

The only language found in Lease 1 pertinent to this issue is:

“A. On oil, and on other liquid hydrocarbons saved at the well, one-eighth of that produced and saved from said land, same to be delivered free of cost at the wells ...”

It is readily apparent that the parties have not specifically contracted on the point involved in this issue, nor is there any evidence of intent between the parties on this point. Case law on the point is scant. The three Wolfe cases, supra, page 413, are helpful. These related cases involve oil production with the lessor having royalty rights for in kind delivery of his share of the oil. They hold that when the lessor fails to provide storage for his part of the oil production, the lessee has the right (impliedly) to sell the lessor’s share with diligence. These cases involving Oklahoma oil and gas leases are authority for the proposition that a lessor taking in kind delivery of production must provide his own storage therefor.

In the Texas case of Atwood v. Humble Oil and Refining Company, supra, Footnote 2, the Court noted, in denying lessors right to in kind delivery of royalty oil, that they did not tender any facilities for the taking of the oil in kind. This case indicates that if the lessors had in kind oil royalty rights they must provide their own facilities for the taking of their royalty oil in kind.

The evidence reveals that the Defendant elected to install a separator on most if not all of the gas wells producing condensate by which the condensate was separated as a liquid from the gas stream. The condensate so separated was then diverted into a storage tank erected by Defendant. All the gas wells are on continuous production.

The Court finds and concludes that Plaintiff need not install his own separator, but upon demanding in kind delivery of his share of the condensate produced, he must provide at his own expense his own facilities to receive and store his share. The Wolfe cases indicate that a lessor waives his right to in kind delivery of production until such time as he provides or otherwise arranges for the storage of his own share.

LIMITATIONS

The Court is not aware of any evidence, argument or briefing in support of this defense asserted by Defendant. It is therefore deemed unsupported or abandoned.

LACHES

Any in kind delivery rights of Plaintiff to condensate under Lease 1 are not deemed lost by the equitable doctrine of laches as urged by Defendant. The Court is not aware of any evidence which shows that Defendant has been materially prejudiced by Plaintiff’s delayed assertion of his in kind delivery rights under Lease 1. See Olansen v. Texaco, Inc., 587 P.2d 976, at page 985 (Okla.1978).

RES ADJUDICATA OR ESTOPPEL BY JUDGMENT

A reading of the case of Barby v. Cabot Corporation, 465 F.2d 11 (Tenth Cir.1972), reveals that the issue decided therein is not one of the issues presented herein. This case dealt with whether the lessor-plaintiffs had been paid all the cash royalty on gas production to which they were entitled under their leases and the lessee’s gas sales contract. It did not involve the issue of whether lessors were entitled upon demand to in kind delivery of condensate under the leases nor did it involve any of the other issues presented herein. Hence, these doctrines are not applicable and neither constitutes a defense in this case.

DAMAGES

As Plaintiffs demand of March 26, 1980 was faulty for reasons stated herein and Plaintiff was entitled to reject the same as made, the Court need not reach the issues between the parties regarding Plaintiffs claim for damages resulting from Defendant’s rejection of said demand and Defendant’s defenses thereto of failure to mitigate and waiver.

CONCLUSION

For reasons stated above, Plaintiffs demand of March 26,1980 for in kind delivery of his condensate under all six leases is found to be faulty as being a demand in excess of his contractual rights. In addition, Plaintiff is not entitled to use Defendant’s condensate storage facilities, but must provide and use his own. Plaintiff did not offer to provide these facilities in his demand, has not provided same to this date and his position in this regard during these proceedings is not crystal clear. For either or both of these reasons, Defendant was entitled to reject said demand. In these circumstances, Plaintiff is not entitled in equity to a decree of specific performance or the recovery of any damages. Plaintiff’s action should be dismissed without prejudice to Plaintiff, if he desires, making a proper demand for in kind delivery of condensate limited to wells under Lease 1. The Court will enter Judgment herein in accordance with the foregoing. Rule 58, Federal Rules of Civil Procedure.

      . Kuntz, The Law of Oil and Gas, § 41.3(b) states:
      The terms "distillate,” "condensate,” and "natural gasoline” are commonly used interchangeably to describe the liquid hydrocarbons which may be extracted from natural gas produced from a well which produces gas only and does not produce crude oil. Such substance is to be distinguished from casing-head gas. ******
      It has been generally recognized in the various jurisdictions with decisions on the subject that distillate (condensate) is not oil but is a component of natural gas and that title to the gas carries with it the title to all of its components. ******
      If the lease contains no special provision for a royalty on distillate or wet products derived from a natural gas well, the distillate will be regarded as a part of the natural gas, and the royalty provision for gas will be applied. Gibbs v. Southern Carbon Co., 171 So. 587 (La.App.1937); Humble Oil & Ref. Co. v. Poe, 29 S.W.2d 1019 (Tex.Comm.App.1930); Bowker v. Panhandle Eastern Pipe Line Co., 169 F.Supp. 713 (D.C.Kan.1959).

      . But see Atwood v. Humble Oil and Refining Company, 338 F.2d 502 (Fifth Cir.1964), cert. denied, 381 U.S. 926, 85 S.Ct. 1562, 14 L.Ed.2d 684 (1965), rehearing denied, 381 U.S. 956, 85 S.Ct. 1804, 14 L.Ed.2d 729, involving Texas law. The oil royalty payment clause in the oil and gas lease therein is like the one in Lease 1 herein except it does not contain the words, "... and on other liquid hydrocarbons ... Also the intent of the parties as to in kind delivery of royalty oil was arrived at by the court by considering the lease and the provisions of two contemporaneous agreements between the parties, one a non-exploration agreement and the other a loan agreement. The court concluded that it was the intent of the parties from the lease and the two contemporaneous agreements to provide for payment of royalty to the lessor only in money and not by in kind delivery. The court also found that at least prior to trial the lessors made no demand for in kind delivery of their oil royalty, nor did they tender any facilities for their taking of royalty oil in kind.

      . None of the royalty payment clauses, either oil or gas, treat with condensate by name.

      . The case relied on by Defendant quotes the gas royalty payment provisions of two of the oil and gas leases involved herein and three other oil and gas leases which do not appear to be involved herein. It does not quote any of the oil royalty payment provisions of any oil and gas leases. It is interesting to note that the case holds that the lessee had complete power to sell the gas produced under the leases involved subject only to the corresponding duty to pay lessees the agreed royalty on all gas marketed. It did not treat with any oil royalty payment provisions in any oil and gas leases and specifically did not treat with the oil and other liquid hydrocarbons provision of Lease 1. The case does support the conclusion reached herein that in the absence of a special provision in a lease for royalty on condensate, the royalty provision in the lease for gas will be applied. But it does not construe the special provision for condensate as an “other liquid hydrocarbon” which is found in the oil royalty payment provision of Lease 1 which the Court must consider and construe in this litigation.


source: Caselaw Access Project

author: SINGLETON, Chief Judge.

license: Public Domain

text:
    BROADCAST MUSIC, INC., Plaintiff, v. ALLEN-GENOA RD. DRIVE-IN, INC. d/b/a Gold Club, Defendant.
    Civ. A. No. H-81-2900.
    United States District Court, S.D. Texas, Houston Division.
    May 4, 1983.
    Judgment Jan. 9, 1984.

      Harvey Stuart, Stuart & Zavin, New York City, Stuart Nelkin, Nelkin & Nelkin, Houston, Tex., for plaintiff.
    William B. Clarkson, Clarkson & Cohn, Houston, Tex., for defendant.
   MEMORANDUM AND ORDER

SINGLETON, Chief Judge.

This is an action for infringement of nine (9) copyrights in and to musical compositions performed on a juke box located at defendant’s place of business located in Houston, Texas. This action arises under the copyright laws of the United States, 17 U.S.C. § 101, et seq., and this court has jurisdiction pursuant to 28 U.S.C. § 1338(a). Presently pending before this court is plaintiff's motion for summary judgment under rule 56(a) of the Federal Rules of Civil Procedure. This court has reviewed the motion and affidavits attached thereto, the pleadings, plaintiff's request for admissions, and defendants response thereto and, finding no genuine issue as to any material fact, is of the opinion that plaintiff’s motion for summary judgment should be granted.

Plaintiff, Broadcast Music, Inc. (“BMI” or “plaintiff”) is a performing-rights licensing organization that has agreements with independent writers and publishers to obtain from them the public performing rights in the copyrighted music that they created. BMI licenses the public performing rights in its copyrighted music to broadcasters, hotel owners, restaurants, and other public establishments, such as nightclubs and lounges, by the issuance of non-discriminatory license agreements directly to such establishments. With respect to public performances of BMI’s copyrighted music via coin-operated phonorecord players (juke boxes), such public performances are subject to a compulsory license, which is obtainable by juke box operators by the registration and payment of an annual licensing fee for each box to the register of copyrights in January of each year, as set forth at 17 U.S.C. § 116. Copyright registration stickers must be displayed on the juke box, as required by 17 U.S.C. § 116(b)(1)(C). BMI, as one of the “principal performing rights societies” referred to at 17 U.S.C. § 116(c)(4), is a recipient of a significant portion of the total net licensing fees distributed annually by the Copyright Royalty Tribunal pursuant to the statute. The monies collected by BMI are distributed by BMI to its affiliated writers and publishers located throughout the United States.

The defendant, Allen-Genoa Rd. Drive-In, Inc., d/b/a Gold Club (“Allen-Genoa” or “defendant”) is the proprietor of an establishment at which a juke box is located and in operation. On July 22, 1981, BMI’s field investigator personally noted and logged the public performances of BMI-controlled musical compositions on the juke box at defendant’s establishment, which juke box displayed no registration sticker. On September 24, 1981, BMI’s attorney wrote to Allen-Genoa to inquire as to the identity of the operator of the reportedly unregistered juke box. As provided by 17 U.S.C. § 116(a)(1)(B), the letter of inquiry was sent by certified mail, return receipt requested, and was received on September 28, 1981. No response to this letter was ever received by BMI or BMI’s attorney.

The essential elements of copyright infringement are

(1) the originality and authorship of the compositions involved; (2) compliance with all formalities required to secure a copyright under Title 17, United States Code; (3) that plaintiffs are the proprietors of the copyrights of the compositions involved in this action; (4) that the compositions were performed publicly for profit [at the location alleged]; and (5) that the defendants had not received permission from any of the plaintiffs or their representatives for such performance.

Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 912 (D.Conn.1980), citing Shapiro, Bernstein & Co. v. The Log Cabin Club Asso., 365 F.Supp. 325, 328 n. 4 (N.D. W.Va.1973).

The uncontroverted affidavit of BMPs Assistant Vice-President, Elizabeth Gran-ville, which incorporates “Schedule I” of the Complaint (containing the name of each musical composition, along with the writers, publishers, date of registration, registration number, date of transfer of each composition), establishes the first three elements: originality and authorship of the compositions, compliance with requirements required to secure a copyright, and plaintiff’s proprietorship of the copyrights. Furthermore, defendant, in its response to plaintiff’s Request for Admissions, has admitted that it has no knowledge or information that is contrary to any of the facts as to authorship, copyright, assignments, and transfers of the musical compositions as asserted by plaintiff in the complaint. Thus, there is no issue of fact concerning these elements of plaintiff’s claim.

With respect to the fourth requirement, that the compositions be performed publicly for profit at the location alleged, the affidavit of BMI’s field investigator, Ollie Henry, establishes that each of the compositions were played. Defendant cannot create a factual dispute by simply denying, in response to plaintiff’s request for admissions, that such compositions were available for playing. See Fed.Rules Civ.Pro. Rule 56(e).

Finally, the uncontroverted affidavit of BMI’s Assistant Vice President establishes the fifth element, that defendant was not given the permission or consent of BMI or of the respective copyright proprietors for the public performance of the musical compositions. This also is not disputed by defendants.

Under 17 U.S.C. § 116(a)(1), a proprietor of an establishment may be held liable for copyright infringement if the “proprietor is the operator of the phonorecord player” or if “such proprietor refuses or fails; within one month after receipt by registered or certified mail of a request, at a time during which the [registration certificate] is not affixed to the phonorecord player, by the copyright owner, to make full disclosure, by registered or certified mail, of the identity of the operator of the phonorecord player.” 17 U.S.C. § 116(a)(1)(A), (B). Defendant admitted, in response to plaintiff’s Request for Admissions, that there was no copyright registration certificate affixed to the juke box on the date of the alleged infringement. In the same Request for Admission, defendant did not deny the request for admission that defendaht failed to make disclosure to BMI or BMI’s attorney as to the identity of the operator of the juke box within one month of receipt of BMI’s letter. Rather, defendant simply stated: “Turned the letter over to the Music Company who owns the vending machine to talk to you people.” Thus, there is no factual issue that defendant failed to respond to plaintiff’s inquiry within the required time. The uncontroverted affidavit of BMI’s attorney, Jonathan Zavin, states that neither he nor BMI received any response to his September 1981 letter from defendant or any other person prior to commencement of the present litigation.

Because there exists no genuine issue as to any material fact plaintiff’s motion for summary judgment should be granted. Plaintiff is entitled to an injunction against further infringement under 17 U.S.C. § 502(a). In addition plaintiff is entitled to statutory damages of not less than $250.00 nor more than $50,000. for each copyright infringement under 17 U.S.C. § 504(c), and full costs and reasonable attorney’s fees pursuant to 17 U.S.C. § 505. Accordingly, it is hereby

ORDERED, ADJUDGED, and DECREED that plaintiff’s motion for summary judgment be, and the same hereby is GRANTED, and that defendant be enjoined from further infringement and plaintiff be granted statutory damages, full costs, and reasonable attorneys fees, to be set out in a final judgment of this court following a hearing on attorneys fees.

JUDGMENT

ORDERED, ADJUDGED and DECREED:

1. That the Plaintiff Broadcast Music, Inc. recover from the Defendant, Allen-Genoa Rd. Drive-In, Inc., d/b/a Gold Club, statutory damages in the amount of $1,000.00 per copyright infringement alleged in the complaint, for a total in statutory damages of $9,000.00 and interest thereon of $1,215; and

2. That the Defendant, Allen-Genoa Rd. Drive-In, Inc., d/b/a Gold Club, its agents, servants and employees be and they hereby are permanently enjoined from further infringements of Plaintiff’s copyrights; and

3. That the Plaintiff in addition recover from the Defendant Plaintiff’s attorneys’ fees in the amount of $3,386.25 and Plaintiff’s costs of court.


author: LEE R. WEST, District Judge.

text:
    W.R. McWHORTER; Stella McWhorter; Carney Maye McWhorter; Kathie Ralston; Linda Stapleton; and The Estate of Alfred T. McWhorter, Plaintiffs, v. LONG ROYALTY COMPANY; Bill R. Long; Earl Dee Long; Russell W. Long; and Terry Payne d/b/a Payne Investments, Defendants.
    No. CIV-82-1701-W.
    United States District Court, W.D. Oklahoma.
    June 8, 1983.

      Loutitia Denison Eason, William B. Federarían, Oklahoma City, Okl., for plaintiffs.
    Richard D. Hampton, Oklahoma City, Okl., for Bill R. Long, Earl Dee Long and Russell W. Long.
    James R. Stout, Stout & Williams, Yukon, Okl., for Terry Payne.
   ORDER

LEE R. WEST, District Judge.

The plaintiffs, W.R. McWhorter, Stella McWhorter, Carney Mae McWhorter, Kathie Ralston, Linda Stapleton, and the Estate of Alfred T. McWhorter, have moved the Court pursuant to Section 11(e) of the Securities Act of 1933, as amended, 15 U.S.C. § 77k(e), and Rule 25(b), Rules of the United States District Court for the Western District of Oklahoma, to require the defendants, Long Royalty Company, Bill R. Long, Earl Dee Long, Russell W. Long, and Terry Payne d/b/a Payne Investments, to give security or post bond for the payment of damages, reasonable attorneys’ fees, and costs of this action. The plaintiffs have submitted briefs and exhibits in support and have directed the Court’s attention to the defendants’ ánswers to the plaintiffs’ Request for Admissions and to the plaintiffs’ Second Set of Interrogatories. The defendants, save Terry Payne d/b/a Payne Investments who has not as yet answered in this action, have responded in opposition to the motion and have referred to the depositional testimony of Earl Dee Long, Russell W. Long, and Bill R. Long taken on May 9, 1983. The depositions however have yet to be filed with the Clerk of the Court or submitted to this Court and thus, the Court cannot consider them for the purposes of the plaintiffs’ motion.

Rule 25(b) provides that

“[o]n its own motion or upon motion of a party in interest, the Court may at any time order any party to give security, bond, or undertaking in such amount as the Court may order for the payment of costs or for performance of other conditions or requirements imposed in an action or proceedings.”

Section 11(e), 15 U.S.C. § 77k(e), allows the Court, in its discretion, to “require an undertaking for the payment of the costs ... including reasonable attorney’s fees____” The appropriate standard for determining whether security should be required pursuant to this statute is whether the movant has shown the court that the opposing party’s claim or defense is maintained in bad faith or is obviously without merit. Weil v. Investment/Indicators, Research & Management, Inc., 647 F.2d 18, 22 (9th Cir. 1981). The Court need not find conclusively at this stage of the proceedings that the defense or claim is maintained in bad faith or is without merit — only that “an eventual finding of bad faith or obvious lack of merit [appears] likely to the ... court in view of the evidence before it.” Id. Thus, the Court must determine from the record as it now stands whether requiring security of the defendants would be appropriate.

The plaintiffs have contended that the defendants in their respective answers assert as an affirmative defense to the state registration claim in the plaintiffs’ Third Claim that the securities sold to the defendants were entitled to statutory exemption under 71 O.S. § 401(b)(15). This section exempts from registration

“[a]ny sale from or in this state to not more than thirty-two persons of a unit consisting of: interests in oil, gas or mining title(s) or lease(s) or any certificate of interest or participation, or conveyance in any form of an interest therein, or in payments out of production under such title(s) or lease(s) whether or not offered in conjunction with, or as an incident to, an operating agreement or other contract to drill oil or gas wells or otherwise exploit the minerals on the particular lease(s), whether or not the seller above or any purchasers are then present in the state, if:
1. the seller above reasonably believes that all buyers are purchasing for investment;
2. no commission or other remuneration is paid or given directly or indirectly for the solicitation of any such sale excluding any commission or remuneration paid or given by and between parties each of whom is engaged in the business of exploring for or producing oil and gas or other valuable minerals;
3. no public advertising or public solicitation or sale; and
4. sales are effected only to persons the seller has reasonable cause to believe are capable of evaluating the risk of the prospective investment and able to bear the economic risk of the investment ____”

This section offers protection if one claiming the exemption can affirmatively show that mineral interests were sold to not more than thirty-two persons and that all of the four conditions are present. Lambrecht v. Bartlett, 53 O.B.J. 3009, 3011, 656 P.2d 269 (Okla.1982).

The plaintiffs have claimed that the defendants’ responses to the plaintiffs’ Request for Admission and Second Set of Interrogatories establish that no genuine issue exists as to the defendants’ claim of exemption and thus security should be required since the defense is without merit.

Request for Admission No. 1 propounded to the defendants on April 11, 1983, reads:

“That the total number of persons to whom undivided fractional working interest or any certificate of interest or participation were sold, or conveyed in any form of an interest therein in the leases described in Exhibit ‘A’ ... exceeds thirty-two persons.”

Defendant Earl Dee Long on April 22, 1983, answering on behalf of all defendants (save Terry Payne d/b/a Payne Investments) stated in response to the above request: “Each one.” Thus, as sales were made to more than thirty-two persons the exemption protection found in section 401(b)(15) is probably not available to the defendants and as evidenced by the date of Exhibit B, the exemption protection has probably not been available to the defendants since at least September 29, 1981, well before the date their affirmative defenses were asserted in response to the plaintiffs’ claim. In their response to the plaintiffs’ motion, the defendants place great reliance on the depositional testimony of three of the defendants; however, as noted earlier by the Court, there are no depositions for the Court to review despite the defendants’ contention that the testimony of said defendants is now part of the record.

Since the challenged defense pertains to the state law claim asserted in the Third Claim, Section 11(e), 15 U.S.C. § 77k(e), cannot expressly authorize the Court to require the defendants to post bond or give security. However, the Court finds the guidelines recognized by courts addressing violations of federal securities law and seemingly meritless defenses instructive in determining whether the apparently meritless defense asserted by the defendants as to the alleged violation of state securities law requires the Court to order the giving of security pursuant to Rule 25(b).

As the Ninth Circuit expressed in Weil the Court must examine the present record to determine whether an eventual finding of bad faith or obvious lack of merit appears likely. Either bad faith or a defense utterly lacking in merit as to border on the frivolous is required. Savino v. E.F. Hutton & Co., 507 F.Supp. 1225, 1234 n. 6 (S.D.N.Y.1981). While applications for posting bond or giving security under section 11(e), 15 U.S.C. § 77k(e), are not generally favored, id., the exhibit attached to the plaintiffs’ motion and the defendants’ response to Request for Admission No. 1 lead the Court to the conclusion that it appears likely that the defense is utterly lacking in merit and will be unsuccessful when asserted at trial.

Accordingly, the Court finds that Rule 25(b) authorizes in this instance and under these circumstances that security be given by the defendants in an amount to be determined by the Court at the pretrial conference previously scheduled in this matter on June 16, 1983. The parties are directed to be prepared to discuss this matter at such time. It must be noted that security will be given in an amount only for the payment of costs. By its language Rule 25(b) does not authorize security to be given for payment of attorney’s fees or any potential liability of a party. Furthermore, as the defendant Terry Payne d/b/a Payne Investments has not yet answered in this action and has not asserted the affirmative defense of which the plaintiffs complain, the requirement of security does not pertain to said defendant at this time. Should the record develop that an application pursuant to Rule 25(b) be appropriate for this defendant, the Court will consider the same if and when submitted by the plaintiffs.


author: FRYE, District Judge:

text:
    ALLSTATE INSURANCE COMPANY, an Illinois corporation, Plaintiff, v. Robert A. BROWNING, Christopher Mark Browning, Kathleen J. Browning, Raymond D. Richardson, and Shirley A. Richardson, Defendants.
    Civ. No. 83-758.
    United States District Court, D. Oregon.
    Aug. 12, 1983.
    James M. Callahan, Landis, Aebi & Bailey, P.C., Portland, Or., for plaintiff.
    Judy Danelle Snyder, Hoevet, Snyder & Van Duyn, P.C., Portland, Or., for defendants Browning.
    Charles J. Merten, Karen L. Fink, Richard S. Yugler, Merten & Fink, Portland, Or., for defendants Richardson.
   OPINION AND ORDER

FRYE, District Judge:

This matter is before the court on cross motions for summary judgment of plaintiff Allstate Insurance Co. (Allstate) and defendants Robert A. Browning, Christopher Mark Browning, and Kathleen J. Browning (Brownings). Allstate seeks a judgment in its favor on the issue of its liability for Christopher Browning’s acts under the policy of insurance issued by Allstate to Christopher Browning’s parents; Brownings seek judgment on the limited issue of whether Allstate has a duty to defend Christopher Browning in the pending Clackamas County lawsuit. Defendants Raymond D. Richardson and Shirley A. Richardson (Richardsons) have filed a memorandum in opposition to Allstate’s motion and in support of Brownings’ motion.

UNDISPUTED FACTS

In 1980 16-year-old Christopher Browning and two of his friends harassed the Richardsons, a black family living in Milwaukie, Oregon, by doing such things as burning a cross in their front yard and shouting racial epithets at them. The Richardsons filed a civil rights suit in federal court against the three boys but later dismissed that suit and refiled in state court, partly in order to allege causes of action under which the boys’ parents’ homeowner’s insurance policies would provide coverage. Richardsons filed a complaint in Clackamas County Circuit Court alleging causes of action for trespass, property damage, interference with the use and enjoyment of their property, and statutory liability of the parents. They alleged that though the boys’ acts were intentional, the harm they caused the Richardsons was not intended. Richardsons also alleged one count of negligent interference with the use and enjoyment of their property. They alleged that as a result of the boys’ acts their right of occupancy was invaded and injured; their use and enjoyment of their home was disrupted and interfered with; they suffered bodily injury in the form of severe mental and physical stress, trauma, pain, discomfort, and nervousness; they incurred medical expenses and lost business profits; and they incurred expenses in making their premises safe from further intrusions.

Allstate Insurance Company, which provided the homeowners’ insurance policy for the parents of Christopher Browning, undertook his defense in the Clackamas County case. Christopher Browning is an insured person under the policy. The policy provides coverage for losses due to bodily injury or property damage which an insured person becomes obligated to pay. However, the policy excludes bodily injury or property damage intentionally caused by an insured person. The policy provides that when an insured person is sued for damages for any covered loss, Allstate will provide a defense, even if the allegations are not true. By letter dated December 18, 1981, Allstate reserved all of its rights and defenses under the policy, including the right “to later disclaim any obligation under the policy and to set up a defense of non-coverage under the policy,” under the policy’s exclusion of coverage for bodily injury or property damage intentionally caused by an insured.

Christopher Browning’s deposition was taken in December, 1980. He testified as follows:

Q: Where did you get the idea for the cross?
A: Well, I had seen such things done on TV, and it was kind of just like a spur of the moment thing.
Q: Where on TV?
A: Like, it was on Roots, and I had seen it on several other shows that were dealing with the same kinds of things. It was like a form of retaliation for a black person.
Q: You mean, against a black person?
A: Yes.
Q: So, your idea was to retaliate?
A: Uh-huh.
Q: And why did you think it was a good idea?
A: It wasn’t necessarily that it was a good idea. It was just an idea.
Q: Well, you wanted to retaliate; is that correct?
A: Yes, ma’am.
Q: Why did you think burning a cross was a good way of doing that?
A: Because I felt that it was something that would symbolize to a black person ill feelings.

Deposition, pp. 55-56, Plaintiff’s exhibit C. Christopher Browning also testified that he knew a black family lived in the house at the time of the cross-burning, though he didn’t know until later that it was the Richardson family. He intended his acts as retaliation against a black youth who had thrown stones at him, although he had no information at the time that the youth lived with the Richardsons, and in fact he did not. Christopher Browning also testified that he had no racial hatred and did not know the emotional effect his acts would have on the Richardsons or on any other black person. In his affidavit filed in this action he states that he did not anticipate that the harm alleged in the Richardsons’ complaint would result from his “pranks” and that he did not intend to harm the Richardsons in any manner.

DISCUSSION

Allstate moves for summary judgment on the grounds that the harm to the Richardsons was caused intentionally by Christopher Browning, therefore liability is excluded under the policy’s “intentionally caused” injury or damage exclusion. Brownings assert that there is a material issue of fact as to whether or not the harm was intentionally caused, therefore summary judgment cannot be granted. Brownings assert that under the undisputed facts Allstate is required to provide a defense. The Brownings seek partial summary judgment in their favor on this issue.

Oregon follows the rule that the harm itself, not just the act causing the harm, must have been intended in order for the clause excluding liability for intentionally caused injury or damage to apply. In Snyder v. Nelson/Leatherby Ins., 278 Or. 409, 564 P.2d 681 (1977), the insured rammed plaintiff’s car with his own, repeatedly, causing injury and property damage. The insurance policy excluded coverage for intentional acts. The court noted that in general it is against public policy for a tortfeasor to insure against liability for intentionally inflicted injury or damage, Isenhart v. General Casualty Co., 233 Or. 49, 377 P.2d 26 (1962), but it concluded that in this ease it was a permissible but not a necessary inference that the insured intended the normal and natural consequences of his acts; that therefore there was a legitimate question of fact as to whether he intended the injury and damages, and summary judgment was therefore inappropriate.

In City of Burns v. Northwestern Mutual Ins. Co., 248 Or. 364, 434 P.2d 465 (1967), the insured wrongfully moved the grave of Mrs. Hovis’s husband, causing her emotional injury. The court held that while the moving of the grave was an intentional act, the injury to the widow was not intended, therefore liability was not excluded by the policy. The court said:

The policy exclusion relates to injury caused intentionally. It is not sufficient that the insured’s intentional, albeit wrongful, act has resulted in unintended harm; it is the harm itself that must be intended before the exclusion will apply. An act may be so certain to cause a particular kind of harm that it can be said that a person who did such an act intended the harm. However, we do not believe that moving a grave is such an act.

248 Or. at 369, 434 P.2d 465. (Emphasis in original). See also, Nielsen v. St. Paul Cos., 283 Or. 277, 583 P.2d 545 (1978).

The present case, while similar to Snyder, supra, can be distinguished in that it is an undisputed fact that Christopher Browning intentionally set out to “retaliate” against a- black youth and had ill feelings toward him as a black person. His were acts “so certain to cause a particular kind of harm that it can be said that [the] person who did such an act intended the harm.” City of Burns, supra. It may well be that the harm he caused exceeded in degree that which he intended, but the kind of harm alleged by the Richardsons was certain to follow from Christopher Browning’s acts, and Christopher Browning knew it would follow, at least to some degree.

This court finds from the undisputed facts that Christopher Browning’s acts were intentional and were intended to produce the kind of harm which resulted. The damage and injury resulting from these acts are therefore excluded from coverage under the insurance policy.

Even though coverage is excluded under the policy, Allstate may still have a duty to defend the Brownings, if withdrawal would prejudice Brownings. United Pacific Insurance v. Pacific Northwest Research Found., 39 Or.App. 873, 593 P.2d 1278 (1979). An insured may not, however, claim prejudice if the insurance company “expressly reserves the right to withdraw from the defense.” United Pacific, supra. (Emphasis added) In its letter of December 18,1981, Allstate reserved the “right to later disclaim any obligation under the policy and to set up a defense of non-coverage under the policy.” Allstate argues that this broad language encompasses its right to withdraw from the defense. It is not, however, an express reservation of that right, and might not be understood as such by the insured. Therefore, this court must instead look at the facts to determine whether prejudice to Brownings would result from Allstate’s withdrawal from the defense at this time.

Christopher Browning asserts in his affidavit that he has relied on Allstate to represent him in the Clackamas County lawsuit since December, 1981; that his personal attorney Judy Danelle Snyder has not been actively involved in the case since that time; and that he believes his defense would be prejudiced if Allstate were now permitted to withdraw. Allstate argues that no prejudice would result since Snyder represented Browning in the federal lawsuit and was present at his’ deposition. The trial of the underlying case is set for October 18, 1983. This court cannot determine whether the Brownings would be prejudiced by having Allstate withdraw from his defense at this late date.

The Clerk shall forthwith set a hearing to allow the parties to present further evidence on this issue.

      . Other acts of harassment are alleged in the complaint and testified to by Christopher Browning in his deposition, such as breaking car and house windows, spray painting, and threatening the Richardsons’ safety, but there is no evidence that Christopher Browning personally carried out these other acts.


author: WHITMAN KNAPP, District Judge.

text:
    WARNER BROS., INC., Plaintiff, v. GAY TOYS, INC., Defendant.
    No. 81 Civ. 1880(WK).
    United States District Court, S.D. New York.
    March 30, 1984.

      Robert Bernstein, Cowan, Liebowitz & Latman, Michael Davis, Weiss, Dawid, Fross, Zelnick & Lehrman, New York City, for plaintiff.
    Milton Wolson, New York City, Robert Mentag, Detroit, Mich., for defendant.
   MEMORANDUM & ORDER

WHITMAN KNAPP, District Judge.

We have before us several motions in the continuing litigation over defendant’s unauthorized toy imitations of the “General Lee” automobile from plaintiff’s television show “The Dukes of Hazzard.” These motions challenge various portions of our December 23,1981 Order holding defendant in contempt, and of the Report and Recommendation of the Honorable Joel Tyler, United States Magistrate, as to the damages due plaintiff from defendant’s contemptuous sales of its “Dixie Racer.”

On December 21, 1981, the parties appeared before us at a Contempt Hearing, at the conclusion of which we held defendant in civil contempt for violations of our temporary restraining order of October 22, 1981. The formal Contempt Order of December 23rd was submitted ex parte, as per our instructions, on the understanding that defendant reserved the right to object on grounds of form to any portion of the Order. Defendant did subsequently object to the provision of the Order which awarded to plaintiff defendant’s profits from the contemptuous sales, which award had not been specifically discussed during the contempt hearing. We denied this motion, with leave to renew after Magistrate Tyler had filed his report. No other motions were received, and Magistrate Tyler proceeded with the inquest.

Magistrate Tyler’s lengthy and detailed report, the product of much careful consideration of a voluminous and complicated record, has now been received by us. In this opinion, we consider defendant’s renewed motion to strike the award of its profits; a new motion to strike the provision of the Contempt Order holding defendant in willful contempt; and defendant’s objections to the Magistrate’s Report. Due to the length and complexity of the Magistrate’s Report, we allowed both sides ample time to present their position, and we heard oral argument on December 16, 1983.

DEFENDANT’S MOTIONS

We consider first defendant’s motion to strike our finding that it acted in willful contempt of our temporary restraining order in its subsequent sales of its “Dixie Racer.” Defendant has presented no valid explanation for the sudden appearance of this motion, almost two years after the contempt order was signed. At that time we made it clear that any objection as to the form of the order would be considered. That defendant understood this is also clear since it did, in fact, move to strike the award of damages (which motion we consider below). We are aware of no reason why defendant could not have raised this issue at the same time. Defendant’s belated excuse that it was unaware that the Magistrate would rely so heavily on that finding, since no mention of willfulness had been made at the December 18th hearing, simply does not hold water. Defendant had notice of the finding of willfulness as soon as it received our signed Order, and it made no objections to it. The Magistrate was fully entitled to consider that he was dealing with willful conduct, and we shall not, at this very late date, consider further a motion which could and should have been made long ago.

Defendant’s motion to strike the award to plaintiff of its profits from sales of the contemptuous cars, however, is timely. We specifically permitted defendant to renew its prior motion to this effect after the issuance of the Magistrate’s Report, and such renewal was made within a reasonable time of that event.

The award of damages to a non-competing defendant when plaintiff can be compensated by an award of lost licensing royalties is, as the Magistrate noted, a troublesome problem, and one to which the Magistrate gave especially careful consideration. Under the circumstances before us, however, we find that the propriety of such an award has become a moot question.

Defendant conceded at oral argument that such an award might appropriately be made “on the merits of the case,” should the Court of Appeals affirm our decision granting summary judgment and a permanent injunction in plaintiff’s favor. Transcript (“Tr.”) of December 16, 1983 at 9. Subsequent to this statement, the Court of Appeals did indeed affirm our decision. 724 F.2d 327. Plaintiff will not be unjustly enriched by receiving an award of profits now, rather than after a further inquest “on the merits,” since this award will be offset against any award which plaintiff would receive should it choose to proceed with an inquest on the final judgment.

OBJECTIONS TO THE MAGISTRATE’S REPORT

As a preliminary matter, we feel it appropriate to remark again on the extraordinary amount of consideration which clearly went into Magistrate Tyler’s lengthy and detailed report. Since our Order of Reference instructed the Magistrate to hear and report, however, we are required to use our own discretion, based upon his findings and analysis, to arrive at a de novo determination. Bearing both of these factors in mind, we commence on our consideration of defendant’s numerous challenges to the Magistrate’s Report.

ACCOUNTING METHOD

Defendant’s first objection to the Magistrate’s recommendations concerns the method of accounting used to compute the costs of its production of the infringing items, which costs are to be subtracted from any profits attributable to the sales of those items.

The Magistrate adopted plaintiff’s proposal of the “incremental approach” of accounting, under which only those costs may be subtracted which were incurred as a direct result of the production of the infringing items. Under this method, only increased costs are so attributable. Defendant urges that the proper method is the “full absorption approach,” in which a contemnor may disallow not only such increased costs but also costs for fixed expenses, such as overhead, to the extent that such expenses are related to the production of the contemptuous items. We agree with defendant that, under the. law of this Circuit, the full absorption approach is the correct accounting method.

The leading case on this subject is Sheldon v. Metro-Goldwyn Pictures Corporation (2d Cir.1939) 106 F.2d 45, in which Judge Learned Hand thus posed the issue (at 54):

Next is a challenge to any allowance for “overhead” at all, on the theory that the defendants did not show that it had been increased by the production of the infringing picture. The correct rule upon this point is stated in Levin Bros. v. Davis Mfg. Co., 8 Cir., 72 F.2d 163, and in substance it is this. “Overhead” which does not assist in the production of the infringement should not be credited to the infringer; that which does, should be; it is a question of fact in all cases. In the case at bar the infringing picture was one of over forty made by the defendants, using the same supervising staff and organization, which had to be maintained if the business was to go on at all. Without them no picture could have been produced; they were as much a condition upon the production of the infringing picture as the scenery, or the plaintiffs’ play itself. Levin Bros. ... did not hold otherwise

Plaintiffs challenge the application of this rule on two grounds. First, they claim that, far from supporting the full absorption method as proposed by defendant, Sheldon actually supports the incremental approach as this approach was approved in Levin Bros. However, the plain language quoted above contradicts this: whatever the Eighth Circuit intended in Levin Bros., Judge Hand interpreted that decision to mean that overhead could be deducted from an infringing defendant’s profits; and it is this latter holding which subsequent cases in this Circuit have followed and by which we are bound.

Plaintiff next asserts that the Sheldon rule is inapplicable to the instant action because of factual differences between the cases, specifically the ability or inability of the Court to make a direct calculation of increased expenses under the incremental approach. Contrary to plaintiff’s contention, however, Sheldon did not hold that overhead costs could only be deducted where such a direct calculation cannot be made. Rather, the feasibility of such a calculation was taken into account in that case in order to determine the manner of allocating overhead expenses to the infringing conduct, 106 F.2d at 52-53. At no point did the Court imply that if direct calculation of increased costs had been feasible the full absorption accounting method would be inapplicable.

Further, even accepting for purposes of this argument plaintiff's contention that the calculations which could not be made in Sheldon can be made here, we find this case to be factually closer to Sheldon than to the two District Court cases which plaintiff has cited as applying the incremental approach. In neither Elnicky Enterprises, Inc. v. Spotlight Presents, Inc. (S.D.N.Y. 1981) 213 USPQ 855 nor Polo Fashions, Inc. v. Extra Special Products, Inc. (E.D.N.Y.1980) 208 USPQ 421, could the defendant’s overhead be considered a major factor in its profits from infringement. The same cannot be said for Gay Toys. Like Metro-Goldwyn Pictures, defendant here produced the infringing items as part of its ongoing business — in the course of which it produced other, non-infringing items — and not merely as a one-shot enterprise. The eases decided by the Court of Appeals for this Circuit do not suggest that we should ignore this reality of defendant’s business in our assessment of its profits and costs, and we do not feel that we may do so.

We therefore remand to the Magistrate for a calculation of defendant’s costs under the full absorption approach.

MARCHAND’S PROFITS

In addition to defendant’s own profits, the Magistrate recommended that plaintiff be awarded the profits of Marchand Enterprises, Inc., a corporation controlled by defendant which produced molded parts for its cars. We cannot agree with this recommendation.

The Magistrate pierced the corporate veil between the two companies on a finding that defendant had “complete domination” over “what Marchand can and cannot produce,” Report at p. 48. However, it is conceded that Marchand was not established or maintained for the purpose of making parts for the infringing cars or taking any other actions to avoid the strictures of our Injunction or Contempt Order. Indeed, Marchand had been in business— and charging defendant competitive prices — before the institution of this lawsuit. On this crucial issue of fraudulent intent, plaintiff merely relied prior to and at oral argument on the conceded closeness of the relationship between the two companies. Subsequent to oral argument, plaintiff drew our attention to a single case, Coca Cola v. International Telephone & Telegraph (N.D.Ga.1978) 201 USPQ 424, for the proposition that “no proof of actual fraud or intent to defraud should be necessary to pierce the corporate veil of the subsidiary ... Only proof of a federally defined violation should be required.” 201 USPQ at 428. Quite apart from the fact that this case is not controlling upon us, we note that the above-quoted words are purest dicta, labeled by the Court “some thoughts on the choice of law” and completely unconnected to the issue actually decided by the Court.

We therefore remain convinced that some proof of fraud, whether actual or intended, must be offered before we may appropriately pierce the corporate veil that separates defendant and Marchand. No such proof having been tendered, we must reject the Magistrate’s recommendation.

TREBLE DAMAGES

We note initially that, had our reference to Magistrate Tyler been to hear and determine rather than to hear and report, we would have no qualms about accepting his decision to award plaintiff three times the amount of its lost profits. However, although we cannot by any means say that the Magistrate abused his discretion, we find, in the exercise of our own discretion, that such an award should not be made.

An award of treble damages, like any other sanction imposed upon a civil contemnor, may serve either or both of two functions: to deter future contemptuous actions, or to compensate the plaintiff fully where an ordinary award of damages could not do so. Vuitton et Fils, S.A. v. Carousel Handbags (2d Cir.1979) 592 F.2d 126; Perfect Fit Industries, Inc. v. Acme Quilting Co. (2d Cir.1982) 673 F.2d 53. Neither purpose is truly applicable here.

The Magistrate relied in part upon the fact that defendant’s conduct was of “wilful and deliberate nature,” Report at 66. Although, as we have said, we adhere to our finding in this regard, we do not think that willfulness is, in and of itself, enough to justify such an award. Gay Toys is not in the class of the defendant in Deering, Milliken & Co. v. Gilbert (2d Cir.1959) 269 F.2d 191, upon which the Magistrate and plaintiff rely. In that case, the court found that the defendant had “embarked on a criminal scheme, calculated to trade upon [plaintiff’s] trademark,” 269 F.2d at 192, which involved the use of fabric stolen from a third party and “criminally received by [defendant],” id. The defendant there further displayed its contumacy by refusing to cooperate with the court during trial. The conduct of defendant in the instant action, while deserving of censure, is simply not comparable. Nor does such conduct indicate to us that defendant is so perverse as to be in need of strong measures to prevent it from further transgressing. Defendant has been held in contempt one time only; no further contemptuous sales were made after the Contempt Hearing. We are convinced that, insofar as defendant needed to be deterred from unlawful conduct, this object has been achieved.

Nor do we think that an ordinary damage award will fail to compensate plaintiff fully. Magistrate Tyler found, quite correctly, that plaintiff had suffered no damage to its good will. While it is conceivable that plaintiff might have suffered pecuniary losses beyond the losses of its licensing revenues, we are impressed by the Magistrate’s finding that the extent of any such losses were “not sufficiently demonstrated,” Report at 66. In light of plaintiff’s failure in this respect, we choose not to exercise our discretion to award plaintiff treble damages.

DEDUCTIONS FROM DEFENDANT’S PROFITS

1. Income Taxes

The Magistrate refused to allow defendant to deduct from its profits on the contemptuous sales the amount paid for income taxes on these profits. Defendant’s objection to this disallowance is no more than a challenge to the Magistrate’s reliance on that provision of the Contempt Order finding it in willful contempt. Since, as we have said, such reliance was justified and indeed to be expected, we affirm and adopt the Magistrate’s recommendation.

2. Variance

Defendant objects to the Magistrate’s rejection of its proposed deduction for unfavorable variances on overhead. After extensive and careful consideration, the Magistrate found that defendant had not clearly demonstrated its entitlement to such a deduction, and found further that plaintiff’s calculation, which did not allow for such a deduction, was more reliable than the calculations relied upon by defendant. We adopt this considered decision.

3. Other Specific Deductions

The Magistrate recommended that we disallow deduction of defendant’s legal expenses, bonuses paid to its corporate officers, and costs of mold amortization and repair, since he found that defendant had failed to show a connection between these expenses and the contemptuous products. Defendant asserts that such a finding is inconsistent with the full absorption accounting method. However, the Magistrate found, and we agree, that the failure to establish such a connection invalidates the claimed deductions under any accounting method.

Even under the full absorption approach, defendant may not deduct costs which it cannot establish were related to the contemptuous conduct. We repeat the words of Judge Learned Hand in Sheldon v. Metro-Goldwyn Pictures Corporation, supra, (at 54) upon which defendant relies:

“Overhead” which does not assist in the production of the infringement should not be credited to the infringer; that which does, should be; it is a question of fact in all cases.

We see no reason why this “question of fact” should not apply to all expenses claimed by defendant as deductions. While it is true, as defendant claims, that the relationship of expense to infringement need not be a “direct causal link,” the Magistrate found not only that no such link existed, but that defendant had completely failed to prove any relationship at all. We are aware of no case which permits an allowance of expenses under these circumstances. We therefore affirm and adopt the Magistrate’s recommendation that they be disallowed.

ATTORNEYS’ FEES

After wading through billing sheets numerous and tortuous almost to the point of incomprehensibility, the Magistrate arrived at what we feel to be a very sensible method of calculating plaintiff’s attorneys’ fees. Although defendant claims that the problems encountered by the Magistrate “made it difficult, if not impossible to analyze plaintiff’s requested fees through the ‘lodestar’ approach,” Defendant’s Objections at 36, we find that the Magistrate did a commendable and convincing job of precisely that. The fact that defendant has a different conception of what constitutes a “reasonable valuation” of plaintiffs counsel’s work, defendant’s Objections at 37, does not convince us that the Magistrate’s approach was not appropriate. We therefore adopt the approach and the figure recommended by the Magistrate.

OTHER COSTS AND DISBURSEMENTS

While recognizing that certain of plaintiff’s claimed costs, such as travel, photocopying and telephone expenses, were not satisfactorily documented, the Magistrate granted them on the grounds that these activities were appropriately included in an award to plaintiff and that defendant had not specifically challenged them. Defendant does not dispute that it made no specific arguments against such an award; however, it asserts, the Magistrate should have recognized and accepted its argument that any such costs should be reduced by the same percentage as plaintiff’s attorneys’ fees.

Although we find defendant’s position rather more nebulous than might be desired — it is unclear, for example, whether defendant refers to its own recommended rate of reduction in attorneys’ fees, the percentage embodied in the total reduction in fees recommended by the Magistrate, or merely the 10% across-the-board reduction applied by the Magistrate after he had made various specific deductions — we find its general suggestion to be in keeping with the Magistrate’s conclusion as to the incompleteness of plaintiff’s presentation. We therefore remand to the Magistrate to determine, in light of his findings, what if any specific deductions should be made and what, if any, across-the-board reduction should be applied.

PLAINTIFF’S WITNESS FEES

Defendant objects to the Magistrate’s recommendation of fees for plaintiff’s expert accounting witness James Goonan in excess of the limit specified by 28 U.S.C. § 1821. While we recognize the importance of Goonan’s contribution to the Magistrate’s determination of the appropriate accounting method by which to measure defendant’s profits, we do not think such an award is appropriate.

The statutory limit as to expert fees may, as the parties recognize, be circumvented in “exceptional” cases. However, the case and facts upon which plaintiff relies do not warrant such action here. In Hain Pure Food Co., Inc. v. Sona Food Products Co. (C.D.Cal.1980) 491 F.Supp. 39, the court merely enforced an agreement by the defendant that it would pay the costs of plaintiff’s accountant: approval of costs beyond the statutory limit thus stemmed from the parties themselves, not from a determination by the court. While the court itself approved an award above the statutory limit in Hexcel Products, Inc. v. American Cyanamid Co. (D.Md.1965) 147 USPQ 511, this award was in conformity with its Contempt Order provision for “reasonable” expert fees. We made no such allowance, prior to the proceedings before the Magistrate, for fees in excess of the statutory limit; nor were we requested to make any prior ruling that the fees of any expert were to be proportional to the complexity or importance of his testimony. Even had we done so, we do not feel that excessive fees would now be “reasonable” in light of our rejection of the accounting method toward the acceptance and use of which all Mr. Goonan’s efforts were directed. We therefore reduce his fees to the amount allowed by 28 U.S.C. § 1821, and remand to the Magistrate for a calculation of this amount.

PREJUDGMENT INTEREST

Finally, defendant objects to the award to plaintiff of prejudgment interest “on all amounts of lost profits and damages from May 15, 1981, and on attorneys’ fees and allowable disbursements from July 1, 1982,” Report at 99. We need not decide the parties’ debate as to whether the propriety of such an award is governed by New York or Federal law, since we find that, even if an award of interest is discretionary (as under Federal law) rather than mandatory (as under New York law), the Magistrate correctly exercised his discretion.

We reject defendant’s contention that the award of interest on plaintiff’s lost profits is “unfair” because plaintiff could not prove that every toy car sold by defendant would have been sold by plaintiff’s licensees but for defendant’s contemptuous conduct. The Magistrate took this fact into account, as defendant is well aware; and the amount of plaintiff’s damages recommended by the Magistrate, upon which prejudgment interest is to be awarded, reflects it. Defendant would appear to imply that, since plaintiff’s proof was unconvincing in this regard, it should receive no damages whatsoever for its lost profits. The Magistrate has not so recommended, and we do not so hold. Prejudgment interest is appropriate to the damages as correctly calculated by the Magistrate.

Defendant’s objections to the award of interest on its own profits are similarly unavailing. Defendant contends that, while the Magistrate recommended such interest from May 15, 1981, “interest [on a defendant’s profits] is usually allowed from the date of filing of the Master’s report,” Carter Products, Inc. v. Colgate-Palmolive Company (D.Md.1963) 214 F.Supp. 383, 417. We find, however, that the instant action presents the sort of “special circumstances” which justify an exception to this rule, 214 F.Supp. at 417.

As the court in Carter Products recognized, the willfulness of a defendant’s behavior may remove a case from the above rule. We find here none of the “countervailing equities,” 214 F.Supp. at 417, on which the Carter Products Court relied in declining to find such an exception. Far from receiving an award in excess of the defendant’s actual profits, like the Carter Products plaintiff, Warner Bros, has actually received less than its calculation of these profits due to our acceptance of defendant’s accounting method; and although we have disallowed some of defendant’s deductions, we note that Magistrate Tyler did approve some over the plaintiff’s objections. We thus cannot say that an award of prejudgment interest on defendant’s profits will be a “windfall” to plaintiff. In light of defendant’s willful contempt, we think this award is justified.

Finally, with respect to interest on the award of plaintiff’s attorneys’ fees, we agree with plaintiff that such an award is properly considered a component of damages in a contempt case. See, e.g., Vuitton, supra. We thus find inapplicable the rule enunciated in Carter Products, that in ordinary litigation an award of attorneys’ fees is analogous to taxable costs and disbursements and is not subject to interest.

We therefore adopt in all respects the Magistrate’s recommendation of an award of prejudgment interest.

SO ORDERED.

      . We note that defendant has recently moved for reconsideration en banc of the Court of Appeals’ affirmance of our grant of summary judgment and final injunction. We recognize that should the Court of Appeals reconsider its decision, or should certiorari be granted, we may have to grapple with defendant’s contention that its profits were improperly included in the Contempt Order.. However, we need not do so at this time.

      . For example, if defendant had bought new machinery to produce the infringing toys, this would be deductible under either approach. However, if it had used the same machinery to produce the infringing items that had been used to produce noninfringing items, the costs of operating and maintaining such machinery would be deductible under the full absorption approach (to the extent that the machinery was used for the infringing items); however, under the incremental approach, no deduction at all would be allowed for such costs.

      . E.g., W.E. Basset Company v. Revlon, Inc. (2d Cir.1970) 435 F.2d 656; see also Stevens Linen Associates, Inc. v. Mastercraft Corp. (S.D.N.Y. 1980) 210 USPQ 573, modified on other grounds (2d Cir. 1981) 656 F.2d 11.

      . Proceedings on remand will be held at the White Plains Courthouse, where the Magistrate is now stationed.

      . Defendant appears to contend that treble damages may never be assessed upon a civil contemnor. This contention is directly at variance with Section 35 of the Lanham Act, 15 U.S.C. § 1117, which provides:
      In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount.

      . Plaintiff implied, at oral argument, that defendant had continued its contemptuous conduct after being held in contempt. We know of no evidence to this effect, and reject any such implication.

      . Although the Magistrate’s Recommendation mentions only "lost profits and damages," Report at 99, it is clear from the applicable footnote that this award was intended to include defendant’s profits. Report at p. S, n. 66.

      . Plaintiff has not appealed from these latter determinations, and we accordingly adopt them.


text:
    LEDA, INC., Plaintiff, v. KILROY COMPANY OF TEXAS, INC., Defendant.
    No. H-82-3302.
    United States District Court, S.D. Texas, Houston Division.
    May 2, 1984.

      John R. Pearson, Clann & Pearson, P.C., Houston, Tex., for plaintiff.
    Don Weitinger, Weitinger, Steelhammer & Tucker, Harold K. Watson, Vinson & Elkins, Houston, Tex., for defendant.
   SINGLETON, Chief Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The above-styled cause, having been tried before the court without a jury, at the close of the evidence and after hearing arguments of counsel, the court makes the following findings of fact and conclusions of law.

The parties stipulate to the following facts:

Leda, Inc. (“Leda”) was the owner and operator of the M/V Taurus on or about July 10, 1981 and at all times material to this suit. Kilroy Company of Texas (“Kilroy”) was the owner and operator of the caisson structure State Tract 98-L, Well No. 1 (“Well No. 1”) on or about July 10, 1981 and at all times material to this suit.

On or about July 10, 1981 the M/V Taurus was enroute to Louisiana in the waters of the Gulf of Mexico to resume fishing activities. At approximately 2300 hours on or about July 10, 1981, the M/V Taurus allided with the caisson Well No. 1. The well is located on the Outercontinental Shelf in the Gulf of Mexico, approximately ten miles east of the Galveston jetties.

Timothy J. Kinzie was the Captain of the M/V Taurus at the time of the allision in question. The allision caused severe damage to the vessel which subsequently sank and was declared a constructive total loss. Prior to this incident, the M/V Taurus was appraised and valued at $165,000. As a result of the allision Leda incurred survey, salvage and towing fees, and other miscellaneous expenses of $52,600, for a total loss of $217,610.

Joseph R. Kinzie was the Captain of the M/V Battleax at the time of the incident in question.

Kilroy cross-claimed for its damages to the boat landing in the amount of $20,-096.56 and for the cost of repair to the lights and horn in the amount of $17,-841.13, for a total of $37,937.69.

FINDINGS OF FACT

The M/V Taurus and the M/V Battleax, both fishing vessels, departed Galveston enroute to the waters of the Gulf of Mexico off the Louisiana shore to resume fishing activities. Captain Tim Kinzie charted his course before leaving the Galveston Bay. His vessel was following the M/V Battleax.

Captain Kinzie had been a captain for six or seven years. The M/V Taurus was in seaworthy condition on the date in question. The weather was clear, visibility was good, and the sea was calm. Captain Kinzie navigated the vessel past the Galveston jetties. Then he turned the wheel over to his First Mate Joseph Andreu, with instructions to stay approximately one mile behind the M/V Battleax. The Captain went to his state room to rest.

Mr. Andreu has been in the fishing business for approximately thirty years and had been working on this vessel with Captain Kinzie for approximately four months at the time of the allision. Mr. Andreu was following the M/V Battleax and could see the lights on upcoming oil rigs. These rigs did not appear on the radar, therefore, Mr. Andreu kept a close watch out the windows on all sides of the vessel. After Mr. Andreu maneuvered the vessel to keep it aligned with the M/V Battleax, he struck defendant’s Well No. 1. Mr. Andreu looked in that direction immediately before impact but did not see anything in the water. He testified that no lights or horn were operating on that well at the time of the allision.

Mr. Ray Rouse, a service supervisor of Tidelands Signal Corporation, testified that his employer is under contract to service the off-shore platforms, including Well No. 1. Mr. Rouse personally serviced Well No. 1 since approximately 1976. However, during 1981 the platform could not be serviced either because of rough weather or because drilling rigs were working intermittently on that platform. The last service call on Well No. 1, usually done every thirty days, was made in December of 1980. In June of 1981, Mr. Rouse learned that the rigs on Well No. 1 were about to leave. He called M.H. Production Company, who operates the structures for defendants, to arrange a service call but was informed that the crew had already serviced the navigational aids on that well and was told that he should wait until next month to make the call.

Approximately two weeks later Mr. Rouse learned of the allision. He was flown out to the rig and was the first person to examine the platform after the accident. He testified that the fog horn was not bolted to the platform and the wiring was not connected to the source of power. Similarly, the lights were not wired to the solar collector, and the batteries were dead. According to his testimony, the crew’s failure to reinstall the lights and horn could be the only explanation for the condition of the equipment. The expert testimony of James Zimmerman, a structural engineer, confirms Mr. Rouse’s testimony that the allision did not cause the damage to the equipment.

From the evidence produced at trial, this court concludes that Mr. Andreu kept a proper lookout when operating the M/V Taurus. The lights and fog horn on Well No. 1 were not properly reinstalled and were not in operation on the night of the allision. Defendant was negligent in failing to maintain the lights and horn in proper working condition, and was solely responsible for the allision. Defendant’s negligence was the proximate cause of plaintiff’s damages. The members of the crew on board the M/V Taurus were not contributorily negligent.

CONCLUSIONS OF LAW

A presumption of fault exists against a moving vessel that strikes a stationary object, such as a dock or navigational aid. Bunge Corp. v. M/V Furness Bridge, 558 F.2d 790 (5th Cir.1977); Brown & Root Operators, Inc. v. Zapata Off-Shore Co., 377 F.2d 724 (5th Cir.1967). The moving vessel has the burden of proving that it was without fault or that the allision was a result of fault of the stationary object. Bunge, 558 F.2d at 795.

As owner of caisson State Tract 98-L, Well No. 1, Kilroy has a general statutory duty to provide the structure with proper operating lights. 33 C.F.R. §§ 67.01-67.15-10, 62.20; Matter of Texaco, Inc., 570 F.Supp. 1272,1283 (E.D.La.1983).. Pursuant to a contract with Kilroy, M.H. Productions, Inc. was responsible for operating Well No. 1, and hired Tidelands Signal Corp. to maintain the navigational aids.

When Mr. Rouse of Tidelands learned that for the first time in six months it would be possible to service Well No. 1, he immediately called M.H. Productions, Inc. to arrange a service call. M.H. Productions, however, informed him that the rigging crew had completed the necessary servicing on the well’s navigational aids and told Mr. Rouse to make the service call next month. The rigging crew did not reinstall the navigational aids and, as a consequence, the lights and horn were not operational.

On or about July 10, 1981, the M/V Taurus was sailing past Well No. 1, behind another vessel. The First Mate checked the radar but also used his own eyesight to spot rigs in the water. He spotted several rigs with bright lights that did not appear on his radar, and was careful to keep a proper lookout. Because Well No. 1 did not have a functioning light or horn, the First Mate could not see it in the night on the Gulf of Mexico. The M/V Taurus struck Well No. 1 and sank as a result.

Kilroy was negligent in failing to properly maintain the light on Well No. 1 as required by federal law. That negligence was the proximate cause of the allision on July 10, 1981 and the sinking of the M/V Taurus. The crew on board the M/V Taurus was not negligent and the allision was not a result of plaintiff’s fault. Therefore, plaintiff is entitled to recover the full amount of its loss, stipulated at $217,610.

Any findings of fact which may more properly be denominated as conclusion of law are hereby adopted as such. All conclusions of law more properly denominated as findings of fact are likewise adopted as such.

In accordance with the preceeding findings of fact and conclusion of law, the court hereby ORDERS, ADJUDGES, and DECREES that Kilroy Company of Texas, Inc. was negligent and that plaintiff is hereby entitled to recover damages of $217,610. The parties are hereby directed to prepare a judgment in conformity with these findings of fact and conclusions of law and to submit it to the court for entry within fifteen (15) days of this Order.