author: JAMES E. DOYLE, District Judge.

text:
    Maureen STOREY, Plaintiff, v. BOARD OF REGENTS OF the UNIVERSITY OF WISCONSIN SYSTEM and Milton L. Sunde, Defendants.
    No. 84-C-250-D.
    United States District Court, W.D. Wisconsin.
    March 26, 1985.

      Michael Fox, Fox Law Offices, Madison, Wis., for plaintiff.
    Diane M. Nicks, Asst. Atty. Gen., Bronson C. LaFollette, Atty. Gen., State of Wisconsin, Madison, Wis., for defendants.
   AMENDED OPINION AND ORDER

JAMES E. DOYLE, District Judge.

Plaintiff alleges that in denying her appointment as an assistant professor in the University of Wiseonsin-Madison Department of Poultry Science, defendants intentionally discriminated against her because of her sex. She invokes Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. (Title VII); 42 U.S.C. § 1983; and Title IX of the Education Act Amendments of 1972, 20 U.S.C. § 1681 et seq. (Title IX). Defendants moved under Fed.R.Civ.P. 12(b)(6) to dismiss the § 1983 and Title IX claims on the ground that Title VII is plaintiffs exclusive remedy. In a previous order I denied defendants’ motion to dismiss the § 1983 claim. Storey v. Board of Regents of Univ. of Wis. System, 600 F.Supp. 838 (W.D.Wis.1985). I now address the viability of plaintiff’s Title IX claim.

OPINION

As I concluded in my earlier opinion in this case, because Title VII pre-dates Title IX, it is presumed Title VII preempts Title IX when the discriminatory conduct at issue is prohibited by Title VII. Id. at 842. I infer Congress intended to make Title VII a nonexclusive avenue of relief only with regard to remedies already in existence or to subsequently created remedies Congress expressly or by clear implication made available to victims of discrimination in employment. Plaintiff asserts that Title IX expressly accords her just such a new remedy, namely, the ability to obtain the termination of federal funds to the University of Wisconsin. Plaintiff also contends Title IX implicitly empowers this court to grant her injunctive and monetary relief, by ordering defendants to install her in the position she was denied and to relinquish full back-pay with interest. I conclude otherwise.

The essence of Title IX is that “[n]o person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.” 20 U.S.C. § 1681. It is settled that this prohibition reaches discrimination in the employment context. North Haven Board of Education v. Bell, 456 U.S. 512, 102 S.Ct. 1912, 72 L.Ed.2d 299 (1982). The only explicit means of enforcing § 1681 appears in § 1682, which provides for the termination of federal funds to recipients by federal departments and agencies. Section 1683 provides that “any person aggrieved” by actions terminating or withholding funds under § 1682 may obtain judicial review.

Title IX is silent as to remedial mechanisms other than the administrative termination of funds. Whether it implies a private right of action for a victim of sex discrimination in the context of employment is the open question raised by defendant's motion in the present case. In certain contexts other than discrimination in employment, it is settled that Title IX does imply a private right of action by an individual, but even in those contexts it appears that Title IX does not imply the availability of direct judicial termination of federal funds in a suit by a private litigant.

In Cannon v. University of Chicago, 441 U.S. 677, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979), plaintiff alleged the defendant medical schools had denied her applications for admission on account of her sex. In concluding Congress intended Title IX to create a private right of action by that plaintiff, the Court relied on the express modeling of Title IX after Title VI of the Civil Rights Act of 1964, which courts had interpreted as embodying an implied private right of action. Id. at 694-96, 99 S.Ct. at 1956-57. Further, dual purposes underlay the enactment of Title IX: (1) “to avoid the use of federal resources to support discriminatory practices” and (2) “to provide individual citizens effective protection against those practices.” Id. at 704, 99 S.Ct. at 1961. The termination procedure spelled out in the statute serves the first purpose, but without a private right of action, the Court stated, it would be impossible to effectuate fully the second purpose. The termination of funds is a cumbersome, costly, and extreme sanction intended to be a remedy of last resort; it is ill-suited to redress isolated instances of discrimination against individuals. Id. at 704-706, 99 S.Ct. at 1961-1962. Accordingly, the Court held that to fulfill the purposes of Title IX it was necessary to infer a private right of action.

In Cannon, plaintiff initially had sought injunctive, declaratory, and monetary relief. Cannon v. University of Chicago, 406 F.Supp. 1257 (N.D.Ill.1976). The Court did not address which of those remedies might be available to her, if she proved up her allegations. However, it strongly suggested that funding termination is not a remedy available to private plaintiffs. In its exposition of the legislative history of Title VI, the Court noted there was explicit debate whether individuals should possess the ability to obtain funding termination. See Cannon, supra, 441 U.S., at 710, n. 46, 99 S.Ct. at 1964, n. 46 (citations omitted).

With one set of exceptions, the excerpts from the legislative history cited by respondents as contrary to implication of a private remedy under Title VI, were all concerned with a procedure for terminating federal funding. None of them evidences any hostility toward an implied private remedy to terminate the offending discrimination. They are consistent with the assumption expressed frequently during the debates that such a judicial remedy ... would be available to private litigants regardless of how the fund-cutoff issue was resolved.

Id. at 711-12, 99 S.Ct. at 1965-66.

The one set of exceptions referred to springs from a comment by Senator Keating, who had proposed unsuccessfully express creation of private remedies, and authorization of individuals to seek the termination of funds. Id. at 713-14, n. 50, 99 S.Ct. at 1966-67, h. 50. The Court interpreted the rejection of Senator Keating’s proposal not as a rejection of all private remedies, but rather as a compromise under which private remedies other than termination were sanctioned:

[The enacted version] was far more conducive to implication of a private remedy against a discriminatory recipient than was the original language, but at the same time was arguably less conducive to implication of a private remedy against the Government (as well as the recipient) to compel the cutoff of funds. Although willing to extend private rights against discriminatory recipients, the Government may not have been anxious to encourage suits against itself.

Id. at 716, n. 51, 99 S.Ct. at 1967, n. 51 (emphasis in original).

The language and structure of Title IX buttresses the conclusion that in every discriminatory context, whether it is employment or admissions or another context, Congress intended the termination process to be invoked and effected only by the federal agency. The statutory termination procedure reflects congressional concern that the power to cut off funds to recipients be used sparingly and prudently. Accordingly, § 1682 holds out termination as a sanction of last resort, permissible only after the agency has notified the recipient of the alleged violations and has determined that voluntary compliance cannot be relied upon to rectify the discrimination. Moreover, no termination is effective until thirty days after a full report of the action is submitted to the congressional committees having jurisdiction over the programs in question. 20 U.S.C. § 1682. A carefully crafted and rather cumbersome statutory mechanism to ensure cautious use of the termination sanction, on the one hand, and, on the other, authorization to individuals to obtain termination in private suits are incongruous. See Brown v. GSA, 425 U.S. 820, 96 S.Ct. 1961, 48 L.Ed.2d 402 (1976) (refusing to permit individuals to bypass administrative enforcement mechanism by seeking judicial remedy). That § 1682 on its face refers only to federal departments and agencies is strong evidence Congress intended that no other parties could seek such a remedy.

Cannon lends strong support to the view that § 1682 permits only governmental executive officers or agencies to terminate funding:

[The Supreme Court] has never withheld a private remedy where the statute explicitly confers a benefit on a class of persons and where it does not assure those persons the ability to activate and participate in the administrative process contemplated by the statute____ As the government itself points out in this case, Title IX not only does not provide such a mechanism, but the complaint procedure adopted by HEW does not allow the complainant to participate in the investigation or subsequent enforcement proceedings. Moreover, even if those proceedings result in a finding of a violation, a resulting voluntary compliance agreement need not include relief for the complainant____ Furthermore, the agency may simply decide not to investigate — a decision that often will be based on a lack of enforcement resources, rather than on any conclusion on the merits of the complaint____ In that case, if no private remedy exists, the complainant is relegated to a suit under the Administrative Procedure Act to compel the agency to investigate and cut off funds.

Cannon, supra, 441 U.S., at 707, n. 41, 99 S.Ct. at 1963, n. 41.

As reflected in the opinion of the Court in Cannon, seeking to remedy specific instances of discrimination and make specific victims whole is to be contrasted with ensuring government funds are not used to foster or support discriminatory programs or institutions. I conclude that Title IX contemplates two separate means to enforce its antidiscrimination directive: (1) private suits to redress instances of certain forms of discrimination against individuals, and (2) an administrative termination mechanism to avoid federal support of pervasively discriminatory programs. Aggrieved individuals are free to complain to the Department of Education and seek administrative action under § 1682, as the employees did in North Haven Board of Education v. Bell, 456 U.S. 512, 102 S.Ct. 1912, 72 L.Ed.2d 299. If unsuccessful, possibly they may seek judicial review of the agency’s inaction under the Administrative Procedure Act. Cannon, supra, 441 U.S., at 707, n. 41, 99 S.Ct. at 1963, n. 41. But individuals are not authorized by Title IX to seek district court judgments directly terminating funds.

Termination of funds is not the only remedy plaintiff seeks under Title IX. She also requests an order directing that she be hired as an assistant professor, and that she receive full back-pay with interest. Had the alleged discrimination occurred in a context other than employment, precedent would support plaintiff’s ability to seek such relief, as well as other forms of injunctive relief and possibly money damages. Guardians Assn. v. Civ. Serv. Com’n of City of N.Y., — U.S. -, 103 S.Ct. 3221, 3229-30, 77 L.Ed.2d 866 (1983).

The question is whether an individual alleging employment-related discrimination may seek the remedies Title IX implicitly provides to individuals alleging non-employment related discrimination. Plaintiff has cited no case, and I have found none, in which an individual in a private suit under Title IX was permitted to litigate employment-related claims. In the reported cases involving private Title IX suits, the plaintiff typically has had no recourse to a remedial statutory scheme such as Title VII. See Cannon, supra; Lieberman v. University of Chicago, 660 F.2d 1185 (7th Cir.1981) (plaintiffs were denied admission to medical schools); De La Cruz v. Tormey, 582 F.2d 45 (9th Cir.1978), cert. denied, 441 U.S. 965, 99 S.Ct. 2416, 60 L.Ed.2d 1072 (1979) (plaintiffs challenged failure of community college district to provide day care facilities). Faced with victims of discrimination who would otherwise have been remediless, courts thus have recognized Title IX affords private remedies.

Plaintiff is not remediless. She is fully capable of pursuing her claim under Title VII, not to mention § 1983. As I previously decided, Congress intended Title VII to preempt remedies other than those in existence prior to enactment of Title VII. Storey, supra, at 842. Of course, following enactment of Title VII, Congress has been free to provide victims of employment-related discrimination with additional remedies. It has been free to do so expressly. It has been free to do so by implication, but against the background of Title VII, its intention to do so requires a powerful implication on its part. Title IX’s only express remedy is termination, which is unavailable to plaintiff. Hence plaintiff’s Title IX claim will stand only if Title IX’s legislative history unmistakably reveals Congress intended to bestow on victims of employment discrimination an avenue of relief in addition to Title VII. In Cannon the Court found sufficient indicia of congressional intent to create a private right of action under Title IX when the absence of private remedies would have left unfulfilled a primary purpose of the act — the protection of individual victims of discrimination. Much stronger indicia than those noted in Cannon are required to persuade me Congress intended to imply remedies for employment-related discrimination, altering and disturbing the comprehensive and elaborate Title VII mechanism. Accordingly, I hold that in response to employment discrimination in federally funded education programs or institutions, Title IX affords no direct remedy to victims.

ORDER

Defendants motion to dismiss plaintiff’s claim under Title IX is granted.

      . "Remedy” is something of a misnomer. Cutting off funds does nothing to make victims of discrimination whole. Except as a general deterrent mechanism, it does not curtail ongoing discrimination. Unlike punitive damages, termination bestows no tangible reward on individual victims. If remedial, it is only in the sense that termination removes the evil of providing government funds to discriminatory programs. From this perspective, members of the national community have equal interest. If victims’ lawsuits could trigger termination, victims of discrimination might be better able to induce discriminators to cease discrimination and to make victims whole, but labelling termination a "remedy” stretches the concept. Nonetheless, like others, I will speak of termination as a remedy.
      Plaintiff appears to concede that in light of Grove City College v. Bell, — U.S. -, 104 S.Ct. 1211, 79 L.Ed.2d 516 (1984), any termination of Title IX funds would be limited to the specific program involved in the discrimination. All of the discriminatory acts alleged in the complaint occurred entirely within the Department of Poultry Science, which is a component of the College of Agriculture and Life Sciences. While it seems clear that based on these facts termination of funds for the entire University of Wisconsin-Madison, much less for the entire statewide University of Wisconsin system, would be impermissible, given my decision below there is no need to address what the relevant program is for termination purposes. Similarly, there is no need to decide whether an isolated incident involving sex discrimination would justify the termination of all federal funds to the program in question.

      . Each Federal department and agency which is empowered to extend Federal financial assistance to any education program or activity ... is authorized and directed to effectuate the provisions of section 1681 ... by issuing rules, regulations, or orders of general applicability ____ Compliance with any requirement adopted pursuant to this section may be effected (1) by the termination of or refusal to grant dr to continue assistance under such program or activity to any recipient as to whom there has been an express finding on the record, after opportunity for hearing, of a failure to comply with such requirement____ Provided, however, That no such action shall be taken until the department or agency concerned has advised the appropriate person or persons of the failure to comply with the requirement and has determined that compliance cannot be secured by voluntary means. In the case of any action terminating, or refusing to grant or continue, assistance because of failure to comply with a requirement imposed pursuant to this section, the head of the Federal department or agency shall file with the committees of the House and Senate having legislative jurisdiction over the program or activity involved a full written report of the circumstances and the grounds for such action. No such action shall become effective until thirty days have elapsed after the filing of such report.
      20 U.S.C. § 1682.

      . Plaintiff contends that the existence of a private right of action is meaningless unless individuals can seek termination of funds. In Guardians Assn. v. Civ. Serv. Com'n of City of N.Y., — U.S. -, 103 S.Ct. 3221, 77 L.Ed.2d 866 (1983), the Court makes clear that equitable relief is available in a private action under Title VI, and thus by implication Title IX, and its opinion suggests that an award of money damages might be appropriate in a private suit involving intentional discrimination. When injunctive, declaratory, and perhaps monetary relief are available in private suits under Title IX, even to a narrow category of plaintiffs, it can hardly be said that the Title IX private right of action is meaningless.

      . In North Haven, the disputants were two school districts and the United States Department of Education, which had threatened to terminate the districts’ federal funds unless they corrected discriminatory employment practices. Complaints by aggrieved employees of the districts had prompted the Department to investigate the districts’ practices, but the individual employees were not parties to the lawsuits. I interpret North Haven as permitting a recipient institution to bring suit to prevent termination of its federal funds on the basis of alleged discriminatory practices. T do not interpret it to permit an individual who alleges discrimination to obtain judicial termination of federal funds for the recipient institution by by-passing the vital role of the Department of Education in determining whether federal funds should be withheld from the recipient institution.

      . I note the difficulties posed by Hills v. Gautreaux, 425 U.S. 284, 96 S.Ct. 1538, 47 L.Ed.2d 792 (1976), in which the Court affirmed a broad district court injunctive remedy that included the termination of federal housing funds unless certain court-imposed conditions were met. At some level Hills may be irreconcilable with Cannon, although there are a number of relevant differences between the two cases: (1) in Hills the funding agency (HUD) was named as a defendant, and was alleged not merely to have provided federal funds to an entity which practiced discrimination in the course of administering its activities, but to have itself directly engaged in discriminatory actions in the administration of the funded program; (2) in Cannon the Court directly addressed the question whether Congress intended the termination sanction to be available to individuals, whereas from the various opinions throughout the course of the Hills litigation it does not appear that the government contested the availability of termination to plaintiffs; (3) Hills was a class action alleging pervasive discrimination whereas in Cannon an individual sought redress for specific instances of discrimination; and (4) the power of the district court in Hills was couched in terms of the broad inherent equity powers of federal courts to rectify unconstitutional racial discrimination. In any event the Court’s discussion in Cannon occurred three years after Hills and was directly applicable to Title IX.
      In directly addressing the termination issue in a case preceding Hills, the Seventh Circuit had ruled that Title VI did not permit an individual to bypass the administrative termination mechanism by suing to enjoin the disbursement of federal housing funds. Green Street Association v. Daley, 373 F.2d 1, 8-9 (7th Cir.1967), cert. denied, 387 U.S. 932, 87 S.Ct. 2054, 18 L.Ed.2d 995 (1967). See also Organ. of Minority Vendors v. Ill. Cent. Gulf R.R., 579 F.Supp. 574 (N.D.Ill.1983) (holding similar statute limits termination authority to funding agency).

      . Where the educational institution is private, the absence of state action will make § 1983 also unavailable to the victim of discrimination. See Cannon v. University of Chicago, 559 F.2d 1063 (7th Cir.1976), rev'd on other grounds, 441 U.S. 677, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979).


source: Caselaw Access Project

author: ROVNER, District Judge.

license: Public Domain

text:
    Joseph LAZZARA, Plaintiff, v. HOWARD A. ESSER, INC., Defendant. HOWARD A. ESSER, INC., Third-Party Plaintiff, v. AETNA CASUALTY & SURETY COMPANY OF ILLINOIS, INC., and RELIANCE INSURANCE COMPANY OF ILLINOIS, INC., Third-Party Defendants.
    No. 83 C 185.
    United States District Court, N.D. Illinois, E.D.
    March 27, 1985.

      Robert A. Downing, Richard J. O’Brien, . Sidley & Austin, Chicago, Ill., for Lazzara.
    Mitchell A. Orpett, Haskell & Perrin, Chicago, Ill, for Howard A. Esser, Inc.
    Thomas M. Hamilton and Michael M. Marick, Hinshaw, Culbertson, Moelmann, Hoban & Fuller, Chicago, Ill, for Aetna Casualty & Surety Co. of Ill., Inc.
    Judge & Knight, Park Ridge, Ill., for Reliance Ins. Co. of Ill., Inc.
   MEMORANDUM OPINION AND ORDER

ROVNER, District Judge.

This is a diversity action governed by the substantive law of Illinois. In the underlying lawsuit, Joseph Lazzara (“Lazzara”) sued Howard A. Esser, Inc. (“Esser”), an insurance broker, for breach of contract and negligence based on Esser’s alleged failure to procure and maintain an agreed upon level of automobile insurance coverage for Lazzara. Presently pending before this Court are the motions of both Lazzara and Esser for reconsideration of two rulings issued by Judge Charles Kocoras in this case before it was transferred to this Court. This Court has reconsidered the rulings at issue and, for the reasons set forth below, has decided to affirm the dismissal of Esser’s third-party complaint but to reverse Judge Kocoras’ denial of Lazzara’s motion for summary judgment.

Facts

Lazzara handled his insurance needs through Esser for many years. In 1973 or 1974, Esser recommended that Lazzara increase his automobile liability insurance coverage to $1 million. Lazzara agreed and instructed Esser to procure such coverage for him. Esser, acting in its corporate capacity as an insurance broker, thus contracted to obtain for Lazzara $1 million in automobile insurance. To fulfill this contract, Esser procured a primary liability policy for Lazzara with Reliance Insurance Company (“Reliance”) and an excess liability policy with Aetna Casualty & Surety Company of Illinois, Inc. (“Aetna”). These policies were in force when Lazzara’s insured auto was involved in an accident, and a $510,000 judgment was entered against him by a state court in Florida.

The basis for Lazzara’s suit against his broker is that, at the time of the accident, a $150,000 gap existed in the coverage provided by the two policies which Esser had procured for Lazzara. The primary liability policy that Esser had obtained from Reliance covered only the first $100,000 of Lazzara’s liability under the judgment; the excess liability policy that Esser had obtained from Aetna covered only liability in excess of $250,000. Thus, in arranging Lazzara’s insurance coverage, Esser left a $150,000 gap, and Lazzara was compelled to make good on that portion of the judgment out of his own pocket.

Lazzara, a citizen of Alabama, sued Esser, an Illinois corporation, invoking the diversity jurisdiction of this Court. The two-count complaint asserts claims for breach of contract and negligence. After Lazzara filed his complaint, Esser filed a third-party complaint against Aetna and Reliance, attempting to impose upon them ultimate liability for the $150,000 gap on the following bases: a written indemnity agreement between Esser and the insurance companies (Counts I and V); indemnity based upon “active-passive” negligence (Counts II and VI); contribution (Counts III and VII); indemnity based on breach of agency duties and obligations (Counts IV and VIII); and, reformation of the contract with Reliance (Count IX).

After considering Esser’s third party allegations against Aetna and Reliance, Judge Kocoras dismissed the third-party complaint in its entirety on February 21, 1984. The court dismissed Counts I and V because the “failure to procure” insurance claims by Esser do not fall within the strict terms of the Aetna or Reliance agreements as a matter of law. Counts II, III, VI, and VII were dismissed because the court held that an insurance company does not have a common law duty to monitor an insured’s day-to-day financial affairs by inquiring into the insurance situation of the insured. Finally, Counts IV, VIII, and IX were dismissed because Esser’s allegation that it was an agent of Aetna and Reliance for procuring insurance was “bare” and “conclusory” and because “it [is] clear as a matter of Illinois law that Esser was a broker which acted on behalf of Lazzara in procuring insurance.” Lazzara v. Esser, No. 83 C 185, slip op. at 5-6 (N.D.Ill. Feb. 21, 1984).

After the third-party complaint against Aetna and Reliance was dismissed, certain discovery was completed. Thereafter, Lazzara filed his motion for summary judgment. In opposing the motion, Esser argued that a question of fact was presented on several issues:

1. whether Esser was a broker or agent;
2. even assuming Esser was a broker, whether plaintiff instructed Esser to provide $1 million in continuous coverage or whether plaintiff merely assumed coverage would be continuous without discussion with Esser;
3. whether, in July, 1979, Esser properly renewed plaintiff’s existing coverage pursuant to its understanding with plaintiff even if that coverage contained a gap;
4. whether the elements of a contract to procure insurance have been established; and
5. whether the Reliance policy provided plaintiff covered the auto involved in the accident in Florida.

Judge Kocoras stated in his October 30, 1984 ruling on the motion for summary judgment that Esser could not withstand Lazzara’s motion by arguing that the loss should not have been covered under the terms of the policies because that defense is available only to an insurer, and, in this case, the two insurers agreed that the loss was a covered loss. See Speroni v. Speroni, 406 Ill. 28, 92 N.E.2d 63 (1950).

Judge Kocoras also held that there was no material issue of fact in dispute with respect to the terms of the agreement between Lazzara and Esser: Esser agreed to obtain $1 million in insurance coverage and to keep it in force until directed otherwise.

In response to Esser’s contention that there was an issue .of fact as to whether it was acting as an agent or broker, Judge Kocoras said that Esser’s argument seems to “run contrary to logic and reason,” but nonetheless denied the motion for summary judgment. Lazzara v. Esser, No. 83 C 185, slip op. at 9 (N.D.Ill. Oct. 30, 1984). In so doing, Judge Kocoras held that because Esser’s commissions were allegedly paid by the insurers, it was conceivable that the trier of fact might conclude that Esser was acting as an agent for the insurance companies rather than as a broker for Lazzara. Because this issue of fact could not be resolved against Esser on the record as it stood at that time, Lazzara’s motion for summary judgment was denied. The denial of Lazzara’s motion has created the apparent inconsistency between the court’s two rulings.

On November 26, 1984, counsel for Lazzara, Esser, and the previously dismissed third-party defendants, Aetna and Reliance, appeared before this Court for a status report. Counsel for Lazzara and for Esser both represented to this Court that Judge Kocoras’s opinions of February 21, 1984 and October 30, 1984 are inconsistent. As a result, Lazzara has moved for reconsideration of the October 30th ruling, and Esser has moved for reconsideration of the February 21st ruling.

The October 30th Ruling On The Motion For Summary Judgment

This Court will first address Lazzara’s motion to reconsider the October 30th ruling on the motion for summary judgment. As already stated, the only reason Judge Kocoras denied Lazzara’s motion for summary judgment was that an issue of fact existed as to whether Esser was a broker or an agent. Judge Kocoras determined that an agreement existed between Esser and Lazzara, that the agreement was for Esser to obtain $1 million in insurance coverage and to keep it in force until told otherwise, and that Esser breached this agreement. Esser does not raise any new points in response to these determinations. Therefore, the only issue raised in Lazzara’s motion to reconsider that this Court need address is whether Judge Kocoras was correct in denying summary judgment on the ground that an issue of fact remained as to whether Esser was acting as a broker or as an agent as a matter of law. This Court finds as a matter of law that Esser was acting as a broker for Lazzara for the purpose of procuring insurance. Accordingly, Lazzara’s motion to reconsider the October 30, 1984 ruling is granted and summary judgment is entered in favor of plaintiff.

Section 490 of the Illinois Insurance Code defines an “agent” as:

(a) ... an individual, firm, partnership, association or corporation appointed by an insurer to solicit, negotiate or bind coverages for or on applications or policies of insurance on its behalf, covering property or risks located in this State.

An “insurance broker” is defined as:

(b) ... an individual, firm, partnership, association or corporation, while not acting as a duly licensed insurance agent, who solicits, negotiates, procures, renews or continues a policy of insurance on behalf of insureds or prospective insureds other than himself.

The Illinois courts have further defined an insurance broker as “one who procures insurance and acts as middleman between the insured and the insurer, and solicits insurance business from the public under no employment for any special company, but, having an order, places the insurance with the company selected by the insured, or, in the absence of any selection by him, with the company selected by such broker.” City of Chicago v. Barnett, 404 Ill. 136, 141-42, 88 N.E.2d 477, 481 (1949). See also Galiher v. Spates, 129 Ill.App.2d 204, 206-07, 262 N.E.2d 626, 628 (4th Dist.1970); Davidson v. Comet Casualty Co., 89 Ill.App.3d 720, 44 Ill.Dec. 943, 412 N.E.2d 19 (2d Dist.1980). An insurance agent, on the other hand, has a fixed and permanent relation to the company he represents and has certain duties and allegiances to such companies. Galiher, 129 Ill.App.2d at 207, 262 N.E.2d at 628.

Whether a person is an agent or a broker is determined by his acts or what he does. City of Chicago v. Barnett, 404 Ill. 136, 141-42, 88 N.E.2d 477, 481 (1949). A four-prong test has been developed to determine whose interest a broker is representing:

1. Who set him in motion first?
2. Who could control his actions?
3. Who pays him?
4. Whose interest was he to protect?

Roby v. Decatur Steel Erectors, Inc., 59 Ill.App.3d 720, 725, 59 Ill.Dec. 71, 75, 375 N.E.2d 1355, 1359 (4th Dist.1978). Although the question of whether an insurance broker is the agent of the insured or insurer is generally one of fact, where the evidence shows clearly he is the agent of the insured, it becomes a question of law. Davidson, 89 Ill.App.3d at 723, 44 Ill.Dec. at 946, 412 N.E.2d at 22; Ross v. Thomas, 45 Ill.App.3d 705, 4 Ill.Dec. 379, 360 N.E.2d 126 (4th Dist.1977); Galiher, 129 Ill.App.2d at 207, 262 N.E.2d at 628.

For example, in Davidson v. Comet Casualty Co., 89 Ill.App.3d 720, 44 Ill.Dec. 943, 412 N.E.2d 19 (2d Dist.1980), the plaintiff Davidson went to the local insurance broker to obtain car insurance. Plaintiff did not ask for insurance with a particular company, but rather asked only for the “cheapest” insurance. The manager of the insurance agency, Pavletic, was to find an insurance company. Pavletic was contacted and directed to protect the interests of the insured, Davidson. The court held that, by these facts alone, Pavletic was acting as Davidson’s agent (i.e., as a broker) for purposes of procuring the policy of insurance in question. Id. at 724, 44 Ill.Dec. at 947, 412 N.E.2d at 23. See also Ross v. Thomas, 45 Ill.App.3d 1106, 4 Ill. Dec. 379, 360 N.E.2d 126 (4th Dist.1980).

Similarly, in Galiher v. Spates, 129 Ill.App.2d 204, 262 N.E.2d 626 (4th Dist.1970), the plaintiff applied to Best Insurance Agency for auto insurance. Best could have applied to several companies for the insurance, but chose Kenilworth Insurance Co. The court found that Best was set in motion by the plaintiff and was directed by him to protect his interests. Furthermore, the facts wholly failed to show a principal-agent relationship between Kenilworth and Best. Accordingly, the court upheld summary judgment for Kenilworth because Best was the agent of the plaintiff rather than Kenilworth as a matter of law. Id. at 207-08, 262 N.E.2d at 628.

In the present case, the documents before this Court clearly show that Esser was acting as Lazzara’s broker for the purpose of procuring the insurance. As in Davidson and Galiher, Esser was set in motion by Lazzara. Also, Lazzara was the person who could control Esser’s actions. It was Lazzara who ordered Esser to obtain the $1 million insurance policy. Esser was contacted and directed by Lazzara to protect the interests of Lazzara, not the insurers.

Moreover, that Esser received its commission checks from Aetna and Reliance is not a factor that supports Esser’s assertion that it did not act as Lazzara’s broker. The contracts between Esser and Aetna and Reliance provided that the commissions would be derived from the premiums paid by' Lazzara, as required by Illinois law. Ill.Rev.Stat. ch. 73, § 1065.40. In fact, for at least the first premium payment, Lazzara paid Esser the premium, who in turn paid the insurance companies, after deducting its commission.

For renewal premiums, both insurance companies provided a plan whereby they would directly bill the insured and then pay Esser its commission out of the premiums received. Esser had admitted in its complaint that the policies were renewed through it. Even if Esser took advantage of this plan, however, the plan was merely one of convenience for both Esser and the insurers and does little to demonstrate that Esser was an agent for the insurers for the purpose of procuring insurance,

Furthermore, nothing in the pleadings or record justifies finding an agency relationship between Esser and the insurers for the relevant purpose at issue here, i.e., for the purpose of procuring and renewing insurance. Esser has given no evidence of a “fixed or permanent” relationship between itself and the insurers. Ross v. Thomas, 45 Ill.App.3d 705, 4 Ill.Dec. 379, 360 N.E.2d 126 (4th Dist.1977). Esser was permitted to solicit from any potential insured it desired. Neither company placed restrictions on the number of carriers for which Esser could act as a broker. Neither company required that Esser broker a particular amount of business annually. Esser, and not the insurers, was responsible for the accounting and payment of premiums, and Esser was not paid a salary, but was compensated by commissions earned when insurance was purchased by an insured Esser had solicited.

Esser has cited the case of Gieseke v. Hardware Dealers Mutual Fire Insurance Co., 46 Ill.App.2d 131, 195 N.E.2d 32 (2d Dist.1963) as support for its assertion that it was acting as an agent for the insurers. Gieseke, however, merely serves to illustrate the flaw of Esser’s arguments. In Gieseke, plaintiff’s complaint against the agent Wallensack alleged that they had contracted to procure insurance for plaintiff’s son containing the same death benefit provision as plaintiff himself had, that Wallensack told plaintiff he would take care of obtaining that insurance, and that the policy issued contained no death benefit. When plaintiffs son was killed in an accident, the insurer refused to pay a death benefit. Judgment against Wallensack after the son’s death was reversed because plaintiff knew him to be the agent of the insurer and because of the principle that an agent was not personally liable when acting within the scope of that agency. The facts of Gieseke clearly demonstrate, however, that Gieseke worked only for Hardware Dealers Mutual and that Wallensack had a fixed and permanent relationship with the insurer. Moreover, Gieseke knew Wallensack worked for Hardware Dealers Mutual and specifically requested Wallensack to obtain the exact same Hardware Dealers Mutual policy as he had.

By contrast, here Lazzara did not request a specific insurer. Nor did he know exactly from which insurers Esser could obtain policies. Esser cannot demonstrate the same fixed and permanent relationship as that in Gieseke in this case.

In summary, consideration of the totality of the relevant considerations compels a finding that Esser acted as Lazzara’s broker for the purpose of obtaining insurance as a matter of law. Accordingly, Lazzara’s motion to reconsider the October 30, 1984 ruling is granted and summary judgment is entered in favor of plaintiff on his complaint in the amount of $150,000.

Reconsideration Of The February 21st Ruling

Esser’s motion for reconsideration asks that the entirety of Judge Kocoras’s February 21st ruling dismissing its third-party complaint against Reliance and Aetna be reconsidered; however, Esser does not raise any new issues that Judge Kocoras did not already consider except the inconsistency between the two rulings as to Esser’s agency. The question of Esser’s agency effects only Counts IV, VIII, and IX of his third-party complaint; therefore, Esser’s motion for reconsideration is denied as to Counts I, II, III, V, VI, and VII.

As to Counts IV, VIII, and IX, this Court shall consider Aetna's and Reliance’s motions to dismiss as motions for summary judgment, pursuant to Federal Rule 56, thus adopting and incorporating all pleadings, briefs, and other supporting materials presented to this Court.

This Court has already determined for the reasons stated above that Esser was Lazzara’s broker for the purpose of procuring insurance as a matter of law. It is not necessary to repeat that analysis. Therefore, Judge Kocoras’s ruling dismissing Esser’s third-party complaint is affirmed, and summary judgment is hereby entered dismissing the complaint against Aetna and Reliance. It is so ordered.

      . Esser cites Browder v. Hanley Dawson Cadillac Co., 62 Ill.App.3d 623, 20 Ill.Dec. 138, 379 N.E.2d 1206 (1st Dist.1978), for the proposition that whether the broker, is an agent for the insured, the insurer, or both is actually a question of fact. Browder, however, does not contradict the rule that where the evidence clearly shows that the insurance broker is the agent of the insured, it becomes an issue of law because in Browder a substantial question existed as to whose agent the car dealer was. In Browder, the plaintiff went to Hanley Dawson to buy a used car. As part of the financing agreement, the plaintiff bought credit life and credit disability insurance. These policies insured that in the event of the plaintiffs death or continuing disability, the indebtedness to the financing company would be satisfied. Thus, the plaintiff went to Hanley Dawson for the purpose of buying a car, not insurance, as in the present case. Moreover, it is unclear as to who controlled the car dealer’s actions; given the nature of car sales, the plaintiff probably had little say in the matter. Finally, the interest sought to be protected was primarily the financing company’s interest rather than that of either the insured or insurer. Thus, because the evidence in Browder was unclear as to whose agent the car dealer was, the court there properly held it to be a question of fact rather than a question of law.

      . Accord Augustine v. First Federal Savings & Loan Ass’n of Gary, 270 Ind. 238, 384 N.E.2d 1018 (1979); Karam v. St. Paul Fire and Marine Ins. Co., 265 So.2d 821 (La.App.1972), aff’d, 281 So.2d 728 (S.Ct.La.1973). In Augustine, the Indiana Supreme Court, considering only the pleadings in the case and the agency agreement involved, held that because the insurance intermediary "wrote insurance policies for various insurance company,” it therefore "was a broker.” Augustine, 270 Ind. at 243-44, 384 N.E.2d at 1021. In Karam, the court held that when a broker places insurance with different companies, is not employed exclusively by any insurer, and when undertaking to procure insurance coverage for particular insureds is able to place the policy with any insurance, that broker acts solely as agent for the insured in procuring the policy of insurance. Karam, 265 So.2d at 825.

      . In the present case, Esser alleges that at all times relevant to the plaintiff’s complaint, Esser acted pursuant to and within the scope of its actual and implied authority as agent of Aetna and Reliance. Thus, in determining whether Esser was acting as agent or broker, this Court must first determine the scope of "all times relevant to the plaintiff's complaint.” The relevant period of time, as indicated by Lazzara’s complaint, was when "Esser acted as the insurance broker for Lazzara for the purpose of obtaining, inter alia, policies of liability insurance with respect to Lazzara’s automobiles.” (Complaint, ¶ 5.)

      . Given the myriad schemes of premium and commission payments insurance companies presently have with agents, general agents, and brokers, it is questionable whether who pays whom is even relevant in determining whether the intermediary is a broker or agent. In fact, Illinois statutory law allows insurers to pay licensed brokers and not just agents. Ill.Rev.Stat. ch. 73, § 1065.40. Also, the cases cited in the text, in determining that the intermediary was a broker as a matter of law, did not consider the question of who paid the broker. Because some cases do list who pays whom as a factor in determining agency, and because Judge Kocoras cited it as a factor in his October 30th ruling, this Court must examine this factor.

      . (Third-Party Complaint, ¶¶ 4-7.) If this means Lazzara paid Esser and after which Esser paid the insurers, then, at least under the Reliance agreement, Esser would deduct its commission from the premium before turning over the premium to the insurers.

      . Under the present facts, the premium and commission payment plans are, at best, an indication that Esser was the insurer’s agent for the purpose of collecting premiums.


author: GERRY, District Judge.

text:
    Steven Michael MARKS, Petitioner, v. Donald D. ZELINSKI, Superintendent, Youth Correction Center, and Irwin I. Kimmelman, Attorney General of New Jersey, Respondents.
    Civ. A. No. 85-0077.
    United States District Court, D. New Jersey.
    March 27, 1985.

      Steven Michael Marks, petitioner pro se.
    New Jersey Atty. Gen. Irwin I. Kimmelman by Nancy Falivena, Deputy Atty. Gen., Trenton, N.J., for respondents.
   OPINION

GERRY, District Judge.

This is a petition for a writ of habeas corpus, in which the petitioner challenges the constitutionality of the denial of his application for bail pending appeal. The petitioner, following a jury trial in the Superior Court of New Jersey, Camden County, was convicted on May 11, 1984, of conspiracy, second degree robbery, aggravated assault, criminal restraint and attempted murder by solicitation. He was acquitted on three other counts. On June 8, 1984, the petitioner was sentenced to 21 years, seven without parole. At the time of sentencing, petitioner moved for an order granting bail pending appeal. This motion was denied. On October 23, 1984, petitioner moved for the same relief before the New Jersey Superior Court, Appellate Division, and his motion was denied on November 4, 1984. The same relief was also denied by the New Jersey Supreme Court on December 19, 1984.

The instant petition for a writ of habeas corpus was filed on January 7, 1985. The sole relief sought is bail pending disposition of his appeal. Mr. Marks alleges that the denial of bail was unconstitutional in that the failure to provide specific reasons for the denial was arbitrary and unreasonable and therefore in violation of his right to due process of law.

In this court’s letter opinion of February 7, 1985, denying Mr. Marks’ motion for leave to appear for oral argument, the court observed that Mr.Marks seemed to have exhausted his state remedies as to the bail question. Nevertheless, we declined to rule on that issue since the respondents had not yet answered the petitioner. The respondents have now filed an answer and have not suggested that petitioner has failed to exhaust state remedies. Hearing nothing to the contrary from the Government, and noting that the petitioner moved for bail pending appeal before the Law Division, the Appellate Division and the Supreme Court of New Jersey, the court concludes that petitioner has exhausted state remedies as to the bail issue. Accordingly, we will proceed to decide the merits of Mr. Marks’ petition.

At the outset, it is important to recall that “there is no absolute federal constitutional right to bail pending appeal after a conviction in the state courts.” Finetti v. Harris, 609 F.2d 594, 597 (2d Cir.1979). However, “once a state makes provision for such bail, the Eighth and Fourteenth Amendments require that it not be denied arbitrarily or unreasonably.” Id. at 599. New Jersey has made such provisions for bail pending appeal. Rule 2:9-4 states in pertinent part as follows:

Except as otherwise provided by R. 2:9-5(a), the defendant in criminal actions shall be admitted to bail on motion and notice to the county prosecutor pending the prosecution of an appeal or proceedings for certification only if it appears that the case involves a substantial question which should be determined by the appellate court and that the safety of any person or of the community will not be seriously threatened if the defendant remains at large. Pending appeal to the Appellate Division, bail may be allowed by the trial judge, or if denied by him, by the Appellate Division, or if denied by the Appellate Division, by the Supreme Court____ A trial judge denying bail shall state briefly his reasons therefor.

Thus, the question now confronting this court is whether, given the New Jersey rule providing for bail pending appeal, the denial of bail in the instant case was unconstitutional.

In deciding the foregoing question, the court need not and indeed may not review the trial judge’s determination to see whether it met the criteria set forth in Rule 2:9-4 itself. Federal district courts “do not ... sit as appellate courts to review the use or abuse of discretion of the state courts ... in granting or withholding bail pending final appeal.” Bloss v. People of State of Michigan, 421 F.2d 903, 906 (6th Cir.1970). Furthermore, a federal suit against state officials on the basis of state law contravenes the Eleventh Amendment. See Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984). Whether or not the denial of bail by the trial court and subsequently by the appellate courts conformed to the state law requirements of Rule 2:9-4, the question before this court is merely whether the failure of the state courts to provide more specific reasons for the denial of bail violated the requirements of the federal constitution. For the reasons set forth below, we hold that it did not.

The parties have not cited and the court is not aware of any Third Circuit cases addressing the question presently before us. However, at least two courts of appeals — the Second Circuit and the Seventh Circuit — have expressly discussed the constitutional requirements surrounding the denial of bail pending appeal. Dealing specifically with the issue of whether a state court must provide reasons for its denial of bail, both the Second Circuit and the Seventh Circuit have concluded that “considerations of federal-state comity require that federal courts, when examining state courts’ denial of bail pending appeal, must presume regularity on the part of the state courts, and that denial of bail without a statement of reasons is not arbitrary per se.” Finetti, 609 F.2d at 599. That is, the mere failure of a court to articulate the reasons for its denial does not create a “presumption of arbitrariness.” United States ex rel. Walker v. Twomey, 484 F.2d 874, 875 (7th Cir.1973). Instead, it is the defendant’s burden to demonstrate that there is no rational basis in the record for the denial of bail. Finetti, 609 F.2d at 601.

Although a federal court in a habeas case may consider several factors to determine whether the denial of bail pending appeal was arbitrary, it has been held that “[t]he seriousness of the crime and the lengthy sentence alone are sufficient to provide a rational basis for denial.” United States ex rel. Sampson v. Brewer, 593 F.2d 798, 799 (7th Cir.1979), cert. denied, 444 U.S. 877, 100 S.Ct. 162, 62 L.Ed.2d 106 (1979); United States ex rel. Smith v. Twomey, 486 F.2d 736 (7th Cir.1973), cert. denied, 416 U.S. 994, 94 S.Ct. 2408, 40 L.Ed.2d 773 (1974). Applying this standard to the case at bar, the court finds that an adequate basis existed in the record for the denial of bail. First, the petitioner was convicted of serious crimes: conspiracy, robbery, aggravated assault, criminal restraint and attempted murder. At the time of sentencing, the trial judge referred to these offenses as “heinous crimes.” (5T 21-12.) He concluded that “[tjhere isn’t any doubt in the Court’s mind that this criminal episode was committed in an especially heinous, cruel, and as a matter of fact, depraved manner.” (5T 24-6 to 24-10.) Furthermore, the judge noted that Mr. Marks was the “grand architect” in that he “masterminded” the whole scheme. (5T 24-17 and 24-18.) Second, the court believes that the length of petitioner’s sentence — 21 years, seven without parole — is sufficient to support a finding that the denial of bail was rational.

Though not essential to its determination, there are also two additional factors which lead this court to find that Mr. Marks’ petition must be denied. Initially, it is significant that although the Appellate Division and the Supreme Court denied his application for bail without providing any reasons at all, the trial court did place on the record a brief summary of its reasons. After hearing both the prosecutor and the defense counsel on the bail question, the trial judge denied Mr. Marks’ request because he did “not conceive of any area where there is a substantial issue for appeal as a matter of law” (5T 44-17 to 44-19), and “because of the nature of the crimes committed, keeping in mind ... this was just short of first degree murder____” (5T 45-2 to 45-5.) The fact that the trial judge actually took these factors into consideration when ruling on the bail motion makes it easier for this court to state that the decision rested on a rational basis, and that it was not arbitrary or unreasonable. In addition, the comments made by the trial judge at the time of sentencing shed more light on his bail ruling. The judge stated that it “is the opinion of this Court that there is a risk that the defendant would commit another crime____” (5T 25-15 to 25-18.) He went on to say that “[t]he testimony in this case is replete with instances of what I would call moral depravity on the part of Mr. Marks.” (5T 25-18 to 25-21.) Although these statements were made in the sentencing context, it is against the background of such comments that the reasonableness of the bail denial must be evaluated. The trial judge was in the best position to observe the defendant and to make a determination of whether the particular circumstances of the case rendered bail pending appeal appropriate. This court cannot lightly disturb the trial judge’s determination, as it has long been recognized that the trial court is “the superior tribunal for the kind of information-gathering which a sound foundation for a bail ruling almost inevitably requires.” United States v. Stanley, 469 F.2d 576, 581-82 (D.C.Cir.1972). In view of the severity of the offenses, the length of sentence imposed, and the perceived possibility that the petitioner would commit another crime, this court finds that there existed a rational basis in the record to support the state courts’ denial of Mr. Marks’ motion for bail pending appeal. Consequently, the court rejects Mr. Marks’ assertion that the denial was so arbitrary and unreasonable as to violate his right to due process. The petition for a writ of habeas corpus in the instant action is denied. The court will enter the accompanying order.


author: TERRENCE WILLIAM BOYLE, District Judge.

text:
    RICHARDS & ASSOCIATES, INC., a Kentucky Corporation, Plaintiff, v. Leslie N. BONEY, D.R. Allen & Son, Inc., Leslie N. Boney, Architect, William J. Boney, Charles H. Boney, Leslie N. Boney, Architect, Inc., Defendants.
    No. 83-89-Civ-7.
    United States District Court, E.D. North Carolina, Wilmington Division.
    March 28, 1985.

      Charles B. Robson, Jr., Raleigh, N.C., Karl W. Leo, Greensboro, N.C., for plaintiff.
    F. Stuart Clarke, Fayetteville, N.C., Joseph C. Moore, Jr., Raleigh, N.C., for defendants.
   MEMORANDUM AND ORDER

TERRENCE WILLIAM BOYLE, District Judge.

This cause comes on before the undersigned United States District Judge on the defendants’ motions pursuant to Rule 56 of the Federal Rules of Civil Procedure. The court has conducted a hearing on these motions at which time argument was received and after considering the entire record and the parties’ briefs, the court makes the following order.

CLAIMS BARRED BY THE STATUTE OF LIMITATIONS

In May, 1976, the plaintiff Richards & Associates, Inc., contracted with the Board of Commissioners of New Hanover County, North Carolina, to install the plumbing for the additions and renovations to the New Hanover Memorial Hospital in Wilmington, North Carolina. The defendant Leslie N. Boney and his corporation was the architect for the project, and the defendant D.R. Allen & Son, Inc., was the general contractor. The plaintiff contracted with the county to provide all of the plumbing services.

In this action the plaintiff claims damage as a third party beneficiary resulting from the alleged breach by the defendants Boney and Allen of their contracts with New Hanover County. The plaintiff also alleges professional malpractice against Boney for its architectural services to New Hanover County, and against Allen for negligently performing its duties during the construction project. Summary judgment is proper and will be allowed as to all of the defendants on all of the pending claims.

North Carolina law requires that actions in contract and professional malpractice be brought within three years of the discovery of injury. NCGS 1-52(1), (15) and l-15(c). Statutes of limitations require that the litigation be initiated within the prescribed time or not at all. Congleton v. The City of Ashboro, 8 N.C.App. 571, 174 S.E.2d 870 (1970); Bolick v. Barmag Corp., 306 N.C. 364, 293 S.E.2d 415 (1982). When this court is sitting based on its diversity jurisdiction, the court must apply the statutes of limitations of the appropriate state, in this case, North Carolina. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945).

The plaintiff filed its first complaint on October 21, 1983. Since the defendants have pled the statutes of limitations, the plaintiff has the burden to show some act of the defendants occurring after October 21, 1980, which caused the plaintiffs damage under the causes of action alleged in the complaint. Parker v. Harden, 121 N.C. 57, 28 S.E. 20 (1897). In an affidavit dated May 27, 1980, Thomas K. Garland, Assistant Vice President of Richards & Associates, Inc., said that the plaintiff had completed its duties under the contract and that there were no liens or other obligations outstanding. The acts of the defendants, if any, causing the plaintiffs damage were therefore done prior to May 27, 1980, by the plaintiffs own statement. Therefore any claims arising out of the negligent management and operation of the construction project are barred by the statute of limitations.

CLAIM FROM BONEY’S ADVICE

The plaintiff claimed damages of $519,000 against the County Commissioners for delays in the construction project. The defendant Boney advised the Commissioners not to pay the final $37,000 due to the plaintiff on the contract until they had settled the $519,000 claim. The Commissioners acted on the advice and settled the dispute with the plaintiff for $50,000 and also paid the $37,000. Richards now alleges that the architect’s advice to the Commissioners was malpractice and it claims damages against the architect Boney. The architect’s advice to the Commissioners, given after October 21, 1980, the relevant date for the statute of limitations, did not give Richards an independent cause of action against the architect.

First, assuming that the architect had some professional duty to the plaintiff during the course of the construction, that professional duty as an architect must have concluded by the time the plaintiff submitted a certificate of completion. The architect may have had continuing duties to contractors still on the job when the plaintiff had finished, but he had no duty to the plaintiff. The plaintiff has failed to show a duty.

Second, assuming that the architect had a duty to the plaintiff after the plaintiff had completed his work, the advice was not architectural and did not breach an architectural duty.

Third, the architect’s advice to the commissioners did not proximately cause the plaintiff any damage. Richards failed to show that it relied on Boney’s advice to the Commissioners when it settled its $519,000 claim against them. He failed to allege that Boney made any assurances or recommendations to him about the settlement. Therefore, the architect’s advice did not proximately cause any damage.

Fourth, the plaintiff had no new damages as a result of the alleged malpractice involving the settlement. Any damages to the plaintiff came from delay in the construction project, and those damages had fully ripened by the time the plaintiff had completed the work.

Having failed to show a duty, breach, causation and damages, the plaintiff has no cause of action against the architect arising out of the settlement of its claim against the commissioners.

RULE 8(a)(2) OF THE STATE RULES OF PROCEDURE

The court is convinced that the running of the statutes of limitations warrants the granting of defendants’ motion for summary judgment. A question arises as to whether a basis exists for dismissing the complaint alleging professional malpractice because of the plaintiffs’ request for $600,-000 in damages. North Carolina law prohibits prayers for relief in professional malpractice actions which ask for a sum certain in excess of $10,000. Rule 8(a)(2) North Carolina Rules of Civil Procedure.

Under Erie R. Co. v. Thompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) and Hanna v. Plumer, 380 U.S. 460, 467, 85 S.Ct. 1136, 1141, 14 L.Ed.2d 8 (1965), this court must strive for consistent results between the state and federal courts, provided it can do so without violating a federal rule. A federal court in a diversity action must apply the substantive law of the state in which it sits. The Erie rule prevents forum shopping and prevents the unfairness of differing results depending on where the case was filed.

In Szantay v. Beech Aircraft Corporation, 349 F.2d 60 (1965), the Fourth Circuit developed a three-part analysis for use when applying Erie to cases in this circuit.

1. If the state provision, whether legislatively adopted or judicially declared, is the substantive right or obligation at issue, it is constitutionally controlling.
2. If the. state provision is a procedure intimately bound up with the state right or obligation, it is likewise constitutionally controlling, (footnote omitted)
3. If the state procedural provision is not intimately bound up with the right being enforced but its application would substantially affect the outcome of the litigation, the federal diversity court must still apply it unless there are affirmative countervailing federal considerations. This is not deemed a constitutional requirement but one dictated by comity.

Id., 63, 64.

South Carolina had a door-closing statute which provided that an action against a corporation created under the law of another state could be brought in South Carolina by a nonresident only when the cause of action or the subject of the action was situated in South Carolina. Residents of Illinois sued a Delaware corporation for negligent manufacture of an airplane that was serviced in South Carolina and crashed in Tennessee.

As to the first prong, the parties in Szantay agreed that the statute was procedural. On the second prong, the court found that because the right arose under Tennessee law, the South Carolina door closing statute was not intimately bound up with the right. On the third prong of the analysis the court found that the state’s policies would not be greatly harmed by refusing to apply the door closing statute. The court said the principles of Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) were “intended to prevent ‘inequitable administration of the laws’ working unfair discrimination against citizens of the forum state.” The court found that refusing to apply the door-closing statute would not hurt the citizens of South Carolina.

The court found federal countervailing considerations in the policy of avoiding discrimination against non-residents and in the full faith and credit clause. Further, had the plaintiffs merely qualified as administrators of the decedents’ estates, they could have sued in South Carolina courts. On the basis of this analysis, the Fourth Circuit refused to apply South Carolina’s door-closing statute to the federal courts in that state.

The Fourth Circuit addressed this issue in a different context in DiAntonio v. Northampton-Accomack Memorial Hospital, 628 F.2d 287 (4th Cir.1980). The Virginia Malpractice Act requires a plaintiff to give prior notice of his intention to file a medical malpractice action and provides for medication and decision by a panel of physicians and lawyers appointed by the Chief Justice of the Commonwealth. The District Court dismissed the plaintiff’s case for failure to give the prefiling notice. He appealed arguing the Virginia statute should not be applied to him because he was a citizen of New Jersey and the action was in federal court.

The Fourth Circuit ruled, “The Act’s notice requirement and provision for panel review at the instance of either party were so ‘intimately bound up’ with the rights and obligations being asserted as to require their application in federal courts under the doctrine of Erie, supra.” Id. at 290. The court further found, “The contention that the jury may be influenced by the admission of the panel opinion is simply not an ‘affirmative countervailing federal consideration’ within the meaning of Byrd [v. Blue Ridge Cooperative, 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958) ].” Id.

The court concluded,

The provision for admission of the panel opinion is intimately related to Virginia’s alteration of the substantive cause of action. It is intimately related to Virginia’s strong policy of encouraging and promoting pretrial mediation. Because it enforces and implements those interests, the admission provision is applicable in this diversity case.

Id. at 291.

In Sandhill Motors, Inc. v. American Motors Sales Corp., 667 F.2d 1112 (4th Cir.1981), the court applied the North Carolina Motor Vehicle Dealers and Manufacturers Licensing Law, which required exhaustion of administrative remedies before filing suit, to diversity actions in federal court.

This court, in applying the Szantay analysis to the case at bar, finds that North Carolina Rule 8(a)(2) is procedural, but it is “intimately bound up” with a substantive state policy. The North Carolina General Assembly enacted the rule to respond to “a national medical malpractice crisis” and the adverse publicity which sometimes accompanies frivolous or exorbitant claims. See Harris v. Maready, 311 N.C. 536, 319 S.E.2d 912 (1984).

Under the third prong of the Szantay analysis, even if it were determined that the provision was not “intimately bound up” in the right to bring the suit, comity dictates that this court apply the rule because there are no countervailing federal considerations. There is no conflict between Federal Rule 8 and Rule 8(a)(2) of the North Carolina Rules of Civil Procedure. Federal Rule 8 does not purport to address professional malpractice actions or limit the monetary relief requested. Neither does the federal rule purport to displace the North Carolina rule.

Since there is no conflict between the two rules, an Erie analysis indicates that the state law should govern, and improper pleading would be a separate basis upon which this court could dismiss the complaint.

Summary

Because any actions by the defendants, which would give the plaintiff a cause of action, took place more than three years before the plaintiff filed this action, all defendants’ motions for summary judgment are ALLOWED.


author: DAN M. RUSSELL, District Judge.

text:
    Patsie Elkins BOLTON, Administratrix of the Estate of Ray Scott Jackson, a Minor, Deceased, Plaintiff, v. UNITED STATES of America, Defendant.
    Civ. A. No. S83-0401(R).
    United States District Court, S.D. Mississippi, S.D.
    March 27, 1985.
    Donald C. Doman, Jr., David Oliver, Biloxi, Miss., for plaintiff.
    Stephen R. Graben, Asst. U.S. Atty., Biloxi, Miss., for defendant.
   MEMORANDUM OPINION

DAN M. RUSSELL, District Judge.

This cause has come before the Court upon the defendant’s motion to dismiss for failure to state a claim upon which relief can be granted, or in the alternative, for summary judgment. The United States of America claims that assuming the allegations of the complaint to be true, it appears beyond doubt that the plaintiff can prove no set of facts in support of her claim which would entitle her to relief and, consequently, the United States of America is entitled to a dismissal of this action. The United States of America further claims, in the alternative, that it is entitled to summary judgment against the plaintiff. The plaintiff asserts that the burden is on the movant to show that the complaint fails to state a claim upon which relief can be granted and that there is no genuine issue as to any material fact and that she is entitled to judgment as a matter of law. The plaintiff further asserts that because the agents of the United States breached the applicable standards of medical care in this case and because related factual issues require resolution by a trier of fact, the Government’s motion is without merit and should be denied. The parties have submitted extensive memoranda in support of and in opposition to the motion. In addition, both parties have attached as exhibits to their briefs excerpts of depositions which are relevant to this cause.

It is entirely within the discretion of the Court whether or not to accept material outside the pleadings. Fed.R.Civ.P. 12(b)(6); Ware v. Associated Milk Producers, Inc., 614 F.2d 413 (5th Cir.1980). However, should the Court decide to accept this extraneous material, the Court must then treat the matter as one for summary judgment and follow the procedures set out in Rule 56. Fed.R.Civ.P. (12)(b); Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 1234, 31 L.Ed.2d 569 (1972); See also Tuley v. Heyd, 482 F.2d 590, 593 (5th Cir.1973); Arrington v. City of Fairfield, 414 F.2d 687, 692 (5th Cir.1969). Therefore, since the submitted material is comprehensive enough to enable this Court to make a complete and rational determination, the motion to dismiss will be directed as one for summary judgment.

Under Rule 56 summary judgment may be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The Court is mindful of the fact that summary judgment is not only a device for “just speedy and inexpensive” resolution, Albatross Shipping Corp. v. Stewart, 326 F.2d 208, 211 (5th Cir.1964), but also is “a lethal weapon” capable of “overkill in its use.” Brunswick v. Vineberg, 370 F.2d 605, 612 (5th Cir.1967). Thus, it is well established in this circuit that the summary judgment may be granted only with extreme caution and only when there is no genuine issue as to a material fact. Scott v. Dollahite, 54 F.R.D. 430 (N.D.Miss.1972). It is also well established that the burden is upon the moving party to show that no genuine issue of material fact exists keeping in mind all doubts are to be resolved against the moving party. Powers v. Nassau Development Corp., 753 F.2d 457 (5th Cir.1985); Hall v. Diamond M. Company, 732 F.2d 1246 (5th Cir.1984); AT & T Co. v. Delta Communications Corp., 590 F.2d 100 (5th Cir.), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979).

The following facts appear without any material dispute.

1. Erwin E. Jackson enlisted in the United States Air Force on July 14,1968, in Harrison County, Mississippi and remained in the Air Force for approximately fourteen years. Deposition of Erwin E. Jackson, pp. 9-11.

2. On March 8, 1970, the plaintiff, Patsie Elkins Bolton, married Erwin Jackson. On May 28,1971, the plaintiff gave birth to Alecia Jean Jackson. On or about June, 1973, the plaintiff and Erwin Jackson were divorced in Biloxi, Mississippi. The plaintiff received custody of the child, Erwin Jackson receiving visitation privileges. On March 16, 1975, the plaintiff remarried Mr. Jackson. On January 26, 1976, Ray Scott Jackson, the Jacksons’ second child, was born in Montgomery, Alabama. In August of 1979, the Jacksons were again divorced. As per the divorce agreement, Mr. Jackson received custody of the two children. Deposition of Patsie Elkins Bolton, pp. 11-17.

3. On June 17, 1981, Erwin Jackson married Pamela Arlene Jackson. Deposition of Erwin E. Jackson, p. 6.

4. Erwin E. Jackson received his basic training in the United States Air Force at Lackland Air Force Base in Texas. Following basic training, he was stationed at Whiteman Air Force Base in Missouri. This was followed by a tour of duty in Vietnam. Upon his return from Vietnam, he was assigned to Keesler Air Force Base, Mississippi. He again saw a tour of duty in Vietnam followed by an assignment to King Solomon Air Force Base in Alaska. This assignment was followed by an assignment to Maxwell Air Force Base near Montgomery, Alabama. Erwin E. Jackson concluded his military career at Keesler Air Force Base. Erwin E. Jackson received the rank of Tech/Sergeant (TSgt) in his tour of duty. His current status with the Air Force is that he is on a temporary disability retired list. Deposition of Erwin E. Jackson, pp. 9-11.

5. Erwin Jackson was admitted to Maxwell Air Force Hospital on October 22, 1979. The reason for his admission was that he had been demonstrating abnormal behavior during the course of that day. He had walked out of his Leadership Management Instructor Class several times on that morning and he exhibited behaviors that suggested that he was anxious, restless and confused. His conversation during the class session was hard to follow and his ideas were loosely associated with each other. The observing doctor, Dr. Rajadorai Calnaido, indicated that the patient was confused, suspicious, excited, and was expressing homicidal ideation. In developing the history of TSgt. Jackson, Dr. Calnaido stated that Jackson had admitted that he had been eating less during the last few days, and that on the morning of the day he was admitted, he had killed a cat by shooting it with an air rifle between the eyes. Jackson also stated that he had locked himself in the basement of his home at approximately 3:00 AM and pounded against the door and screamed until his eight-year old daughter came and let him out. The provisional diagnosis at Maxwell Air Force Hospital was acute schizophrenic episode. Deposition of Dr. Rajadorai Calnaido, pp. 14-16.

6. On or about October 26, 1979, Jackson was admitted to Eglin Air Force Base Hospital. He was confined at Eglin from October 26, 1979 to November 17, 1979 for treatment of his mental problems. Dr. Calnaido downgraded Jackson’s diagnosis from schizophrenia to transient situational disturbance and discharged him to return to duty at Maxwell on November 17, 1979. At that time, it was recommended that Jackson not participate in the leadership management course for at least one year and that he receive follow-up mental health treatment at Maxwell. In early 1980, TSgt. Jackson was reassigned to Keesler Air Force Base. Deposition of Dr. Rajadorai Calnaido, pp. 32-35; 39.

7. TSgt. Jackson was not seen at the Keesler Air Force Base Mental Health Clinic on any occasion after his arrival in early 1980. On October 28, 1981, TSgt. Jackson came to the Emergency Room at the Keesler Air Force Base Hospital requesting an evaluation of his back pain which he stated had lasted two and one-half years. He was referred to the Primary Care Clinic. On October 29, 1981, TSgt. Jackson was seen and examined in the Primary Care Clinic complaining of back and neck pain lasting three months. TSgt. Jackson was prescribed a muscle relaxant and an analgesic and advised to return to the clinic as needed. Deposition of Dr. Joe A. Jackson, pp. 49-50.

8. On the morning of November 1, 1981, TSgt. Jackson stabbed his five-year old son, Ray Scott Jackson, in the back with a knife at his home. TSgt. Jackson and his second wife, Pamela Jackson, transferred Ray Scott Jackson to Memorial Hospital at Gulfport, Mississippi. During the course of Ray Scott Jackson’s treatment in the Emergency Room, TSgt. Jackson killed Ray Scott Jackson by hitting him in the head with a metal stool. Deposition of Tim Moore, pp. 12-15; Deposition of Erwin E. Jackson, pp. 54-62.

THE FERES DOCTRINE

The plaintiff has brought this suit pursuant to the Federal Tort Claims Act, 28 U.S.C. § 1346(b), § 2671 et seq. alleging inter alia acts of malpractice were committed in conjunction with the treatment of Erwin E. Jackson, causally breaching a duty owed to the plaintiff; negligence in failing to diagnose, confine and/or refer TSgt. Jackson in light of his mental problems; and negligence in the Government’s failure to provide the reasonable and proper medical care, skill and treatment accepted and proper in the circumstances.

Federal courts are without subject matter jurisdiction to hear suits against the United States unless there has been a waiver of sovereign immunity. In 1946, Congress enacted the Federal Torts Claims Act which constituted a limited waiver of sovereign immunity for suits against the United States in tort. United States v. Sherwood, 312 U.S. 584, 61 S.Ct. 767, 85 L.Ed. 1058 (1941); United States v. Orleans, 425 U.S. 807, 96 S.Ct. 1971, 48 L.Ed.2d 390 (1976).

In Feres v. United States, 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152 (1950), the Supreme Court held that “the Government is not liable under the Federal Torts Claims Act for injuries to servicemen where the injuries arise out of or are in the course of activity incident to service.” Id. at 146, 71 S.Ct. at 159. The Court held there could be no recovery for claims under the FTCA for the death of an Army officer allegedly caused by fire in the barracks where he was quartered, or for death or injury of members of the Armed Forces caused by the medical malpractice of an Army physician. Subsequently, in Stencel Aero Engineering Corp. v. United States, 431 U.S. 666, 97 S.Ct. 2054, 52 L.Ed.2d 665 (1977), the Court reaffirmed the Feres reasoning. In Steneel, a National Guardsman brought an action against the United States and the manufacturer of certain aviation equipment which caused his injuries. The manufacturer cross-claimed for indemnity from the United States. The National Guardsman had already been awarded a government pension for the injuries he received. Because the serviceman’s claim was incident to military service, summary judgment for the United States was affirmed.

The tragic case before the Court presents facts which, of course, are of first impression. However, the law as relates to the facts sub judice involves the application of well-settled legal principles. The issue before the Court is whether the Feres doctrine operates to bar claims which are not the serviceman’s, but are claims which belong to his ex-wife as administratrix of the estate of the deceased son, Ray Scott Jackson.

After exhaustive research of the issue, the Court has found definitive the case law which holds that the Feres doctrine bars recovery by family members where the cause of action is ancillary or derivative to the serviceman’s action for his own injury. Of prime example is the Feres decision. In Feres, two of the three cases considered and barred were brought by the widows of servicemen who died while on active duty. Furthermore, the Feres doctrine has barred actions by family members for their alleged injuries which are the result of, or ancillary to any injury suffered by the serviceman. Hinkie v. United States, 524 F.Supp. 277 (E.D.PA 1981); rev’d 715 F.2d 96 (3rd Cir.1983); De Font v. United States, 453 F.2d 1239 (1st Cir.1972), cert. denied, 407 U.S. 910, 92 S.Ct. 2436, 32 L.Ed.2d 684 (1972) (serviceman’s wife’s action for loss of companionship, loss of husband’s income and mental anguish, child’s action for loss of companionship); Harrison v. United States, 479 F.Supp. 529 (D.Conn.1979), aff'd without opinion, 622 F.2d 573 (2d Cir.1980), cert. denied, 449 U.S. 828, 100 S.Ct. 93, 66 L.Ed.2d 32 (1980) (serviceman’s wife’s action for loss of consortium); Wisniewski v. United States, 416 F.Supp. 599 (E.D.Wis.1976) (serviceman's wife’s action for damages for familial and marital disharmony).

Federal courts have also applied Feres where the family member has suffered a direct physical injury which was allegedly caused by some negligent act or omission on the part of the United States with regard to the serviceman. Hinkie, supra; Harten v. Coons, 502 F.2d 1363 (10th Cir.1974), cert. denied, 420 U.S. 963, 95 S.Ct. 1354, 43 L.Ed.2d 441 (1975) (serviceman’s wife’s action for costs of raising and maintaining a child to the age of eighteen following negligent vasectomy operation performed upon a serviceman); Monaco v. United States, 661 F.2d 129 (9th Cir.1981), cert. denied, 456 U.S. 989, 102 S.Ct. 2269, 73 L.Ed.2d 1284 (1982) (serviceman’s child’s action for congenital birth defects caused by father’s exposure to radiation); Mondelli v. United States, 711 F.2d 567 (3rd Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 1272, 79 L.Ed.2d 677 (1984) (serviceman’s child’s action for genetic injuries caused by father’s exposure to radiation); Gaspard v. United States, 713 F.2d 1097 (5th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 2354, 80 L.Ed.2d 826 (1984) (servicemen’s wives’ claims for loss of consortium and emotional distress).

The case at bar is unique in that the plaintiff is now, and was at the time of the tragedy, divorced from her serviceman husband Erwin Jackson. However, the plaintiff cannot escape the genesis of her claim. Erwin Jackson, at the time of the occurrence, was on active duty and had been continually in the service for some thirteen years. The plaintiff’s claims occurred only because of the alleged injuries to Erwin Jackson. Her claim is that the negligent acts and omissions by the United States with regard to Erwin Jackson caused injury to her in the death of her son, Ray Scott Jackson. This is clearly a derivative tort. Furthermore, to allow the circumvention of the Feres doctrine by relying upon the divorce between the plaintiff and her serviceman husband could produce inequitable and irrational results.

In conclusion, the Court is well aware of the harsh results of this decision. While it seems unfair to deny the ex-spouse of any means of compensation for the “incidental consequences of actions attributable to her husband’s military service” which resulted in the loss of her son, because of controlling, unwaivering precedent, the Court must dismiss the plaintiff’s action, with prejudice. Hinkie, supra, 715 F.2d at 99. The Court grants the defendant’s motion to dismiss which was converted by the Court into one for summary judgment.

An Order in accordance with this Opinion shall be provided as set forth in the Local Rules.

      . For purposes of ruling on the Government’s motion sub judice, the Court accepts the well-pleaded allegations of the plaintiff's complaint as true. Sheuer v. Rhodes, 416 U.S. 232, 236-37, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).

      . The Court is aware of the line of cases since Feres which allowed recovery by the serviceman’s family members. Various federal courts have allowed recovery against the United States under the FTCA where the injury to the family member is directly caused by the United States, is independent of any injury to the serviceman, and is not related to any combatant activities. See e.g. Costley v. United States, 181 F.2d 723 (5th Cir.1950); Grigalauskas v. United States, 103 F.Supp. 543 (D.Mass.1951), aff'd, 195 F.2d 494 (1st Cir.1952); Fournier v. United States, 220 F.Supp. 752 (S.D.Miss.1963); Herring v. United States, 98 F.Supp. 69 (D.Colo.1951); Messer v. United States, 95 F.Supp. 512 (D.Fla.1951); Wilscam v. United States, 76 F.Supp. 581 (D.Hawaii 1948). The case before the Court clearly involves an injury to a family member which is not independent of any injury to the serviceman.

      . The plaintiffs argument that she is not a member of the Armed Forces and that Feres does not apply to her is adequately discussed and dispelled in Monaco v. United States, 661 F.2d 129, 133 (9th Cir.1981).