author: DECKER, District Judge.

text:
    BODINE’S INC., Plaintiff, v. FEDERAL INSURANCE COMPANY, et al., Defendants.
    No. 84 C 5388.
    United States District Court, N.D. Illinois, E.D.
    Nov. 13, 1984.

      Michael P. Casey, Edward R. Vrdolyak, Ltd., Chicago, 111., for plaintiff.
    James M. Hoey, James R. Swinehart, Clausen, Miller, Gorman, Caffrey & Witous, Chicago, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

DECKER, District Judge.

Plaintiff, Bodine’s, Inc. (Bodine’s), brought this action against the Federal Insurance Company (Federal), the Chubb Group of Insurance Companies (Chubb) and the Associated Agencies, Inc. (Associated) in state court. Defendants removed the case to this court on the basis of diversity jurisdiction. The case is before the court on two related motions. First, defendants moved to dismiss Chubb and Associated from the action. In response, Bodine’s requests the court to remand the case to state court.

I. Factual Background

This case centers around an insurance policy. The insurance agreement expressly states that “[Bodihe’s] ... is insured by [Federal]” and that “[Federal] has issued this policy____” Exhibit “A” to Complaint For Declaratory Judgment. The policy contains property, business interruption, and boiler and machinery coverage.

Bodine’s is a manufacturer incorporated under the laws of Illinois and has its principal place of business in Illinois. Federal is an insurance company incorporated in New Jersey and has its principal place of business there. For the purposes of diversity jurisdiction, Bodine’s is a citizen of Illinois, and Federal is a citizen of New Jersey. 28 U.S.C. § 1332(c) (1983).

Chubb manages insurance policies for several insurance companies, including Federal. Associated is the agent/broker for the insurance policy at issue in this case. Plaintiff alleges that both Chubb and Associated are “residents” of Illinois. Plaintiff’s Brief in Opposition to Defendant’s [sic] Motion to Dismiss at 1. Although defendants deny that Chubb is a citizen of Illinois, the court assumes for the sake of this decision that both Chubb and Associated are non-diverse to Bodine’s.

Bodine’s filed an action on the policy against the three defendants in the Circuit Court for ,Cook County. In its complaint, Bodine’s asserted that all three defendants issued the insurance policy. Complaint For Declaratory Judgment at 2. On June 25, 1984, defendants petitioned to remove the case to this court pursuant to 28 U.S.C. § 1441(a). Defendants based their petition on diversity of citizenship under 28 U.S.C. § 1332. On the same day, defendants also moved to dismiss Chubb and Associated from the action for failure to state a cause of action against them. The pleadings and attached affidavits claim that neither Chubb nor Associated issued the policy or was a party thereto.

In their pleadings, defendants argue primarily that Chubb and Associated ■ were fraudulently joined to defeat diversity jurisdiction. Therefore, defendants urge the court to dismiss Chubb and Associated and allow the matter to proceed in this court. On the other hand, Bodine’s moves to remand the case to state court for two reasons. First, Bodine’s denies that defendants have met the burden necessary to establish fraudulent joinder. Second, Bodine’s insists that, regardless of the status of Chubb and Associated, Federal is non-diverse to Bodine’s under the direct action proviso to 28 U.S.C. § 1332(c). The court addresses these contentions in turn.

II. Discussion

It is axiomatic that the right to remove a diversity action “cannot be defeated by a fraudulent joinder of a resident defendant having no real connection with the controversy.” E.g., Chesapeake & Ohio Ry. v. Cockrell, 232 U.S. 146, 152, 34 S.Ct. 278, 280, 58 L.Ed. 544 (1914); Wecker v. National Enameling Co., 204 U.S. 176, 185-86, 27 S.Ct. 184, 188, 51 L.Ed. 430 (1907). It is equally clear, however, that “[t]he burden of persuasion placed upon those who cry ‘fraudulent joinder’ is indeed a heavy one.” B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981); Miller v. Firestone Tire & Rubber Co., 581 F.Supp. 36, 37 (W.D.Pa.1984).

In order to establish that an instate defendant has been fraudulently joined, “[t]he removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court, or that there has been outright fraud in the plaintiff’s pleadings of jurisdictional facts.” Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir. 1983); B., Inc., 663 F.2d at 549. In the absence of direct proof that there has been outright fraud in the plaintiff’s pleading of jurisdictional facts, as in this case, “the stringent test for fraudulent joinder has uniformly been at least whether there is any reasonable basis for predicting that state law might impose liability on the non-diverse defendant.” American Mutual Liability Insurance Co. v. Flintkote Co., 565 F.Supp. 843, 845 (S.D.N.Y.1983). Similarly, the District Court for the Central District of Illinois has adopted the rule that “joinder may be fraudulent if the plaintiff fails to state a cause of action against the resident defendant, and failure is obvious according to the settled rules of the state.” Chappell v. SCA Services, Inc., 540 F.Supp. 1087, 1091 (C.D.Ill.1982).

The Eighth Circuit recently applied these strict standards to find fraudulent joinder in a similar ease. Anderson v. Home Insurance Co., 724 F.2d 82 (8th Cir.1983). In Anderson, the plaintiff-insured sued the defendant-insurer in state court on a fire insurance policy. The plaintiff added the insurer’s non-diverse insurance agent as a defendant. The district court found that joinder of the insurance agent was fraudulent, allowed removal under 28 U.S.C. § 1441(a), and dismissed the claim against the agent for misjoinder under Fed.R. Civ.P. 21. 724 F.2d at 83-84.

On appeal, the Eighth Circuit agreed with the district court that joinder was fraudulent. Id. at 84. The circuit court observed that, on the face of the pleadings, the plaintiff stated no claim against the non-diverse insurance agent because the plaintiff-insured and the defendant-insurer were the only parties to the insurance contract. Id. As a result, the agent was not an indispensable party under Fed.R.Civ.P. 19(a) and had no genuine interest in the case. See id. Therefore, the Eighth Circuit held that the district court properly dismissed the plaintiff’s claim against the non-diverse defendant. Id.

Plaintiff has attempted to state a cause of action against Chubb and Associated simply by stating in its complaint that, together with Federal, they issued the insurance policy. Complaint for Declaratory Judgment at 2. On the other hand, defendants have established that neither Chubb nor Associated, was a party to the insurance contract or issued the insurance policy. The most-important evidence supporting defendants’ position is the insurance policy itself, attached to plaintiff’s complaint. The insurance agreement specifically states that Bodine’s is insured by Federal and that Federal has issued the policy. Furthermore, the policy and its numerous amendments repeatedly refer to the obligations and liabilities of “the company,” which is shorthand for the Federal Insurance Company. Exhibit “A” to Complaint for Declaratory Judgment. Nowhere does the policy suggest that it was issued by either Chubb or Associated.

In addition, in support of their motion to dismiss, defendants have submitted affidavits of two representatives of Chubb and Associated both stating that neither company issued the insurance policy to Bodine’s. Reply to Plaintiff’s Response to Defendants’ Motion to Dismiss, Exhibits “A” and “B”. The court may consider these affidavits in ruling on defendants’ motion. B., Inc., 663 F.2d at 549. Plaintiff has offered nothing to rebut defendants’ contention. Thus, the court must treat this factual assertion as uncontested.

Evaluating all of the contested factual allegations in the light most favorable to Bodine’s and resolving all contested issues of substantive fact in favor of Bodine’s, the court concludes that there is no reasonable basis to believe that state contract law might impose liability on Chubb and Associated. Accordingly, the court dismisses the claim of Bodine’s against Chubb and Associated.

Finally, without citing any authority, Bodine’s argues that diversity between Federal and Bodine’s does not exist by virtue of the proviso to 28 U.S.C. § 1332(c). Section 1332(c) provides in relevant part that “in any direct action against the insurer of a policy or contract of liability insurance ... to which the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen____” Id. The court rejects this argument.

This court recently held that “Section 1332(c) was intended to deal with the tort-claim ‘direct action’ statutes ... that were viewed as putting an undue burden on the federal courts’ diversity jurisdiction.” Estate of Zeiler v. Prudential Insurance Co., 570 F.Supp. 627, 628 (N.D.Ill.1983) (original emphasis). Another court explained that “[i]t is clear from the history and application ... of 1332(c) ... that ... it applies only to ‘direct actions' between the insurer and an injured party. It does not apply to actions between the insurer and the insured.” Fidelity and Deposit Co. v. Southern Utilities, Inc., 524 F.Supp. 692, 693 (M.D.Ga.1981). This case obviously does not involve a direct action between an injured third party and an insurer. Rather, Bodine’s, the insured, sued Federal, the insurer.

Furthermore, section 1332(c) expressly applies only to direct actions on a policy or contract of liability insurance. The courts have recognized that “the term ‘liability insurance’ has over the years ... come to be accepted ... as meaning an indemnity agreement which protects the insured against his liability to others, and the report of the Senate Committee on [1332(c) ] ... discloses that it was this meaning that the Senate had in mind in considering the amendment____” Twin City Fire Insurance Co. v. Wilkerson, 247 F.Supp. 766, 767 (E.D.Tenn.1965). The policy in this case insures the property, machinery and business of Bodine’s and is clearly not a contract of liability insurance as contemplated by § 1332(c). Therefore, the proviso to § 1332(c) simply does not apply to this case, and diversity exists between Bodine’s and Federal.

III. Conclusion

For the reasons stated above, the court grants defendants’ motion to dismiss Chubb and Associated from the action and denies plaintiff’s motion to remand the claim against Federal to state court.

      . Bodine’s does not dispute that this suit involves the requisite amount in controversy. Therefore, the issues raised go only to diversity of citizenship.

      . Even without the affidavits, the court would still find that neither Chubb nor Associated issued the insurance policy. The court treats this as an uncontested fact deducible from the policy itself and unchallenged by any of plaintiff's factual allegations.


source: Caselaw Access Project

author: SWEET, District Judge.

license: Public Domain

text:
    Rafael TRIGUERO, Plaintiff, v. CONSOLIDATED RAIL CORPORATION, Defendant. CONSOLIDATED RAIL CORPORATION, Third-Party Plaintiff, v. UNIVERSAL MARITIME SERVICE CORP., Third-Party Defendant.
    No. 83 Civ. 5717 (RWS).
    United States District Court, S.D. New York.
    Nov. 16, 1984.

      Walker & Bailey, New York City, for defendant and third-party plaintiff; Lawrence R. Bailey, Jr., New York City, of counsel.
    Grainger & Tesonero, New York City, for third-party defendant; William E. Bell, New York City, of counsel.
   OPINION

SWEET, District Judge.

This is a renewed motion for summary judgment brought by the third party defendant stevedore Universal Maritime Service Corp. (“Universal”). The motion is granted, and the third party complaint of defendant and third party plaintiff Consolidated Rail Corporation (“Conrail”) is dismissed.

Prior Proceedings

The opinion of May 2, 1984 in this action granted partial summary judgment for Universal dismissing Conrail’s claim for indemnity in the event that the plaintiff Rafael Triguero (“Triguero”), Universal’s employee, is successful in this tort action against Conrail. 585 F.Supp. 1202. The claim for contribution against Universal remained since the record was inconclusive on the determinative issue of whether Triguero was an employee meeting both the “status” and “situs” tests of 33 U.S.C. § 902(3). Application of § 902(3) at the time of the accident would bar Conrail’s action for contribution. Subsequent to the May 2nd opinion, both Conrail and Universal have conducted discovery, and the record demonstrates that Triguero is a statutory “employee.”

Facts

Triguero was injured while at a Conrail facility known as the Portside Container Yard (“Portside”) in Port Elizabeth, New Jersey. At the time, Triguero was employed by Universal as a driver of a hustler, a trucklike vehicle used to transport large metal boxes, known as containers, in which cargo is stored. While one of the containers Triguero was moving was being loaded onto the chassis of the hustler, the hustler tipped over, causing the personal injury that is the basis of this suit.

Triguero’s function as a hustler driver was to move containers within Universal’s facility known as Shed 220 or between Shed 220 and Portside. Shed 220 is a pier and terminal consisting of 95 acres of land with holding areas for cargo, storage areas for equipment, and garage, repair, and office facilities. Shed 220 is designed for the temporary holding of cargo either recently unloaded from overland transportation and awaiting loading onto a vessel, or cargo recently unloaded from overland transportation and awaiting loading onto a vessel, or cargo recently unloaded from a vessel and awaiting overland transportation. At Shed 220 Universal provides the linkage between overland and sea-going transportation.

Portside is the only rail facility in the Port Elizabeth-Port Newark area at which Universal either picks up or discharges containers. In driving from Shed 220 to Port-side, a distance of 1 lh miles by road, a driver would use several public roads and go through several intersections. The route between Shed 220 and Portside is dictated by the placement of both Shed 220 and Portside adjacent to the Elizabeth Channel. (See exhibit one).

Hustlers such as the one Triguero was driving at the time of the accident are used only to transport containers within Shed 220 or from Portside to Shed 220. The hustlers do not provide overland transportation other than between the rail yard and Shed 220 and within Shed 220 itself, and the hustler cabs are not registered with the State of New Jersey for overland transportation.

At the time Triguero’s accident occurred, he was at the Portside facility, having been instructed to pick up two container units at Portside and then deliver the containers to Shed 220, where the containers would be temporarily stored until they were loaded on the liner BARBER NARA, scheduled to arrive in port after the time of the accident.

Discussion

In order to be an “employee” within § 902(3), a worker must satisfy both the situs and status tests. Northeast Marine Terminal Co. v. Caputo, 432 U.S. 249, 97 S.Ct. 2348, 53 L.Ed.2d 320 (1978). A worker will satisfy the situs test if he is employed “on navigable waters of the United States (including any adjoining pier, wharf, drydock, terminal, building way, marine railway, or other area customarily used by an employer in loading, unloading, repairing, or building a vessel).” § 903(a). Under the status test a worker must be “... engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor worker including a ship repairman, shipbuilder, and shipbreaker.” § 902(3). Triguero satisfies both.

A. The Situs Test

In Texports Stevedore Co. v. Winchester, 632 F.2d 504 (5th Cir.1980) the Court held that “[t]he statute does require the injury to occur in an ‘adjoining area’ ... To instill in the term its broader meanings is in keeping with the spirit of the congressional purposes. So long as the site is close to or in the vicinity of navigable waters, or in a neighboring area, an employee’s injury can come within the [act].” Id. at 514. The Texport Court consequently found a worker injured in a gear room five blocks from the waterfront to be covered by the situs test. See Brady-Hamilton Stevedore Co. v. Herron, 568 F.2d 137 (9th Cir.1978), Stockman v. John T. Clark & Son of Boston, 539 F.2d 264 (1st Cir.1976), cert. denied, 433 U.S. 908, 97 S.Ct. 2972, 53 L.Ed.2d 1092 (1977).

In the May 2nd opinion, I held that Universal could satisfy the situs test by demonstrating that the Portside terminal, where Triguero was injured, adjoins or is close to navigable water. I also held that three factors could be relevant in determining whether the situs test was satisfied: 1) the suitability of the terminal for maritime activities referred to in the act: 2) whether surrounding properties are devoted to maritime commerce; and 3) whether the site is as close to navigable water as is practicable. Portside satisfies the required criteria: it is across one street from Elizabeth Channel; Portside’s essential function is to serve as an interface between overland and ocean transportation; and the surrounding area is similarly involved with maritime shipping. {See exhibit one).

B. The Status Test

The status test, as defined by the Court of Appeals for the Second Circuit, allows the “application of the [Act] ... to employee[s] whose activities ... bear a significant relationship to navigation or to commerce on navigable waters.” Fusco v. Perini North River Associates, 622 F.2d 1111, 1113 (2d Cir.1980), cert. denied, 449 U.S. 1131, 101 S.Ct. 953, 67 L.Ed.2d 119 (1981). Moreover, the “language of the 1972 Act is broad and suggests that we should take an expansive view of the extended coverage.” Arbeeny v. McRoberts Protective Agency, 642 F.2d 672, 674 (2d Cir.), cert. denied, 454 U.S. 836, 102 S.Ct. 140, 70 L.Ed.2d 116 (1981) (security guards injured on pier while protecting a shipment were covered by the Act). As indicated in the May 2nd opinion, since Triguero was injured while transporting containers from Portside to Shed 220 for subsequent shipment aboard an ocean-going vessel, he satisfies the status test.

Conclusion

Triguero satisfies both the situs and status tests, and he is therefore an employee within § 902(3). Section 905 consequently makes Universal immune from Conrail’s action for indemnification, and the third party complaint is dismissed. Discovery on the primary case shall be completed by January 2, 1985 and a joint pretrial order submitted by January 9, 1985.

IT IS SO ORDERED.


author: PLATT, District Judge.

text:
    John and Catherine VECCHIO, Plaintiffs, v. S & T MANUFACTURING CO., Defendant.
    No. 83 CV 1015.
    United States District Court, E.D. New York.
    Nov. 26, 1984.

      Bauman, Greene & Kunkis, P.C. by Bert Bauman, New York City, for plaintiffs.
    Bower & Gardner, by Thomas J. Wacht, Jason M. Poliner, New York City, for defendant.
   MEMORANDUM AND ORDER

PLATT, District Judge.

Defendant, an Oklahoma corporation, moves to dismiss this tort suit against it for lack of personal jurisdiction. Plaintiffs, as residents of New York, evoke the Court’s diversity jurisdiction over the defendant under New York’s long arm statute. N.Y. CPLR section 302(a)(3)(ii) (McKinney 1972). For the reasons set forth below, the Court finds that it may not properly rule on the motion at this time and orders that a hearing be held to produce further evidence as specified in this opinion.

Background

The plaintiff, Mr. Yecchio, an employee of American Airlines, claims that on April 26, 1982, he was injured while using an airplane engine workstand at J.F.K. Airport in New York. He also claims that his injuries occurred through no negligence on his part, but rather were a direct result of the defendant, S & T Manufacturing Company’s, [hereinafter referred to as “S & T”] negligent construction of the engine work-stand it had sold to American Airlines. Finally, plaintiffs claim that S & T which made the workstand in Oklahoma, knew or had reason to know that the two work-stands it made on order for American Airlines, were to be used by the airline in its hangers at either or both J.F.K. and LaGuardia Airports in New York.

Defendant S & T claims to have had no prior contacts with New York and asserts that it is strictly a small local concern, consisting of two shareholders and five employees. S & T does admit to having manufactured in Oklahoma three engine workstands for American Airlines, two of which it knew were ordered for use in New York. But, S & T insists that all its dealings with American Airlines took place within Oklahoma and that consequently, it has no way of knowing whether the stands it produced ever arrived in New York. In support of its argument S & T states that American Airlines’ engineering division in Oklahoma' provided the design specifications for the workstand and that both delivery of the final products and payment took place there as well. Even assuming that its workstands did arrive in New York, S & T asserts that the total cost of the work-stands, $7,400 or 1.304% of its total business in 1982, falls below the “substantial revenue” requirement for New York’s long arm jurisdiction.

Discussion

In order for the Court to exercise its jurisdiction over S & T, it must determine whether New York’s CPLR section S02(a)(3)(ii) can be properly applied in this case. This statute provides for jurisdiction over a non-domiciliary where he personally or through an agent “commits a tortious act without the state causing injury to person or property within the state, ... if he expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.”

Turning to the first requirement that the defendant expected or should have expected its actions to have consequences within New York, both the due process requirement and the somewhat narrower statutory requirement for personal jurisdiction are satisfied in the present case. In contrast to the defendant in World Wide Volkswagen, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), S & T did not merely introduce its product into the stream of commerce; S & T sold its products with full notice that these products were ordered for use in New York. Under the CPLR, a court must find that “the presence of defendant’s product in New York with some potential consequences was reasonably foreseeable rather than fortuitous”. Tracy v. Paragon Contact Lens Labs., 44 A.D.2d 455, 355 N.Y.S.2d 650, 653 (3d Dep’t 1974). Thus, as noted above, the fact that defendants entered a purchase agreement in which two of the three workstands it produced were earmarked for use in New York, weighs in favor of finding that the products’ presence here was reasonably foreseeable.

Turning to the second requirement, the derivation of “substantial revenue” from interstate or international commerce, New York courts construing this term have provided only a few guidelines; beyond these, the courts have rested their decisions on each case’s particular facts. The general approach has been to determine “substantial revenue” from a “comparison between a defendant’s gross sales revenue, and between a defendant’s net profit from interstate or international business with total net profit, (cites omitted).” Allen v. Auto Specialities Mfg. Co., 45 A.D.2d 331, 357 N.Y.S.2d 547, 550 (3rd Dep’t 1974). New York courts have also ruled that “the collateral activities relative to revenue need not occur in New York so long as they are interstate and substantial.” Id. Additionally, it has been held that there need be no connection between the tortious act and the derivation of substantial revenue. Gonzales v. Harris Calorific Co., 64 Misc.2d 287, 315 N.Y.S.2d 51 (Sup.Ct.), aff'd, 35 A.D.2d 720, 315 N.Y.S.2d 815 (2d Dep’t. 1970).

Examples of cases holding that certain revenue is “substantial” vary as to whether the amount is described in terms of percentages or a numerical figure. For example, in Allen v. Canadian General Electric Co., Ltd., New York sales of $8.79 million were to be prima facie evidence of substantial revenue even though it amounted to only 1% of the defendant’s gross sales. 65 A.D.2d 39, 410 N.Y.S.2d 707 (3rd Dep’t 1978). In that case, the court reasoned that income could be substantial enough to support long arm jurisdiction either if the amount was large in an absolute sense, that is, a large sum of money, or if the amount was large in a relative sense, that is, a large percentage of gross revenue. Id. at 702.

In terms of what percentage of gross revenue derived from New York alone by an out of state corporation is sufficient for long arm jurisdiction, the courts have ruled different ways. On the one hand, the Case of Tonns v. Spiegel’s and Pro-Tec, Inc. holds that a Washington corporation deriving only 4% of its revenues from New York could be subject to personal jurisdiction in a negligence action involving an allegedly defective product that the company had knowingly shipped to New York. 90 A.D.2d 548, 455 N.Y.S.2d 125 (2d Dep’t 1982). See also Darienzo v. Wise Shoe Stores, Inc., 74 A.D.2d 342, 427 N.Y.S.2d 831 (2d Dep’t 1980) (approximately 5% of the defendant foreign corporation’s products reached New York each year over an averaged eight year period). On the other hand, an earlier case, Chunky Corp. v. Blumenthal Bros. Chocolate Corp., holds that a foreign corporation deriving 4% of its total sales from New York customers, but having no continuous activities in New York, should not be subject to personal jurisdiction here. 299 F.Supp. 110 (S.D.N. Y.1969). Notably, in that case, the Court emphasized the difficulty of establishing a lower limit for the substantial revenue requirement. Id. at 115.

In any case, despite the variances in the rulings discussed above, it should be kept in mind that how much revenue a foreign corporation derives from New York alone, whether in percentage or monetary terms, has only been used as a guideline by courts: the statutory language and test requires that this Court look to whether the foreign corporation “derives substantial revenue from interstate and international commerce.” N.Y. CPLR section 302(a)(3)(ii) (emphasis added).

While defendant correctly asserts that one of the statute’s purposes is to exclude non-domiciliary businesses of a local nature, defendant has failed to present sufficient evidence to show that it is such a business. The only figure presented to the Court is defendant’s assertion that the total dollar value of the two workstands in New York was $7,400 and that that figure was only 1.304% of defendant’s total 1982 revenues. The Court here finds that this $7,400 figure alone is not so large that it would constitute prima facie evidence to satisfy the substantial revenue requirement. Cf. Allen v. Auto Specialties Mfg. Co., 357 N.Y.S.2d at 550. But, because the record does not reveal the amount of defendant’s total revenue derived from interstate and international business, that is, the revenue derived beyond those from the two New York workstands, the Court does not believe it may properly rule on the motion at this time without further evidence.

Under Rule 43(e) of the Federal Rules of Civil Procedure, the Court may and hereby does direct that the defendant produce for a deposition at this Court for the plaintiff an officer or employee of S & T having knowledge of the facts to testify with all pertinent supporting books and records as to the gross sales revenue and net profits derived from interstate or international commerce and total business during the fiscal or calendar year encompassing April 26, 1982; the cost of the hearing to abide the outcome of the motion.

SO ORDERED.

      . In its decision on this motion, the Court was mindful of the fact that this motion could be potentially dispositive of the entire case, — at least as it stands before this court. American Airlines, the employer of the allegedly injured plaintiff, has been impleaded in this case by a prior defendant, Bil Jax Inc. Bil Jax was originally thought to have manufactured the engine workstand at issue in this case. Only after discovery had commenced against Bil Jax, did plaintiffs learn that S & T Manufacturing Company was the suspected manufacturer and not Bil Jax. Consequently, this Court dismissed Bil Jax as a party in this suit and plaintiffs served their complaint on the present defendant.

      . Defendant claims it is not licensed, nor authorized to do business, nor incorporated in any other state but Oklahoma. Moreover, defendant, S & T, denies, inter alia, that it has ever had any agents, offices, bank accounts, financial holdings, sales representatives, subsidiaries, or divisions in New York; it further denies having ever advertised or solicited business in New York. These factors are relevant, however, only if the plaintiffs had tried to assert jurisdiction under N.Y. CPLR section 302(a)(1) non-dom,¡ciliary that "transacts any business within the state", or under 302(a)(3)(i) which gives the court jurisdiction over a non-domiciliary that "regularly does or solicits business, or engages in any other persistant course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state." As plaintiffs ask that jurisdiction be asserted under N.Y. CPLR section 302(a)(3)(h), these other sections cited above and factors relevant to their requirements do not concern us here.

      . The Federal Rules of Civil Procedure Rule 43(e) reads as follows:

        Evidence on Motions. When a motion is based on facts not appearing of record the court may hear the matter on affidavits presented by the respective parties, but the court may direct that the matter be heard wholly or partly on oral testimony or deposition.
      28 U.S.C. (1984)


author: CAHILL, District Judge.

text:
    HAMPTON FOODS, INC., Plaintiff, v. AETNA CASUALTY & SURETY COMPANY, Defendant.
    No. 81-0564C(4).
    United States District Court, E.D. Missouri, E.D.
    Nov. 27, 1984.

      John A. Walsh, Jr., Robert P. Baine, Jr., St. Louis, Mo., for plaintiff.
    Bernard C. Brinker, St. Louis, Mo., for defendant.
   MEMORANDUM

CAHILL, District Judge.

This Court in a previous order dated May 9, 1983, granted the plaintiff (Hampton Foods, Inc.), partial summary judgment on the issue of liability. The remaining issue of damages will now be addressed by the Court.

The Plaintiff commenced this action seeking to recover damages for (1) lost earnings, (2) interest and wage expenses, (3) loss of business personal property, (4) loss of leased business personal property, and (5) vexatious refusal to pay the insurance claim. This Court, upon careful consideration of all of the documents, memoranda, and affidavits presented, comes to the following conclusions in regards to damages.

BUSINESS INTERRUPTION COVERAGE.

1. Profits.

Under Part III of the plaintiff’s insurance policy, the defendant agreed to insure the plaintiff against loss of earnings and additional costs and expenses resulting from an interruption of business. The plaintiff attempts to recover for lost net earnings based on projected and anticipated profits. While it is true that there are some instances in which a new business may recover anticipated profits, the case now before the Court is not one of those instances.

Plaintiff’s expert witness projected a 10% annual increase in sales from July 1980 to July 1982. The expert’s conclusions were based on increasing gross profits and decreasing operating expenses during the last six months of operation of Hampton Foods. This Court, however, is of the opinion that the projections of the expert witness were far too speculative to justify allowing the plaintiff to recover for projected lost profits. Plaintiff suffered an operating net loss of $108,983 during its first year of operation, and a net loss of $148,263 during its second. It appears highly unlikely to this Court that Hampton Foods would have generated a profit of $117,000 as suggested by the plaintiff. Thus, it is the opinion of this Court that plaintiff cannot recover the projected lost profits because they are too speculative in nature. See Handi Caddy, Inc. v. American Home Prod. Corp., 557 F.2d 136, 139 (8th Cir.1977).

2. Interest Expense.

The plaintiff categorizes its interest expense as an operating cost. Thus, the plaintiff asserts that the interest expense comes within the coverage of the insurance policy. Part III, subpart A(l), of the plaintiff’s insurance policy states that

The company shall be liable for the excess of the total costs and expenses of the operation of the business during the period of restoration ... over and above the total costs of such operation that would normally have been incurred during the same period, had there been no interruption of business. (Emphasis added.)

The plaintiff cannot recover its interest expense based on the above clause. Plaintiff's interest expense was a normal operating cost. The interest expense did not constitute excess costs as required by the above clause. The plaintiff is also unable to recover for interest expense under sub-part A(4) of the insurance policy, which states that the defendants would be liable

For such expenses as are necessarily incurred for the purpose of reducing loss under this policy____

The plaintiff cannot argue that the interest expense was incurred to reduce losses. Thus, plaintiff cannot recover under sub-part A(4) of the insurance policy.

The Court recognizes that under Missouri law, the plain and unambiguous language in an insurance policy must be given its ordinary meaning and effect. See Robin v. Blue Cross Hospital Service, Inc., 637 S.W.2d 695, 698 (Mo.1982). Construction of the insurance policy should only be resorted to where an ambiguity exists. Id. at 698. If the language used is reasonably susceptible to two interpretations, an ambiguity exists. Id. Any ambiguity is construed in favor of the insured. Id. at 698; Heshion Motors v. Western International Hotels, 600 S.W.2d 526, 537 (Mo.App.1980). The Court does find that an ambiguity existed within the insurance contract, and construes the contract in the light most favorable to the plaintiff. But even when deference is given to the plaintiff, the Court must still conclude that the plaintiff cannot recover its interest expenses from the defendant based on the business interruption section of the insurance policy. See Northwestern States Portland Cem. Co. v. Hartford Fire and Insurance Co., 360 F.2d 531, 534 (8th Cir. 1966).

WAGE EXPENSE.

Plaintiff asserts a claim for $15,225 for services rendered by one of its employees (Mrs. Hipp). The Court is of the opinion that it was not unreasonable for the plaintiff to continue to employ Mrs. Hipp to handle matters that occurred after the business was closed. Indeed, such an expense can be categorized as one incurred to prevent further loss. Therefore, the plaintiff is entitled to recover for wage expenses. The Court will, however, limit such expenses to $9,100 which covers payments made to Mrs. Hipp during the time that she was a full-time employee of Hampton Foods.

BUSINESS PERSONAL PROPERTY.

The plaintiff asserts that it is entitled to $80,914.66 as a result of the loss suffered to its business personal property. The Court concludes that the plaintiff is entitled to such a loss. Part II of the insurance policy states that “the defendant will be liable for loss to business personal property ... while in or on the premises [of the insured].” The plaintiff’s loss fits within this clause. The amount recoverable, however, must be reduced by the amount obtained from the sale of those items sold at salvage prices. The defendant, however, is liable for the expenses incurred in salvaging the goods and the commission that was paid to the salvager.

LEASED BUSINESS PERSONAL PROPERTY.

Originally, the plaintiff asked this Court to grant its request for a separate trial on the issue of leased business personal property. Later, the plaintiff filed a motion asking this Court to allow voluntary dismissal of the above claim without prejudice. This Court subsequently set a hearing on the issue of the leased business personal property. Upon reflection, the Court is of the opinion that the plaintiff’s request to dismiss the leased business personal property claim should have been granted. Such dismissal is warranted in light of the fact that another trial will take place involving the plaintiff and an outside party concerning the plaintiff’s liability for the destruction of the leased items. Therefore, to prevent inconsistent determinations, the Court will grant the plaintiff’s request to dismiss the above issue from this case.

VEXATIOUS REFUSAL TO PAY.

MO.REV.STAT. §§ 375.296 and 375.420 allow the insured to recover damages for vexatious refusal to pay. It is the opinion of this Court that the statute should not be enforced against the defendant in this case because there existed genuine issues regarding the coverage of the insurance policy. “Where there [are] open questions] of fact or law determinative of the insured’s liability, the insurer, acting in good faith, may insist on judicial determination of such questions without subjecting itself to penalties for vexatious refusal to pay.” Taylor v. Commercial Union Ins. Co., 614 F.2d 160, 165 (8th Cir.1980); citing United States v. F.D. Rich Co., 439 F.2d 895, 905 (8th Cir.1971). Thus, the Court concludes that the plaintiff may not recover for vexatious refusal to pay.

Accordingly,

Pursuant to the Court’s previous Order of May 9, 1983, the Court enters judgment in favor of the plaintiff in the amount of $58,331.08. The Court assesses 9% interest on the judgment amount, and such interest shall begin to accrue upon the filing of this Order.

Further, plaintiff’s claim for loss to rented business personal property is dismissed without prejudice.


author: SHADUR, District Judge.

text:
    MOTOROLA, INC., Plaintiff, v. KIMBALL INTERNATIONAL, INC., Defendant.
    No. 84 C 3429.
    United States District Court, N.D. Illinois, E.D.
    Dec. 12, 1984.
    Robert P. Cummins, Chicago, III, Michael J. Stolarski Motorola, Inc., Schaumburg, 111., for plaintiff.
    Theodore W. Anderson, Jr., William M. Wesley, J. Bradford Leaheey Neuman, Williams, Anderson & Olson, Chicago, III., for defendant.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Motorola, Inc. (“Motorola”) has moved in this patent infringement action:

1. under Fed.R.Civ.P. (“Rule”) 12(b)(6) to dismiss the second counterclaim (the “Counterclaim”) filed by Kim-ball International Company (“Kimball”), charging an antitrust violation under Sherman Act § 1 (15 U.S.C. § 1) and Clayton Act § 4 (15 U.S.C. § 15), and
2. under Rule 12(f) to strike Kimball’s affirmative defense of patent misuse (the “Affirmative Defense,” asserted in Ans. If 15).

For the reasons stated in this memorandum opinion and order, Motorola’s motion to dismiss is granted (albeit only for the present) and its motion to strike is denied.

Facts

Motorola owns United States Patent No. 3,546,355 (the “Patent”), relating to certain technology embodied in electronic organs. In 1981 Motorola began to negotiate license agreements with allegedly infringing manufacturers. By January 1984 Motorola had reached an agreement with Nippon Gakki Seizo Kabushiki Kaisha (“Nippon Gakki”), the world’s largest organ manufacturer (known in the United States under the tradename Yamaha). On April 20, 1984 Motorola sued five companies (including Kimball) that had not taken licenses.

Both the Counterclaim and the Affirmative Defense are predicated on an alleged conspiracy between Motorola and Nippon Gakki to establish discriminatory royalty rates. Kimball charges all the current infringement suits are designed to coerce it and other manufacturers into license agreements requiring royalty payments significantly higher than those of Nippon Gakki. Motorola’s Rule 12(b)(6) motion asserts the Counterclaim has failed properly to allege injury from Motorola’s conduct. Its Rule 12(f) motion contends the Affirmative Defense is insufficient because a defense of misuse cannot be based solely on proposed license terms.

Kimball’s Counterclaim

1. Rule 12(b)(6) Principles

Motorola supplemented its motion-supporting memorandum with a two-page affidavit by Vincent J. Rauner (“Rauner”), Motorola’s Vice President for Patents, Trademarks and Licensing. Kimball has responded with its own affidavit and the contention that under Rule 12(b) this Court “must” now treat the motion as one for summary judgment, with the Rauner affidavit as Motorola’s entire factual presentation. That misreads Rule 12(b) (emphasis supplied):

If, on a motion asserting the defense numbered (6), to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall .be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.

Were this Court inclined to treat the present motion as one under Rule 56, it would at the least allow Motorola to make a more thorough presentation. But — consistent with the discretion clearly intended by the Rule’s “not excluded by the court” language and the Advisory Committee Note on the 1946 amendment to Rule 12(b) —this Court elects not to convert the motion into one under Rule 56.

Nor is that decision appropriate for this day and date only. On a substantial number of occasions (most recently in Grove School v. Guardianship and Advocacy Commission, 596 F.Supp. 1361, 1363 n. 4 (N.D.Ill.1984)) this Court has said such a conversion procedure is usually undesirable at the outset of a case, in substantial part because at such an early stage the parties generally lack the full factual background to make rounded presentations on a fully dispositive motion. That is true in spades where, as here, the pleading alleges a complex antitrust conspiracy. Consideration of the motion — as any Rule 12(b)(6) motion — will therefore be limited to the pleadings (Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1107 (7th Cir.1984)), with Kimball’s well-pleaded allegations accepted as true. Wolfolk v. Rivera, 729 F.2d 1114, 1116 (7th Cir.1984).

2. Legal Sufficiency

Clayton Act § 4 (emphasis added) clearly requires an allegation of injury in a private antitrust claim:

Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of the suit, including a reasonable attorney’s fee.

Only Counterclaim 1132 (emphasis added) attempts any reference to such injury:

Upon information and belief, Motorola has combined and conspired with Nippon Gakki and perhaps other favored licensees to maintain a discriminatory royalty rate for Kimball and other manufacturers of electronic organs above that charged to Nippon Gakki and perhaps other favored licensees, giving the favored licensees an unfair and illegal competitive advantage in the electronic organ market to the detriment and injury of Kimball and other manufacturers of electronic organs and unreasonably restrains [sic] trade in the electronic organ market and substantially lessens [sic] competition in the electronic organ market.

Motorola correctly contends that allegation is insufficient as a matter of law because (1) it is conclusory and (2) non-licensee Kim-ball could not have been injured solely by a discriminatory royalty rate.

Antitrust claimants must normally allege a specific injury to business or property caused by the alleged violations. Carlson Cos. v. Sperry and Hutchinson Co., 507 F.2d 959, 961 (8th Cir.1974); Beegle v. Thomson, 138 F.2d 875, 881 (7th Cir.1943), cert. denied, 322 U.S. 743, 64 S.Ct. 1143, 88 L.Ed. 1576 (1944). Kimball suggests in support of its conclusory allegation that injury may be presumed in a discriminatory licensing case because the licensee by definition has paid too much in royalties.

But Kimball is forced to concede (Mem. 8) such a per se rule is inapplicable here because it never took a license and thus never paid any royalties. That being so, Kimball cannot assert injury from discriminatory royalty rates alone. And that means Counterclaim 1132’s allegation, which focuses solely on the royalty rates, is insufficient to support a claim. In like manner, Motorola’s mere prosecution of this infringement action does not by itself cause the requisite antitrust injury. Bendix Corp. v. Balax, Inc., 471 F.2d 149, 154, 159 (7th Cir.1972).

Instead Kimball’s antitrust claim must be ascribed to injury caused by both Motorola’s courses of action, which force Kim-ball into a trilemma. Dairy Foods, Inc. v. Dairy Maid Products Corp., 297 F.2d 805, 808 (7th Cir.1961) explained the predicament of a patent infringement defendant in Kimball’s position:

The injury [to defendant in its business or property] is the necessity that defendant make a choice among alternatives each of which has an adverse economic or financial impact on its ... business. It was allegedly compelled either to cease production with consequent loss of sales of the product, pay tribute with consequent increase in production cost, or incur the financial burden of expenses incident to the defense of litigation. Each of these alternatives had its particular adverse economic or financial effect on defendant’s ... business. To place a person in such a situation is an injury to his business.

And Dairy Foods, id. at 809 held the requisite injury was triggered by the patentee’s filing of its infringement suit — “the compulsion that forced the choice.”

All the elements of injury identified in Dairy Foods are thus posed in this action. Nonetheless the requisite allegation that the combination of those elements injured Kimball is lacking from the Counterclaim. Judge Marovitz’ dictum in Alberto-Culver Co. v. Andrea Dumon, Inc., 295 F.Supp. 1155, 1159 (N.D.Ill.1969) fits this situation perfectly:

The simple fact which distinguishes this case from Dairy Foods is the counterclaim in Dairy Foods specifically alleged the expenditure of time and money in defending the patent litigation while in the instant action no such allegation has been made [citing Dairy Foods]. All that has been alleged by defendant in paragraph [32, in this case] of the counterclaim is that it has been injured. That is simply not enough under Dairy Foods or any other standard.

Consequently the Counterclaim as it now stands is wanting in purely formal terms. But it is equally plain Kimball can readily make the allegations necessary to bring itself within Dairy Foods. Leave is therefore granted to file a properly amended counterclaim on or before December 20, 1984.

Kimball’s Affirmative Defense

No such flaw attaches to the Affirmative Defense, which asserts the Patent is invalid due to its misuse as part of Motorola’s discriminatory licensing scheme. Motorola’s Rule 12(f) motion advances the theory that a patent misuse defense cannot be predicated merely on proposed license terms (rather than an executed license agreement). But the cases cited by Motorola (the brief statements in Benz v. Celeste Fur Dyeing & Dressings Corp., 57 F.Supp. 895, 899 (D.C.N.Y.1944), aff'd, 156 F.2d 510 (2nd Cir.), cert. denied, 329 U.S. 736, 67 S.Ct. 101, 91 L.Ed. 635 (1946) and Honeywell, Inc. v. Sperry-Rand Corp., 1974 Trade Cas. (CCH) If 74,874, at 95,541 (D.Minn.1973)) provide no support for that proposition, and this Court’s independent research similarly reveals no supporting authority.

On the contrary, the cases indicate patent misuse may be established much more easily than an antitrust violation. Bendix, 471 F.2d at 154-55; Transitron Electronic Corp. v. Hughes Aircraft Co., 487 F.Supp. 885, 892-93 (D.Mass.1980) (and cases cited), aff'd, 649 F.2d 871 (1st Cir. 1981). Moreover no allegation of specific injury (the only gap in the Counterclaim) is necessary in a claim of patent misuse (Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 494, 62 S.Ct. 402, 406, 86 L.Ed. 363 (1942)). It thus follows that Kimball has pleaded a valid misuse defense.

Conclusion

Kimball’s second counterclaim is dismissed without prejudice and with leave to amend on or before December 20, 1984. Motorola is ordered to answer the amended second counterclaim (assuming its timely filing) on or before December 31, 1984. Motorola’s motion to strike Kimball’s affirmative defense of patent misuse is denied.

      . Motorola has also moved for sanctions under Rule 11 and 28 U.S.C. § 1927, charging the Counterclaim and Affirmative Defense lack any factual or legal basis. This Court's disposition of the substantive motions renders unnecessary any consideration of the requested sanctions. Indeed, if the propriety of any argument in this proceeding may be called into question, it could only be the propriety of the Rule 11 motion itself.

      . Even had this Court opted for Rule 56 treatment, summary judgment would be unavailable, for the affidavits clearly create a genuine issue as to the central facts of this case.

      . In this respect Kimball is actually better off than Nippon Gakki.

      . Motorola seeks to rely on the post-Dairy Foods decision in LaSalle Street Press, Inc. v. McCormick & Henderson, Inc., 445 F.2d 84, 95 (7th Cir.1971) as supporting its position for dismissal. But LaSalle Street Press, id. at 96 highlights the distinction between the good-faith filing of an infringement action (involved in that case) and the Dairy Foods situation of infringement actions brought "as a tool of an established pattern of punitive and otherwise monopolistic practice.” At least on Kimball’s allegations, Motorola’s conduct fits the Dairy Foods mold and not that of LaSalle Street Press.

      . Motorola argues from dictum in Honeywell (1974 Trade Cas. (CCH) at 95,941) that it purged any misuse of the Patent by filing this infringement suit. Honeywell's statement on that issue is neither worthy of reliance nor applicable here. Not only is the statement dictum and unsupported by the cases it cites, but it does not purport to state a general rule that infringement suits purge misuse as a matter of law. Such a general rule would contradict common sense because — as Dairy Foods, Bendix and other cases recognize — infringement suits can be part and parcel of an unlawful conspiracy to restrain trade or monopolize a market. Whether a "purge" has occurred therefore involves questions of fact that cannot be dealt with on a pleading motion.


author: LEVAL, District Judge:

text:
    General William C. WESTMORELAND, Plaintiff, v. CBS INC., et al., Defendants.
    No. 82 Civ. 7913 (PNL).
    United States District Court, S.D. New York.
    Dec. 13, 1984.
    See also D.C., 97 F.R.D. 703.
    Dan M. Burt, Capital Legal Foundation, Washington, D.C., for plaintiff; David M. Dorsen, Washington, D.C., Donovan, Leisure, Newton & Irvine, New York City, of counsel.
    David Boies, Stuart W. Gold, Cravath, Swaine & Moore, New York City, for defendant CBS Inc.; Robert H. Baron, Randy M. Mastro, William F. Duker, Michael R. Doyen, George Vradenburg, III, CBS Inc., New York City, of counsel.
   OPINION AND ORDER

LEVAL, District Judge:

CBS objects on numerous grounds to the receipt in evidence of the Benjamin Report. The motion is granted for reasons explained below — in particular that the Report is largely irrelevant to the issues before the jury and consists in great part of opinion and hearsay of varying degrees of remoteness. Various facts asserted by the Report may nonetheless be received.

The history of the Report in brief is as follows: CBS broadcast its documentary— ■The Uncounted Enemy: A Vietnam Deception —on January 23,1982. Three days later General Westmoreland held a news conference challenging the broadcast, and in May 1982, TV Guide carried a cover article criticizing it.

Thereupon Van Gordon Sauter, President of CBS News, asked Burton Benjamin, a Senior Executive Producer of CBS News, to undertake a study of the preparation of the broadcast in the light of the criticisms leveled by the Westmoreland press conference and the TV Guide article. Benjamin delivered his report in writing on July 8, 1982. Sauter shortly thereafter on July 15, 1982 issued a public statement summarizing briefly the contents of the Benjamin Report and stating that CBS stood by its broadcast.

Plaintiff initially stated that the entire report would be offered in evidence. CBS responded with a lengthy memorandum setting forth numerous objections, including the argument that the Report contained many instances of double and triple hearsay and inadmissible repetitions of charges from the TV Guide article.

Plaintiffs counsel then deleted certain hearsay portions of the Report from his offer. Also, where the Report quoted charges from the TV Guide article, plaintiff reworded the Report to eliminate reference to TV Guide and to put the issue rather in terms of questions: Whether CBS had done so-and-so in the preparation of the broadcast. The retyped and amended version of the Report offered by plaintiff runs 64 pages after deletions.

1. Report Not Excluded as a Subsequent Remedial Measure Under Rule 407.

CBS contends that receipt of the Report is barred by Rule 407, Fed.R.Evid. and judge-made doctrine to the effect that subsequent remedial measures may not be received as an admission of prior culpable conduct. The doctrine, however, does not go as far as CBS would push it. The fact that subsequent remedial measures are excluded as admissions of fault does not mean that competent evidence resulting from an internal investigation of a mishap must also be excluded. CBS argues: (1) honest self-examination and self-policing should be encouraged; (2) a rule permitting the discovery and the use in evidence of reports of such self-investigations will discourage potential defendants from doing it; therefore, (3) the rule of law should exclude such evidence. The logic of the argument parallels that which underlies Rule 407. See Advisory Committee Note.

The fault of the argument is not in its logic but in that it goes too far and fails to credit the social value of making available for trial what is often the best source of information. CBS’ argument really goes beyond the issue of the admissibility of the investigative report; its logic addresses as well the admissibility of the facts uncovered by the investigation. If the internal investigator uncovered the “smoking gun,” it is often a cosmetic matter whether this evidence is received as a part of the investigative report or in some other manner. The question of social policy raised by CBS is whether in order to encourage such investigations, their fruits should be shielded from use by adverse claimants. There is, however, no such doctrine either as to the internal investigative report or as to facts revealed by it. In industrial and railroad accident litigation, for example, it is commonplace that such reports, or at least the facts revealed by them, are used by the injured to establish the liability of the company that conducted the investigation in spite of CBS’ arguments. Wright v. Farmers Coop of Arkansas & Oklahoma, 681 F.2d 549 (8th Cir.1982); Collins v. Wayne Corp., 621 F.2d 777 (5th Cir.1980); United States v. Lykes, 432 F.2d 1076 (5th Cir.1970); Southern Ry. Co. v. Lanham, 403 F.2d 119 (5th Cir.1968); Pekelis v. Transcontinental & Western Air, Inc., 187 F.2d 122, 128-129 (2d Cir.), cert. denied, 341 U.S. 951, 71 S.Ct. 1020, 95 L.Ed. 1374 (1951); see also Gillman v. United States, 53 F.R.D. 316 (S.D.N.Y.1971). To establish a rule forbidding such use would deprive injured claimants of one of the best and most accurate sources of evidence and information.

CBS relies further on certain special rules formulated by courts, such as the rule shielding the findings of special hospital inquiry boards. See Gillman, supra at 319 (Report shielded but not statements revealed in course of investigation); Bredice v. Doctors Hospital, 50 F.R.D. 249 (D.D.C.1970). It is sufficient answer that these authorities state exceptions to the general rule and not the rule itself.

2. Report not Excluded in its Entirety as Hearsay Statement of Benjamin.

Although, as defendants argue, out-of-court statements offered to prove the truth of what is asserted in them are generally barred as hearsay (absent a prevailing exception), I agree with plaintiff that his offer of Benjamin’s statement against CBS is not hearsay since the statement is “offered against a party [CBS] and is ... a statement by [its] agent [Benjamin] concerning a matter within the scope of his employment____” Rule 801(d)(2), Fed.R. Evid. It is thus excluded from the hearsay rule as an admission of a party, through its employee.

3. Inadmissible Matters.

In spite of these observations, I conclude the major part of the Report may not be admitted for a variety of reasons.

a. Not Relevant. First, very substantial portions of the Report are not relevant to the issues in dispute in the libel case. The Report tracks and discusses various charges made against CBS, primarily by TV Guide. These charges address different standards and criteria than those involved in a libel suit.

Thus the Report addresses whether the broadcast was “fair and balanced” and whether supporters of Westmoreland’s side of the dispute were given fair opportunity to respond to the charges of others. Views are expressed on these questions by Benjamin and by persons Benjamin interviewed.

The fairness of the broadcast is not at issue in the libel suit. Publishers and reporters do not commit a libel in a public figure case by publishing unfair one-sided attacks. The issue in the libel suit is whether the publisher recklessly or knowingly published false material. The fact that a commentary is one sided and sets forth categorical accusations has no tendency to prove that the publisher believed it to be false. The libel law does not require the publisher to grant his accused equal time or fair reply. It requires only that the publisher not slander by known falsehoods (or reckless ones). A publisher who honestly believes in the truth of his accusations (and can point to a non-reckless basis for his beliefs) is under no obligation under the libel law to treat the subject of his accusations fairly or evenhandedly.

The jury would not be permitted to consider whether the publisher had acted fairly or unfairly — only whether he acted in reckless or knowing disregard of the truth. Accordingly, the extensive discussions and expressions of opinion in the Benjamin Report of fairness and related subjects cannot properly be brought before the jury.

The Report considers and discusses a number of other controversies that are irrelevant to the trial. Among the issues considered are whether CBS violated its rules and guidelines by permitting Adams to rehearse his interview, by permitting Allen to be interviewed twice and to view film clips of other interviews, and by failing to identify Adams as a paid consultant. If it is the case that various internal rules of CBS were broken in the making of the documentary, that fact has no bearing on whether the documentary was made in reckless or intentional disregard of the truth. The fact of the violation of rules is not relevant to any issue in the lawsuit. Even assuming the purpose of the guidelines was to promote the integrity of broadcasts, the fact that what was done violated a rule has no tendency to prove knowing or reckless falsity. What was done may be proved, and the jury may consider whether these acts indicate knowing or reckless falsehood. What may not be proved is that these acts violated rules.

To show such violation of rules might indeed show recklessness of a different sort — not recklessness as to truth. It might therefore prejudice the jury against the defendants. Even if some marginal relevance can be found, it is far outweighed by the potential for misunderstanding, confusion and prejudice. The fact that those rules or guidelines were broken may not be shown to the jury.

b. Hearsay. Although the Report is not to be considered hearsay in its entirety to the extent that it constitutes a statement offered against CBS made by its employee concerning matters within the scope of his employment, substantial portions of the document are, nonetheless, excludable as hearsay (even after plaintiffs deletions). These include instances in which Benjamin quotes assertions by others in circumstances that are not excepted from the hearsay rule.

Examples are quotations from Lyndon Johnson concerning his readiness for Tet, quotations of a military historian on military procedure, assertions of fact by Benjamin based directly or indirectly on sources external to CBS and on sources lacking personal knowledge of the fact asserted, and quotations by Benjamin of CBS’ employees where the statement quoted would be hearsay if that employee took the stand to testify to it. See generally Litton Systems, Inc. v. American Tel. & Tel. Co., 700 F.2d 785, 816-17 (2d Cir.1983), cert. denied, — U.S.-, 104 S.Ct. 984, 79 L.Ed.2d 220 (1984); Northern Oil Co. v. Socony Mobil Oil Co., 347 F.2d 81 (2d Cir.1965).

Hearsay also occurs where the Report quotes charges from TV Guide. As noted above, plaintiff has sought to obviate this problem by recasting these accusations and assertions as questions.

There may well be instances in which it is appropriate to so recast a written document in order to make admissible matters comprehensible while avoiding hearsay. The use of this device in plaintiff’s document far exceeds such justification. The recasting of accusations as questions does not disguise the fact that someone has made the accusation or raised the question (else why would Benjamin be discussing it). To place before the jury this lengthy list of accusatory questions would convey only hearsay and prejudice without communicating competent evidence tending to establish any fact in dispute.

c. Opinion Matters. In numerous instances, the Report expresses Benjamin’s opinion in a manner that would not be permitted if Benjamin were called to testify. There is no reason why Benjamin’s written report should be admitted to convey such opinions as Benjamin would not be permitted to testify to. The Report also quotes others in their expression of opinions that they would not be permitted to testify to. (See, as an example, Benjamin’s assertion that “Robert Komer was a special ambassador to LBJ” and “as such,” (apparently quoting General Davidson) “had a vital interest in enemy strength figures.” Benjamin Report, p. 40.) See generally Litton, supra; Oreck Corp. v. Whirlpool Corp., 639 F.2d 75, 81 n. 3 (2d Cir.1980); Northern Oil, supra.

4. Matters Not Inadmissible But Equally Available from Other Sources.

Substantial portions of the Benjamin Report are not inadmissible as hearsay but are equally available from other sources or are already in evidence. These include quotations from Crile’s “White Paper,” from the broadcast transcript and from notes taken by Adams and Crile. Assuming these passages are relevant and do not suffer from any other evidentiary defect, they are admissible in the original form. The fact that they are quoted in the Benjamin Report adds nothing to their status as evidence.

The matters reviewed above and found to be either inadmissible or admissible without reference to the Report cover a very substantial portion of the document offered by plaintiff. They constitute sufficient reason to sustain defendants’ objection to the document as offered by plaintiff.

I do not mean by this ruling to suggest that nothing contained in the Report may be received. There are interspersed in its text a substantial number of items which would be appropriate for receipt in evidence. These include (a) Benjamin’s report of relevant admissions made to him by the individual defendants Wallace, Crile and Adams, (b) Benjamin’s report of relevant admissions by individual defendants made to others and repeated to Benjamin, (c) Benjamin’s report of relevant statements made to him by other employees of CBS if within such employees’ scope of employment and competence, and (d) assertion by Benjamin of various facts learned by him within his competence.

It is my impression from discussions with counsel that the great majority of the admissible matters contained in the Report are not disputed by the defendants. Facts asserted in the Report such as that Allen was interviewed twice, that Allen was shown other interviews, that Adams was not identified in the broadcast as a paid consultant, which sources were and were not interviewed and which were and were not used — all this I believe is conceded to be true (although its relevance may be contested). Also, I assume many of the statements reported by Benjamin to have been made by individual defendants are not contested.

Plaintiff should identify to CBS with precision each line of the Benjamin Report that it wishes to offer. Defendants may prepare if they so choose a formal admission of any such facts that might obviate the need for their being introduced through the Report.

SO ORDERED.

      . To a limited extent when such reports are prepared "in anticipation of litigation," they are shielded from discovery by Rule 26(b)(3) Fed.R. Civ.P. and the work product rule, unless the adverse claimant can demonstrate a “substantial need."

      . The discussions noted above are merely examples and not an exhaustive list of the observations and discussions in the Report that are irrelevant to the issues in the lawsuit. I do not mean to suggest by the discussion above that all statements contained in these portions of the Report are excluded because they fall within a generally irrelevant discussion. Scattered within these discussions are instances of admissible evidence of relevant facts. These are discussed below.


author: MYRON H. THOMPSON, District Judge.

text:
    Charlie HARRIS and Mose Batie, individually, and on behalf of all others similarly situated, Plaintiffs, v. Charles A. GRADDICK, in his official capacity as Attorney General of Alabama; et al., Defendants, John W. Jones, Jr., as Judge of Probate of Dallas County, Alabama; et al., Defendant-Intervenors.
    Civ. A. No. 84-T-595-N.
    United States District Court, M.D. Alabama, N.D.
    Dec. 13, 1984.

      James U. Blacksher, Larry T. Menefee, Blacksher, Menefee & Stein, Mobile, Ala., Delores Boyd, Mandell & Boyd, Terry Davis, Montgomery, Ala., Jack Greenberg, Lani Guinier, New York City, for plaintiffs.
    Joseph E. Faulk, Troy, Ala., for Powell and Anderson.
    Charles A. Graddick, Atty. Gen., Susan McKinney, Algert S. Agricola, James Callen Sparrow, Asst. Atty. Gen., Montgomery, Ala., for Stone, Graddick & Wallace.
    Edward Still, Birmingham, Ala., for State Democratic Exec. Committee.
    Edwin A. Strickland, R. Clifford Fulford and Max C. Pope, Fulford, Pope & Natter, Birmingham, Ala., for Jefferson County— Probate Judge, Circuit Clerk & Sheriff.
   MEMORANDUM OPINION

MYRON H. THOMPSON, District Judge.

On August 1, 1984, the court issued a preliminary injunction in this cause requiring that the appointing authorities for all but one of Alabama’s 67 counties appoint more black persons as poll officials for all primary, general and special elections. Harris v. Graddick, 593 F.Supp. 128 (M.D. Ala.1984). The cause is now again before the court on the appointing authority for Jefferson County’s October 30, 1984, motion to dissolve or modify the court’s preliminary injunction. The court held a hearing on this motion on November 13, 1984.

I.

In a memorandum opinion accompanying the August 1 injunction, the court began with an eye to history. The court stated that “[t]he past reality in Alabama has been that black citizens of the state were not only prohibited from participating in the political process, they were taught that this was the rule of law and society, the transgression of which merited severe punishment.” 593 F.Supp. at 133. The court also found that it could not be blind to the present, pervasive effects of Alabama’s past. The court stated that

The evidence now before the court dramatically and persuasively reflects that many blacks, in particular the elderly and uneducated, still labor under these past memories of personal humiliation, intimidation and violence. They understandably still harbor strong fears of entering all-white public places, even though they are now legally entitled to do so. They find the simple act of registering and voting, especially when the voting officials are all white, an extremely intimidating experience; and as a result, many of them do not register, and many of those who do register do not vote.

593 F.Supp. at 131.

In at least one respect, however, the court saw that the effects of Alabama’s discriminatory legacy can be addressed straightforwardly and satisfactorily. The court found that “[t]he open and substantial presence of black poll officials, according to the evidence, is a significant indication to many black persons that voting places are now open to all, that black persons not only have a legal right to come and vote, they are welcome.” Id. (emphasis in original) Nevertheless, as the court found, those in authority in Alabama today have not chosen the path of progress from the state’s regrettable past. Instead, the evidence reflected that “across the state black persons are grossly underrepresented as poll officials.” Id.

These facts supported the court’s preliminary conclusion that the failure to appoint black persons as poll officials throughout Alabama has impeded and impaired the access of many black persons to the political process, in violation of section 2 of the Voting Rights Act of 1965, as amended, 42 U.S.C.A. § 1973 (West Supp.1983). Id. at 133. Accordingly, the court entered a preliminary injunction requiring that appointing authorities across the state substantially increase the number of black poll officials.

II.

The results of the court’s injunction have been largely encouraging. The reports filed by appointing authorities after the November 6, 1984, election demonstrate considerable compliance with the requirements for appointment of black persons as poll officials. There is also an absence of complaints from the responsible appointing authorities of any great inconvenience or burden. In only a few cases has the court found reason for renewed scrutiny. One such case is that of the Jefferson County appointing authority.

By its October 30, 1984, motion, the Jefferson County appointing authority seeks to free itself from the court’s preliminary injunction in whole or in part. It contends, first, that there is no evidence of discriminatory purpose or effect in its appointment of poll officials, and therefore the injunction should not apply to it. Alternatively, it contends that the terms of the injunction should be modified to correspond to certain demographic features of Jefferson County, one of Alabama’s most densely populated counties, with many more legislative districts than most others. The Jefferson County appointing authority wishes the court to order that black persons be appointed as poll officials in future elections according to the percentage they represent in each legislative district, rather than according to the county-wide proportion.

Not only do these alternative contentions presented by the motion lack merit,- the evidence in support of the contentions reflects conduct of such an intolerable nature that immediate and further preliminary injunctive relief specially directed at the Jefferson County appointing authority is warranted.

III.

The basis for the motion is apparent from the evidence: to avoid the appointment of black poll officials with supervisory authority at polling places where the majority of the voters are white. The Jefferson County appointing authority maintains that white voters at these polling places will not accept a black supervising poll official. George R. Reynolds, probate judge of Jefferson County and a member of its appointing authority, testified as follows:

A. Where you got 75 percent of the voters are white and you are going to throw them in a black chief inspector, you are all asking for something, or somebody is that don’t make sense. And I can’t get re-elected with that kind of program, I will just tell you like it is.
Q. I see. They would vote against you when you ran for office next time?
A. You damn right. Man, these folks campaign fiercely against your party. People that are primarily working at the polls are the most biased, prejudiced, politically affiliated people in the world and they are the ones that go out and make three or four thousand phone calls every election.

Reynolds further testified that

even if [the white chief inspector and assistant inspector] both died tomorrow, if that’s a predominantly white box ... then, man, the people in that area ain’t going to stand for me appointing some black to run the voting place when the blacks are the minority at that box.

Reynolds then concluded that the appointment of black poll officials according to the black population in each legislative district rather than the county as a whole would allow the Jefferson County appointing authority to perpetuate the above racially-inspired scenario. He stated:

Well, if they modify the order and make it by legislative district, we got no problem because they have got 95 percent of the poll officials in the black legislative districts already, ain’t no problem.

The appointing authority for Jefferson County thus seeks by its motion to have this court validate its intentionally discriminatory practice of not appointing black poll officials with supervisory authority at majority white polling places.

The lack of merit in the Jefferson County appointing authority’s motion is self-evident and requires little discussion. Section 2 of the Voting Rights Act of 1965, as amended, 42 U.S.C.A. § 1973 (West Supp. 1983) “prohibits not only official action taken or maintained for a racial discriminatory purpose, it prohibits any official action that results in the impairment or denial of the right of any citizen on account of race.” Harris v. Graddick, 593 F.Supp. at 132 (emphasis in original). In the prior injunction and opinion in this cause, the court did not reach the issue of whether the present appointing authorities across the state had intended discrimination by appointing disproportionately few black persons as poll officials, since the effect of this practice alone was illegal' under section 2. 593 F.Supp. at 132-33. In Jefferson County’s case, however, the evidence is clear and unequivocal that the county appointing authority has denied and seeks to continue to deny persons an opportunity to serve as poll officials simply because they happen to be black. The authority’s conduct constitutes a vestige of Alabama’s insidious past in its most resistant strain. A finding of intentional discrimination is unavoidable.

This court cannot and will not tolerate the racially discriminatory practice of the appointing authority for Jefferson County. The court will therefore not only deny the authority’s motion to dissolve and modify this court’s previous preliminary injunction, it will enter an additional preliminary injunction prohibiting the authority from intentionally discriminating against the black citizens of this state in the appointment of poll officials.

IV.

Finally, in view of the evidence before the court, a few additional comments are appropriate. In a democratic society, public officials occupy a high trust. They undertake to uphold society’s moral standard, not bow to its basest biases. They take an oath to enforce the law of the land, and the law of the land is clear: intentional discrimination on the basis of race in the appointment of poll officials is illegal. That public officials today would practice open and intentional discrimination of the kind now evidenced before the court is lawless and inexcusable. That these officials would try to excuse the practice under cover of the purported intolerance of their own constituents is indefensible and repugnant.

An appropriate order will be entered.

ORDER AND INJUNCTION

In accordance with the memorandum opinion entered this date, it is the ORDER, JUDGMENT, and DECREE of the court:

(1) That the appointing authority for Jefferson County’s October 30, 1984, motion to dissolve or modify the court’s preliminary injunction of August 1,1984, be and it is hereby denied; and

(2) That the members of the appointing authority for Jefferson County — O.H. Florence, George R. Reynolds, Polly Conradi, and Melvin Bailey — be and each is hereby ENJOINED and RESTRAINED from intentionally discriminating against black persons in the appointment of poll officials.

The United States Marshal is DIRECTED to serve copies of this order and injunction and accompanying memorandum opinion personally upon the members of the appointing authority for Jefferson County.

The clerk of the court is DIRECTED to mail copies of this order and injunction and accompanying memorandum opinion to all parties and all members of the defendant class.

      . Reynolds’s deposition of November 7, 1984, pp. 27-28.

      . Id., p. 32.

      . Id., pp. 36-37.

      . The court’s finding today of intentional discrimination by the Jefferson County appointing authority is also an alternative basis for the preliminary relief granted by the court on August 1, 1984, as to the Jefferson County appointing authority.

      . The Jefferson County appointing authority also argues that this court’s August 1 preliminary injunction prohibits the appointment of white poll official with supervisory authority at majority black polling places. There is nothing in any injunction, order or opinion of this court that prohibits the appointment of white poll officials of all ranks at majority black polling places and the appointment of black poll officials of all ranks at majority white polling places.
      Furthermore, in view of the obvious lack of merit in the argument made by the Jefferson County appointing authority, the court is compelled to add that it will countenance neither covert nor overt efforts designed to avoid or delay full and immediate compliance with the orders and injunctions of the court and the law of this land.


author: FORRESTER, District Judge.

text:
    Salvatore A. CAVALINO, Plaintiff, v. Diana M. CAVALINO, Defendant.
    Civ. A. No. C84-944A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Dec. 17, 1984.

      Robert P. Hein, Gortatowsky, Bernard, Hein & Thurston, Atlanta, Ga., for plaintiff.
    H. Darrell Greene, Greene & Davis, Marietta, Ga., for defendant.
   ORDER

FORRESTER, District Judge.

This action is before the court on plaintiff’s motion for appointment of receiver and other relief; defendant’s motion to dismiss and/or motion for summary judgment; and plaintiff’s motion to amend the complaint. Plaintiff, now a resident of New York, was divorced from defendant by a final judgment and decree of divorce entered in the Superior Court of Cobb County, Georgia, on March 4, 1983. In addition to providing for alimony, child custody, visitation rights, and other matters, the final decree provided for the disposal of the home belonging to the parties as follows:

Each of the parties shall retain equal ownership of the property located at 1370 Willow Point Terrace, Marietta, Cobb County, Georgia; the plaintiff may reside at 1370 Willow Point Terrace until disposition of the property. Each of the parties are to pay equal payments of the mortgage, taxes and house insurance until the home is sold. The house shall be placed on the open market for sale at a reasonable and fair market value to be sold within a period of one (1) year, with the proceeds of such sale being equally divided.

Plaintiff contends that defendant has failed to place the home on the market for sale and has hindered his efforts to do so. Count I of plaintiff’s complaint asked the court to appoint an equitable receiver pursuant to O.C.G.A. § 9-8-2 to effectuate the sale of the house as required by the divorce decree. Count II asserts that defendant has wrongfully interfered with plaintiff’s ownership and control of the property and has refused to comply with the divorce decree and that such actions constitute an intentional tort warranting punitive damages. Count III asserts that defendant has acted in bad faith and has been stubbornly litigious. Count IV asserts that defendant has wrongfully interfered with plaintiff’s visitation rights by prohibiting the children to travel to and from New York unless accompanied, at his own expense, by plaintiff. Plaintiff asserts that such interference with his visitation rights constitutes an intentional injury to plaintiff’s “peace, feelings and happiness.” Count V asserts that defendant’s continued actions interfering with plaintiff’s property rights constitutes a conversion of his interest in said property. Finally, Count VI asks this court to modify the final judgment and decree of the Cobb County Superior Court to clarify the visitation rights and duties of the parties.

Defendant’s motion to dismiss and/or motion for summary judgment asserts that plaintiff’s complaint should be dismissed because it involves domestic relations issues which are either beyond the subject matter jurisdiction of this court or are controlled by principles of abstention. See Jagiella v. Jagiella, 647 F.2d 561 (5th Cir. 1974). Defendant further argues that the court should exercise its discretion and dismiss this action on comity principles because plaintiff had previously filed in the Superior Court of Cobb County a petition to have defendant held in contempt for violation of the final judgment and decree of divorce. Defendant argues that the petition for contempt is founded upon the exact same facts as the present complaint and that this court should therefore defer to the Cobb County Superior Court.

In response to defendant’s motion plaintiff dismissed the contempt proceeding in the Cobb County Superior Court and filed its motion to amend the complaint. The motion to amend the complaint does not seek to add anything new to the complaint but instead seeks to dismiss Counts II through VI. Although Rule 15 of the Federal Rules of Civil Procedure is not by its terms limited to amendments which add rather than delete matters, the court believes plaintiff’s motion is more appropriately brought under Rule 41(a)(2). Rule 41(a) provides in pertinent part:

Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs, or (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action____
(2) By Order of Court. Except as provided in paragraph (1) of this subdivision of this rule, an action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as the court deems proper____

As defendant has filed no response to plaintiff’s motion to amend, plaintiff’s motion is deemed unopposed. Construing the motion as one under Rule 41(a)(2), the court grants plaintiff's motion and hereby DISMISSES Counts II through VI of plaintiff’s complaint.

Having dismissed Counts II through VI of plaintiff’s complaint, it remains for the court to determine whether defendant’s motion to dismiss and/or motion for summary judgment should be granted as to Count I of plaintiff’s complaint. The court begins its analysis of this issue by an examination of what it is plaintiff asks this court to do. Plaintiff asks the court to appoint a receiver to oversee and effectuate the sale of the house and the distribution of the proceeds in accordance with the final judgment and decree of divorce entered by the Cobb County Superi- or Court. This court has found no case where a federal court has been asked to implement a decree of a court of the forum state providing for the sale of the marital property and division of the proceeds. However, the present case can be analogized to a suit petitioning this court for recovery of alimony in accordance with a divorce decree. The federal courts have been extremely reluctant to entertain such suits unless the alimony award has been reduced to a final monetary judgment. See Lynde v. Lynde, 181 U.S. 183, 187, 21 S.Ct. 555, 556, 45 L.Ed. 810 (1901) (alimony award for a fixed sum already due held recoverable in a federal court of another state, while future alimony not recoverable in federal court); Barber v. Barber, 62 U.S. (21 How.) 582, 16 L.Ed. 226 (1859). This reluctance to reduce an alimony award to judgment is based upon the fact that alimony award is within the discretion of the state trial judge and can be modified at any time. Once the award is reduced to a judgment for a sum certain, it can be enforced like any other state court judgment. Until that time, however, any action by the federal court to reduce the award to a sum certain necessarily requires the court to intrude upon an area still within the discretion of judges with expertise in domestic relations matters. This intrusion into matters which are still the subject of the Cobb County court and within its special expertise in the area of domestic relations alone would warrant dismissal of Count I of plaintiffs complaint. Lynde v. Lynde, 181 U.S. 183, 187, 21 S.Ct. 555, 556, 45 L.Ed.2d 810 (1901). However, additional and stronger grounds exist for dismissing Count I. Appointment of a receiver to manage the sale of the house would necessarily require this court to assert in rem or quasi in rem jurisdiction over the house. The Supreme Court has held that a federal court may not assert in rem or quasi in rem jurisdiction over a piece of property where another court has previously acquired such jurisdiction over the same property. Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285 (1939). In Rockefeller v. First National Bank of Brunswick, 154 F.Supp. 122 (S.D.Ga.1957), the court stated:

It is well settled that where a proceeding is brought, either in the state or federal court, in rem or quasi in rem, which involves the control or disposition of specific property, the court which first acquires jurisdiction may maintain and exercise that jurisdiction to the exclusions of the other, and that the later proceeding brought in the other court must be dismissed. Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285. The Supreme Court has said that the principle there laid down “is a principle of right and of law, and therefore, of necessity. It leaves nothing to discretion or mere convenience.” Kline v. Burke Construction Company, 260 U.S. 226, 43 S.Ct. 79, 81, 67 L.Ed. 226.

Therefore, if the Superior Court of Cobb County, Georgia acquired and still asserts in rem or quasi in rem jurisdiction over the house belonging to the parties, then this court is precluded from taking any action with reference to the property and must dismiss plaintiffs complaint.

While this court claims no special expertise in domestic relations matters, it appears to the court that the Superior Court of Cobb County did assert quasi in rem jurisdiction over the marital property when it provided for the division of the property. O.C.G.A. § 19-5-5 requires the party seeking divorce and division of property to file a statement of the marital property. The jury has the authority under Georgia law to divide equitably the property between the parties regardless of which party may have had title to the property. Stokes v. Stokes, 246 Ga. 765, 273 S.E.2d 169 (1980). Finally, “the verdict of the jury disposing of the property in a divorce case shall be carried into effect by the court by entering such judgment or decree or taking such other steps as are usual in the exercise of the court’s equitable powers to execute effectually and fully the jury’s verdict.” O.C.G.A. § 9-5-13.

Black’s Law Dictionary defines the term “quasi in rem” as

A term applied to proceedings which are not strictly and purely in rem, but are brought against the defendant personally, though the real object is to deal with particular property or subject property to the discharge of claims asserted.

Under this definition the court believes that a court hearing a suit for divorce and division of property asserts quasi in rem jurisdiction over the marital property. Its equitable division of the property is a proper exercise of such quasi in rem jurisdiction. Cf. Blount v. Metropolitan Life Insurance Company, 190 Ga. 301, 303, 9 S.E.2d 65 (1940) (“[Wjhere the subject of the suit relates to an actionable interest or claim by the plaintiff in real or personal property located in this state, a court of equity of this state will have jurisdiction to render a decree in rem with respect to the particular property involved____”). Therefore, this court finds that the Superior Court of Cobb County did assert quasi in rem jurisdiction over the marital property, including the property which is the subject of this lawsuit. The court further finds that, because the Cobb County Court’s order providing for the sale of the property and division of the proceeds has not yet been complied with, that court still has and continues to exercise quasi in rem jurisdiction over the property. The court finds, therefore, that it has no power to grant plaintiff the relief he seeks and that this action must be dismissed for failure to state a claim. Princess Lida of Thurn and Taxis v. Thompson, 305 U.S. 456, 59 S.Ct. 275, 83 L.Ed. 285 (1939); Rockefeller v. First National Bank of Brunswick, 154 F.Supp. 122 (S.D. Ga.1957). Defendant’s motion to dismiss is GRANTED as to Count I of plaintiff’s complaint pursuant to Fed.R.Civ.P. 12(b)(6).

In sum, plaintiff’s motion to amend the complaint by dismissing Counts II through VI of its complaint is converted to a motion under Rule 41(a)(2) and GRANTED. Defendant’s motion to dismiss is GRANTED as to Count I of plaintiff’s complaint and DENIED as moot as to Counts II through VI. Plaintiff’s motion for appointment of a receiver is controlled by and made moot by the court’s decision to dismiss Count I of the complaint and is, therefore, DENIED. There being no further issues for the court’s resolution, this action is hereby DISMISSED.

      . Indeed, such lack of expertise is a principal reason for a federal court abstaining from deciding domestic relations issues. See Crouch v. Crouch, 566 F.2d 486, 487 (5th Cir.1978).