author: SWEET, District Judge.

text:
    John MAISCH, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. 84 Civ. 2822 (RWS).
    United States District Court, S.D. New York.
    March 22, 1985.

      Marc L. Ames, New York City, for plaintiff.
    Rudolph W. Giuliani, U.S. Atty., S.D.N.Y. by Neal S. Mann, Asst. U.S. Atty., New York City, for defendant.
   OPINION

SWEET, District Judge.

This is an action brought by plaintiff John Maisch (“Maisch”) under section 205(g) of the Social Security Act, as amended (the “Act”), 42 U.S.C. § 405(g), to review a final determination of the Secretary of Health and Human Services (the “Secretary”), which denied Maisch’s application for federal disability insurance benefits. Maisch has now moved pursuant to Fed.R. Civ.P. 12(c) for judgment on the pleadings. The Secretary has cross-moved for an order pursuant to Rule 12(c) affirming the decision. For the following reasons, the decision of the Secretary is reversed, and the case is remanded to the Secretary for further proceedings consistent with this opinion.

Prior Proceedings

Maisch filed an application for Social Security Disability Benefits (“Disability Benefits”) on February 11, 1980, alleging that he had been disabled since May 7, 1979 due to back injuries he sustained while performing his job. His application was denied initially and on reconsideration, and Maisch subsequently requested a hearing to review his application. The hearing was held on July 8, 1980. Maisch appeared before Administrative Law Judge Jerome Feiner (“Feiner”), who considered the case de novo. On October 31, 1980, the Administrative Law Judge (“ALJ”) found that Maisch was not under a disability, and the Appeals Council affirmed that determination. Maisch sought review of the Secretary’s decision by commencing an action on March 9, 1981, filed under Docket No. 81 Civ. 1347 (MP). By order dated September 25, 1981, the Honorable Milton J. Pollack, United States District Judge for the Southern District of New York, remanded the case to the Secretary for further consideration under 20 C.F.R. App. II súb-part P. because he found that the ALJ did not comply with the standard set out in Gold v. Secretary of HEW, 463 F.2d 38 (2d Cir. 1972). Pursuant to the court’s order, a new hearing was held on March 18, 1983 before ALJ Feiner, who considered the case de novo. Maisch was represented by counsel. On June 30, 1983, the ALJ found that Maisch was disabled due to a mental impairment as of March 2, 1982, but not prior thereto. On December 29, 1983 the Appeals Council adopted the decision of the AU which then became the final decision of the Secretary. Maisch commenced the instant action on April 20, 1984 to review the final decision of the Secretary.

The Record Below

Maisch was bom on September 21, 1934 and at the time of the second hearing was 48 years of age. He completed most of high school and worked as a rigger and crane foreman for a utilities company for over 28 years. On May 7, 1979, Maisch suffered an occupational injury after falling down a flight of stairs, sustaining a low back injury and fracturing ribs. On the date of his injury Maisch was examined by Dr. Francesco Cavallo (“Dr. Cavallo”), a general practitioner. Dr. Cavallo treated Maisch weekly through at least July 1980. In a report dated May 21, 1980 Dr. Cavallo stated that examination of that date revealed that Maisch had tenderness of the cervical, thoracic and lumbar spine as well as left shoulder and wrist. He had limited flexion of the lumbar spine and walked with an antalgic gait. Diagnosis was chostochondral detachment of the right ribs with thoracic spine sprain and lumbosacral derangement. Dr. Cavallo assessed Maisch’s residual functional capacity and determined that in an eight hour work day Maisch could sit, stand and walk for one hour each, occasionally lift and carry up to ten pounds and could not use his left hand for repetitive action. In a subsequent report dated July 2, 1980 Dr. Cavallo found that Maisch was totally and permanently disabled with a diagnosis of low back derangement with discogenic disease of L5-S1.

Approximately two weeks after his accident, on May 20, 1979 Maisch was treated at the emergency room in Huntington Hospital complaining of pain in his rib cage and upper back. It was felt that Maisch had a possible fracture in the eleventh rib on the right side. He was discharged with pain medication and told to visit his physician.

The record contains a report dated July 24, 1979 from Dr. Anthony Puglisi (“Dr. Puglisi”), a board certified orthopedic surgeon. His examination revealed limitation of range of motion of the lumbosacral spine. Straight leg raising was positive at 60 degrees bilaterally but deep tendon reflexes were normal. X-rays of the lumbosacral spine revealed some narrowing of the L5-S1 interspace as well as- traction spurs and other degenerative changes of the lower lumbar spine. Dr. Puglisi diagnosed low back derangement and felt that Maisch would benefit from a course of bedrest, pelvic traction and medication. He felt that Maisch was temporarily disabled.

On February 25,1980 Dr. Saverio Franco (“Dr. Franco”), a board certified internist, reported the results of seven examinations of Maisch. He felt that Maisch had a diagnosis of low back derangement. Examination of January 10, 1980 revealed Maisch’s back was straight. He was able to flex to 75 degrees with no spasms. Deep tendon reflexes were normal and straight leg raising was negative. Dr. Franco stated that Maisch’s absence from work was considered indefinite.

Maisch was examined on seven occasions by Dr. William Jaffe (“Dr. Jaffe”), a board certified orthopedic surgeon. Dr. Jafee’s report of July 1, 1980 referred to a prior report after his first examination of September 28, 1979. In this report while finding some positive physical findings, Dr. Jaffee stated that he did not feel Maisch would be permanently or seriously disabled. He also stated that if Maisch’s symptoms diminished he would suggest he return to light duty. Dr. Jaffee did, in fact, recommend light duty for Maisch after his examination of December 11, 1979 and again after his examination of January 8, 1980.

In order to obtain a more definite assessment of Maisch’s orthopedic impairment, several consultative examinations were requested. On August 25, 1980 Maisch was examined by Dr. Richard Goodman (“Dr. Goodman”), a board certified orthopedic surgeon. Physical examination revealed some limitation of range of motion of the lumbar spine. Knee and ankle reflexes were three plus and equal bilaterally. Neurological examination was within normal limits. In the sitting position straight leg raising was negative to 90 degrees bilaterally. When lying down straight leg raising was limited to 20 degrees but with a negative Lasegue sign. X-rays of the lumbosacral spine revealed moderate narrowing of the L5 interspace with slight degenerative changes of the lumbosacral spine and slight spondylosis of the lumbar spine. It was the opinion of Dr. Goodman that while Maisch had some loss of motion of the lumbar spine this was partially due to spondylosis and partially on a voluntary basis. He felt that with proper physical therapy stimulation Maisch could sit, stand and walk for eight hours in an eight hour day and continuously lift and carry up to 50 pounds, and that Maisch could use his hands for repetitive actions. It does not appear from Dr. Goodman’s report that he actually examined Maisch’s hands.

At the first hearing, Maisch testified that because of almost continuous severe back pain, he is unable to sit for more than 45 minutes, after which he must stand for about a half hour, that he is unable to stand for more than an hour, and that he is unable to drive a car. He also testified that he was able to do a little housework, take care of most of his personal needs, and swim for short periods of time.

On the basis of the above evidence, the AU concluded at the end of the first hearing that Maisch possessed the residual functional capacity to perform at least sedentary work and that he was therefore not disabled. He reached this conclusion by weighing the evidence presented by the various doctors as to Maisch’s physical capacity and by considering Maisch’s allegations of pain. Following Judge Pollack’s remand for failure to comply with the appropriate standard, the Appeals Council asked the United States Attorney’s Office to provide further information as to the basis for remand due to the brevity of the court order. The U.S. Attorney’s office was advised the Appeals Council that Judge Pollack believed there was a need for vocational evidence in light of what he considered to be a showing of physical problems, that he queried whether the AU had given appropriate weight to Maisch’s subjective testimony or to the reports of Maisch’s treating physicians, and that he was concerned as to whether Maisch was allowed to have counsel represent him at a rehearing of the AU’s opinion.

Upon remand, additional evidence was presented for the AU’s consideration.

On May 27, 1982 Maisch was examined by Dr. Harold Massoff (“Dr. Massoff”), a board certified consultative orthopedic surgeon. His physical examination revealed that Maisch had a deep tan from the waist up including the upper extremities and when the wrist support was removed from the left wrist there was no lightening of the tan. When Maisch sat over the side of the table he was able to extend his knees fully. Straight leg raising was positive at 60 degrees but when he flexed his hips he could go to 90 degrees. Left straight leg raising was positive at 60 degrees and an attempt to passively increase range of motion was met by resistance. Ankle jerks and knee jerks were bilateral and equal. He had a socklike hyperesthesia bilaterally from the ankles to the toes. He held his lumbar muscles tightly with firmness of the paraspinal musculature. There was limitation of range of motion of the lumbar spine. X-ray of the lumbosacral spine revealed narrowing of the L5-S1 interspace. Dr. Massoff’s diagnosis was low back syndrome with possible radicular symptoms and some unphysiological findings of pain distribution and hyperesthesia. Dr. Massoff assessed Maisch’s residual functional capacity and based upon this assessment in an eight hour work day Maisch could sit for six hours, stand and walk for two hours each, occasionally lift up to 20 pounds and occasionally carry up to 25 pounds. He could use his hands for repetitive actions bilaterally.

The record contains an attending doctor’s progress report to the Workers’ Compensation Board by Dr. Kenneth Glass (“Dr. Glass”), an orthopedic surgeon. This report was dated April 1, 1981. Dr. Glass gave Maisch the diagnosis of cervical and lumbar sprain. He stated that Maisch was disabled as of the time of his report. He noted that Maisch was going for physical therapy and using a brace.

On March 4, 1982 Maisch was examined by Dr. Justus Kaufman (“Dr. Kaufman”), an abdominal surgeon who had considerable experience as an orthopedic surgeon, at the request of his attorney. Physical examination revealed that he appeared in acute discomfort. He walked with a decided limp. Examination of the back revealed loss of the normal lumbar curve. Tenderness was present over the lower lumbar vertebra. Range of motion of the lumbar spine was markedly limited and he could not stand on his heels or toes. There was no atrophy of the thighs or calves. Straight leg raising was positive at 45 degrees bilaterally with positive Lasegue and Patricks signs. There was weakness and extension of the big left toe present and bilaterally present Ely signs. Cervical spine revealed moderate restriction in all motions. Marked course tremors were present in both outstretched hands. Examination of the heart revealed tachycardia of 110 with elevated blood pressure at 150/104. There were narrowing arterioles in the fundi. Examination of the lower extremities revealed no pulsation in the right femoral artery and in the left dorsalis pedis. Dr. Kaufman’s diagnosis was lumbar hypertrophic osteoarthritis associated with discogenic disease, hypertrophic osteoarthritis of the neck, diabetes, hypertension and arteriosclerosis obliterans involving the lower extremities associated with calcification of the abdominal aorta and its iliac branches. Dr. Kaufman opined that Maisch was totally disabled. In a subsequent report dated April 21,1982 Dr. Kaufman noted that on March 26, 1972 Maisch sustained a fracture and subluxation of the navicular bone. Examination of the left upper extremity revealed a 25 percent restriction in dorsi and palmar flexion of the wrists. Tenderness was present over the navicular bone. Claimant had moderate weakness in hand grasps and tenderness over the tip of the thumb. X-ray of the left hand revealed an old fracture of the navicular bone with evidence of osteoporosis and arthritic changes in the carpal bones. Dr. Kaufman also appeared and testified at the hearing. His testimony comported with his reports. He stated that Maisch’s hypertension was under good control with medication. Dr. Kaufman assessed Maisch’s residual functional capacity and based upon this assessment he testified that Maisch could only walk one block before his legs would become numb and he could only sit and stand one-half hour without pain. He also testified that he gave Maisch the diagnosis of diabetes strictly by history.

Maisch was examined on two occasions by Dr. John Bellia (“Dr. Bellia”), a board certified psychiatrist. A mental status examination on March 2, 1982 revealed that Maisch was “constantly choked up,” in obvious emotional distress and cried a number of time. He had symptomatology of a seriously depressed and anxious individual. He did not socialize at all. Dr. Bellia felt that Maisch had symptoms indicative of a major depressive disorder. He had a disphoric mood, usually of depression and a loss of interest in pleasure in almost all activities. The disturbance was persistent and associated with other symptoms, such as insomnia, psychomotor agitation, loss of energy and fatigue and feelings of worthlessness. Suicidal ideation was present, as was anxiety. His anxiety was manifested by palpitations, difficulty in breathing, dizziness and vertigo as well as hyperesthesias. During the examination he was easily distracted. Dr. Bellia also appeared and testified at the hearing. He testified that he has given Maisch psychotherapy on two occasions in his office and has spoken to Maisch numerous times over the phone. He did not place Maisch on any psychotrophic medication because of all the other medication he was taking. He felt Maisch was credible and his findings were consistent with Maisch’s allegations. Maisch was unable to relate to others. It was Dr. Bellia’s opinion that Maisch could not be competitive or productive. He had severe difficulty in concentrating and could not even read a newspaper. He could not retain information and his frustration tolerance level was extremely low. He could not tolerate even ordinary or work related stress and could not meet productive standards. Dr. Bellia testified that these findings have been present since his examination of March 2, 1982 at the same level of severity. But he could not say how depressed or anxious Maisch was after his injury or at any time up to the date of his examination.

The record contains a report from Seymour Seltzer (“Seltzer”), a registered physical therapist dated November 29, 1982. Seltzer stated that Maisch appeared for treatment on five occasions from February 26, 1981 through March 31, 1981. He was referred to Seltzer by Dr. Glass. During the course of treatment Maisch complained of pain in his neck and low back areas.

Dr. David Vandergoot (“Dr. Vandergoot”), vocational consultant appeared and testified at the second hearing. Dr. Vandergoot reviewed the medical evidence of record and the testimony at the hearing prior to his testimony. It was the opinion of Dr. Vandergoot that based upon the mental status findings and residual functional capacity as set forth by Dr. Bellia, Maisch could not engage in any substantial gainful activity because of his difficulty in concentrating, problems with interaction and severe inability to deal with stress. He further testified based upon a hypothetical question that leaving aside any psychiatric disorders, if Maisch could perform sedentary unskilled work, there were jobs that he could perform such as wire worker, clerical sorter, order clerk or sedentary cashier work. Maisch acquired skills that were transferrable to other semi-skilled and/or skilled work sedentary jobs from his past relevant work. These skills included ability to follow instruction, ability to use hand and power tools, ability to estimate distance and planning work of others. The semi-skilled and/or skilled sedentary jobs that these skills were transferrable to include sedentary assembly and inspecting jobs. In response to another hypothetical question, Dr. Vandergoot testified that if Maisch was ambidextrous and could not use his left hand, he could do most of the sedentary jobs Dr. Vandergoot had previously enumerated.

At the second hearing, Maisch repeated the substance of his testimony at the original hearing. In addition, he testified about his mental state. He testified as to his feelings of worthlessness and helplessness and stated that his emotional problems began when he became incapable of paying his bills. He also testified that he has problems with his left wrist that required him to wear a brace when getting up and down. Additionally, he stated that he is ambidextrous, although he does more with his left hand than his right.

Mrs. Maisch, Maisch’s wife of over twenty-five years, also testified at the second hearing. She stated that Maisch was depressed right from the time of the accident and that beginning at that time she was afraid to leave him alone due to his feelings of worthlessness and because of her fear that he might be suicidal. In response to a question by the AU as to any changes in his emotional condition from the time of the accident to the present that it was “maybe a little worse.” The record also includes a letter from Mrs. Maisch to Maisch’s attorney, dated December 31, 1980 which Mrs. Maisch adopted at the second hearing as her testimony. In that letter, she wrote that she was concerned about her husband's emotional state, that he “feels so useless to himself,” that he had been “very depressed” since the accident, and that he is in constant pain.

At the conclusion of the second hearing, the AU considered the medical evidence presented by Drs. Cavallo, Glass, Kaufman, Puglisi, Goodman, Jaffee and Massoff, as well as the testimony of Dr. Vandergoot and Maisch’s allegations of severe pain. He concluded that Maisch suffered from a severe sprain of the cervical and lumbar which prevented him from performing his past work, but that he retains the residual functional capacity to engage in sedentary work and is therefore not disabled. On the basis of Dr. Bellia’s testimony, he concluded that Maisch had a severe psychiatric impairment as of March 2, 1982 which would prevent him from engaging in any substantial painful activity. Because he found the record “totally devoid of any evidence of a psychiatric impairment” prior to March 2, 1982, the AU found Maisch disabled since March 2, 1982 but not prior to that time.

Maisch now claims that there was not substantial evidence to support the AU’s finding that he was not under a disability from May 7, 1979, the date of the accident, to March 2, 1982. He contends that as before the AU gave insufficient weight to the testimony of Maisch’s treating physicians and to the testimony of Maisch and his wife, that there is not enough evidence to support the AU’s conclusion that Maisch was capable to sedentary work, given the medical problems with his left hand, and that the AU’s choice of March 2, 1982 as the date on which Maisch first became disabled was arbitrary.

Discussion

In reviewing a denial of Social Security disability benefits, a court’s function is to determine whether the decision of the Secretary is supported by substantial evidence on the record as a whole. Donato v. Secretary of Health and Human Services, 721 F.2d 414, 418 (2d Cir.1983); Spicer v. Califano, 461 F.Supp. 40, 45 (N.D.N.Y.1978); 42 U.S.C. § 405(g). Substantial evidence in this context has been defined as “more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971), quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938); Donato v. Secretary of Health and Human Services, supra, 721 F.2d at 418. The reviewing court is not to decide the case novo, and where supported by substantial evidence the Secretary’s findings of fact, as well as the inferences and conclusions to be drawn from those findings, are conclusive even where the reviewing court’s independent analysis of the evidence may differ from the Secretary’s analysis. Rutherford v. Schweiker, 685 F.2d 60, 62 (2d Cir.1982). As the trier of fact, it is the function of the Secretary, and not the court, to resolve conflicts in the evidence and to pass on the credibility of witnesses. Richardson v. Perales, supra, 402 U.S. at 399, 91 S.Ct. at 1426; McLaughlin v. Secretary of Health, Education and Welfare, 612 F.2d 701, 705 (2d Cir.1980).

In assessing an individual’s disability, the Secretary must consider: (1) the objective medical facts, (2) the medical opinions of the examining or treating physicians; (3) the subjective evidence of the claimant’s symptoms submitted by the claimant, his family, and others; and (4) the claimant’s educational background, age, and work experience. Gold v. Secretary of Health, Education and Welfare, 463 F.2d 38, 41 n. 2 (2d Cir.1972); Mongeur v. Heckler, 722 F.2d 1033, 1037 (2d Cir. 1983).

For purposes of the Social Security Act, disability is defined as:

inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

42 U.S.C. § 423(d)(1)(A). A physical or mental impairment is defined as “an impairment that results from anatomical, physiological or psychological abnormalities which are demonstrable by medically acceptable clinical and laboratory diagnostic techniques.” 42 U.S.C. § 423(d)(3).

In Berry v. Schweiker, 675 F.2d 464 (2d Cir.1982), the Second Circuit set forth a five-step sequence to be utilized in evaluating disability claims:

First, the Secretary considers whether the claimant is currently engaged in substantial gainful activity. If he is not, the Secretary next considers whether the claimant has a “severe impairment” which significantly limits his physical or mental ability to do basic work activities. If the claimant suffers such an impairment, the third inquiry is whether, based solely on medical evidence, the claimant has an impairment which is listed in Appendix 1 of the regulations. If the claimant has such an impairment, the Secretary will consider him disabled without considering vocational factors such as age, education, and work experience; the Secretary presumes that a claimant who is afflicted with a “listed” impairment is unable to perform substantial gainful activity. Assuming the claimant does not have a listed impairment, the fourth inquiry is whether, despite the claimant’s severe impairment, he has the residual functional capacity to perform his past work. Finally, if the claimant is unable to perform his past work, the Secretary then determines whether there is other work which the claimant could perform.

675 F.2d at 467. See City of New York v. Heckler, 742 F.2d 729, 732 (2d Cir.1984); Chico v. Schweiker, 710 F.2d 947, 950-52 (2d Cir.1983); 20 C.F.R. 404.1520. The Second Circuit also set forth the burdens of proof on the various steps: the claimant bears the burden of proof as to the first four steps, while the Secretary must prove the final one. Berry v. Schweiker, supra, 675 F.2d at 467. See Carroll v. Secretary of Health and Human Services, supra, 705 F.2d at 642.

In the present case the AU applied this analysis separately to Maisch’s claims of physical or exertional disabilities and his claims of mental or non-exertional disabilities. As to the assertions of a mental disability, the AU found that although Maisch had met his burden of proving that from March 2, 1982 on he was so disabled that he was unable to perform substantial gainful activity, he had presented no evidence of mental disability prior to that time. As to the assertions of a physical disability, the AU concluded that while Maisch had met his burden of proof as to the first two steps of the analysis, he had failed to prove that his impairment was “listed.” He further found that while Maisch lacked the residual functional capacity to perform his past work, he was capable of performing sedentary work.

Non-exertional Impairment

The Secretary’s determination that Maisch’s mental disability did not begin before March 2, 1982 is unsupported by substantial evidence. With regard to the onset date of Maisch’s mental disability, the AU reasoned as follows:

The undersigned cannot find that the claimant was disabled by reason of his psychiatric impairment prior to March 2, 1982. The record is totally devoid of any evidence of a psychiatric impairment pri- or to this time. At the hearing, Dr. Bellia testified that although the claimant’s psychiatric impairment has maintained at the disabling level of severity since his examination of March 2, 1982 he was unable to state how severe the claimant’s impairment was prior to his examination. As such, while the undersigned finds that the claimant has been unable to engage in any substantial gainful activity since March 2, 1982, I cannot find the claimant disabled prior to this date.

The AU’s statement that “[t]he record is totally devoid of any evidence of a psychiatric impairment prior to this time” is not supported by the record. At the hearing, Dr. Bellia testified that “based on the history, it would seem he became depressed and anxious after his injury.” He also stressed the role that Maiseh’s injury played in his psychological disorder, noting his feelings of uselessness and inability to produce or compete. He testified that “based on the history, it would seem that he became depressed and anxious after his injury” and also stated that “I think the level of severity has progressively increased,” although he was unable to judge the point at which Maisch’s impairment reached the level of severity that existed on March 2, 1982, the date of Dr. Bellia’s first examination. The record also includes the testimony of both Maiseh and his wife as to the onset of his psychiatric disorder. Mrs. Maiseh testified that her husband’s emotional upset began right “from the beginning” and that right after the accident she was concerned about his suicidal tendencies. She also stated that his emotional condition is “maybe a little worse” since May of 1979. Maiseh himself testified that his emotional problems developed when he first became unable to handle his finances.

Given the above testimony, the AU’s claim that there was no evidence presented as to a psychiatric impairment prior to March 2, 1982 cannot withstand scrutiny. An AU has an obligation to consider more than just objective medical

facts and medical opinions when assessing an individual’s disability: he should also consider the subjective evidence submitted by the claimant and his family. See Gold v. Secretary of Health, Education and Welfare, supra, 463 F.2d at 41. An individuals own subjective estimation of his impairment is not, of course, in itself sufficient to establish a disability. See Reyes v. Harris, 482 F.Supp. 638, 641 (S.D.N.Y.1979). In the present case, however, the record contains medical evidence of Maiseh’s mental impairment. Dr. Bellia’s testimony suggested that the impairment existed prior to March 2, 1982, and therefore any finding of a disability prior to that time would be supported by more than just Maiseh’s subjective testimony. Furthermore, where it is not possible to reach a determination of disability based on expert medical opinion and evidence, subjective testimony by lay witnesses may be entitled to great weight if uncontradicted in the record. See Laws v. Celebrezze, 368 F.2d 640, 644 (4th Cir.1966). It was within the province of the AU to reject self-serving statements of a claimant and his family, but it was an error of law for him to fail to consider expressly such subjective complaints. See Spicer v. Califano, supra, 461 F.Supp. at 47-48. The AU was not entitled to assume that Maiseh became mentally disabled on the day of Dr. Bellia’s examination absent some evidence to support such a view. Instead, he was required to examine the record further to determine the onset date. Bell v. Secretary of Health and Human Services, 732 F.2d 308 (2d Cir.1984). For that reason, I reverse the decision of the AU and remand the case for further consideration of the date of the onset of Maisch’s severe mental disability.

In addition, even if on remand the judge concludes on consideration of all of the evidence that Maiseh did not have a severe mental disorder qualifying as a “listed” impairment prior to March 2, 1982 he must still consider whether prior to that time his impairment was severe enough to limit Maisch’s ability to do basic work activities. If he concludes that Maisch was severely impaired, he must consider whether prior to that time Maisch had a mental impairment which would prevent him from returning to his prior work. If he finds that Maisch was so impaired, he must then decide whether Maisch retained the residual functional capacity to engage in some sort of work. Because the AU concluded that there was no evidence of any psychiatric impairment prior to March 2, 1982, he failed to apply the five-step sequence required in evaluating disability claims. See Berry v. Schweiker, supra, 625 F.2d at 464. Given the fact that the record contains evidence that could support a finding of some level of mental disability prior to March 2, 1982, the AU must fully consider that evidence in accordance with the required sequence of evaluation.

Exertional Impairments

The AU made additional errors constituting adequate grounds for reversal in applying the relevant legal standards to Maisch’s claims of physical disability and in concluding that Maisch was not disabled.

1. Testimony of Physicians The Second Circuit has repeatedly emphasized that a treating physicians’ opinion is entitled to particular weight and is binding on the Secretary when it is not contradicted by substantial evidence. See, e.g., Rivera v. Schweiker, 717 F.2d 719, 723 (2d Cir.1983); Eiden v. Secretary of Health, Education and Welfare, 616 F.2d 63, 64 (2d Cir.1980). One of the bases for Judge Pollack’s remand of the AU’s first decision was his failure to give appropriate weight to the reports of treating physicians. The Second Circuit rule requires that “special weight ... be given to medical reports submitted by an applicant’s attending physician even if there is contradicting medical evidence supplied by the agency-appointed physician.” Chiappa v. Secretary of HEW, 497 F.Supp. 356, 360 (S.D.N.Y.1980). There is no requirement that medical opinions be necessarily supported by “objective” clinical or laboratory findings. Spicer v. Califano, supra, 461 F.Supp. at 45; Cutler v. Weinberger, 516 F.2d 1282, 1286-87 (2d Cir.1975). Therefore, a medical opinion does not become unacceptable simply because it is based upon the claimant’s symptomology. Spicer v. Califano, supra, 461 F.Supp. at 45.

In the case at hand, the AU correctly found that the medical evidence pertaining to Maisch’s physical impairment was contradictory. In evaluating the varying reports, however, he expressly discounted the findings of Maisch’s treating physicians, Drs. Cavallo and Glass, on the grounds that they were “totally devoid” of any physical findings or clinical and diagnostic findings. Because the AU rejected Maisch’s physicians’ opinions by using a standard contrary to the law, he failed to give appropriate weight to their reports. Furthermore, I question whether the other doctors’ reports constitute substantial evidence sufficient to contradict expert opinions of the treating physicians. On remand, the AU should accord appropriate weight to the treating physicians’ findings and should thoroughly examine the findings of the non-treating physicians to see if they are sufficient to contradict these findings.

2. Combination of Impairments 20 C.F.R. § 404.1522 specifically provides that the Secretary should combine unrelated impairments to see if together they are severe enough to prevent a claimant from doing substantial gainful activity. Similarly, 20 C.F.R. § 404.1545(a) provides that the Secretary should consider all known impairments together in order to determine residual functional capacity. Furthermore, it is the rule in the Second Circuit that “all complaints ... must be considered together in determining ... work capacity.” Gold v. Secretary of HEW, supra, 463 F.2d at 42; DeLeon v. Secretary of Health and Human Services, 734 F.2d 930, 937 (2d Cir.1984).

In the present case, there is no evidence that the AU took into consideration both Maisch’s mental and physical impairments in considering the severity of his impairment or his residual functional capacity.

His discussion of Maisch’s mental disability is completely separate from his evaluation of his physical capabilities. The evidence submitted by the various doctors on which the ALJ relied to find that Maisch’s physical impairments did not prevent him from engaging in substantial gainful activity and that he retained the residual functional capacity to do sedentary work did not appear to in any way take into account Maisch’s alleged mental difficulties. When Dr. Vandergoot testified that, assuming Maisch had a residual functional capacity to perform sedentary jobs, unskilled sedentary jobs existed that Maisch could perform given his age, education and work history, the ALJ specifically told him not to consider Maisch’s psychiatric profile in making this assessment.

Given the fact that, as discussed above, the record contains evidence that might support the conclusion that Maisch had some sort of mental disability prior to March 2, 1982, the ALT had an obligation to assess Maisch’s allegations of mental disability in connection with his consideration of Maisch’s physical problems. Even if the ALJ were justified in concluding that the evidence submitted by Maisch did not support an independent finding of either physical or mental impairment, the evidence taken as a whole might support the conclusion that Maisch was unable to engage in gainful activity or that he did not retain the residual functional capacity to engage in sedentary work. On remand, the AU must expressly consider the evidence of Maisch’s alleged mental impairment in determining whether or not Maisch was capable of engaging in substantial gainful activity or retained sufficient residual functional capacity prior to March 2, 1982.

In concluding that Maisch was not disabled, the AU specifically found Rules 201.27 and 201.29 of Appendix 2, Subpart P., Part 404 of the Regulations applicable. However, the Regulations are only applicable where the findings of fact made with respect to a particular individual’s vocational factors and residual functional capacity coincide with all of the criteria of a particular rule. The Regulations state:

[wjhere an individual has an impairment or combination of impairments resulting in both strength limitations and nonexertional limitations, the rules in this sub-part are considered in determining first whether a finding of disabled may be possible based on the strength limitations alone and, if not, the rule(s) reflecting the individual’s maximum residual strength capabilities, age, education, and work experience provide a framework for consideration of how much the individual’s work capability is further diminished in terms of any types of jobs that would be contraindicated by the nonexertional limitations. Also, in these combinations of nonexertional and exertional limitations which cannot be wholly determined under the rules in this Appendix 2, full consideration must be given to all of the relevant facts in the case in accordance with the definitions and discussions of the regulations, which will provide insight into the adjudicative weight to be accorded each factor.

Section 200.00(e)(2) of Appendix 2, Subpart P, Part 404. In the present case, the AU’s failure to consider how Maisch’s work capability might be affected by any non-exertional impairment would only be justifiable if he had correctly found that Maisch was in no way mentally impaired prior to March 2, 1982. Because the AU incorrectly determined that there was no evidence in the record of any mental impairment prior to March 2, 1982, his reliance on Rules 201.27 and 201.29 was incorrect. On remand, he must first assess all evidence of Maisch’s mental impairment prior to that date and, if he finds that Maisch suffered from any mental impairment, no matter how unsevere, during the relevant time period he must take that impairment into account in determining Maisch’s work capability.

The record also contains conflicting evidence pertaining to Maisch’s ability to use his left hand. It is unclear from the AU’s report whether he found Maisch’s ability to use his left hand impaired, although the nature of his decision makes clear that if he found any impairment to exist he did not believe it to be severe. However, if the AU believed that such an impairment existed to any extent, he had, an obligation to assess that impairment’s affect on Maisch’s overall job capacity and his express reliance on the Rules would be inappropriate. The explanatory material in Section 201.00(h) of Appendix 2 provides as an example of a situation where the rules are not applicable an individual with a permanent injury of the right hand limiting the individual to sedentary jobs which do not require bilateral manual dexterity. The Section notes that the rules cannot be applied where an “individual cannot perform the full range of work defined as sedentary.” While Dr. Yanderoot testified that jobs exist which Maisch could undertake despite any limitations on his manual dexterity, his testimony would not justify the AU’s express reliance on the Rules if he found Maisch’s ability to use his hand impaired.

Because Maisch’s ability to use his left hand is an important element of his residual functional capacity, the AU should have expressly considered the medical evidence pertaining to his hand. On remand, the AU should first evaluate the medical evidence as to Maisch’s manual dexterity in accordance with the discussion above as to the weight to be accorded the testimony of the various physicians, and then expressly assess Maisch’s residual functional capacity in light of any manual impairment.

Pain

In his motion papers Maisch also contends that the AU failed to give appropriate weight to Maisch’s subjective claims of pain. It is well established that “subjective pain may serve as the basis for establishing disability, even if such pain in unaccompanied by positive clinical findings or other ‘objective’ medical evidence.” Marcus v. Califano, 615 F.2d 23, 27 (2d Cir.1979) (emphasis and citations omitted); Aubeuf v. Schweiker, 649 F.2d 107 (2d Cir.1981). It is within the discretion of the AU to evaluate the credibility of a claimant and to arrive at an independent judgment in light of medical findings and other evidence regarding the true extent of pain felt by the claimant. Marcus v. Califano, supra, 615 F.2d at 28; Bolton v. Secretary of Health and Human Services, 504 F.Supp. 288, 291 (E.D.N.Y.1980). However, a claimant’s subjective evidence of pain may not be disregarded solely because there is no objective evidence supporting his complaints. Furthermore, where medical evidence establishes a physical basis for the claimants’ subjective complaints, the AU’s right to make a credibility determination cannot of itself insulate his decision for review. See Ghazibayat v. Schweiker, 554 F.Supp. 1005, 1010-1011 (S.D.N.Y. 1983).

In his decision, the AU stated that he carefully considered Maisch’s allegations of severe pain and found that prior to March 2, 1972 Maisch’s pain was not so severe, constant or intractable so as to preclude the performance of sedentary work. He noted that Drs. Jaffe, Puglisi, Goodman and Massoff all considered Maisch’s allegation of pain when they concluded that he was not severely disabled or incapable of performing sedentary work. He also noted that at the first hearing Maisch testified that he was capable of doing some light housework, taking care of his personal needs, and partaking in some recreation. Finally, the AU stated that he “carefully observed the claimant during the course of the first hearing and he did not appear in pain.”

I find that the AU’s evaluation of Maisch’s subjective evidence of pain was sufficient to uphold his determination that the pain was not disabling. The AU was entitled to evaluate Maisch’s claims of disabling pain in light of the other evidence of record and to reject them as self-serving. While relying only on the opinions of the physicians would not have been appropriate, the AU’s statements as to Maisch’s ability to perform certain tasks make clear that the AU undertook an independent assessment of Maisch’s credibility. While I note that the AU’s reference to his own observation of Maisch at the first hearing is questionable in light of the fact that the Second Circuit has raised doubts as to the propriety of subjecting claimants to a “sit and squirm” index. See Aubeuf v. Schweiker, supra, 649 F.2d at 113, the record as a whole makes clear that the AU gave sufficient weight to Maisch’s own testimony.

For the reasons discussed above, the decision of the Secretary is reversed and the case is remanded for further consideration in accordance with this opinion. The case is closed with leave to reopen ab initio, on the specific understanding that the court retains jurisdiction, on motion and without the payment of filing fees, to enter all necessary orders or conduct any necessary future proceedings in the case, as if it had not been closed.

IT IS SO ORDERED.


source: Caselaw Access Project

author: STAPLETON, Chief Judge:

license: Public Domain

text:
    GILBANE BUILDING COMPANY, Plaintiff, v. The NEMOURS FOUNDATION, et al., Defendants.
    Civ. A. No. 83-58-WKS.
    United States District Court, D. Delaware.
    March 25, 1985.

      Victor F. Battaglia, Robert K. Beste, Jr., Biggs & Battaglia, Wilmington, Del., Jack Rephan, Paula J. Glaser, Braude, Margulies, Sacks & Rephan, Washington, D.C., for Pierce.
    Roderick R. McKelvie, Ashby, McKelvie & Geddes, Wilmington, Del., Jeffrey G. Weil, Mark Klugheit, Dechert, Price & Rhoads, Philadelphia, Pa., for Frazer.
    James S. Green, Connolly, Bove, Lodge & Hutz, Wilmington, Del., Howard D. Venzie, Jr., Kevin G. Amadio, Venzie, Phillips & Warshawer, Philadelphia, Pa., for Honeywell.
    Stuart B. Young, Josy B. Ingersoll, Young, Conaway, Stargatt & Taylor, Wilmington, Del., George Anthony Smith, Randall F. Hafer, David A. Dial, Smith, Currie & Hancock, Atlanta, Ga., for Nemours.
    Howard M. Berg, Paul R. Bradley, Howard M. Berg & Associates, Wilmington, Del., for Furlow Associates.
    William Prickett, Richard R. Wier, Jr., Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., John A. Wolf, M. Hamilton Whitman, Ober, Kaler, Grimes & Shriver, Baltimore, Md., for Gilbane.
    Frank O’Donnell, O’Donnell & Hughes, Wilmington, Del., Edward C. German, Peter E. Kane, German, Gallagher & Murtagh, Philadelphia, Pa., for Saxelbye.
    William H. Sudell, Jr., Denison Hatch, Morris, Nichols, Arsht & Tunnell, Wilmington, Del., for DiSabatino.
    Rodman Ward, Jr., Steven J. Rothschild, Edward P. Welch, Skadden Arps, Slate, Meagher & Flom, Wilmington, Del., David G. Lane, William D. Blakely, Lewis, Mitchell & Moore, Vienna, Va., for Dynalectric.
   OPINION

STAPLETON, Chief Judge:

Before me is one portion of a consolidated action arising out of the construction of an 830,000 square foot addition to the Alfred I. duPont Institute Children’s Hospital in Wilmington, Delaware (the “Project”). Contractual disputes and delays in completing the Project have spawned a complex and entangled thicket of litigation involving numerous parties and millions of dollars in claims. Since the factual background of the case has been set forth in some detail in prior opinions, see, e.g., Gilbane Building Co. v. Nemours Foundation, 568 F.Supp. 1085 (D.Del. 1983), repetition here is unnecessary. However, certain portions of this background must be highlighted in order to provide a factual backdrop for the discussion contained herein.

BACKGROUND

On April 5, 1983, Pierce Associates, Inc. (“Pierce”) and Dynalectric Company (“Dynalectric”) filed “sister” breach of contract actions against Gilbane Building Company (“Gilbane”). Gilbane had been retained by the Nemours Foundation (“Nemours”), the owner of the Project, to serve as the prime contractor during Phase 5B of the Project. Pierce and Dynalectric had both entered into subcontracts with Gilbane to perform portions of the work scheduled for completion during Phase 5B. It was the alleged breach of these contracts by Gilbane which provided the genesis for the suits by Pierce and Dynalectric.

In response to the initiation of these breach of contract actions, Gilbane filed counterclaims against Pierce and Dynalectric and third-party complaints against Nemours, Saxelbye, Powell, Roberts & Ponder, Inc. (“Saxelbye”), the architect for the Project, and Furlow Associates, Inc. (“Furlow”), the mechanical and building management systems engineer for the Project. Nemours then filed an answer and counterclaim against Gilbane in each of the cases and claims pursuant to Rule 14 of the Federal Rules of Civil Procedure against Pierce and Dynalectric. Subsequently, Nemours twice amended these claims against Pierce and Dynalectric.

In April, 1984, both Pierce and Dynalectric answered Nemours’ claims and asserted virtually identical counterclaims against Nemours. Nemours moved to dismiss on the basis that neither Pierce nor Dynalectric had stated claims upon which relief could be granted and that Dynalectric had not stated a claim properly within the subject matter jurisdiction of the Court. On October 31, 1984, following the briefing of these motions, both Pierce and Dynalectric amended their counterclaims against Nemours, and on November 7, 1984, the Court heard oral argument, at which time, Nemours represented that its motions to dismiss applied to both the original counterclaims as well as the amended counterclaims. Thereafter, the two cases were consolidated with three other actions similarly arising out of disputes concerning the Project.

DISCUSSION

A. Dynalectric’s Counterclaim Against Nemours — Subject Matter Jurisdiction

Nemours contends that Dynalectric’s counterclaim is not properly within the subject matter jurisdiction of the Court since Nemours and Dynalectric are both citizens of Florida and no federal question is presented by the counterclaim. In short, Nemours argues that in order for a plaintiff to assert a claim against a third-party defendant, there must be an independent jurisdictional basis for such a claim, notwithstanding that such a claim may be in the nature of a counterclaim asserted in response to a claim made by the third-party defendant against the original plaintiff. In support of its position, Nemours relies principally on Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978).

In response, Dynalectric contends that where a third-party defendant has asserted a claim against the original plaintiff pursuant to Fed.R.Civ.P. 14, and, as a result, the original plaintiff has asserted what is essentially a compulsory counterclaim against the third-party defendant, Owen Equipment & Erection Co. v. Kroger, does not require an independent basis for jurisdiction since such a claim is properly within the ancillary jurisdiction of the Court.

While both parties have vigorously contested this issue, the Third Circuit Court of Appeals has recently held that “if ... a third-party defendant asserts claims under Rule 14(a) against [a] plaintiff, ancillary jurisdiction extends to support plaintiff’s ‘compulsory counterclaim’ under Fed.R. Civ.P. 13(a).” Finkle v. Gulf & Western Manufacturing Co., 744 F.2d 1015, 1018 (3d Cir.1984). Since this decision is binding precedent, the controlling issue therefore is whether Dynalectric’s claim against Nemours constitutes a “compulsory counterclaim”.

Rule 13(a) of the Federal Rules of Civil Procedure governs the assertion of compulsory counterclaims as follows:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's ■claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction____

Fed.R.Civ.P. 13(a) (emphasis added).

Nemours does not contend that Dynalectric’s counterclaim requires the presence of third parties over whom this Court cannot acquire jurisdiction. Hence, the key question is whether Dynalectric’s counterclaim arises out of the same transaction or occurrence that formed the basis for Nemours’ claims against Dynalectric.

In Xerox Corp. v. SCM Corp., 576 F.2d 1057 (3d Cir.1978), the Third Circuit indicated that “the operative question in determining if a claim is a compulsory counterclaim is whether it bears a logical relationship to an opposing party’s claim.” Id. at 1059.

[A] counterclaim is logically related to the opposing party’s claim where separate trials on each of their respective claims would involve a substantial duplication of effort and time by the parties and the courts. Where multiple claims involve many of the same factual issues, or the same factual and legal issues, or where they are offshoots of the same basic controversy between the parties, fairness and considerations of convenience and of economy require that the counterclaimant be permitted to maintain his cause of action.

Id. (quoting Great Lakes Rubber Corp. v. Herbert Cooper Co., 286 F.2d 631, 634 (3d Cir.1961). See also Paine, Webber, Jackson & Curtis, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 587 F.Supp. 1112, 1113-14 (D.Del.1984); Wheaton Glass Co. v. Pharmex, Inc., 548 F.Supp. 1242, 1246 (D.N.J.1982); 3 J. Moore, Moore’s Federal Practice ¶ 13.13 (2nd Ed.1984).

A review of Nemours’ claims against Dynalectric indicates that Dynalectric’s counterclaim does in fact arise out of the same transaction or occurrence upon which Nemours' claims are based. Both sets of claims relate to delays and disputes occurring during Phase 5B of the Project. More specifically, Nemours, as a third-party beneficiary of Dynalectric’s subcontract with Gilbane, has charged Dynalectric with breaching its subcontractual obligations. Nemours has also demanded judgment against Dynalectric for damages allegedly resulting from Dynalectric’s intentional and/or negligent failure to perform duties owed to Nemours in a timely and reasonably careful manner. Dynalectric, as will be discussed more fully hereinafter, has charged Nemours with failure to supply Dynalectric with accurate information, plans, and specifications upon which Dynalectric grounded its decision to enter into the subcontract with Gilbane, negligently and tortiously interfering with Dynalectric’s contractual relationship with Gilbane, and retaining the benefit of Dynalectric’s labor and materials without paying full compensation thereof.

Since Dynalectric’s claims are clearly “compulsory counterclaims”, I find that they properly fall within the ancillary jurisdiction of this Court. Therefore, Nemours’ motion to dismiss Dynalectric’s counterclaim for lack of subject matter jurisdiction must be denied.

B. Pierce’s And Dynalectric’s Counterclaims Against Nemours — Substantive Challenges

As previously noted, the counterclaims filed by Pierce and Dynalectric against Nemours are virtually identical. Therefore, the following discussion is applicable to both counterclaims. In addition, the amendments which Pierce and Dynalectric made to their counterclaims following the completed briefing on Nemours’ motions to dismiss have rendered some of Nemours’ contentions moot. Indeed, at oral argument, Nemours withdrew its challenge to Count II of the amended counterclaims on the basis that the amended counterclaims concededly set forth a claim for fraudulent misrepresentation. Consequently, I need only focus on the assertions by Nemours which have not been cured by the amendments to the counterclaims.

The standard which governs motions to dismiss for failure to state a claim upon which relief can be granted is well known. As the Third Circuit Court of Appeals recently stated:

The relevant legal precept is a familiar one; in deciding a Rule 12(b)(6) motion, factual allegations of the complaint are to be accepted as true and the complaint should be dismissed only if it appears to a certainty that no relief could be granted under any set of facts which could be proved. Reasonable factual inferences will be drawn to aid the pleader.

D.P. Enterprises, Inc. v. Bucks County Community College, 725 F.2d 943, 944 (3d Cir.1984).

Count I of the amended counterclaims of Pierce and Dynalectric advances a claim based on negligent misrepresentation. Pierce and Dynalectric allege that Nemours carelessly and negligently furnished them with both incomplete, inaccurate, and insufficient plans and specifications relating to the Project and incorrect information concerning the completion date of the prior phase (Phase 5EXT) of construction work on the Project. Pierce and Dynalectric further claim that they submitted their subcontract bids to Gilbane on the basis of these false representations, and as a result, suffered increased costs and expenses in attempting to perform as required under the subcontracts with Gilbane. In short, Pierce and Dynalectric assert that the cost of and time required for the performance of their work under the subcontracts with Gilbane were substantially increased beyond what they had anticipated in preparing and submitting their subcontract bids since those bids were based on false information negligently supplied by Nemours.

As the primary basis for its challenge to Count I of the counterclaims, Nemours contends that Delaware law does not recognize a cause of action for negligent misrepresentation. At a minimum, Nemours argues, a misrepresentation must be made recklessly in order to be actionable. Mere negligence in propounding a misrepresentation is insufficient.

In response, neither Pierce nor Dynalectric have offered any Delaware cases which expressly recognize a cause of action for negligent misrepresentation. Rather, they argue that even if such a cause of action is without precedent in Delaware, this Court should hear their claims since their interests are entitled to legal protection.

Section 552 of the Restatement (Second) of Torts sets forth the contours of the cause of action for negligent misrepresentation, as follows:

Information Negligently Supplied for the Guidance of Others
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered
(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and
(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.
(3) The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.

Restatement (Second) of Torts § 552 (1977).

While research has not disclosed any cases in which the Delaware courts have expressly embraced Section 552 of the Restatement (Second) of Torts as a correct statement of Delaware law, I am convinced that the Delaware Supreme Court, if confronted with this issue, would so hold. Moreover, I find that Count I of the counterclaims of Pierce and Dynalectric allege facts which, if proven, would satisfy the elements of the cause of action for negligent misrepresentation as described by this section of the Restatement (Second) of Torts. First, it is at least inferrable from the counterclaims that Nemours had a “pecuniary interest” in the transactions between Gilbane and Dynalectric and Pierce. Second, Pierce and Dynalectric specifically allege that Nemours knew or should have known that they would rely on the inaccurate plans, specifications, and information concerning the completion of the preceding phase of the construction work provided to them by Nemours in preparing and submitting their subcontract bids to Gilbane. Third, Pierce and Dynalectric allege that Nemours did not exercise reasonable care in providing them with the inaccurate plans, specifications, and other information. Fourth, Pierce and Dynalectric sufficiently allege that they were part of the limited group of entities for whose benefit and guidance Nemours supplied the false information. Finally, Pierce and Dynalectric sufficiently allege that they suffered losses because of their reliance on this false information in performing the transactions that Nemours intended to influence through the dissemination of such information. Consequently, I must deny Nemours’ motion to dismiss with respect to Count I of the counterclaims.

Count III of the counterclaims of Pierce and Dynalectric sets forth claims against Nemours based on negligence. Specifically, Pierce and Dynalectric allege that Nemours obstructed and interfered with their efforts to perform their work under the subcontracts with Gilbane in an orderly, efficient, and timely manner by negligently failing to process change estimates and proposals and change order amendments in a timely and proper manner, negligently failing to provide Pierce and Dynalectric with work schedules reflecting actual conditions existing at the Project, and negligently failing to provide Pierce and Dynalectric with updated and revised contract design drawings for the Project.

Nemours challenges Count III on the basis that Pierce and Dynalectric have failed to allege or demonstrate the existence of any legal duty owed them by Nemours. This is without merit since Count III of the amended counterclaims contains clear allegations that Nemours owed Pierce and Dynalectric a duty to exercise reasonable care in (1) processing change estimates and proposals and change order amendments, (2) providing reasonable and accurate schedules, and (3) providing updated and revised contract design drawings. Further, Count III of the counterclaims expressly alleges that' Nemours owed Pierce and Dynalectric a duty not to hinder, delay, or interfere with their performance of their subcontractual obligations.

In addition, Nemours asserts that as a matter of law, neither Pierce nor Dynalectric can prove that Nemours owed them any duty of care since at most the acts and omissions set forth in Count III are breaches of duties owed by Nemours to Gilbane under the prime contract, or by Gilbane to Pierce and Dynalectric under the subcontracts. As support for this proposition, Nemours relies on Harbor Mechanical, Inc. v. Arizona Electric Power Cooperative, Inc., 496 F.Supp. 681 (D.Ariz.1980) (Arizona law). There, the court granted summary judgment against contractors who had brought claims against the engineering firm retained by the owner of a construction project alleging, inter alia, that the engineering firm had negligently drafted plans and specifications for the project and had negligently supervised construction of the project. The court found that the contractors were neither parties to the contract between the engineering firm and the owner nor third-party beneficiaries of that contract. The court then indicated that for a negligence claim to be actionable, there must be the breach of some duty owed by the defendant to the plaintiff. While the court did not foreclose the possibility that the parties to a construction project could create the duties allegedly owed by the engineering firm to the contractors through contract, the court found that the contract between the engineering firm and the owner specifically provided that the engineer’s obligations extended only to the owner thereby preventing the court from imposing any duties or obligations on the engineer with respect to the contractors.

The continuing validity of this decision is in serious doubt in light of the en banc decision by the Arizona Supreme Court in Donnelly Construction Co. v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 677 P.2d 1292 (1984), holding that a contractor could maintain an action against an architectural firm absent privity of contract for negligently providing incorrect design plans and specifications. The court found that the defendant architectural firm was under a duty to use ordinary skill and care in providing plans and specifications which were sufficient and adequate and that this duty extended to both those with whom the firm was in privity and those with whom it was not. Since it was foreseeable that the plaintiff contractor would incur increased costs if the plans and specifications were in error, the court ruled that the contractor had stated a cause of action in negligence.

Similarly, in Berkle & Company Contractors, Inc. v. Providence Hosp., 454 So.2d 496 (Ala.1984), the court, inter alia, reversed a decision granting summary judgment in favor of the defendant hospital where a subcontractor had brought claims against the hospital and its architect for negligently directing the subcontractor’s activities with respect to the construction of an addition to the hospital. The court rejected the hospital’s argument that the subcontractor could not enforce the hospital’s duties absent privity or third-party beneficiary status, stating:

[The hospital] misconstrues the basis of duties in negligence actions. A plaintiff may argue that another party owes a duty under a contract upon which the plaintiff reasonably relied____ Alternatively, a plaintiff may argue that another party has duties independent of any contract because that party has acted affirmatively____ [The hospital] can be held liable for negligence injuring third parties, whether or not [the hospital] has a similar duty under contract to some others. The existence of a collateral contract does not negate the obligation imposed in tort to act reasonably.

454 So.2d at 502 (citations omitted).

Although the Delaware case law on this issue is somewhat meager, I am convinced that the Delaware Supreme Court would adopt the position embraced in Donnelly Construction Co. v. Oberg/Hunt/Gilleland, supra, and Berkel & Company Contractors, Inc. v. Providence Hosp., supra, that in a construction dispute, privity of contract or third-party beneficiary status is not a prerequisite in all cases for bringing an action sounding in negligence.

In Crowell Corp. v. Topkis Construction Co., 280 A.2d 730 (Del.Super.Ct.1971), the Delaware Superior Court held that an owner of a building could not bring a negligence action for faulty workmanship against a subcontractor which had assisted in the construction of the building where no “dramatic accident or collapse” had taken place and no person had “suffered physical injury” due to the subcontractor’s alleged negligence absent privity of contract. Id. at 731-32. The court recognized that the privity requirement had been abandoned in cases involving accidents and/or physical injuries, but refused to extend such a rule to cover situations involving only pecuniary loss relying principally on Trans World Airlines v. Curtiss-Wright Corp., 1 Misc.2d 477, 148 N.Y.S.2d 284 (1955), aff'd, 2 A.D.2d 666, 153 N.Y.S.2d 546 (1956), a case involving negligently manufactured airplane engines. While the court conceded that “[f]rom a social viewpoint there is much to be said in favor of the approach taken by [the owner]”, id. at 731, it found that if the ultimate user of a manufactured item were allowed to sue the manufacturer in negligence “merely because an article with latent defects turned out to be bad when used in ‘regular service’ without any accident occurring, there would be nothing left of the citadel of privity and not much scope for the law of warranty.” Id. at 732.

In Oliver B. Cannon & Sons, Inc. v. Dorr-Oliver, Inc., 312 A.2d 322 (Del.Super.Ct.1973), the Delaware Superior Court again confronted the issue of whether an owner could sue a subcontractor for negligent workmanship absent privity of contract. The court indicated that “[w]hile, even under the facts of Crowell, there may be some reason to question preservation of the citadel of privity, this opinion does not question the recent authority of Crowell in deciding Cannon’s motion for summary judgment.” Id. at 329. Rather, the court expanded Crowell’s requirement that there be “an accident” in order to avoid the requirement of privity of contract to apply to a situation in which a subcontractor had negligently applied a polyester resin coating to the inside of chemical process tanks which began to deteriorate less than a year later.

This is a case of physical injury to property and not mere economic loss. It can be reasonably argued that there has been an accident in the basic sense that there was in fact immediate physical injury to the storage tanks not caused by normal wear and tear.

Id. On appeal, the Delaware Supreme Court affirmed the lower court’s decision denying summary judgment in favor of the subcontractor on grounds that the owner was a third-party beneficiary of the subcontract. However, the court did not address the Crowell issue. Oliver B. Cannon & Sons, Inc. v. Dorr-Oliver, Inc., 336 A.2d 211 (Del.1975).

Shortly thereafter, however, in Seiler v. Levitz Furniture Co., 367 A.2d 999 (Del. 1976), the Delaware Supreme Court upheld the right of a tenant of a shopping center to sue, inter alia, the architect of the shopping center for design defects resulting in flood damage to the tenant’s store and the contents thereof. The court set forth alternative grounds for its holding as follows:

Seiler [the architect] argues ... that he was not in privity with Levitz____ [A]s to privity, the case against Seiler was tried on a negligence basis (not on a contract theory) and, to the■ extent he relies on the absence of privity in product liability cases, the argument is without merit in light of our recent decision in Martin v. Ryder Truck Rental, Inc., Del.Supr., 353 A.2d 581 (1976).... In any event, Seiler is accountable to Levitz under third-party beneficiary principles. Oliver B. Cannon & Son, Inc. v. Dorr-Oliver, Inc., Del.Supr. 336 A.2d 211, 215 (1975)....
For these reasons, we conclude that neither the absence of privity nor the other contentions made by Seiler on this issue are meritorious, and we affirm the Trial Court’s conclusion that Levitz has a cause of action against Seiler.

Id. at 1006-1007 (emphasis added).

Since Martin v. Ryder Truck Rental, Inc., 353 A.2d 581 (Del.1976), clearly indicated that Delaware had abandoned common law privity requirements in the area of products liability cases, I am convinced that the Delaware Supreme Court in Seiler, by relying on Martin, was likewise indicating an intent to abandon privity as a prerequisite to bringing suit on a negligence theory to recover financial losses suffered in the construction context. Indeed, this was precisely the result in Seiler. Consequently, I am not prepared to rule at this time that, as a matter of law, Nemours owed no duty of care to Pierce and Dynalectric concerning the alleged actions and/or omissions by Nemours simply because Nemours does not stand in privity of contract with either Pierce or Dynalectric. Rather, a decision as to whether Nemours owed a duty of care to Pierce and Dynalectric must await the development of a factual record. Therefore, I must deny Nemours’ motion to dismiss with respect to Count III of the amended counterclaims.

Count IV of the counterclaims advances a claim based on the theory of tortious interference with contractual relations. Pierce and Dynalectric allege, inter alia, that Nemours intentionally failed to timely and properly process change estimates and proposals and change order amendments, to approve realistic and reasonable work schedules, and to provide updated and revised contract design drawings thereby preventing Pierce and Dynalectric from performing their obligations under the subcontracts with Gilbane and inducing Gilbane to materially breach these subcontracts. Moreover, Pierce and Dynalectric allege that by filing actions against Gil-bane, Pierce, and Dynalectric in the Florida state courts in February, 1983, Nemours induced Gilbane to repudiate and anticipatorially breach its subcontracts with Pierce and Dynalectric.

The parties agree that DeBonaventura v. Nationwide Mutual Insurance Co., 419 A.2d 942 (Del.Ch.1980), aff'd, 428 A.2d 1151 (Del.1981), correctly sets forth the elements of a cause of action for tortious interference with contractual relations. As Chancellor Marvel stated:

[Interference with an existing contract requires (a) an intent to induce a breach (b) of an existing contract, (c) proximate causation, and (d) damages____

419 A.2d at 947. I find that Count IV of the amended counterclaims of Pierce and Dynalectric sufficiently alleges each of these elements.

Nemours argues that dismissal of Count IV is required because Pierce and Dynalectric have not alleged that Nemours induced

Gilbane to breach its subcontracts with Pierce and Dynalectric and have not alleged that the tortious interference was the result of intentional as opposed to negligent conduct. This position is untenable. While Count IV of the amended counterclaims embraces all the prior allegations including the allegations of negligent conduct, it specifically contains allegations that Nemours, inter alia, intentionally refused to process change order amendments in a timely manner, to provide updated design drawings, and to approve reasonable work schedules thereby inducing Gil-bane to materially breach its subcontracts with Pierce and Dynalectric. Hence, Count IV clearly alleges that the claimed tortious interference with contractual relations was caused by intentional rather than negligent conduct. Moreover, I find that it can be fairly inferred from the allegations of such intentional conduct that Nemours intended to induce a breach of the subcontracts between Gilbane and Pierce and Dynalectric. In addition, Count IV alleges that Nemours knowingly induced Gilbane to repudiate these subcontracts by initiating litigation against Gilbane, Pierce, and Dynalectric in Florida. This likewise clearly supports an inference that Nemours intended to induce a breach of the subcontracts. Therefore, I must deny Nemours’ motion to dismiss with respect to Count IV of the amended counterclaims.

Count Y of the amended counterclaims of Pierce and Dynalectric sets forth a claim against Nemours to recover the value of uncompensated work performed by Pierce and Dynalectric on the basis of the doctrine of quantum meruit. Pierce and Dynalectric reaver the prior allegations of the amended counterclaims and assert that Nemours’ alleged actions so substantially interfered with Pierce’s and Dynalectric’s subcontractual duties that Pierce and Dynalectric are entitled to treat their subcontracts with Gilbane as repudiated or “cardinally” breached. Pierce and Dynalectric then claim that since Nemours has received and retained the benefits of the materials and labor provided by Pierce and Dynalectric under their subcontracts for which Pierce and Dynalectric have not been fully compensated, Nemours has been unjustly enriched and should be required to pay Pierce and Dynalectric for the benefits thus conferred.

Nemours contends that Count V of the counterclaims fails to state a claim upon which relief can be granted because there is no right to bring an action based on quasi-contract principles where an express contract governs. More specifically, Nemours argues that the fact that Pierce and Dynalectric and Gilbane expressly contracted for the provision of materials and services which Pierce and Dynalectric now claim unjustly enriched Nemours bars any recovery against Nemours on a quantum meruit theory since Pierce and Dynalectric are limited to seeking relief from Gilbane pursuant to their subcontracts.

I am convinced that the law of Delaware precludes granting relief under Count V given the facts which have been alleged. Stripped to its bare essentials, Count V alleges that Pierce and Dynalectric have conferred upon Nemours a benefit for which they have not been fully compensated and that it would be inequitable to allow Nemours to retain this benefit without compensating Pierce and Dynalectric. There are no allegations that Pierce and Dynalectric will not ultimately be compensated by Gilbane or that Nemours has failed to pay Gilbane for the services rendered by Pierce and Dynalectric under the subcontracts.

In Cohen v. Delmar Drive-In Theatre, Inc., 45 Del. 427, 84 A.2d 597 (Del.Super.Ct.1951), the court held that “[a] material-man who, as subcontractor, furnishes materials upon the order and credit of a general contractor or another sub-contractor, cannot recover in an action in personam against the owner upon the basis of implied contract arising from the receipt and acceptance of the benefit of the materials furnished.” 84 A.2d at 598. The court indicated that there was no privity of contract between the plaintiff subcontractor and the defendant owner and found that a judgment in favor of the subcontractor was thereby precluded. Id.

Cohen v. Delmar Drive-In Theatre, Inc., seems to follow the general rule set forth in Board of Public Education v. Aetna Casualty & Surety Co., 34 Del. 355, 152 A. 600 (Del.Super.Ct.1930). There, the court found that by the terms of a surety bond entered into between the defendant surety firm and the prime contractor, a supplier to a subcontractor properly stated a cause of action under the bond for payment for materials supplied to the subcontractor. However, of importance to the case at bar, the court also commented as follows:

We take it to be the established law that where a person employs another to do work for him, he is not liable to an action for services performed in the work by a third person solely on behalf of such second person nor for materials furnished by such third person to such second person under a contract between them alone. There is no privity between the first party and third — the contract being solely between the sub-contractor and laborer or material man as the case may be.

152 A. at 603.

More recently, in Chrysler Corp. v. Air-temp Corp., 426 A.2d 845 (Del.Super.Ct.1980), the court addressed whether a party to a contract could recover from a third-party beneficiary to that contract the value of services rendered. Specifically, Chrysler entered into a contract with Fedders Corporation whereby Fedders agreed to purchase most of the assets of Chrysler’s Airtemp Division. To effectuate this transfer, Fedders created Airtemps (the defendant), a wholly owned subsidiary to which the assets in question were transferred. Fedders also agreed to pay Chrysler for providing certain services to Airtemps for a period following the transfer. After allegedly not receiving payment for these services, Chrysler sued Airtemps on, inter alia, a quantum meruit theory. The court ruled that Airtemps, the third-party beneficiary of the contract between Chrysler and Fedders, could not be held liable “on the theory of quantum meruit or implied contract, at least in the absence of inability to recover under the underlying contract.” Id. at 854.

In the case at bar, Pierce and Dynalectric seek a judgment in their favor against Nemours, the third-party beneficiary of their subcontracts with Gilbane. While Pierce and Dynalectric allege that they have not been fully compensated for their services and materials, and that Nemours has retained the benefits thereof, there is no allegation that they will be unable to recover full compensation for these services and materials from Gilbane. Moreover, Count V of the amended counterclaims is devoid of any factual allegations from which one could conclude that Nemours has been unjustly enriched. Therefore, Nemours’ motion to dismiss with respect to Count V of the amended counterclaims will be granted.

CONCLUSION

For the foregoing reasons, I conclude that this Court has subject matter jurisdiction over Dynalectric’s amended counterclaim against Nemours, that Nemours’ motions to dismiss Count V of the amended counterclaims of Pierce and Dynalectric should be granted and that its motions to dismiss Counts I through IV of these counterclaims should be denied.

      . On November 20, 1984, Nemours renewed its motions to dismiss, expressly indicating that the motions were to apply with respect to the amended counterclaims filed by Pierce and Dynalectric and that it would rely on the briefing previously submitted.

      . Dynalectric concedes that its counterclaim is not based on a federal question and that there is no diversity of citizenship between the two parties.

      . Finkle v. Gulf & Western Manufacturing Co. involved a factual background remarkably similar to the case at bar. Plaintiff, as lessor, brought suit against, inter alia, Gulf & Western Manufacturing Company (“G & WM"), the lessee, to recover an amount allegedly owed for failure to renew the lease in a timely manner. Jurisdiction was based on diversity of citizenship. G & WM then impleaded Philmont Steel Products, Inc. ("Philmont”), the party to which G & WM had assigned its rights under the lease, on the basis of an alleged indemnification agreement. Philmont, in turn, filed a claim against the plaintiff to recover damages allegedly sustained by plaintiffs refusal to allow Philmont to renew the lease after the renewal deadline had passed. In response, plaintiff filed a counterclaim against Philmont for the sum owed for failure to timely renew the lease. However, as between plaintiff and Philmont, no diversity of citizenship existed.
      The Third Circuit began its analysis of the jurisdictional issue presented by the case by noting that both G & WM’s claims against Philmont and Philmont’s claims against the plaintiff could be maintained absent an independent jurisdictional basis since they fell within the ancillary jurisdiction of the court. The court then extended the ambit of ancillary jurisdiction to cover plaintiff's claims against Philmont as well, commenting that "[sjuch claims are induced by the third-party’s choice to assert its claims against plaintiff.” 744 F.2d at 1018. Moreover, the court distinguished Owen Equipment & Erection Co. v. Kroger, supra, on the basis that Owen had simply prohibited the voluntary assertion by a plaintiff of an independent claim against a third-party defendant absent an independent jurisdictional basis. By contrast, the court found that the plaintiff in Finkle, as here, had chosen not to independently assert claims against the third-party defendant. Rather, it was only in response to the third-party defendant’s assertion of claims against the plaintiff that the plaintiff had filed compulsory counterclaims.

      . As the Supreme Court noted in Owen Equipment & Erection Co. v. Kroger, supra, a determination as to whether a nonfederal claim between parties of the same state is properly within the scope of the subject matter jurisdiction of the federal courts involves a two-step analysis. First, the nonfederal claim must fall within the ambit of the federal judicial power created and limited by Article III of the Constitution.
      Pendent jurisdiction, in the sense of judicial power, exists whenever there is a claim ‘arising under [the] Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority ...,' U.S. Const., Art. Ill,' § 2, and the relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional ‘case’____ The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.
      437 U.S. at 371, 98 S.Ct. at 2401 (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966) (emphasis in original). While United Mine Workers v. Gibbs involved pendent jurisdiction and Owen Equipment & Erection Co. v. Kroger involved ancillary jurisdiction, the Court pointed out that it was unnecessary to decide whether there were any "principled” differences between ancillary and pendent jurisdiction, 437 U.S. at 370, n. 8, 98 S.Ct. at 2400, n. 8, since the cases involved two species of the same generic problem. Id. at 370, 98 S.Ct. at 2400.
      Second, assuming that the Constitution confers the power on the federal courts to hear the nonfederal claims, such claims must be within the courts’ jurisdiction as limited by Congress. Id. at 372-73, 98 S.Ct. at 2401-2. That is, even though nonfederal and federal claims may derive from "a common nucleus of operative fact”, Congress may have precluded the federal courts from entertaining the nonfederal claims.
      With this in mind, Finkle v. Gulf & Western Manufacturing Co., supra, can be seen as an implicit determination by the Third Circuit that when a claim by a plaintiff against a third-party defendant is a "compulsory counterclaim” as that term is used in Fed.R.Civ.P. 13(a), such a claim and the “federal” claims contained in the case necessarily derive from a common nucleus of operative fact and the claim is within the ambit of the subject matter jurisdiction conferred upon the federal courts by Congress.

      . I note in passing that the Third Circuit has recently established a three-tiered analysis to determine whether ancillary or pendent jurisdiction should be exercised in a particular case. Abromovage v. United Mine Workers, 726 F.2d 972, 989-991 (3d Cir.1984). First, there must be judicial power under the Constitution to entertain the nonfederal claims. Second, the exercise of ancillary or pendent jurisdiction must not violate federal policy decisions as generally embodied in the relevant federal rules and statutes. Finally, the exercise of jurisdiction over the ancillary or pendent claims must not offend prudential considerations of convenience, judicial economy, and fairness to the litigants. I find that my decision to invoke ancillary jurisdiction over Dynalectric’s counterclaim against Nemours is consistent with this three-tiered analysis.

      . All the parties agree that Delaware law is controlling with respect to the substantive aspects of the counterclaims.

      . Nemours also contends that Count I must be dismissed since Pierce and Dynalectric have failed to allege that they were ignorant of the falsity of this information. This contention is without merit. The amended counterclaims clearly allege that Pierce and Dynalectric were unaware that the representations upon which they were relying were false.

      . In Employers Liability Assurance Corp. v. Madric, 4 Storey 146, 54 Del. 146, 174 A.2d 809 (Del.Super.Ct.1961), rev’d, 4 Storey 593, 54 Del. 593, 183 A.2d 182 (Del.1962), the court ruled that where an insurance agent had negligently provided the insured with incorrect information concerning the scope of his automobile insurance coverage, the insurer was estopped by its agent’s misrepresentations from using a restrictive clause in the policy as a means to avoid coverage. The court rejected the insurer's contention that carelessly providing misinformation was not actionable, 174 A.2d at 813-14, relying in part on Restatement of Torts § 552, which parallels section 552 of the Restatement (Second) of Torts. However, the court used this part of its decision simply as a predicate for finding an estoppel against the insurer. On appeal, the Delaware Supreme Court reversed on grounds that the evidence failed to establish that the insurer’s agent had misled the insured regarding the scope of his coverage so as to constitute an estoppel without addressing the lower court's discussion regarding § 552 of the Restatement of Torts.
      More recently, in Insurance Company of North America v. Waterhouse, 424 A.2d 675 (Del.Super.Ct.1980), the court dismissed a fourth party complaint by an insurance company against an independent insurance agency alleging, inter alia, that the insurance agency had negligently disseminated information to the insured which injured the insurance company. The court found that section 552 of the Restatement (Second) of Torts was inapplicable since the complainant insurance company was not within the limited group of persons for whose benefit and guidance the insurance agency had supplied the information. Id. at 677-78.

      . The comments following section 552 indicate that a "defendant’s pecuniary interest in supplying the information will normally lie in a consideration paid to him for it or paid in a transaction in the course of and as a part of which it is supplied. It may, however, be of a more indirect character." Restatement (Second) of Torts § 552, comment d (1977).

      . Delaware law has long recognized a distinction between actions at common law for fraud or deceit and actions in equity for relief from fraud. With respect to the former, a necessary element of a common law fraud claim is a showing that the defendant made a false representation with the knowledge or belief that the representation was false, or at least with reckless indifference to the truth of the representation. Stephenson v. Capano Development, Inc., 462 A.2d 1069, 1074 (Del.1983); Nye Odorless Incinerator Corp. v. Felton, 35 Del. 236, 162 A. 504, 510-11 (Del.Super.Ct.1931). By contrast, in an action at equity for relief from fraud, there is no requirement that the defendant have known or believed his or her statement to be false or to have made the statement in reckless disregard of the truth. Rather, equity provides a remedy for negligent and/or innocent misrepresentations. Stephenson v. Capano Development, Inc., supra, 462 A.2d at 1074; Eastern States Petroleum Co. v. Universal Oil Products Co., 24 Del.Ch. 11, 3 A.2d 768, 775 (1939). Judge Taylor summarized the law in this area as follows:
      Although intent to defraud or deceive is an essential element to relief at law, it is not essential to equitable relief if a false statement has been made____ In equity, misrepresentation may be founded merely upon a false statement even though its falseness is not known to the maker of the statement____ Misrepresentation does not require legal fraud____ In equity, it has been held that a person may be chargeable if he makes an untrue statement of fact and has no knowledge that the statement is true, even though he believed it to be true ... or if one has a duty of knowing the truth and makes an un
        true statement ... or if the untrue statement results from one’s own forgetfulness.

        In re Brandywine Volkswagen, Ltd, 306 A.2d 24, 28 (Del.Super.Ct.), aff’d, 312 A.2d 632 (Del.1973). Therefore, to the extent that Count I of the counterclaims of Pierce and Dynalectric demands equitable relief, it likewise states a claim upon which relief can be granted in accordance with long established principles of Delaware law.

      . In a footnote, the Supreme Court simply noted that “[o]n remand the parties are free to argue a tortious basis for damages in any way that is not inconsistent with this opinion.” Oliver B. Cannon & Sons, Inc. v. Dorr-Oliver, Inc., 336 A.2d 211, 216 n. 6 (Del.1975).

      . In Martin v. Ryder Truck Rental, Inc., 353 A.2d 581 (Del.1976), the Delaware Supreme Court held for the first time that under common law principles, a party could be held strictly liable for injuries caused by its defective product absent privity of contract. More specifically, the court ruled that where a bystander had been injured in an accident allegedly resulting from failure of the braking system of a truck rented from the defendant, the defendant could be held liable without proof of negligence and absent privity of contract.

      . The concerns identified by the court in Crowell Corp. v. Topkis Construction Co., supra, as to allowing recovery for pecuniary losses suffered from "defects" in mass produced items are apparently viewed by the Delaware Supreme Court as inapplicable in the context of a typical construction project. Owners, architects, engineers, contractors, subcontractors, and suppliers all rely on each other to varying-degrees to ultimately achieve a completed structure. This interdependence differentiates the calculus of foreseeable harm in this context from other contexts such as the- manufacturing of mass produced items.

      . Nemours advances the additional argument that even if Nemours did interfere in some way with Pierce’s and Dynalectric’s subcontractual relations with Gilbane, such interference was not "improper”, since it was simply exercising rights available to it as owner of the Project and/or pursuant to the various contracts. Hence, Pierce and Dynalectric have failed to state actionable claims for tortious interference with contractual relations. I do not agree.
      As the Fifth Circuit per Judge Wisdom stated in Thompson v. Allstate Insurance Co., 476 F.2d 746 (5th Cir.1973), a case involving a claim for tortious interference with business relations, ”[j]ustification for interference in another’s business is an affirmative defense and is no part of the plaintiff's case. It 'is enough to allege and prove the conduct and effect, leaving the defendant to justify if he can’”. Id. at 748 (quoting American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 259, 36 S.Ct. 585, 586, 60 L.Ed. 987 (1916) (Holmes, J.)). Under this standard, the court refused to dismiss plaintiffs complaint for failure to state a claim.
      Similarly, in Leeward Petroleum, Ltd. v. Mene Grande Oil Co., 415 F.Supp. 158 (D.Del.1976), Judge Wright rejected a motion to dismiss directed at claims, inter alia, alleging tortious interference with contractual relations where the defendant asserted that its acts were privileged and therefore could not constitute tortious interference. The court commented as follows:
      This Court cannot now accede as a matter of law that such a privilege, if it exists, applies here____ [B]efore the court could rule on such a question, it would require a factual showing on the background of the transaction, and the respective interests of all the parties. Such a factual showing must await summary judgment or trial.

        Id. at 164 (emphasis added).

        Nemours’ argument that it was somehow justified in allegedly interfering with the subcontractual relations between Gilbane, Pierce, and Dynalectric necessarily depends on facts not in the record before me on these motions to dismiss and, as such, cannot be decided at this time. Moreover, whether or not Nemours' conduct was justified is in the nature of a defense. It is sufficient at this stage of the proceedings that Pierce and Dynalectric have properly stated claims upon which relief can be granted. With respect to Count IV of the amended counterclaims, I have so found.

      . As with the negligence issue, the parties have provided little assistance with respect to this issue, citing absolutely no Delaware state court decisions.

      . The court likewise rejected Chrysler’s argument that it was entitled to recovery from Air-temps on the basis of restitution, finding that the benefits retained by Airtemps did not constitute unjust enrichment, since, as the third party beneficiary to the contract, Airtemps was entitled to receive such services. Id. at 854-55.