author: REGAN, District Judge.

text:
    ST. LOUIS HOME INSULATORS, et al., Plaintiffs, v. BURROUGHS CORPORATION, Defendant.
    No. 84-008C(B).
    United States District Court, E.D. Missouri, E.D.
    Oct. 5, 1984.
    See also, D.C., 597 F.Supp. 100.
    James D. Cullen, Helton Reed, St. Louis, Mo., for plaintiffs.
    Steven McCormick and Robert Shapiro, Chicago, 111., Richard Cornfeld, Mark Bayles, St. Louis, Mo., for defendant.
   ORDER DENYING REMAND

REGAN, District Judge.

For consideration is plaintiffs’ motion to remand this cause to the Circuit Court of the City of St. Louis on the ground that the cause was removed more than thirty days after defendant was served with process.

Section 1446(b), 28 U.S.C. provides in relevant part that the petition for removal shall be filed within thirty days after receipt by the defendant of a copy of the initial pleading setting forth a removable claim. Inasmuch as defendant was served with a copy of the initial petition on June 28, 1983 but did not file its petition for removal until January 4, more than six months thereafter, it is obvious that the removal was effected long after the statutorily prescribed thirty day period.

Plaintiffs argue that jurisdiction cannot be conferred by consent. That is, of course, true (even as to a timely petition for removal) if, for example, there is no diversity of citizenship or the amount involved is less than $10,000. Such is not the instant case. Here, there is the requisite amount and the diversity of citizenship necessary to give this Court jurisdiction of the case. It is now well settled that the statutory time limit for removal petitions is not jurisdictional but is merely a formal and modal requirement for transferring to the federal court a civil action such as the instant one of which the court would have had original jurisdiction. See, for example, Mackay v. Uinta Development Co. 229 U.S. 173, 33 S.Ct. 638, 57 L.Ed. 1138 (1913); Fristoe v. Reynolds Metals Co., 615 F.2d 1209 (9 Cir.1980); and Leininger v. Leininger, 705 F.2d 727 (5 Cir.1983); Nevertheless, the time limit is mandatory and a timely objection to a late petition for removal will result in remand. However, the statutory time limit may be waived or the party may be estopped from objecting to untimeliness by his conduct after removal. Harris v. Edward Hyman Co., 664 F.2d 943 (5 Cir.1981); Leininger v. Leininger, supra; Mackay v. Uinta Development Co., supra; Green v. Zuck, 133 F.Supp. 436 (D.C.N.Y.1955).

The verified petition for removal in this case specifically alleges that “plaintiffs have waived any and all objections to the timeliness of said filing.” Attached to the petition for removal was the return of the sheriff certifying that service was had on June 28, 1983. Plaintiffs took no exception to the claim of waiver by them. Instead, they accepted the verity of the allegation by vigorously prosecuting this case. Inter alia, in March and again in May they filed interrogatories on the merits directed to defendant and filed requests for admissions and for production of documents. They entered into and obtained the approval of the Court to a confidentiality agreement in June. They noticed witnesses for depositions, and' filed interrogatories to ascertain the names and addresses of all witnesses defendant might call at the trial.

An aborted jury trial was held for three days, at which plaintiffs presented virtually all their witnesses and exhibits. That trial would have proceeded to judgment in early August, 1984 but for the fact that for reasons extraneous to the conduct of the trial, the Court sua sponte declared a mistrial. Defendant’s motion for summary judgment on each óf the three counts of the Complaint (contested by plaintiffs) which was based solely on limitations resulted in the dismissal of two counts. The third (fraud) count was left for determination on condition that plaintiffs file an amended complaint complying with Rule 9(b) FRCP.

Plaintiffs filed their amended complaint (after first obtaining an order extending the time for doing so) in .which they affirmatively sought judgment in this Court. Thereafter, with the fraud claim set for trial on October 1, defendant moved for a dismissal for failure to state a claim. After considering the motion and plaintiffs’ response thereto, the Court concluded that, the motion was well taken and orally notified the parties that the motion would be sustained. A formal order of dismissal was not entered due to lack of time to prepare formal opinion.

Plaintiffs’ motion to remand was filed the following day. In support thereof plaintiffs apparently rely in part on the contention that a request for removal may be made at any time prior to entry of final judgment. Although it is true that in most of the relevant reported cases an unsuccessful motion to remand was made after final judgment had been entered, we find no basis for requiring that the case be in that posture. Only the fortuitous circumstance that as a courtesy to counsel (in order to permit them to avoid the trouble and expense of subpoening their witnesses) we gave advance notice of our intended ruling gave plaintiffs time to hurriedly prepare and file their motion to remand prior to final judgment.

We add that there is no merit to plaintiffs’ contention that Section 1447(c), 28 U.S.C. specifically directs the court to order the relief (i.e. remand) which plaintiffs now seek. That statute provides that “if at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the court shall remand the case.” The key words which the plaintiffs overlook are “and without jurisdiction.”

We are convinced that plaintiffs waived any objection to the timeliness of the removal petition, both on the basis of the verified allegation therein and plaintiffs’ conduct thereafter, and that in any event, by their conduct, plaintiffs are es-topped from objecting to the late removal. It is obvious that if the case had ended in a judgment for plaintiffs, they would have continued to maintain their silence on this issue. In our judgment, under the circumstances of this case, it would be “offensive to fundamental principles of fairness” and justice to allow plaintiffs to have it both ways.

It follows that plaintiffs’ motion to remand should be and it is hereby DENIED.


source: Caselaw Access Project

license: Public Domain

text:
    ST. LOUIS HOME INSULATORS, INC., et al., Plaintiffs, v. BURROUGHS CORPORATION, Defendant.
    No. 84-8C(B).
    United States District Court, E.D. Missouri, E.D.
    Oct. 5, 1984.
    See also, D.C., 597 F.Supp. 98.

      James D. Cullan, Helton Reed, St. Louis, Mo., for plaintiffs.
    Steven McCormick and Robert Shapiro, Chicago, 111., Richard Cornfeld, Mark Bayles, St. Louis, Mo., for defendant.
   MEMORANDUM AND ORDER

REGAN, District Judge.

Before us is defendant’s motion to dismiss plaintiffs’ first amended complaint in which recovery is sought based on allegedly fraudulent misrepresentations inducing the purchase of a B-80 computer system.

By way of background: Plaintiffs’ original complaint alleged, in addition to a fraud claim, claims based on alleged breaches of warranty and negligent misrepresentation. Defendant moved for summary judgment on all claims on the ground they were barred by limitations. The motion was taken with the case, trial of which commenced on July 30, 1984, but which ended in a mistrial on August 2, 1984, after all of plaintiffs’ witnesses (other than an expert on damages) had testified. Following the mistrial, the motion for summary judgment was taken under submission.

On August 16, 1984, the Court entered its order sustaining defendant’s motion as it related to plaintiffs’ claims for breach of warranty and negligent misrepresentations, but overruled the motion as to the fraud claim, on the premise that the Court could not hold as a matter of law that the five year statute of limitations had not been tolled. The meritorious issue as to the fraud claim limitations defense pertained to the time when the alleged fraud as to the adequacy of the performance of the computer was discovered or should have been discovered by plaintiffs, who contended that they relied on the continuous assurances of defendant that the problems would be corrected.

Concurrently with overruling the motion for summary judgment on the fraud claim, the Court held that such claim had not been adequately pleaded, and ordered plaintiffs to file an amended complaint in compliance with Rule 9(b) FRCP. Defendant’s motion to dismiss puts in issue the sufficiency of the amended complaint to state the claim of fraud. We note that in drafting their amended complaint, plaintiffs had the benefit of all their trial evidence.

Rule 9(b) provides that in all averments of fraud, the circumstances constituting fraud shall be stated with particularity. In Bennett v. Berg, 685 F.2d 1053, 1062 (8 Cir.1982), Judge Henley defined “circumstances”, as used in Rule 9(b), to “include such matters as the time, place and contents of false representations, as well as the identity of the person making the representation and what was obtained or given up thereby.”

The amended complaint alleges (as did the original in identical language) that “on or about April, 1977” Plaintiffs requested of Defendant a proposal for products and services to perform seven specified “operational elements” (of which “inventory control” was one), and that Defendant proposed that Plaintiffs purchase certain listed equipment and services. The time of defendant’s proposal and the manner in which it was made (oral or in writing, etc.) and the content of the proposal have not been stated.

In their response to defendant’s motion to dismiss, plaintiffs state that the complaint “and the evidence” disclose a series of meetings and demonstrations in 1976 and 1977 at which the specific software programs ordered by Plaintiffs were discussed. Nothing in the complaint so states. Plaintiffs then add (with no specifics as to time or manner) that defendant “promised and agreed that Inventory Control Reports would be produced by the B-80 computer and that it would do whatever necessary to assure that the inventory programs would run on the specific B-80 model proposed.” And in their so-called “more definite statement” attached to their response plaintiffs state that “during the period January through May, 1977” (May is the month the computer purchase was made) certain representations were made at the office of defendant in University City, Missouri, by agents of defendant (only one of whom is identified). Again, the complaint does not so state.

The alleged representations (as set forth in the “more definite statement”) are two in number, (1) that the B-80 computer and its software would convert Plaintiffs’ business records into a report group entitled “Inventory Control and Management, Payroll, Accounts Receivable, Accounts Payable, General Ledger and Invoicing”, and (2) that the B-80 hardware and software had been tested by defendant and would produce accurate reports from each of the six programs and defendant would make any modifications necessary to produce that result.

As pleaded in Paragraph 8 of the Amended Complaint, the alleged representations (at a time, place and in a manner not set forth) were that the hardware and software it proposed (1) were adequate in size and capacity to perform the operational elements, (2) were fully engineered, tested, debugged and operational at time of sale, (3) that the Inventory Control and Management Programs could be modified to meet Plaintiffs’ requirements, (4) that the Inventory Control and Management Programs would be modified by defendant to meet Plaintiffs’ requirements, (5) that the software programs would be installed in a nine-month period from the date of installation, and (6) that defendant would maintain, repair or replace any defective hardware or programs.

The amended complaint then alleges in Paragraph 9 that the aforesaid representations were false in that (1) the hardware products were inadequate to perform Plaintiffs’ applications, by reason of their inadequate memory size and data storage capacity, (2) the hardware and software products were defective and incapable of performing Plaintiffs’ applications, by reason of defective design and/or manufacturing procedures and incomplete or inadequate testing, and (3) the Inventory Control and Managemént Programs were not modified or installed for Plaintiffs’ use.

In our judgment, the pleaded fraud does not sufficiently set forth the circumstances thereof as required by Rule 9(b). And in determining the motion to dismiss we can look only to the allegations of the complaint. Wholly irrelevant is plaintiffs’ argument that defendant has heard the testimony of their witnesses and so should be aware of the details of plaintiffs’ claim and the circumstances of the alleged fraud. We add that even we are not so aware.

It is further obvious that the Paragraph 9 allegation of falsity of the representations cannot apply to all of the six alleged representations, e.g., that the software programs would be installed within 9 months from the date of installation. In addition, some of the alleged representations relate to promises of future actions, the non-performance of which would not of itself be fraudulent under Missouri law. We are, of course, aware that although a state of mind as to future performance or conduct may be misrepresented and so become actionable, that is not the case alleged or even shown by plaintiffs’ evidence. Hence, all that plaintiffs allege as to allegedly actionable false representations inducing the purchase is that the equipment sold by defendant was (1) inadequate to perform plaintiffs’ applications and (2) that said equipment was defective and incapable of performing plaintiffs’ applications, as the result of defective design and incomplete and inadequate testing.

Of importance also is plaintiffs’ further allegation (Paragraph 18) that their “decision to purchase the Burroughs B-80’s was made solely because of the representations that the 7 program elements would be successfully installed and that the B-80 hardware was adequately tested and operational.” Thereby, plaintiffs have narrowed the number of alleged misrepresentations on which they allegedly relied.' We add that their proposed instructions for use in the trial set for October 1, 1984, plaintiffs submit only alleged false representations: (1) that defendant would provide operational programs for inventory control that would produce inventory reports in the B-80 computers, and (2) that the B-80 hardware would be tested prior to installation, thus further narrowing the issues.

Over and beyond the foregoing is the ever-present question of limitations. Unquestionably, this action was instituted more than five years after the alleged fraud occurred, so that to overcome this hurdle, it is essential for plaintiffs to demonstrate that their cause of action accrued at a later date. Under Missouri law, the five year statute does not begin to run (and the cause of action is not deemed to have accrued)' until the aggrieved discovered (or should have discovered) the facts constituting the fraud.

As held in Kueneke v. Jeggle, 658 S.W.2d 516, 518, (Mo.App.1983), “When discovery is relied on to toll the statute, the pleading should aver when it was made and why it was not made sooner.” See also Womack v. Calloway County, 159 S.W.2d 630, 632 (Mo.Sup.1942). The amended complaint alleges, without more (Paragraph 19), that “(o)n or about February 1982 Plaintiffs discovered that the failures of the B-80 system were the result of Burroughs’ initial false representations as to the capability of the 64K B-80 with mini-disks to perform the promised applications.”

In their original complaint plaintiffs alleged that “on January 30,1983”, plaintiffs discovered that the management system could not be achieved. Even in their response to defendant’s motion, plaintiffs have not explained the change in the alleged date of the discovery. More importantly, whatever the date, the amended complaint is wholly silent on the crucial question of why the facts could not, by the exercise of due diligence, have been discovered within the five year period. A complaint which fails to plead due diligence' in other than conclusory language is insufficient.

We note that in plaintiffs’ “more definite statement”, (which is no part of the amended complaint), they assert, without amplification, that they could not discover that the representations were untrue “until they completed the purchase and installation of additional equipment on- or about February 1982” and that on that date they “gained final knowledge that the B-80 system originally proposed possessed inadequate memory and data storage capacity to produce the reports promised by Defendants.” Even this assertion is insufficient to meet the requirements of demonstrating why in the exercise of due diligence they could not have made the discovery long before.

It follows that the motion to dismiss is well taken and should be sustained. Defendant urges that the dismissal should with prejudice, and we next turn to that question.

As a general rule, in the interest of justice, a plaintiff should be permitted to amend his pleading to cure deficiencies. Plaintiffs have already been given that opportunity and the amended' complaint is the result. Here, unlike the usual situation, the amended complaint was filed at our direction after discovery had been completed and after plaintiffs had virtually completed the presentation of their .evidence. Assuming that such evidence is sufficient to withstand a motion for a directed verdict, plaintiffs have given us no explanation for their failure to state a claim based thereon in accordance with the law.

As we view the complaint, plaintiffs have taken their claim for breach of warranty (which we have held is barred by limitations) and attempted to dress it up in the trappings of fraud. We have held that as against the motion to dismiss plaintiffs have failed to do so.

In ruling whether justice requires that the dismissal should be without prejudice, we also consider the nature and legal sufficiency of the evidence adduced by plaintiffs on the trial as well as the basis of our prior holding denying summary judgment on the fraud claim. Because of the mistrial, defendant had no opportunity to move for a directed verdict. Much of the evidence pertained to the alleged breach of warranty and the claim of negligent misrepresentation. Parenthetically, we note that even in their present attempt to state a claim limited to fraud, plaintiffs have interwoven allegations pertinent only to breach of warranty. Thus, in Paragraph 20 plaintiffs allege that they have sustained damages as a result not merely of the allegedly false representations of B-80 capabilities, but also as a result of defendant’s “failure to replace and repair defective hardware and software.”

In denying summary judgment, we held that by reason of defendant’s alleged assurances that it would correct the problems, there was a possibility a jury might find that the running of the statute of limitations had been tolled. Upon further consideration, however, in light of the trial evidence, we do not believe that' the facts permit a finding that plaintiffs either did not nor could not by the exercise of due diligence discover (prior to June 20, 1978) the facts demonstrating the falsity of the alleged representations on the basis of which the purchase was made. Plaintiffs are sophisticated business men. Long before the crucial date, they knew that all attempts to modify the inventory programs and correct the problems had dismally failed. That futile attempts had been made to modify the inventory programs in order to comply with the original alleged representation would conceivably support a finding of breach of warranty, but not of fraud.

The situation presented by the evidence is wholly unlike that in Swope v. Prinz, 468 S.W.2d 34 (Mo.1971). That was a medical malpractice case in which the evidence disclosed that the surgeon defendant had severed a nerve (a fact the patient plaintiff would not know) and not only concealed that -fact from his layman patient but assured her she would recover (knowing she would not) and urged her not to seek other medical advice. Here, long before the five year period had elapsed, plaintiffs actually knew of the inadequacies they complain of and the failure of the defendant to remedy them. They now say (in their response) that not until they installed additional equipment in February, 1982 did they gain “final knowledge” that the B-80 system originally proposed ; possessed inadequate memory and data storage capacity to produce the promised, reports. Their evidence is to the contrary. The law requires parties to be alert and diligent. They may not shut their eyes to the facts (and the significance thereof) which disclose the alleged fraud. Plaintiffs’ evidence clearly discloses that after acquiring actual knowledge of all the pertinent facts within the five year period of limitations, plaintiffs, experienced business men, simply slept upon whatever rights they had, both in contract and otherwise.

Plaintiffs have had ample opportunity to demonstrate that they have a submissible case. Defendant’s motion to dismiss is hereby sustained. Under the circumstances, and in fairness to both parties, we are convinced that the dismissal should be and is hereby ordered to be with prejudice. Judgment will be entered in accordance herewith and with our prior order.


author: PIERAS, District Judge.

text:
    ALTAIR CORPORATION, et al., Plaintiffs, v. Carmen PESQUERA DE BUSQUETS, et al., Defendants.
    Civ. No. 83-2028 (JP).
    United States District Court, D. Puerto Rico.
    Oct. 10, 1984.

      Jorge L. Suarez, Melendez Carrucini and Suarez Montes, San Juan, P.R., for plaintiffs.

      Gloria E. Flores Andino, Federal Litigation Div., U.S. Dept, of Justice, San Juan, . P.R., for defendants.
   OPINION AND ORDER

PIERAS, District Judge.

This is an action brought by Altair Corporation, formerly Caribbean Finance Co., Inc. (plaintiff), pursuant to 42 U.S.C. Section 1983, seeking damages in the amount of $1,605,342.47 for an alleged deprivation of property without due process of law. Plaintiff claims said deprivation resulted from an order of the Department of Consumer Affairs of the Commonwealth of Puerto Rico, reducing certain financing charges for retail installment sales of motor vehicles. This Court’s jurisdiction has been invoked under 28 U.S.C. Section 1343.

On August 14, 1984, Carmen Pesquera de Busquets and Angel S. Biaggi (defendants herein) filed a Motion for Summary Judgment and Memorandum of Law. On August 16, 1984, plaintiff filed its own Motion for Summary Judgment, submitting in support a Memorandum of Law filed August 14, 1984. On the basis of the Motions for Summary Judgment filed by the parties, together with the accompanying documents submitted, this Court reaches the following determinations of fact and law:

A. FACTS

The essential facts in this case are not in dispute.

1. Plaintiff, Altair Corporation, formerly Caribbean Finance Co., Inc., is a corporation organized and existing under the laws of the Commonwealth of Puerto Rico, with its principal place of business in San Juan, Puerto Rico.

2. On July 14, 1980, defendant Angel S. Biaggi, as Acting Secretary of the Department of Consumers Affairs, hereinafter “the Department”, issued “Order No. 1 for the Revision of the Interest Rate and/or Finance Charges for Retail Installment Sales and Financing Contracts of Motor Vehicles” (hereinafter Order No. 1) reducing the maximum rates allowable for financing charges in sales of new and used motor vehicles. Order No. 1 was issued without prior notice or hearing.

3. On July 16, 1980, plaintiff petitioned the agency for reconsideration of said order.

4. Defendant Carmen T. Pesquera de Busquets, as Secretary of the Department of Consumer Affairs, reaffirmed said Order No. 1 in a Resolution dated August 18, 1980 and denied reconsideration.

5. On August 27, 1980, plaintiff appealed for judicial review of the administrative decision to the Superior Court of Puerto Rico, San Juan Part, naming as defendant Carmen T. Pesquera de Busquets in her official capacity. Defendant Angel S. Biaggi was not sued in the. State Court suit.

6. The Superior Court of Puerto Rico, San Juan Part, entered a Judgment revoking Order No. 1 on May 7, 1981. A Motion for Reconsideration of the Judgment filed by the Department on May 22, 1981 was denied by the Superior Court in its Decision and Order issued September 13, 1982. The Judgment of May 7, 1981 became final and unappealable on October 13, 1982, 30 days from the daté of denial of reconsideration. The parties have agreed that the Superior Court’s decision is to be considered as res judicata in the instant case.

7. The Superior Court decision was based on its finding that plaintiff was denied due process of law because a hearing in accordance with law was not held prior to the issuance of Order No. 1.

8. On May 1980, prior to Order No. 1, the maximum interest rates allowed by the Department were 11% for loans on used cars and 10% for loans on new cars. Order No. 1 reduced the interest rates on used and new car loans to 9% and 8%, respectively. This Order was in effect from July 14, 1980 through November 16, 1980. After holding public hearings on November 17, 1980, the Department issued Order No. 2 raising the interest rates to 1072% on used cars and 972% on new cars. The parties agree that plaintiff’s damages are limited to the period between July 14, 1980, the date of issuance of Order No. 1, and November 17, 1980, the date of issuance of Order No. 2.

B. ISSUES OF LAW

42 U.S.C. § 1983 provides in pertinent part: “Every person who, under color of any statute, ordinance, regulation, custom or usage of any State or Territory ... subjects or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges or immunities searched by the Constitution and Laws, shall be liable to the party injured in an action at law...”

Plaintiff alleges that it was deprived of its property without due process of law as secured by the U.S. Constitution when defendants Pesquera and Biaggi, acting under color of state law and without prior notice and hearing, issued Order No. 1, reducing the interest rates and/or financing charges allowable in retail sales of motor vehicles. Although plaintiffs allegations assert the elements necessary to state a cause of action under 42 U.S.C. § 1983, plaintiffs claim cannot prevail on the merits without overcoming the affirmative defenses of qualified immunity and statute of limitations raised by defendant.

1. Doctrine of Qualified Immunity

In actions brought under 42 U.S.C. § 1983, a qualified immunity defense from liability for damages is available to state executive officers performing discretionary functions. E.g., Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). The Supreme Court has emphasized the essential role of the qualified immunity defense in allowing the vindication of legitimate claims for violations of constitutional rights while preserving the freedom of public officials to act without fear of subsequent harassing litigation which could not reasonably have been anticipated at the time of action. See, e.g., Butz v. Economou, 438 U.S. 478, 506-7, 98 S.Ct. 2894, 2910-11, 57 L.Ed.2d 895 (1978); Harlow v. Fitzgerald, 457 U.S. 800 at 814, 818-19, 102 S.Ct. 2727 at 2736, 2738-39, 73 L.Ed.2d 396 (1982).

In order to receive the protection of qualified immunity, it must be shown that an official’s conduct did not violate “clearly-established statutory or constitutional rights of which a reasonable person would have known” at the time of the conduct. Harlow v. Fitzgerald, 457 U.S. at 818, 102 S.Ct. at 2738. Even if a defendant’s conduct violates some statutory or administrative provision, qualified immunity still provides protection unless it is demonstrated that the conduct violated the relevant legal standard defined at that time. Davis v. Scherer, — U.S.-, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984).

On a motion for summary judgment, it is appropriate for a trial court to determine whether the law was clearly established at the time of the conduct at issue. If the law was clearly established, the immunity defense will fail; if the law was not clearly established, or if the official pleading the defense proves extraordinary circumstances which show that he neither knew nor should have known of the applicable legal standard, the defense should be sustained. Harlow v. Fitzgerald, 457 U.S. at 818-19, 102 S.Ct. at 2738-39; See 438 U.S. at 507-08, 98 S.Ct. at 2911-12.

In the instant case, the Department officials have raised the defense of qualified immunity, and, in the effort to meet their burden of proof, have submitted for this Court’s consideration the statutory and regulatory provisions on which they relied. Defendants argue that they issued Order No. 1 in the good faith fulfillment of their responsibilities under Article 8 of the enabling act of the Department. Title 3 L.P.R.A. Section 341g. Article 8 expressly excludes the requirement of a public hearing when the Secretary issues price orders on the basis of regulations containing criteria for determination of said orders. 3 L.P.R.A. 341g, Subsection (a), paragraph 3. The term “price order” in this provision has been interpreted to include financing charges. Caribbean Finance Co., Inc. v. Hon. Carmen T. Pesquera, Decision and Order, Civil No. 80-4597, Superior Court of Puerto Rico, San Juan Part, (Sept. 13, 1982). As noted by the Puerto Rico Superior Court, the rate reductions in Order No. 1 were determined in accordance with the criteria established in Regulation No. 2640 promulgated by the Department and approved by defendant Pesquera as Secretary on May 1,1980. Section 2(a) of this regulation provides:

“A. At his own initiative or as requested by the interested party, the Secretary may issue- order revising the rate of interests and/or the maximum financing charges in the retail installment sales contracts for motor vehicles taking into consideration the following criteria:
1. money and operation costs involved in the financing
2. market conditions
3. reasonable benefits.
4. interest of all parties affected;
5. and any other economic factor that is necessary for said order.” Regulation to Regulate Activities Conducted in the Retail Installment Sales of Motor Vehicles, # 2640, Part II, Section 2(a).

On judicial review, the Superior Court found that the criteria relied on by the Department officials were not adequate to warrant the application of Article 8’s exception to the prior hearing requirement. The Superior Court also cited a conflicting statutory provision governing the Department which requires a public hearing in order to fix or review the maximum financing charges for retail installment sales. Article 407 of Act Number 68, 10 L.P.R.A. 777.

According to the Superior Court, the statutory exception to the rule requiring hearings would be triggered only when the criteria established by regulation contained all the “pertinent data, information, observations or arguments” needed to determine new price orders, or when the criteria were sufficiently concrete to allow the revision of charges in an objective manner such as a mathematical formula dependent solely on the bank prime rate. Caribbean Finance v. Pesquera, Civil No. 80-4597, slip op. at 7. The Court concluded that the criteria relied on by the Department officials in the issuance of Order No. 1 required data which, according to the clear-cut public policy underlying both statutes, could only be obtained through a public hearing.

Although this Court now enjoys the benefit of the state Court’s resolution of the apparently conflicting statutory mandates, the Department officials could not reasonably have anticipated this judicial interpretation of the exception authorized in the Department’s enabling act. Although, at the time the defendant’s conduct occurred, notice and a hearing were clearly established elements of the constitutional right to due process, the requirements of prior notice and hearing applied to the administrative revision of financing charges were not clearly established as a matter of Constitutional law.

The procedural safeguards guaranteed by the due process clause protect citizens against the arbitrary deprivation of significant established property interests. Since the statutory provisions governing the Department’s revision of interest rates conflicted with regard to the requirement of a hearing in the setting of interest rates, it cannot be said plaintiff had a clearly-established entitlement to said rates rather than a mere expectation of loans at such rates. See Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). Furthermore, even if plaintiff could establish that the level of interest rates constituted a property interest triggering constitutional safeguards, plaintiff’s right to a prior hearing before revision of those rates would only be required if the government interest in administrative and fiscal efficiency were outweighed by the individual interest and the value of the procedural safeguards. See Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976). In this case, the government might very well predominate in the balance in light of the strong state interest in the efficient regulation of business for the social welfare.

Although the state court’s final decision on the matter in 1982 established that the officials’ conduct violated the applicable statutory provisions, the Supreme Court has rejected the suggestion that the violation of some statutory or administrative provision, even if clear at the time of violation, was sufficient in itself to forfeit an official’s qualified immunity. Davis v. Scherer, — U.S.-, 104 S.Ct. 3012, 82 L.Ed.2d 139. This rejection is based on the recognition that higher-level executive officials routinely make close decisions which are “subject to a plethora of rules ‘often so voluminous, ambiguous and contradictory, and in such flux that officials can comply with them only selectively.’ See P. Shuck, Suing Government 66 (1983).” Id. at -, 104 S.Ct. at 3021. To require officials to not only know the applicable regulations but also to understand the interest underlying each regulation, an interest which in some cases eludes even trained lawyers with full access to relevant legislative and administrative materials, would be unfair and impracticable in light of the public need for officers to act swiftly and firmly. Id. at_, n. 13, 104 S.Ct. at 3021, n. 13.

The Department officials in the case at bar are no exception. Faced with the ambiguous and contradictory mandates of their own enabling act and the provisions governing the authority of the retail installment Sales Board transferred to them, the Department officials selectively complied with the enabling act. It would be unfair and impracticable to now charge these officials with lack of the hindsight understanding gained from the state court decision reached after a lengthy process of research and consideration.

2. Application of Statute of Limitation

The parties have raised the running of the statute of limitations as a contested issue of law in this case (Pre-trial Order, p. 4; Initial Scheduling Order, p. 3). The question presented before this Court is whether the one year limitations period began to run on July 14, 1980, the date of the issuance of Order No. 1, or on October 13, 1982, the date when the decision of the Superior Court became final and unappealable.

Since no federal statute prescribes the limitations period applicable to 1983 claims, the period for filing such actions is controlled by the applicable state statute of limitation. Board of Regents v. Tomanio, 446 U.S. 478, 100 S.Ct. 1790, 64 L.Ed.2d 440 (1980). The First Circuit has held that the most analogous state statute of limitations is the one year period applied to tort actions brought under Title 31 L.P.R.A. Section 5298(2). Graffals González v. García Santiago, 415 F.Supp. 19 (1976), aff'd 550 F.2d 687 (1st Cir.1977); Rivera Fernández v. Chardón, 648 F.2d 765 (1st Cir.1981). Furthermore, the First Circuit has firmly held that an action in state court between the same parties and arising from the same facts does not toll the statute of limitations unless the action is for the same remedy as the case at bar. Ramirez de Arellano v. Alvarez de Choudens, 575 F.2d 315, 319-20 (1st Cir.1978) (plaintiff’s action for mandamus in courts of the Commonwealth of Puerto Rico does not toll statute of limitations in plaintiff’s 1983 suit).

Applying the Ramirez rule to this case, it is clear that, even if defendants are not entitled to qualified immunity, plaintiff’s claim under 42 U.S.C. § 1983 in this case is time-barred under the applicable one year statute of limitations. Under 31 L.P.R.A. Section 5298(2), the one year period runs from the time the injured person knew or should have known of the injurious action. In this case, the 1983 action began to run on July 14, 1980, the date of issuance of Order No. 1. The limitation period was not tolled by the institution of judicial proceedings in the Superior Court of Puerto Rico because the state suit was one for judicial review seeking injunctive relief against defendant Pesquera in her official capacity. In the 1983 case now before this Court, plaintiff is seeking damages against defendant Pesquera in her personal capacity, an action which plaintiff was free to file within 1 year after learning of the issuance of Order No. 1. Such a situation is exactly the sort barred by the First Circuit in Ramirez since the action was not tolled by institution of a prior judicial proceeding. Furthermore, plaintiffs action against defendant Biaggi in this case is time-barred apart from the Ramirez rule. Biaggi was not named a party to the prior state court suit and thus plaintiffs claim against him was barred as of one year from July 14, 1980.

C. CONCLUSION

This Court concludes that the action taken by the Secretary and Acting Secretary of the Department of Consumer Affairs in the issuance of Order No. 1 without a prior hearing did not. violate clearly-established standards of due process at the time of issuance and are thus protected by a qualified immunity. Furthermore, plaintiffs claim under 42 U.S.C. § 1983 is time-barred, having been brought more than one year after July 14, 1980.

Accordingly, for all of the above stated reasons, Summary Judgment is hereby GRANTED in favor of defendants.

IT IS SO ORDERED.

The Clerk is to enter Judgment accordingly.

      . This provision originally applied to the Retail Installment Credit and Financing Companies Regulatory Board. Subsequently, the functions, powers and duties of the Board were transferred to the Department and its Secretary. Article 5 of the Organic Law, 3 L.P.R.A. 341d.


author: ELLEN B. BURNS, District Judge.

text:
    Olga JENNETT v. UNITED STATES of America.
    Civ. No. N-77-283.
    United States District Court, D. Connecticut.
    Oct. 10, 1984.
    Bernard Avcollie, Naugatuck, Conn., Theodore J. Wurz, Bristol, Conn., for plaintiff.
    Thomas Riley, Asst. U.S. Atty., New Haven, Conn., for defendant.
   RULING ON MOTION FOR SUMMARY JUDGMENT

ELLEN B. BURNS, District Judge.

In this action, the plaintiff has alleged that the negligence of employees of the United States Army Corps of Engineers caused the wrongful drowning death of her son, John I. Andrzywski. Jurisdiction is based on the Federal Tort Claims Act (“F.T.C.A.”), 28 U.S.C. § 2674 et seq., and 28 U.S.C. § 1346. Connecticut substantive law governs. 28 U.S.C. § 1346(b); Maltais v. United States, 439 F.Supp. 540, 550 (N.D.N.Y.1977).

The defendant has moved for summary judgment alleging there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. The parties have entered into a stipulation of facts which are or may be material to the issue of liability and which reads in relevant part as follows:

On May 22, 1974, the general Hop Brook Reservoir project area, consisting of 538 (fee) acres, was open to the public for hiking, picnicking, fishing, boating and similar recreational purposes, other than swimming. No fees were charged to the public for the use of the facilities for these purposes.
On May 22,1974, swimming in the Hop Brook Reservoir was prohibited.
Prior to May 25, 1974, the official policy of the Corps of Engineers was to prohibit swimming in the Hop Brook Reservoir. Pursuant to this policy the Corps’ Project Manager had instructed his staff to require anyone found swimming in the reservoir to leave the reservoir area immediately. The staff had done so on a number of occasions prior to May 22, 1974, and on May 22, 1974, prior to the drowning at issue here.
On or before May 22, 1974, there was a gate at the project entrance that was customarily opened at 8:00 a.m. and was closed at sundown. This gate was open at the time of the drowning at issue here.
On May 22, 1974, no person was assigned to be at the reservoir or on the beach for the full length of time during which the project was open. Rather, the Corps’ personnel, who worked 8:00 a.m. to 4:30 p.m. Monday through Friday, periodically checked the reservoir and beach area. There was no specific schedule for these inspections.
At the time of the drowning at issue in this ease, no Corps of Engineers’ personnel or lifeguards were present at the reservoir. There also were no signs posted which prohibited swimming, no lifesaving equipment nor a public telephone in the immediate vicinity.
On May 22, 1974, at roughly 5:00 p.m. John I. Andrzywski, then 16 years of age, attempted to swim across Hop Brook Reservoir with several other individuals.....
The group intended to swim from the beach side of the reservoir to the Middle-bury side. At or near the midpoint of the swim Andrzywski called for help, indicating that he couldn’t make it across. Several of his companions attempted to save him, but were unsuccessful. Andrzywski disappeared below the surface. All of his companions completed the swim to the Middlebury side of the reservoir.
After reaching the other shore, two of his companions got a ride to a nearby gas station and' called the Middlebury Police at roughly 5:17 p.m.
The Middlebury Police and the Fire Department Rescue and Fire Department Ambulance crews responded to the scene. At roughly 6:00 p.m. the Fire Department members recovered the body of Andrzywski by means of a grappling hook lowered from a boat.
Efforts to resuscitate Andrzywski were unsuccessful. The medical examiner pronounced him dead at the scene.
On May 23, 1974, Dr. David M. Lowell, pathologist at Waterbury Hospital, confirmed that the cause of John I. Andrzywski’s death was asphyxiation due to submersion, i.e. drowning.

Plaintiff in her brief has made several other factual claims. All are unsupported by affidavits or other competent evidence. They do not meet the requirements of Fed.R.Civ.P. 56(e) and are, therefore, insufficient to raise the possibility of any factual disputes.

Defendant premises its disclaimer of liability on the provisions of Conn.Gen.Stat. § 52-557g, which, at the time of this tragic accident, stated in relevant part:

(a) Except as provided in § 52-557h, an owner of land who makes all or any part of the land available to the public without charge, rent, fee or other commercial service for recreational purposes owes no duty of care to keep the land, or the part thereof so made available, safe for entry or use by others for recreational purposes, or to give any warning of a dangerous condition, use, structure or activity on such premises to persons entering for such purposes.
(b) Except as provided in § 52-557h, an owner of land who, either directly or indirectly, invites or permits without charge, rent, fee or other commercial service any person to use the land, or part thereof, for recreational purposes does not thereby: (1) make any representation that the premises are safe for any purpose; (2) confer upon the person who enters or uses such land for recreational purposes the legal status of an invitee or licensee to whom a duty of care is owed; or (3) assume responsibility for or incur liability for any injury to person or property caused by an act or omission of the owner.

Defendant claims that because plaintiffs decedent paid no fee for the use of the Hop Brook Reservoir and was engaged in a recreational activity in an area open to the public for recreational purposes, § 52-557g applies and it owed no duty of care to him. The plaintiff has admitted that, if § 52-557g does so apply, her cause of action is barred.

The question whether the statute applies is a matter of law and, since no genuine issue of material facts relevant to this determination exists, summary judgment is appropriate. The court agrees with the defendant’s interpretation and thus grants defendant’s motion for summary judgment.

DISCUSSION

The plaintiff’s argument focuses on the fact that at the time of the drowning swimming was prohibited.. She maintains that because none of the land was open to the public for the recreational purpose of swimming, Connecticut’s recreational use statute does not relieve the United States of liability in this case. Thus, plaintiff continues, the decedent was a licensee or invitee and as' such was owed the duty of reasonable care.

At the outset, the court notes that the applicability of § 52-557g is not affected because the landowner in this case is the United States government. The principle of encouraging landowners to open up their land by limiting potential tort liability applies with equal force to the Government as to other landowners. Gard v. United States, 594 F.2d 1230, 1233 (9th Cir.1979), cert. denied, 444 US. 866, 100 S.Ct. 138, 62 L.Ed.2d 90 (1979).

The language of the Connecticut statute does not define the protection it affords landowners in terms of the type of recreational activity. The statute does not limit the recreational purpose to permitted recreational uses. It is beyond question that swimming is a “recreational purpose”, as it is specifically defined as such in § 52-557f(4). The only limitation expressed within the statute is that if a landowner opens only a part of his land to the public, he then owes no duty of care to others only for that geographical part so made available.

Plaintiff might prevail if the reservoir itself had not been open for use for any purpose whatsoever, with only the surrounding land open for hiking. Such was not the case, however. The lake was open for boating and fishing, also both recreational uses under § 52-557f(4).

The express language of § 52-557g is clear. Nowhere is there any indication that “made available ... for recreational purposes” should be read “made available for permitted recreational purposes”. Indeed, subsection (b) indicates just the opposite. An owner who permits his land, or any part thereof, to be used for recreational purposes makes no “representation that the premises are safe for any purpose”. § 52-557g(b)(1) (emphasis added). Nor does the owner “assume responsibility for or incur liability for any injury____” § 52-557g(b)(3) (emphasis added). The clearly expansive thrust of § 52-557g(b) undermines plaintiffs argument that a statute in derogation of the common law must be construed strictly. The court construes § 52-557g strictly and nonetheless finds that its protections encompass injuries incurred while using the land for a prohibited recreational purpose.

Nor is the Connecticut statute unique in the extent of its protections to landowners. See, e.g., Russell v. Tennessee Valley Authority, 564 F.Supp. 1043, 1047 (N.D.Ala.1983) (17 year old injured while sliding down a dam spillway not intended for public use; plaintiff admitted he was using the spillway for recreational purposes; TVA not liable under Alabama statute similar to Connecticut statute); Gard v. United States, 420 F.Supp. 300 (N.D.Cal.1979) aff'd 594 F.2d 1230 (9th Cir.) cert. denied 444 U.S. 866, 100 S.Ct. 138, 62 L.Ed.2d 90 (1979). (While sightseeing on federal lands, plaintiff injured while .exploring old mine; United States not liable under Nevada sightseer statute).

To hold that the Andrzywski drowning falls outside the statute would have the effect of discouraging landowners from opening their lands for any public use free of charge. It would require that a landowner either open up his land for all purposes, or greatly increase the number of security personnel to ensure that only permitted uses occur in order to secure the protection of the statute.

The plaintiff’s position would have the anomalous result that the United States would have no duty of care to keep the reservoir safe for permitted uses; but would have a higher duty of care to those who used the land for prohibited purposes. If the legislature had intended the statute to- limit liability only for the specific activities permitted by the landowner, it could easily have used language to that effect.

The court therefore concludes that when the United States opened the Hop Brook Reservoir to boating and fishing on May 22, 1974, that geographic area was “made available” for use by others for recreational purposes. It incurred no liability for the drowning death of John Andrzywski ’ that occurred while he was swimming in the reservoir.

CONCLUSION

The plaintiff cannot recover damages because the Connecticut recreational use statute § 52-557g is applicable. The defendant’s motion for summary judgment is granted.

Having found the government had no duty of care, it obviously cannot be found negligent, nor is it necessary to reach the issue of whether defendant’s negligence caused the death of plaintiff’s decedent.

Accordingly, judgment may enter for defendant.

SO ORDERED.

      . Section 52-557h states two exceptions to the immunity from liability granted under § 52-557g: if there is a wilful or malicious failure to warn or guard against a dangerous condition, use, structure or activity, or if the owner charges a fee for the use of the land. In the present case, the plaintiff has alleged neither exception, and the facts do not suggest that either exception applies. See Gard v. United States, 594 F.2d 1230 (9th Cir.1979).

      . The plaintiff also maintains there are fact disputes preventing the entry of summary judgment for defendant. These issues, such as notice and the presence of defendant’s agents, would only be relevant if the court found the statute inapplicable and that the United States had some duty of care under common law. Because the statute applies, the court need not address those issues.


author: DOUMAR, District Judge.

text:
    William BOONE, Jr., Petitioner, v. Superintendent E. STACY, Respondent.
    Civ. A. No. 84-231-N.
    United States District Court, E.D. Virginia, Norfolk Division.
    Oct. 18, 1984.
    William Boone, Jr., pro se.
    Robert Q. Harris, Asst. Atty. Gen., Commonwealth of Virginia, Richmond, Va., for respondent.
   ORDER

DOUMAR, District Judge.

The petitioner, a Virginia inmate proceeding pro se, brings this writ of habeas corpus under 28 U.S.C. § 2254. Petitioner was convicted of grand larceny (Va.Code § 18.2-95 (1982)) and possession of burglarious tools (Va.Code § 18.2-94 and 10 (1982) by the Norfolk Circuit Court in a bench trial. On March 18, 1983, the court imposed a three-year sentence on each conviction, with the burglary tool sentence suspended for six years conditioned upon good behavior. The petitioner raised the claim presented herein previously in a direct petition for appeal heard by the Supreme Court of Virginia. That court refused the petition for appeal on October 18, 1983, finding no reversible error. Therefore, the petitioner has exhausted his available state remedies as required by 28 U.S.C. § 2254(c).

THE ERROR ALLEGED

The conviction is based on insufficient, evidence because the value of the stolen goods, an essential element of grand larceny, was not established.

I. BACKGROUND

Petitioner was convicted of grand larceny for the theft of five dresses from a Smith & Welton department store located in a Norfolk shopping mall. Mrs. Pawl, a security guard at a different store in the mall, testified at the trial that she first observed the petitioner and others in the Smith & Welton’s store beside a dress rack. She was passing the store while on her lunch hour at the time. She recognized one of the co-defendants from a previous shoplifting arrest and recognized the petitioner from prior occasions. (Tr. p. 9). The security guard qualified as an expert on security matters and said that from 30 feet she observed the petitioner and others placing dresses in a “booster box” placed between the petitioner’s legs. (Tr. p. 9). A “booster box” is a special box used by professional shoplifters to conceal merchandise from detection. (Tr. p. 17). Soon thereafter the petitioner and others were apprehended in a car driven by the petitioner. The dresses and the booster box were found in the car under the driver’s seat, with the store price tags still attached to the dresses. (Tr. p. 28).

The sole issue raised here is whether the prosecution proved the value of the dresses was “$200 or more” to support the grand larceny conviction under Va.Code § 18.2-95 which reads in part:

§ 18.2-95. Grand larceny defined; how punished. — Any person who:
(1) Commits larceny from the person of another of money or other thing of value of five dollars or more, or
(2) Commits simple larceny not from the person of another of goods and chattels of the value of $200 or more, shall be deemed guilty of grand larceny which shall be punishable by confinement in the penitentiary for not less than one nor more than twenty years or in the discretion of the jury, or judge sitting without a jury,, be confined in jail for a period not exceeding twelve months or fined not more than $1,000, either or both.

(Emphasis added). The burden is upon the Commonwealth to prove beyond a reasonable doubt that the value of the goods stolen equals or exceeds the statutory amount fixing the grade of the offense. Knight v. Commonwealth, 225 Va. 85, 300 S.E.2d 600 (1983); Wright v. Commonwealth, 196 Va. 132, 139, 82 S.E.2d 603, 607 (1954).

With respect to a habeas corpus petition, the current standard for assessing sufficiency of the evidence to withstand due process scrutiny is set forth in Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979) rehearing denied, 444 U.S. 890, 100 S.Ct. 195, 62 L.Ed.2d 126 (1979). In Jackson, the United States Supreme Court established the rule that to withstand constitutional scrutiny, a state court conviction must be based on evidence sufficient to justify a rational trier of fact in finding guilt beyond a reasonable doubt. The Court stated that “the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Id. at 319, 99 S.Ct. at 2789. (Emphasis in original.) An applicant is entitled to relief on the ground of insufficient evidence to convict only if it is found that “upon the record evidence adduced at trial no rational trier of fact could have found proof of guilt beyond a reasonable doubt.” Id. at 324, 99 S.Ct. at 2791-92.

The petitioner asserts that the tagged selling price of the dresses is not the test of market value nor can it be the basis for testimony, but rather that fair market value must be established in some other fashion.

II. THE TRIAL

At trial, the Commonwealth called Mr. John Maroulis, assistant manager of this branch of Smith & Welton, a retail department store, to establish among other things the “value” of the five stolen dresses, which still had attached the Smith & Welton price tags. Mr. Maroulis testified that the cumulative tagged selling price of the five dresses was $424.00 and the cost of the dresses was $211.00 (Trial at Norfolk Circuit Court, p. 78). However, the petitioner’s attorney objected to the statement as to “cost” as hearsay since Mr. Maroulis had no experience as a buyer of clothing, or direct knowledge of the cost of the dresses (Tr. pp. 78 and 81), and this colloquy ensued:

MR. ROBINSON [petitioner’s attorney]: Fair market value, depending on the kind of retail outlet that we are dealing with. And this witness wouldn’t be in a position to tell us about that either because he is not a buyer.
THE COURT: Again, he is not a buyer. But it seems to me his testimony should come in. Of course, you can examine in reference to the weight, the value. Just like the cases tell us the person — the owner of a house where items are taken, they can testify. Yet they are not experts. But they can testify. Of course, it’s hearsay to them.
Now, in that sense you don’t have people you can examine. He, being assistant manager, and he relates the price tags. I will let him say where they come from____

(Tr. p. 82) (emphasis added). However, on cross-examination by the petitioner’s attorney as to “cost” and how Smith & Welton arrived at its retail prices, Mr. Maroulis stated:

They usually go by the cost of the dress, what they paid for the dress, and normally there is. a hundred percent markup on the dress. Sometimes there may be a couple of dollars more, but that’s the normal process.

(Tr. p. 87). The petitioner’s attorney continued to maintain that fair market value had not been established for the dresses because the testimony was hearsay and the following dialogue took place on this issue:

MR. ROBINSON [petitioner’s attorney]: All right, Judge. I again move to strike the witness’s testimony about value. We don’t have any evidence of value at this point.
THE COURT: Now, like I said, I said is not retail. It seems to me most cases say, when I say retail, the fair market value. Now, I don’t know that we have a case in Virginia. I would have to take a quick look at that to be sure that says that. Of course he did say two hundred eleven dollars.
MR. ROBINSON: That’s wholesale.
THE COURT: Wholesale. And that they sell for four twenty-two.
MR. ROBINSON: A hundred percent markup.
THE COURT: Yes. Of course, under either viewpoint is it not two hundred dollars, in excess—
MR. ROBINSON: Judge, what I’m saying is that if you rule that they can use wholesale value as the value determinant in the case, then I would believe our objection concerning that testimony being based upon hearsay would have to be sustained. If we are going to use the test of whether it’s fair market value, then we know we have — I would concede that we have dresses of some value, but what amount of value it is impossible to say.
MR. McKENNEY [Attorney for Commonwealth]: Your Honor, if I might point out, there has been nothing to contradict the witness’s testimony that the value of these dresses is four hundred and some dollars as shown by the price tags on them____
* * * * * *
MR. ROBINSON: I don’t think market value has anything to do with retail value. Everybody knows retailers are out to make a profit.
MR. MCKENNEY: The term fair market value means the price at which a willing seller would sell to a willing buyer.
THE COURT: Well, we have that definition, yes, then on the open market .with eminent domain, condemnation', and that phrase carries over I suppose into the other fields. I follow what each of you have said, and I have read cases where it says fair market value. I cannot say I read a Virginia case where we have held here in this state____ But I feel under either theory, Mr. Robinson, I have got to overrule your motion.

Tr. pp. 88-91. Thus, the petitioner’s attorney maintained that the retail price tags were insufficient evidence of value and that Mr. Maroulis was unqualified to testify as to routine mark-up procedures or value based on his store’s price tags.

III. THE PROPER TEST FOR VALUE

Market value, fairly determined, may be measured in various ways, depending on the circumstances of each case, and no general formula should be used for the purpose, but the court should retain the concept of market value as a practical standard. U.S. v. Miller, 317 U.S. 369, 373, 63 S.Ct. 276, 279, 87 L.Ed. 336 (1943) (eminent domain context). The amount at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, is a general litmus test for fair market value in many analogous legal situations. However, the Court addresses itself here solely to the “value” required to prove grand larceny under Va.Code § 18.2-95.

In civil matters, the value of property may be established in a number of ways, depending upon the nature of the case: the original cost of an item See Norfolk So. Ry. v. Fentress, 127 Va. 87, 102 S.E. 588 (1920); or an estimate of value or current selling price made by the owner or a third person, (Norfolk & W. Ry. v. Briggs, 103 Va. 105, 48 S.E. 521 (1904); Barnes v. Morrison, 97 Va. 372, 34 S.E. 93 (1899)). In criminal matters, the Virginia Supreme Court has indicated that value can be proved by circumstantial evidence. Veney v. Commonwealth, 212 Va. 805, 188 S.E.2d 80 (1972). The original purchase price of a used item recently purchased may be admitted as evidence of its current value with due allowance for proper depreciation. Gertler v. Bowling, 202 Va. 213, 215, 116 S.E.2d 268, 270 (1960). However, on a used item 10 years old, in addition to the cost of the item, there must be some evidence of the effect of “age and wear and tear” in order to establish value. Dunn v. Commonwealth of Virginia, 222 Va. 704, 705, 284 S.E.2d 792 (1981).

The general rule in a shoplifting case is that uncontradicted evidence that merchandise was displayed in a retail establishment for regular sale at a marked price representing its retail price can serve as sufficient circumstantial evidence of fair market value. Calbert v. State of Nevada, 670 P.2d 576 (Per Curiam) (Nev.1983); City of Albuquerque v. Martinez, 93 N.M. 704, 604 P.2d 842 (App.1979); Norris v. State, 475 S.W.2d 553 (Tenn.Cr.App.1971); Maisel v. People, 166 Colo. 161, 442 P.2d 399 (1968); Lauder v. State, 233 Md. 142, 195 A.2d 610 (1963); People v. Irrizari, 5 N.Y.2d 142, 182 N.Y.S.2d 361, 156 N.E.2d 69 (1959). Indeed, in the widely cited Irrizari case, supra, the New York Court of Appeals stated:

“In short, market value, ... denotes not the value of the goods in the market in which the owner had purchased them or in which he could replace them, but the value in the market in which the goods were being traded, namely, the price at which they would probably have been sold in the regular course of business at the time when and place where they were stolen. And so, we note, the courts have held in a number of other jurisdictions where the market value is likewise the criterion for determining the value of stolen property.” [Emphasis added].

182 N.Y.S.2d at 364, 156 N.E.2d at 71. Attaching any other “value” to stolen retail goods “ignores the realities of the marketplace, particularly the fact that a thief may often be compelled to sell stolen property at far below its market value.” Mercado v. Sheriff, Clark County, 94 Nev. 771, 587 P.2d 1327 (1978) (receiving stolen goods). Courts have stated that the tagged retail price serves as “competent evidence,” (Cal bert, supra), or, alternatively, that, though hearsay, the price tag is “a document prepared or entry made in the regular course of business____” and this hearsay exception would apply “in criminal as well as civil cases.” (Lauder, supra). Therefore, the retail price tags, with the testimony of the assistant manager, were sufficient to prove that the dresses had a value in excess of $200.00.

Upon a careful review of each of the petitioner’s handwritten notes, and the complete transcript, the Court concludes that the petitioner’s suit for a grant of habeas corpus is ORDERED DENIED and DISMISSED. The respondent’s motion to dismiss is GRANTED.

Should petitioner desire to appeal the judgment of this Court, written notice of appeal must be filed with the Clerk of this Court, Room 307, U.S. Courthouse, 600 Granby Street, Norfolk, Virginia 23510, which said written notice of appeal must be received by the Clerk within thirty (30) days from the date of this order.

IT IS SO ORDERED.


author: MIHM, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. PRINCE HALL VILLAGE, INC., Defendant.
    No. 83-4048.
    United States District Court, C.D.Illinois, Peoria Division.
    Oct. 19, 1984.

      Mark D. Stuaan, Asst. U.S. Atty., Peoria, 111., for plaintiff; John Mahoney, U.S. Dept, of HUD, Chicago, 111., of counsel.
    Clarence J. Crooks, Chicago, 111., for defendant.
   ORDER

MIHM, District Judge.

The United States filed this foreclosure suit alleging that it was the holder of the note, mortgage and security agreement for the Riverview Apartments, that the loan was in default, and that the United States was entitled to a decree foreclosing its lien and an order requiring judicial sale of its property. On July 15, 1983, two days after the filing of the complaint, the Government was placed in possession of the subject premises and has remained in possession. Currently pending before the Court are the parties’ cross-motions for summary judgment.

FACTUAL BACKGROUND

The following facts are uncontested: On August 6, 1970, Prince Hall Village, Inc. (“Prince Hall”) executed and delivered to Northwest Bank and Trust Company a mortgage note in the amount of $2,288,200 securing the same by a mortgage encumbering certain realty in Rock Island County. The note provided for payment of monthly installments and authorized the holder to accelerate the maturity if any installment remained unpaid on the due date of the next installment. The mortgage was duly recorded in the Office of the Recorder of Deeds of Rock Island County. On January 26, 1970, to further secure payment of the note, Prince Hall executed and delivered to Northwest Bank and Trust Company a security agreement covering certain chattels, located or to be located on the realty described in the mortgage.

Paragraph nineteen of the mortgage provides for acceleration and immediate right to foreclosure . upon default. Paragraph five of the mortgage note contains a substantially identical provision.

Executed contemporaneously with the mortgage note and mortgage was a Regulatory Agreement. That agreement was also recorded in the Office of the Recorder of Deeds. The Regulatory Agreement gave the Department of Housing and Urban Development (HUD) the right to limit the rents charged by Prince Hall. Prince Hall requested rent increases in 1978, 1980 and 1982, all of which were approved by HUD.

The Secretary of HUD is now the lawful owner and holder of the note and mortgage by virtue of assignments recorded in the Office of the Recorder of Deeds. It is also the lawful owner and holder of the security agreement by virtue of an unrecorded assignment and the filing of UCC notices of assignment. Undér the terms of the mortgage, default entitles the mortgagee to the appointment of a receiver, to possession of the premises and to all profits and income.

The Government alleges that Prince Hall did not pay the installment due September 1, 1971 prior to the due date of the next monthly installment and has made no subsequent payment sufficient to restore the loan to currency. As of December 1, 1983, the accelerated debt was almost $3,000,000. Prince Hall contends that HUD prevented or would not allow it to charge sufficient rents in order to generate sufficient income so that Prince Hall could meet its project financial obligations, and thus, Prince Hall has a valid defense to the foreclosure action.

Prince Hall argues that the prevention doctrine constitutes a valid defense to the action on the debt, and therefore it can be raised in a foreclosure action upon which the debt is predicated. The prevention doctrine, Defendant submits, states that each party to a contract implicitly agrees not to prevent the other party from performing, and failure to perform any contract according to its terms is excused when such performance is prevented by the acts of the opposite party, especially where one party has, by its acts or conduct, made performance by the other party impossible. Prince Hall argues that HUD, pursuant to the authority granted to it in the Regulatory Agreement, has made performance by Prince Hall impossible since HUD did not allow Prince Hall to charge adequate rents in order to generate sufficient income to pay the obligations owed .by it to HUD under the note and mortgage. Defendant contends that HUD’s policy gave undue weight and consideration to the ability of tenants to pay such rent increases and that HUD’s denial of legitimate rent increases which would have allowed Prince Hall to meet its contractual obligations can be construed as arbitrary and capricious conduct.

In United States v. Winthrop Towers, 628 F.2d 1028 (7th Cir.1980), the Seventh Circuit articulated the standard by which the Secretary of HUD’s actions in foreclosure of a federally insured mortgage are gauged, and identified the procedures to be followed in district court. In exercising its discretion, HUD may decide to foreclose in order to minimize losses from its insurance fund and may also consider other factors relevant to national housing policy. 628 F.2d at 1036. Judicial review of HUD’s action is limited to the question of HUD’s compliance with the “arbitrary and capricious” standard of the Administrative Procedures Act.- That “very limited review” does not entail a de novo review of the merits of HUD’s decision or compel HUD to initially file proof of procedural regularity, but requires the mortgagor resisting foreclosure to introduce “some evidence of HUD’s arbitrary or capricious action, abuse of discretion or failure to comply with applicable law.” 628 F.2d at 1036. Given HUD’s broad discretion, Winthrop Towers noted that summary judgment motions would frequently be the appropriate mechanism for determining whether there is any substance to the mortgagor’s claims. 628 F.2d at 1036.

HUD decisions regarding rent increases are committed to agency discretion by law. Hahn v. Gottlieb, 430 F.2d 1243 (1st Cir.1970). Gottlieb stated that there is an implied congressional intent to cut off review of such a decision above the agency level and that the courts áre ill-equipped to superintend managerial decisions regarding rent increases. See also Langevin v. Chenango Corp., Inc., 447 F.2d 296, 303 (2nd Cir.1971). The Seventh Circuit expressed its concurrence with these holdings in Harlib v. Lynn, 511 F.2d 51 (7th Cir.1975). Harlib involved the issue of whether tenants of a project subsidized and insured under § 221(d)(3) of the National Housing Act were entitled to judicial review of HUD’s decision to grant the mortgagor’s request for a rental increase. The Seventh Circuit held that no right to a hearing could be found in the statutes and agreed with the First, Second, and Third Circuits that Congress' did not intend such review. 511 F.2d at 55, 56. The court referenced, with approval, portions of the decision in Hahn, supra, and Langevin, supra.

The limited review which can be conducted by this Court under the Win throp Towers standard does not lead to the conclusion that HUD’s actions were arbitrary and capricious. The above-cited authority makes it clear that the duties of the Secretary of HUD are discretionary in the area of rent increases. It is inappropriate to submit these decisions to judicial supervision. See also Frakes v. Pierce, 700 F.2d 501, 505 (9th Cir.1983); Falzarano v. United States, 607 F.2d 506, 513 (1st Cir.1979). The Defendant was aware at the time it executed the note and mortgage in 1970 that rents were to be kept at levels that low and moderate income tenants could afford. It expressly agreed to restrictions on rental charges when it executed the Regulatory Agreement.

Prince Hall’s defense based on the prevention doctrine must also fail based on the rationale of United States v. Sherman Gardens Co., 298 F.Supp. 1332 (D.Nev.1967). Sherman Gardens held that the affirmative defenses of impossibility, prevention of performance and commercial frustration were unavailable to a defendant in an action brought by the government on a promissory note and for foreclosure of a trust deed on a housing project. The court stated that:

“This was a simple loan transaction. The government did not guarantee a profitable operation or limit the source of the funds to be used to pay the loan (citations omitted) ____ If a lender wishes to guarantee that a debtor will have the money to pay the debt when it falls due, we assume he could do so, but nothing but an express unequivocable undertaking to that effect would warrant such a conclusion.” 298 F.Supp. at 1334.

Prince Hall also raises the affirmative defense that it was denied an operating subsidy. The Government replies that the Defendant is estopped from claiming a right to such a subsidy. The operating subsidy was authorized by Congress on August 22, 1974 in the 1974 Housing Act. Section 212 of that Act amended § 236(f) of the National Housing Act (“NHA”), 12 U.S.C. § 1701 et seq., by authorizing the Secretary of HUD to make operating subsidies available to project owners in order to cover increased utility costs and property taxes exceeding a predetermined operating expense level. Section 212 also amended § 236(g) of the NHA by authorizing the Secretary to' use excess rentals collected from project owners for the payment of these operating subsidies. Pub.L. 93-383, 88 Stat. 633, 672. The subsidies were to be paid only to the extent there were tenants residing in the project who pay more than 25% of their income for rent (where rent includes utilities). See Abrams v. HUD, 547 F.2d 1062, 1066 (9th Cir.1976).

Subsequently, the Secretary declined to implement the operating subsidy program. Residents of HUD 236 projects brought suits across the United States and the courts uniformly found the operating subsidy program to be mandatory. In the light of these decisions, HUD entered into a settlement agreement (Exhibit A to Plaintiff’s Memorandum in Support of Motion for Summary Judgment) under which approximately $60,000,000 was deposited with a district court for disbursement in accordance with paragraph 9 of the settlement agreement. Plaintiff argues that Prince Hall (Riverview Apartments) was not entitled to nor did it make a claim for the money in the settlement fund. As a project owner, Prince Hall was only eligible when it “ha(d) been enjoined from collecting a HUD-approved rent increase, or ha(d) agreed not to collect such an increase by reason of specific litigation brought on behalf of tenants____" (paragraph 9(d) of the Settlement Agreement). Plaintiff submits that none of these preconditions are present in this case. On the other hand, a tenant who resided in Riverside Apartments between February 1, 1975 and September 30, 1977 and who paid in excess of 25% of his or her income for rent was eligible to share in the settlement funds.

Prince Hall rejects HUD’s reliance on the settlement agreement reached in the cases brought by tenants of 236 projects and instead relies on Battles Farm Company v. Harris, 703 F.2d 1292 (D.C.Cir.1983), a suit initiated by owners of housing projects. Defendant contends that Battles Farm mandates HUD implementation of the operating subsidy program and specifies the manner of determining the amount of operating subsidy to which a project owner may be entitled. Prince” Hall argues that, at HUD’s insistence and encouragement, it did not request rent increases during the period in which the operating subsidy was to apply. An operating subsidy coupled with a legitimate rent increase, Prince Hall argues, could have obviated Defendant’s indebtedness to HUD.

Battles Farm may theoretically entitle Prince Hall to an operating subsidy, but the facts do not show that Prince Hall is entitled to such relief. First, Battles Farm expressly rejected the project owners’ claim to a long term contract for operating subsidies. 703 F.2d at 1297. Second, Battles Farm held that as long as the actual rent charged by the owners was less than the maximum basic rental they could have charged but greater than or equal to 30% of the tenant’s income, the owners were entitled to retroactive subsidy payments for the difference between the amount of the subsidy received and the actual rent received from the tenants. 703 F.2d at 1295-96. In resisting Plaintiff’s Motion for Summary Judgment, it is incumbent on the Defendant to make some showing that it meets the requirements which would entitle it to an operating subsidy. The Defendant has not attempted to show that it comes within the narrow category of owners entitled to an operating subsidy under the Battles Farm criteria.

Since Prince Hall has not made a showing that it fulfills the requirements for an operating subsidy, whether or not it sought that subsidy is immaterial. However, even if Prince Hall did meet the requirements, it is precluded from such relief because it did not apply for a subsidy when HUD’s program was supposed to be in effect. Defendant’s affidavit of Clarence Crooks states that the operating subsidy was asked for “(m)any times subsequent to April, 1983.” The program, however, was eliminated in 1978. Defendant’s memorandum states that Prince Hall did not request rent increases during the period in which the operating subsidy was- to apply due to HUD’s insistence and encouragement. There is no evidence in the record, however, to support that inference. Thus, this is not a situation where equitable estoppel could be applied.

Based on the foregoing, IT IS ORDERED:

1. Plaintiff’s Motion for Summary Judgment is GRANTED.

2. Defendant’s Motion for Summary Judgment is DENIED.

3. The matter will be set as soon as the Court’s calendar allows for a hearing on the question of appropriate relief.


author: BARRINGTON D. PARKER, District Judge:

text:
    Harrison COMBS, et al., Plaintiffs, v. ADKINS & ADKINS COAL CO., INC., et al., Defendants.
    Civ. A. No. 84-781.
    United States District Court, District of Columbia.
    Oct. 19, 1984.

      Rodney F. Page, R. Steven Holt, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D.C., for plaintiffs.
    Dennis Dean Kirk, Washington, D.C., for defendants.
   MEMORANDUM OPINION

BARRINGTON D. PARKER, District Judge:

This matter comes before the Court on the motion to dismiss, or in the alternative, to transfer, filed by the defendants, and the plaintiffs’ motion for summary judgment asserting the defendants’ liability to the plaintiffs for contributions due under the Employee Retirement Income Security Act of 1974 (“ERISA”).

The plaintiffs, trustees of the United Mine Workers of America’s (“UMWA”) 1950 and 1974 Pension Plans (“Plans” or “Fund”) have brought suit under ERISA, as amended by the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. § 1001 et seq. As sponsors of the Plans, the plaintiffs seek a declaratory judgment that the defendants have ceased to make contributions to the Plans, 29 U.S.C. § 1383(a), and request payment of contributions equaling approximately $50,-000, together with the liquidated damages and interest which are authorized by statute.

Defendants Phillip and Earl Adkins operate a coal mining business in Kentucky. When the Adkins’ business operated as the Adkins & Adkins Coal Company, Inc. (“Adkins & Adkins”), the company was a signatory to the National Coal Mine Construction Agreéments of 1978 and 1981, which required it to contribute to the Plans. Subsequently, the business operated by the Adkins brothers has also been known as the A & A Coal Company and the. P & E Coal Company, Inc. For purposes of this Memorandum Opinion, the above entities are collectively referred to as the defendants.

The two pending motions present three issues for the Court’s consideration: first, whether venue lies in the District of Columbia; second, whether this Court has personal jurisdiction over the defendants; and third, whether the defendants have withdrawn from a multiemployer pension plan within the meaning of 29 U.S.C. § 1398. For the reasons set forth below, the Court denies the defendants’ motion to dismiss or transfer, and grants summary judgment in favor of the plaintiffs.

A.

Venue and Personal Jurisdiction

The Trustees are authorized to bring this action pursuant to 29 U.S.C. §§ 1132(a)(3) and 1451(a)(1). In actions “to compel an employer to pay withdrawal liability” or “to collect withdrawal liability,” 29 U.S.C. § 1451(b), (c), venue and service of process are governed by 29 U.S.C. § 1451(d). That section provides that:

[a]n action ... may be brought in the district where the plan is administered or where the defendant resides or does business, and process may be served in any district where a defendant resides, does business, or may be found.

Similar venue and service of process provisions are provided in 29 U.S.C. § 1132(e)(2), which permits actions by plan fiduciaries to enforce ERISA liability. See Combs v. Pelbro Fuel, Inc., 4 E.B.C. 2610, 2611 (D.D.C.1983). Since the 1950 and 1974 pension plans are administered in the District of Columbia, venue lies in this District within the plain meaning of sections 1451(d) and 1132(e)(2).

Moreover, this Court possesses personal jurisdiction over the defendants, who reside in Kentucky. Where Congress has authorized nationwide service of process, a federal court may exercise personal jurisdiction over any United States resident, without regard to whether its sister state court could assert jurisdiction under minimum contacts principles. Briggs v. Goodwin, 569 F.2d 1, 8-10 (D.C.Cir.1977) (interpreting similar provisions of 28 U.S.C. § 1391(e)), rev’d on other grounds sub nom. Stafford v. Briggs, 444 U.S. 527, 100 S.Ct. 774, 63 L.Ed.2d 1 (1980); Combs v. Pelbro Fuel, Inc., 4 E.B.C. at 2611 (District Court for the District of Columbia asserted jurisdiction over defendant Pennsylvania corporation in ERISA case). Here, the defendants’ .status as United States residents is not disputed, and this Court may assert personal jurisdiction over them.

This finding also disposes of the defendants’ contentions with respect to service of process. The validity of service in this case depends on the defendants’ “contacts with the district of service,” I.A.M. National Pension Fund, Benefit Plan A v. Wakefield Industries, Inc., 699 F.2d 1254, 1258 (D.C.Cir.1983), and not, as the defendants contend, on their contacts with the District of Columbia. The Congress may constitutionally authorize extraterritorial service of process, see Briggs v. Goodwin, 569 F.2d at 8, as done here. The defendants do not dispute that they have sufficient contacts with Kentucky, the district of service. Accordingly, the defendants’ motion to dismiss must be denied.

This Court also- declines to disturb the plaintiffs’ choice of forum by transferring this action to Kentucky'under the doctrine of forum non conveniens or pursuant to its discretion under 28 U.S.C. § 1404(a). Numerous decisions of this Court have denied similar motions filed by nonresident defendants in other ERISA cases. See, e.g., Combs v. Pelbro Fuel, 4 E.B.C. 2612-13; Combs v. Rawhide Coal Co., No. 83-2045 (D.D.C. Nov. 16, 1983); Combs v. Garin Trucking Co., No. 83-3651 (D.D.C. May 21, 1984), appeal docketed, No. 84-5343 (D.C.Cir. May 31, 1984). The defendants were given ample notice that litigation could ensue in the District of Columbia, and in any event, it makes good sense to hear this case where the Plans are administered.

The defendants also argue that litigation currently pending in the Eastern District of Kentucky supports transfer to that district. This argument must be rejected because the Kentucky litigation concerns the defendants’ dispute with the union, not the pension fund. See District 30, United Mineworkers of America v. Adkins & Adkins Coal Co., Inc. (“Kentucky litigation”), No. 82-310 (E.D. Kentucky, amended complaint filed Feb. 25, 1983). The amended complaint is attached as Exhibit 6 to the Memorandum in Opposition to Defendants’ Motion to Dismiss, or, in the Alternative, to Transfer, and in Support of Plaintiffs’ Motion for Summary Judgment (“Plaintiffs’ Memorandum”), filed Aug. 21, 1984.

B.

Subject Matter Jurisdiction: Exemption From Withdrawal Liability Under 29 U.S.C. § 1398

The defendants oppose the plaintiffs’ motion for summary judgment on the grounds that they are engaged in a labor dispute with their employees within the meaning of 29 U.S.C. § 1398, and are therefore exempt from any obligation to make contributions to the Plans. The dispute between the defendants and their employees in this case is summarized in the Amended Complaint in the Kentucky litigation, which alleges that Adkins & Adkins Coal failed to withhold membership dues and union fees and remit those sums to the UMWA in accordance with a 1981 Wage Agreement. Plaintiffs’ Memorandum, Ex. 6, ¶¶ 9, 12. In addition, the defendants allege certain work stoppages and union confrontations since February of 1982.

Although the defendants and their employees are apparently involved in a labor dispute, this finding does not automatically insulate the defendants from all liability in connection with payment of contributions. The purpose of the labor dispute exception is to protect an employer from the threat of withdrawal liability for time period during which its contributions have been temporarily interrupted by labor problems. I.A.M. National Pension Fund, Benefit Plan C v. Schulze Tool and Die Co., Inc., 564 F.Supp. 1285, 1295 (N.D.Cal.1983). This exception, however, does not give an employer the unrestricted ability to permanently cease contributions to a pension plan merely because the “cessation ... was precipitated by a labor dispute.” 126 Cong.Rec. 23,038.

The facts and circumstances in this case strongly suggest that the defendants have permanently withdrawn from the Plans. They have admitted that the entity known as Adkins & Adkins Coal Company, Inc. ceased operations in February of 1982, and was reconstituted as the P & E Coal Company, Inc., a non-union shop. Affidavit of Phillip Adkins at ¶ 9, attached as Ex. 1 to Defendants’ Reply to Plaintiffs’ Memorandum in Opposition and Memorandum in Opposition to Plaintiffs’ Motion for Summary Judgment and Statement of Facts, filed Aug. 31, 1984. Despite the issuance of withdrawal liability notices by the Fund, the defendants have not made any contributions since February of 1982. Affidavit of Deborah L. Gilleland, Assistant Comptroller of the Withdrawal Liability Section of the UMWA Health and Retirement Funds, at ¶ 4, filed Aug. 21, 1984. Based on this information, the trustees of the Fund reasonably determined that the defendants’ failure to make payments constituted a permanent withdrawal from the Plans.

More importantly, the defendants have forfeited their opportunity to contest the existence or the amount of their withdrawal liability because they blatantly ignored the clear statutory requirements for resolution of disputed withdrawal liability determinations. Within 90 days of receipt of notice and demand for payment, an employer is required to request the plan sponsor to review any dispute concerning the withdrawal liability determination. 29 U.S.C. § 1399(b)(2)(A). If the employer disagrees with the sponsor’s decision, it may initiate arbitration. This arbitration must be initiated within 60 days of the date the sponsor notified the employer of the decision on review or within 120 days of the date the employer requested review, whichever is earlier. 29 U.S.C. § 1401(a)(1)(A). If arbitration is not initiated within the statutory time frame, “the amounts demanded by the plan sponsor ... shall be due and owing.” 29 U.S.C. § 1401(b)(1).

In June of 1983, the trustees notified Adkins & Adkins that.it owed $36,171.82 and $11,102.12 in unpaid contributions to the 1950 and 1974 Plans, respectively, and established a payment schedule. The trustees also notified Adkins & Adkins that its failure to abide by the statutory timetable for review would preclude any dispute over the amount owed. Later, in October of 1983, the trustees again demanded payment of the unpaid contributions, in addition to interest. On July 23, 1984, the trustees revised their calculation of the defendants’ liability to the 1974 Plan based on a recalculation of unfunded vested benefits. Gilleland Aff. at ¶ 9. This revision increased the defendants’ obligation to the 1974 Plan from $11,102.12 to $14,127.89. Despite notification of their obligation to pay $50,299.71 in unpaid contributions, Adkins & Adkins did not request review of this determination or seek arbitration.

The requirement of arbitration broadly covers disputes involving “the establishment or amount of withdrawal liability.” Shelter Framing Corp. v. Pension Benefit Guaranty Corp, 705 F.2d 1502, 1509 (9th Cir.1983), reversed on other grounds sub nom. Pension Benefit Guaranty Corp. v. R. A. Gray & Company, — U.S.-, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984). The Act delegates “factfinding functions to administrative-type bodies,” Washington Star Co. v. International Typographical Union Negotiated Pension Plan, 729 F.2d 1502, 1511 (D.C.Cir.1984), and an arbitrator’s responsibilities include the interpretation of the statutory language of the Act. Republic Industries, Inc. v. Teamsters Joint Council No. 83 of Virginia Pension Fund, 718 F.2d 628, 634 (4th Cir.1983) (meaning of “facility” under section 1397(a) is arbitrable issue), cert. denied, — U.S. -, 104 S.Ct. 3553, 82 L.Ed.2d 855 (1984). Thus, an arbitrator could have determined whether a “labor dispute” existed within the meaning of section 1398, and whether the trustees had correctly computed the amount of withdrawal liability owed.

Moreover, the defendants have taken no action which would toll the statutory time frames. See Republic Industries, Inc., 718 F.2d at 644 (filing of suit challenging constitutionality of Act tolls limitations period). Under these circumstances, they have conceded the existence and amount of withdrawal liability owed to the Fund. Board of Trustees of Western Conference of Teamsters Pension Trust Fund v. J.N. Ceazan, 559 F.Supp. 1210, 1218 (N.D.Cal.1983) (citing 29 U.S.C. § 1401(b)(1); Speckmann v. Paddock Chrysler Plymouth, Inc., 565 F.Supp. 469, 473 n. 2 (E.D.Mo.1983).

C.

Amount of Defendants’ Withdrawal Liability

While the foregoing discussion establishes that the defendants are legally liable to the Plans for withdrawal liability under ERISA, the amount owed must still be determined. Under 29 U.S.C. § 1132(g)(2), the amount of withdrawal liability equals the sum of unpaid contributions, interest on the unpaid contributions, and liquidated damages, as well as reasonable attorneys’ fees and costs.

The $50,299.71 in unpaid contributions will be taken as established. The Court rejects the defendants’ contention that this sum should be decreased by the $50,000 reduction provided by the de minimis rule of 29 U.S.C. § 1389(a). This assertion is barred by the defendants’ failure to pursue the arbitration scheme outlined in the statute, and furthermore, it is substantively incorrect. The de minimis rule is not uniformly applicable to all claims for unpaid withdrawal liability. Shelter Framing Corp., 705 F.2d at 1514. For instance, plans which are covered by section 404(c) of the Internal Revenue Code, 26 U.S.C. § 404(c), are statutorily exempt from the operation of the de minimis rule. 29 U.S.C. § 1391(d). This exemption also extends to any continuation of a plan which was subject to section 404(c). Id. The 1950 Plan, as a trust established in the coal industry, is covered by section 404(c). H.R.Rep. No. 2543, 83d Cong., 2d Sess., reprinted in 1954 U.S.Code Cong. & Ad. News 4017, 5280, 5303 (conference report, Internal Revenue Code of 1954). The 1974 Plan is a continuation of the earlier plan. Short v. United Mineworkers of America 1950 Pension Trust, 728 F.2d 528, 531 (D.C.Cir.1984). Thus, the de minimis rule does not apply in this instance, and the full amount of withdrawal liability determined by the trustees is due and owing.

With respect to the determination of the amount of interest and liquidated damages owed to the plaintiffs, the detailed affidavit of Ms. Gilleland is in accordance with the applicable law, see Speckmann v. Paddock Chrysler Plymouth, Inc., 565 F.Supp. at 475, and the Court finds that her affidavit correctly sets forth the withdrawal liability owed as of August 21, 1984. In addition, this interest assessment shall be increased at a daily rate of $15.14, until such time as defendants tender payment of the unpaid contributions. Id. at 476; Gilleland Aff. at ¶ 11. The Court will entertain requests to amend this finding upon an appropriate showing of interest rate changes.

Moreover, each named defendant is liable to the Fund for the amount of the unpaid withdrawal liability. As the legislative history indicates, “[an] employer contributing to a plan — will not be able to evade withdrawal liability by going out of business and resuming business under a different identity.” 126 Cong.Rec. 23,038. Each entity is under the common control of the defendants Phillip and Earl Adkins, see Affidavits of Earl Adkins (¶ 3) and Phillip Adkins (¶ 5), attached to Defendants’ Motion, filed July 27, 1984, and as such, each is considered a single employer under 29 U.S.C. § 1301(b)(1). Thus, the defendants are jointly and severally liable for the withdrawal of Adkins & Adkins Coal. 29 U.S.C. § 1301(b)(1).

      . The defendants repeatedly confuse 28 U.S.C. § 1404(a) (transfer in the interest of justice) with 28 U.S.C. § 1406(a) (transfer for improper venue). Since venue lies in the District of Columbia, transfer is not authorized by section 1406(a).

      . Section 1398 provides in relevant part that: [an] employer shall not be considered to have withdrawn from a plan solely because—

        (2) [it] suspends contributions under the plan during a labor dispute involving its employees.
      Although the statute does not provide a definition of the term "labor dispute,” the legislative history of section 1398 indicates that a "strike or lockout” falls within this exception. See 126 Cong.Rec. 23,038 (1980) (remarks of Rep. Thompson).

      . Although an employer may pursue arbitration and, in turn, seek judicial review of the arbitrator's decision, the employer must make payments under the schedule determined by the Trustees "beginning no later than 60 days after the date of the demand notwithstanding any request for review or appeal of determinations of the amount of such liability____” 29 U.S.C. § 1399(c)(2).

      . In granting the plaintiffs’ motion to amend their complaint to include the higher figure, the Court observed that the defendants had not responded to the motion. Order, filed Sept. 11, 1984. In fact, the defendants’ opposition was buried in a pleading containing defendants’ reply to the plaintiffs’ motion for summary judgment, filed August 31, 1984. The Court now reaffirms its finding that amendment of the complaint is appropriate. See'discussion infra at 128 n. 5.

      . Here, the defendants suggest that this increase may not in fact be warranted, but proffer no evidence in support of their contention. While the absence of an official demand for $3,000 increase in the amount owed to the 1974 Plan might suggest that this amount should not be taken as established under the statutory framework, this Court adopts the plaintiffs' increased assessment. As the Court noted in J.N. Ceazan, 559 F.Supp. at 1218 n. * *, ”[m]ore than [] mere allegation and speculative possibility is needed to defeat the Fund’s motion for summary judgment.” The Ceazan Court approved the Fund’s calculation' of the amount of liability owed, and this Court will do likewise.