author: RICE, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. INTERNATIONAL HARVESTER COMPANY, Defendant.
    No. C-3-85-365.
    United States District Court, S.D. Ohio, W.D.
    Nov. 25, 1985.
    Dale Goldberg, Asst. U.S. Atty., Dayton, Ohio, Steven J. Willey, Atty. at Law, U.S. Dept, of Justice, Lands & Natural Resources Div., Washington, D.C., Carey S. Rosemarin, Asst. Regional Counsel, U.S. E.P.A., Chicago, 111., for plaintiff.
    Howard P. Krisher, Dayton, Ohio, Donald W. Rupert, Chicago, 111., for defendant.
   DECISION AND ENTRY OVERRULING DEFENDANT’S MOTION TO STAY CO-PENDING ADMINISTRATIVE PROCEEDING (DOC. #9); SCHEDULE SET FOR FURTHER PROCEEDINGS IN THIS COURT; SETTLEMENT CONFERENCE SET

RICE, District Judge.

The substance of the instant Decision and Entry is essentially that which was conveyed to the parties in a telephone conference call which was held between the Court and counsel on Tuesday, November 19, 1985.

A. DEFENDANT’S MOTION TO STAY CO-PENDING ADMINISTRATIVE PROCEEDING (DOC. # 9)

The Court notes at the outset that, while Defendant’s motion is framed in terms of a “stay,” in essence Defendant seeks that this Court enjoin an administrative proceeding before the United States Environmental Protection Agency (USEPA) entitled In the Matter of International Harvester Corporation, CAA-120-V-84-1. While the Court would agree with Defendant that it possesses the inherent power to stay cases on its own docket, the Court cannot and does not accept Defendant’s proposition that this inherent power extends to control or “stay” of cases on the docket of another judge such as Administrative Law Judge Vanderheyden. Preliminary injunctive relief is required for the end sought by Defendant.

This being said, the Court notes the clear intent of Congress, as reflected by the statutory structure, that 42 U.S.C. Sections 7413(a) and 7420 be simultaneous, independent and cumulative remedies for violations of the Clean Air Act and the Ohio State Implementation Plan (SIP). Section 120 of the Clean Air Act, 42 U.S.C. § 7420, was specifically added in 1977 because Congress anticipated that even the strengthened civil penalty of Section 113, 42 U.S.C. § 7413(a), would not create sufficient incentives for polluters to comply with air quality standards. Duquesne Light Co. v. E.P.A., 698 F.2d 456, 463 (D.C.Cir.1983). In 42 U.S.C. § 7420(f), moreover, Congress clearly stated that the administrative remedy of Section 120 is to be completely independent of the remedy available in district court under Section 113. Non-compliance penalties owed to the government due to a Section 120 violation may be enforced in district court pursuant to Section 113(b) by the government, even as a civil penalty is pursued under Section 113 in district court. Reviews of Section 120 non-compliance proceedings, however, lie in the Sixth Circuit, and not in this Court.

Defendant argues that 42 U.S.C. § 7607(g) impliedly gives this Court authority to enjoin an administrative proceeding under Section 120. Defendant reads this statute as restricting only the court actually handling a Section 120 action from entering a stay in that action prior to the entry of final judgment. No legislative history or case law appears on point. Even were this Court persuaded by Defendant’s interpretation of 42 U.S.C. § 7607(g), which it is not, this provision alone is not enough to counterbalance, at least in this Court’s opinion, the rest of the statutory indications that the proceedings under Section 113 and 120 of the Clean Air Act are to be simultaneous, independent and cumulative.

Turning from the clear intent of the statutory scheme, the Court also notes that Defendant has failed to satisfactorily establish the presence of any of the four criteria necessary in this circuit for the issuance of injunctive relief. See Frisch’s Restaurant v. Shoney’s, 759 F.2d 1261 (6th Cir.1985). With respect to irreparable injury, Defendant only offers its speculation as to the possible impact of Plaintiff’s success in this litigation, as well as its protests of the inconvenience and drain of resources caused by the Plaintiff’s maintenance of two actions. This is, plainly, insufficient for purposes of an injunction. With respect to injury to the EPA, while Defendant contends that any non-compliance penalties will continue to accumulate, this Court must agree with Plaintiff that an injunction would deprive Plaintiff of an authorized statutory tool of enforcement. There is no need to consider the remaining prongs of the four-part test for injunctive relief, except to note that Defendant has simply not made out a case for the issuance of an injunction.

For these reasons, Defendant’s Motion to Stay Co-Pending Administrative Proceeding is overruled in its entirety.

B. SCHEDULE FOR FURTHER PROCEEDINGS IN THIS COURT

As represented by counsel during the telephone conference call on November 19, Administrative Law Judge Vanderheyden granted the E.P.A.’s Motion in Limine on November 7, 1985, thus excluding Defendant’s proposed defenses of technical infeasibility and economic unreasonableness. The AU opened discovery in the administrative case on November 7, and apparently has allowed the parties 32 days of discovery. Discovery is thus to cut off in the administrative proceeding on December 9, 1985. Trial before Judge Vanderheyden is set for December 18 through December 27, 1985, excluding the day of Christmas. Defendant has filed before the AU a Motion to Reconsider his ruling of November 7. As of the date of this Decision and Entry, Judge Vanderheyden has not as yet ruled upon said motion.

The further proceedings in this Court will thus turn on the progress of the administrative case before Judge Yanderheyden. In the event that Defendant’s Motion to Reconsider is denied, the parties should notify this Court on the day that post-trial briefs in the administrative case are filed with Judge Vanderheyden. Upon such notification, this Court will convene a telephone conference call with counsel. At that time, a discovery schedule of four months will be set. After the completion of this four-month period, plus an additional 35 days for trial preparation, trial on the merits will begin in this Court on the first Monday after the completion of the 35-day post-discovery period.

In the event that the AU sees fit to sustain Defendant's Motion to Reconsider, the parties are to notify this Court immediately. A telephone conference call will be convened at that juncture in order to determine the impact, on the instant case, of Judge Vanderheyden’s ruling and any new schedule to be followed by him in the administrative case.

C. SETTLEMENT CONFERENCE

As determined in the telephone conference call of November 19, a settlement conference is set in chambers in this matter for Wednesday, December 4, 1985, at 10 a.m. Steven Willey and Donald Rupert have both indicated that they will be in attendance. Carey Rosemarin will be present in the event that other commitments permit him to participate. Local counsel of record for Defendant, Howard Krisher, will be excused from attending said conference.


source: Caselaw Access Project

author: HAWKINS, District Judge.

license: Public Domain

text:
    SOUTHERN RAILWAY COMPANY, Plaintiff, v. STRACHAN SHIPPING, a corporation, Defendant.
    Civ. A. No. 2:84-2289-1.
    United States District Court, D. South Carolina, Charleston Division.
    Nov. 26, 1985.
    William H. Grimball, and Frank Grim-ball, Charleston, S.C., for plaintiff.
    Marvin D. Infinger, Sinkler, Gibbs & Simons, Charleston, S.C., and Abda Lee Quillian, Savannah, Ga., for defendant.
   ORDER AND JUDGMENT

HAWKINS, District Judge.

Southern Railway Company (“Southern”) brings this action against Strachan Shipping (“Strachan”) for detention and repair charges on three containers because of Strachan’s alleged use of the same. Southern contends that Strachan is responsible for these payments pursuant to certain “Trailer Use Agreements” between the two parties. Strachan answered the Complaint denied liability, asserting that it had no contractual relationship with Southern.

The case was heard without a jury on November 12, 1985. For the reasons stated below, this Court is of the opinion that Southern is not entitled to the detention and repair charges sought. Pursuant to F.R.C.P. 52(a), the Court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. Southern Railway Company is a corporation organized under the laws of the Commonwealth of Virginia, with its executive offices in Atlanta, Georgia.

2. Strachan Shipping Company is a corporation organized under the laws of the State of Georgia, with its principal place of business in Savannah, Georgia. The Defendant maintains an office and transacts business in Charleston, South Carolina.

3. Strachan serves as agent for various steamship lines. As agent, Strachan books cargo space on vessels for shippers and/or consignees of goods to be carried aboard ocean-going vessels.

4. In the present circumstances, Strachan was contacted by Coltex Disc Corporation of Charlotte, North Carolina, (“Coltex”) to reserve cargo space on an oceangoing vessel, the SS ISLA PUNA sailing for Guayaquil, Equador. Strachan was contacted by Coltex because it was acting as steamship agent for the vessel ISLA PUNA, and her operator, Transportes Navieros Equatorianois (“Trans Nave”). The space to be reserved was to be sufficient to accomodate three 40 ft. containers. The shipping instructions received from Coltex, Defendant’s Exhibits 1, 2, and 3, describe the containers which serve as the subject of this litigation being trailer numbers RRFX-294629, REAZ-251662, and REAZ255287. The instructions note the shipping destination as Guayaquil, Equador, and describe the consignee as Fabrica de Tejuidos de Punto Alfatez, S.A., Casilla 3866 Guayaquil, Equador. Additionally, the instructions provide that inland and ocean freight along with other incidental charges arising from the shipment were to be for Coltex’s account.

5. The trailers were carried from Charlotte to Charleston by Southern under three separate Way Bills of Lading. The Way Bills were prepared by Southern which named Strachan as consignee. The Way Bill under which trailer RRFZ-294629 was shipped noted as consignee “Strachan Shipping, Columbus Street Terminal for Steamship ‘Isla Puna’, Charleston, S.C.”

6. The containers arrived in Charleston at Southern’s piggyback yard in the north area, which yard was operated for Southern by its independent contractor. Upon the arrival of each container, Strachan Shipping was notified, consistent with Southern’s Way Bills issued as an incident to the carriage of these trailers from Charlotte to Charleston. For each container at such time as Strachan was notified, it engaged a drayman on behalf of the steamship line, to deliver the trailers by truck from the piggyback yard to the Columbus Street terminal of the South Carolina State Ports Authority for loading aboard the vessel ISLA PUNA.

7. It appears that the containers had been leased by Coltex from Southern or some other party. In any event, Strachan in no way contracted for or arranged for the use of these containers for the shipment of the goods therein contained. Coltex or someone acting on its behalf had made these arrangements.

8. Upon delivery of the trailers at the piggyback yard, the draymen receipted for the trailers on each occasion by virtue of a document entitled “Trailer Use Agreement”. These documents, offered as Plaintiffs Exhibits 13, 14, and 15 were printed by Southern and prepared by its contractor at the piggyback yard. On each of the documents receipting for the three trailers, Strachan was noted as the “user”. There were so noted by virtue of Strachan having been designated as consignee on Southern’s Way Bills of Lading under which the trailers were shipped from Charlotte to Charleston. Strachan had no role in preparing these Way Bills or “Trailer Use Agreements” or in providing input for their preparation. Each “Trailer Use Agreement” is signed by the individual driver on behalf of the drayman employed. Thus, for trailer number RRFZ-294629, John Ward, an employee of the drayman involved for that particular trailer, GFC, signed for it on behalf of GFC. Similarly, for containers number REAZ-2251662 and REAS-2552787, the driver signed for the trailers on behalf of the drayman responsible therefore, Mercury Motors.

9. It is upon these Trailer Use Agreements that Southern bottoms its claim against Strachan in this case, alleging that the documents created a contractual relationship between the parties. The Trailer Use Agreements contain the following provisions:

It is understood and agreed by and between the user designated above and the Southern Railway Company (hereinafter referred to as “Railroad”) that the use of the equipment described herein is made in accordance with, and is subject to, the terms and conditions printed on the reverse side of this sheet, and to the provisions of any applicable tariff on file either with the Interstate Commerce Commission or with any other regulatory agency having jurisdiction.

On the reverse side, the following is contained:

... (ii) The User shall pay rental for the use of the equipment described on the reverse side in accordance with the provisions of the applicable tariff or tarriffs on file with the Interstate Commerce Commission or other regulatory agency having jurisdiction in the premises, if any.

10. With reference to the Trailer Use Agreements in question, Strachan received only a xeroxed copy of the front portion thereof. It did not receive a copy of the reverse side until after instant litigation started.

11. The Trailer Use Agreement as to trailer number RRFX-294629 was dated December 18, 1983; with regard to Trailer numbers REAZ-251662 and REAZ2552787, the applicable “Trailer Use Agreements” were dated January 6, 1982.

12. Shortly after the Trailer Use Agreements were delivered to the draymen and deposited at Columbus Street, they were loaded on the vessel ISLA PUNA and sailed for Guayaquil, Equador. For reasons not established at trial, the containers were temporarily lost or detained in Equador. They eventually made their way back to New York on May 11, 1983, where they were ultimately claimed by Southern. As a result of this delay in return of the containers, Southern claims detention charges for 485 days for containers REAZ-251662 and REAZ-2552787 and for 505 days for trailer RRFZ-294629. Southern bottoms its charges on the Trailer Use Agreement which allegedly incorporates a document, alleged to be a tariff, entitled, “Rules Applying in Connection with Trailer on Flat Car (TOFC) and Containers on Flat Car (COFC) Transportation Via Southern Railway Company and Affiliated Lines”. This document was introduced by Plaintiff as its Exhibit No. 32. With regard to the “tariff”, it is important to note the following:

a. There was no evidence that the tariff was filed with the Interstate Commerce Commission or any other appropriate regulatory agency.
b. There was no evidence that the detention charges were required by law to be included in the tariff even if the tariff had been filed.

13. Using Exhibit No. 32, Plaintiffs figured detention and repair charges in the amount of $46,225.70 to be owing Southern from Strachan.

CONCLUSIONS OF LAW

(a) This Court has jurisdiction over the subject matter of this action by virtue of 28 U.S.C. §§ 1332 and 1337.

(b) The Trailer Use Agreements do not constitute a valid and binding contractual relationship between Strachan and Southern for the following reasons:

It is cardinal that an enforceable contract cannot exist where there is no meeting of the minds as to a vital term of the contract such as price or remuneration. W.E. Gilbert & Associates v. S.C. Nat’l. Bank, 330 S.E.2d 307 (S.C.App.1985). Here, Southern seeks to impose damages based on the Trailer Use Agreement in conjunction with the provisions of its tariff, Plaintiff’s Exhibit No. 32. There was no evidence at trial of actual notice of the provisions of the tariff which were relied upon to establish the charges sought to be charged against Strachan. Without actual notice on the part of Strachan, constructive notice must be relied upon by Southern to establish the binding nature of the tariff provisions on Strachan. However, there was no evidence that the tariff was filed with the Interstate Commerce Commission or any other regulatory body with jurisdiction over Southern. Southern’s witness called on the point testified he did not know if it had been filed. Filing is the sina quo non of constructive notice in this context. Indeed, the Trailer Use Agreements indicate that it is subject to the provisions of any applicable tariff “on file ... ”. The failure to prove filing is fatal to Plaintiff’s claim.

Even if the tariff had been filed, there is no constructive notice as to provisions not required by law to be included in the tariff and filed with the appropriate regulatory commission. In LaSalle Mach. Tool, Inc., v. Maher Terminals, Inc., 611 F.2d 56 (4th Gir.1979), it was conceeded that no actual notice of the provisions had been given LaSalle, the party sought to be charged with the terms of the tariff there at issue. In addressing the issue of constructive notice to LaSalle, the Court noted:

Nor is there any basis for imputing constructive knowledge of the tariff’s provision to LaSalle. Maher argues that the filing of the tariff with the FMC gave the public constructive notice of the liability limitations contained in it. But it is well established that the filing of a tariff gives constructive notice only to those terms which were required by law to be filed. (Citation omitted, emphasis added). Page 60.

Here Southern’s own witnesses indicated that the detention charges or trailer use charges applied to the rental of the trailer as equipment only, and not for the carriage or moving of goods for which there is a freight or rates for transportation charge. As appears from 49 U.S.C. § 10762(a)(2), (b)(1), only transportation charges and terminal charges are required to be filed by statute. Indeed the term “rate” is defined as a charge for transportation under the act, see 49 U.S.C. § 10102(20).

There is no basis, therefore, for concluding a contract in the circumstances. There was no meeting of the minds as to the vital term thereof, detention charges, because of lack of notice thereof by Strachan. The contract, therefore, must fail. W.E. Gilbert & Associates, supra.

(c) Alternatively, although not vital to the Court’s decision, Strachan is absolved from liability in that it was acting as agent for a disclosed principal in this matter. Plaintiff’s Exhibit No. 5, the Way Bill of Lading under which one of the trailers was shipped and which was prepared by Southern, indicated that Strachan was consignee at Charleston for purposes of loading the trailer on board steamship ISLA PUNA. Additionally, Southern’s witnesses testified that they were familiar with Strachan’s business as that of steamship agent, which acted on behalf of steamship lines and the vessels operated by them. In such circumstances, one in the position of Strachan is absolved of liability. See TTT Travel Services, Inc., v. Rogers Terminal & Shipping Corp., 1983 A.M.C. 2597 (ED. L.A.1983).

Strachan Shipping Company is entitled to judgment in its favor. It is, therefore, ordered that the Clerk enter judgment in favor of Strachan Shipping Company and that Southern Railway Company take nothing on its claim.

AND IT IS SO ORDERED.


author: GETZENDANNER, District Judge:

text:
    Clayton J. GRAHAM, Plaintiff, v. Jay SLAUGHTER and Janet Slaughter, Defendants.
    No. 84 C 7881.
    United States District Court, N.D. Illinois, E.D.
    Nov. 27, 1985.
    George W. Hamman, Dawn M. Cassie, Hamman & Benn, Chicago, 111., for plaintiff.
    Frances J. Higgins, John J. Verscaj, Bell, Boyd & Lloyd, Chicago, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

GETZENDANNER, District Judge:

This action for rescission of a contract and payment of pension funds was removed here from state court approximately one year ago. The matter is currently before the court on the motion of plaintiff Clayton J. Graham to dismiss the amended counterclaim filed by defendant Jay E. Slaughter. On June 17, 1985, the court entered judgment for plaintiff on his ERI-SA claim to recover vested pension benefits. The amended counterclaim, which purports to state a claim under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1964(c), is currently the sole basis for federal jurisdiction.

For purposes of the present motion, the court takes all well-pleaded factual allegations of the defendant’s counterclaim as true. From sometime before .May of 1975 until March of 1984, plaintiff and defendant were co-partners doing business as Leasco, International. On or about May 1975, the parties purchased the assets of TWR Plating Corporation, and formed a corporation called TWR Service Corp (“TWR”), of which they were sole shareholders until 1978. Also on or about May 1975, the parties as shareholders entered into an oral contract among themselves and with TWR which provided that their respective salaries, bonuses and benefits as corporate officers would be equal. During this period, Leasco continued to own the building in which TWR operated its business, some land on which TWR planned to construct a new plant, and other equipment used by TWR.

Commencing on or about May 1980, and continuing through January 1983, Graham embezzled certain funds from TWR and from Leasco in an amount not less than $60,000. The principal mechanism was a series of wire transfers and checks drawn on the account of TWR and Leasco. These checks were issued by Graham, pursuant to his powers as TWR’s chief financial officer, and were made payable to himself or to companies which he controlled. The complaint identifies twenty such payments, all of them drawn or negotiated on the account of TWR, and purportedly involving use of the mails or interstate telephone lines in violation of 18 U.S.C. §§ 1341 and 1343, respectively.

Based on the foregoing series of payments as predicate acts of racketeering, Slaughter alleges that Graham conducted the affairs of TWR through a “pattern of racketeering activity” in violation of 18 U.S.C. § 1962(c), and that Slaughter has been injured “by reason of” that violation. Specifically, Slaughter alleges that Graham caused TWR to breach the contract among and between shareholders in that bonuses and benefits were unequal, caused TWR to default on monthly rental payments owed to Leasco, and caused direct loss of partnership income to Slaughter.

On February 21,1985, in reliance on Gallagher v. Canon USA, 588 F.Supp. 108, 110 (N.D.Ill.1984), this court held that defendant could not bring a RICO counterclaim based solely on injuries he suffered as a shareholder of TWR. Mem. Op. and Order at pp. 3-5. This rule has since been adopted by the Sixth Circuit. Warren v. Manufacturers National Bank, 759 F.2d 542, 544 (6th Cir.1985). The amended counterclaim rectifies the deficiencies noted in that earlier opinion by making specific allegations that Graham embezzled funds from both TWR and Leasco, and caused direct harm to Slaughter by virtue of the partnership income and the alleged oral contract. While these allegations are somewhat conclusory (none of the alleged wire transfers are drawn on Slaughter’s or Leasco’s account), the fiduciary relationship between the parties and the allegations of personal loss are sufficient to establish a claim by Slaughter in his individual capacity. See Buschmann v. Professional Men’s Association, 405 F.2d 659, 662-63 (7th Cir.1969); De Valk Lincoln Mercury, Inc. v. Ford Motor Co., 550 F.Supp. 1199, 1203 (N.D.Ill. 1982).

Plaintiff nonetheless moves to strike ¶! 31 of the Amended Counterclaim for repeating allegations regarding Slaughter’s injuries as a shareholder. The court agrees that 1131 alleges injuries which are recoverable only by TWR, not Slaughter directly. The allegations are not so clearly insufficient or unrelated to questions of liability, however, that striking under Rule 12(f) is warranted.

Plaintiffs chief argument for dismissal rests on defendant’s purported failure to allege a “pattern” as defined in the Supreme Court decision of Sedima, S.P.R.L. v. Imrex Co., — U.S. -, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). In Sedima, the Supreme Court held that civil RICO plaintiffs need not plead a prior criminal conviction nor a separate “racketeering injury” before maintaining a private action under § 1964(c). The Court expressed concerns over RICO’s expansionary evolution, however, and noted that one reason for the “extraordinary” uses to which civil RICO has been put is “the failure of Congress and the courts to develop a meaningful concept of ‘pattern.’ ” Id. 105 S.Ct. at 3287. The Court stated that while the statutory definition requires “at least two acts of racketeering activity,” see 18 U.S.C. § 1961(5), it would be a mistake to assume that allegations of any two acts are therefore sufficient:

The legislative history supports the view that two isolated acts of racketeering activity do not constitute a pattern. As the Senate Report explained: “The target of [RICO] is thus not sporadic activity. The infiltration of legitimate business normally requires more than one ‘racketeering activity’ and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern.”

105 S.Ct. at 3285 n. 14 (citing S.Rep. 91-617, 91st Cong., 1st Sess. 158).

The exact impact of Sedima on the pleading of civil RICO cases is currently a matter to which numerous federal judges have directed their attention, largely as part of an effort to limit the expansion of civil RICO and to stem its concomitant threat of federal jurisdiction over run-of-the-mill business fraud cases. This court has in fact invited briefing of the “pattern” issue in several cases in order to determine whether these cases truly belong in federal court.

Perhaps the most thorough post-Sedima discussion of the “pattern” issue is that of my colleague Milton Shadur in Northern Trust Bank/O’Hare, N.A. v. Inryco, Inc., 615 F.Supp. 828 (N.D.Ill.1985). In that case, Judge Shadur reviewed earlier Seventh Circuit precedent in light of Sedima. For example, in United States v. Weatherspoon, 581 F.2d 595, 602 (7th Cir.1978), the Seventh Circuit had held that each mailing in a scheme to defraud is a separate offense for purposes of determining whether an indictment charges a pattern of racketeering activity. In United States v. Starnes, 644 F.2d 673, 677-78 (7th Cir. 1981), the Court held that acts taken in furtherance of a single criminal end are sufficiently related to satisfy the “pattern” requirement.

To the extent Weatherspoon and Starnes imply that multiple mailings in furtherance of a single criminal episode may constitute a pattern, this court agrees with Judge Shadur that such a result is no longer warranted under Sedima. In Inryco, the complaint specified only two mailings made in connection with a phony subcontract under which kickbacks were later made; the court concluded that these two acts, without any facts from which to infer continuous criminal activity, were plainly insufficient under Sedima to establish a “pattern of racketeering activity.”

Plaintiff, however, interprets Inryco also to mandate a conclusion that multiple mailings can never establish a pattern of racketeering activity unless they are used to implement different fraudulent schemes. Such an interpretation, while clearly suggested by dictum in Inryco, was rejected by Chief Judge Frank McGarr in Trak Microcomputer Corporation v. Wearne Brothers, 628 F.Supp. 1089 (N.D. Ill.1985). Nothing in the legislative history of RICO or the language of Sedima compels the conclusion that a “pattern of racketeering” requires a pattern of fraudulent schemes.

The court nonetheless agrees with Judge Shadur’s analysis in Inryco that the term “pattern” connotes not only a relatedness but a multiplicity of events: “the term presumes repeated criminal activity, not merely repeated acts to carry out the same criminal activity. It places a real strain on the language to speak of a single fraudulent effort, implemented by several fraudulent acts, as a ‘pattern of racketeering activity.’ ” 615 F.Supp. at 831. Where this court differs with Inryco is in the implication that a single fraudulent effort or episode should be equated with a single scheme.

Generally, to be related, the predicate acts of a § 1964(c) claim must involve common perpetrators, methods of commission, victims, or motive. See Allington v. Carpenter, 619 F.Supp. 474 (C.D.Cal.1985). To be “continuous,” more than sporadic or isolated activity must be alleged. In this court’s view, that requires more than a single transaction but not necessarily more than a single scheme. Certainly, a two-year practice of embezzling funds from a company through otherwise separate transactions constitutes a “pattern of racketeering activity” notwithstanding the fact that the numerous acts arguably comprise a single criminal scheme. In other words, while a RICO claim must involve different criminal episodes, i.e., transactions “somewhat separated in time and place,” United States v. Moeller, 402 F.Supp. 49, 57-58 (D.Conn.1975), an open-ended scheme may include a sufficient number of independent criminal episodes to satisfy the “continuity” factor of Sedima. To the extent that Inryco implies otherwise, Judge Shadur himself appears to have since rejected that implication. United States v. Yonan, 622 F.Supp. 721 (N.D.Ill.1985) (ten bribery payments paid to the same person in order to fix ten separate lawsuits distinguishable from Inryco).

The present complaint alleges over twenty predicate acts stretched out over a two year period. Each of the acts involved the same or similar purpose, thus meeting the “relatedness” requirement. The fraud was clearly ongoing, and involved at least three different third parties: the two corporations controlled by Graham and an advertising agency whose invoices were fraudulently redirected to TWR. Unlike the case in Inryco, the predicate acts alleged are not ministerial acts performed in the execution of a single fraudulent transaction, but appear to be independently motivated crimes. Under any reasonable definition of “pattern,” the allegations of this complaint would suffice to state a claim under Sedima. Cf. Alexander Grant & Co. v. Tiffany Industries, Inc., 770 F.2d 717, 718 n. 1 (8th Cir.1985) (“The number and nature of acts [30 allegations of mail and wire fraud] together with allegations demonstrating their similar purposes, results, participants, victims, and methods of commission bespeak a sufficient ‘continuity plus relationship’ to satisfy the Supreme Court’s concerns in Sedima____”)

The courts of appeals, even after Sedima, have been extraordinarily liberal in sustaining RICO claims on allegations less indicative of ongoing activity than those alleged here. See, e.g., R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350 (5th Cir.1985) (complaint alleging two acts of mail fraud held to state a claim where the alleged acts were “related.”); Illinois Department of Revenue v. Phillips, 771 F.2d 312, 313 (7th Cir.1975) (nine monthly mailings of fraudulent state sales tax returns held, without discussion of the pattern issue, to state a RICO claim); Alexander Grant & Co., 770 F.2d at 718 (thirty acts of mail and wire fraud in connection with a single audit.) As noted by the Seventh Circuit in Phillips, it is up to Congress, not the courts, to limit the private remedy under RICO: “We can only hope that this decision appears to Congress as the distress flag that it is, and that Congress will act to limit, as only it is empowered to, the statute’s application to cases such as the one before us now.” 771 F.2d at 317. It would be an abuse of discretion for this court to reject the present RICO claim, involving both repeated and related criminal activity, based on some notion, however justified in policy, that the claim more properly belongs in state court.

Accordingly, the motion to dismiss defendant’s counterclaim is denied.

It is so ordered.


author: ROBERT D. POTTER, Chief Judge.

text:
    Cornelius M. BATES and Doris A. Bates, Plaintiffs, v. J.C. PENNEY COMPANY, INC., Defendant.
    No. C-C-85-353-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Nov. 27, 1985.
    Dale S. Morrison, Campbell, Morrison & Bush, Charlotte, N.C., Robert L. Morrison, Jr., Warren, Parker, Williams, Stillwell & Morrison, Danville, Va., for plaintiffs.
    Philip R. Hedrick, Martha W. Surles, Hedrick, Eatman, Gardner & Kincheloe, Charlotte, N.C., for defendant.
   ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER is before the Court on the Defendant’s motion to transfer this action to the Middle District of Florida, Orlando Division, pursuant to 28 U.S.C. § 1404(a). That section provides:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

The decision whether to transfer a case under § 1404(a) rests in the discretion of the District Court. Akers v. Norfolk & Western Railway Co., 378 F.2d 78, 80 (4th Cir.1967).

The Plaintiffs are citizens of North Carolina and reside in Charlotte. The Defendant is a Delaware corporation, but is doing business in both North Carolina and Florida.

This suit arose from an incident that occurred in the home of Mr. and Mrs. R.A. Leeman in Titusville, Florida on November 26, 1983. At that time, Plaintiff Cornelius M. Bates allegedly suffered an injury to his back after the chair on which he sat purportedly broke, causing him to land on the floor on the base of his spine. The chair in question was allegedly sold in 1981 in Florida by the Defendant to the Leemans, who are Mr. Bates’ parents-in-law.

After his fall, Mr. Bates was hospitalized in Titusville, Florida from November 28, 1983 until December 2, 1983. On December 2, 1983, Mr. Bates was sent by air ambulance to the Orthopaedic Hospital of Charlotte. He was discharged from the Orthopaedic Hospital of Charlotte on December 13, 1983. He was hospitalized again at that hospital from May 18, 1984 to May 25, 1984, and at Mercy Hospital in Charlotte, North Carolina from August 20, 1984 to August 25, 1984. He has also received physical therapy at the Orthopaedic Hospital of Charlotte. Since his discharge from Mercy Hospital, he was hospitalized at the Veterans Hospital in Salisbury, North Carolina for eight days in February 1985 and is scheduled for admission to the Asheville Veterans Hospital for further examination and possible surgery. He has not consulted nor been treated by Florida medical doctors since December 2,1983.

Before his accident, Mr. Bates was employed as a machinist. Since December 1983 he has been unable to work. His sole income consists of disability benefits.

On May 29, 1985 the Plaintiffs brought this products liability action with a pendent claim for loss of consortium against the Defendant. The Plaintiffs’ decision to bring their action in the Western District of North Carolina was not improper, and as this Court has previously noted,

it is “black letter law”, that ‘a plaintiff’s choice of a proper forum is a paramount consideration in any determination of a transfer request, and that choice ... should not be lightly disturbed.’ ”

Western Steer-Mom ‘N’ Pops, Inc. v. FMT Investments, Inc., 578 F.Supp. 260, 265 (W.D.N.C.1984) (quoting Scott Paper Co. v. Scott’s Liquid Gold, Inc., 374 F.Supp. 184, 191 (D.Del.1974)) (quoting Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3rd Cir.1970), cert. denied, 401 U.S. 910, 91 S.Ct. 871, 27 L.Ed.2d 808 (1971)). In this case, the Plaintiffs’ choice of forum should be given especially strong consideration since the forum they chose is in the district in which they reside. See Popkin v. Eastern Air Lines, Inc., 253 F.Supp. 244, 246 (E.D.Penn.1966).

The burden of establishing that the case should be transferred to another forum is on the Defendant. The Defendant must make a clear showing that the balance of factors bearing on the convenience of witnesses, the convenience of the parties, and the interest of justice weighs strongly in its favor. Morehead v. Barksdale, 263 F.2d 117 (4th Cir.1959). If a transfer would merely shift the inconvenience from the Defendant to the Plaintiffs, or if the equities lean but slightly in favor of the Defendant after all factors are considered, the Court should not disturb the Plaintiff’s choice of forum. See Milliken & Company v. Federal Trade Commission, 565 F.Supp. 511, 517 (D.S.C.1983); Grey v. Continental Marketing Associates, Inc., 315 F.Supp. 826, 831 (N.D.Ga. 1970).

The Defendant argues that the case should be transferred for several reasons. The sale of the allegedly defective chair and the accident allegedly caused by the chair occurred in Florida. Therefore, the Defendant contends that Florida has a great interest in this dispute, and Florida law should govern the parties’ substantive rights.

The Defendant notes that the manufacturer of the chair has its offices in Florida, all of the Defendant’s employees who would have knowledge of the chair and its purported sale reside in Florida, and the physicians who initially treated Mr. Bates are in Florida. Mr. Bates’ father-in-law, who witnessed the accident, also lives in Florida. The Defendant argues that it would be inconvenient for all these potential witnesses as well as unduly burdensome and expensive for the Defendant to have to bring them to North Carolina to testify. It further argues that because these witnesses are beyond the reach of the subpoena power of this Court, it might be disadvantaged at trial by having to rely on affidavits and depositions to present the testimony of any unwilling witnesses.

The Defendant finally argues that all proof of a defective product will be in Florida where the manufacture and sale of the product occurred. Since the discovery and work on this case will be conducted in Florida, the Defendant contends that the trial should also be conducted there for ease of access to proof.

Although these arguments may seem compelling at first blush, they are insufficient to carry the Defendant’s burden on further scrutiny, particularly in light of the Plaintiffs’ counterarguments. First, Florida is not the only forum with an interest in this litigation; the injured Plaintiffs are residents of North Carolina and Mr. Bates has had to undergo prolonged treatment in North Carolina. Therefore, evidence bearing on the damages aspect of the Plaintiffs’ claims is primarily in North Carolina. The fact that Mr. Bates’ products liability claim will be governed by Florida law should not in itself require transfer; there is no reason to believe that Florida law on products liability is so complex that this Court could not properly apply it without difficulty.

The Defendant’s contentions that the case should be transferred for the convenience of its witnesses; that it should be transferred so that it will be spared the burden and expense of having to bring its witnesses to North Carolina; and so that it will be spared the potential disadvantage of having to rely at trial on depositions and affidavits of unwilling witnesses cut both ways. Both parties propose to offer their own local witnesses. Mr. Bates plans to call the physicians who have treated him in North Carolina. He will be able to present the live testimony of those physicians, however, only if the trial is held in Charlotte. Mr. Bates’ physicians will be at the trial to present live testimony only if the trial is held in Charlotte. Mr. Bates, unlike the Defendant, has stated in an Affidavit that he cannot bear the expense of sending his medical witnesses to Florida, not just that it would be burdensome or expensive for him to do so. Therefore, whereas the Defendant has not specified whether it will definitely be forced to rely on depositions and affidavits or whose testimony would have to be presented in that manner, there is no question that the Plaintiffs would be deprived of the live testimony of their local witnesses. Further, Mr. Bates stated in his Affidavit that he would be severely hindered both financially and physically if he had to travel to and from Florida for the purpose of litigating this case; he has been unable to work since his accident and suffers increased pain in his lower back when he has to sit still for long periods of time.

It is apparent that the Defendant, a corporation doing business in many states, is in a much better position to litigate this suit in a distant forum than are the Plaintiffs. The additional expense and physical burden of having to litigate in Florida might result in the Plaintiffs having to terminate their lawsuit, whereas the Defendant would not be precluded by economic considerations from proceeding in North Carolina. Other courts have found the parties’ relative ability to undertake a trial in any particular forum to be a proper and important consideration in ruling on a § 1404(a) motion. The Butterick Company, Inc. v. Will, 316 F.2d 111, 113 (7th Cir.1963); Garrett v. Ruth Originals Corp., 456 F.Supp. 376, 385 (S.D.Ohio 1978); Hervey v. United States, 450 F.Supp. 1148, 1149 (E.D.Wisc.1978).

Further, the Defendant’s contention that “all” of the evidence of a defective product is in Florida is not accurate. The Plaintiffs have pointed out that the actual chair that allegedly caused the accident is presently in Michigan for examination. The chair is obviously portable and can be produced at any place necessary for the trial.

Finally, the Plaintiffs have produced the Affidavit of Donald Brown, Office Manager of the Orlando Division of the United States District Court for the Middle District of Florida, to show that a trial in Charlotte is much more likely to occur within a reasonable time than one in the Orlando Division. While this Court’s Pretrial Order directs the parties to expect the case to be calendared for trial within 120 days, Mr. Brown did not know how long the period between the filing of a civil action and its being placed on the calendar for trial in Orlando would be. The Orlando Division already has 1,031 civil actions pending and 50 criminal cases, which take precedence over the civil actions. There is only one Judge in the Orlando Division. The relative court congestion weighs in favor of retaining the case.

The Court is not satisfied that the Defendant has met its burden of establishing that there should be a change of forum. Having considered all the facts, the Court is of the opinion that venue should remain in the Western District of North Carolina.

NOW, THEREFORE, IT IS ORDERED that the Defendant’s motion to transfer pursuant to 28 U.S.C.A. § 1404(a) is DENIED.


author: SWEET, District Judge.

text:
    BEAUFORT NAVIGATION, INC., Plaintiff, v. MED AFRICA LINE S.P.A., Defendant.
    No. 85 Civ. 6109 (RWS).
    United States District Court, S.D. New York.
    Nov. 27, 1985.
    Hughes, Hubbard & Reed; New York City (Susan L. Thomer, of counsel), for plaintiff.
    Hill, Betts & Nash, New York City, for Interpleader Defendant Resources Warehousing & Consolidation Services; Christopher Raleigh, of counsel.
    Walker & Corsa, New York City, for Interpleader Defendant Mare Sarina Eggers Schiffahrts, K.G.; Kathleen V. McQuilling, of counsel.
   OPINION

SWEET, District Judge.

Beaufort Navigation, Inc. (“Beaufort”) brings this motion to confirm an order of attachment issued against property and debts owing to defendant Medafrica Line S.p.A. (“Medafrica”). Beaufort is also a defendant in a related interpleader proceeding before this court entitled Chase Manhattan Bank, N.A. v. Resources Warehousing, et al., (85 Civ. 4079), but obtained this ex parte order of attachment before the Honorable John F. Keenan acting as Emergency Part I Judge. For the reasons set forth below, Beaufort’s motion to confirm its attachment is denied.

FACTS

This controversy arises from the failure of Medafrica, a foreign corporation with its principal place of business in Genoa, Italy, to pay outstanding debts for services rendered by corporations doing business in the United States. Medafrica’s bankruptcy and default on its contractual obligations has sent its creditors scrambling to attach Medafrica’s property in the United States and to establish collection priority over creditors competing for assets located in the United States. Beaufort’s motion is one of five related motions arising from the efforts of creditors to secure a priority lien on the available funds, and their interrelationship requires that the facts pertaining to each be set forth chronologically below.

The first Medafrica creditor to attempt to attach funds was Mare Sarina Eggers Schiffahrts, K.G. (“Mare Sarina”) which obtained an order of attachment and served it upon Chase Manhattan Bank (“Chase”) on October 2,1984. Chase was then in possession of cash collateral deposited by Medafrica to secure a letter of credit established on April 2, 1984 in favor of American Motorist Insurance Co. (“AMIC”) for the account of Medafrica Line (U.S.A.), Inc. Although Mare Sarina did not move or begin a special proceeding against the funds held by Chase within the ninety day period required by New York Civil Practice Law and Rules (“CPLR”) 6214(e), Mare Sarina did move on July 22, 1985 before the Honorable Charles E. Stewart for an order nunc pro tunc extending its time to do so, which motion is pending in Mare Sarina Eggers Shiffahrts K.G. v. Medafrica Lines, S.P.A. (84 Civ. 7042), which has been referred to this court as a related case.

On October 15, 1984, Resources Warehousing & Consolidation Services, Inc. and Resources Trucking, Inc. (collectively “Resources”) commenced a suit for non-payment of warehousing and trucking charges against Medafrica and Beaufort and also served Chase with its own order of attachment four days later on October 19, 1984. By motion filed March 12, 1985, Resources obtained by court order dated March 29, 1985 granting nunc pro tunc extension of time pursuant to CPLR 6214(e) to move or commence a special proceeding against the funds at Chase through May 31, 1985. On November 29, 1984, Resources obtained a judgment by default against Medafrica and on May 6, 1985 moved for an order compelling Chase to pay the monies it was holding into the custody of the U.S. Marshall so that this default judgment could be partially satisfied.

In response to this Resources’ motion, Chase commenced an interpleader action on May 31, 1985 which named all of the aforementioned claimants among others, as defendants. At oral argument on Resources’ motion on May 81, 1985, the court determined that it would reserve decision on the Resources’ motion pending the outcome of Chase Bank’s interpleader proceeding. This court also issued an injunction pursuant to 28 U.S.C. § 2361 on July 1, 1985 enjoining the defendants “from instituting any action or other proceeding in any state or United States court affecting the property or the obligation involved in this inter-pleader action” and “from prosecuting any action or other proceeding in any state or United States court to the extent that defendant’s prosecution of such action or proceeding affects the property or obligation involved in this interpleader action.” Resources’ motion for summary judgment filed on July 1, 1985 in the interpleader proceeding was heard by this court on August 16,1985 and is still pending, as well as Mare Sarina’s motion to extend its time to perfect its attachment, nunc pro tunc, as well as the instant motion by Beaufort, seeking to perfect its attachment.

AMIC attempted to satisfy obligations incurred by Medafrica by drawing down the Chase letter of credit executed in its favor. On December 5, 1984 Chase advised AMIC that this letter of credit would expire on March 22, 1985. On December 28, 1984, AMIC presented a draft to Chase in the amount of $30,000, and Chase made full payment on this draft, drawing approximately half of the $60,000 cash collateral securing the credit line.

AMIC presented Chase with another draft on or about March 7, 1985 in the amount of $60,000 which was rejected by the Bank, and the letter of credit expired on March 22, 1985. AMIC, also a defendant in the interpleader proceeding, then moved to dismiss the interpleader complaint as it pertained to AMIC and moved to sever its counterclaim against Chase for failure to tender payment on the second draft against the letter of credit. This motion was withdrawn by consent at the August 16, 1985 hearing, and Chase was granted leave to amend its interpleader complaint to be added as a claimant/defendant in the action. Chase and AMIC were directed to complete their discovery, with the intention that a resolution of the Chase/AMIC dispute would determine whether Chase properly is holding funds for Medafrica’s benefit.

Finally, Beaufort, movant in the present motion, obtained an ex parte order of attachment from the Honorable John F. Keenan on August 7, 1985, and motions this court to confirm this order of attachment as is required by CPLR § 6212(a). Beaufort is also a defendant in the inter-pleader action commenced by Chase.

In sum, there are four motions relevant to the instant motion by Beaufort: 1) Mare Sarina’s motion pursuant to CPLR § 6214(e) to extend its time to move or begin a proceeding against the Medafrica funds held by Chase; 2) Resources’ summary judgment motion in the Chase inter-pleader action; 3) AMIC’s motion to dismiss the interpleader complaint as it pertains to AMIC and motion to sever its letter of credit counterclaim against Chase (withdrawn by consent), and 4) Chase’s motion to amend its complaint and add the bank as a defendant/claimant to the inter-pleaded fund (granted at oral argument).

DISCUSSION

Beaufort’s attempt to attach the inter-pleader funds violates both the letter of the injunction and the purpose of the inter-pleader proceeding in this case.

On July 1, 1985, Chase obtained an order from this court enjoining the defendants, including Beaufort, from commencing any independent proceeding against the fund which is the subject of the interpleader action. The order provided in relevant part:

ORDERED that pursuant to 28 U.S.C. § 2361 and 28 U.S.C. § 1335 defendants are enjoined from instituting any action or other proceeding in any state or United States court affecting the property of the obligation involved in this interpleader action, and
IT IS FURTHER ORDERED that pursuant to 28 U.S.C. § 2361 and 28 U.S.C. § 1335 defendants are enjoined from prosecuting any action or other proceeding in any state or United States court to the extent that defendants’ prosecution of such action or proceding affects the property or obligation involved in this interpleader action.

Beaufort’s ex parte attachment order is a violation of the terms of this injunction because it “affects the property or obligation involved in this interpleader action.” Beaufort claims that this injunction does not prohibit the “mere attachment” of the interpleader fund (Plaintiff’s Supplemental Memorandum p. 3), because it only seeks to “protect its priority of position among claimants to that fund, a matter that is now pending before the court.” (Plaintiff’s Memorandum in Support, p. 7). However, the establishment of a priority lien affects the fund in the profoundest of ways: it preempts the resolution of the competing and interdependent claims of other potential lien creditors, all of whom have abided by the injunction and have not filed collateral attachment proceedings of their own. Permitting this attachment against the interpleader fund could threaten the centralized adjudication of priorities which the injunction was meant to preserve.

Similarly, Beaufort’s attempt to bypass the injunction undermines the purposes of Chase’s interpleader action. As the court explained in Irving Trust Company v. Nationwide Leisure Co., 95 F.R.D. 51, 59 (S.D.N.Y.1982), “Interpleader is an equitable device, and its objectives go beyond protection of the stakeholder — especially where, as here, the courts restraining power under 28 U.S.C. § 2361 has been invoked and this litigation may be the only way that claimants can get any sort of recovery.” See also Commercial Union Insurance Co. of N.Y v. Adams, 231 F.Supp. 860, 867 (S.D.Ind.1964). This is precisely the case in the situation before us, where there are colorable claims to priority status among various creditors of Medafrica, and these claims far outstrip the concededly meager fund of approximately $30,000.

Beaufort’s service of attachment followed the motion of Mare Sarina and that of Resources, occurring over nine months after each had served Chase with an attachment order, and was the only one to be served after the court had issued its injunction pursuant to Chase’s interpleader action.

Beaufort offers two cases to support its contention that its attachment is outside the scope of this court’s injunction. Beaufort cites Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Snite, 216 F.Supp. 197 (S.D. N.Y.1963) as evidence that a section 2361 injunction does not prohibit the attachment of an interpleaded fund. However, the attachment in this Merrill Lynch case occurred before the injunction was entered, not after, as occurred in the case at bar.

Similarly, Beaufort’s citation of State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 535, 87 S.Ct. 1199, 1206, 18 L.Ed.2d 270 (1967) (“interpleader was never intended ... he be an all-purpose ‘bill of peace’ ”) does more harm than good to its cause. In State Farm the language parenthetically stated above was reserved for the situations of “vexing problems of multiparty litigation arising out of a mass tort.” Id. at 535, 87 S.Ct. at 1206. The State Farm court also outlined a different situation in which all actions would be confined to the single interpleader controversy:

There are situations, of a type not present here, where the effect of an interpleader is to confine the total litigation to a single form and proceeding. One such case is where a stakeholder, faced with rival claims to the fund itself, acknowledges — or denies — his liability to one or the other of the claimants. In this situation, the fund itself is the target of the claimants. It marks the outer limits of the controversy. It is, therefore, reasonable and sensible that interpleader, in discharge of its office to protect the fund, should also protect the stakeholder from vexatious and multiple litigation.

Id. at 534, 87 S.Ct. at 1205.

This situation is precisely the case at hand, and we decline to permit Beaufort to accomplish an “end run” around the inter-pleader injunction. Of course, whatever rights Beaufort has vis-a-vis Resources and Mare Sarina are yet to be determined. Indeed, that determination will be reached only if it is determined that a fund exists in the hands of Chase which can be attached. The motion to confirm the order of attachment is denied at this time.

IT IS SO ORDERED.


text:
    SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. FINANCIAL AND BUSINESS SERVICES, INC., Arthur B. Jacoby, and Joseph J. Pavlico, Defendants. SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. Arthur B. JACOBY and Joseph J. Pavlico, Defendants.
    No. C-C-85-0468-P.
    Misc. No. 762-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Nov. 27, 1985.
    Supplemental Order Dec. 13, 1985.
    Michael K. Wolensky, Joseph L. Grant, William C. Woodward, Jr., W. Scott Sorrels, S.E.C., Atlanta, Ga., for plaintiff.
    George V. Laughrun, II, Charlotte, N.C., Scott H. Ray, Jr., Lebanon, Ohio, for Joseph J. Pavlico.
    Harold J. Bender, Charlotte, N.C., for Arthur Jacoby.
    Pamela H. Simon, R.C. Carmichael, Jr., Wade & Carmichael, Charlotte, N.C., for receiver.
   ORDER AND JUDGMENT

ROBERT D. POTTER, Chief Judge.

THIS MATTER came on for hearing before the undersigned on November 25,1985 at Charlotte, North Carolina, on the Receiver’s Motion and the Securities and Exchange Commission Motion for “Show Cause Order” and “Application for Order to Show Cause why Defendants should not be punished for Criminal Contempt”, which Motions were consolidated for hearing by the Court.

The Securities and Exchange Commission was represented by W. Scott Sorrels and the Receiver was represented by Pamela H. Simon and R.C. Carmichael, Jr., Attorneys at Law. The Defendant Joseph J. Pavlico was represented by Scott H. Ray, Jr. an attorney in good standing before the Ohio Supreme Court, and George V. Laughrun, II of the North Carolina bar. The Defendant Arthur B. Jacoby was represented by Harold J. Bender, Attorney at Law.

The Court had previously issued on July 26, 1985, a temporary Restraining and Order for an Accounting, Establishment of a Constructive Trust and Other Equitable Relief which among other things prohibited Jacoby and Pavlico from directly and indirectly dissipating, concealing and disposing of, in any manner, any assets, choses in action or other property of Defendants Financial & Business Services, Inc. or Jacoby as Trustee, and any other affiliates of Financial and Business Services, Inc. or Jacoby, as Trustee.

On July 31, 1985, this Court entered an “Order Extending Temporary Restraining Order” until September 9, 1985.

On August 30, 1985, this Court entered a “Preliminary Injunction and Other Relief.”

On September 23, 1985 this Court issued a “Final Judgment of Permanent Injunction and Order Appointing Receiver and Other Equitable Relief” setting forth the prohibitions contained in the July 26, 1985 Order of this Court and ordering the Receiver in substance to take possession of all funds and other property of Financial & Business Services, Inc. and “... prevent the withdrawal and misapplication of funds entrusted to defendants, and to determine, adjust, and protect the interests of the investors and defendant Financial & Business Services, Inc.”

The Defendants Jacoby and Pavlico on November 26,1985 have stipulated through their attorneys that they have violated the said orders of this Court, and the Court, based upon such stipulation, and the evidence presented concludes that the Plaintiffs have proved beyond a reasonable doubt that the Defendants Jacoby and Pavlico willfully, contumaciously, intentionally, with a wrongful state of mind violated this Court’s Orders which were definite, clear, specific and left no doubt or uncertainty in the minds of the Defendants, and therefore, the Court finds that the Defendants Jacoby and Pavlico are in criminal contempt, and imposes a sentence of six months in prison and a $500.00 fine on each Defendant. The imposition of the sentence of imprisonment is suspended on the following conditions with the understanding that failure to abide by these conditions will result in the revocation of the order of suspension of the term of imprisonment.

As a condition of the Court’s Order of suspension of the sentence of imprisonment (1) The Defendants will reimburse the Receiver the sum of $15,000.00 in the form of a certified or cashier’s check not later than the close of business on November 27, 1985; and

(2) The Defendants will reimburse the Receiver the sum of $118,112.34 in the following manner:

(a) the Defendants will deliver to the Receiver or cause to be delivered to the Receiver the sum of FIFTY THOUSAND AND 00/100 ($50,000.00) DOLLARS in the form of a certified or cashier’s check on or before 5:00 o’clock p.m. the 12th day of December, 1985;
, (b) Simultaneously with the delivery of said check the Defendants will deliver to the Receiver a note in the amount of SIXTY EIGHT THOUSAND ONE HUNDRED AND TWELVE AND 84/100 ($68,112.84) DOLLARS together with a Deed of Trust in proper form for recording in the Office of the Register of Deeds where the real property described therein is located, including real property only in North Carolina. The Note and Deed of Trust will bear interest on the unpaid balance at the rate of Eight (8%) percent per annum, will be executed by Arthur. B. Jacoby and Joseph J. Pavlico and their respective spouses and the principal and interest will be payable in 24 equal monthly payments commencing on the 12th day of January, 1986, and continuing on the 12th day of each month thereafter until paid in full, except that if not sooner paid, the entire balance of principal and interest will be due and payable on the 12th day of December, 1986. The Deed of Trust securing said Note will describe property of a value not less than ONE HUNDRED THOUSAND AND 00/100 ($100,000.00) DOLLARS as determined by the Receiver, after deducting from the total value, all existing encumbrances, if any.
The Note will contain a provision that in the event of default of the payment of any installment when due, the entire balance will become due and payable immediately.
The title of the property or properties described in the Deed of Trust will be examined by Travis W. Moon, Attorney at Law, and a certificate of title certifying that the title is free and clear of all encumbrances except as noted therein will be furnished to the Receiver.

IT IS FURTHER ORDERED that

(1) The Defendants will vacate the offices they now occupy or any other offices located at 2730 Rozzell’s Ferry Road, and that they will not return to said premises except by leave of Court, and further that they will not violate this Order or any other Orders previously issued by this Court; and
(2) The Defendants will pay the fine of FIVE HUNDRED AND 00/100 ($500.00) DOLLARS to the Office of the Clerk of Court for the Western District of North Carolina in Charlotte, North Carolina not later than December 12, 1985.

The Clerk is directed to certify copies of this Order to all Defendants and their counsel; the Receiver; and Plaintiffs and their counsel.

SUPPLEMENTAL ORDER

In its Order of November 27, 1985, this Court inadvertently stated that the entire balance of principal and interest of the note the Defendants were to deliver to the Receiver on this date “will be due and payable on the 12th day of December, 1986.” The date on which the entire balance will be due should have been stated as the 12th day of December, 1987.

The Court has .been informed by the Receiver’s attorney, Travis W. Moon, that the Defendants are unable to deliver the full $50,000.00 to the Receiver today as was ordered by this Court. Further, there is a dispute as to whether the real property that is to secure the note of sixty-eight thousand one hundred and twelve and 84/100 ($68,112.84) dollars is worth one hundred thousand and 00/100 ($100,000.00) dollars as must be determined by the Receiver.

The Court is of the opinion that the Defendants should have until 5:00 p.m. on Monday, December 16, 1985, to deliver to the Receiver the $50,000.00 in the form of a certified or cashier’s check. By that time, the Receiver should have been able to determine whether the real property in question has a value of at least $100,000.00.

NOW, THEREFORE, IT IS ORDERED that:

(1) The sixth line on page 5 of the Court’s Order issued November 27, 1985 is amended to read:
“the 12th day of December, 1987. The”; and
(2) The Defendants have until and including Monday, December 16, 1985 at 5:00 p.m. to deliver to the Receiver the sum of FIFTY THOUSAND AND 00/100 ($50,000.00) DOLLARS in the form of a certified or cashier’s check, and the note in the amount of SIXTY-EIGHT THOUSAND ONE HUNDRED AND TWELVE AND 84/100 ($68,112.84) DOLLARS, together with the Deed of Trust as described in the Court’s Order of November 27, 1985.


author: RAYMOND J. BRODERICK, District Judge.

text:
    Joanne RICHMOND v. ALLSTATE INSURANCE COMPANY.
    Civ. A. No. 85-3599.
    United States District Court, E.D. Pennsylvania.
    Dec. 2, 1985.

      Ronald L. Wolf, Donald E. Matusow, Philadelphia, Pa., for plaintiff.
    Robert M. Landis, Norbert F. Bergholtz, Frank J. O’Hara, Philadelphia, Pa., for defendant.
   MEMORANDUM

RAYMOND J. BRODERICK, District Judge.

This garnishment action originated in the Philadelphia County Court of Common Pleas. It is based upon a judgment obtained by the plaintiff, Joanne Richmond, against Bernadette Kelly in a case arising out of a motor vehicle collision which was tried in the Philadelphia Common Pleas Court. Plaintiff attempted to execute on this judgment by garnishing the property of defendant Allstate Insurance Company (Allstate) on the basis of an automobile liability insurance policy which Allstate had issued to Ms. Kelly. Allstate removed the garnishment action to this Court on the basis of diversity of citizenship and an amount in controversy of over $10,000.

Following removal, the defendant Allstate filed a motion to stay the garnishment action pending the appeal of the underlying judgment in the Superior Court of Pennsylvania. Plaintiff filed a motion to remand this action to state court. For the reasons discussed below, plaintiff’s motion to remand will be granted.

A suit which is merely ancillary or supplemental to another action cannot be removed from a state court to a federal court. Western Medical Properties Corp. v. Denver Opportunity, Inc., 482 F.Supp. 1205, 1207 (D.Colo.1980) (collecting cases and treatises). There is no controlling precedent or consensus among the federal courts on the question of whether garnishment actions should be treated as ancillary or independent civil actions. Id. Compare, e.g. Butler v. Polk, 592 F.2d 1293 (5th Cir.1979); Swanson v. Liberty National Insurance Co., 353 F.2d 12 (9th Cir.1965); Randolph v. Employers Mutual Liability Insurance Company of Wisconsin, 260 F.2d 461 (8th Cir.1958), cert. denied, 359 U.S. 909, 79 S.Ct. 585, 3 L.Ed.2d 573 (1959); Adriaenssens v. Allstate Insurance Co., 258 F.2d 888 (10th Cir.1958) (garnishment is an independent civil action and removable) with American Auto Insurance Co. v. Freundt, 103 F.2d 613 (7th Cir.1939); Western Medical Properties, supra; Overman v. Overman, 412 F.Supp. 411 (E.D.Tenn.1976); Hoagland v. Rost, 126 F.Supp. 232, 234 (W.D.Mo.1954), Toney v. Maryland Casualty Co., 29 F.Supp. 785 (W.D.Va.1939) (garnishment is ancillary to the original judgment and nonremovable). See also International Organization Masters, Mates and Pilots of America, Local No. 2 v. International Organization Masters, Mates and Pilots of America, Inc., 342 F.Supp. 212, 214 (E.D.Pa.1972) (“The garnishment cases [constitute] the most numerous category of ‘ancillariness’ decisions____ The courts are hopelessly divided in their results and reasoning, however____”).

This court views the characterization of garnishment proceedings for removal purposes as a matter of federal law rather than a matter determined by construing each state’s garnishment statute. See Chicago, Rock Island & Pacific Railroad Co. v. Stude, 346 U.S. 574, 580, 74 S.Ct. 290, 294, 98 L.Ed. 317 (1953). See also 1A J. Moore and B. Ringle, Moore’s Federal Practice ¶ 0.167 [12.3] at 526 (1985). After a consideration of all of the factors involved in the present case, the Court has determined that this garnishment action should be treated as a supplemental proceeding which is substantially a continuation of the prior state court suit. See Barrow v. Hunton, 99 U.S. (9 Otto) 80, 25 L.Ed. 407 (1879). In making this determination, this Court was influenced by the sound logic and practical approach taken by Judge Fullam in the case of International Organization Masters, Mates and Pilots of America, Local No. 2 v. International Organization Masters, Mates and Pilots of America, Inc., supra:

The policies underlying the rule against removal of ancillary causes of action are nowhere well articulated. Several can be discerned or imagined, however. A party should not, as a general principle, be permitted to relitigate a state court action in the equivalent federal court. The notion of comity between state and federal courts also supports the view that a court should have control over its own process, including its mode of execution. Bifurcation of a case into two forums might do it practical violence. From a pragmatic viewpoint, it would be wasteful to have the appendage in federal court when the principal claim is being litigated in state court. The state courts may have more expeditious methods for adjudicating issues bearing on matters already sub judice. Finally, it might be thought unduly burdensome for a federal court to be forced to concern itself with sometimes minor matters (e.g. garnishment) arising out of the court proceedings.

342 F.Supp. at 213-14. The above-quoted analysis supports a flexible determination of ancillariness in order that substance, rather than form, will be determinative.

In the present case, Bernadette Kelly stated by affidavit that Allstate paid the entire proceeds of her insurance policy in settlement of two other claims arising out of the same automobile accident from which plaintiff’s claim arose. Plaintiff represents to the Court that Allstate unsuccessfully attempted to have plaintiff’s consolidated actions against Ms. Kelly dismissed on the ground that the entire insurance proceeds were paid out to other claimants. Following the judgment for plaintiff, Ms. Kelly obtained a stay of execution and waiver of appeal bond. The order of the Superior Court provided that “Appellant’s application for waiver of security and for a stay pending appeal is granted without prejudice to any rights the parties may have if an independent suit for bad faith, refusal to settle is instituted.” Allstate now seeks a stay of garnishment in this Court, representing that the application for stay was captioned and docketed in only one of the two later consolidated appeals through inadvertence of counsel. Plaintiff, on the other hand, asserts that she successfully argued to the Superior Court that any stay order should be directed to Kelly and should not relieve Allstate of its obligation to post a bond for the entire amount of the verdict.

These arguments reveal to the Court that Allstate’s defense based on its having paid the entire proceeds of Ms. Kelly’s policy has been raised in the state trial court as well as before the Superior Court. Further, the Court is able to foresee that it will be called upon to determine the facts which gave rise to Ms. Kelly’s liability to the plaintiff in order to determine whether Allstate’s policy covers that liability. This is substantially a duplication of the function performed by the state trial court. In addition the Court is being asked to provide a stay of execution despite the fact that the same relief was available by application to the state court. If the plaintiffs assertion that Allstate was deliberately excluded from the stay is correct, for this Court to grant a stay would contradict the order of the Superior Court and contravene the principles of comity. A dispute over the interpretation of the Superior Court’s order would best be resolved in the state court.

In sum, the action sought to be removed is a “ ‘mere mode of execution or of relief, inseparably connected with the original judgment or decree.’ ” Western Medical Properties, supra, 482 F.Supp. at 1207 (quoting International Organization Masters, supra, 342 F.Supp. at 214). See Pa.R. C.P. 3101, 3103. It is therefore this Court’s determination that under the circumstances discussed herein, the garnishment proceeding is not a removable “civil action” within the meaning of 28 U.S.C. § 1441(a) (1973). Therefore, this ease will be remanded to the Court of Common Pleas of Philadelphia County pursuant to 28 U.S.C. § 1447(c).


author: WALKER, District Judge.

text:
    Godfrey B. LUMAUIG, Plaintiff, v. PHILIPPINE AIRLINES, Defendant.
    No. 84 Civ. 8429.
    United States District Court, S.D. New York.
    Dec. 2, 1985.
    Billy Cris D. Vidal, Goodwin Reyes Valdez, P.C., New York City, for plaintiff.
    Edward C. Dial, Condon & Forsyth, New York City, for defendant.
   MEMORANDUM DECISION

WALKER, District Judge.

Plaintiff brings this action alleging that Philippine Airlines (“PAL”) sold him a $350 tour package to Hong Kong including airfare and three nights in a hotel and then failed to book the hotel accomodations. The complaint alleges that when the plaintiff arrived in Hong Kong he was properly met and driven to the Lee Gardens Hotel where he “was surprised to find out that no reservation was made under his name contrary to the agreement entered into between Godfrey B. Lumauig and defendant Philippine Airlines.” There is no allegation that the plaintiff was in any way abused or treated discourteously by the hotel, PAL or any other person. There is a statement in defendant’s brief, which the court is not considering in deciding this motion, that plaintiff spent one night in the hotel at his own expense and the other two nights at the home of a friend.

The complaint contains two counts. The first seeks $3,000 in out-of-pocket expenses arising out of PAL’s failure to provide hotel reservations as provided by contract. The second claim seeks $50,000 to compensate plaintiff for the mental distress suffered as a result of PAL’s breach of contract. The defendant stipulates that hotel reservations were not made for the plaintiff but maintains that plaintiff’s second count fails to state a cause of action upon which relief may be granted.

Defendant’s motion to dismiss plaintiff’s claim for mental distress is granted.

When considering dismissal of a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court is required to construe the complaint in the light most favorable to the plaintiff. Indeed, “[f]or the purposes of a motion to dismiss, the material allegations of the complaint are taken as admitted.” Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 1849, 23 L.Ed.2d 404 (1969). The complaint should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957).

The general rule in New York is that no right of recovery exists for mental distress resulting from a breach of contract. Wehringer v. Standard Security Life Ins. Co., 57 N.Y.2d 757, 454 N.Y.S.2d 984, 440 N.E.2d 1331 (1982); Fleming v. Allstate Ins. Co., 106 A.D.2d 426, 482 N.Y.S.2d 519 (2d Dep’t 1984). See also Mon-Shore Management, Inc. v. Family, Media, Inc., 584 F.Supp. 186, 195 (S.D.N.Y.1984).

An exception to the general rule has been recognized by the New York courts where the contract has established a fiduciary relationship, such as that between innkeepers and guest and common carrier and passenger, and where some additional tortious activity has occurred. In such cases, recovery for emotional distress upon an alleged breach of contract has been allowed. Boyce v. Greeley Square Hotel, 228 N.Y. 106, 111, 126 N.E. 647, 649 (1920); Aaron v. Ward, 203 N.Y. 351, 96 N.E. 736 (1911); Coorman v. Brooklyn Heights Railroad Co., 127 A.D. 315, 111 N.Y.S. 531 (1908); Gillespie v. Brooklyn Heights Railroad Co., 178 N.Y. 347, 70 N.E. 857 (1904); Rich v. New York Central Hudson River Railroad Co., 87 N.Y. 382, 395 (1882). See also Tobin v. Slutsky, 506 F.2d 1097, 1100 (2d Cir.1974) noting New York’s recognition of fiduciary obligations of innkeepers and carriers.

In Boyce, supra, “an employee of the defendant, a house detective, broke into a hotel room and wrongfully accused a husband and wife of engaging in prostitution. The court stated:

The plaintiff was entitled to recover, upon the evidence in her behalf, upon the theory of a tort or a breach of contract by the defendant____ As a general rule, mental suffering resulting from a breach of contract is not a subject of compensation. The rule does not obtain, however, as between a common carrier or an innkeeper and an insulted and abused passenger or guest, or the proprietor of a public resort and a patron publicly ejected. Id. 228 N.Y. at 110-111, 126 N.E. at 649.

At the core of the line of cases starting with Rich, supra, is the idea that where the contract creates a relationship of trust and confidence between the parties in addition to the agreement expressed by the instrument itself, a breach of the contract may be established as a tort, but before there can be emotional distress damages there must be a duty arising from the special relationship. As the court stated in Rich, supra, “unless the contract creates a relation, out of which relation springs a duty, independent of the mere contract obligation, though there may be a breach of the contract, there is no duty to be violated.” Rich, supra at 395.

It should be pointed out that a few lower courts in New York have sought to expand liability by granting compensation for emotional distress based on the existence of a perceived fiduciary relationship between a travel agent and its client without requiring a showing of added tortious conduct. Bucholtz v. Sirotkin Travel, Ltd., 80 Misc.2d 333, 363 N.Y.S.2d 415 (1973); Ostrander v. Billie Holm’s Village Travel, 87 Misc.2d 1049, 386 N.Y.S.2d 597 (1976).

While the question is not free from doubt, this court, now being asked to construe the law of New York, is of the view that in this case as it has been alleged a New York court would hold that the plaintiff would be unable to recover damages for emotional distress. In agreeing to book plaintiffs hotel reservations, PAL was acting neither as an innkeeper nor as a common carrier out of which a special duty could be held to have arisen. The defendant merely contracted to make hotel reservations for the plaintiff which contract defendant allegedly failed to perform. Moreover, even if there had been a special duty, there is no allegation of additional tortious or abusive conduct. There is no allegation that plaintiffs transportation to Hong Kong by the defendant was in any way flawed, nor is there any allegation that the Lee Gardens Hotel abused plaintiff or that it was even under defendant’s control. Accordingly, this court holds that on the complaint as alleged a New York court would not permit plaintiff to recover damages for emotional distress.

Admittedly, the lower court decisions in Bucholtz, supra and Ostrander, supra, permitting recovery of emotional stress by a traveller against a travel agent for failure to book hotel rooms, if adhered to by the New York Court of Appeals and assuming that the defendant was found to have acted in the role of travel agent, would perhaps require a different result.

However, the New York Court of Appeals has never adopted the holding in Bucholtz nor has it recognized the Bucholtz holding as among the exceptions to the general rule disallowing damages for emotional distress in breach of contract cases. It is noteworthy that in Wehringer, supra, decided nine years after Bucholtz, there is no mention of that case among the cases cited as setting forth exceptions to the general rule. There is no persuasive reason, and none is advanced in Bucholtz, why the purely contractual relationship between a travel agent and its customer, without more, should warrant expanded liability. In the absence of any New York or Second Circuit appellate decisions on the point, this court declines to follow Bucholtz.

Plaintiff’s claim for $50,000 for emotional and mental damages is dismissed.

So Ordered.


author: BARKER, District Judge.

text:
    Rita Kay WYMAN, Plaintiff, v. John Frederick LARNER, Defendant.
    No. IP 85-108-C.
    United States District Court, S.D. Indiana, Indianapolis Division.
    Dec. 3, 1985.

      John P. Tobin, Indianapolis, Ind., for plaintiff.
    John Frederick Larner, pro se.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

BARKER, District Judge.

This lawsuit arises out of a continuing custody battle between the plaintiff, Rita Kay Wyman (“Wyman”), and the defendant, John Frederick Larner (“Larner”), parents of Leah Renee Wyman (“Leah”). Since Leah’s birth in December, 1981, the custody issue has been litigated in both Indiana and Colorado state courts by Wyman and Larner, respectively. The end result of this litigation is conflicting custody decrees. Colorado awarded custody to Larner while Indiana awarded custody to Wyman.

In order to obtain resolution of these inconsistent decrees, Wyman filed the present suit on January 24, 1985, alleging jurisdiction under the Parental Kidnapping Prevention Act (PKPA), 28 U.S.C. § 1738A. On January 29, 1985, this Court sua sponte dismissed the complaint for lack of jurisdiction and denied plaintiff’s motion to stay the Colorado state court custody proceedings. Wyman immediately filed a motion to reconsider, citing Flood v. Braaten, 727 F.2d 303, 310 (3d Cir.1984), and Heartfield v. Heartfield, 749 F.2d 1138, 11 Family Law Rptr. 1145 (5th Cir.1985), as authority for her contention that the Court had jurisdiction under the PKPA to determine which state court decree should prevail. The Court, on consideration of those recent decisions, on February 26, 1985, reinstated Wyman’s case and stayed the Colorado state court proceedings. On the same day that Wyman’s complaint was sua sponte dismissed, Larner filed an identical suit in the United States District Court for the District of Colorado.

Presently, the Court is faced with various motions by Larner and one by Wyman. Larner’s motions include: 1) consolidation of this action with the Colorado Federal District Court proceeding by deferring to the Colorado court; 2) stay of all further proceedings in any state court and that the Court vacate the Colorado state court stay, or, to vacate the stay and consolidate the Federal District Court actions by deferring to the Colorado District Court, and 3) for an enlargement of time of fifteen (15) days after all motions are decided in which to answer Wyman’s complaint. On March 21, 1985, Larner filed an answer and counterclaim to Wyman’s complaint. In his answer, Larner alleges that the complaint fails to state a claim upon which relief may be granted, both generally and under 28 U.S.C. § 1738A, that the complaint is insufficiently verified, that Wyman has not alleged inadequate Colorado state court remedy, and that the Indiana Supreme Court’s decision in State, ex rel. Larner v. Martin Circuit Court, 456 N.E.2d 395 (Ind.1983), reh’g denied, Id., cert. denied, — U.S. -, 105 S.Ct. 138, 83 L.Ed.2d 78 (1984), was erroneous. Larner’s counterclaim, in essence, reiterates the procedural history of all prior custody litigation, and alleges that the Marion Circuit Court of Indiana and the Indiana Supreme Court have violated 28 U.S.C. § 1738A by refusing to enforce the Colorado state court custody decree. In his counterclaim, Larner seeks: 1) deferral to the United States District Court, District of Colorado; 2) or, in the alternative, for summary judgment; 3) enforcement of the custody order of the Colorado state court; and 4) payment of all attorney fees, costs, and travel expenses incurred in the “defense of various lawsuits.” On April 2, 1985, Wyman moved to dismiss the counterclaim for failure to state a claim on which relief may be granted.

Based on the briefs and pleadings submitted by both parties, the Court, being duly advised in the premises, now submits its Findings of Fact and Conclusions of Law. In accordance therewith, the Court DENIES the defendant’s Motion for Summary Judgment and sua sponte GRANTS summary judgment to the plaintiff.

Findings of Fact

1. Leah Renee Wyman was born on December 6, 1981, in Indianapolis, Indiana.

2. Wyman and Larner are the parents of Leah Renee Wyman.

3. Since the time of her birth in 1981, Leah Renee Wyman has resided with her mother in the State of Indiana and has never left the state.

4. John Frederick Larner resides in Steamboat Springs, Colorado.

5. On February 25, 1983, the Marion Superior Court No. 5 of Indiana granted custody of Leah Renee Wyman to Wyman.

6. On April 18, 1983, the Routt County District Court of Colorado granted custody of Leah Renee Wyman to Larner.

7. Any finding of fact stated above, to the extent that it constitutes a conclusion of law, is herein incorporated by reference as an additional conclusion of law by the Court.

Conclusions of Law

1. This Court has jurisdiction of this matter pursuant to 28 U.S.C. § 1738A because there are two inconsistent state court custody decrees.

2. Under 28 U.S.C. § 1738A, the state courts of a child’s “home state” have jurisdiction to determine which parent is entitled to custody of the child.

3. Title 28 U.S.C. § 1738A defines “home state” as that state where, immediately preceding the home involved, the child lived with her parent(s) for at least six (6) consecutive months. In a case where the child is less than six months old, the home state is the state in which the child lived from birth with any of her parents).

4. Leah Renee Wyman was less than six (6) months old when the child custody proceedings were begun; thus, the home state is the state in which she lived from birth. Because Leah Renee Wyman has lived in Indiana since her birth, the Court finds that Indiana is her home state within the meaning of 28 U.S.C. § 1738A.

5. Because Indiana is the home state of Leah Renee Wyman, the courts of Indiana have jurisdiction to 28 U.S.C. § 1738A to determine which parent is entitled to custody of Leah Renee Wyman.

6. Further, because all evidence relevant to a determination of the best interests of Leah Renee Wyman is located in Indiana, the courts of Indiana are most properly situated to determine which parent is entitled to custody of Leah Renee Wyman.

7. The undisputed facts presented clearly support the determination that Indiana is Leah Renee Wyman’s home state, and summary judgment shall be entered for the plaintiff, Rita Kay Wyman, on her complaint.

8. In his counterclaim, Larner is seeking an enforcement of the Colorado state court’s custody order, a determination that the Indiana court issued a custody decree in violation of his rights protected by 28 U.S.C. § 1738A, and a dismissal of Wyman’s complaint now before this Court. Because these issues are nearly identical to those presented in the complaint, in that it calls for a decision as to which state court has proper authority to issue a child custody order, the Court finds that the above rulings on Wyman’s complaint are also dis-positive of the issues presented by Larner’s counterclaim. Accordingly, Larner’s counterclaim is hereby DISMISSED.

9. Any conclusion of law stated above, to the extent that it constitutes a finding of fact, is herein incorporated by reference as an additional finding of fact by the Court.

Memorandum

I. Lamer’s Motion for Summary Judgment

The standards governing a motion for summary judgment are well-established. Summary judgment is not to be granted unless the Court finds from the pleadings and the evidence that no genuine issue as to any material fact exists. Fed.R.Civ.P. 56(c) (1985). The nonmoving party’s reasonable allegations are to be accepted as true. Yorger v. Pittsburgh Corning Corp., 733 F.2d 1215, 1218 (7th Cir.1984). Furthermore, inferences drawn from underlying facts contained in pleadings and other documents must be viewed in the light most favorable to the party opposing the motion. U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). If any doubt remains as to the existence of a genuine issue of material fact, such doubt must be resolved against the movant for summary judgment, and the motion for summary judgment must be denied. Yorger, 733 F.2d at 1218; Moutoux v. Gulling Auto Electric, 295 F.2d 573, 576 (7th Cir.1961).

Larner claims that he is entitled to summary judgment. In order to determine whether a genuine issue of material fact exists in the present case, it is necessary to understand the provisions of the PKRA, and to apply them to the facts presented.

II. The PKPA

Federal courts have jurisdiction under the PKPA, 28 U.S.C. § 1738A, to determine which of two inconsistent state court custody decrees is valid. Heartfield v. Heartfield, 749 F.2d 1138, 11 Fam.L.Rptr. 1145 (5th Cir.1985); DiRuggiero v. Rodgers, 743 F.2d 1009 (3d Cir.1984); Flood v. Braaten, 727 F.2d 303 (3d Cir.1984). To invoke the PKPA, a plaintiff must allege injury resulting from two inconsistent state court custody decrees. The plaintiff must also allege that one decree was rendered in violation of the PKPA. Although the federal courts have declined to decide whether a plaintiff must exhaust all state court remedies prior to seeking relief in federal court, inconsistent decrees have been held to constitute a sufficient basis to invoke federal jurisdiction. DiRuggiero, 743 F.2d at 1015. See also Flood, 727 F.2d at 312, n. 28. Because both Indiana and Colorado state courts have rendered inconsistent custody decrees in the case at bar, this Court has jurisdiction under the PKRA to address the issues presented.

Once jurisdiction is established, federal courts face the narrow issue of determining which state court exercised jurisdiction in violation of the PKPA. Flood, 727 F.2d at 310. This determination “requires only preliminary inquiry into jurisdictional facts.” Id. Furthermore, the statute precisely defines the standards by which to identify the state that erroneously ruled on the custody issue. “Pursuant to 28 U.S.C. § 1738A(c), a custody determination is consistent with the provisions of the PKPA only if the court making the determination has jurisdiction under the law of such state and one of five [statutory] conditions is met.” Virginia E.E. v. Alberto S.P., 440 N.Y.S.2d 979, 983, 110 Misc.2d 448 (N.Y. Fam.Ct.1981). Of the five statutory conditions, the one relevant to the present dispute states:

“(A) Such State (i) is the home State of the child on the date of the commencement of the proceeding, or (ii) had been the child’s home State within six months before the date of the commencement of the proceeding and the child is absent from such State because of his removal or retention by a contestant or for other reasons, and a contestant continues to live in such State[.]”

28 U.S.C. § 1738A(e)(2)(A). According to this condition, a court located in the child’s “home state” has jurisdiction to enter a custody decree. 28 U.S.C. § 1738A(c)(2)(A). The statute defines home state as:

“the state in which, immediately preceding the home involved, the child lived with his parents, a parent, or a person acting as a parent, for at least six consecutive months, and in the case of a child less than six months old, the state in which the child lived from birth with any of such persons.”

28 U.S.C. § 1738A(b)(4).

Reading condition A together with the definition of “home state,” the Court finds that Indiana is the only state to qualify as Leah’s home state. When Larner filed suit in April, 1982, Leah was four months old. The statute requires that the child’s home state be determined in relation to the time of the commencement of custody proceedings. Because Leah was less than six months old at that time, section (b)(4) of the statute defines Leah’s home state as the state where she lived from birth. 28 U.S.C. § 1738A(b)(4). On the face of the statute, therefore, Indiana is Leah’s home state.

Larner contends that because Leah was conceived and carried for several months in Colorado, Colorado is the child’s home state. However, Congress specifically provided for situations such as this one in section (b)(4) of the statute where it states that for children less than six months of age, the home state is the state where the child resided from birth. 28 U.S.C. § 1738A(b)(4). Because Congress has specifically limited the time frame for determining the child’s home state to those months after birth, the courts will adhere to those limitations.

Looking beyond the statute, the case law interpreting the PKPA supports this Court’s finding that Indiana is Leah’s home state. In Quenzer v. Quenzer, 653 P.2d 295 (Wyo.1982), the father appealed a grant of custody to his former wife. The Supreme Court of Wyoming determined that because the child lived in Wyoming for more than six months prior to the commencement of custody proceedings, Wyoming was the child’s home state. Therefore, the Court ruled that the Wyoming lower court decree prevailed over the inconsistent Texas court decree. The court further noted that the child had a significant connection with the State of Wyoming. That is, all of the evidence relevant to determining the child’s best interest was located in Wyoming. The court identified the relevant evidence as information concerning the child’s personal relationships, present or future, training, protection and care, friends, neighbors, and school personnel.

Similarly, in Ex parte Lee, 445 So.2d 287 (Ala.Ct.Civ.App.1983), the court addressed the issue of whether Texas was the child’s home state. The child was born in Texas and lived there for precisely six months. Thereafter, the child was removed to Alabama by his mother. Six days later, the father instituted custody proceedings in Texas. Because the child had lived in Texas for the first six months of his life, the Alabama court enforced the Texas custody decree. Noting the unambiguous provisions of the PKPA, the court stated, “[s]uch a determination is inescapable under the federal act.” Id. at 290. See also Mitchell v. Mitchell, 437 So.2d 122 (Ala. Civ.App.1982) (The home state of a child who is less than six months of age when custody proceedings are initiated is the state in which the child lived from birth).

The case law clearly supports this Court’s finding that Indiana is Leah’s home state. Leah was born in Indiana and has continuously lived in the state since her birth. Moreover, Leah has never been to the State of Colorado. As in Quenzer, all of the evidence relevant to determining Leah’s best interest is located in Indiana. As in Mitchell, the home state of Leah, who was less than six months old when custody proceedings were initiated, is the state in which she lived from birth. And, most importantly, as the court in Lee noted, the language of the PKPA is unequivocal. To paraphrase that court, the determination that Indiana is Leah’s home state is inescapable under the Federal Act.

Larner asserts that Wyman is not entitled to a federal court adjudication of the custody issue because she has not exhausted Colorado state court remedies. As noted previously, the federal courts have not formally decided whether a plaintiff must exhaust all state court proceedings prior to seeking federal relief. See, e.g., DiRuggiero, 743 F.2d at 1015; Flood, 727 F.2d at 312, n. 28. However, the Third Circuit Court of Appeals has twice addressed the exhaustion issue and, without ruling on it, held that inconsistent custody decrees are sufficient to invoke the PKPA. DiRuggerio, 743 F.2d at 1015; Flood, 727 F.2d at 312, n. 28. In DiRuggerio, for example, the court noted that both New Jersey and North Carolina courts had rendered inconsistent custody decrees. “Because the intent of the PKPA is to avoid the multiple exercise of jurisdiction over custody,” the court stated, “one of these awards is inconsistent with the PKPA.” DiRuggerio, 743 F.2d at 1015. Because the inconsistent decrees were adequate to invoke the district court’s subject matter jurisdiction, the court did not decide the exhaustion issue. Id. The case at bar is analogous to Flood and DiRuggerio in that two state courts have rendered inconsistent custody decrees. Because the PKPA is designed to prevent the concurrent exercise of jurisdiction by two state courts, Wyman has a sufficient basis to invoke the statute.

Both the PKPA and the case law support the finding that Indiana is Leah’s home state. Therefore, no genuine issue of material fact exists. Accordingly, the Court DENIES Larner’s Motion for Summary Judgment and sua sponte GRANTS summary judgment to Wyman.

      . Conditions B through E, which deal with abandoned or abused children, and situations where no state would have jurisdiction under condition A, do not apply to the present dispute. See 28 U.S.C. § 1738A(c)(2)(B-E).