author: JUNE L. GREEN, Senior District Judge.

text:
    Nathan H. FRIEDMAN, M.D., Plaintiff, v. John A. MANFUSO, Jr., Defendant. and ALCON LABORATORIES, INC., Defendant and Third-Party Plaintiff, v. John A. MANFUSO, et al., Third-Party Defendants.
    Civ. A. No. 83-2741.
    United States District Court, District of Columbia.
    Feb. 25, 1985.

      Michael S. Horwatt and Thomas J. Shaughnessy, Odin, Feldman & Pittleman, Fairfax, Va., for plaintiff.
    Jeffrey S. Davidson and David K. Per-due, Kirland & Ellis, Washington, D.C., for defendant and third-party plaintiff.
    James Robertson and Joseph K. Brenner, Washington, D.C., for third-party defendants.
   MEMORANDUM OPINION

JUNE L. GREEN, Senior District Judge.

This matter is before the Court on cross-motions for partial summary judgment by plaintiff and defendant Alcon Laboratories, Inc. (“Alcon”), their respective oppositions thereto, the parties’ replies, and the entire record herein. For the reasons stated below, the Court grants defendant Alcon’s motion for partial summary judgment and denies plaintiff’s cross-motion.

On September 16, 1983, plaintiff Friedman brought this action for compensatory and punitive damages against defendant Alcon. Plaintiff thereafter amended the complaint to add defendant John A. Manfu-so, Jr. (“Manfuso”). In his amended complaint, plaintiff alleged that he was not “fully and fairly” paid the royalties and other compensation due to him under a license agreement involving his invention of an electrode cream. Amended Complaint 111119-21.

Defendant Alcon filed a motion for partial summary judgment, contending that plaintiff could not recover on the majority of his claims because of either the applicable statute of limitations or the unconditional assignment of the patent and trademark rights. Plaintiff cross-filed for partial summary judgment, claiming that defendants fraudulently concealed their breach of the license agreement and thereby deprived plaintiff of the true value of his invention and the related patent and trademark rights.

Statement of Facts

In February 1958, plaintiff Friedman entered into a license agreement with Burton Parsons Chemicals, Inc. (“Burton Parsons”), the predecessor in interest of defendant Alcon. Under the agreement, Burton Parsons received exclusive rights to “manufacture, promote, sell and distribute” EKG Sol, an electrode cream invented by plaintiff, in exchange for the payment of royalties. Exhibit A HIT 2, 3 to Amended Complaint. The exclusive rights of Burton Parsons were to continue until the end of the patent term. In addition, the company received the right “to utilize and exploit Inventor’s trade-marks ... and to utilize Inventor’s secret processes, information and know-how concerning the manufacture of [the invention].” Id. ¶ 2.

In exchange, plaintiff received $2,500, plus seven percent of the first $20,000 of the company’s annual “net sales” and five percent of the “net sales” above $20,000. The payments were to be made quarterly and to include a statement of the “net sales” and “any other particulars necessary or material.” The agreement defined “net sales” as the gross selling price less customer discounts, returns, taxes, and freight. Id. 113.

The agreement permitted Burton Parsons to use affiliated corporations to sell and distribute EKG Sol. In that case, however, “net sales” was defined as sales “to the wholesale and retail drug market and shall not mean the sale of The Compound to [the affiliated corporation].” Id.

In addition, Burton Parsons received the right to grant licenses to manufacture EKG Sol for sale and distribution in foreign countries. If a manufacturing license were granted, plaintiff was to receive 30 percent of the royalties or other compensation paid to Burton Parsons by the foreign corporation. Id. II4.

The agreement required the company to maintain adequate records and gave plaintiff the right to inspect the books. Id. U 12. Plaintiff also reserved the right to inspect the company’s facilities to control the nature and quality of the product. Id. ¶ 9.

Plaintiff could terminate the agreement upon written notice if the company failed to pay any royalties within 60 days or otherwise breached the agreement. Id. ¶ 7. Likewise, the company could terminate the agreement if the manufacture of the invention became infeasible or undesirable for valid business reasons. Id. 118.

Upon execution of the license agreement, plaintiff had applied for, but had not received, the patents and registered trademark. In 1961, plaintiff assigned all his “right, title and interest” in the United States and Canadian patents for EKG Sol for ten dollars and one dollar, respectively. Exhibits 5, 7 to Statement of Points and Authorities in Support of Alcon’s Motion for Partial Summary Judgment (“Motion of Alcon”). Plaintiff also assigned the registered trademark to Burton Parsons at that time for “good and valuable consideration.” Exhibit 9 to Motion of Alcon. None of the assignments explicitly mentioned the license agreement.

In April 1968, Burton Parsons informed plaintiff by letter that the method of computing his royalties on sales of EKG Sol in Canada was changed to conform with the “foreign licenses” provisions of the license agreement. Exhibit 10 to Motion of Alcon. The new royalty computation appeared on every quarterly royalty statement sent to plaintiff from 1968 through 1977. Defendant Alcon’s Statement of Material Facts as to Which There is No Genuine Issue (“Defendant Alcon’s Statement of Material Facts”) ¶ 5; see, e.g., Exhibit 12 to Motion of Alcon.

Another change in the computation of royalties occurred in November 1974. Burton Parsons began deducting each month 7.025 percent from the gross sales of EKG Sol in the United States before computing plaintiff’s royalty. The deduction was not noted on plaintiffs quarterly accountings, although it was set forth in the company’s books and records. Plaintiff’s Statement of Material Facts Not in Dispute (“Plaintiff’s Statement of Material Facts”) ¶ 4(b); Motion of Alcon at 7.

In September 1977, about one-and-a-half years before the expiration of the patent, Burton Parsons sold the EKG Sol product line and Canadian patent and trademark rights to Graphic Controls Corporation for $600,000. Plaintiff’s Statement of Material Facts If 6. Prior to the closing of the sale, plaintiff accepted a one-time, lump-sum payment of $15,000 in full settlement of his remaining royalty rights under the license agreement. Defendant Alcon’s Statement of Material Facts ¶¶ 3-4; see Exhibit 15 to Motion of Alcon.

Defendant Alcon acquired Burton Parsons two years after the sale of the EKG Sol product and patent and trademark rights. Plaintiff and defendant Alcon never had any direct dealings prior to the initiation of the instant lawsuit. Defendant Alcon’s Statement of Material Facts ¶ 7.

Plaintiff claims that he was unaware of the 7.025 percent deduction until September 1982, when he was asked to testify in a case against Burton Parsons brought by another inventor for the identical discounting of sales. Plaintiff’s Statement of Material Facts ¶ 8. In July 1983, plaintiff demanded that defendants Alcon and Manfu-so pay to him all sums wrongfully withheld under the license agreement. Id. 119.

Plaintiff thereafter filed the instant action in which he claims: (1) breach of contract for failure to pay royalties due to him under the license agreement; (2) punitive damages for “wanton, malicious, intentional” breach of contract; (3) conversion and misappropriation of plaintiff’s patent and trademark rights; (4) fraudulent inducement of plaintiff to accept the $15,000 final royalty payment; and (5) unjust enrichment. Amended Complaint ¶1125-42.

Conclusions of Law

Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure when no genuine issues of material fact exist and when the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Weiss v. Kay Jewelry Stores, Inc., 470 F.2d 1259, 1262 (D.C.Cir.1972) (quoting Traylor v. Black, Sivalls & Bryson, Inc., 189 F.2d 213, 216 (8th Cir.1951)).

In Count I of the Amended Complaint, plaintiff seeks an accounting of the wrongfully withheld royalties. Amended Complaint UK 25-27. In Counts III, IV, and V, plaintiff seeks the proceeds of the 1977 sale of the patent and trademark rights to Graphic Controls Corporation. Id. UK 30-42.

Plaintiffs claims against defendant Al-con raise two general issues: (1) whether defendant fraudulently breached the license agreement by withholding royalty payments from sales of EKG Sol in Canada and the United States, and (2) whether a breach entitled plaintiff to terminate the patent and trademark assignments.

The sole material fact in dispute that bears upon these issues is whether plaintiff had actual or constructive knowledge of the 7.025 percent deduction in gross sales of EKG Sol in the United States. This question must be resolved at trial. The Court, however, may rule on the issues of breach of contract concerning the Canadian sales royalties and the right of termination. All other material facts are undisputed and therefore the issues are properly before the Court for summary judgment.

The Court finds that plaintiff was informed of the change in computation of Canadian sales royalties in 1968, but failed to dispute the change. His claim, therefore, is barred by the statute of limitations. The Court also finds that the assignments were absolute and did not grant to plaintiff a right to revoke upon a breach of the license agreement. Thus, defendant Al-con’s motion for partial summary judgment on Count I, concerning the Canadian royalties, and Counts III, IV, and V is granted.

In addition, plaintiff seeks punitive damages in Count II of the Amended Complaint for malicious breach of contract. Amended Complaint ¶¶ 28-29. Two threshold questions govern whether punitive damages may lie in this case. First, which jurisdiction controls? Second, does the controlling jurisdiction allow punitive damages for malicious breach of contract? The material facts that bear on these questions are not in dispute. Therefore, the punitive damages issue may properly be considered for summary judgment.

The Court finds that plaintiff is not entitled to punitive damages against defendant Alcon as a matter of law, and grants Al-con’s motion for partial summary judgment as to Count II of the Amended Complaint.

A. Count I: Royalties from Canadian Sales

Plaintiff alleged two breaches of the license agreement: (1) a wrongful recompu-tation of royalties from sales of EKG Sol in Canada, and (2) a unilateral deduction of 7.025 percent from gross sales in the United States before computation of plaintiffs royalties. Motion of Plaintiff at 1-3.

As stated previously, the alleged breach involving the deduction from gross sales in the United States raises a question of material fact which must be resolved at trial.

The change in the computation of royalties from Canadian sales occurred in 1968. Before then, the sales by Burton Parsons’s Canadian subsidiary were added to the sales in the United States. Plaintiff then received seven percent of the first $20,000 of “net sales” annually and five percent thereafter. Motion of Alcon at 26.

In January 1968, Burton Parsons licensed the Canadian subsidiary to manufacture its own supplies of EKG Sol. Paragraph 4 of the license agreement required Burton Parsons to pay plaintiff 30 percent of all royalties or other compensation that the company received from a foreign manufacturer. Exhibit A ¶ 4 to Amended Complaint.

Defendant Manfuso, as vice president of Burton Parsons, notified plaintiff of the change by letter dated April 4, 1968. The letter explained that the change occurred “since EKG Sol was being manufactured in Montreal, Canada by Burton, Parsons & Company of Canada Ltd., under a licensing agreement with Chemicals.” Exhibit 10 to Motion of Alcon. Defendant Manfuso further stated that the change “really doesn’t make much difference I don’t believe, dollar and cents wise.” Id. Plaintiff’s next royalty statement for December 1967 and January and February 1968 noted the new method of computation. Exhibit 12 to Motion of Alcon.

Plaintiff did not object to the change in computation until shortly before the initiation of the instant action. Motion of Al-con at 27. Plaintiff now claims that Burton Parsons fraudulently withheld material facts concerning the change in computation of his royalties, thereby concealing the breach of the license agreement. Plaintiff contends that defendant Manfuso concealed that the Canadian subsidiary was wholly owned by Burton Parsons. In addition, plaintiff claims that defendant Manfu-so “exploited his position of trust and confidence by making the obviously misleading statement that the change `doesn't really make much difference.'" Motion of Plaintiff at 2.

Defendant argues that plaintiff's claim is barred by the applicable statute of limitations. Plaintiff contends that the fraudulent concealment of material facts tolled the running of the statute until plaintiff's discovery of the breach in September 1982.

In a diversity case, a federal court must apply the statute of limitations that the court of the forum state would apply. Guaranty Trust Company v. York, 326 U.S. 99, 110, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945). Which state's statute applies depends on the forum's choice-of-law rules. Klaxon Company v. Stentor Electric Manufacturing Company, Inc., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941).

The District of Columbia Court of Appeals has said explicitly that the question of whether an action is time-barred is procedural in nature and therefore governed by the statute of limitations of the forum. Hoffa v. Fitzsimmons, 673 F.2d 1345, 1360 n. 41 (D.C.Cir.1982) (citations omitted); Steorts v. American Airlines, Inc., 647 F.2d 194, 197 (D.C.Cir.1981).

The statute of limitations for breach of contract and tort actions in the District of Columbia is three years. D.C.Code Ann. § 12-301(7), (8) (1981). The three-year period begins to run "from the time the right to maintain the action accrues." Id.

In the absence of fraud, the right to maintain a breach of contract action accrues when the contract was breached. Poole v. Terminix Company of Maryland and Washington, Inc., 84 A.2d 699, 701 (D.C.1951), aff'd, 200 F.2d 746 (D.C.Cir.1952). In the instant action, the alleged breach occurred in 1968 and continued through September 1977 when the license agreement terminated. Plaintiff, however, alleges fraudulent concealment of the breach.

Under District of Columbia law, the tolling of the statute of limitations requires either some affirmative act tending to conceal the cause of action or a misrepresentation, even if the misrepresentation does not hide the cause of action itself. Richards v. Mileski, 662 F.2d 65, 70 (D.C.Cir.1981).

"Concealment by mere silence is not enough. There must be some trick or connivance intended to exclude suspicion and to prevent discovery of the cause of action by the use of ordinary diligence." Poole v. Terminix Company of Maryland and Washington, Inc., 84 A.2d at 702. Accord William .J. Davis, Inc. v. Young, 412 A.2d 1187, 1192 (D.C.1980); Adrian v. American Security & Trust Company, 211 A.2d 771, 772 (D.C.1965). Any statement, word, or act, however, which tends to suppress the truth may constitute fraudulent concealment. William J. Davis, Inc. v. Young, 412 A.2d at 1192. Even an innocent misrepi~esentation may toll the statute of limitations. Keener v. Walker, 256 A.2d 779, 781 (D.C.1969).

Once tolled by a positive act of concealment or a misrepresentation, the statute of limitations does not begin to run until the plaintiff discovers or should have discovered the wrong. William J. Davis, Inc. v. Young, 412 A.2d at 1191.

A well-established defense to a claim of fraudulent concealment is that the plaintiff knew, or by the exercise of due diligence could have discovered, that he may have a cause of action. Estate of Chappelle v. Sanders, 442 A.2d 157, 158 (D.C.1982); Westinghouse Electric Corporation v. City of Burlington, Vermont, 351 F.2d 762, 764 (D.C.Cir.1965). "The test of due diligence measures the plaintiff's efforts to uncover his cause of action against what a reasonable person would have done in his situation given the same information." Richards v. Mileski, 662 F.2d at 71.

In the instant case, plaintiff was fully informed in writing of the change in computation of royalties from Canadian sales and the reason for the change. He was reminded continually of the change by the quarterly royalty statements which noted the new method of computation.

The Court rejects plaintiff’s claims of fraudulent nondisclosure and misrepresentation. In the letter of April 1968, defendant Manfuso specified that the change was based on Burton Parsons’s manufacturing license with Burton Parsons & Company of Canada Ltd. This information reasonably should have raised a suspicion that the companies were affiliated rather than “exclude a suspicion ... of [plaintiff’s] right of action.” Adrian v. American Security & Trust Company, 211 A.2d at 772.

In addition, defendant Manfuso’s statement of his opinion as to the importance of the change in computation did not amount to a fraudulent misrepresentation. Plaintiff had no right to rely on the opinion. Plaintiff possessed the ability to determine for himself the importance of the change. Defendant Manfuso did not claim to have any special expertise regarding this matter, nor did the parties as inventor and patentee have a fiduciary or confidential relationship. Babb v. Bolyard, 194 Md. 603, 72 A.2d 13, 16 (1950); Restatement (Second) of Torts §§ 542, 543 (1977); 37 Am.Jur.2d Fraud & Deceit § 265 (1968).

The Court finds that plaintiff knew or should have known of the alleged breach of the license agreement in 1968 and, therefore, his claim is barred by the statute of limitations.

B. Count II: Punitive Damages

Under Count II of the Amended Complaint, plaintiff seeks punitive damages for alleged malicious breach of contract involving the nonpayment of royalties. Plaintiff alleges that defendant Alcon’s breach was “wanton, malicious, intentional and in reckless disregard of Dr. Friedman’s rights.” Amended Complaint 1129.

In considering a claim for punitive damages, the Court must decide which jurisdiction’s law applies and then determine whether punitive damages are available under the applicable law. Keene Corporation v. Insurance Company of North America, 597 F.Supp. 934, 936 (D.D.C.1984).

A choice-of-law issue in a diversity case is determined by the rules of the forum state. Klaxon Company v. Stentor Electric Manufacturing Company, Inc., 313 U.S. at 496, 61 S.Ct. at 1021. District of Columbia courts employ an “interest analysis” approach, whereby the courts apply the law of the State with the most significant interest in the immediate controversy. Keene Corporation v. Insurance Company of North America, 597 F.Supp. at 938.

In the instant case, the “immediate controversy” is the availability of punitive damages. “When the primary purpose of a rule of law is to deter or punish conduct, the States with the most significant interests are those in which the conduct occurred and in which the principal place of business and place of incorporation of defendant are located.” Id.

The parties in the instant case agree that the principal place of business of Burton Parsons controls. Motion of Plaintiff at 13; Opposition to Plaintiff’s Cross Motion for Partial Summary Judgment and Reply Memorandum in Support of Alcon’s Motion for Partial Summary Judgment (“Opposition of Alcon”) at 20. Plaintiff claims that the company was headquartered at all times in Washington, D.C. Motion of Plaintiff at 13. Plaintiff cites the prefaces of the 1958 license agreement and 1977 sales contract with Graphic Controls Corporation, which refer to Washington, D.C., as the principal place of business. Exhibits 1, 14 at 1 to Motion of Alcon.

The evidence produced by defendant Al-con, and undisputed by plaintiff, demonstrates that Burton Parsons moved its headquarters to Maryland in 1962. The company’s mailing address, however, continued to be Washington, D.C. Declaration of Marjorie Jo Rumrill (attached to Opposition of Alcon); Exhibits A, B to Opposition of Alcon.

The Court finds the mailing address of a corporation not controlling. The interest of the State of the principal place of business is in punishing or protecting a resident corporation for specific conduct. Keene Corporation v. Insurance Company of North America, 597 F.Supp. at 940. The quirks of the postal service in determining postal zones does not give Washington, D.C., a greater interest in the punitive damages issue than the State of residency.

The only wrongdoing alleged properly against defendant Alcon pertains to the discounting of gross sales in the United States beginning in 1974, after the company’s move to Maryland. Any wrongful nonpayment of royalties and false account-ings would have occurred at the company’s headquarters. Thus, the place of conduct, as well as the principal place of business of Burton Parsons in 1974, was Maryland. These relationships to the controversy give Maryland a substantial interest in the punitive damages issue. No State has a stronger interest. The Court, therefore, will apply Maryland law.

Maryland courts follow the general rule of disallowing punitive damages in pure breach of contract actions. General Motors Corporation v. Piskor, 281 Md. 627, 381 A.2d 16, 22 (1977). The courts recognize, however, a gray area between pure tort and pure contract actions. In this gray area, the courts allow punitive damages for torts arising from a contractual relationship, but only if actual malice is shown. Id., 381 A.2d at 22-23; Aeropesca Limited v. Butler Aviation International, Inc., 44 Md.App. 610, 411 A.2d 1055, 1064 (1980); H & R Block, Inc. v. Testerman, 275 Md. 36, 338 A.2d 48, 52-53 (1975).

Recovery is limited to cases where the conduct clearly warrants punitive damages.

“... We do not mean to say there may not be [punitive] damages in cases of this character, for if, for example, there was evidence tending to show that the defendant had caused the contract to be broken for the sole purpose, and with the deliberate intention of wrongfully injuring the plaintiff, exemplary damages might be recovered, but when the object was merely to benefit itself, although the plaintiff would be thereby injured, there would be no more reason for allowing such damages than there would be in a suit by one party to a contract against the other for breach of it-” (emphasis added).

H & R Block, Inc. v. Testerman, 338 A.2d at 53 (quoting Knickerbocker Company v. Gardiner Company, 107 Md. 556, 69 A. 405, 410 (1908)).

The Maryland courts have defined actual malice as “the performance of an act ... with an evil or rancorous motive influenced by hate, the purpose being to deliberately and willfully injure the plaintiff.” Id., 338 A.2d at 52. Deliberate violation of a known right without legal justification will not support an award for punitive damages in a tort action arising from a contractual relationship. Food Fair Stores, Inc. v. Hevey, 275 Md. 50, 338 A.2d 43, 47 (1975). Nor is evidence of a motive of greed or a desire to maximize profits sufficient. Aeropesca Limited v. Butler Aviation International, Inc., 411 A.2d at 1065; H & R Block, Inc. v. Testerman, 338 A.2d at 54.

Plaintiff in the instant case presented no evidence that Burton. Parsons harbored any ill will toward plaintiff, nor that it acted with “an evil or rancorous motive influenced by hate.” The company may have acted with wanton or reckless disregard of plaintiff’s rights, but this does not constitute actual malice as required by the Maryland courts. Aeropesca Limited v. Butler Aviation International, Inc., 411 A.2d at 1065. The Court, therefore, dismisses Count II of the Amended Complaint.

C. Counts III, IV, and V: Proceeds of Sale of Patent and Trademark Rights

Plaintiff further claims a right to the proceeds of the 1977 sale of the EKG Sol patent and trademark rights to Graphic Controls Corporation under the theories of conversion and misappropriation, fraudulent inducement, and unjust enrichment. Amended Complaint ¶¶ 30-42.

Plaintiff argues that the 1961 assignments and the original 1958 license agreement constituted the same transaction. Therefore, the right to terminate under the license agreement for nonpayment of royalties applied equally to the subsequent assignments. Plaintiff further contends that by concealing their breach of the license agreement, defendants denied plaintiff the right to revoke the assignments. Plaintiff was deprived thereby of the value of the patent and trademark rights which he would have reacquired upon notice of the breach. Motion of Plaintiff at 6-11.

Plaintiffs claims under Counts III, IV, and V of the Amended Complaint depend on the existence of his right to terminate the assignments. The Court disagrees with plaintiffs “same transaction” argument and finds that he unconditionally assigned his rights under the patents and trademark to Burton Parsons.

The assignments on their face are absolute. Contrary to plaintiffs statement, the assignments do not “refer back explicitly to the License Agreement.” Id. at 6. The United States patent assignment recites the same patent application date of December 30, 1957 and the same application number as does the license agreement. In addition, the trademark assignment is effective nunc pro tunc as of February 3, 1958, the date of the license agreement. Exhibits B, C to Amended Complaint.

Explicit reference to the license agreement is not necessary if the documents pertain to the same transaction. “Where several instruments, executed contemporaneously or at different times, pertain to the same transaction, they will be read together although they do not expressly refer to each other.” 17A C.J.S. Contracts § 298 (1963); see Helvering v. Le Gierse, 312 U.S. 531, 540, 61 S.Ct. 646, 649, 85 L.Ed. 996 (1941); Restatement (Second) of Contracts § 202(2) (1981). This rule of construction, however, may not be applied mechanically, without regard to the particular circumstances of each case. If documents are in fact independent, they may not be considered together even though they involve the same parties or the same subject matter. 17A C.J.S. Contracts § 298.

The license agreement and assignments in the instant case do not constitute the “same transaction.” Although the agreements all transfer some rights in EKG Sol to Burton Parsons, the legal relationships created thereby are different. The license agreement granted a mere license “to manufacture, promote, sell and distribute” the invention. Exhibit A 112 to Amended Complaint. The assignments, on the other hand, granted to Burton Parsons a proprietary interest in the patents and registered trademark. See Positype Corporation of America v. Mahin, 32 F.2d 202, 204 (2d Cir.), cert. denied, 280 U.S. 575, 50 S.Ct. 30, 74 L.Ed. 626 (1929).

The assignments recited separate considerations and were executed more than three years after the license agreement. The parties could have executed the assignments and license agreement contemporaneously. An assignment before the issuance of the patent is not invalid. Hendrie v. Sayles, 98 U.S. (8 Otto) 546, 549, 25 L.Ed. 176 (1878); Kenyon v. Automatic Instrument Company, 160 F.2d 878, 882 (6th Cir.1947); Lamar v. Granger, 99 F.Supp. 17, 36 (W.D.Pa.1951).

In addition, circumstances between the parties changed after execution of the license agreement. Under the license agreement, the parties intended that plaintiff prosecute the pending United States patent application. Exhibit A II to Amended Complaint. The patents then would be granted in his name. Id. at 2 ¶ 3, 3 15. Several events occurred, however, that necessitated prosecution of the patent by Burton Parsons. Motion of Alcon at 5. Thereafter, upon notice that the patent would be granted, plaintiff assigned the patent to Burton Parsons. The patent was issued directly to the company as assignee. Id.

Plaintiff also reserved the right under the license agreement to inspect Burton Parsons’s facilities as required by the holder of a registered trademark. By acquiring the trademark, Burton Parsons relieved plaintiff of the obligation to ensure the quality of the goods sold under the mark as of the effective date of the assignment. Motion of Alcon at 6.

The Court may not overlook these events in interpreting the relationship of the documents. The Court finds that the license agreement and assignments constituted separate legal transactions and that the assignments were absolute. A right to revoke the assignments did not arise from the nonpayment of royalties. Plaintiffs cause of action is limited to breach of contract. Hartshorn v. Day, 60 U.S. (19 How.) 211, 222, 15 L.Ed. 605 (1856).

The Court, therefore, grants defendant Alcon’s motion for partial summary judgment and denies the cross-motion of plaintiff. The Court filed an order to this effect on February 6, 1985.

      . The parties stipulated that the Amended Complaint would not be served on defendant Manfu-so until after the Court’s decision on the cross-motions for partial summary judgment. Stipulation (filed Jan. 2, 1985).

      . Burton, Parsons & Company, Inc., a parent corporation of Burton Parsons Chemicals, Inc., was merged into defendant Alcon after August 1979. Answer of defendant Alcon ¶ 2.

      . The United States patent was not issued until March 27, 1962. The assignment is dated July 17, 1961, a few days after the Patent and Trademark Office gave notice that the patent would be granted. Motion of Alcon at 5, n. 4.

      . The Canadian patent was assigned on September 7, 1961, and issued in November 1961. Id. at 5.

      . The trademark was registered on June 2, 1959, and assigned to Burton Parsons on June 16, 1961.

      . The United States patent on EKG Sol had been transferred to Hewlett Packard Company in 1975 for $110,000 in settlement of litigation between that company and Burton Parsons over the Canadian patent. Plaintiffs Statement of Material Facts ¶ 5; Motion of Alcon at 9 n. 5.

      . Plaintiff requested summary judgment on Count I and spoke only to the alleged breaches concerning the Canadian sales royalties and the 7.025 percent deduction. The Court recognizes only these claims for purposes of this action.

      . A grant of the exclusive right to make, use, and sell an invention during the term of the patent is an assignment rather than a license as a matter of law, unless the parties evidence a contrary intent. Kronner v. United States, 110 F.Supp. 730, 734-35, 126 Ct.CI. 156 (1953); Eterpen Financiera Sociedad de Responsabilidad Limitada v. United States, 108 F.Supp. 100, 104, 124 Ct.Cl. 20 (1952), cert. denied, 346 U.S. 813, 74 S.Ct. 22, 98 L.Ed. 340 (1953).
      In the instant case, the license agreement grants to Burton Parsons all of plaintiffs rights to the invention. The agreement, however, evidences the parties’ intent not to assign the patent. Twice the agreement refers to the patent being granted subsequently to plaintiff. Exhibit A at 2, 3 to Amended Complaint. In addition, plaintiff retained the right to inspect the company’s facilities to ensure the quality of the invention. Id. ¶ 9.


source: Caselaw Access Project

author: BLOCH, District Judge.

license: Public Domain

text:
    Theodore F. STAATS and Professional Financial Planners, Inc., Plaintiffs, v. The OHIO NATIONAL LIFE INSURANCE COMPANY, a corporation, Defendant.
    Civ. A. No. 84-2556.
    United States District Court, W.D. Pennsylvania.
    March 12, 1985.

      Herbert Bennett Conner and Ray F. Middleman, Pittsburgh, Pa., for plaintiffs.
    Thomas R. Wright, Pittsburgh, Pa., for defendant.
   MEMORANDUM OPINION

BLOCH, District Judge.

Plaintiffs bring this action to recover damages emanating from plaintiff Staats’ termination as a general agent of The Ohio National Life Insurance Company (hereinafter referred to as “Ohio National”). The complaint sets forth six theories of liability: Count 1, tortious wrongful discharge; Count 2, violation of constitutional rights; Count 3, breach of agency and/or franchise contractual relationship; Count 4, breach of implied contract; Count 5, tortious conversion of trade secrets; and Count 6, interference with contractual relationships. Defendant moved to dismiss the amended complaint pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, under Fed.R.Civ.P. 56. In addition, the defendant moved to dismiss any claim for punitive damages as to Counts 3 and 4; to order a more definite statement as to Counts 5 and 6 pursuant to Fed.R.Civ.P. 12(e); and to strike scandalous or impertinent material contained in paragraph 12 of the amended complaint pursuant to Fed.R.Civ.P. 12(f). This Court will grant defendant’s motion to dismiss Counts 1 and 2: all other motions will be denied.

Insofar as defendant moves for dismissal for failure to state a cause of action, the allegations of the complaint must be accepted as true. Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); Paolino v. Channel Home Centers, 668 F.2d 721, 722 (3d Cir.1981). It is well settled that, in deciding such a motion to dismiss, the Court should construe the allegations in the complaint liberally in favor of the pleader. Scheuer v. Rhodes, 416 U.S. at 236, 94 S.Ct. at 1686. The complaint should not be dismissed “unless it appears beyond a reasonable doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id. at 236, 94 S.Ct. at 1686, quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).

I. Counts 1 and 2

Counts 1 and 2 are based upon assertions in paragraphs 11 through 14 of the complaint that the defendant advised plaintiff Staats that he was being terminated because he had been accompanied to the Ohio National “Council of Honor Convention” by a woman who was not his wife. Plaintiff Staats specifically complains in paragraph 12 that before his notice of termination, the defendant “via the conduct of many of its top officers and employees fostered an atmosphere of permissiveness, allowing its general agents, officers, life agents, and employees to engage in open extramarital relationships with impunity.” Plaintiff Staats also asserts in paragraph 15 of Count 1 that defendant’s true reason for terminating his employment relationship was the defendant’s desire “to obtain employees of the Plaintiff who were recruited and trained by Plaintiff and encouraged by Plaintiff to engage in a business relationship with Defendant, Ohio National.”

Plaintiff Staats bases his claim of wrongful discharge on Geary v. United States Steel Corp., 456 Pa. 171, 319 A.2d 174 (1974), and Novosel v. Nationwide Insurance Company, 721 F.2d 894 (3d Cir.1983). Condensed to a paragraph, plaintiff Staats’ argument is as follows:

In the instant case, Plaintiff was terminated because he was accompanied by a woman who was not his wife, but was presented as his wife, and because he had developed his business to the point that he out-earned even the highest paid officers of Ohio National. As in Novo-sel, the individual’s rights of expression and free association are being squashed.

(Docket entry No. 14). As the Third Circuit stated in Novosel, wrongful discharge actions arise “where the employment termination abridges a significant and recognized public policy.” 721 F.2d at 898 (emphasis added). The Third Circuit adopted the definition of a “ ‘clearly mandated public policy’ as one that ‘strikes at the heart of a citizen’s social right, duties and responsibilities.’ ” Id. at 899, quoting Palmateer v. International Harvester Co., 85 Ill.2d 124, 52 Ill.Dec. 13, 421 N.E.2d 876 (1981). Though freedom of association is an important social right, and one that ordinarily should not dictate employment decisions, this Court finds that the right to “associate with” a non-spouse at an employer’s convention without fear of termination is hardly the kind of threat to “some recognized facet of public policy” that the Pennsylvania Supreme Court envisioned in Geary or the Third Circuit contemplated in Novosel. In alleging that plaintiff Staats’ extramarital relationship was a mere pretense for his discharge, plaintiff Staats claims that he was arbitrarily fired for becoming “too successful.” This does not fall within the ambit of a claim based on wrongful discharge or a constitutional right, either.

Defendant has also moved to strike paragraph 12 which is contained in Count 1 of the amended complaint. Although Count 1 will be dismissed, the allegations contained in paragraphs 1 through 19 of Count 1 are incorporated in the other counts of the complaint; therefore, the motion to strike is not moot. Paragraph 12 contains the following allegations:

At the time of Plaintiff’s attempted termination and for a long time prior thereto, Ohio National had no written policy wherein it was indicated that its agents, employees, franchisees, or others with whom it had a business relationship were forbidden from having extramarital relationships and that any such relationships would result in termination of any business relationship with Ohio National. In fact at material times before September, 1984, Ohio National via the conduct of many of its top officers and employees fostered an atmosphere of permissiveness, allowing its general agents, officers, life agents, and employees to engage in open extramarital relationships with impunity so long as the agent, employee, or officer discharged his business responsibilities in a competent fashion.

The allegations contained in paragraph 12 could be pertinent with respect to other counts. Since no person is specifically named in paragraph 12 as conducting an extramarital affair, the material contained in that paragraph is not so scandalous that it must be stricken.

II. Counts 3 and 4

In Count 3, plaintiff Staats asserts that “his agency and/or franchise relationship with Defendant created a contractual relationship in which Defendant was caused to substantially change his position by investing funds in his general agency,” which gave rise to the “reasonable expectation” that the relationship “could be terminated only for good cause.” In Count 4, plaintiff Staats asserts that the defendant’s policies, procedures, statements, and course of conduct “gave rise to an implied contractual right of indefinite employment, absent good cause for a termination.” The defendant responds that the written contract between the parties provides for termination by either party “without specifying a reason” upon thirty days written notice. Defendant supports its position with the affidavit of Robert J. Lindenber-ger, Vice President and Director of Agencies of the defendant, to which a copy of the contract and four letters are attached as exhibits.

The complaint itself makes no reference whatsoever to the existence of a written contract between the parties. Assuming that all facts alleged in Counts 3 and 4 are true and that no written contract exists, plaintiff Staats can conceivably prove a set of facts in support of those counts which would entitle him to relief. Although the defendant moved, in the alternative, for summary judgment pursuant to Fed.R. Civ.P. 56, the Court cannot treat a motion to dismiss as one for summary judgment without providing the plaintiffs with a “reasonable opportunity to present all material made pertinent to such a motion by Rule 56.” Fed.R.Civ.P. 12(b). Since discovery closes in this case on April 12, 1985, the Court declines to convert this motion to dismiss to one for summary judgment at this time, finding that it would be more efficient to proceed in accordance with the pretrial schedule for the filing of summary judgment motions. Thus, the plaintiffs will also have had the opportunity for “ample discovery into the personnel procedures” of the employer, which the Third Circuit encouraged in Wolk v. Saks Fifth Avenue, 728 F.2d 221, 224 (3d Cir.1984), prior to a decision on the merits. Likewise, the Court will deny defendant’s motion to strike the claim for punitive damages on Counts 3 and 4 based on the face of the complaint, though this matter may be raised again in the motion for summary judgment.

III. Counts 5 and 6

In Count 5, the plaintiffs assert that the defendant confiscated confidential customer lists compiled by plaintiff Staats on behalf of Professional Financial Planners, Inc. (hereinafter referred to as “PFP, Inc.”). In Count 6, plaintiffs assert that the defendant interfered with their contractual relationships with agents of PFP, Inc. Assuming the allegations are true, these counts state a cause of action.

With respect to defendant's motion for a more definite statement as to these counts, the Court finds that these counts meet the notice pleading requirement of the Federal Rules of Civil Procedure, and the defendant may use discovery to ascertain additional facts with respect to these counts.

An appropriate Order will be issued.


author: LIMBAUGH, District Judge.

text:
    SUN REFINING AND MARKETING COMPANY, a Pennsylvania Corp., Plaintiff, v. GOLDSTEIN OIL COMPANY, and Novelly Oil Company, Missouri Corporations, General Partners of Apex Oil Company, a Missouri General Partnership, Defendants.
    No. 82-600A(5).
    United States District Court, E.D. Missouri, E.D.
    April 16, 1985.

      Christopher F. Jones, St. Louis, Mo., for plaintiff.
    Richard H. Ulrich, Lee G. Kline, David L. Baylard, St. Louis, Mo., for defendants.
   MEMORANDUM

LIMBAUGH, District Judge.

This case is before the Court for a decision on the merits following a three-day bench trial. Plaintiff has asserted three claims against defendants, one for demur-rage charges, one for freight charges, and the last for breach of contract for a short payment on a sale of toluene. The first two claims are maritime claims brought pursuant to this Court’s admiralty jurisdiction. 28 U.S.C. § 1333. The last claim is brought under the Court’s diversity jurisdiction. 28 U.S.C. § 1332. After consideration of the testimony adduced at trial, the exhibits introduced into evidence, the briefs of the parties and the applicable law, the Court hereby makes the following findings of fact and conclusions of law, as required by Rule 52 of the Federal Rules of Civil Procedure.

Plaintiff, Sun Refining and Marketing Company (SRMC), is a Pennsylvania corporation with its principal place of business in the State of Pennsylvania. SRMC is the successor corporation to Sun Oil Company of Pennsylvania (SOCP), formerly a Pennsylvania corporation with its principal place of business in the State of Pennsylvania. At all relevant times, Sun Petroleum Products company (SPPC) was a division of SOCP.

Defendants Goldstein Oil Company and Novelly Oil Company are Missouri Corporations with their principal place of business in the State of Missouri. Goldstein Oil and Novelly Oil are general partners of the Apex Oil Company (Apex), a Missouri general partnership with its principal place of business in the State of Missouri.

$75,095.95 Demurrage Claim

On December 12,1980, Apex entered into an oral agreement to purchase approximately 200,000 barrels of 2.8 sulphur Number 6 fuel oil at $29.95 per barrel from SPPC. The broker that negotiated the purchase between SPPC and Apex was Triad Petroleum Company (Triad). The custom of the petroleum industry in general and between SPPC and Apex, in particular, was to confirm oral contracts to purchase and to sell petroleum products by having the purchaser and the seller send telexes to the broker. The broker would then relay the purchaser’s telex to the seller and the seller’s telex to the purchaser.

As for the delivery of the cargo, SPPC’s telex to defendant stated: “DELIVERY: To buyer’s designated terminal USNH Base Norfolk on vessel New Jersey Sun ETA 12/15/80. Second port permitted with all costs for buyer’s account”. The telex the broker sent to SPPC on behalf of Apex stated: “DELIVERY: Delivered USNH Basis Norfolk during the period December 15, 1980.” Both telexes provided that the laytime, the free time that a vessel is detained for loading or unloading, would be thirty-six hours plus six hours after Notice of Readiness (NOR).

The demurrage clause in SPPC’s telex to Apex stated in pertinent part: “DEMUR-RAGE: The amount of demurrage paid to vessel owner shall be: at worldscale rate of particular size/type vessel for spot charter and if time charter at AFRA rate ... ”. The demurrage clause in Apex’s telex to SPPC stated: “DEMURRAGE: In accord with the fixing rate of the vessel.” The evidence at trial showed that Sun Transport, Inc. was at all relevant times the owner of the vessel S.S. New Jersey Sun.

The New Jersey Sun arrived in the harbor at Norfolk, Virginia, on December 15, 1980, at 9:38 p.m. The vessel anchored in the harbor at that time and awaited Apex’s discharge orders. Phillip Liles, the tanker scheduler for Apex Oil at the time, notified Henry Reid, chief negotiator for Apex in the sale, that the New Jersey Sun had arrived in Norfolk harbor on the fifteenth. Joe DiMauro, an employee of Triad, stated that the contract between SPPC and Apex reflected Apex’s ability to receive the cargo on December 15, 1980. Henry Reid admitted that he knew the area in which the New Jersey Sun would be on December 15, was the Norfolk area since he knew the barge left its port in Puerto Rico on December 12, 1980.

On December 17, Apex then ordered the ship to go to Savannah, Georgia, to discharge the crude at three berths. The vessel left Norfolk at 11:55 p.m. on the seventeenth and arrived in Savannah at 9:30 a.m. on December 19. The master of the vessel tendered a formal NOR to Koch Fuels in Savannah on December 19, 1980. The NOR was received at 6:30 p.m. The vessel had discharged the cargo contracted for by 11:20 a.m. on December 21.

The total amount of time the New Jersey Sun spent in Norfolk was fifty hours and twenty-two minutes. The time spent in Savannah, less the time spent at anchor and shifting to the first berth, was forty-two hours and twenty-five minutes. The total time spent in Norfolk and Savannah amounted to ninety-two hours and forty-seven minutes. Upon subtracting the allowance for laytime, plaintiff seeks to recover fifty-six hours and forty-seven minutes or 2.365972 days for demurrage.

Apex received plaintiffs invoice with the attached laytime statement and port log sometime in February, 1981. Apex has refused to pay the amount of the demur-rage charges plaintiff claims was incurred, specifically $75,095.95. Consequently, plaintiff brought this action against Apex.

Plaintiffs claim is made within the admiralty jurisdiction of this Court. 28 U.S.C. § 1333; Compagnia Di Navigazione Mauritius Rome v. Kulukundis, 182 F.Supp. 258 (E.D.N.Y.1959).

When a party charters a vessel, it is allowed a certain amount of time to unload the vessel. The time allowed is referred to as laytime. After the laytime has expired, the vessel owner is entitled to receive de-murrage charges. The purpose of demur-rage is to make compensation for delay or detention of a vessel. Cia. Blanca Ltda. v. S.S. Nictric, 247 F.Supp. 161 (D.Or.1965), aff'd. Schnitzer Steel Products Co. v. Amtro Corp., 368 F.2d 575 (9th Cir.1966).

Defendant asserts that plaintiff has no standing to assert the demurrage claim against Apex. The demurrage clause contained in plaintiffs telex stated that any demurrage charges shall be paid to the vessel owner. The demurrage clause in defendant’s telex was not as clear, but still left the inference the charges, if any, were to be paid to the vessel owner. Demurrage charges are normally paid to the owner of the vessel since “time is always of direct and vital financial significance to the owner [of the vessel].” G. Gilmore and C. Black, The Law of Admiralty, 2d ed., § 4-8 at 210 (1975). There is no evidence to show plaintiff was ever the owner of the vessel.

However, plaintiff can still be deemed the real party in interest if it can show that Sun Transport, Inc., the admitted owner of the vessel involved, had either assigned or subrogated its demurrage claim to plaintiffs predecessor. Both sub-rogation and assignment are cognizable in admiralty. American Commercial Lines, Inc. v. Valley Line Co., 529 F.2d 921, 925 (8th Cir.1976). The evidence adduced at trial showed that plaintiff, SRMC, had received a demurrage calculation from Sun International, Inc., in the amount which SPPC then charged Apex. However, SRMC has not shown that the demurrage charges were either paid by it, or assigned to it. Plaintiff also did not show that the parties had agreed that the demurrage charges, if any, were to be paid by the buyer to the seller. Therefore, since plaintiff has not proven the loss it alleges that it incurred, judgment will be entered for defendant on the demurrage claim.

$8,325.04 Claim

Plaintiff’s second claim against defendants is an account stated claim for freight charges. Plaintiff’s claim arises from an agreement where the vessel the Toledo Sun would transport approximately 35,000 barrels of gasoline from plaintiffs terminal in Newark, New Jersey, to Apex’s designated place of discharge in New York Harbor at B & P Tremley Point in Linden, New Jersey.

Prior to August 9, 1980, SPPC and Apex entered into an oral agreement. The agreement stated that Apex agreed to pay SPPC freight charges at the rate of $.23 per barrel in exchange for SPPC transporting the 35,000 barrels of gasoline on the Toledo Sun for defendant. SPPC sent written confirmation of the agreement to Apex on August 9, 1980.

On the ninth of August, SPPC transported 36,195.81 barrels of Apex’s regular gasoline via the barge, The Toledo Sun, from Sun’s terminal in Newark to Apex’s designated place of discharge berth at B & P Tremley Point.

As summarized in the Toledo Sun’s deck abstract, the freight incurred for Apex’s account equalled $8,325.04. (36,195.81 barrels unloaded at discharge X $.23 per barrel equals $8,325.04). Apex received SPPC’s invoice, plus copies of the deck abstract and the original confirmation around September 9, 1980. Apex has refused to pay any part of the invoice SPPC sent them.

This case is brought pursuant to this Court’s admiralty jurisdiction 28 U.S.C. § 1333; Hapag-Lloyd, A.G. v. Levine, 473 F.Supp. 991 (N.D.Ill.1979).

A shipper who agrees to pay a carrier freight for transporting the shipper’s goods to a designated place of delivery is liable to the carrier for the stipulated freight when the goods have been delivered. Hapag-Lloyd, A.G. v. Levine, supra, at 992-93. To recover freight from the shipper, the carrier need only show the evidence of the agreement and performance of the agreement. According to the foregoing findings of fact, defendant is obligated to pay the $8,325.04 freight charge owed to plaintiff. Judgment will be entered for plaintiff on Count IV of its second amended complaint.

$40,487.68 Claim

The last of plaintiff’s claims concerns the purchase of the petroleum product toluene. On July 22, 1981, SPPC and Apex entered into an oral agreement negotiated by Jim Amaroso of SPPC and John Samsel of Apex. According to the terms of the agreement, SPPC was to sell to Apex approximately 20,000 barrels of toluene at $1.28 per gallon. Delivery was to be FOB plaintiff’s Marcus Hook Refinery. Neither Samsel or Amaroso mentioned how the inspection or measurement of the loaded toluene was to be performed while negotiating the agreement.

On July 23, 1981, John Samsel sent Jim Amaroso Apex’s product purchase agreement to confirm the sale. Apex’s confirmation provided for independent inspection of shore tank readings at loading, but was silent on how the loaded quantity was to be measured if shore tank readings at loading were unavailable or were inaccurate. On July 31, 1981, Jim Amaroso returned Apex’s confirmation unsigned with SPPC’s confirmation of sale form. SPPC’s confirmation did not address the question of how the toluene was to be measured.

If the independent inspection or shore tank readings were unavailable at the time of loading, trade usage allowed for the loaded quantity to be based on independent inspection of barge readings at loading. If the inspection of the barge readings were not available, then the inspector could use whatever other measurements at loading that he deemed most reliable to determine the quantity to toluene delivered at loading. There was no trade usage calling for the loaded quantity to be based on shore tank readings at discharge in the absence of shore tank readings at loading. In any event, Jim Amaroso, Acting on SPPC’s behalf, did not agree to accept payment from Apex based upon the shore tank readings at loading.

On August 29, 1981, SPPC delivered 937,336 gallons of toluene into Apex’s barge, the Ocean Trader. An independent inspection company, Charles Martin, certified the amount delivered to Apex in its final inspection report as 937,336 gallons. The certification was based on measurements of the Ocean Trader at loading. The inspection company was hired by both SPPC and Apex to certify the quantity delivered to Apex. The inspector did not take shore tank measurements at loading because the shore tanks in which the toluene was stored could not be measured as accurately as the receiving barge.

The inspector’s initial loaded quantity figure was 956,893 gallons. The inspector later mathematically adjusted the final loaded quantity figure to 937,336 gallons, using the Sagbolt experience factor for the Ocean Trader.

SPPC then sent Apex the invoice for the delivery of toluene around September 4, 1981. On October 15, 1981, Apex short-paid the product portion of the September 4th invoice by $40,487.68. The October 15th payment was SPPC’s first notice of any objection by Apex to the loaded quantity figure of 937,336 gallons.

Maritime obligations in contracts for the sale of goods may be enforced in admiralty. Klosters Rederi Aktieselskab v. Amtorg Trading Corp., 7 F.Supp. 727 (S.D.N.Y.1934). However, maritime provisions must be separable and capable of litigation without reference to the balance of the sales contract. Tropwood, A.G. v. Tae Chang Wood Industry Co., 454 F.Supp. 964,966 (N.D.Ill.1978). The claim before the Court is based in part on maritime usage, but the trade usage issue cannot be litigated without reference to the balance of the sales contract. Therefore, plaintiff's claim arises within the diversity jurisdiction of this Court. 28 U.S.C. § 1332.

The Uniform Commercial Code (UCC) which governs contracts for the sale of goods, may be relied on by a federal court analyzing an admiralty contract. Sun Oil Co. v. Mercedes Maria, 1983 A.M.C. 718, 723 (E.D.Pa.1983).

Under § 400.2-207, R.S.Mo. (1983 Supp.), the terms of the SPPC confirmation became a part of the agreement between SPPC and Apex. Section 400.2-207 provides that any additional terms in a written confirmation become a part of the contract unless: (a) the offer expressly limits acceptance to the terms of the offer; (b) they materially alter it; (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. None of the three exceptions occurred in the matter now before the Court.

The sales contract between SPPC and Apex consisted of the quantity, price and delivery terms to which SPPC and Apex agreed to on July 22, 1981. Additionally, the contract also contained the nonconflict-ing terms of the Apex written confirmation and the SPPC written confirmation. § 400.2-207, R.S.Mo. (1983 Supp.).

Another term in the contract was provided by trade usage which required the buyer to pay for the loaded quantity of toluene based upon an independent inspection of barge measurements at loading if independent inspection of shore tank measurements at loading was not feasible. § 400.2-202(a), R.S.Mo. (1983 Supp.). Therefore, by having established that it delivered 937,336 gallons of toluene to Apex at loading in accordance with their agreement and that Apex did not pay for 31,631 gallons of the to~uene delivered, SRMC is entitled to judgment in its favor on Count IX of its second amended complaint in the amount of $40,487.68.


author: HILLMAN, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. The ESTATE OF William G. COLE, Defendant.
    No. G83-1181 CA6.
    United States District Court, W.D. Michigan, S.D.
    May 14, 1985.

      Dudley Pearce, Office of the Gen. Counsel, Veteran’s Admin., Washington, D.C., Julie Ann Woods, Asst. U.S. Atty., Grand Rapids, Mich., for plaintiff.
    James Booth Burr, Jr., Grand Rapids, Mich., for defendant.
   OPINION RE CROSS MOTIONS FOR SUMMARY JUDGMENT

HILLMAN, District Judge.

Plaintiff, the United States of America, brings this action against the estate of William G. Cole for the refund of allegedly wrongfully-paid veteran’s disability benefits during a period from April 28, 1977, until February 28, 1981. Richard Cole, the brother of William Cole and conservator of his estate, denies that the Veterans Administration is entitled to any refund and has counterclaimed for disability benefits for the period from March 1, 1981, to May 14, 1981.

William G. Cole is one hundred percent disabled and incapacitated due to a military service related disability. He was hospitalized at Kalamazoo State Hospital from April 28, 1977, until May 14, 1981. This is the only time period with respect to which the payment of veteran’s disability benefits is in dispute. Since May 14, 1981, it is undisputed that the expense of William Cole’s care has been assumed by the Veterans Administration. Regarding the disputed period, the Government claims that benefits should not have been paid from April 28,1977, until February 28, 1981, and that the Government is entitled to a refund of $42,635.00 wrongfully paid during that period. On the other hand, the conservator, Richard Cole, claims that William Cole’s estate was entitled to those benefits and that their termination during the period from March 1, 1981, until May 14, 1981, the latter being the date when the Veterans Administration assumed the expenses of William Cole’s care, was wrongful. On that basis the conservator claims that the Veterans Administration owes the estate of William Cole $2,932.50.

The Government relies on 38 U.S.C. § 3203(b)(1) and (2) in support of its position that William Cole was not entitled to veteran’s disability benefits during the period he was hospitalized at Kalamazoo State Hospital. 38 U.S.C. § 3203(b)(1) and (2) provide in pertinent part:

“(b)(1)(A) In any case in which a veteran having neither spouse nor child is being furnished hospital treatment or institutional or domiciliary care without charge or otherwise by the United States, or any political subdivision thereof, is rated by the Veterans’ Administration in accordance with regulations as being incompetent by reason of mental illness, and the veteran’s estate (excluding the value of the veteran’s home unless there is no reasonable likelihood that the veteran will again reside in such home, from any source equals or exceeds $1,500, further payments of pension, compensation, or emergency officers’ retirement pay shall not be made until the estate is reduced, to $500. (B) The amount which would be payable but for this paragraph shall be paid to the veteran in a lump sum; however, no payment of a lump sum herein authorized shall be made to the veteran until after the expiration of six months following a finding of competency and in the event of the veteran’s death before payment of such lump sum no part thereof shall be payable.
(2) ... Paragraph (1) of this subsection shall not prevent the payment, out of any remaining amounts discontinued under that paragraph, on account of any veteran of so much of the veteran’s pension, compensation, or retirement pay as equals the amount charged to the veteran for the veteran’s current care and maintenance in the institution in which treatment or care is furnished the veteran, but not more than the amount determined by the Administrator to be the proper charge as fixed by any applicable statute or valid administrative regulation.”

There is no dispute of fact that William Cole meets the criteria of 38 U.S.C. § 3203(b)(1) for the period in question. He has neither spouse nor child, was receiving care at a state hospital, was incompetent by reason of mental illness and his estate exceeded $1,500.00. However, defendant claims that the Government is not entitled to any refund on two grounds. First, the conservator argues that the Government’s claim is barred by the statute of limitations. Second, the conservator contends that because Kalamazoo State Hospital charged the estate of William Cole for his hospitalization, the Veterans Administration remained obligated to pay monthly disability benefits to his estate.

Defendant cites 28 U.S.C. § 2415 as the applicable statute of limitations. Section 2415(b) provides a six-year statute of limitations for actions to recover alleged overpayments of money under Government grant programs. See United States v. Roberts Nursing Home, Inc., 710 F.2d 1275 (7th Cir.1983). The alleged over-payments to the veteran’s estate began on April 28, 1977, and this action was commenced on October 12, 1983, approximately six months beyond the six-year period. However, 28 U.S.C. § 2416(c) provides that the statute of limitations will be tolled during any period when facts material to the right of action are not known by the official of the United States charged with responsibility to act in the circumstances.

According to an affidavit submitted by Gordon H. Clowney, Director of the Veterans Administration Regional Office in Detroit, Michigan, that office first received notice of William G. Cole’s hospitalization on March 2, 1981. Clowney’s affidavit further states that this was the first opportunity for a Veterans Administration official charged with the responsibility of taking suspend-pay action to determine that because of 38 U.S.C. § 3202(b)(1), payments of disability compensation on behalf of William Cole for that period should not have been made, and to have taken appropriate action. Defendant has not controverted these sworn allegations regarding the Government’s knowledge of material facts. Therefore, the statute of limitations was tolled until March 2, 1981, pursuant to 28 U.S.C. § 2416(c). Accordingly, this action, filed on October 12, 1983, was well within the six-year period provided in 28 U.S.C. § 2415(b).

Further, the fact that the Veterans Administration failed to take timely action to terminate William Cole’s benefits did not preclude overpayment nor obviate the indebtedness that resulted from the overpayment.

“ ‘The Government by appropriate action can recover funds which its agents have wrongfully, erroneously, or illegally paid.’ United States v. Wurts, 303 U.S. 414, 415 [58 S.Ct. 637, 638, 82 L.Ed. 932] (1938). It is well established that parties receiving monies from the Government under mistake of fact or law are liable ... to refund them, and that no specific statutory authorization upon which to base a claimed right of set-off or an affirmative action for recovery of these monies is necessary.”

Disilvestro v. United States, 405 F.2d 150, 155 (2d Cir.1968), and citations contained therein.

The conservator also argues, however, that the veteran’s estate is not indebted to the Veterans Administration because the care and maintenance of William Cole at Kalamazoo State Hospital was not “without charge.” It is undisputed that the State of Michigan billed the veteran’s estate approximately $68,000 for the cost of his care during the relevant time period and his conservator has already paid approximately $38,000 of that debt. The conservator argues that 38 U.S.C. § 3203(b) was not intended to prevent payment of Veterans Administration benefits for a patient who is lawfully obligated to pay for his care in a state hospital.

Immediately prior to the enactment of Pub.L. No. 86-146 (pertinent portions of which are presently found in 38 U.S.C. § 3203(b)), the $1,500.00 limitation applied only to incompetent veterans in Veterans Administration Hospitals. Pub.L. No. 86-146 enlarged the scope of the law to include veterans in other tax supported institutions. S.Rep. No. 344, 86th Cong., 1st Sess., reprinted in 1959 U.S.Cong. & Adm. News, page 2048, et seq. The parties agree that the basic purpose of Pub.L. No. 86-146 was to establish ■ advance controls to prevent the accumulation of excessive amounts in the estates of incompetent veterans without dependents, institutionalized at taxpayer expense, so as to reduce the gratuitous Veterans Administration funds available to be inherited by collateral or remote heirs. U.S.Cong. & Adm.News, supra. However, the conservator argues that since William Cole’s estate was charged for his care and maintenance during the period he was hospitalized at Kalamazoo State Hospital, no excessive accumulation of funds accrued to his estate. Although defendant’s argument admittedly has some logical appeal, 38 U.S.C. § 3203 is not in fact interpreted or applied in the manner defendant argues.

First, I note that 38 U.S.C. § 3203(b)(1), by its own terms, is not limited in application to only those situations where the disabled veteran receives care “without charge.” The statutory language mandates application of the provision to a situation where the veteran is receiving care at a facility of the United States, or one of its political subdivisions, whether that care is administered “without charge or otherwise ” (emphasis added).

Second, subsection (2) of 38 U.S.C. § 3203(b) specifically provides that subsection (1) “shall not prevent payments” out of any amount discontinued under subsection (1) equivalent to the amount charged by the tax supported institution in which the veteran is receiving care. It is the position of the Government that Congress was fully aware that many state institutions “charge for the maintenance of the veteran” (1959 U.S.Code Cong. & Adm.News at 2050) and provided discretionary authority for the Veterans Administration to release funds to defray such expenses.

Defendant has relied heavily on a May 20, 1959, letter contained in the statute’s legislative history from Sumner G. Whittier, who was then the Administrator of the Veterans Administration, to Hon. Harry F. Byrd, who was then the Chairman of the Committee on Finance. Defendant maintains that this letter supports defendant’s interpretation of the legislative intent that benefits should not be suspended pursuant to 38 U.S.C. § 3203(b)(1) when the veteran is domiciled in a government institution which charges for his care. However, I have reviewed the letter and find it consistent with the language of 38 U.S.C. § 3203(b)(1) and (2), as that language has been consistently interpreted and applied by the United States Government. Specifically, the letter discusses the permissive payment to charging institutions out of benefits which would otherwise be discontinued. The provision for this permissive payment is made in 38 U.S.C. § 3203(b)(2). It is apparent from the statutory language that Congress did not intend to preclude the use of Veterans Administration funds to pay for lawful charges for the care of incompetent veterans in non-Veterans Administration institutions. However, the language of 38 U.S.C. § 3203(b)(2) is clearly permissive and not mandatory.

Section 13.71(b) of Title 38, Code of Federal Regulations provides, in effect, that where payments are discontinued because of the provision of 38 U.S.C. § 3203(b)(1), the Veterans Services Officers (VSO) “may certify the amount to be released ... to pay the cost of the veteran’s current care and maintenance.” Section 13.74 of 38 C.F.R. contains the guidelines that the VSO are to follow in such cases to determine the amount, if any, to be paid out of the appropriate funds. By the terms of that regulation, if the veteran’s estate is $2,500 or more, the hospital care and maintenance charges may be paid out of personal funds of the patient if available; otherwise, the institution must look to the veteran’s estate for payment. 38 C.F.R. § 13.74(b) and (c). The VSO may deviate from this criteria only to prevent hardship. 38 C.F.R. § 13.-74(d).

In the instant case, since the veteran’s estate exceeded $2,500 at the time the Veterans Administration should have stopped payments under the provisions of 38 U.S.C. § 3203(b)(1), 38 C.F.R. § 13.74 would have prevented the Veterans Administration from making a care and maintenance award to the hospital. There is no indication of hardship justifying deviation under section 13.74(d).

When the language “shall not prevent” of 38 U.S.C. § 3203(b)(2) is considered in light of the stated purpose for the $1,500 limitation, it is clear that the Administrator is given latitude in administering the care and maintenance provision of section 3203(b)(2) to assure that the prevention of the excessive accumulation of estates does not serve to deprive incompetent veterans of the institutional care they need. Plaintiff’s exhibit number 1 (the affidavit of Norman C. Paulson, Assistant General Counsel with the Veterans Administration) supports the Government’s contention that the Veterans Administration has interpreted and applied subsection (2) as discretionary since the passage of Pub.L. No. 86-146. Courts accord great weight to such agency interpretations. Miller v. Youakim, 440 U.S. 125, 144, 99 S.Ct. 957, 968, 59 L.Ed.2d 194 (1979). Defendant does not argue that the regulations were incorrectly applied in this case, e.g., that the veteran’s estate did not exceed $2,500, nor that there was hardship present.

In contrast, Congress set by statute, section 3203(b)(1), the amount of the estate limitation which will, if exceeded, result in the cutoff of benefits to an incompetent veteran, without spouse or child, institutionalized in a tax-supported facility. Subsection (1) is couched in mandatory terms and defendant cites to no authority to the contrary. I also note that subsection (1), designed to prevent excessive estate accumulation, also assures that there is not permanent loss of benefits to such veteran should he become competent and remain so for at least six months. In such a case, the veteran is entitled to a lump sum payment of all funds withheld because of the $1,500 provision. 38 U.S.C. § 3203(b)(1).

There is no dispute of fact that the terms of 38 U.S.C. § 3203(b)(1) were met during the relevant time period. Defendant’s only defense to the Government’s claim that it is entitled to a refund of funds paid to William Cole during the period from April 28, 1977, until March 1, 1981, is the legal argument that the provision is inapplicable when the veteran is charged for his care at a state institution. However, as discussed, that situation is specifically addressed in 38 U.S.C. § 3203(b)(2) and regulations promulgated under that subsection. There is no dispute of fact that the veteran’s estate was liable for the state hospital charges under applicable regulations. Accordingly, I find that the Government is entitled to a refund of the $42,635.00 wrongfully or mistakenly paid to the estate of William Cole during the relevant time period. Therefore, for the reasons stated in this opinion, the Government’s motion for summary judgment is granted, and defendant’s motion for summary judgment is denied. Each party shall bear its own costs.

      . The Government claims that as of August, 1982, William Cole’s estate was $94,359, which claim the conservator has not disputed.


author: VANARTSDALEN, District Judge.

text:
    Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor v. METROPOLITAN DISTRICT COUNCIL OF CARPENTERS, UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, AFL-CIO.
    Civ. A. No. 84-5348.
    United States District Court, E.D. Pennsylvania.
    May 16, 1985.
    Edward T. Ellis, Asst. U.S. Atty., Philadelphia, Pa., for plaintiff.
    William J. Einhorn, Philadelphia, Pa., for defendant.
   MEMORANDUM OPINION AND ORDER

VANARTSDALEN, District Judge.

The Secretary of Labor (Secretary) filed suit against defendant Metropolitan District Council of Carpenters, United Brotherhood of Carpenters and Joiners of America, AFL-CIO, alleging violations of section 401(c) and 401(g) of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 481(c), (g). Before the court are the Secretary’s motion for summary judgment and motion for a preliminary injunction. The motions will be denied.

Briefly stated, the facts giving rise to the Secretary’s suit are as follows. In a mail ballot election that concluded on June 7, 1984, Edward Coryell was elected president of the Metropolitan District Council. Cor-yell, who ran as the incumbent, has been president of the Metropolitan District Council since 1981. John C. McCloskey, recording secretary of Local 1856, announced in or about October 1983 that he would run for the office of president against Coryell. A third candidate, William McGugan, also sought that office. Coryell was elected president by a slim margin over McCloskey.

On January 27, 1984, about four months before the election, business agent Michael Dooley, organizer Harrison Langley and the Metropolitan District Council’s attorney, with the aid of West Conshohocken Police Chief Joseph Claybourne, confiscated a mailing list from Archibald Allan Associates, a printing company. The mailing list contained the names and addresses of most of the Metropolitan District Council’s nine thousand members. The confiscated list was evidently a 1981 copy of the Metropolitan District Council’s official membership list, with certain updated information. McCloskey asserts that he obtained the list from a now deceased union member and that it was delivered to Archibald Allan Associates solely in order to have mailing labels printed for his campaign literature.

The officers of the Metropolitan District Council somehow found out about the list and physically retrieved it from the printer with the help of the local police chief. McCloskey filed a civil lawsuit against the individuals involved in confiscating the list, seeking its retrieval, but the Honorable Marvin Katz of this court denied McCloskey’s motion for a temporary restraining order and preliminary injunction. McCloskey v. Dooley, No. 84-504 (E.D.Pa. February 13, 1984).

It is undisputed that sometime in February 1984, about a week or two after the above incident, McCloskey sought to have campaign literature mailed out to union members through established union procedures. It is disputed when and how many times he made such request or requests. McCloskey represents that he made two requests, one on February 8, 1984 and the other on February 16, 1984. Defendant claims that a single request was received on February 20, 1984. In either event, McCloskey’s February request was denied by Coryell. In a letter dated February 21, 1984, Coryell explained that the reason for denying McCloskey’s request was a rule adopted by the Metropolitan District Council at its February 16, 1984 meeting. According to defendant, the rule that was adopted was promulgated pursuant to section 32(c) of the District Council’s Bylaws. The rule provided:

Any announced candidate (upon proper request) will be eligible for authorized mailing labels for mailing literature after April 15, 1984. There will be no limit on the number of mailing labels allowed for candidates.

At the February 16, 1984 District Council delegates meeting, internal union charges that had been filed against McCloskey by Coryell and others were read for the first time, in accordance with the Constitution of the United Brotherhood of Carpenters and Joiners of America (UBCJA). Moreover, union member Dooley reported on his activities in conjunction with the civil suit then proceeding before Judge Katz. Such discussion became a part of the detailed minutes prepared by the Secretary/Treasurer that were sent out to the local unions. The charges against McCloskey were read for the second time at the March 15, 1984 District Council delegate’s meeting. At that meeting, George Walish, a member of the General Executive Board of the UBCJA, addressed the delegates. A portion of his address was devoted to a “recent communication from a candidate for office that was distributed by mail to most of the Members of the Metropolitan District Council.” A page of the March 15, 1984 minutes contained a summary of Walish’s responses to the allegations lodged against the officers of the current District Council in that “communication.” The “communication” involved was unquestionably one of McCloskey’s campaign letters.

In accordance with the Constitution of the UBCJA, following the two readings of the charges against McCIoskey, his case was taken to the trial committee. Two days of hearings were held on March 22 and 29, 1984, before trial committee members Giardinelli, Boyle, Preston and Wheeler, who were selected at random from the standing trial committee. The charges considered by the trial committee were:

Gen. Const. See. 55, Para. A(l): Brother McCIoskey caused dissension among the members of the United Brotherhood by his misappropriation and misuse of District Council property.
Gen. Const. Section 55, Para. A(7): Brother McCIoskey furnished to Archibald Allen [sic] Associates, Inc. an unauthorized person, without the consent of the District Council and its affilitated [sic] Local Unions, a list of the membership of the District Council.
General Constitution Sec. 55, Para. A(8): By distributing a membership list to Archibald Allan Associates, Inc., Brother McCIoskey divulged the business of the District Council without its consent. General Constitution Sec. 55, Para. A(13): By the act described above and the specifications appearing below, Brother McCIoskey has violated the obligation.

The trial committee voted 3 to 1 to recommend to the District Council that McCIoskey be found guilty of all four charges. The three members who voted guilty voted 2 to 1 to recommend a six-month suspension on each charge, the periods to runs consecutively. The recommendation went to the District Council on April 19, 1984. The council voted 18 to 12 in favor of suspension. The Secretary contends McCIoskey was not given, in accordance with the union’s Constitution, a chance to address the council before the vote was taken. McCIoskey was allowed to plead his case after the vote was taken.

McCIoskey was allowed to and did participate in the June 7, 1984 election because the union’s Constitution provides that suspension from membership does not become effective during the time for filing or the pendency of an appeal. McCIoskey ran for president and lost a close election. He filed an appeal by letter dated June 12, 1984. The International Appeals Committee issued a one-page decision dismissing McCloskey’s appeal on January 30, 1985.

In his motion for a preliminary injunction, the Secretary seeks an order preventing the Metropolitan District Council from suspending McCIoskey. The Secretary also seeks summary judgment on his claims under section 401(e) and (g) of the LMRDA, 29 U.S.C. § 481(c), (g) and seeks to have this court order a new election to be conducted pursuant to 29 U.S.C. § 482(c).

Motion for Summary Judgment

The summary judgment standard is well known: “[t]he judgment shall be rendered forthwith if ... there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). The moving party, the Secretary in this case, has the burden of showing that there are no genuine issues of material fact that would preclude entry of judgment in his favor as a matter of law. See Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir.1981). With regard to issues of fact, all reasonable inferences from the evidentiary material of record must be drawn in favor of the party opposing the motion for summary judgment. Small v. Seldows Stationery, 617 F.2d 992, 994 (3d Cir.1980). Conflicts of credibility must not be resolved by the court unless the opponent’s evidence is “too incredible to be believed by reasonable minds.” Losch v. Borough of Parkesburg, 736 F.2d 903, 909 (3d Cir.1984). A response to a properly-supported summary judgment motion may not rest on allegations in the pleadings, but must present significant probative evidence in the form of affidavits, depositions or answers to interrogatories sufficient to create a genuine issue of material fact. Fed.R.Civ.P. 56(e); Sunshine Books Ltd. v. Temple University, 697 F.2d 90, 96 (3d Cir.1982).

Section 401(c) of the LMRDA provides in pertinent part that labor unions have a duty “to comply with all reasonable requests of any candidate to distribute by mail or otherwise at the candidate’s expense campaign literature in aid of such person’s candidacy to all members in good standing of such labor organization and to refrain from discrimination in favor of or against any candidate with respect to the use of lists of members_” 29 U.S.C. § 481(c). Section 401(g) provides:

No moneys received by any labor organization by way of dues, assessment, or similar levy, and no moneys of an employer shall be contributed or applied to promote the candidacy of any person in an election subject to the provisions of this subchapter. Such moneys of a labor organization may be utilized for notices, factual statements of issues not involving candidates, and other expenses necessary for the holding of an election.

29 U.S.C. § 481(g).

The Secretary, in his motion for summary judgment, asserts that defendant violated the quoted sections of the LMRDA as a matter of law by its conduct. The court heard oral argument on the motion following the presentation of evidence on the motion for preliminary injunction. The motion for summary judgment must be denied.

The Secretary concedes that there is an issue of fact regarding McCloskey’s alleged February 8, 1984 request to the Metropolitan District Council to mail his campaign literature. Nevertheless, the Secretary asserts that the February 16, 1984 request, considered alone, establishes a violation of section 401(c). I cannot agree.

Section 401(c) provides that “reasonable requests” must be complied with by the union. Historically, determinations of reasonableness are for the trier of fact based upon all the evidence. I cannot, therefore, determine as a matter of law, based upon “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits” that there is no genuine issue of fact as to the reasonableness of McCloskey’s request. It may very well be that presentation of all the evidence will reveal that the request was reasonable; however, the court cannot determine it at this time as a matter of law. Moreover, the court also cannot determine, without considering all the evidence, whether the District Council violated section 401(g) (use of union money to promote the candidacy of Coryell) by its use of the minutes of the District Council delegate’s meetings.

Motion for Preliminary Injunction

In determining whether to grant preliminary injunctive relief, courts focus on four criteria: (1) the probability of irreparable injury to the moving party in the absence of relief; (2) the possibility of harm to the nonmoving party if relief is granted; (3) the likelihood of success on the merits; and (4) the public interest. United States v. Price, 688 F.2d 204, 211 (3d Cir.1982). It is quite apparent that the Secretary’s motion for preliminary injunction is tied in with the motion for summary judgment on the section 401(c) and (g) claims. If the Secretary were to prevail on those claims and this court order a new election, as things currently stand, McClos-key’s two-year suspension would prevent him from participating in the election, either as a candidate or as a union member.

It should also be apparent that the decision to deny the Secretary’s motion for summary judgment substantially reduces the probability of irreparable harm to the moving party, who in this ease is the Secretary, not Mr. McCloskey. Because I have denied the motion for summary judgment, the probability of irreparable harm to the Secretary in the absence of relief does not warrant granting preliminary relief. The Secretary’s interest in Mr. McCloskey’s suspension is directly related to whether the June 7, 1984 election will be set aside and a new election ordered. As I have not yet determined if that will be done, there is no harm to the Secretary in allowing Mr. McCloskey’s suspension to stand at this time.

If I had granted summary judgment on the section 401(c) and (g) claims, the probability of irreparable harm to the Secretary would be substantially increased. In that case, preparations for an election would be proceeding but Mr. McCloskey’s suspension would prevent a competitive election from taking place. McCloskey’s suspension is only relevant to the Secretary if a new election is ordered. Because a new election has not been ordered, McCloskey is not being prevented from doing anything that would result in irreparable harm to the Secretary.

The Secretary suggests that Mr. McClos-key’s present suspension, if continued until such time as a new election is ordered, will place him at a great disadvantage even if the court directs that he may be a candidate and fully participate in union activities and in the reelection campaign. Although this is a reasonable position, the Secretary agrees that the better procedure would be to have a final early determination on the merits on the issue of whether a new election should be ordered, and, if so, whether the “suspension” of Mr. McCloskey should be vacated or relief be provided whereby Mr. McCloskey may be an effective and viable candidate.

The court recognizes the urgency of this matter to the parties and as both sides represented during the preliminary injunction hearing that little or no discovery was needed, this case will be listed for disposition on the merits for June 11, 1985. In the meantime, the parties are to go forward with whatever discovery they need.

      . Because the Secretary’s motion for summary judgment is denied, I have not addressed, at this time, the very serious jurisdictional issue of the Secretary’s standing to assert a cause of action under Section 401(c). I note that section 401(c) provides that labor unions are under a duty. “enforceable at the suit of any bona fide candidate for office in such labor organization in the district court of the United States in which such labor organization maintains its principal office,” to comply with reasonable requests of candidates, (emphasis added).


author: EGINTON, District Judge.

text:
    Brian G. LEWIS, Plaintiff, v. AWARD DODGE, INC., Chrysler Credit Corporation, and Chrysler Corporation, Defendants.
    Civ. No. N-83-456 (WWE).
    United States District Court, D. Connecticut.
    May 30, 1985.

      William Clendenen, New Haven, Conn., for plaintiff.
    David Reif, J. Michael Sulzbach, Winer & Sulzbach, New Haven, Conn., for Chrysler Credit Corp.
    James N. Olayos, Thomas C. Thornberry, Bridgeport, Conn., for Award Dodge Inc.
   RULING ON CROSS MOTIONS FOR SUMMARY JUDGMENT

EGINTON, District Judge.

This action arises in connection with the interpretation of the Consumer Credit Protection Act, 15 U.S.C. § 1601 et seq. (1976) (amended 1980), Federal Reserve Board Regulation Z, 12 C.F.R. Part 226 (1981) and the Connecticut Truth-in-Lending Act, Conn.Gen.Stat. § 36-393 et seq. (1969) (amended 1983).

In his motion for partial summary judgment against CHRYSLER CREDIT CORPORATION, plaintiff alleges violation of the truth in lending laws in connection with an installment sales contract signed by plaintiff with defendant AWARD DODGE, INC. on November 30, 1982. This contract was subsequently assigned to defendant CHRYSLER CREDIT CORPORATION. The contract involved the purchase by plaintiff of a 1982 Dodge Colt which was registered in the State of Connecticut. CHRYSLER CREDIT CORPORATION was listed on the certificate of title as a lien holder. Plaintiff was charged one dollar ($1.00) to list CHRYSLER CREDIT CORPORATION as a lien holder on the certificate of title. Defendant CHRYSLER CREDIT CORPORATION filed a cross motion for summary judgment asserting that it is entitled to judgment as a matter of law.

The issue before the Court is whether CHRYSLER CREDIT CORPORATION complied with the truth in lending provisions by disclosing the one dollar lien under the section entitled “Itemization of the Amount Financed” on the retail installment contract. Plaintiff maintains that the one dollar lien fee should also have been disclosed in the space marked “Filing Fees $_” Review of the applicable authorities establishes that both disclosures were necessary to comply with the truth in lending laws.

Revised Regulation Z, 12 C.F.R. Part 226 (1981), promulgated by the Federal Reserve Board, governs this issue as the Connecticut Truth-In-Lending Act specifically requires compliance with these federal standards pursuant to Conn.Gen.Stat. Section 36-393b.

The content of truth in lending disclosures is governed by Revised Regulation Z, Section 226.18 (1981) which requires the creditor to disclose certain information. One required disclosure is an itemization of the amount financed. Section 226.18(c)(1) requires “[a] separate written itemization of the amount financed, including: ... (iii) [a]ny amounts paid to other persons by the creditor on the consumer’s behalf. The creditor shall identify those persons.” Defendant CHRYSLER CREDIT CORPORATION satisfied this requirement by disclosing the one dollar filing fee under the section of the retail installment contract entitled “Itemization of the Amount Financed” on line 4(b)(ii).

Plaintiff alleges that defendant was also required to disclose this information separately pursuant to Section 226.18(o) as a security interest charge. This section requires disclosing “[t]he disclosures required by § 226.4(e) in order to exclude from the finance charge certain fees prescribed by law_”

Section 226.4(e) of Regulation Z provides that: “[i]f itemized and disclosed, the following charges may be excluded from the finance charge: (1) [t]axes and fees prescribed by law that actually are ... paid to public officials for ... perfecting a security interest.” According to the Official Staff Interpretations, examples of charges ex-cludable from the finance charge under section 226.4(e)(1) include: “[ejharges for filing or recording security agree-ments_” 12 C.F.R. Part 226, Supp. 1 at 684 (1985). It is also noted that “[tjhe various charges described in § 226.4(e)(1) may be totaled and disclosed as an aggregate sum, or they may be itemized by the specific fees and taxes imposed. If an aggregate sum is disclosed, a general term such as security interest fees or ‘filing fees’ may be used.” 12 C.F.R. Part 226, Supp. 1 at 684 (1985).

Plaintiff paid a one dollar fee to list CHRYSLER CREDIT CORPORATION’S security interest upon the certificate of title in conformity with Conn.Gen.Stat. Section 14-192(a)(2). This listing was necessary to perfect CHRYSLER CREDIT CORPORATION’S security interest pursuant to Conn.Gen.Stat. Section 14-185(a). Thus, Revised Regulation Z, 12 C.F.R. Section 226.4(e)(1) is applicable here via Section 226.18(o) making a “filing fees” disclosure necessary.

The Official Staff Interpretations of Section 226.18(o) address the format of this disclosure:

No special format is required for these disclosures; under § 226.4(e), taxes and fees paid to government officials with respect to a security interest may be aggregated, or may be broken down by individual charge. For example, the disclosure could be labeled ‘filing fees and taxes’ and all funds disbursed for such purposes may be aggregated in a single disclosure. This disclosure may appear, at the creditor’s option, apart from the other required disclosures.

12 C.F.R. Part 226, Supp. 1 at 731 (1985).

Defendant CHRYSLER CREDIT CORPORATION alleges that disclosure of the one dollar fee under the section entitled “Itemization of the Amount Financed” satisfies both Section 226.18(c)(1) and Section 226.18(o) disclosure requirements. Defendant relies on Section 226.17 which states the general disclosure requirements:

(a) Form of disclosures. (1) The creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep. The disclosure shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related (footnote omitted) to the disclosures required under § 226.18.//

12 C.F.R. § 226.17(a)(1) (1981).

Defendant contends that it has set forth the fee separately in the computation of the “Amount Financed.” Memorandum of Defendant CHRYSLER CREDIT CORPORATION In Opposition to Plaintiff’s Motion for Summary Judgment at 2. This argument fails since Regulation Z, Section 226.17(a)(1), further states that “[tjhe itemization of the amount financed under § 226.18(c)(1) must be separate from the other disclosures under that section.” Since the fee also had to be disclosed separately from the “Amount Financed” disclosure pursuant to Section 226.18(o), defendant cannot argue that this one disclosure satisfies both requirements.

This rationale similarly defeats defendant's contention that “the inclusion of the ‘Filing Fee’ space in the ‘federal block’ is mere surplusage, as the same information is properly integrated elsewhere.” Memorandum in Opposition at 3. Revised Regulation Z requires two disclosures regarding the filing fee pursuant to sections 226.17(a)(1), 226.18(c)(1) and 226.18(o). Therefore, these disclosures may not be integrated. Defendant’s reliance on Gambardella v. G. Fox & Co., 716 F.2d 104 (2d Cir.1983) is misplaced since the court held that the imperfections in format at issue there did not constitute a violation of the law. Id. at 118. Here we are dealing with a failure to make a required disclosure which violates Section 226.18(o) of Revised Regulation Z.

Defendant also maintains that Gambardella, supra, established that “a deviation from the strict terms of Regulation Z is not actionable, unless the error is likely to result in confusing the debtor.” Memorandum in Opposition at 4. However, since that case dealt with inaccurate disclosures rather than failure to make a required disclosure, its holding is inapplicable to this case.

Defendant also argues that the policy of the truth in lending laws and regulations will not be furthered by finding a violation for failure to properly disclose the one dollar filing fee. However, this Court is bound to enforce the requirements of Regulation Z: “as we so plainly recognized in Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980), absent some obvious repugnance to the statute, the Board’s regulation implementing this legislation should be accepted by the courts, as should the Board’s interpretation of its own regulation.” Anderson Bros. Ford v. Valencia, 452 U.S. 205, 219, 101 S.Ct. 2266, 2273, 68 L.Ed.2d 783 (1980). It is not obviously repugnant to the statute to require that the filing fee be disclosed separately from its itemization in the “Amount Financed” disclosure. Furthermore, the Board’s intent to have such double disclosures is illustrated by its model forms, H-1 (Credit Sale Model Form) and H-3 (Amount Financed Itemization Model Form). 12 C.F.R. Part 226, App. H at 642, 644 (1985).

Finally, defendant charges that liability cannot rest on such a hypertechnical violation. However, this Court strictly construes the subject laws and regulations. Luczak v. General Motors Acceptance Corp., 494 F.Supp. 210, 215 (W.D.N.Y.1980); Grey v. European Health Spas, Inc., 428 F.Supp. 841, 847 (D.Conn.1977). Based on the finding of a violation, summary judgment for the plaintiff is appropriate. Accordingly, plaintiff’s motion for summary judgment is GRANTED and defendant’s' motion for summary judgment is DENIED.

So ordered.

       The following disclosures may be made together or separately from other required disclosures: ... certain security interest charges under § 226.18(o).