author: McLAUGHLIN, District Judge.

text:
    The PEOPLE OF the STATE OF NEW YORK, v. Tom BELL (Charged as Thomas Campanella), Defendant-Petitioner.
    No. 85 CR 472.
    United States District Court, E.D. New York.
    Sept. 9, 1985.

      Tom Bell, pro se.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

Petitioner is charged in New York State’s Suffolk County District Court, First District, with escape, resisting arrest, and numerous traffic violations. People v. Thomas Campanella, Index No. 85/3561. He has filed a petition to remove that criminal action to this Court. 28 U.S.C. §§ 1443, 1446. The Court has reviewed the petition and the supporting papers. For the reasons developed below, the action is remanded.

Facts

Petitioner’s papers reveal that since the date of his arrest he has deluged the Suffolk County District Court with pleadings and memoranda in which he asserts numerous constitutional rights. The gist of these state-court claims is that he is a sovereign over whom the state lacks jurisdiction, that the state lacks the power to regulate his use of an automobile, and that he was unlawfully arrested. After several appearances before the state court, petitioner was arraigned on April 24, 1985. The Court entered pleas of not guilty in petitioner’s behalf to the misdemeanor charges of escape and resisting arrest. No trial has been held.

Petitioner asserts numerous grounds for removal. He alleges, inter alia, that he was unlawfully arrested without a warrant, beaten so that he would give information and submit to fingerprinting, denied assistance of counsel, denied food and water for 30 of the 52 days he was imprisoned prior to his arraignment, and denied a suppression hearing. According to petitioner, these constitutional violations entitle him to a trial in federal court.

Discussion

The right to remove a case from state to federal court is entirely a creature of statute. People of the State of New York v. Muka, 440 F.Supp. 33, 35 (N.D.N. Y.1977). The statutes governing removal of this criminal action are 28 U.S.C. §§ 1443 and 1446.

Section 1446(c)(1) provides that:

A petition for removal of a criminal prosecution shall be filed not later than thirty days after the arraignment in the State court, or at any time before trial, whichever is earlier, except that for good cause shown the United States district court may enter an order granting the petitioner leave to file the petition at a later time.

Petitioner was arraigned on April 24, 1985. He filed the removal petition on August 9, 1985, well beyond the statutory 30-day maximum. At no time did petitioner request an extension of time to file the petition; and no good cause for granting an extension appears in the papers. Because the petition is untimely, the case must be remanded to state court. See People of the State of New York v. Muka, supra, 440 F.Supp. at 35.

Notwithstanding the procedural defect in the petition, it must also be rejected on the merits. 28 U.S.C. § 1443(1), the only removal statute remotely related to this action, permits removal from the state court of a criminal action brought “[ajgainst any person who is denied or cannot enforce in the courts of such State a right under any law providing for the equal civil rights of citizens of the United States____” That statute has been construed to apply solely to a defendant’s inability to enforce, in a state court, civil rights specifically stated in terms of race. See Georgia v. Rachel, 384 U.S. 780, 792, 86 S.Ct. 1783, 1790, 16 L.Ed.2d 925 (1966); cf. People of the State of New York v. Galamison, 342 F.2d 255, 269 (2d Cir.) (§ 1443 “applies only to. rights that are granted in terms of equality and not to the whole gamut of constitutional rights”), cert. denied, 380 U.S. 977, 85 S.Ct. 1342, 14 L.Ed.2d 272 (1965).

Petitioner’s papers do not implicate any specific civil rights protecting racial equality. Indeed, nowhere does petitioner claim that any of the constitutional transgressions committed by the state court relate to his race.

Assuming the truth of all of petitioner’s allegations, the action must be remanded to the state court. Petitioner’s claims may all be presented to, and passed upon by, the trial and appellate courts of New York State. Additionally, the claims may be raised at the proper time before a federal court by way of a petition for a writ of habeas corpus. See People of the State of New York v. Muka, supra, 440 F.Supp. at 36; People of the State of New York v. Jenkins, 422 F.Supp. 412, 414-15 (S.D.N.Y.1976).

For the foregoing reasons, this criminal action is hereby remanded to the State of New York.

SO ORDERED.


source: Caselaw Access Project

author: CLARKSON S. FISHER, Chief Judge.

license: Public Domain

text:
    B.F. HIRSCH, INC., Plaintiff, v. ENRIGHT REFINING COMPANY, Defendant.
    Civ. A. No. 81-1064.
    United States District Court, D. New Jersey.
    Sept. 9, 1985.

      Hannoch, Weisman, Stern, Besser, Berko witz & Kinney by Lawrence T. Neher, Roseland, N.J., Schulte Roth & Zabel by Robert M. Abrahams, Aegis J. Frumento, New York City, for plaintiff.
    McCarter & English by John L. McGoldrick, John F. Brenner, Newark, N.J., for defendant.
   OPINION

CLARKSON S. FISHER, Chief Judge.

On November 17, 1983, this court entered judgment in favor of plaintiff, B.F. Hirsch, based on the court’s findings that defendant, Enright Refining Co., Inc., had breached its contract with plaintiff when it charged a retainage fee, that Enright committed fraud by intentionally misleading plaintiff and deliberately concealing its retainage fee, and that Enright’s conduct violated section 1962(c) of the Racketeer Influence and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968 (1983). B.F. Hirsch, Inc. v. Enright Refining Co., Inc., 577 F.Supp. 339 (D.N.J.1983). This court determined the appropriate measure of damages for Enright’s breach of contract and awarded plaintiff treble damages and attorney’s fees as allowed by the RICO statute. 18 U.S.C. § 1964(c).

On appeal of this court’s order, the Court of Appeals for the Third Circuit affirmed this court’s judgment to the extent that it was based on the breach of contract and fraud' claims and found no error in the calculation of damages. B.F. Hirsch v. Enright Refining Co., Inc., 751 F.2d 628 (3d Cir.1984). The Third Circuit did, however, vacate that portion of the judgment which was based on the RICO statute, 18 U.S.C. § 1962(c), and remanded the case to this court with directions “to consider whether the evidence establishes a section 1962(c) violation and whether the plaintiff has established the elements necessary to present a civil cause of action for a violation of section 1962(a).” B.F. Hirsch, 751 F.2d at 634.

The underlying facts of this case are amply discussed in this court’s earlier opinion as well as in the opinion of the Third Circuit Court of Appeals and need not be repeated here. Initially, I determined that Enright’s actions violated section 1962(c) of RICO which reads

[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt.

18 U.S.C. 1962(c). This determination was premised on the conclusion “that it is within the proper statutory construction [of section 1962(c)] to treat a defendant as both an ‘enterprise’ and a ‘person,’ the terms being not mutually exclusive.” B.F. Hirsch, 577 F.Supp. at 347. In this case, the “person” charged with liability, En-right, is the same entity as the entity fulfilling the “enterprise” requirement. On this point the Third Circuit has instructed that the language of section 1962(c) “contemplates that the ‘person’ must be associated with a separate ‘enterprise’ before there can be RICO liability on the part of the ‘person’ ”. B.F. Hirsch, 751 F.2d at 633 (emphasis added). Consequently, the Third Circuit vacated the RICO portion of this court’s judgment. Alas, “all that glitters is not gold.” Shakespeare, Merchant of Venice, Act II, sc. vii.

Pursuant to the opinion and judgment of the Third Circuit, it is now incumbent upon this court to determine whether Enright, by its conduct, violated section 1962(a). Title 18 U.S.C. § 1962(a) states, in pertinent part that

[i]t shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal within the meaning of section 2, title 18, United States Code, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.

18 U.S.C. § 1962(a). Enright argues that B.F. Hirsch is precluded from recovering under section 1962(a) by its failure to plead and prove a case against an entity other than Enright Refining Company, Inc. En-right asserts that “[s]ection 1962(a), like 1962(c), requires the existence of two entities: a ‘person’ who has received income through participation as a principal in a pattern of racketeering activity, and an ‘enterprise’ which the ‘person’ acquires an interest in, establishes, or operates with the illegally obtained income.” Defendant’s Brief on Remand at 9. Recent authority on this issue, however, indicates otherwise.

In Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384, 402 (7th Cir.1984), aff'd, — U.S.-, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985), the Seventh Circuit held that “[s]ubsection (a) [of § 1962] does not contain any of the language in subsection (c) which suggests that the liable person and the enterprise must be different. Under subsection (a), therefore, the liable person may be a corporation using the proceeds of a pattern of racketeering activity in its operations.” This interpretation is consistent with both the language of the statute cited and the intent of Congress in enacting RICO. See Rusello v. United States, 464 U.S. 16, 26-28, 104 S.Ct. 296,---, 78 L.Ed.2d 17 (1983); United States v. Turkette, 452 U.S. 576, 591, 101 S.Ct. 2524, 2532, 69 L.Ed.2d 246 (1981). In Sedima, S.P.R.L. v. Inrex Co. Inc., — U.S.-, 105 S.Ct. 3275, 3286, 87 L.Ed.2d 346 (1985), the Supreme Court concluded that

RICO is to be read broadly. This is the lesson not only of Congress’ self-consciously expansive language and overall approach, but also of its express admonition that RICO is to “be liberally construed to effectuate its remedial purposes.” The statute’s “remedial purposes” are nowhere more evident than in the provision of a private right of action for those injured by racketeering activity-

(citations omitted). This application of sections 1962(a) and (c) is also consistent with the principle that a corporation should not be held liable if it is merely the victim or prize of a fraud perpetrated by an employee, but that the corporation should be liable if it has itself been the perpetrator or beneficiary of the fraud. Thus, under section 1962(a), a corporation can be held liable when it is actually the perpetrator or beneficiary, direct or indirect, of the pattern of racketeering activity.

In the instant case, plaintiffs initial complaint alleged violations of section 1962(a) as well as 1962(c). The RICO portion of the judgment entered against En-right, however, was based solely on section 1962(c). This court specifically declined to consider plaintiffs allegations in relation to section 1962(a). B.F. Hirsch, 577 F.Supp. at 346. Having reviewed the evidence adduced at trial, this court now concludes that plaintiff has sufficiently pled and proved a cause of action against Enright pursuant to section 1962(a). Specifically, the court finds that Enright is a “person,” that it received income from a “pattern of racketeering activity,” and that it used or invested the ill-gotten income in the operation of an “enterprise” engaged in interstate commerce, namely, itself.

Enright satisfies the definitional requirements of both the “person” and “enterprise” entities referred to in section 1962(a). 18 U.S.C. §§ 1961(3) and (4). It is undisputed that Enright engaged in, and its activities affected, interstate commerce. The court finds that Enright engaged in and received income, directly or indirectly, from a “pattern of racketeering activity” within the meaning of RICO, 18 U.S.C. § 1961(5). This conclusion reflects the court’s earlier finding that Enright’s conduct with regard to its undisclosed retain-age constituted such a pattern. B.F. Hirsch, 577 F.Supp. at 347. Enright inevitably used or invested, directly or indirectly, all or part of the income received from a pattern of racketeering activity in the operation of its own business. Finally, the court reaffirms its earlier conclusion that plaintiff has the requisite standing to recover under section 1964(c) of RICO. That is, plaintiff has suffered a racketeering injury by reason of Enright’s violation of section 1962(a).

This court’s earlier calculation of plaintiff’s damages, $111,175.84, was reviewed and affirmed by the Third Circuit. Pursuant to RICO section 1964(c), plaintiff is entitled to three times that amount. Judgment will be entered in favor of plaintiff, B.F. Hirsch, against defendant, Enright, in the amount of $333,527.52 plus interest and costs as indicated in the earlier opinion of the court. Counsel for plaintiff shall submit an order forthwith.


author: RICHARD L. WILLIAMS, District Judge.

text:
    Dorothy J. LAND, Plaintiff, v. DEAN WITTER REYNOLDS, INC., et al., Defendants.
    Civ. A. No. 85-0720-A.
    United States District Court, E.D. Virginia, Alexandria Division.
    Sept. 10, 1985.

      Anthony J. Trenga, Sachs, Greenebaum & Tayler, Arlington, Va., for plaintiff.
    Sydney F. Rab, Statland, Nerenberg, Nassau, Buckley & Squires, Washington, D.C., for defendants.
   MEMORANDUM OPINION

RICHARD L. WILLIAMS, District Judge.

This action arises out of an investment contract entered into by Dorothy Land and Dean Witter Reynolds. Plaintiff Dorothy Land has instituted this action against defendant Dean Witter on the following counts: § 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (Count 1); § 13.1-502 of the Code of Virginia (Virginia’s Blue Sky law) (Count 2); common law fraud, breach of contract, breach of fiduciary duty, and negligence (Counts 3-6). In Count 7, Land also has apparently asserted a claim under 18 U.S.C. 1961 (1985) (hereafter RICO).

This matter comes before the Court on defendants’ motion to dismiss the federal and state securities claims as barred by the statute of limitations, or in the alternative, to compel arbitration. The investment contract contained a provision requiring the arbitration of “any controversy ... arising out of or relating to this contract or the breach thereof.”

Statute of Limitations

The defendant argues that plaintiff’s suit is barred by the statute of limitations. Although the contract was entered into on October 11, 1982, Land did not file her complaint until June 21, 1985. The applicable statute of limitations for both the § 10(b) and Virginia blue sky claims is the two year limitations period Virginia applies under its blue sky law. Newman v. Prior, 518 F.2d 97 (4th Cir.1975). The critical issue, then, is whether Land knew or should have known of the alleged fraud over two years before the complaint was filed.

On the basis of the pleadings, the Court cannot conclude that the suit is barred by the two year limitations period. The facts bearing upon when Land was “put on notice” are in controversy at this point and create an issue which needs to be resolved by the factfinder at trial. Therefore the motion to dismiss on statute of limitations grounds must be denied provisionally.

Motion to Compel Arbitration

Next, the defendants urge the Court to stay this action and to compel arbitration of plaintiff’s claims. The investment contract signed by both parties clearly states that all controversies are to be referred to arbitration. While Land argues that this clause is part of a contract of adhesion which cannot be enforced against her, the Court disagrees. The clause is not in small print and it has a clear heading of “Arbitration of Controversies.” Dean Witter did not obtain Land’s signature by fraud or duress, nor is the clause couched in obtuse legal terminology designed to hide its meaning. In keeping with the strong federal policy of enforcing arbitration agreements where possible, the Court concludes that the arbitration clause is enforceable as a matter of law. The state law claims, counts 2-6, are clearly subject to arbitration, and the Court, following Dean Witter Reynolds, Inc. v. Byrd, — U.S. -, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), orders the arbitration of these claims.

Dean Witter also urges that the Court compel the arbitration of count 1, the claim grounded upon the 1934 Securities Exchange Act. The Court holds that count 1, based upon an implied right of action in the 1934 Securities Act, is also subject to arbitration and therefore stays further action as to this count.

In Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953), the Court declined to compel the arbitration of a federal securities claim arising out of the 1933 Securities and Exchange Act. In that case the plaintiff’s cause of action was expressly created by Congress. Before the Court’s recent decision in Byrd, several circuits had read Wilko to prevent the arbitration of implied claims based on the 1934 Act. E.g., Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023 (11th Cir.1982). The Fourth Circuit has never ruled on whether federal securities claims could be arbitrated where related state claims were forced into arbitration. The Court notes that the reasoning in Belke runs contrary to concerns of judicial economy and frustrates the rather clear purpose of the arbitration clauses.

In Byrd, the Supreme Court majority intimated that the Wilko holding would not apply to claims under § 10(b) and Rule 10b-5. 105 S.Ct. 1240 at n. 1. In his concurring opinion, Justice White noted that the reasoning of Wilko could not be “mechanically transplanted” to the 1934 Act and expressed “grave doubts” about the continuing validity of lower court decisions which did so. 105 S.Ct. at 1244. Furthermore, the Supreme Court has previously cast some doubt upon the assumption that 1934 Act claims are non-arbitrable. Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974). Finally, the Court has clearly expressed the strong national policy which favors arbitration. E.g., Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). See also Raiford v. Merrill, Lynch, Pierce, Fenner & Smith, Case No. 83-685-A (N.D.Ga., May 16, 1985) (order granting motion to compel arbitration); Gregory v. Merrill Lynch, Pierce, Fenner & Smith, Case No. 84-1647 (M.D. Fla., March 9, 1985) (order granting motion to compel arbitration).

This Court concludes that federal claims based upon implied rights of action founded in the 1934 Securities and Exchange Act are arbitrable. Wilco’s solicitude for a cause of action expressly created by Congress is not necessarily appropriate here, where the Court is faced with a judicially implied cause of action that is intimately related to the arbitrable state claim. The Court cannot see where any beneficial purpose would be served by splitting related claims between the courts and the arbitrators. In light of the national policy favoring arbitration, expressed in the Federal Arbitration Act, 9 U.S.C. § 1, and the clear intent of the parties as expressed in the contract, the Court hereby compels arbitration of Count 1, the federal securities act claim.

In addition, the Court also compels arbitration of Count 7, which appears to allege, in very vague and conclusory terms, a RICO violation. After the details of this claim have been fleshed out in arbitration, this count may be referred back to this Court for resolution should the arbitrator determine that this claim is not arbitrable.


author: EDWARD WEINFELD, District Judge.

text:
    DEVELOPMENT BANK OF THE PHILIPPINES, Plaintiff, v. CHEMTEX FIBERS INC., Defendant.
    No. 85 Civ. 1146 (EW).
    United States District Court, S.D. New York.
    Sept. 11, 1985.
    Cichanowicz, Callan, Carcich & Keane New York City, for plaintiff; Michael J. Carcich Alfred F. Koller, New York City, of counsel.
    Reboul, MacMurray, Hewitt, Maynard & Kristol, New York City, for defendant; Wayne A. Cross, Susan L. Arinaga, New York City, of counsel.
   OPINION

EDWARD WEINFELD, District Judge.

Plaintiff, the Development Bank of the Philippines (“DBP”), was the guarantor of loans made by defendant Chemtex Fibers Inc. (“Chemtex”) to American Philippine Fiber Industries Inc. (“APFI”). Chemtex, an American corporation incorporated in New York, is engaged in the business of rendering technical and engineering services, including the design of plants and machinery for the manufacture of synthetic fibers. APFI, a corporation organized under the laws of the Republic of the Philippines, with its principal place of business in Manila, contracted with Chemtex in 1976 for assistance in dismantling a used synthetic fiber plant in Virginia for reassembly and operation in the Philippines. Chemtex also agreed to provide financing for the project through disbursements up to $5.1 million, receiving in exchange promissory notes from APFI guaranteed in turn by DBP. APFI defaulted on some of the notes, and payment was made by DBP as guarantor.

DBP alleges in this action that Chemtex submitted false accounts of the disbursements made by it on APFI’s behalf, and seeks to recover moneys paid to Chemtex in excess of the amounts it actually disbursed under theories of fraud and unjust enrichment. In addition, DBP alleges a civil violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), predicated upon Chemtex’s alleged fraudulent use of the mails and international telephone and telex facilities. Chemtex moves, under the arbitration clause contained in the Loan Agreement, for a stay of proceedings in this Court, and an order compelling the parties to arbitrate their differences, which DBP opposes.

At the outset, DBP claims that it, as the guarantor, was not a party to the contract, and that the arbitration clause is not applicable to it. This construction of the contract is without substance. While the agreement is in form a loan agreement between the lender, Chemtex, and the borrower, APFI, the guarantor, DBP, is a signatory and a party to the agreement. DBP in addition, along with the other parties, initialled every page, including the page containing the arbitration clause. The provision for giving notice to parties to the contract lists the guarantor, and gives DBP’s address. DBP relies for its position on the decision of our Court of Appeals in Interocean Shipping Co. v. National Shipping & Trading Corp. This reliance is misplaced. In Interocean Shipping, the Court of Appeals held that a guarantor not a signatory to a charter party was not bound by the arbitration clause in that agreement. The guarantee was embodied in a separate document, which did not incorporate the terms of the charter party. The situation in this case is entirely different; DBP is a signatory to the agreement containing the arbitration clause. The attempt by DBP, as the guarantor, to remove itself from the contract is contradicted by the document. As a party to the agreement, its claims against any other party are covered by the arbitration clause.

DBP further argues that its RICO claim is not subject to arbitration under the Federal Arbitration Act. DBP relies for this proposition upon the decision in S.A. Minercao da Trinidade-Samitri v. Utah International Inc. In Samitri, the Court analogized RICO claims to anti-trust claims, which courts have long held not to be subject to arbitration. The Court in Samitri reasoned that RICO, like the Sherman Act, involves substantial public and community interests, the safeguarding of which Congress did not intend to leave in the hands of arbitrators. For this reason, the Court held, claims under RICO do not fall within the strong preference for arbitration over litigation established by the Federal Arbitration Act.

Samitri is substantially weakened by the recent decision of the Supreme Court in Mitsubishi Motors Corp. v. Soler Chrys ler-Plymouth, Inc. In Mitsubishi, the Supreme Court rejected the rule in American Safety where the antitrust claims sought to be litigated arose in an international commercial setting. In such a context, the Court held, “concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the needs of the international commercial system for predictability in the resolution of disputes require that we enforce the parties’ agreement, even assuming that a contrary result would be forthcoming in a domestic context.” This case, like Mitsubishi, arises in the context of international commerce; the desire for certainty and predictability in international commercial transactions is as compelling here as it was for the Supreme Court in Mitsubishi; the interest of the domestic community in the enforcement of the federal anti-rackeetering statute in these circumstances is certainly no stronger than the interest in the enforcement of American antitrust principles found wanting in Mitsubishi, and is indeed arguably a great deal less strong.

The Supreme Court has in recent cases repeatedly stressed that the Federal Arbitration Act establishes a strong preference for arbitration, which is to be given presumptive effect in doubtful cases. This preference for arbitration is strengthened in the international context. In view of the recent guidance provided by the Supreme Court in Mitsubishi, and taking into account the preference for arbitration in the international commercial context established by the prior decisions, this Court is satisfied that plaintiff’s RICO claims are arbitrable under the clause contained in the loan agreement. Accordingly, proceedings in the present action are stayed pending the completion of arbitration, and the parties are hereby ordered to proceed to the arbitration of plaintiff’s claims under the loan agreement.

So ordered.

      . 18 U.S.C. § 1962 et seq.

        . The clause provides that
      Any dispute between the parties to this Agreement shall be referred to arbitration at such place as may be agreed upon, and in the event of a failure so to agree within 30 days of the date of request to arbitrate, then in New York City under the rules of the International Chamber of Commerce. The agreement on any arbitration award made hereunder shall be final.
      Loan Agreement, Exhibit A to Affidavit of Roghi Yazgi, at 19-20, para. I.

      . Id. at 20.

      . 523 F.2d 527 (2d Cir.1975), cert. denied, 423 U.S. 1054, 96 S.Ct. 785, 46 L.Ed.2d 643 (1976).

      . 576 F.Supp. 566 (S.D.N.Y.), aff’d, 745 F.2d 190 (2d Cir. 1984).

      . See American Safety Equipment v. I.P. Maguire, 391 F.2d 821 (2d Cir.1968); Hunt v. Mobil Oil Corp., 410 F.Supp. 10, 25 (S.D.N.Y.1976), aff’d, 550 F.2d 68 (2d Cir.), cert. denied, 434 U.S. 984, 98 S.Ct. 608, 54 L.Ed.2d 477 (1977); see also Cobb v. Lewis, 488 F.2d 41, 47 (5th Cir.1974); Helfenbein v. International Indus., Inc., 438 F.2d 1068, 1070 (8th Cir.), cert. denied, 404 U.S. 872, 92 S.Ct. 63, 30 L.Ed.2d 115 (1971); A. & E. Plastik Pak Co. v. Monsanto Co., 396 F.2d 710, 715-16 (9th Cir.1968).

      . 9 U.S.C. § 1, et seq.

      . — U.S.-, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

      . 105 S.Ct. at 3355. Cf. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) (effect given to forum selection clause depriving United States courts of jurisdiction in international marine towage contract).

      . See, e.g., Dean Witter Reynolds, Inc. v. Byrd, — U.S. -, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985); Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-42, 74 L.Ed.2d 765 (1983).

      . See Scherk v. Alberto-Culver Co., 417 U.S. 506, 516-17, 94 S.Ct. 2449, 2455-56, 41 L.Ed.2d 270 (1974) (securities fraud claim not arbitrable under domestic law arbitrable in international transaction).

      . At oral argument upon the motion, counsel for plaintiff suggested that Article V(2)(b) of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, embodied in 9 U.S.C. § 201, authorizes American courts to hold that RICO claims are not arbitrable as contrary to public policy. This argument misunderstands the relevant provision of the Convention. Article V(2)(b) states that “Recognition and enforcement of an arbitral award may ... be refused if the competent authority in the country where recognition and enforecement is sought finds that: ... (b) The recognition or enforcement of the award would be contrary to the public policy of that country." 21 U.S.T. at 2520. As this language makes clear, the provision does not permit domestic authorities to deny recourse to arbitration; it is directed instead to the post-arbitral stage at which an award is enforced by domestic courts. The Supreme Court has observed that "the efficacy of the arbitral process requires that substantive review at the award-enforcement stage remain minimal.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 105 S.Ct. at 3360. Whatever the permissible inquiry after conclusion of an arbitration proceeding, it is clear that the Convention does not contemplate the expression of local public policy as a barrier to the arbitrability of claims.


author: McMILLAN, District Judge.

text:
    UNITED STATES of America and Maxie G. Reedy, Special Agent, Internal Revenue Service, Petitioners, v. Graham C. McPHAUL as President of Greer-McPhaul Funeral Home, Inc. and Greer-McPhaul Funeral Home, Inc., Respondents. UNITED STATES of America and Maxie G. Reedy, Special Agent, Internal Revenue Service, Petitioners, v. John K. McGILL, Attorney with Garland Alala, P.A., and Garland Alala, P.A., Respondents.
    Civ. Misc. Nos. ST-201, 700-M.
    United States District Court, W.D. North Carolina, Statesville and Charlotte Divisions.
    Sept. 11, 1985.
    Charles R. Brewer, U.S. Atty., Asheville, N.C., Betsy E. Burke, Trial Atty., Tax Div., U.S. Dept, of Justice, Washington, D.C., for petitioners.
    John K. McGill, Garland & Alala, P.A., Gastonia, N.C., for respondents.
   ORDER

McMILLAN, District Judge.

On June 21, 1984, Internal Revenue Service (I.R.S.) summonses were served upon (1) Graham C. McPhaul, as President of Greer-McPhaul Funeral Home, Inc. and Greer-McPhaul Funeral Home, Inc. and (2) John K. McGill, attorney with Garland and Alala, P.A., and Garland and Alala, P.A., requiring them to appear before an I.R.S. agent and to produce requested business records. The summonses do not require that respondents appear to testify. These summonses are the last of a series of summonses issued against the respondents; the previous ones have been withdrawn because of defects.

On April 10, 1985, the United States and I.R.S. agent Maxie G. Reedy filed petitions to enforce the summonses. Because the two petitions involve the same legal and factual questions, they have been consolidated for consideration.

Respondents have not raised any issues of the sufficiency of the summonses or the petitioners’ statutory authority to request the information. Affidavits of Maxie Reedy show that the prerequisites to an enforceable summons, explained in United States v. Powell, 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-255, 13 L.Ed.2d 112 (1964), have been met.

The government is now conducting a joint investigation through the Civil and Criminal Investigation Divisions of the Internal Revenue Service. No referral to the Justice Department, as defined by 26 U.S.C. § 7602(c)(2), has been made.

Respondents advance four arguments to limit or defeat the summonses:

1. Respondents argue that petitioners are limited in their authority to copy documents produced in response to the summonses. Respondents claim that the I.R.S. agents may not copy all of the documents and may not copy documents which are not relevant to the investigation.

The summonses have been issued pursuant to 26 U.S.C. § 7602(a)(1) which authorizes the agent to “examine any books, papers, records, or other data which may be relevant or material to such inquiry” (emphasis added).

The I.R.S. agent has authority to photocopy any documents produced in compliance with the summonses. McGarry v. Riley, 363 F.2d 421 (1st Cir.), cert. denied, 385 U.S. 969, 87 S.Ct. 502, 17 L.Ed.2d 433 (1966). Respondents argue that although there is authority to photocopy some records, it does not extend to copying all of the records, if the agent chooses to do so. The court finds no support for this argument. The I.R.S. agent may copy any and all documents which, in the agent’s opinion, are or may be relevant. No judicial determination of relevancy is required.

Respondents have requested that the production, if ordered, take place at the office of Garland and Alala, P.A. Petitioners have no objection to this as long as they are permitted to copy the documents there. The court finds that the law office is a reasonable place for the production.

2. Respondents argue that they have a right to have counsel present both at the production of documents and at any subsequent examination of the documents.

This right to have counsel in such cases is founded, not upon any constitutional right, but upon the Administrative Procedures Act (APA), 5 U.S.C. § 551 et seq. Under 5 U.S.C. § 555(b), there is a right to have counsel present whenever a person is compelled to appear. The summonses in question require the respondents to appear and produce the documents. The provisions of the APA apply to proceedings of the I.R.S. Backer v. C.I.R., 275 F.2d 141 (5th Cir.1960). Therefore, the court concludes that respondents have a right to counsel at the production of the documents. However, the court finds no support for respondents’ contention that the right to counsel extends to subsequent examination of the documents. Such a right to counsel would require the I.R.S. agent to notify respondents and set a time and place before the agent even reviews the copied documents as part of the investigation. The APA does not extend the right to counsel so far. The court will order that counsel bé allowed to be present at the production of documents, but not at any subsequent examination of those documents.

3. Respondents contend that allowing the petitioners to copy and examine the records continually will violate their rights to have a notice of a second audit, pursuant to 26 U.S.C. § 7605(b). The joint investigation by the Civil and Criminal Investigation Divisions is still under way. There has been no referral to the Justice Department.

The Fourth Circuit Court of Appeals has recently decided in a similar situation that there was no second audit requiring additional notice to the taxpayers. United States v. Morgan, 761 F.2d 1009 (4th Cir. 1985). The court finds that Morgan controls the issue presented. Under circuit law, there has been no end to the first audit, and therefore there is no need for a second notice.

4. The most serious issue raised by respondents is that an order that they produce the documents will violate their right under the Fifth Amendment not to incriminate themselves.

The Supreme Court has held that the contents of the documents produced pursuant to an I.R.S. summons are not privileged, but the act of production itself may be privileged. United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984). This court is unable to understand why the most important element, the contents of the documents, has no Fifth Amendment privilege, but the Supreme Court has spoken clearly on this issue; and that Court, not this court, makes the law.

The act of production of the documents may be protected by the Fifth Amendment if the production is testimonial and is incriminating. Id., 465 U.S. at-, 104 S.Ct. at 1241. An example of this may occur if the government relies upon the production in compliance with the summonses in order to authenticate the documents.

The court has received no evidence on the testimonial and incriminating aspects of the production in this case. However, the petitioners have made a statutory request, pursuant to 18 U.S.C. §§ 6002, 6003, for the grant of use immunity for the act of production of the documents. The court has approved this request. The Supreme Court in Doe explained that such immunity will protect the Fifth Amendment rights of the taxpayers and still allow the I.R.S. to gain access to the unprivileged contents of the documents. However, the immunity only extends to the act of production. The Supreme Court characterized as “unfounded” the argument that the use immunity extends to the “contents of the document as well as the act of production.” Id., 465 U.S. at-, n. 17, 104 S.Ct. at 1244, n. 17. 52 U.S.L.W. at 4300, n. 17.

Because use immunity will be granted, there is no barrier from the Fifth Amendment to the production of the documents.

IT IS THEREFORE ORDERED that the petitions to enforce the summonses are GRANTED to the following extent:

1. That the documents specified in the summonses be produced for the inspection of I.R.S. agents at the offices of Garland- and Alala, P.A. located at 192 South Street, in Gastonia, North Carolina, at ten o’clock a.m. on the 7th day of October, 1985, provided that petitioners deliver to respondents at or before the inspection a copy of an order of use immunity, as required by 18 U.S.C. § 6002.

2. That counsel for respondents may be present at the production of the documents, but that presence of counsel is not required at any subsequent examination of the documents.

3. That agents for petitioners may examine and copy any of the documents produced. I.R.S. agents will determine what documents are or may be relevant. I.R.S. agents may then remove those copies from the offices of Garland and Alala, P.A.


author: RALPH G. THOMPSON, District Judge.

text:
    FEDERAL DEPOSIT INSURANCE CORPORATION, Receiver for Penn Square Bank, N.A., Plaintiff, v. HAINES PIPELINE CONSTRUCTION, INC., an Oklahoma corporation, et al., Defendant.
    No. Civ-85-1564-T.
    United States District Court, W.D. Oklahoma.
    Sept. 11, 1985.
    Robert J. Westbrook, Oklahoma City, Okla., for plaintiff.
    Michael W. Mitchell, Donald R. Liles, Woodward, Okla., Robert S. Payne, Payne & Payne, Oklahoma City, Okla., for defendant.
   ORDER

BACKGROUND

RALPH G. THOMPSON, District Judge.

In this action the FDIC, as receiver for Penn Square Bank, is suing the makers and guarantors of a note to Penn Square. The FDIC is also suing Union Bank and Trust Company, another creditor of the defendant, because Union Bank and Penn Square held competing security interests in the same collateral. The security given for the Penn Square note and also pledged to Union Bank was the proceeds from the borrower’s construction contracts with a New Mexico utilities company. Apparently, the borrower paid the contract proceeds to Union Bank in discharge of his debt there and did not satisfy his obligations to Penn Square.

Union Bank has moved for dismissal or summary judgment on grounds that the FDIC has failed to state a claim, and, alternatively, that any claim for conversion is barred by Oklahoma’s two year limitation statute.

Movant correctly notes that the FDIC has not articulated its theories of recovery against Union Bank. The complaint merely alleges that the FDIC is entitled to first priority creditor status on the contract proceeds; that Union Bank refused to turn over to the FDIC the proceeds of the debt- or’s contracts; and that “the FDIC is entitled to an order directing Union Bank to deliver to the FDIC the proceeds of a contract.” Based on these allegations, the FDIC urges a constructive trust theory as well as conversion. Union Bank maintains that there could be no constructive trust because there was no fiduciary relationship, privity or contractual basis for liability between the competing banks, although it concedes that the FDIC may have a “technically ... proper cause of action” for conversion (Union Bank’s Supplemental Brief, August 21, 1985, at 2).

Union’s statement of undisputed facts concedes that its loan was repaid in full on November 2, 1982 and that the FDIC demanded payment from Union on May 22, 1983. FDIC’s factual allegations, which this Court must view in their most favorable light and accept as true for purposes of this motion, are that Penn Square’s note and guaranties were executed prior to Union Bank’s loan and that Penn Square’s security interest in the contract proceeds was perfected through filing prior to Union Bank’s interest. We note from the record that FDIC filed the instant suit on June 14, 1985, which is more than two years after it demanded payment from Union and more than two years after it perfected its security interest.

CONVERSION

Union Bank asserts that the pertinent limitations statute is 12 O.S. § 95, Oklahoma’s two-year limitations period for conversion actions of personal property. Since the receiver knew of Union’s competing security interest for more than two years before filing suit, Union asserts that § 95 bars this action.

Very recently, the Tenth Circuit held that the six-year federal limitations statute contained in 28 U.S.C. § 2415(a) applies to collection suits brought by the FDIC as a receiver of an insolvent national bank. FDIC v. Petersen, et al., 770 F.2d 141 (10th Cir.1985). Subsection (b) of that same statute, 28 U.S.C. § 2415(b), relates to actions in tort and provides:

... every action for money damages brought by the United States or an officer or agency thereof which is founded upon a tort shall be barred unless the complaint is filed within three years after the right of action first accrues: provided, that ... an action for conversion of property of the United States may be brought within six years after the right of action accrues.

This Court has found that the FDIC as receiver for Penn Square Bank is a federal agency for tort claims purposes (Morris v. Penn Square Bank, No. CIV-84-1664-W, (W.D.Okla., May 31, 1985); accord, FDIC v. Citizens Bank and Trust Company, 592 F.2d 364 (7th Cir.1979). This Court now finds, in light of FDIC v. Petersen, that 28 U.S.C. § 2415(b) and the six year federal limitations period applies to the receiver’s action for conversion based on claims owned by an insolvent national bank. (See U.S. v. Haviland Agricultural Chemical Co., 489 F.Supp. 42 (W.D.Mich.1980)) (six-year period under § 2415(b) applied to Farmers Home Administration conversion claim against competing security holder.) Accordingly, to the extent that the receiver’s claims sound in tort for conversion, they are not time barred.

CONSTRUCTIVE TRUST

The FDIC asserts that a constructive trust should be imposed on the proceeds of the borrower’s contract that served as collateral. The FDIC bases its position on Oklahoma case law recognizing a constructive trust when it would be “inequitable” for a party to retain property acquired “by fraud or by violation of confidential or fiduciary relations or any other unconscionable manner.” Peyton v. McCaslin, 417 P.2d 316 (Okla.1966). In the receiver’s view, its earlier recorded security interest in the collateral constituted notice to Union Bank of Penn Square’s superior security interest, and therefore it would be “inequitable” for Union to retain the collateral proceeds.

While Oklahoma case law embraces a broad equitable approach to constructive trusts (Easterling v. Ferris, 651 P.2d 677, Okla.1982), the Tenth Circuit imposes a stricter requirement. In Baum v. Great Western Cities, Inc. of New Mexico, 703 F.2d 1197, 1212 (10th Cir.1983) the court stated that “constructive fraud arises only when there exists a special confidential or fiduciary relation between the parties to a transaction or contract.” The plaintiff bears a heavy burden in proving a constructive trust (Guarantee Reserve Life Insurance Co. v. Hardin, 404 F.Supp. 961, 963 (W.D.Okla., 1974)).

It is settled doctrine that “if the law affords a remedy and that remedy is adequate, the cause may not be made the basis of a suit in equity.” Sun Oil Co. v. Fleming, 469 F.2d 211 (10th Cir., 1972). Accord, Goadby v. Philadelphia Electric Co., 639 F.2d 117 (3d Cir., 1981). Absent a fiduciary relationship or a more compelling fact situation, the Court will not apply an equitable theory to this secured transaction case involving a commercial loan when the conversion remedy is available and appears to be adequate.

CONCLUSION

Union Bank’s motion to dismiss the complaint on limitations grounds is denied. Union Bank’s motion to dismiss the complaint for failure to state a claim for conversion is denied. However, Union Bank’s motion to dismiss the equitable trust theory is granted.


author: KANE, District Judge.

text:
    James Mark THORPE, Petitioner, v. Chase RIVELAND, Director, Department of Corrections of the State of Colorado; Bill Wilson, Warden, Canon City Correctional Facility, and the Attorney General for the State of Colorado, Respondents.
    Civ. A. No. 85-K-214.
    United States District Court, D. Colorado.
    Sept. 13, 1985.

      Robert T. Booms, Denver, Colo., for petitioner.
    John O. Bailey, Attorney General’s Office, Corrections Dept., Denver, Colo., for respondents.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Petitioner, James Mark Thorpe, is an inmate at Canon City Correctional Facility, Canon City, Colorado. He filed a Petition for Writ of Habeas Corpus pursuant to 28 U.S.C. Section 2254. He alleges that a guilty plea leading to one of the sentences for which he is incarcerated was not voluntarily entered and that he had ineffective assistance of counsel before the plea.

This matter was referred to a United States Magistrate who examined the petition and accompanying documents and filed a written recommended order. The recommendation was objected to because of several alleged errors. The magistrate did not read the transcripts of proceedings in the state district court. Accordingly, I ordered production of the transcripts. I have read them together with all other documents, pleadings and correspondence on file.

Thorpe was charged in Colorado state criminal case 79-CR-1567 with attempted murder, first degree assault, and a mandatory sentencing count. In a separate Colorado state case 79-CR-1671, he was charged with first degree murder, first degree kidnapping and felony murder. Both cases were brought before Judge Cisneros for disposition by plea and immediate sentencing. Since Colorado law provides that pre-sentence time in confinement cannot be credited to a life sentence, Thorpe wanted to plead, be sentenced and start the time running on his sentence. He pled guilty to first degree assault in 79-CR-1567 and guilty to first degree murder in 79-CR-1671. On the latter case, he was sentenced to life imprisonment. On the former case 79-CR-1567, he was sentenced to prison for no less than 10 years nor more than 20 years, with his sentence to run concurrently with the life imprisonment in 79-CR-1671. Other counts in the two criminal cases were dismissed. All of the foregoing was pursuant to a plea agreement between the defendant and the district attorney.

In respect to his first degree murder case (79-CR-1671), Thorpe filed a Rule 35 Motion for Post Conviction Relief. He alleged the same issues as raised here; namely, denial of effective assistance of counsel, denial of due process of law, and an allegation that his guilty plea was involuntary. He alleges that the trial court should not have denied his Rule 35(c) Motion for Post Conviction Relief since the prosecution failed to present any evidence at the state Rule 35(c) hearing.

Thorpe appealed the adverse Rule 35(e) ruling. His appeal was denied by the Colorado Court of Appeals in case 82-CA-160, decided February 10, 1983. The Supreme Court of Colorado denied certiorari in its case 83-SC-141, on June 20, 1983. The petition is properly before this court.

Thorpe does not attack his conviction of first degree assault (79-CR-1567). His application for post conviction relief is limited to the first degree murder case, 79-CR-1671. Thorpe was originally represented by T. Kenneth Laughlin in both cases. When the murder case was assigned to Judge Cisneros, however, Laughlin’s appointment was not confirmed. Instead, Judge Cisneros appointed Jonathan Olom. Laughlin continued to represent Thorpe before a different district judge in the first degree assault case. Olom, now deceased, was a highly regarded specialist in the defense of criminal cases.

Thorpe, through Laughlin, asked to plead guilty and for immediate sentencing. Olom was opposed to the plea bargain, but correctly advised Thorpe that the decision of whether to plead guilty was entirely up to him. Laughlin favored the plea bargain. At the providency hearing both Olom and Laughlin correctly advised Thorpe of his rights and the consequences of his plea. Before the hearing, however, Laughlin made many statements to Thorpe about criminal procedure and substantive law that were flat wrong.

Thorpe has never questioned the adequacy or competency of Olom. He asserts that Laughlin was incompetent. The Colorado Court of Appeals decision notes that “the record discloses the second attorney [Olom] rectified the previous errors and rendered highly competent representation to the defendant. Defendant’s contention that he was not adequately represented is not supported by the record.” The opinion further states, “defendant admits that the providency hearing was properly conducted, and the record clearly establishes that the defendant’s plea was knowingly and voluntarily entered.”

In this proceeding, I am in essentially the same position as the judges of the Colorado Court of Appeals. I note, however, that concerns of both comity and federalism provide a presumption of correctness to state court findings. Stone v. Powell, 428 U.S. 465, 494, 96 S.Ct. 3037, 3052, 49 L.Ed.2d 1067 (1976); Sumner v. Mata, 449 U.S. 539, 550, 101 S.Ct. 764, 770, 66 L.Ed.2d 722 (1982). Here, the presumption is not needed since I have viewed the transcripts and find that the state court findings are factually correct.

Voluntariness of a guilty plea is a question of fact. Hopkins v. Anderson, 507 F.2d 530, 531 (10th Cir.1975). While they are not exclusive, Thorpe has failed to raise any of the circumstances specified in Section 2254(d) in his habeas petition. Neither is there any basis for finding that the state court factual determination is not fairly supported by the record. Hunt v. The State of Oklahoma, 683 F.2d 1305, 1309 (10th Cir.1982).

After reviewing all the record certain facts remain unblemished by the petitioner’s attack. Nowhere is there any suggestion that defendant is anything other than guilty of the crimes charged. The defense of not guilty by reason of insanity was carefully considered and rejected. Mr. Olom was of the opinion that the murder case devolved upon the issue of credibility of the state’s principal witness. If, according to Olom, the jury did not believe this witness, the case against Thorpe would not be proved. Mr. Laughlin believed that the case for the prosecution was solid; that Thorpe had in fact committed the crimes and that there was a significant risk of consecutive sentences. Olom and Laughlin disagreed on the role and ethical obligations of defense counsel. Even though Laughlin gave misinformation to Thorpe before the providency hearing, he gave correct advice during the hearing.

The hearing was not a demonstration of form over substance. Judge Cisneros was thorough and penetrating in his examination of Thorpe. That Thorpe should choose one path rather than another when he has been correctly advised and ably represented is not a matter of constitutional significance.

IT IS ORDERED that the petition is denied.


author: COHN, District Judge.

text:
    Margerie SWANIGAN, Personal Representative of the Estate of Kenneth Akins; Margerie Swanigan, individually, Plaintiff, v. AMADEO ROSSI, S.A., Defendant.
    No. 85-CV-2592-DT.
    United States District Court, E.D. Michigan, S.D.
    Sept. 13, 1985.
    Samuel A. Meklir, Southfield, Mich., for plaintiff.
    R. Craig Harrison, Helm, Schumann & Miller, Detroit, Mich., Timothy Atwood, Marsh, Day & Calhoun, Bridgeport, Conn., for defendant.
   ORDER

COHN, District Judge.

For the reasons stated on the record of the hearing on September 12, 1985, and for the following reasons, defendant Amadeo Rossi’s Motion to Dismiss is DENIED, and plaintiff’s Motion to Add Defendant and Remand to State Court is DENIED.

I.

This is a products liability case principally involving claims of breach of warranties and defective design of a handgun. Plaintiff’s decedent was killed when a handgun manufactured by defendant Amadeo Rossi, S.A. accidentally discharged while he was playing. The case was initially filed in Wayne County Circuit Court with the owner of the handgun, Eddie Robinson, named as a defendant. Robinson was dismissed as a consequence of plaintiffs failing to file a proof of service. Defendant Amadeo Rossi then removed the case to this Court where it renewed its motion to dismiss for lack of jurisdiction previously denied by the Wayne County Circuit Court and affirmed by the Michigan Court of Appeals. On July 15, 1985, the Court deferred deciding the motion to dismiss to allow plaintiff an opportunity to take discovery on the jurisdictional issue and denied plaintiffs first motion to remand without prejudice. This Court may consider the motion to dismiss notwithstanding the prior state court rulings. Hiram Remington v. Central Pacific R.R. Co., 198 U.S. 95, 25 S.Ct. 577, 49 L.Ed. 959 (1904); Quinn v. Aetna Life & Casualty Co., 616 F.2d 38 (2d Cir.1980). Defendant Amadeo Rossi’s handguns are sold in Michigan. This is a sufficient basis for the asserted personal jurisdiction. Miller v. G.H. Mumm & Cie, Civ. No. 82-72046 (Memorandum and Order) (E.D.Mich. Feb. 7, 1984); Poyner v. Erma Werke GMBH, 618 F.2d 1186 (6th Cir.1980).

II.

Plaintiff has now moved to add Robinson as a party on the grounds that his presence is necessary to a determination of this case. If Robinson is added, plaintiff then moves to remand on the grounds that there will no longer be complete diversity. The only circumstance that would allow for adding Robinson under Fed.R.Civ.P. 19 would be if he were indispensable, in which event it would be necessary to remand the case to state court. See In re Merrimack v. Mutual Fire Ins. Co., 587 F.2d 642 (5th Cir.1978); Harleysville Mut. Ins. Co. v. Nationwide Mut. Ins., 605 F.Supp. 133 (W.D.Va.1985); Render by Render v. Consolidated Rail Co., 585 F.Supp. 630 (N.D. Ill.1984). Robinson is certainly neither an indispensable party or even a necessary party. The allegations of negligence against defendant Amadeo Rossi do not implicate him. A complete resolution can be reached between plaintiff and Amadeo Rossi without Robinson. At most, Robinson is a proper party.

The propriety of removal is determined at the time of removal. Holloway v. Pacific Indemnity Co., 422 F.Supp. 1036 (E.D.Mich.1976). Here at the time the action was removed Robinson had been dismissed as a party for some eleven days. Indeed it was plaintiff’s filing of an “At Issue Praecipe” in the Wayne County Circuit Court which triggered removal. To add Robinson now would destroy this Court’s jurisdiction. This would be improper. Boyd v. Diebold, Inc., 97 F.R.D. 720 (E.D.Mich.1983). Furthermore, even if plaintiff had sought to add Robinson under the permissive joinder provisions of Fed.R. Civ.P. 20, its motion would still be denied. Permissive joinder rests with the sound discretion of the court and will be denied where the apparent intent of the moving party is to destroy the court’s jurisdiction. Boyd v. Diebold, Inc., supra.


author: HAIGHT, District Judge:

text:
    Bertha DAVIDSON, Plaintiff, v. The LONG ISLAND RAIL ROAD COMPANY, et al., Defendants.
    No. 85 Civ. 5543-CSH.
    United States District Court, S.D. New York.
    Sept. 13, 1985.

      Peter M.J. Reilly, Islip, N.Y., for plaintiff.
    Thomas M. Taranto, Jamaica, N.Y. (Edward G. Lukoski, Jamaica, N.Y., of counsel), for defendants.
   MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

I conclude that this Court lacks subject matter jurisdiction over this action. Accordingly, in response to defendant’s motion, the complaint will be dismissed, without prejudice and without costs.

Plaintiff successfully prosecuted a claim against defendant pursuant to the Federal Employers’ Liability Act, 45 U.S.C. § 51 et seq. (“FELA”). The case was tried before Judge Brieant and a jury, 84 Civ. 9028 (CLB). The jury awarded plaintiff $50,000. The Clerk entered judgment. Neither party appealed. I am advised by counsel for defendant that the judgment will soon be paid. That FELA litigation is over.

Plaintiff now invokes the FELA in this new action as a jurisdictional vehicle for challenging her administrative termination by defendant after the trial. Defendant purportedly based that action on its “review of reports from your doctor and his testimony during your recent trial in a Federal Court that you cannot return to work in Train Service due to permanent disability.” Defendant’s letter to plaintiff of June 24, 1985, Ex. A to complaint.

Plaintiff alleges that she is in fact able to work; that her termination was in retaliation for her pursuit of an FELA remedy; that it forms a part of defendant’s ongoing scheme to frighten all its employees from bringing FELA actions; and that the scheme is a “device” violative of section 5 of the FELA, 45 U.S.C. § 55. Because of her present straitened circumstances, plaintiff asks for a preliminary injunction of reinstatement.

I accept the representations of plaintiff’s counsel concerning the difficult situation in which she and her children presently find themselves. Doing so, it is impossible not to be sympathetic. But federal courts are courts of limited jurisdiction. It is for Congress, and the executive branch acting pursuant to delegated congressional authority, to enact the laws and regulations that create and govern citizens’ rights and remedies: subject, of course, to the limitations of the Constitution. Courts cannot fashion remedies contrary to valid congressional enactments.

In the case at bar, plaintiff alleges a wrongful discharge. The sole source of plaintiffs right not to be discharged and of defendant’s obligation to restore her to employment following injury is the collective bargaining agreement between defendant and plaintiff’s union. Absent that agreement, plaintiff would be terminable at defendant’s will. In those circumstances, plaintiff must follow the grievance and arbitration procedures set forth in the Railway Labor Act, 45 U.S.C. § 153. That remedy is exclusive, ánd precludes this Court’s jurisdiction. Andrews v. Louisville & Nashville Railroad Co., 406 U.S. 320, 92 S.Ct. 1562, 32 L.Ed.2d 95 (1972).

Plaintiff’s invocation of section 5 of the FELA is unavailing. That follows under the Andrews rationale; and also because the FELA does not proscribe every “device” employed by a railroad which might arguably be characterized as unfair. The statute proscribes only those devices whose intent is “to enable any common carrier to exempt itself from any liability created by this chapter____” (emphasis added). The provision is inapplicable to the case at bar because nowhere in the FELA is there a “liability” created to continue an individual in the carrier’s employment.

These conclusions are supported by authorities in other circuits with whose analyses I agree. Jackson v. Consolidated Rail Corp., 717 F.2d 1045 (7th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 1000, 79 L.Ed.2d 233 (1984); Greenwood v. The Atchison, Topeka and Santa Fe Railway Co., 129 F.Supp. 105 (S.D.Cal.1955). I am cited to no contrary Second Circuit authority; and in any event, regard Andrews, supra, as controlling.

I am not persuaded by plaintiff’s counsel that the cited cases are distinguishable on their facts. However, the case upon which plaintiff places primary reliance, Kozar v. Chesapeake and Ohio Railway Co., 320 F.Supp. 335 (W.D.Mich.1970), modified on other grounds, 449 F.2d 1238 (6th Cir. 1971), is clearly inapposite. In Kozar the district judge properly condemned defendant railroad for overreaching and browbeating the widow of a railroad employee killed in an industrial accident, for the express purpose of dissuading her from filing an action under the FELA. The language which plaintiff quotes from Kozar in her brief at pp. 5-7 is immediately preceded by these comments of the district judge, who had first set forth the transcript of a hearing into the railroad’s behavior after the death:

“John Kozar was, according to the testimony, one of the Chesapeake and Ohio’s most valuable employees. He was killed while serving, to the extent of his ability, the best interests of the railroad. The above indicates a strong probability that, from the moment of his death, his employer adopted some rather primitive means in an attempt to defeat the just claims of his widow under a statute specifically designed for his own and his family’s protection.” 320 F.Supp. at 382-83.

In the case at bar, no such pre-FELA litigation conduct on the part of defendant is suggested.

It is perfectly possible, as plaintiff’s counsel suggests, to hypothesize a railroad adopting a policy of post-FELA employment termination where claims of permanent injury have been made, for the purpose of chilling future claims by other employees. One may just as easily hypothesize a chilling effect upon the assertion by railroad employees of trumped-up claims of permanent injury. The policy considerations and social effects are not that cut and dried. But these are matters for the legislature, not the judiciary. The present statutory scheme affords to plaintiff a forum in which to attack the circumstances of her discharge by defendant. Presumably her union will take a serious view of employer intimidation, if that is what is occurring; and if a course of coercive conduct by defendant is demonstrated, defendant, one hopes, will eventually answer for it. This long-term view may not comfort the present plaintiff, but under present law, the grievance procedure is exclusive. This Court lacks subject matter jurisdiction.

The Clerk of the Court is directed to dismiss the complaint without prejudice and without costs. The dismissal will be “without prejudice” because, this Court lacking subject matter jurisdiction, no view is intimated as to the merits of the claim.

It is SO ORDERED.

      . The statute provides:
      "Any contract, rule, regulation, or device whatsoever, the purpose or .intent of which shall be to enable any common carrier to exempt itself from any liability created by this chapter, shall to that extent be void: Provided, That in any action brought against any such common carrier under or by virtue of any of die provisions of this chapter, such common carrier may set off therein any sum it has contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought.”


author: ROBERT D. POTTER, Chief Judge.

text:
    William G. HARDIN, Jr. and Charlotte W. Fletcher d/b/a HLC Associates #1, a partnership, Plaintiffs, v. DLF COMPUTER COMPANY, INC., Defendants.
    No. C-C-85-0207-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Sept. 13, 1985.

      Harold J. Bender, Charlotte, N.C., for plaintiffs.
    Don Black, Dallas, Tex., for defendant.
   ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER is before the Court on motion of Defendant to dismiss for lack of personal jurisdiction and for improper venue. The Court heard arguments of Plaintiffs’ counsel in open court on September 10, 1985, the date scheduled on the Court’s Motion Calendar. Defendant’s counsel was not present at that hearing. The Court is informed by the Clerk’s Office that a calendar was mailed to Defendant’s attorney on August 2, 1985.

The facts of the case revolve around a dispute to a contractual relationship. The Plaintiffs, North Carolina citizens, agreed to sell to the Defendant, a Texas citizen, certain IBM computer equipment which was, at that time, located in Charlotte. There is a dispute as to which party initiated the negotiations. According to Defendant’s president, Debbie Flowers, an equipment purchase agreement was prepared by Flowers and mailed to Plaintiffs. The Plaintiffs completed the execution of the contract in Charlotte. The “Terms of Payment” provision of the contract provided that the price of the equipment, $26,475, was to be “paid in full prior to pick up.” The equipment was picked up and shipped at the direction of Defendant although no payment was made nor has any payment been made. Before and after delivery of the equipment, it is alleged that the parties had several phone conversations.

The Defendant’s company headquarters and only office is in Dallas, Texas. There is no indication that the Defendant maintains any contacts with this forum other than the contractual arrangement which is the subject of this lawsuit.

. The question, therefore, before this Court is whether the Defendant’s contacts with North Carolina are sufficient for this Court to exercise personal jurisdiction over the Defendant?

The North Carolina Long-Arm Statute provides for in personam jurisdiction over a non-resident defendant

[i]n any action ... which arises out of a promise, made anywhere to the plaintiff ... by the defendant to deliver or receive within this State, or to ship from this State goods, ... or other things of value.

N.C.Gen.Stat. § 1-75.4.

An alternative statutory ground for finding jurisdiction provides, in part, that

Every foreign corporation shall be subject to suit in this State ... whether or not ... transacting business in this State ... on any cause of action arising ... out of any contract made in this State or to be performed in this State.

N.C.Gen.Stat. § 55-145(a)(l).

There is a clear mandate that the (North Carolina) long-arm statute be given liberal construction, thereby favoring a finding of personal jurisdiction. Vishay Intertechnology, Inc. v. Delta Int’l. Corp., 696 F.2d 1062 (4th Cir.1982).

Regardless of the statutory ground, a court cannot expand the permissible scope of state jurisdiction over nonresident parties beyond due process limitations. There must be a showing that the defendant has sufficient minimum contacts with North Carolina. Speizman Knitting Mach. Co. v. Terrot Strickmaschinen, 505 F.Supp. 200 (W.D.N.C.1981). The criteria for determining whether minimum contacts exist include: (1) the quantity of contacts, (2) the nature and quality of contacts, (3) the source and connection of the cause of action with those contacts, (4) the interests of the forum state and convenience, and (5) whether the defendant invoked benefits and protections of law of the forum state. Southern Case, Inc. v. Management Re cruiters Int’l. Inc., 544 F.Supp. 403 (E.D. N.C.1982); Speizman, supra.

A single contract executed in North Carolina or to be performed in North Carolina may be a sufficient minimal contact in which to base personal jurisdiction. Byrum v. Register’s Truck & Equip. Co., 32 N.C.App. 135, 231 S.E.2d 39 (1977). If a contract is to be actually performed in North Carolina and has a substantial connection with this State, jurisdiction will lie. Staley v. Homeland, Inc., 368 F.Supp. 1344 (E.D.N.C.1974).

A recent Fourth Circuit case reversed an Eastern District Court’s dismissal for lack of personal jurisdiction over a foreign corporation. Vishay Intertechnology, Inc. v. Delta Int’l Corp., supra. The Court, in a unanimous decision, held that due process was not violated regardless of the fact that the defendant only wrote three letters and executed five phone calls to North Carolina and neither maintained a place of business there nor had an agent there. Id. at 1068. The defendant was held subject to jurisdiction under N.C.Gen.Stat. §§ l-75.4(4)(a), 55-145(a)(4). The Court stated that defendant intended forseeable injury to plaintiff in North Carolina and could reasonably expect answering to plaintiff in North Carolina on claims arising out of defendant’s North Carolina contacts with defendant and to avail itself of the benefits and protections of North Carolina laws. Id.

The North Carolina Court of Appeals has similarly held sufficient minimum contacts existed for asserting personal jurisdiction in the recent case of Harrelson Rubber Co. v. Dixie Tire and Fuels, Inc., 62 N.C.App. 450, 302 S.E.2d 919 (1983). In that case, the contract giving rise to plaintiff’s suit was made in North Carolina, the agreement provided that it should be governed by North Carolina law, and the contract was performed in North Carolina by virtue of the plaintiff manufacturing the goods and then shipping them to out-of-state defendant. Citing N.C.Gen.Stat. § 55-145(a)(1), the court held that “a single contract which was made or was to be performed in this state is sufficient to subject a nonresident corporation to suit.” Id. at 302 S.E.2d 921.

In the instant case, Defendant seeks a dismissal for lack of jurisdiction. Defendant relies on the affidavit of Flowers to factually support its request. The Flowers affidavit indicates that Defendant has no contacts with this forum other than its contractual relationship with Plaintiffs. However, Flowers admits to preparing and mailing a contract to Plaintiffs in Charlotte. Defendant does not deny that it arranged to have the equipment picked up from the Charlotte plant and shipped to Plaintiffs’ Dallas office nor does Defendant deny that it engaged in several telephone conversations with Plaintiffs regarding their relationship. Defendant had to know that the contract would be executed in North Carolina, that the subject matter of the contract was in North Carolina, that payment was due in North Carolina before delivery per the contract, and that Defendant would be responsible for picking up the equipment in North Carolina. These facts were part of the purchase agreement.

The Plaintiffs’ contract action, therefore, arises out of Defendant’s promise to receive or ship goods within or from North Carolina, and to make payment to Plaintiffs in North Carolina. Accordingly, N.C.Gen.Stat. §§ 1-75.4, and 55-145(a)(l) provide ample statutory ground for the assertion of personal jurisdiction over Defendant. Furthermore, the Defendant’s contacts with North Carolina by virtue of its contractual relationship with Plaintiff are sufficient for a finding of personal jurisdiction without offending due process. See, Vishay Intertechnology, Inc. v. Delta Int’l Corp., supra; Byrum v. Register’s Truck & Equip. Co., supra; and Speizman Knitting Mach. Co. v. Terrot Strickmaschinen, supra.

If the basis of federal subject matter jurisdiction is diversity, then the proper venue is the district where the plaintiff resides, or where the defendant resides, or where the claim arose. 28 U.S.C. § 1391(a). Venue, therefore, is proper in this forum.

Thus, it is the opinion of the Court that the Defendant is subject to this Court’s in personam jurisdiction and that venue here is proper.

IT IS, THEREFORE, ORDERED that:

(1) Defendant’s motion to dismiss for lack of jurisdiction is DENIED;
(2) Defendant’s motion to dismiss for improper venue is DENIED; and
(3) Defendant file an answer to Plaintiffs’ complaint within twenty (20) days of the date of this Order.


author: MYRON L. GORDON, Senior District Judge.

text:
    UNITED STATES of America, Plaintiff, v. FULLPAIL CATTLE SALES, INC., and Commercial State Bank, Defendants.
    No. 85-C-288.
    United States District Court, E.D. Wisconsin.
    Sept. 17, 1985.
    Joseph P. Stadtmueller, U.S. Atty. by Stephen J. Liccione, Asst. U.S. Atty., Milwaukee, Wis., for plaintiff.

      Grodin & Grodin by Russell M. Lein, Milwaukee, Wis., for Commercial State Bank.
    Angela E. Canellos, Wauwatosa, Wis., for Fullpail Cattle Sales, Inc.
   DECISION and ORDER

MYRON L. GORDON, Senior District Judge.

The plaintiff brings this action to recover the unpaid balance and interest on certain loans made by the Farmers Home Administration (FmHA). Both defendants moved to dismiss the original complaint. The plaintiff then moved to amend its complaint; the court granted this motion at the status conference held in this case on July 23, 1985. Each defendant has now moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted or, alternatively, for judgment on the pleadings, pursuant to Rule 12(b), (c), and (h)(2), Federal Rules of Civil Procedure. and for failure to join a necessary party, pursuant to Rule 12(b)(7) and Rule 19. The defendants’ motions will be denied.

Review of a Rule 12 motion to dismiss is limited to the allegations of the complaint. Powe v. City of Chicago, 664 F.2d 639, 642 (7th Cir.1981). The court, as it must, accepts these factual allegations as true and views the reasonable inferences drawn therefrom in the light most favorable to the plaintiff. Id. The complaint will be dismissed only if it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957).

The complaint, as amended, alleges, in substance, that John D. and JoAnn M. Reysen obtained loans totalling $100,000.00 from the FmHA in July 1981 and March 1982 which they used to purchase cattle, using the cattle as security for the loans. It is further alleged that in July 1981 the Reysens entered into a consumer credit transaction with defendant Commercial State Bank (Bank), and that defendant Fullpail Cattle Sales, Inc. (Fullpail) subsequently assigned its interest in this transaction to the Bank. In March 1982, Mr. Reysen allegedly entered into a consumer credit transaction with Fullpail, which in turn assigned its interest in the transaction to the Bank.

The plaintiff avers that on November 1982 the defendants seized and removed 42 head of cattle from the Reysen’s farm in which the plaintiff had a first security interest. According to the complaint, the defendants thereby unlawfully converted this property to their own use. Because the Reysens are now in default on the FmHA loans, the plaintiff seeks from the defendants the amount due and owing on the loans secured by the cattle, plus interest.

The defendants first contend that the amended complaint does not allege the requirements of a conversion. It is well-established that conversion actions can be used to enforce the rights of secured parties against transferees. Production Credit Ass’n of Madison v. Nowatzski, 90 Wis.2d 344, 353, 280 N.W.2d 118 (1979)). This is not a contract action to recover on the FmHA loans themselves, as the bank suggests by its citation to Wis.Stat. § 403.-401. The present action is a tort action to recover for the conversion of property in which the plaintiff claims it has a first secured interest.

In order to recover in a conversion action, the plaintiff must allege and prove that it had possession, or the right to immediate possession, of the property in issue at the time of the conversion. Production Credit Ass’n of Chippewa Falls v. Equity Coop Livestock Sales Ass’n, 82 Wis.2d 5, 10, 261 N.W.2d 127 (1978); Prosser and Keeton, Law of Torts § 15, p. 102 (5th ed. 1984). The plaintiff does not allege that it was in possession of the cattle at the time of the conversion. The question rather is whether the plaintiff has sufficiently alleged that it was entitled to immediate possession of the cattle at such time.

The plaintiffs right to immediate possession, in turn, depends upon whether the debtors were in default at the time of the conversion. Wis.Stat. § 409.503 (“Unless otherwise agreed, a secured party has on default the right to take possession of the collateral.”) In contrast to Equity Coop, supra, 82 Wis.2d at 12, 261 N.W.2d 127, the relevant security agreements between the plaintiff and the debtors, John and JoAnn Reysen, incorporated by reference in the amended complaint, expressly prohibit the debtors from selling or otherwise disposing of loan collateral, which allegedly includes the cattle in issue, or permitting others to do so without the FmHA’s written consent. Ex. C, p. 2, H B; Ex. D, p. 2, ¶ B. Thus, according to a reasonable reading of the complaint, when the defendants seized the cattle, thereby causing a violation of the security agreements, a default occurred. See Wis.Stat. § 409.311; Nowatzski, supra, 90 Wis.2d at 351-53, 280 N.W.2d 118. The plaintiff, therefore, had the right to immediate possession of the cattle at the time of the default, which coincided with the alleged conversion by the defendants.

Fullpail argues that it is unclear whether the plaintiff had a security interest in the converted cattle superior to that of the defendants. Resolution of this dispute concerns the merits of the case and not the sufficiency of the plaintiffs complaint.

Nor is the plaintiff in this case required under the law of conversion to allege that it made a demand for return of the seized cattle and that the defendants refused such demand. In Johnson v. Ashland Lumber Co., 45 Wis. 119, 120 (1878), the Wisconsin Supreme Court held that it is sufficient to allege an unlawful conversion without alleging a demand and refusal. In addition, it is reasonable to infer from, the plaintiffs complaint an allegation that the defendants sold the cattle after seizing them. A demand is unnecessary where, as here, it would be impossible, in practical terms, for the defendants to return the cattle. See Union Naval Stores Co. v. United States, 240 U.S. 284, 293, 36 S.Ct. 308, 312, 60 L.Ed. 644 (1916); Meyer v. Doherty, 133 Wis. 398, 405, 113 N.W. 671 (1907).

The defendants also suggest that the action should be dismissed because the government’s request for damages in the amount of the unpaid balance of the FmHA loans to the Reysens is inconsistent with the proper measure of damages for conversion. The defendants contend that the plaintiff’s damages are limited to the value of the property at the time of the conversion, plus interest to the date of trial. The defendants, indeed, may be correct in this regard. See Nowatzski, supra, 90 Wis.2d at 354, 280 N.W.2d 118. That the plaintiff may not be entitled to all the relief it seeks, however, in no way suggests that it has failed to state a claim upon which any relief may be granted.

Finally, the defendants assert that the plaintiff’s complaint should be dismissed for failure to join necessary parties, the Reysens, to this action. The Bank suggests that the Reysens are indispenable, as opposed to necessary, parties. The question of indispensability only arises where the parties in question cannot be joined by the court. There is no evidence, other than the bank’s unexplained labelling of the Reysens, that the court could not order the Reysens joined if it found them to be necessary parties. Fed.R.Civ.P. 19(a) and (b).

Under Rule 19(a), a party is necessary if

“(1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence May (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.”

Applying this standard to the present case, it is clear that the Reysens are not necessary parties. As previously discussed this is an action for conversion against the alIeged converters. This is not a contract action against the breaching party, the Reysens. Therefore, complete relief for the alleged unlawful conversion can be accorded without the Reysens.

Nor will disposition of the present action in the Reysens’ absence as a practical matter impair their ability to protect their interests. The Reysens are neither parties to this action nor in privity with any party with respect to the alleged conversion. Thus, they will not be bound, under principles of res judicata, by the disposition of this case.

Further, the absence of the Reysens will not subject any party in this action to multiple or inconsistent obligations. To the extent the government recovers from the defendants, it will not be able to obtain duplicate recovery if it later sues the Reysens. Moreover, if the defendants believe that the Reysens are liable for any part of the plaintiff’s claim herein, they may seek to join the Reysens by a third party complaint. See Fed.R.Civ.P. 14(a).

Therefore, IT IS ORDERED that the defendants’ motions be and hereby are denied.

IT IS ALSO ORDERED that a pretrial conference in this case be and hereby is scheduled for Friday, October 11, 1985, at 9:30 A.M. By this date, the parties shall complete all discovery, exchange their lists of witnesses, and disclose to each other the documentary evidence they intend to rely on at trial.

IT IS FURTHER ORDERED that trial to the court of this case be and hereby is scheduled for Monday, October 21, 1985, at 9:30 A.M.

Both the pretrial conference and the trial will be held in courtroom 225, 517 East Wisconsin Avenue, Milwaukee, Wisconsin.


text:
    DMP CORPORATION, Plaintiff, v. FRUEHAUF CORPORATION, Defendant.
    No. C-C-85-285-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Sept. 18, 1985.
    David A. White, Benjamin A. Johnson, Roddey, Carpenter & White, Rock Hill, S.C., and John E. Hodge, Jr., Tucker, Hicks, Moon, Hodge & Cranford, Charlotte, N.C., for plaintiff.
    Ernest S. DeLaney, Delaney, Millette & McKnight, Charlotte, N.C., for defendant.
   ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER is before the Court on motion of the Defendant to transfer this action to the Western District of Pennsylvania pursuant to 28 U.S.C. § 1404(a). The Court heard arguments of parties’ counsel in open court on September 10, 1985. Defendant was represented by Ernest S. De-Laney, Attorney at Law. Plaintiff was represented by Benjamin A. Johnson, Attorney at Law.

The facts of this case have to do with a waste water treatment system which Plaintiff sold to Defendant for use at Defendant’s plant site in Pennsylvania. The Defendant is in the business of manufacturing over-the-road trailers; cleaning trailer bodies is necessary to that process.

To comply with state environmental regulations, Defendant contracted with Plaintiff for the design and construction of a waste water treatment system. A substantial part of the contract performance occurred at Defendant’s plant site in Pennsylvania. Upon its installation, the system allegedly failed to perform according to the contract specifications. Defendant notified Plaintiff of the problems, but a dispute arose as to who bore responsibility. Defendant later notified the Plaintiff that another entity would be retained to handle the waste water system and that Defendant would hold Plaintiff responsible.

Plaintiff then initiated this lawsuit for the balance of the purchase price of the waste water treatment system. Defendant counterclaimed and moved to have the case transferred from the Western District of North Carolina to the Western District of Pennsylvania.

The question, therefore, before this Court is whether transfer is necessary for the convenience of the parties and witnesses, and further, that it is in the interests of justice to do so pursuant to 28 U.S.C. § 1404(a)?

The burden of establishing that the action should be transferred is on the Movant who must make out a clear or strong case by showing more than a bare balance of convenience in his favor and that a transfer does more than merely shift the inconvenience. 1 Moore’s Federal Practice 110.145[5]; See, also; Milliken & Co. v. F.T.C., 565 F.Supp. 511 (D.C.S.C.1983); Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3848 (1976).

Interests to be considered are: (1) plaintiff’s initial choice; (2) relative case of access to sources of proof; (3) availability of compulsory process for attendance of unwilling, and the costs of obtaining attendance of willing, witnesses; (4) possibility of premises of view, if appropriate; (5) enforceability of a judgment if one is obtained; (6) relative advantages and obstacles to a fair trial and all other practical problems that make trial easy and inexpensive; (7) administrative difficulties of court congestion; (8) local interests in having localized controversies settled at home; and (9) avoidance of unnecessary problems with conflict of laws.

1 Moores Federal Practice, supra.

In the instant action, Defendant argues that the case should be transferred for several reasons. The waste treatment facility which is the subject of this lawsuit is located at Defendant’s Pennsylvania plant site. The negotiations between the parties for this contract took place in Pennsylvania. The waste treatment facility was designed to meet environmental standards set by the Pennsylvania Department of Environmental Resources.

Further, the Defendant contends that the Pennsylvania forum has a greater interest in settling localized disputes there. Defendant contends that Pennsylvania law will control the legal issues at trial. In addition, Defendant asserts that the case should be transferred because its witnesses are in Pennsylvania and by not having the opportunity to present live testimony, the Defendant would be prejudiced at a trial in this forum, which the Plaintiff has chosen for its attorneys’ convenience.

Although this Court recognizes that venue would also be proper in Pennsylvania and that the convenience interests of the Defendant would be better served there, the Defendant’s arguments do not meet the burden of establishing the action should be transferred.

Both parties propose to offer their own local witnesses. Thus, one side must suffer the inconvenience of transporting its witnesses to a distant forum. The Plaintiffs plant, where the waste treatment facility was manufactured, is no more than 20 miles from where this Court sits. Plaintiffs six witnesses either work or live within the same 20-mile radius. The Plaintiffs initial choice of forum is also accorded some weight. Furthermore, the parties agree that the Pennsylvania environmental law involved here consists of engineering principles and standards. Expert testimony will be required regardless of the forum and there is no reason why adequate expert testimony could not as easily be presented here as in Pennsylvania.

The pleadings indicate that formation of the contract was made conditional upon receipt by Plaintiff of Defendant’s acceptance, which occurred in South Carolina. Therefore, South Carolina law would apply. In any event, this dispute will require application of the Uniform Commercial Code, the principles and provisions of which are fairly familiar to this Court. While the dispute may involve state environmental regulations, it is essentially a breach of contract action between private parties whose interests can be addressed here as well as in Pennsylvania. This Court sees no local interests of Pennsylvania which require the transfer of this case.

Likewise, the fact that the plant site is in Pennsylvania does not lean towards transfer since there hás been no reason offered that the location of the facility would have any significant bearing on the case at trial. Photographs of the facility could provide a jury with the accurate information, in the unlikely event it became necessary.

Therefore, having considered the pleadings and briefs, and having heard arguments, this Court is of the opinion that Defendant’s motion to transfer should be DENIED.

NOW, THEREFORE, IT IS SO ORDERED.


text:
    Robert R. FULLER, Plaintiff, v. ANHEUSER-BUSCH, INC., Defendant.
    No. C-C-83-866-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Sept. 18, 1985.

      Jonathan Wallas, Chambers, Ferguson, Watt, Wallas, Adkins & Fuller, Charlotte, N.C., for plaintiff.
    George R. Hodges, Moore, Van Allen, Allen & Thigpen, Charlotte, N.C., for defendant.
   ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER is before the Court on a letter from Plaintiffs attorney received September 3, 1985, requesting until September 10, 1985 to respond to Defendant’s Motion to Amend the Judgment to more fully support the Court’s award of attorneys’ fees to the Defendant.

The Court filed an Amended Memorandum of Decision on August 30, 1985 which contained an additional finding of fact that “Plaintiff’s action is frivolous, unreasonable, and without foundation.” This finding was added to the Court’s decision to more fully support the Court’s award of attorneys’ fees to the Defendant.

To allow Plaintiff more time for responding to Defendant’s Motion to Amend and the Court more time to consider the same, the Court stayed its Judgment in this cause by an Order dated September 5, 1985.

The standard for awarding attorneys’ fees to a prevailing defendant in a Title VII case is whether the “plaintiff’s action was frivolous, unreasonable or without foundation.” Christiansburg Garmet Co. v. EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978); See also, Arnold v. Burger King Corp., 719 F.2d 63 (4th Cir. 1983). The assessment of frivolousness and the award of attorneys’ fees is peculiarly within the province of the trial judge. Id. at 65. However, the fee award should be used sparingly. Christiansburg, supra 434 U.S. at 421, 98 S.Ct. at 700. The plaintiff’s subjective state for initiating the suit is irrelevant since a plaintiff acting in good faith may nevertheless be assessed fees if his claim is groundless. Id.

In determining whether plaintiff’s claims are frivolous or groundless, few guidelines exist. However, the Fourth Circuit Court of Appeals in, Lotz Realty Co., Inc. v. U.S. Dept. of Housing, 717 F.2d 929 (1983), suggested that the district court judge examine the suit against the background of law and facts at the time the plaintiff filed the suit. Thus, the Court should determine whether, at that time, it could reasonably be said that plaintiff had no evidence to support his claims.

After carefully reviewing the pleadings and record of the instant case, this Court is of the opinion that it cannot reasonably say that, at the time Plaintiff filed this suit, and examined in view of the facts and law existing at that time, there was no evidence to support at least some of his claims.

NOW, THEREFORE, IT IS ORDERED that the Court’s Memorandum of Decision, filed August 12, 1985, and the Court’s Amended Memorandum of Decision, filed August 30, 1985, be vacated to the extent they support an award of attorney’s fees to Defendant.

IT IS FURTHER ORDERED that the judgment filed August 12, 1985 be VACATED and that the attached Judgment be filed simultaneously with this Order.


text:
    Arthur C. DiRITO, Plaintiff, v. IDEAL BASIC INDUSTRIES, INC., and Roger H. Bonnell, Defendant.
    Civ. A. No. 85-K-1026.
    United States District Court, D. Colorado.
    Sept. 18, 1985.

      Sally K. Ortner, Denver, Colo., for plaintiff.
    Cathlin Donnell, Denver, Colo., for defendant.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Plaintiff brings this action against defendants based oh the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634 (1983). Plaintiff also asserts pendent state claims including outrageous conduct, promissory estoppel, fraud, negligent misrepresentation, and violations of the Colorado age discrimination statute, Colo.Rev.Stat. § 8-2-116 (1973).

Defendants move to dismiss plaintiff’s § 8-2-116 claim for failure to state a cause of action pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. Defendants assert that an essential element of a cause of action under § 8-2-116 is not alleged in plaintiff’s complaint, namely that plaintiff was discharged “solely and only upon the ground of age.”

For the defendants to prevail on a motion to dismiss for failure to state a claim upon which relief can be granted it must appear “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). Generally, the allegations of the complaint are to be liberally construed. 2A J. Moore & J. Lucas, Moore’s Federal Practice, ¶ 12.07[2.-5] at 12-65 (M.B. 2d ed. 1985).

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Thus, the plaintiff is only required to state facts sufficient to give the opposing party fair notice of the claim. Rawson v. Sears, Roebuck & Co., 530 F.Supp. 776, 781 (D.Colo. 1982).

The complaint gives defendants fair notice of plaintiffs claim of age discrimination. In paragraph 67, plaintiff alleges that “Ideal (company-wide) did not treat age neutrally in promotion and termination decisions, and refused to retain, relocate, reassign or retrain DiRito because of his age or regarded his age as a negative factor.” (Emphasis added.) In paragraph 73, plaintiff alleges that “Ideal has intentionally and willfully denied and continues to deny DiRito retention, rehire, reassignment or relocation with Ideal solely because of his age, in violation of the provisions of § 4 of the A.D.E.A., 29 U.S.C. § 623. (Emphasis added.) In paragraph 76 of plaintiffs sixth claim for relief, plaintiff incorporates all prior paragraphs by reference. In paragraph 77 of the sixth claim for relief, plaintiff alleges that the above actions of Ideal constitute a violation of the Colorado age discrimination statute, § 8-2-116. These pleadings are adequate to overcome a motion to dismiss for failure to state a claim upon which relief can be granted.

I dismiss plaintiffs § 8-2-116 claim and plaintiffs other pendent state claims, however, for lack of subject matter jurisdiction. In the recent case of Pascoe v. Hoyle Lowdermilk, Inc., 614 F.Supp. 546 (D.Colo.1985), the plaintiffs brought an action against their employer under the ADEA. The plaintiffs also asserted pendent state claims including wrongful discharge, outrageous conduct, and breach of contract. I dismissed the plaintiffs’ state claims because they sought to enlarge remedies which Congress has not authorized. I stated that most courts have determined that Congress intended to limit the scope of remedies under the ADEA to those specifically enumerated in the statute. This intent was “implied from the statutory content of the ADEA, the administrative conciliation scheme envisioned by the statute, and the fact that Congress could have provided for additional types of remedies but chose not to.” Id., at 547. In addition, the state issues would predominate in terms of comprehensiveness of the remedy sought, and there was a real likelihood of jury confusion in treating divergent legal theories of relief. Pascoe, at 548; see also Silver v. St. Luke’s Hospital, Inc., No. 84-M-2046, slip op. at 4 (D.Colo. May 3, 1985) (Matsch, J.); Borumka v. Rocky Mountain Hospital & Medical Service, 599 F.Supp. 857, 860 (D.Colo.1984) (Moore, J.); Ritter v. Colorado Interstate Gas Co., 593 F.Supp. 1279 (D.Colo.1984) (Carrigan, J.); Hannon v. Continental National Bank, 427 F.Supp. 215, 218 (D.Colo.1977) (Finesilver, J.). Accordingly, I decline to exercise pendent jurisdiction over plaintiffs state claims. This action will proceed only on the claim under the ADEA.

IT IS THEREFORE ORDERED that plaintiffs first, second, third, fourth, and sixth claims for relief are dismissed without prejudice.

      . Colorado Revised Statutes § 8-2-116 (1973) provides:
      No person, firm, association, or corporation conducting within this state any business requiring the employment of labor shall discharge any individual between the ages of eighteen and sixty years, solely and only upon the ground of age, if such individual is well versed in the line of business carried on by such person, firm, association, or corporation and is qualified physically, mentally, and by training and experience to satisfactorily perform and does satisfactorily perform the labor assigned to him, or for which he applies.

      . Defendants' motion is titled "Motion to Dismiss Plaintiff's First Claim For Relief For Failure To State A Cause Of Action”. (Emphasis added.) From the context of the motion, it is obvious that the defendants are moving to dismiss plaintiffs sixth claim for relief.