text:
    Stanley HANZEL, et al., Plaintiffs, v. Dr. Milton J. ARTER, et al., Defendants.
    No. C-3-82-861.
    United States District Court, S.D. Ohio, W.D.
    Dec. 12, 1985.

      Michael Dyer, Dayton, Ohio, for plaintiffs.
    Larry A. Smith, Dayton, Ohio, for defendants.
   DECISION AND ENTRY OVERRULING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT (DOC. # 16) AND SUSTAINING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT (DOC. #17); JUDGMENT FOR DEFENDANT AND AGAINST PLAINTIFFS; TERMINATION ENTRY

RICE, District Judge.

I. Facts

This case comes before the Court on stipulated facts (Doc. # 14) and cross motions for summary judgment (Docs. # 16, 17). The New Lebanon Board of Education is the sole Defendant remaining in this action, the individual Defendants having been dismissed at the request of Plaintiffs. (Doc. # 12).

The basis of controversy herein is the application and interpretation of certain Ohio statutes. Ohio Rev.Code § 3313.-671(A) requires that Ohio public school students be immunized against certain specified diseases. Ohio Rev.Code § 3313.67 gives to local boards of education the authority to make rules to secure the immunization of public school students. An exception to this immunization requirement is contained in Ohio Rev.Code § 3313.-671(A)(3), which provides:

A pupil who presents a written statement of his parent or guardian in which the parent or guardian objects to the immunization for good cause, including religious convictions, is not required to be immunized.

Stanley Hanzel, Jr. and Tisha Hanzel, the children of Plaintiffs Stanley Hanzel and Sandy Hanzel, attend the New Lebanon public schools. Plaintiffs object to the immunization of their children on the basis of their belief in “chiropractic ethics,” a body of thought which teaches that injection of foreign substances into the body is of no benefit and can only be harmful. (Doe. # 14, Stipulations ¶ 5, 6; Doc. # 16, Affidavit of Sandy Hanzel).

In a meeting with Dr. Milton Arter, Defendant’s superintendent, and the sehool nurse, Plaintiff Sandy Hanzel explained why her children had not been immunized as required by Ohio Rev.Code § 3313.-671(A). In two subsequent letters sent by Plaintiff Sandy Hanzel to Defendant, she reiterated that her personal philosophy and belief in chiropractic ethics had led her to refuse immunization for her children, and she requested that they be exempted from vaccination under Ohio Rev.Code § 3313.-671(A)(3). (Doe. # 14, ¶ 5, 6). An informal hearing was then convened by Dr. Arter. Plaintiff, represented by counsel, expressed her views against immunization at the hearing. (Doc. # 14, 1Í 7).

Dr. Arter, after the hearing, informed Plaintiffs in writing that their belief in chiropractic ethics did not constitute “good cause” for an exemption for their children under Section 3313.671(A)(3), and that their children would have to be immunized in order that they be allowed to remain in the New Lebanon public schools. (Doc. # 14, 1111, 12). Defendant affirmed Dr. Arter’s decision in its Resolution 82-138. (Doc. # 16, Exh. 1).

Plaintiffs thereupon filed their Complaint and Amended Complaint in the instant case. (Docs. # 1, 6). In their Amended Complaint, Plaintiffs seek either that the “Ohio Immunization Laws” be declared unconstitutional on their face or as applied, or, alternatively, that this Court issue a declaratory judgment that Plaintiffs’ personal beliefs against immunization amount to “good cause” for Plaintiffs’ children to be exempted from vaccination under Sections 3313.67 and 3313.671(A)(3). Plaintiffs also seek a permanent injunction against Defendant’s expulsion of their children from the New Lebanon public schools. The parties have stipulated that Plaintiffs’ children be allowed to remain in school, without having been immunized, pending resolution of this case. (Doc. #2). This stipulation was recently reiterated by the Court. (Doc. #20).

II. Privacy

Plaintiffs challenge the immunization requirement of Ohio Rev.Code § 3313.-671(A) on privacy grounds, contending that the constitutional right to privacy is broad enough to apply to the decision to subject oneself or one’s children to immunization. Were the right of privacy to protect individual decisions relating to immunization, then such decisions would implicate a “fundamental right.” State regulation of an individual’s decision as to immunization would then require a “compelling state interest” in order to be found valid. Roe v. Wade, 410 U.S. 113, 152-55, 93 S.Ct. 705, 726-28, 35 L.Ed.2d 147 (1973). Plaintiffs argue that Ohio lacks a compelling interest sufficient to overcome their right to privacy with respect to immunization of their children.

The United States Constitution nowhere mentions a right of privacy, and the Supreme Court has not recognized the existence of a general right to privacy. J.P. v. DeSanti, 653 F.2d 1080, 1087 (6th Cir.1981). Rather, the Supreme Court has found the right of privacy to protect certain individual decisions relating, for example, to the termination of pregnancy, Roe v. Wade, 410 U.S. at 113, 93 S.Ct. at 705, contraception, Eisenstadt v. Baird, 405 U.S. 438, 92 S.Ct. 1029, 31 L.Ed.2d 349 (1972), marriage, Loving v. Virginia, 388 U.S. 1, 87 S.Ct. 1817, 18 L.Ed.2d 1010 (1967), and child rearing, Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070 (1925). The Supreme Court recently observed that the core types of decisions encompassed by the right of privacy are those involving “freedom of personal choice in matters of marriage and family life.” Akron v. Akron Center for Reproductive Health, 462 U.S. 416, 427, 103 S.Ct. 2481, 2491, 76 L.Ed.2d 687 (1983). The fact that the Constitution protects several specifie aspects of personal choice, however, does not mean that it protects all aspects of individual privacy. J.P. v. DeSanti, 653 F.2d at 1088.

Long before much of this attention to the right of privacy, a Massachusetts resident urged the Supreme Court to invalidate a compulsory vaccination statute on the grounds that the statute amounted to a deprivation of liberty and that it was hostile to the individual’s own freedom to care for his or her body. Jacobson v. Massachusetts, 197 U.S. 11, 26, 25 S.Ct. 358, 361, 49 L.Ed. 643 (1905). The challenge was rejected, a majority of the Supreme Court holding that the Constitution's guarantee of liberty did not include an absolute right to individual freedom from restraint, and that the collective interest in health and safety outweighed the petitioner’s interest. Id. at 38-39, 25 S.Ct. at 366-67.

The Jacobson court’s view of bodily integrity was revisited decades later in Roe v. Wade. There, in attempting to describe the parameters of a woman’s right to abortion, Justice Blackmun observed:

In fact, it is not clear to us that the claim asserted by some amici that one has an unlimited right to do with one’s body as one pleases bears a close relationship to the right of privacy previously articulated in the Court’s decision. The Court has refused to recognize an unlimited right of this kind in the past. Jacobson v. Massachusetts, 197 U.S. 11 [25 S.Ct. 358, 49 L.Ed. 643] (1905) (vaccination); Buck v. Bell, 274 U.S. 200 [47 S.Ct. 584, 71 L.Ed. 1000] (1927) (sterilization) 410 U.S. at 154, 93 S.Ct. at 727.

This Court believes this passage in Roe v. Wade to signal the inconsistency of Plaintiffs’ position — that the immunization decision is entitled to the same protection as the decision to bear children or to terminate a pregnancy — within the parameters of the privacy right which has been etched out by the Supreme Court. Certainly contraception, abortion and vaccination all involve the human body and some form of intrusion or infiltration of it. Yet it does not necessarily follow, in keeping with Justice Blackmun’s observation in Roe v. Wade, that bodily autonomy per se has been deemed “fundamental” by the Supreme Court’s rulings. Such a definition of privacy would seem to ignore not only the thrust of the Jacobson decision, but also the permissibility of the forced blood tests, see Schmerber v. California, 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966), and military conscription, see Selective Service Draft Cases, 245 U.S. 366, 38 S.Ct. 159, 62 L.Ed. 349 (1918), which have been upheld despite the impact of such compelled decisions upon the human body. Henkin, Privacy and Autonomy, 74 Colum.L.Rev. 1410, 1429 (1974).

One commentator has read the Supreme Court’s privacy rulings as establishing that privacy, while rooted in a reference to the body, is limited to bodily or mental intimacy. Vaccination, in this view, may interfere with bodily autonomy, but fails to offend the intimacy of the individual’s personal identity. Gerety, Redefining Privacy, 12 Harv.Civ.R.-Civ.Lib.L.Rev. 233, 274-75 n. 153 (1977). However conceptualized, given the Supreme Court’s view of the immunization decision, its view of the lack of congruence between bodily autonomy and privacy, and our mandate to give a fairly restrictive reading to these aspects of personal choices included in the privacy right, this Court concludes that the immunization decision is not encompassed by the right of privacy.

In light of this conclusion with respect to privacy, the Court does not reach the issue of whether the state’s interest in public health would be so compelling as to allow it to limit an individual’s decision as to vaccination. The Supreme Court’s citation of Jacobson in Roe v. Wade might be taken as an indication that such a compelling state interest in public health is a limit on the immunization decision. Plaintiffs contend, on the other hand, that health conditions today are so improved that Jacobson is no longer relevant. Another consideration could be the undefined breadth of Ohio Rev.Code § 3313.671(A)(3) in its delegation of authority to local officials to exempt students from immunization for “good cause.” While the statute's potential, on its face, for immunization exemptions might be sufficient to call into question the compelling nature of the state’s interest in public health, Defendant had, in actuality, only granted two such “good cause” exemptions at the time of the filing of the motions in this case. These factors having been noted, the Court finds it unnecessary to resolve this issue due to its conclusion that the immunization decision is not encompassed within the right of privacy.

III. Due Process

Plaintiffs also argue that Section 3313.671(A)(3), as applied by Dr. Arter and ratified by Defendant, violates the Fourteenth Amendment’s guarantee of due process. Plaintiffs do not contend that they were denied a meaningful opportunity to be heard. Rather, their charge is that this statutory exemption to Ohio’s immunization requirement authorizes local school officials to burden a fundamental right without providing guidelines for the officials’ exercise of their authority.

Plaintiffs rely upon cases such as Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213 (1940), which involved a Connecticut statute prohibiting solicitation on public streets in the absence of a permit issued by local officials. The statute charged local officials with the task of determining whether the “cause” being promoted through solicitation was a religious or philanthropic one, and in the event that such a cause was found, directed that a permit be issued. Id. at 302, 60 S.Ct. at 902. Upon a challenge to the statute by three members of the Jehovah’s Witness sect, each of whom had been prosecuted for solicitation without the necessary license, the Supreme Court struck down their convictions under the statute. As the statute allowed local officials to determine who could engage in solicitation based on their view of the religious content of the communication, the statute was found to interfere with freedom of speech and freedom of religion. Id. at 303-307, 60 S.Ct. at 903-905.

At issue in Niemotko v. Maryland, also cited by Plaintiffs, was a custom whereby groups desiring to use a local park for meetings would apply to local officials for a permit. 340 U.S. 268, 269, 71 S.Ct. 325, 326, 95 L.Ed. 267 (1951). This practice was challenged by Jehovah’s Witnesses who were denied a permit to use the park due to the discomfort of local officials with the religious views of these individuals. The Supreme Court held the practice of allowing local officials this discretionary control over public parks unconstitutional on the basis of freedom of religion. It also found an equal protection violation, given that other religious groups had been given permission to make use of the park. Id. at 272-73, 71 S.Ct. at 327-28. See also Lovell v. City of Griffin, 303 U.S. 444, 58 S.Ct. 666, 82 L.Ed. 949 (1938); Avard v. Dupuis, 376 F.Supp. 479, 482-83 (D.N.H.1974).

Plaintiffs contend that, as in Cantwell and Niemotko, Defendant’s unguided determination as to what constitutes “good cause” for exemption from vaccination is also unconstitutional given the “close parallel” between the cited cases and the instant case. This Court cannot agree. While both cases do involve the exercise of administrative discretion, the place of religious beliefs in our constitutional framework, and the protection accorded them, are without parallel in the realm of secular beliefs. This distinction was articulated by the Supreme Court in Wisconsin v. Yoder, 406 U.S. 205, 92 S.Ct. 1526, 32 L.Ed.2d 15 (1972), in their evaluation of certain Amish citizens’ challenge to Wisconsin’s compulsory school-attendance statute:

In evaluating those claims we must be careful to determine whether the Amish religious faith and their mode of life are, as they claim, inseparable and interdependent. A way of life, however virtuous and admirable, may not be interposed as a barrier to reasonable state regulation of education if it is based on purely secular considerations; to have the protection of the Religion Clauses, the claims must be rooted in religious belief. Although a determination of what is a “religious” belief or practice entitled to constitutional protection may present a most delicate question, the very concept of ordered liberty precludes allowing every person to make his own standards on matters of conduct in which society as a whole has important interests. Thus, if the Amish asserted their claims because of their subjective evaluation and rejection of the contemporary secular values accepted by the majority, much as Thoreau rejected the social values of his time and isolated himself at Walden Pond, their claims would not rest on a religious basis. Thoreau’s choice was philosophical and personal rather than religious, and such belief does not rise to the demands of the Religious Clauses.

Id. at 215-16, 92 S.Ct. at 1533 (footnote omitted).

Yoder reflects the view that, even if the values and objectives of two groups are identical, their claims will receive differing treatment under the Constitution depending on whether or not their claims are based upon religious tenets. Such is the balance between flexibility and anarchy which has been struck in our constitutional system. As such, the Court cannot accept that Defendant’s action with respect to Plaintiffs and their children can be viewed as an exercise of discretion which burdened a fundamental right in the manner of Cantwell and Niemotko. Plaintiffs’ challenge to the application of Section 3313.-671(A)(3) on this basis is, accordingly, not well taken.

IV. Equal Protection

Finally, Plaintiffs challenge Defendant’s application of Section 3313.671(A)(3) on equal protection grounds. The parties have stipulated that religious reasons have been found by Defendant to be “good cause” sufficient to exempt two other school children from vaccination under Section 3313.671(A)(3). (Doc. # 14,118). Plaintiffs contend that their objection to vaccination based upon chiropractic ethics renders them similarly situated, for purposes of the “good cause” contemplated by Section 3313.671(A)(3), to those parents whose objections to vaccinations are based upon religious teachings. Accordingly, Plaintiffs assert that Defendant has violated the equal protection clause of the Fourteenth Amendment by denying them an exemption accorded to similarly situated individuals.

This Court has no quarrel with the proposition that, even though Section 3313.-671(A)(3) itself contains no classification, the classification established by Defendant’s administrative actions may be tested under the equal protection clause. Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886). The Court also believes that the standard for its evaluation of Defendant’s application of Section 3313.-671(A)(3) is the same standard which it would apply if Section 3313.671(A)(3) itself created the classification to which Plaintiffs object. Plaintiffs acknowledge that their challenge to the statute’s application does not implicate the free exercise clause of the First Amendment. Nor does Defendant’s application of the statute involve a classification by race, alienage or national origin. The minimum scrutiny which the Supreme Court has deemed applicable to economic and social legislation is thus the proper standard of review. As explained by the Supreme Court in City of Cleburne v. Cleburne Living Center, — U.S.-, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985), the essence of minimum scrutiny is

that where individuals in the group affected by a law have distinguishing characteristics relevant to interests the state has the authority to implement, the courts have been very reluctant, as they should be in our federal system and with our respect for the separation of powers, to closely scrutinize legislative choices as to whether, how and to what extent those interests should be pursued. In such cases, the Equal Protection Clause requires only a rational means to serve a legitimate end. Id. 105 S.Ct. at 3255.

Plaintiffs contend that the purpose of Ohio’s vaccination statute is the preservation of health. This Court agrees, and would go further in observing that the purpose of having an exemption to such a statute is to provide some flexibility at the local level in the enforcement of such a requirement. The Court cannot agree, however, with Plaintiffs’ argument that any distinction between chiropractic ethics and religious beliefs for purposes of the “good cause” exemption is unrelated to the purpose of the statutory system, and thus discriminatory and unconstitutional. As made clear by the Supreme Court in Wisconsin v. Yoder, philosophical beliefs do not receive the same deference in our legal system as do religious beliefs, even when the aspirations flowing from each such set of beliefs coincide. The fact that this case does not involve a challenge under the free exercise clause of the First Amendment does not make this differentiation any less relevant herein.

Minimum scrutiny under the equal protection clause requires this Court only to consider whether Defendant’s exercise of its discretion under Section 3313.671(A)(3) was a rational means of permitting exceptions to Ohio’s vaccination requirement. Were this a case involving Defendant’s determination that some religious beliefs constitute “good cause” and some do not, perhaps this would be a different case. Given the different weights accorded religious and secular beliefs, however, this Court cannot find Defendant to have violated Plaintiffs’ right to the equal protection of the laws.

Dalli v. Board of Education, 358 Mass. 753, 267 N.E.2d 219 (1971), cited by the Plaintiffs in support of their equal protection claim, is inapposite herein. Dalli involved a statutory exemption to Massachusetts’ compulsory immunization law for members “of a recognized church or religious denomination” whose tenets conflicted with the practice of vaccination. The statute was challenged by an individual who did not belong to an organized religion but whose objection to vaccination was based upon her own belief in the Bible and its teachings. Finding the plaintiff’s objections to be “concededly religious in nature," the Supreme Judicial Court of Massachusetts found the statutory exemption to violate both the free exercise and equal protection clauses by according preferred treatment to some religious beliefs while denying it to others. 358 Mass, at 759, 267 N.E.2d at 222. Obviously, Plaintiff’s challenge to the Ohio statute is not based upon the distinction deemed impermissible in Dalli, nor is the rule of law enunciated in Dalli equally applicable to the facts of the instant case.

V. Conclusion

For the reasons aforesaid, this Court overrules Plaintiffs’ Motion for Summary Judgment, and declines to enter a declaration either as to the unconstitutionality of the challenged statutes and practices or as to the proper determination of what constitutes “good cause” under Ohio Rev.Code § 3313.671(A)(3). Defendant’s Motion for Summary Judgment is sustained. The order of this Court, reminding Defendant of the stipulation by Defendant that Plaintiffs’ children may remain in school without the required vaccinations, is of no further effect.

The captioned cause is hereby ordered terminated upon the docket records of the United States District Court, Southern District of Ohio, Western Division, at Dayton.

      . Stanley Hanzel, Jr. and Tisha Hanzel, Plaintiffs’ children, have both submitted affidavits indicating that their views as to immunization are identical to those held by their parents. (Doc. # 16).

      . In their memoranda, Plaintiffs focus solely upon the unconstitutionality of Ohio Rev.Code § 3313.671(A)(3) as applied in this case. To the extent that their Amended Complaint suggests that Plaintiffs also believe this provision to be unconstitutional on its face, the Court declines to consider such an argument.
      Ohio Rev.Code § 3313.671(A)(3) may well be susceptible of an application violative of the free exercise or equal protection guarantees of the first and fourteenth amendments, due to the standardless delegation of discretion which the state legislature has imparted to local school boards. Cf. Kent v. Dulles, 357 U.S. 116, 129, 78 S.Ct. 1113, 1119, 2 L.Ed.2d 1204 (1958). Yet one of the “cardinal rules” governing the federal courts provides that "one to whom application of a statute is constitutional will not be heard to attack the statute on the ground that impliedly it might also be taken as applying to other persons or situations in which its application might be unconstitutional." Brockett v. Spokane Arcades, Inc., - U.S. -, 105 S.Ct. 2794, 2801, 86 L.Ed.2d 394 (1985) (quoting United States v. Raines, 362 U.S. 17, 21, 80 S.Ct. 519, 522, 4 L.Ed.2d 524 (1960)).
      One of the exceptions which exists to this "cardinal rule" is the overbreadth doctrine, which also involves the first amendment. This doctrine, and the closely-related void-for-vagueness doctrine, allows invalidation of a statute, whether or not the plaintiff has engaged in activity prohibited by the statute, in situations where the statute threatens to inhibit free speech. Brockett, 105 S.Ct. at 2802; Raines, 362 U.S. at 22, 80 S.Ct. at 523; J. Nowak, R. Rotunda and J. Young, Constitutional Law, Ch. 18, § III at 867-72 (2nd ed. 1983); C. Wright, Federal Courts, Ch. 2, § 13 at 73-74 (4th ed. 1983). When the overbreadth doctrine has been applied in cases involving free exercise of religion, its application has been justified by the interference with free speech also threatened by the statute in question. See Kunz v. New York, 340 U.S. 290, 295, 71 S.Ct. 312, 315, 95 L.Ed. 280 (majority opinion), 304-305, 71 S.Ct. at 320 (Jackson, J., dissenting); Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213 (1940); J. Nowak, R. Rotunda and J. Young, Constitutional Law, Ch. 19, § III at 1055-6. The instant statute, Ohio Rev.Code § 3313.671(A)(3), does not pose an inhibitory effect on free speech, whatever the other potential constitutional infirmities in its application. For these reasons, the Court does not consider whether Ohio Rev.Code § 3313.671(A)(3) may be unconstitutional on its face.

      . Even if this Court were to agree with Plaintiffs that Section 3313.671(A)(3) is unconstitutional and that its application must be enjoined, the result would likely be that this statutory exemption to Ohio’s immunization requirement would be struck, leaving extant the immunization requirement contained in Ohio Rev.Code § 3313.-671(A). Under Ohio law, one part of a statute may be found unconstitutional without affecting the validity of the remainder of the statute, provided that the stricken portion of the statute was not so essential to the remainder of the statute or so related to the general purpose of its enactment as to warrant the conclusion that the state legislature would have refused to adopt the statute with the invalid portion stricken therefrom. Emmons v. Keller, 21 Ohio St.2d 48, 254 N.E.2d 687 (1970). The Court believes that Ohio Rev.Code § 3313.671(A), providing for immunization for public school students, would indeed have been enacted without an exemption provision. Other courts which have invalidated statutory immunization exemptions have struck only the exemption upon a successful constitutional challenge, leaving the statutory immunization requirement itself intact. See Avard v. Dupuis, 376 F.Supp. 479 (D.N.H.1974); Brown v. Stone, 378 So.2d 218 (Miss.1979); Dalli v. Board of Education, 358 Mass. 753, 267 N.E.2d 219 (1971).


source: Caselaw Access Project

author: PEREZ-GIMENEZ, Chief Judge.

license: Public Domain

text:
    UNITED STATES of America v. Alain Claude VOULOUP, Antonio Rito Silva, Nicholas Cadabi, Antonio Escandon.
    Crim. No. 75-179(PG).
    United States District Court, D. Puerto Rico.
    Dec. 16, 1985.

      Jorge Vega Pacheco, Asst. U.S. Atty., San Juan, Puerto Rico, for plaintiff.
    Benito Rodríguez Massó, Caguas, Puerto Rico, Fernando Gierbolini, San Juan, Puerto Rico, Luis Amorós, Río Piedras, Puerto Rico, Nydia Diaz Buxó, Caguas, Puerto Rico, for defendants.
   OPINION AND ORDER

PEREZ-GIMENEZ, Chief Judge.

On June 1, 1985, after receiving authorization from the French Government, the S/V CASANCANI, a French registered vessel, was boarded on the high seas by agents of the U.S. Coast Guard. Upon boarding, the team found marijuana aboard the vessel.

Defendants in this action are the Master, Alain Claude Vouloup, a French national, and the crew members of the CASANCANI, composed of three Colombians, Antonio Rito Silva, Nicholas Cadabi and Antonio Escandón.

The defendants have been charged under 18 U.S.C. § 2 and with violations to the Marijuana on the High Seas Act of 1980, concretely, 21 U.S.C. § 955a(a), (c), (f), for the unlawful possession with intent to distribute approximately 800 lbs. of marihuana.

Motions to suppress evidence on grounds of illegal search and a motion to dismiss for lack of jurisdiction were set for hearing before the U.S. Magistrate on October 10, 1985.

On October 25, 1985, the U.S. Magistrate rendered a report and recommendation on the matter concluding that there is no subject matter jurisdiction in the instant case and recommending.suppression of the evidence and dismissal of the case. The United States Government filed an opposition on November 4, 1985, to which defendants replied on November 14, 1985. The matter stands now before use.

In essence, the U.S. Magistrate determined that the boarding of the S/V CASANCANI was within the scope of the law and that the Fourth Amendment had not been infringed. However, on the jurisdictional issue he concluded that the offense was committed beyond the jurisdiction or laws of the United States and further concluded that no subject matter jurisdiction exists in the instant case.

While we fully agree with the determination that the boarding of the CASANCANI was within the scope of the law, we reject the Magistrate’s conclusion that the offense did not occur within the jurisdiction of the United States.

In the instant case jurisdiction exists by virtue of the extension of the concept of “customs waters”. As a general rule the Coast Guard is divested of authority to search foreign vessels not within the “customs waters” of the United States. However, the United States may extend its “customs waters” to specific foreign vessels, and specific foreign vessels may be designated as within “customs waters” through specific arrangements with the governments of foreign nations.

“Customs waters” is defined in 19 U.S.C. § 1401©:

The term “customs waters” means, in the case of a foreign vessel subject to a treaty or other arrangement between a foreign government and the United States, enabling or permitting the authorities of the United States to board, examine, search, seize, or otherwise to enforce upon such vessel upon the high seas the laws of the United States, the waters within such distance of the coast of the United States as the said authorities are or may be so enabled or permitted by such treaty or arrangement and in the case of every other vessel the waters within four leagues of the coast of the United States, (emphasis ours)

Thus, it is clear that nothing prohibits that two nations by arrangement extend the “customs waters” and also the reach of the domestic law of one of the nations into the high seas. United States v. Romero-Galue, 757 F.2d 1147, 1154 (1st Cir.1985).

In the instant case the U.S. Government has submitted exhibits which evince that the Government of France authorized the boarding and search of the CASANCANI (Government’s Exhibit 1). Subsequently, authority was received to seize the subject vessel on behalf of the French Government, to arrest the Master on behalf of the French Government and to arrest the crew for violation of the laws of the United States (Government’s Exhibit 2).

U.S. Government agents may search or seize a foreign vessel “upon the high seas” if enabled or permitted under special arrangement with the foreign government. United States v. Marsh, 747 F.2d 7, 9-10 (1st Cir.1984). It has been held that the consent for a particular arrangement to be valid need not be a formal agreement but the consent may be relayed by electronic communications such as radio or telephone. United States of America v. Angel Rey González, 776 F.2d 931 (11th Cir., November 1, 1985). Furthermore, no treaty is required to exist before an arrangement can be made between the United States and a foreign nation for Coast Guard search and seizure of a foreign nation’s vessel. See, United States v. Angel Rey González, supra.

A special arrangement within the meaning of the statute is present in the instant case. United States v. Marsh, supra; United States v. Loalza Vázquez, 735 F.2d 153 (5th Cir.1984); United States v. Green, 671 F.2d 46, 51 (1st Cir.1982).

Jurisdiction is derived by that special arrangement with the Government of France. The arrangement extended the U.S. “customs waters” and created an area within which the laws of the United States may be enforced. The fact that defendants have been indicted under the provisions of the Marihuana on the High Seas Act, 21 U.S.C. §§ 955a-955d, does not affect the Court’s jurisdiction. Congress intended said provisions to have extra territorial effect. United States v. Romero-Galue, supra, at 1149.

Having found that jurisdiction to enforce the laws of the United States is present through a special arrangement, we need not enter into the application of the protective principle to the facts of this case.

WHEREFORE, in view of the foregoing the Magistrate’s Report and Recommendation is affirmed in part as to the legality of the boarding of the CASANCANI, and rejected in part as to the conclusion that no jurisdiction is present here. Accordingly, the Court finds that there is jurisdiction in the instant case and DENIES the motion to suppress.

IT IS SO ORDERED.

      The U.S. Magistrate explained this conclusion reasoning that the United States and France have not entered into any type of treaty which would have become federal law granting jurisdiction and determining that the instant case cannot fit as acts of possession of narcotics committed outside the territorial jurisdiction of the United States punishable by section 965. We fail to agree.


author: WILLIAM C. CONNER, District Judge.

text:
    Herbert LEINWANDER, Individually, and as Executor of the Estate of Charles S. Andres, Deceased, Plaintiff, v. NEWMAN, ARONSON & NEUMANN, Harry N. Newman and Henry J. Clay, Defendants.
    No. 84 Civ. 2851 (WCC).
    United States District Court, S.D. New York.
    Dec. 16, 1985.
    Hyman L. Rutman, Mineóla, N.Y., for plaintiff.
    Abberley Kooiman Marcellino & Clay, New York City, for defendant Henry J. Clay; Brooks Banker, Jr., of counsel.
    D’Amato & Lynch, New York City, for defendants Newman, Aronson & Neumann and Harry N. Newman; Robert E. Meshel, Timothy P. Butler, of counsel.
   OPINION AND ORDER

WILLIAM C. CONNER, District Judge.

Plaintiff Herbert Leinwander (“Leinwander”) is the executor of the estate of Charles S. Andres. He brought this action against attorneys Henry J. Clay (“Clay”), Harry N. Newman, and the law firm of Newman, Aronson & Neumann alleging that they unlawfully deprived him of approximately $75,000 in commissions for his services as executor of the estate. The caption of the complaint recites that Leinwander is suing “Individually, and as Executor of the Estate of Charles S. Andres,” thereby suggesting that he is suing on behalf of the estate. However, an examination of the complaint itself reveals that Leinwander seeks to recover only on his own behalf.

Briefly stated, the relevant facts are as follows: Among the assets of the estate of Charles Andres was a claim for remuneration from the government of Czechoslovakia under the International Claims Settlement Act of 1949, as amended, 22 U.S.C. §§ 1621-1645o (1982). Leinwander engaged defendants to prosecute the claim on behalf of the estate. According to the complaint, an award was finally obtained under the Act in 1982 when the United States Treasury forwarded the sum of $1,359,-561.64 to defendant Clay as attorney of record in the proceedings. Apparently, defendants deducted the fees for their services from this award before turning it over to the estate or its beneficiaries.

Leinwander alleges that in deducting their fees from the award, defendants violated title 22, sections 1623(f) and 1642m which provide that compensation for services rendered on behalf of a claimant under the Act may not exceed 10% of any award won. Both sections provide in identical language that'

[n]o remuneration on account of services rendered ont behalf of any claimant in connection with any claim filed with the Commission under this subchapter shall exceed 10 per centum of the total amount paid pursuant to any award certified under the provisions of this subchapter, on account of such claim. Any agreement to the contrary shall be unlawful and void. Whoever, in the United States or elsewhere, demands or receives, on account of services so rendered, any remuneration in excess of the maximum permitted by this section, shall be fined not more than $5,000 or imprisoned not more than twelve months, or both.

22 U.S.C. §§ 1623(f), 1642m (1982). Leinwander alleges that defendants took more than 10% of the award for their fees, thereby reducing the amount paid to the estate, and thus reducing the amount of his commissions as executor.

This matter is now before the Court on defendants’ motions pursuant to rule 12(b)(1) of the Federal Rules of Civil Procedure to dismiss the complaint for lack of subject matter jurisdiction. In response, Leinwander contends that subject matter jurisdiction is properly found in §§ 1623(f) and 1642m set forth above. Those provisions, however, clearly do not expressly grant a private right of action, but instead set out only criminal penalties for their violation.

Leinwander suggests that a private right of action is implicit in these provisions, but under the circumstances of this case, I cannot agree. In Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1965), the Supreme Court outlined several factors for determining whether a private remedy is implicit in a statute not expressly providing one: first, whether the plaintiff is “ ‘one of the class for whose special benefit the statute was enacted’ second, whether there is any evidence of legislative intent to create or deny such a remedy; third, whether it is consistent with the underlying purpose to imply such a remedy; and finally, whether the cause of action or area of concern is one that is traditionally relegated to the states. Id. at 78, 95 S.Ct. at 2087.

In this case, the first and most important factor does not favor finding a private right of action. The persons to be protected by §§ 1623(f) and 1642m are those individuals with claims under the Act. Leinwander does not personally have such a claim, and as I stated at the outset, notwithstanding the wording of the caption of his complaint, he does not seek to recover on behalf of Andres’s estate. While there is a factual connection between the estate’s claims under the Act and Leinwander’s commissions as executor, he is clearly not the sort of individual Congress sought to protect by enacting §§ 1623(f) and 1642m.

The remaining factors do not suggest a different result. There is no evidence, explicit or implicit, of legislative intent to create a private right of action with these statutes. Moreover, while it may not be inconsistent with the purpose of §§ 1623(f) and 1642m to imply a private remedy for their violation, estate matters and the regulation of attorney conduct are areas that are traditionally left to the states. Therefore, for all of these reasons, I decline to find a private right of action in §§ 1623(f) and 1642m, at least under the circumstances presented here.

The only other basis Leinwander has alleged for jurisdiction here is the Declaratory Judgment Act, 28 U.S.C. § 2201 (1982). It is well established, however, that § 2201 merely enlarged the range of remedies available in federal court, and did not create an independent ground for federal subject matter jurisdiction. Shelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 878, 94 L.Ed. 1194 (1950).

Therefore, for the reasons stated above, defendants’ motions to dismiss the complaint for lack of subject matter jurisdiction are granted, and the Clerk of the Court is directed to enter judgment in favor of defendants.

SO ORDERED.


text:
    BALTIMORE AND ASSOCIATES, INC., Debtor, Melvin M. Feldman, Trustee, Plaintiff, v. MUNICIPAL ESCROW AND TITLE CO., INC., Defendant.
    No. Misc. 84-0109.
    United States District Court, District of Columbia.
    Dec. 19, 1985.
    James A. Harrihan, James P. Shaughnessy, Hogan & Hartson, Washington, D.C., for plaintiff.
    Eugene J. Fitzpatrick, Washington, D.C., for defendant Melvin Feldman.
   MEMORANDUM ORDER

(Denying Motion for Relief From Judgment)

BARRINGTON D. PARKER, Senior District Judge.

Riggs National Bank of Washington, D.C. (“Riggs”), a garnishee in this action, seeks relief from a judgment entered against it on July 17, 1984 in favor of the plaintiff Melvin M. Feldman. Riggs claims that the judgment was based on the mistaken premise that it held assets belonging to the defendant Municipal Escrow and Title Co. (“METCO”) that could be garnished by the plaintiff. As explained below, the Court determines that the requested relief cannot be granted and the judgment must be enforced.

BACKGROUND

This case arises from a judgment entered on October 8, 1982 against METCO in the U.S. District Court for the District of Maryland. On April 17, 1984, plaintiff Feldman filed a certified copy of that foreign judgment in this Court. Later, he filed an attachment on the judgment accompanied by interrogatories which were served on Riggs on June 20, 1984. Riggs responded to the interrogatories on June 29, 1984, indicating that it was “holding $3,384.85 net of outstanding bank charges and subject to final payment of checks accepted by us for clearance.”

On July 10, 1984, the plaintiff filed a motion for a judgment of recovery against credits in the possession of the bank. According to a certified mail receipt, Riggs received this motion on July 9, 1984, but did not respond to or contest it in any way. On July 17, 1984, Judge Aubrey Robinson, Jr. entered an order granting judgment of recovery of $3,384.85 in favor of the plaintiff, the amount Riggs previously certified on June 29, 1984.

On September 7, 1984, Riggs filed a motion for relief from Judge Robinson’s order together with supplemental interrogatory answers, indicating that since May 24, 1984, METCO’s account with Riggs had been overdrawn in the amount of $344,-073.43. An affidavit by David Lesser, Vice-President and Associate General Counsel of Riggs (“Lesser affidavit”), submitted to the Court on December 5, 1984, provides some clarification. METCO had two accounts with Riggs numbered 07-235-128 (“128 Account”) and 07-235-7^ (“136 Account”). As of May 24, 1984, the 128 Account was overdrawn by $344,-037.43. The interrogatory answer filed on June 29, 1984, however, referred to the 136 Account. According to Riggs, it was thus not indebted to METCO at the time that its original interrogatory answers were prepared and submitted. Riggs argues that the July 17 order was based on erroneous facts which it supplied and therefore should be vacated.

DISCUSSION

It is well established that a bank generally has the right to set off its debts to a customer, such as account balances, against debts owed to it by that customer because of other transactions. 5A Mitchie on Banks and Banking ch., 9, § 114 (1983). Moreover, this right does not have to be exercised before a writ of attachment is served by another creditor. The bank may exercise its right of setoff once a depositor’s account is threatened by attachment. General Electric Credit Corp. v. Tarr, 457 F.Supp. 935, 937 (W.D.Pa.1978).

Nevertheless, in most jurisdictions, set-off does not occur automatically when depositors become indebted to their banks. See 5A Mitchie on Banks and Banking, ch. 9, § 123 (“Ordinarily it is optional with a bank whether it will avail itself of the right to apply a deposit to the payment of the indebtedness of the depositor.”). In Baker v. National City Bank of Cleveland, 511 F.2d 1016 (6th Cir.1975), the trustees of a railroad undergoing reorganization sought to recover a portion of the railroad’s checking account that had been setoff by the defendant bank against outstanding loan indebtedness. The bank claimed that the setoff had been exercised the day before a federal district court entered an order in the bankruptcy proceeding enjoining all creditors holding any deposit balances or credits of the railroad from offsetting those credits against the railroad’s obligations. The court held that under Ohio law a setoff is accomplished only after three steps have been taken: “1) the decision to exercise the right, 2) some action which accomplishes the setoff and 3) some record which evidences that the right of setoff has been exercised.” Id. at 1018. It then determined that a mere telephone call between two officers of the bank was not a sufficient affirmative act to exercise the right to setoff and therefore disallowed the bank’s action.

While no case or statutory provision directly addresses this issue in the District of Columbia, D.C.Code § 28:4-303 (1981) speaks of a “setoff exercised by a payor bank” and sets out a series of specific events after which such action will be ineffective. In the absence of a more specific provision on the subject, this language suggests that in the District of Columbia set-off does not occur automatically. Some affirmative act is necessary in order to exercise the right.

Baker involved a right to setoff which was asserted subsequent to a court order specifically prohibiting such action. A similar result has been reached in cases where the Internal Revenue Service has levied upon a depositor’s bank account to collect delinquent taxes. Unless the bank has already exercised its right of setoff, the tax levy extinguishes that right. See United States v. Citizens and Southern National Bank, 538 F.2d 1101 (5th Cir.1976), cert. denied, 430 U.S. 945, 97 S.Ct. 1579, 51 L.Ed.2d 792 (1977); United States v. Sterling National Bank & Trust Co. of New York, 494 F.2d 919 (2d Cir.1974).

Riggs argues that it still had the right to exercise a setoff against the funds in METCO’s account after the writ of attachment was served on June 20, 1984. This is undoubtedly true. See Tarr, 457 F.Supp. at 957. The crucial date here, however, is not June 20, but rather July 17, 1984, the date of the court order entering a judgment of recovery against Riggs.

When the time of a setoff is at issue, the bank must produce evidence to show when it actually occurred. Baker, 511 F.2d at 1018. There is nothing in the record to indicate that Riggs took any affirmative action prior to July 17, 1984 to apply the funds it held in METCO’s 136 Account to the overdraft in the 128 Account. Riggs did not respond to the motion for judgment, as it might have been expected to do if the setoff right had been exercised once the 136 Account was threatened with attachment. Furthermore, while the Lesser affidavit states specifically that Riggs had not exercised the right of setoff before June 21, 1984, Lesser affidavit at ¶ 9, it does not go on to indicate when or if the setoff was in fact exercised. Nor was any further documentation submitted to support Riggs’ motion to vacate the judgment. The circumstances of this case suggest to the Court that Riggs discovered its right to setoff only after Judge Robinson’s July 17, 1984 order.

A bank’s right to setoff cannot continue indefinitely. To vacate the judgment in this case would be to suggest that banks can attack a garnishment at any later time if they discover accounting errors or pure oversight of possible setoff rights. Such a result would threaten the finality of financial transactions and the security of the banking system. Accordingly, it is this 19th day of December, 1985,

ORDERED

That the motion of the Riggs National Bank of Washington, D.C. seeking relief from the order of July 17, 1984 granting judgment of recovery in favor of the plaintiff is denied.

That Riggs National Bank of Washington, D.C. shall comply forthwith with the order entered on July 17, 1984.

      . While not addressing the issue in this case, the District of Columbia Court of Appeals in Security Bank v. Whiting Turner Contracting Co., 277 A.2d 106 (D.C.1971), also suggests that the right to setoff is not automatically exercised, but instead is dependent on affirmative action. The plaintiff bank in that case sought to setoff a deposit to a third party’s account against the indebtedness of the account holder. The court found that the deposit had already been utilized to reduce the liability of the defendant who had stopped payment on a check of the account holder. The court stated: "Neither the affidavit filed by the bank’s president in the trial court subsequent to the transactions in question nor the entries on the notes themselves show application of the $2,823.33 against this indebtedness which later matured." Id. at 108.

      . Pittsburgh National Bank v. United States, 657 F.2d 36 (3d Cir.1981), is to the contrary, but that case held that Pennsylvania law recognizes a doctrine of automatic setoff.


author: MAHON, District Judge.

text:
    MBANK FORT WORTH, N.A. (formerly Continental National Bank of Fort Worth) Plaintiff, v. TRANS MERIDIAN, INC. Robert G. Tunnell, Gale Tunnell Itaf Daou, Ghalee A. Hamadeh, Mary Hamadeh, Charles L. Ward, Barbara Ward, H.J. Van Praag, and Laiping F. Van Praag, Counterclaim Plaintiffs, v. MBANK FORT WORTH, N.A. (formerly Continental National Bank of Fort Worth), Sabre Exploration Corp., John C. Andrews, and Gerald T. Langford, Counterclaim Defendants.
    Civ. A. No. 4-83-13-E.
    United States District Court, N.D. Texas, Fort Worth Division.
    Dec. 20, 1985.

      John Keker, Keker & Brokett, San Francisco, Cal., for TMI.
    Edward L. Kemble, Cantey, Hanger, Gooch, Munn & Collins, Fort Worth, Tex., for Sabre.
    Sam J. Day, McDonald, Sanders, Ginsburg, Phillips, Maddox & Newkirk, Fort Worth, Tex., for plaintiff MBank.
   MEMORANDUM OPINION

MAHON, District Judge.

At the close of the evidence in this case and prior to the charge to the jury, the Court was asked by the parties to resolve certain questions of law regarding the applicability of certain statutes and defenses to the facts of this case. The Court carried these requests to alter the jury’s deliberation so that fact findings could be made as to each alleged cause of action, thereby obviating the need for a new trial in the event this Court errs in its ruling. On May 7, 1985, the jury returned their verdict. Thereafter, on May 13, 1985, the Court ordered all parties to submit proposed forms of judgment and accompanying briefs in support thereof for consideration by the Court. In the briefs, the Court asked that the following issues be addressed:

1. Whether the Texas Deceptive Trade Practices — Consumer Protection Act, Tex.Bus. & Com.Code § 17.41 et seq. (hereinafter referred to as “DTPA”) applies to the facts of this case;
2. Whether Tex.Rev.Civ.Stat.Ann. art. 5539c (Vernon’s 1985) prevents the application of the statute of limitation defense to the counterclaim upon which the TMI Group prevailed; and
3. Whether the waiver defense applies to a DTPA claim.

Each party filed proposed forms of judgments, accompanying briefs, reply briefs and letter briefs pursuant to the Court’s order. After careful consideration of all the briefs filed, the record in this case and the applicable law, the Court makes the following determination to those questions of law previously presented to the Court so that a judgment may be entered.

I. Background

This case revolves around the sale of a participating working interest in certain oil and gas leases in the South Hamel field in Colorado County, Texas between the TMI Group and Sabre Exploration. A final agreement called a Drilling and Participation Agreement was executed by the TMI Group and Sabre on August 1, 1980. Thereafter, in December 1980 and July 1981, MBank made two loans to the TMI Group totaling $1 million. The TMI Group pledged its interest in the South Hamel field to MBank as security for the loans. The loans eventually became delinquent and in December of 1982, MBank filed suit against the TMI Group to collect the unpaid balances of the notes, to foreclose on the oil and gas properties securing payment of the notes, and to recover the deficiency upon foreclosure.

On January 11, 1983, the TMI Group answered MBank’s suit by filing a counterclaim against Sabre and MBank, contending that Sabre and MBank defrauded them and that they should not be required to repay the loans. Specifically, the TMI Group alleged that they were induced into investing into the South Hamel field by fraudulent misrepresentations and omissions by both Sabre and MBank pursuant to an overall plan on the part of Sabre and MBank to recoup losses from unsuccessful drilling. The TMI Group claimed that these facts gave rise to causes of action for common law and statutory fraud, negligent misrepresentation, violations of Texas and federal securities laws, and a violation of the Texas Deceptive Trade Practices-Consumer Protection Act.

Sabre and MBank denied that they violated any state or federal law or committed any fraud, and asserted various affirmative defenses to the TMI Group’s claims which would preclude any recovery on the part of the TMI Group. Specifically, they allege that the TMI Group’s actions were barred by the applicable statute of limitations; that members of the TMI Group were contributorily negligent and proximately caused their own damages; that the TMI Group had superior knowledge of the operations in the South Hamel filed as early as July 1980 but misrepresented and concealed any unfavorable information to the Bank’s and Sabre’s detriment; that the TMI Group failed to prevent or mitigate their damages by seeking loans from MBank after they knew of the rights to proceed against Sabre; and that by their actions, the TMI Group waived any right to relief for any alleged misrepresentations based on the original Drilling Participation Agreement.

II. Jury Findings

The jury was charged on each of the TMI Group’s theories of recovery as well as each of Sabre’s and MBank’s defenses. The jury found that the TMI Group did not establish fraud against either Sabre or MBank. On the TMI Group’s negligent misrepresentation claim, the jury found that the TMI Group established a claim against MBank but not against Sabre. The jury also found that the TMI Group was' contributorily negligent and attributed the percentage of the fault 90% to the TMI Group and 10% to MBank.

The jury found that both Sabre and MBank violated the DTPA by engaging in any one or more false or deceptive acts, practices or omissions in the conduct of its trade or business. The jury found that Sabre but not MBank violated section 12(2) of the Securities Act of 1933 and that neither Sabre nor MBank violated section 10(b) and Rule 10b-5 of the Securities and Exchange Act of 1934 or the Texas Securities Act.

As to the defenses issues raised by Sabre and MBank, the jury found that the TMI Group failed to exercise due diligence in investing in the drilling program in the South Hamel field; that the TMI Group waived their right to complain of Sabre’s and MBank’s conduct with respect to the TMI Group’s investing in the drilling program in the South Hamel field; and that the TMI Group did discover or should have discovered the untrue statements and omissions which the jury found prior to January 10, 1981 — more than two years prior to the TMI Group’s filing of its counterclaim.

The jury then went on to award actual damages to each member of the TMI Group. The jury also awarded punitive damages to be assessed only against Sabre.

It is clear, based on the jury verdict, that the TMI Group did not prevail on its claim for negligent misrepresentation against MBank and on its claim for a violation of section 12(2) of the Securities Act of 1933 against Sabre. The defenses of waiver, which is applicable to both claims, and due deligence, which applies only to the security claim, are a complete bar to the TMI Group’s recovery on these bases of recovery.

The TMI Group argues that they prevailed in their DTPA claim against both MBank and Sabre because the defense of waiver does not apply to claims under the DTPA and because article 5539c of the Tex.Rev.Civ.Stat.Ann. (Vernon’s 1985) prevents the application of the statute of limitations defense to the counterclaims upon which the TMI Group prevailed. The TMI Group also argues that even if its affirmative claim under the DTPA is barred by the statute of limitations, the jury’s verdict constitutes an affirmative defense to MBank’s original claim on the notes. MBank and Sabre argue that the DTPA is inapplicable to the facts of this case because the TMI Group are not “consumers” as defined in the Act; that article 5539c does not extend the statute of limitations of the TMI Group’s DTPA claim; and that the defense of waiver applies to a DTPA claim.

III. DTPA

The Court’s analysis must begin with whether or not the TMI Group prevailed on its affirmative claim under the DTPA. Although the jury found that both Sabre and MBank engaged in deceptive practices, their actions cannot give rise to a private cause of action for damages under the DTPA unless the TMI Group can first qualify as a “consumer” as defined in the Act. Knight v. International Harvester Credit Corp., 627 S.W.2d 382, 388 (Tex.1982); Riverside National Bank v. Lewis, 603 S.W.2d 169, 173 (Tex.1980). “Consumer” is defined in § 17.45(4) as “an individual, partnership, corporation or governmental entity, who seeks or acquires by purchase or lease any goods or services.” “Goods” are defined in § 17.45(1) as “tangible chattels or real property purchased or leased for use.” “Services” are defined in § 17.45(2) and include “work, labor or service purchased or leased for use, including services furnished in connection with the sale or repair of goods.” Furthermore, these goods or services acquired by the consumer must form the basis of the DTPA complaint. Knight, 627 S.W.2d at 388; Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539 (Tex.1981); Riverside, 603 S.W.2d at 175.

Thus, there are two requirements which must be satisfied before a person may maintain a cause of action under the DTPA: (1) a person must have sought or acquired goods or services by purchase or lease for use, and (2) the goods or services purchased or leased must form the bases of the complaint. “If either requirement is lacking, the person aggrieved by a deceptive act or practice must look to the common law or some other statutory provision for redress.” Cameron, 618 S.W.2d at 539.

MBank and Sabre argue that the TMI Group is not a “consumer” because the oil and gas interests purchased by the TMI Group were “securities” and therefore cannot also be “goods” within the terms of the DTPA. The TMI Group argues that because the DTPA’s definition of goods includes “real property purchased or leased for use” and the oil and gas interests purchased by them were interests in real property, they are “consumers.”

Texas courts have held that a security is not a “good” within the meaning of the DTPA. See Swenson v. Englestad, 626 F.2d 421, 428 (5th Cir.1980); Portland Savings and Loan Assoc. v. Bevill, Bresler & Shulman Government Securities, Inc., 619 S.W.2d 241, 245 (Tex.Civ.App.—Corpus Christi 1981, no writ); First State Bank, Morton v. Chesshir, 613 S.W.2d 61, 62 (Tex.Civ.App.—Amarillo 1981, no writ). See also Riverside, 603 S.W.2d at 175. These cases however dealt with the purchase of stock certificates and certificates of deposit, instruments traditionally understood as securities or intangibles. The facts of this case present a different security transaction and do not fall squarely within these holdings. Here, the TMI Group purchased interests in real property, interests which were recorded in the county in which the property was located, and later foreclosed upon by MBanlc.

In Cherokee Water Co. v. Forderhouse, 641 S.W.2d 522 (Tex.1982), the Texas Supreme Court held that the execution of an oil and gas lease to a third party was a sale of an interest in land. See also Duke v. Sun Oil Co., 320 F.2d 853, 858 (5th Cir.1963) (“In Texas, ordinary oil and gas leases is a transfer and conveyance of real property so that title to the oil and gas in place is vested in the lessee thereunder.”); Mayers v. Sanchez-O’Brien Minerals Corp., 670 S.W.2d 704, 709 (Tex.App.—San Antonio 1984). Accordingly, the TMI Group maintains that in addition to being a security transaction, the interests in oil and gas leases it purchased from Sabre constitutes a “good” under the DTPA.

The issue of whether the sale of oil and gas leases can give rise to liability under both federal and state securities laws and the DTPA was addressed in Vick v. George, 671 S.W.2d 541 (Tex.App.—San Antonio 1983), aff'd in part and rev’d and remanded in part, George v. Vick, 686 S.W.2d 99 (Tex.1984) (per curiam). The suit in Vick v. George arose from the sale of interests in an oil and gas venture. The plaintiffs proceeded under theories of common law fraud and recission, state and federal securities laws and the DTPA. After trial to a jury, the trial court rendered judgment for recession and restoration of the purchase price with interest under the Texas Securities Act in favor of the plaintiffs against defendants, Jack Vick, John Askew and Penny McClean although the jury found that the defendants had also engaged in deceptive trade practices. In its judgment, the trial court explained why it allowed recovery only under the Texas Securities Act:

And the Court having asked the plaintiffs to elect what remedy they desire of the various theories in the pleadings and of the jury verdict, and the plaintiffs having refused to waive any specific remedy, the Court decided to award relief pursuant to recission under the Texas Securities Act.

671 S.W.2d at 550.

The Court of Appeals reversed the judgment in its entirety and remanded the case for a new trial. In commenting on points “which may arise again in the trial court,” the Court stated:

Plaintiffs correctly state that recovery under either the TSA or the DTPA is not exclusive of any other rights or remedies that may exist. It is axiomatic, however, that an aggrieved party is entitled to but one recovery for the same loss. Where damages are sought under the Section 17.50(b)(1) (amended 1979), recovery is limited to three times the amount of actual damages proved, since damages cannot be quadrupled by also recovering restoration of the consideration paid.

Id. at 551 (citations omitted).

It appears to this Court that the purpose of this statement was to assure the parties that recovery could not be had under both the Texas Securities Act and the DTPA. Because there is nothing in the opinion to indicate that anyone challenged the applicability of both statutes to the facts of the case, it further appears to this Court that the Court of Appeals recognized that the transaction could come within both statutes, and simply allowed the plaintiffs a choice between the two remedies. See id. at 550.

In its per curiam opinion in the same ease, the Texas Supreme Court stated:

The Court of Appeals correctly adjudicated the points- on appeal, but because its remand for a new trial of all parties and issues is contrary to Rule 434 Tex.R. Civ.P., we grant the writ of error and without hearing oral argument reverse the judgment in part and partially remand the case to the court of appeals.

George v. Vick, 686 S.W.2d at 100. The Supreme Court remanded on an issue wholly unrelated to the issue before this Court. Again it appears to this Court that the parties did not raise and the Supreme Court did not address the question which is now before this Court.

Nevertheless, because the Supreme Court did not reverse that part of the Court of Appeals’ decision which this Court interprets as permitting a transaction to be both a security and a good under the DTPA, the Court finds that the purchase of a fractional interest in oil and gas is a “good” as that term is defined in the DTPA. This finding is consistent with Texas cases which have held that a purchaser of real estate for investment purposes is a consumer under the meaning of the DTPA. See First Texas Savings Association v. Stiff Properties, 685 S.W.2d 703 (Tex.Civ.App.—Corpus Christi (1984); Gibbs v. Main Bank of Houston, 666 S.W.2d 554 (Tex.App.—Houston 1984).

Accordingly, the Court holds that the August 1, 1980 transaction between the TMI Group and Sabre involved the purchase of a good for purposes of the DTPA. Furthermore, it is clear that this purchase formed the basis of the TMI Group’s counterclaim. Therefore, the TMI Group has satisfied the requirements to maintain a cause of action under the DTPA against Sabre.

Having found that the TMI Group qualifies as a “consumer” with respect to Sabre, the Court must now determine whether the TMI Group has standing as a “consumer” as to MBank. MBank contends that the TMI Group is not a “consumer” as to MBank under the criteria established by Texas courts for subjecting third party lenders to liability under the DTPA. The Court disagrees.

It is clear under Texas law that a consumer can bring a DTPA action against anyone in the transaction who violated the Act, including a third party lender. See LaSara Grain v. First National Bank of Mercedes, 673 S.W.2d 558 (Tex.1984); Flenniken v. Longview Bank and Trust Company, 661 S.W.2d 705 (Tex.1983); Knight v. International Harvester Credit Corp., 627 S.W.2d 382 (Tex.1982). In LaSara Grain, the Texas Supreme Court stated that a “lender may be subject to a DTPA claim if the borrower’s ‘objective’ is the purchase or lease of a good or service thereby qualifying the borrower as a consumer.” 673 S.W.2d at 567. Thus, it is immaterial whether or not MBank provided a service. “If in the context of a transaction in goods or services, any person engages in an unconscionable course of action which adversely affects a consumer, that person is subject to liability under the DTPA.” Flenniken, 661 S.W.2d at 707 (emphasis added).

MBank was sufficiently involved in the South Hamel Field transaction to be equally responsible for the conduct of the transaction. The TMI Group’s objective in the transaction which forms the basis of the complaint was the purchase of oil and gas leases. Its borrowings from MBank were a means of financing the purchase. The evidence adduced at trial shows that MBank knew from the beginning that the TMI Group’s borrowing was for the purpose of acquiring oil and gas leases from Sabre. MBank’s willingness to lend on the South Hamel Field project and the conditions under which it would do so were communicated to the TMI Group prior to the execution of the August 1, 1980 agreement with Sabre. See TMI Exhibit 51. Members of the TMI Group as well as MBank employees testified that the Bank’s willingness to lend on the project was discussed as early as July 1980. In November 1980, Dean Cochran, a loan officer with MBank, wrote in a presentation to MBank’s loan and financial committee in which he recommended approval of the loan to the TMI Group, that the money borrowed by the TMI Group from MBank was being used to fund the drilling project in the South Hamel Field because Sabre did not have adequate funds to do so. TMI Exhibit 65. The same exhibit evidences that not only should MBank expect to receive “additional borrowing requests from the TMI Group when the next phase of the wells are drilled,” but that the loan program with TMI represents the best way in which to assist Sabre in making their payments to MBank. Id.

The Court finds that MBank, as a lender, is subject to a DTPA claim for its involvement in the August 1, 1980 transaction. This finding is based on the evidence presented at trial and is reflected by the jury’s verdict. The jury found that MBank made misrepresentations and/or omissions which constituted false or deceptive acts or practices and that this conduct was a producing cause of the TMI Groups losses.

Accordingly, the Court holds that the TMI Group prevailed in its affirmative claim under the DTPA against both Sabre and MBank. The Court must now determine whether this claim is barred by the statute of limitations and if so, whether it still constitutes an affirmative defense to MBank’s original action on the notes.

IV. Statute of Limitations

The DTPA provision on limitations is set forth in section 17.56A and provides:

All actions brought under this subchapter must be commenced within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice. The period of limitation provided in this section may be extended for a period of 180 days if the plaintiff proves that failure timely to commence the action was caused by the defendant’s knowingly engaging in conduct solely calculated to induce thé plaintiff to refrain from or postpone the commencement of the action.

Tex.Bus. & Comm. Code Ann. § 17.56A (Vernon’s 1985) (emphasis added).

The jury found in question number 63 of the verdict that the TMI Group did discover or should have discovered both Sabre’s and MBank’s deceptive acts on or before January 9, 1981. Accordingly, section 17.56A requires the TMI Group to bring its DTPA suit within two years, i.e., on or before January 9, 1983 which the TMI Group admittedly did not do. The TMI Group did not file its counterclaim until January 10, 1983. Thus it appears that its claim is barred by limitations.

The TMI Group argues, however, that 5539c of Texas Civil Statutes makes timely its tardy DTPA claim. Article 5539c provides:

In the event a pleading asserting a cause of action is filed under circumstances where at the date when answer thereto is required by law a counterclaim or cross claim would otherwise be barred by the applicable statute of limitation, then the party so answering may, within 30 days following such answer date file a counterclaim or cross claim in such cause and the period of limitation is hereby extended for such period of time provided that the counterclaim or cross claim arises out of the same transaction or occurrence that is the subject matter of the opposing party’s claim.

Tex.Rev.Civ.Stat.Ann. art. 5539c (Vernon’s 1985).

This provision permits a party to assert by counterclaim or cross-claim a claim which, although otherwise barred by the applicable statute of limitations, arises from the same transaction or occurrence that is the subject matter of the lawsuit. The TMI Group maintains that its DTPA claim arose out of the “same transaction or occurrence” underlying MBank’s action on its notes. Having already addressed this issue in discussing MBank’s liability under the DTPA as a third party lender, the Court finds that the TMI Group’s borrowing from MBank was solely in connection with Sabre’s South Hamel drilling program. Nevertheless, the Court finds article 5539c inapplicable to the TMI Group’s DTPA claim.

In Brooks Fashion Stores, Inc. v. North Park National Bank, 689 S.W.2d 937 (Tex. App.—Dallas 1985, no writ) the Texas Court of Civil Appeals in Dallas recently held that “section 17.56A governs exclusively the limitations period applicable to DTPA suits.” Id. at 943. Although the Court did not specifically address the application of article 5539c to a DTPA claim, this Court finds that the Court of Civil Appeals’ opinion to be controlling on this issue.

In Brooks the appellant argued that section 17.56A permits a longer limitations period for DTPA claims arising from contracts than would apply to those violations not involving a contractual relationship. In rejecting this argument, the Court examined the legislative history behind section 17.56A. Prior to the enactment of section 17.56A, the DTPA contained no limitations provision and courts relied on other statutes and caselaw to determine the applicable limitations period. See id. at 942. In enacting section 17.56A, however, “the Legislature must have known of the pre-existing limitations law, and intended every word of the new limitations provision to have meaning.” Id. at 943 (citations omitted). Thus, the Court held to “ignore the plain meaning of the legislative mandate that ‘[a]ll [DTPA] actions’ be brought within two years of the deceptive act would engraft upon this section an exception for which the Legislature could have easily provided had it chosen to do so.” Id.

The Court finds that the only limitations provision which applies to a DTPA claim is that contained in section 17.56A. Had the Legislature intended to give DTPA claimants the benefit of other savings provisions outside that contained in this section, they could have easily provided for such in section 17.56A. Having not done so, therefore, the TMI Group’s argument that article 5539c allows them to avoid the application of section 17.56A is without merit. Accordingly, the Court finds that the TMI Group’s affirmative DTPA claim upon which it prevailed against both Sabre and MBank is barred by the applicable statute of limitations.

The statute of limitations stands on a different footing, however, with respect to MBank’s original claim on the notes. It is clear in Texas that where the subject matter of an affirmative defense or recoupment arises out of the same transaction or occurrence as the claim itself, it may defeat a plaintiff’s claim even though it would be barred by the statute of limitations if affirmatively brought. This is especially true where fraud is pled as a defense to a suit on the contract even though at the time such defensive plea is made, it would be barred by limitations if asserted as a basis for recovery of damages. See Southern Pacific Co. v. Porter, 160 Tex. 329, 331 S.W.2d 42 (1960) (Limitations does not apply to a plea of recoupment arising from the same transaction as plaintiff’s claim and predicated on a factor that would vitiate the contract as of the time the contract was made.); Bodovsky v. Texoma National Bank of Sherman, 584 S.W.2d 868 (Tex.Civ.App.—Dallas 1979, writ ref’d n.r.e.); Garza v. Allied Finance Co., 566 S.W.2d 57, 59 (Tex.Civ.App.—Corpus Christi 1978); Finger v. Morris, 468 S.W.2d 572 (Tex.Civ.App.—Houston 1971, writ ref’d n.r.e.); Reynolds-Southwestern Corp. v. Dresser Industries, Inc., 438 S.W.2d 135 (Tex.Civ. App.—Houston 1969, writ ref’d n.r.e.); Morris-Buick Co. v. Davis, 127 Tex. 41, 91 S.W.2d 313 (Tex.Com.App., op. Adopted).

In Bodovsky, the Bank brought an action against the borrowers on certain promissory notes. The borrowers pled fraudulent misrepresentations and fraudulent concealment as a defense and also counterclaimed for damages for fraud. On appeal, the Court held that “the unchallenged jury findings support the allegations of fraud as a defense or offset to the main claim, but that the plea of limitation was properly sustained with respect to the counterclaim because of jury findings that [the counterclaim based on fraud was barred by the two year statute of limitations].” 584 S.W.2d at 871-72. The Court affirmed the judgment that the counterclaim was barred by the statute of limitations but reversed the trial court’s rendering judgment for the bank on the main claim. Id. at 878.

The Court already determined that the subject matter of the TMI Group’s claims and defenses arose out of the same transaction as MBank’s original claim. The only difference between the facts in Bodovsky and here is that here, the TMI Group is trying to use the DTPA as a defense to MBank’s action on the notes and not common law fraud. In Bodovsky, the jury found that the borrowers had made out a prima facia case for common law fraud. See id. at 872. Nevertheless, the Court finds that this distinction does not preclude the TMI Group from using the DTPA as an affirmative defense. The jury found that MBank made misrepresentations and/or omissions which constituted false or deceptive acts or practices and that this conduct was a producing cause of the TMI Group’s losses. These same misrepresentations and omissions formed the basis of the TMI Group’s affirmative defense and it is of little consequence that the misrepresentations and omissions gave rise to liability for one theory of recovery and not another. All the theories of recovery propounded by the TMI Group can be classified under the general heading of “fraud.” Accord. Garza v. Allied Finance Co., 566 S.W.2d at 62-63. (Court allowed the borrowers’ Truth-In-Lending Act claim to be used in the nature of a recoupment to the Finance Company’s suit on a promissory note even though it was admitted the claim would have been barred by the statute of limitations if it would have been brought as an original claim.)

Having found that the statute of limitations does not prevent the TMI Group from asserting the DTPA as an affirmative defense to MBank’s claim on the notes, the Court must now determine whether the jury’s finding that the TMI Group waived their right to complain of MBank’s conduct bars the use of the DTPA as an affirmative defense. Section 17.42 of the DTPA, as applicable to this case, provides that “[a]ny waiver by a consumer of the provisions of this subchapter is contrary to public policy and is unenforceable and void.” The TMI Group argues that this language applies to any type of waiver of the DTPA whereas MBank contends that this anti-waiver provision only applies to contractual waivers made at the time of the underlying transaction and not to post-transactional waivers as is the case here.

The law is clear in Texas that one can waive any right including the right to assert a defense, to which one is legally entitled, whether that right is secured by contract, statute or guaranteed by the Constitution. See Williams v. Williams, 548 S.W.2d 492, 493 (Tex.Civ.App.—Austin 1977), aff'd in part and rev’d in part on other grounds, 569 S.W.2d 867 (Tex.1978); Yandell v. Tarrant State Bank, 538 S.W.2d 684, 687 (Tex.Civ.App.—Fort Worth 1976, writ ref’d n.r.e.); see also, Bodovsky v. Texoma National Bank of Sherman, 584 S.W.2d at 872-74 (Court recognized bank’s right to claim waiver to fraud defense but found that record did not show that a waiver in fact occurred). MBank argues that thé rights given consumers under the DTPA are not exempt from this doctrine and relies on two recent Texas Court of Appeals decisions involving the DTPA. The first is U.S. Home Corp. v. Hickie, No. 01-83-00550-CV (Tex.Civ.App.—Houston December 27, 1984, writ ref’d n.r.e.) and the second is Rocha v. U.S. Homecraft Corp., 653 S.W.2d 53 (Tex.App.—San Antonio 1983, writ ref’d n.r.e.). The Court finds that neither of these eases requires a limited application of § 17.42.

In Hickie, plaintiffs purchased a house with a detached two car garage which, because of its placement behind the house, was allegedly incapable of enclosing two cars. Plaintiffs sued under, inter alia, the DTPA for the inadequate garage. A default judgment was entered and defendant filed a motion for new trial claiming that it had a meritorious defense. The trial court denied the motion. The Court of Appeals reversed and remanded for a new trial holding that defendant set up a meritorious defense based on the undisputed testimony that plaintiffs knew of the placement and dimensions of the garage on the property prior to the sale. Although the Court of Appeals referred to this as a “defense of waiver,” the Court finds that this was in fact a defense that there was no violation of the DTPA because the acts of defendant, even if deceptive, were not a producing cause of any damages suffered by plaintiffs. In contrast, the jury in this case found that MBank made misrepresentations and/or omissions which were a producing cause of the TMI Group’s losses.

In Rocha, plaintiff’s attorney stated in open court that he was not seeking treble damages under the DTPA. On appeal, plaintiff argued that under § 17.42, this statement must be considered null and void. The Court of Appeals disagreed, holding that § 17.42 does not apply to this situation. The waiver claimed in Rocha was of a completely different nature than the waiver claimed here. Here the defense of waiver was based on the TMI Group’s subsequent conduct with MBank and Sabre and was akin to estoppel. In Rocha, on the other hand, defense of waiver was wholly unrelated to any course of dealing between the parties.

In dicta, the Court of Appeals went on to state that § 17.42 was intended only to prevent a release in the relevant contract of any possible claim under the DTPA. See 653 S.W.2d at 56-57. The Court finds this statement not only not controlling on this issue but also at odds with how this Court feels the Texas Supreme Court would resolve the issue. See supra note 13. The DTPA is a broad remedial statute which is to be liberally construed to promote its underlying purpose and § 17.42 was drafted consistent with this purpose. See § 17.44 of the DTPA. If the Texas legislature wanted to draft a narrow anti-waiver provision, it was free to do so. Furthermore, a broad reading of § 17.42 is consistent with this Court’s prior analysis of the definition of “consumer.” Therefore, the Court finds that § 17.42 precludes MBank from asserting the defense of waiver to the TMI Group’s affirmative defense to MBank’s claim on the notes.

Accordingly, the Court finds that even though the TMI Group’s affirmative claim under the DTPA is barred by the statute of limitations, the jury’s verdict nevertheless constitutes an affirmative defense to MBank’s claim on the notes.

V. Conclusion

In sum, the Court finds that the TMI Group qualifies as a “consumer” within the meaning of the DTPA and therefore based upon the jury verdict, prevailed on its affirmative claim under the DTPA. The Court further finds that the limitations provision contained in the DTPA is exclusive and therefore bars the TMI Group’s affirmative claim under the DTPA. Nevertheless, the Court finds that neither the statute of limitations nor the defense of waiver is available to MBank to defeat the TMI Group’s affirmative defense to MBank’s original action on the notes, and that the jury verdict constitutes an affirmative defense to MBank’s claim.

The judgment entered on September 26, 1985 is unaffected by this opinion and remains in full force and effect.

ORDER

ON MOTION TO ALTER OR AMEND

On October 7, 1985 plaintiff and counterclaim defendant MBank Fort Worth, N.A. (“MBank”) filed a motion to alter or amend judgment and alternative motion for new trial. On the same day, defendants and counterclaim plaintiffs Trans Meridian, Inc., Robert and Gale Tunnell, Itaf Daou, Ghaleb and Mary Hamadeh, Charles and Barbara Ward, and H.J. and Laiping Van Praag (“the TMI Group”) filed a motion for judgment notwithstanding the verdict or, in the alternative, for a new trial. Each side has responded to the other side’s motion. After carefully considering the briefs of the parties, the record and the applicable law, the Court is of the opinion that neither motion is well founded and both should, in all respects, be denied. Nevertheless, the Court finds it necessary to address certain of the issues raised by both parties in their respective motions.

As to MBank’s motion, the Court finds that MBank’s claim that the TMI Group waived their right to complain of its conduct by way of affirmative defense is a point that should have been addressed in the Court’s opinion rendered on September 26, 1985. Therefore, the Court will withdraw that opinion and enter a new opinion concurrently with this order for that limited purpose. However, because the Court finds that the jury’s finding of waiver does not apply to the Deceptive Trade Practices — Consumer Protection Act, Tex.Bus. & Com.Code § 17.41 et seq. (“DTPA”) claim, the Court will not alter the judgment entered on September 26, 1985.

As to the TMI Group’s motion, it is patently false for the TMI Group to claim that this Court granted both MBank’s and Sabre Exploration Company’s motion for summary judgment on the TMI Group’s Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”) claim. Prior to trial, the Court expressly stated that it would not rule on the merits of the motion until the Supreme Court entered its decision in Sedima v. Imrex Company, Inc., which it did on July 1, 1985. See, - U.S. -, 105 S.Ct. 3292, 87 L.Ed.2d 361. The Court went on to state that it would not continue the entire case until a decision in Sedima was reached but instead would try the case on the other theories alleged by the TMI Group. The TMI Group now claims that it is entitled to a judgment on its RICO claim based on the evidence adduced at trial and the jury’s verdict. The Court disagrees. If, as the TMI Group claims, that the evidence supported a RICO verdict, then it was the TMI Group’s responsibility to request jury instructions and issues on that claim. Failure to request that such instructions and issues be submitted or to object to the failure by the Court to give such instructions and issues results in a waiver of the right to have that claim submitted to a jury. See Fed.R.Civ.P. 49(a), 51; see also, Molex Inc. v. Nolen, 759 F.2d 474, 478 (5th Cir.1985). It is undisputed that the TMI Group failed to request instructions and issues on the RICO claim and to object to their omission in the Court’s charge and verdict. Therefore, the Court finds that the TMI Group waived their right to have their RICO claim submitted to the jury. Furthermore, the Court is of the opinion that the TMI Group is not entitled to a new trial solely on the RICO claim.

Accordingly, the Court ORDERS that both MBank’s motion and the TMI Group’s motion are, in their entirety, hereby DENIED. The Court further ORDERS that the opinion dated September 26, 1985 is hereby WITHDRAWN and that a new opinion be entered concurrently with this order. The Court further ORDERS that all other relief not expressly granted is hereby DENIED. Finally, the Court ORDERS that the judgment entered on September 26, 1985 is unaffected by either this order or by the new opinion and remains in full force and effect.

      . “The TMI Group" consists of Trans Meridian, Inc., Robert E. and Gale Tunnell, Itaf Daou, Ghaleb A. Hamadeh, Charles L. and Barbara Ward, and HJ. and Laiping Van Praag.

      . "Sabre Exploration” or “Sabre" consists of Sabre Exploration Corp.; John C. Andrews and Gerald T. Langford.

      . "MBank” is the shortened name of MBank Fort Worth, N.A., formerly Continental National Bank of Fort Worth.

      . Sabre also claimed that they were defrauded by the TMI Group. Because the jury failed to find for Sabre on this claim, no further discussion will be given to it.

      . The jury was charged on three theories of fraud: misrepresentation, failure to disclose and statutory fraud.

      . It is therefore unnecessary at this juncture to determine whether the statute of limitations defense bars recovery on these claims.

      . At the close of the evidence the Court found as a matter of law that the TMI Group’s investment in the South Hamel field was a security transaction for purposes of both the federal and state securities laws. Not only were the oil and gas leases securities as defined in the securities acts, but the drilling and participation agreement was an investment contract within the meaning of the acts. See S.E.C. v. W.J. Howey Co., 328 U.S. 293, 298-99, 66 S.Ct. 1100, 1102-03, 90 L.Ed. 1244 (1946); S.E.C. v. C.M. Joiner Leasing Corp., 320 U.S. 344, 64 S.Ct. 120, 88 L.Ed. 88 (1943); Williamson v. Tucker, 645 F.2d 404, 418-19 (5th Cir.) cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981); Doran v. Petroleum Management Corp., 545 F.2d 893 (5th Cir.1977); Nor-Tex Agencies, Inc. v. Jones, 482 F.2d 1093, 1098 (5th Cir.), cert. denied, 415 U.S. 977, 94 S.Ct. 1563, 39 L.Ed.2d 873 (1973).

      . The trial court also rendered judgment that the plaintiffs take nothing against defendants Calvin Vick and James Baxter.

      . In its brief, the TMI Group states that the Court of Appeals reversed the trial court’s refusal to enter judgment in both the Texas Securities Act and DTPA claims and that this "holding was affirmed by the Texas Supreme Court, which stated that ‘[T]he Court of Appeals correctly held that the trial court erred in failing to render judgment ... for violations of the Deceptive Trade Practices Act.’ George v. Vick, supra, 686 S.W.2d at 100." TMI Group's reply brief in support of proposed judgment at 7.
      The TMI Group wholly misconstrues the holding of both the Court of Appeals and Supreme Court opinions. The above quote from the Supreme Court opinion omits reference to Defendant Calvin Vick. The trial court disregarded the jury’s verdict on the DTPA issue as to Calvin Vick and rendered judgment that the plaintiffs take nothing against him. On appeal, the plaintiffs claimed that there was sufficient evidence to support a verdict under the DTPA against Calvin Vick. The Court of Appeals agreed. 671 S.W.2d at 549-50. The Supreme Court simply reversed the Court of Appeals remanding this part of the cause of action and rendered judgment against Calvin Vick for violations of the DTPA.
      This Court assumes that the misrepresentations of the holdings of these cases on the part of the TMI Group was attributable to over zealous advocacy and was not in any way intended to deliberately mislead the Court.

      . The fact that MBank did not make the first loan until nearly four and one-half months after the execution of the agreement is of no consequence. This issue was squarely resolved in Flenniken where the Texas Supreme Court stated:
      [T]he fact that the Bank's unreasonable course of action occurred after the [parties] entered into the contract for sale of the horse does not exempt the Bank from liability under the DTPA. Under section 17.50(a)(3) there is no requirement that the defendant’s unconscionable act occur simultaneously with the sale or loan of the goods or services that form the basis of the consumer’s complaint.
      661 S.W.2d at 707.

      . In fact, the timing of the interest payments received by MBank from Sabre during the fall of 1980 make clear that THE LOAN PROGRAM WITH THE TMI Group was the best way to assist Sabre in making their payments. On July 30, 1980, two weeks after the TMI Group paid $300,000.00 to Sabre, Sabre made a payment of $12,000.00 to MBank. In September 1980, the TMI Group paid $375,000.00 to Sabre for drilling expenses; on September 29, 1980, Sabre made a payment of $44,000.00 to MBank. On December 31, 1980, the TMI Group paid $500,-000.00 which was borrowed from MBank to Sabre; on the same day, Sabre made a payment of $144,000.00 to MBank. See TMI Exhibit 174.

      . Having found that MBank is subject to a DTPA claim as a third party lender, it is unnecessary for the Court to determine whether MBank may also be subject to a DTPA claim for providing services as that term is defined in the Act.

      . Although the Court finds this ruling to be correct under Texas law, the Court also finds it to be disconcerting. Given the many remedial statutes designed to protect against commercial fraud, the Court is of the opinion that the Texas legislature never envisioned the DTPA to be used as it is today against sophisticated business people to redress this type of fraud. By its very name, Deceptive Trade Practices — Consumer Protection Act, the DTPA evokes such transactions as the sale of a home or the purchase of a car. Acknowledging that there are invariably situations not expressly anticipated by the legislature when enacting a statute, the Court is apprehensive over the way in which a dispute between business people can be converted into a DTPA action mandating treble damages.
      The Court’s concern is fueled by the many analogies drawn between the use of the DTPA and the civil provisions of the Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. As with the DTPA in this case, civil RICO, with its treble damage, divestiture and injunctive provisions, is being applied against legitimate business people in cases of ordinary fraud and breach of contract. Of course, any changes in the DTPA, as with RICO, can only come from the legislature. However, until such changes, if any, are made, this Court does not believe that Texas courts are required to read the DTPA as broadly as this Court fears is being done.

      . No one has claimed that the proviso for extending the period for 180 days as quoted above is applicable to this case. Therefore, the Court will not consider it.

      . Such a finding therefore, renders it unnecessary for the Court to determine whether the waiver defense applies to the TMI Group’s affirmative DTPA claim.

      . In fact, the legislature knew how to draft such a provision when it wished to do so. See article 5069-6.05(4) of the Consumer Credit Code, Tex.Rev.Civ.Stat.Ann. art. 5069-6.05(4) (Vernon’s 1985).


author: BARRINGTON D. PARKER, District Judge.

text:
    Clifford R. WYMER, et. ux., Plaintiffs, v. Lawrence S. LESSIN, M.D., et al., Defendants. Clifford R. WYMER, et ux., Plaintiffs, v. Clara CHAN, M.D., Defendant.
    Civ. A. Nos. 84-0444, 85-1941.
    United States District Court, District of Columbia.
    Dec. 20, 1985.
    Aubrey M. Daniel, III, Jeffrey D. Ubersax, Williams & Connelly, Washington, D.C., for plaintiffs.
    R.G. Guziak, Brault, Graham, Scott & Brault, Washington, D.C., for Clara Chan.
   ORDER

(Denying Defendant Chan’s Motion to Dismiss)

BARRINGTON D. PARKER, District Judge.

This is a medical malpractice action arising from plaintiff Clifford Wymer’s contraction of hepatitis following oral surgery on February 24 and 25, 1981. The original defendants were the dentist who performed the surgery and four doctors involved in the management of Mr. Wymer’s hemophiliac condition during the surgery. Now before the Court is defendant Chan’s motion to dismiss. Upon consideration of the motion, the Court concludes that it should be denied.

The material facts are briefly stated. This proceeding was set for trial on June 10, 1985. On that date, after the jury had been impaneled, it was revealed that Dr. Chan was not a U.S. citizen when the complaint was filed. Since the plaintiffs were foreign citizens as well, complete diversity between the parties was lacking and this Court had no jurisdiction to hear the case. Because of this development, the action against Dr. Chan was dismissed without prejudice.

Dr. Chan became a U.S. citizen on June 4, 1984, approximately four months after the original complaint was filed. After the dismissal of June 10, 1985, plaintiff filed a new action against Dr. Chan which was consolidated with the original suit against the remaining defendants. Dr. Chan has moved to dismiss the case against her since it was filed after the applicable three year statute of limitations for negligence action in the District of Columbia. See D.C.Code § 12-301(8) (1981). She argues that since the injury which is the source of this action occurred in March of 1981, the second suit, which was filed on June 14, 1985, is barred.

Many states have enacted statutes that deal with precisely this situation. These provisions, often referred to as “savings statutes,” allow plaintiffs to refile complaints within a certain period of time if the original complaint is dismissed without prejudice for procedural defects. See Burnett v. New York Central Railroad Co., 380 U.S. 424, 431-32 & n. 9, 85 S.Ct. 1050, 1056-57 & n. 9, 13 L.Ed.2d 941 (1965). The District of Columbia, however, has no such statute. In Carter v. Washington Metropolitan Transit Authority, 764 F.2d 854 (D.C.Cir.1985), our Circuit Court held that the absence of a savings statute indicates that “the District of Columbia particularly wishes that its statute of limitations be respected.” Id. at 857.

Nonetheless, as the Ca,rter court noted, the courts have long recognized that the doctrine of equitable estoppel can be invoked to prevent an unjust application of the statute of limitations. See Carter, 764 F.2d at 855. Under that doctrine, a defendant cannot rely on the statute if his conduct has tended to lull the plaintiff into inaction, permitting the statute to run. Alley v. Dodge Hotel, 551 F.2d 442, 446-47 (D.C.Cir.1977) (per curiam), cert. denied, 431 U.S. 958, 97 S.Ct. 2684, 53 L.Ed.2d 277 (1977). Plaintiffs convincingly argue here that this doctrine should prohibit Dr. Chan from availing herself of the statute of limitations.

Specifically, plaintiffs assert that the statute of limitations expired because Dr. Chan did not state her true citizenship in a 'motion to dismiss the original complaint, but instead answered the complaint and denied knowledge of the facts necessary to respond to the plaintiffs’ allegations of diversity jurisdiction. They argue that Dr. Chan should not benefit because of the misleading statements in her own pleadings. Had the plaintiffs learned of Dr. Chan’s citizenship at the time a responsive pleading was due, they could have refiled • their action in the D.C. courts well within the three year limitations period.

The Court finds that it would be harsh and inequitable to penalize the plaintiffs for the shortcomings of Dr. Chan’s answer. This is particularly true because if this motion to dismiss is granted, plaintiffs would also be barred from suing Dr. Chan in D.C. Superior Court. Cf. Carter, 764 F.2d at 858 (noting that local remedies remained to the plaintiff). Dr. Chan’s failure to deny U.S. citizenship in her answer was a result of her counsel’s failure to make reasonable inquiry into that matter. Since Dr. Chan’s citizenship is a fact peculiarly within her knowledge, the plaintiffs relied on her answer to know whether their action was properly before the Court. The failure to deny citizenship deprived the plaintiffs of the opportunity to remedy the flaw in their complaint within the statute of limitations. As a consequence, the defendant should not be allowed to avail herself of the statute of limitations bar.

Accordingly, it is this 20th day of December, 1985

ORDERED

That defendant Chan’s motion to dismiss is denied.

      . Plaintiffs' cause of action accrued on March 30, 1981, the date that he learned from his physician that he had hepatitis and therefore knew of the injury he had suffered. See Burns v. Bell, 409 A.2d 614, 617 (D.C.1979). Dr. Chan received service of the complaint on February 13, 1984. A timely answer or motion to dismiss should have been filed by March 4, 1984. While it is true that Dr. Chan’s answer was not actually filed until March 30, the extension was requested by Dr. Chan’s lawyer and acquiesced in by the plaintiffs. The delay therefore does not defeat plaintiffs’ equitable argument.

      . For a more complete discussion of this determination, see the accompanying order upholding the plaintiffs’ appeal from the Magistrate's order of August 15, 1985.