author: FOREMAN, Chief Judge:

text:
    Otis and Eunice WOLF, Plaintiffs, v. MARYLAND CASUALTY CO., Defendant.
    Civ. No. 84-3027.
    United States District Court, S.D. Illinois, East St. Louis Division.
    Aug. 15, 1985.

      R. Michael Fisher, Alton, 111., for plaintiffs.
    David M. Duree, O’Fallon, 111., Leritz & Reinert, St. Louis, Mo., for defendant.
   MEMORANDUM AND ORDER

FOREMAN, Chief Judge:

Before the Court are plaintiffs’ Motion for Summary Judgment (Document No. 14) and defendant’s Cross-Motion for Summary Judgment (Document No. 27).

The present case flows from an earlier action in Madison County styled Harold E. Norris v. Wolf, Case No. 77-LM-167. Norris, who was insured by defendant, sued the plaintiffs for money owed for the construction of a swimming pool in the plaintiffs’ backyard. The plaintiffs counterclaimed alleging the pool was defective and caused damage to their property. Judgment was subsequently entered in favor of the plaintiffs for $50,000. The record indicates that the judgment against Norris was obtained from Norris’ agreement to not contest to the Plaintiffs’ motion for summary judgment and that Norris agreed to this judgment in consideration for plaintiffs’ promise to collect the $50,000 only from defendant. Defendant initially agreed to defend Norris in the state action under a reservation of rights, however, defendant withdrew the defense when the plaintiffs filed their second-amended counterclaim because in its opinion the second-amended counterclaim did not allege facts within the potential coverage of the policy. Plaintiffs brought an action for the $50,000 against the defendant in state court but took a voluntary dismissal when the state judge denied both parties’ motions for summary judgment. The plaintiffs refiled in federal court and both parties have now placed their prior motions before this Court.

Summary judgment is appropriate only where the record shows that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. The party moving for summary judgment has the burden of establishing the lack of a genuine issue of material fact.” Korf v. Ball State University, 726 F.2d 1222, 1226 (7th Cir.1984). The Court must view the evidence, and the reasonable inferences to be drawn therefrom, in the light most favorable to the party opposing summary judgment. Where the moving party fails to meet its strict burden of proof, summary judgment cannot be entered even if the opposing party fails to respond to the motion. Yorger v. Pittsburgh Corning Corp., 733 F.2d 1215 (7th Cir.1984).

Where the moving party has met its initial burden and the opposing party asserts the existence of a question of fact, the Seventh Circuit has identified two considerations to be used in determining whether summary judgment is proper. The Court must determine whether the non-moving party has established that there is a genuine issue as to that fact.

To create a question of fact, an adverse party responding to a properly made and supported summary judgment motion must set forth specific facts showing that there is a genuine issue for trial____ A party may not rest on mere allegations or denials of his pleadings; similarly, a bare contention that an issue of fact exists is insufficient to raise a factual issue.

Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, — U.S.-, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). Furthermore, the disputed fact must be material, that is, it must be outcome-determinative under the applicable law. Egger v. Phillips, 710 F.2d 292, 296 (7th Cir.) (en banc), cert. denied, — U.S.-, 104 St. 284, 78 L.Ed.2d 262 (1983).

The fact that both parties have filed motions for summary judgment does not mean that the Court is bound to decide the case on the motions. The Court could quite conceivably denied both motions if both parties have failed to meet their burden of proving that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2270.

The gist of the plaintiffs’ argument is that since the allegations in the second-amended counterclaim potentially fell within the purview of the defendant’s policy with the Norrises, the defendant breached its duty to defend and is now estopped from arguing no coverage under the policy. The gist of the defendant’s argument is that, based on the allegations contained in the second-amended counterclaim, the defendant clearly had no duty to defend. Additionally, both parties have fired allegations of fraud at each other. The plaintiffs allege that the defendant coaxed them into amending their counterclaim so as to make the allegations in the second-amended counterclaim fall outside the terms of the policy. The defendant contends that the plaintiffs colluded with the Norrises to defraud the defendant by amending the counterclaim, not forwarding this counterclaim to the defendant, having the Norrises agree not to contest the summary judgment motion, and then agreeing not to execute judgment against the Norrises.

It has long been established that if an action is commenced against an insured alleging claims potentially within the purview of the policy, the insurer must either defend the suit under a reservation of rights or seek before or pending the trial of the original action a declaratory judgment that the policy affords no coverage. Thornton v. Paul, 74 Ill.2d 132, 23 Ill.Dec. 541, 384 N.E.2d 335 (1978). The insurer’s obligation is not satisfied by simply refusing to participate in the litigation and waiting for the insured or the claimant to institute litigation against the insurer to determine their respective rights and duties. Trovillion v. U.S. Fidelity and Guaranty Co., 130 Ill.App.3d 694, 86 Ill. Dec. 39, 42, 474 N.E.2d 953, 956 (1985).

If the insurer fails to defend under reservation of rights and fails to seek a timely declaratory judgment, it does so at the peril that it might later be found to have breached its duty to defend. Maneikis v. St. Paul Insurance Co. of Illinois, 655 F.2d 818, 821 (7th Cir.1981). Once the insurer breaches its duty to defend it is es-topped from denying policy coverage in a subsequent lawsuit by the insured or the insured’s assignee. Id. This estopped arises at the moment the insurance company refuses to defend. Id. at 822. As discussed later, the only exception to the es-topped rule occurs where the insurer would have faced a conflict of interest if it had defended the insured. Thornton, 74 Ill.2d 132, 23 Ill.Dec. at 549, 384 N.E.2d at 343.

The inquiry here, therefore, is whether the insurer’s refusal to defend breached the insurance contract. Maneikis, 655 F.2d at 822. “Since an insurer’s duty to defend is broader than its duty to indemnify in Illinois, an insurer’s refusal to defend is wrongful if the allegations in the underlying lawsuit are even potentially within the scope of the policy____” Id. (emphasis in original). The Court believes that had the defendant sought a declaratory judgment before or pending the original action, the Court would have declared, that based on the second-amended counterclaim, the policy affords no coverage. The second-amended counterclaim was based on a breach of warranty theory for the sale of a defective pool. However, the policy in question specifically excludes damage to the product or work of the insured. The same policy and an identical claim was analyzed, and the same conclusion was reached in Western Casualty & Surety Co. v. Brochu, 105 Ill.2d 486, 86 Ill.Dec. 493, 475 N.E.2d 872 (1985). Unfortunately, the inquiry here is not whether there was coverage but whether the allegations of the second-amended counterclaim fell potentially within the scope of the policy. The Court is convinced that under this low threshold requirement the insurer breached its duty to defend.

In Count I and III of the second-amended counterclaim, the plaintiffs allege they sustained the expense of removing the defective swimming pool and installing a comparable swimming pool. They also indicated in these counts that the swimming pool collapsed. This latter point should have put insurer on notice that there could have been damage to the plaintiffs’ property. The court in Trovillion v. U.S. Fidelity and Guaranty Co., 130 Ill.App.3d 694, 86 Ill.Dec. 39, 43, 474 N.E.2d 953, 957 (1985), faced a complaint even less revealing than the counterclaim here, and it decided that the assertions there potentially fell within the purview of the policy. Therefore, the Court holds that the defendant breached its duty to defend when it refused the defense of the second-amended counterclaim. It is now estopped from asserting lack of coverage in this proceeding. Based on this holding, the Court need not reach the defendant's argument that the third-amended counterclaim was never tendered to the defendant, or the plaintiffs’ allegation of fraud on the part of the defendant in coaxing them into amending the counterclaim.

The Court does not believe that the narrow exception to the above rules announced in Thornton is applicable here. In Thornton, the plaintiff filed an action against Ben Paul for personal injuries suffered when Paul struck him on the head with a wooden club. Paul’s insurer refused to defend on the grounds that the policy did not cover for damages caused by an intentional tort such as a battery. A default judgment was later entered against Paul for $30,000. Sometime prior to the default, Paul and Thornton entered into an agreement whereby in exchange for $100, Thornton would not execute judgment on Paul, but would pursue the insurer. Thornton then instituted a garnishment action against the insurer for the $30,000. After a hearing, the trial court ordered the insurer to pay the $30,000. The appeals court affirmed both this order and the lower court’s order refusing to vacate the default judgment. After discussing the various principles expressed above, the Illinois Supreme Court held that even though the insurer failed to seek a declaratory judgment or defend under a reservation of rights, it was not estopped from raising lack of coverage in the garnishment proceeding because of the conflict of interest it would have faced had it defended the original action. Thornton, 74 Ill.2d at 144, 23 Ill.Dec. at 549, 384 N.E.2d at 343. The court stated that:

We noted earlier, that, under the facts of this case, the general rule that the insurer is estopped, because of its failure to defend, from asserting lack of coverage in a garnishment proceeding does not apply ... Clearly, if Illinois Foudners would have accepted the defense of the amended complaint, there would have been a direct conflict between its interest and those of the defendants____
Although, the allegations of the complaint determine whether or not the insurer is obligated to provide a defense, when there is a conflict of interests, as in the present case, the insurer should not be obligated or permitted to participate in the defense of the case. Its obligation to provide a defense should be satisfied by reimbursing the insured for the costs of the defense.

Id.

The few Illinois cases invoking the Thornton exception have done so only where the potential conflict of interest was complete, where the disputed issue could only be resolved into one of two mutually exclusive outcomes, one which benefited the insured and one which benefited the insurer. Maneikis, 655 F.2d at 825. For example, in Thornton the insured’s actions were either intentional or negligent, but not both. Likewise, see Home Insurance Co. v. Lorelei Restaurant Co., 83 Ill.App.3d 1083, 39 Ill.Dec. 304, 307, 404 N.E.2d 895, 898 (1980) (arson or negligence); Aetna Casualty & Surety Co. v. Dichtl, 78 Ill.App.3d 970, 34 Ill.Dec. 759, 763, 398 N.E.2d 582, 586 (1979). (the insured killed her husband either intentionally or because she was insane); Associated Indemnity Co. v. Insurance Co. of North America, 68 Ill.App.3d 807, 25 Ill.Dec. 258, 268, 386 N.E.2d 529, 539 (1979) (driver was either an agent or an independent contractor). The defendant here alleges that there is a conflict of interest since it would have an incentive to assign to insured’s product as much of the damage as possible. However, unlike the cases above, the conflict is not complete, since it is quite possible, if not probable, that there would be both damage to the pool and to the plaintiffs’ property. Therefore, the Thornton exception is inapplicable to the case at hand.

In summary, the Court holds that the defendant breached its duty to defend the insured based on the second-amended counterclaim, since the allegations contained therein potentially fell with the purview of the policy. As a result, the defendant is estopped from asserting a lack of coverage in this proceeding.

The Court would be inclined to grant summary judgment for the plaintiffs were it not for the defendant’s strong allegations of fraud and collusion. Taken at face value,' the Court characterizes the plaintiffs’ action as “sharp” as that term was used in Thornton. After the defendant refused to defend, the plaintiffs amended their counterclaim for a third time to clearly fall with the terms of the policy and state damages for the policy limit, and thereafter entered into an agreement whereby the Norrises would not contest their summary judgment motion in exchange for the plaintiffs’ assurance that they would only pursue the defendant for the judgment. There is no indication that the defendant was ever notified that a third-amendment had been filed or that such an agreement was reached, nor is there any indication that the trial court was apprised of this agreement. Even though the defendant has not supported the allegations of collusion, this Court feels that the bare facts as stated above are enough to get this case, as to that point, before the jury. While an insurer who breaches its duty to defend is liable for the amount of an judgment or reasonable settlement, the Court does not believe that once the insurer breaches this duty the remaining parties are given carte blanche to essentially force a unilateral judgment or settlement on an unsuspecting insurer. The Court believes the correct rule of law to be that the breaching insurer must pay the judgment or reasonable settlement absent collusion or bad faith by the insured and the injured party. See Carter v. Aetna Casualty and Surety Co., 473 F.2d 1071 (8th Cir.1973). If the jury finds there to be collusion or bad faith, then the insurer would only be liable for the damages reasonably sustained to the plaintiffs property. The defendant would not be totally relieved of its duty pay, since it breached its duty to defend. By the same token, the plaintiffs would not reap the benefits of estoppel, but would be limited to recovery of only that portion of the damages which the policy actually covers. The defendant has the burden of proof as to the collusion or bad faith issue.

Accordingly, the defendant’s Cross-Motion for Summary Judgment (Document No. 27) is hereby DENIED. The plaintiff's Motion for Summary Judgment (Document No. 14) is GRANTED in part and DENIED in part. Pursuant to Fed.R.Civ.P. 56(d) the Court finds that the defendant breached its duty to defend based on the allegations in the second-amended counterclaim. It is therefore estopped from asserting non-coverage in this proceeding. A trial will be held for the limited purpose of determining the collusion issue expressed above. The trial schedule is amended as follows: A final pretrial conference will be held at 9:30 a.m. on October 4, 1985 in East St. Louis. Discovery will end on October 25, 1985. The trial date will be November 4, 1985, in East St. Louis, at 9:30 a.m.

IT IS SO ORDERED.


source: Caselaw Access Project

author: ALSOP, Chief Judge.

license: Public Domain

text:
    M. Michele COOK, Plaintiff, v. CITY OF MINNEAPOLIS, George T. Caldwell, Director of the Minneapolis Department of Civil Rights, and Gene Robinson, Employee of the Minneapolis Department of Civil Rights, Defendants.
    No. 3-84 CIV 425.
    United States District Court, Dist. Minnesota, Third Division.
    Aug. 16, 1985.

      Dunkley and Bennett, P.A. by Michael D. Madigan, Minneapolis, Minn., for plaintiff.
    Robert J. Alfton, City Atty. by Scott Reeves, Asst. City Atty., Minneapolis, Minn., for defendants City of Minneapolis and George T. Caldwell.
    Kudak and Associates, P.A. by David G. Kudak, Minneapolis, Minn., for defendant Gene Robinson.
   MEMORANDUM ORDER

ALSOP, Chief Judge.

This matter comes before the court upon the motion of defendants City of Minneapolis (City) and George Caldwell (Caldwell) for summary judgment pursuant to Fed.R.Civ.P. 56.

I. FACTUAL AND PROCEDURAL BACKGROUND

The factual allegations underlying this action arise from plaintiff M. Michele Cook’s (Cook) dealings with the Minneapolis Department of Civil Rights during the fall of 1980. On October 7, 1980, Cook filed an employment discrimination claim with the Minnesota Department of Human Rights. The claim was turned over to the Minneapolis Department of Civil Rights, an agency of defendant City of Minneapolis (City), for investigation. Defendant Gene Robinson (Robinson), an employee of the Minneapolis Department of Civil Rights, was assigned to investigate Cook’s claim. On December 11, 1980, Robinson contacted Cook about her claim and arranged for a meeting. Later that evening, Robinson and Cook met in Robinson’s car at a secluded location. At that time, Robinson allegedly “attacked, battered, assaulted, and raped Ms. Cook in his car.” Complaint ¶ 11. Thereafter, “Robinson told Ms. Cook never to tell anyone about the rape because no one would believe her and because her discrimination claim would go nowhere if she did.” Id. During all relevant times, defendant George T. Caldwell (Caldwell) was Director of the Minneapolis Department of Civil Rights.

Cook filed this action on March 30, 1984. In her complaint, Cook alleges seven causes of action. The first through the fourth causes of action present state law claims against Robinson. The fifth cause of action presents a state law claim for negligence against the City and Caldwell. The sixth cause of action also presents a state law negligence claim against the City and Caldwell, specifying that “[defendants improperly employed, failed to supervise and failed to train Defendant Robinson.” Id. 1139. The seventh cause of action is brought pursuant to 42 U.S.C. § 1983. Cook alleges that the “actions of Defendants deprived Ms. Cook of her rights, privileges, and immunities secured by the Constitution and laws.” Complaint II44. Although the complaint does not specify the “right, privilege or immunity” violated by defendants’ action, plaintiff’s counsel conceded at oral argument that Cook’s only claim against the City and Caldwell under § 1983 arises from an alleged violation of her liberty interests protected by the fourteenth amendment due process clause.

The City and Caldwell raise three arguments in their summary judgment motion: (1) plaintiff’s § 1983 claim is barred by the statute of limitations, (2) plaintiff’s § 1983 due process claim must be dismissed because an adequate postdeprivation remedy exists under state law, and (3) plaintiff has failed to plead or prove a custom or policy of the City which caused a deprivation of a right, privilege or immunity actionable under § 1983.

II. STATUTE OF LIMITATIONS

A. Applicable Statute of Limitations

Section 1983, like other federal statutes, does not contain a specific statute of limitations. In such instances, courts are instructed to select and apply the most appropriate or analogous state statute of limitations if it is not inconsistent with federal law or policy to do so. 42 U.S.C. § 1988; Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 1942, 85 L.Ed.2d 254 (1985). Using this analytical framework, the Eighth Circuit has held that in Minnesota, the six-year limitations period for statutory actions, Minn.Stat. § 541.05 subd. 1(2) (1984), applies to actions arising under § 1983. Occhino v. United States, 686 F.2d 1302, 1307-08 (8th Cir.1982).

The Supreme Court’s recent decision in Wilson v. Garcia, — U.S.-, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985), requires a re-evaluation of the Occhino court’s selection of a Minnesota limitations period for § 1983 actions. In Wilson v. Garcia, the Supreme Court held that § 1983 claims are best characterized as personal injury actions for statute of limitations purposes. 105 S.Ct. at 1947. According to the Court, this characterization is supported by the nature of the § 1983 remedy and by the federal interest in ensuring that the borrowed period of limitations not discriminate against the federal civil rights remedy. Id. at 1947-49. The task now before this court, in light of Wilson v. Garcia, is “to select, in [Minnesota], the one most appropriate statute of limitations for all § 1983 claims.” Id. at 1947. The issue is one of first impression in Minnesota.

The selection of a state statute of limitations applicable to personal injury actions should be an easy chore. In many states, there is but one statute of limitations governing personal injury actions. See, e.g., Wilson v. Garcia, supra, 105 S.Ct. 1938 (New Mexico); Smith v. City of Pittsburgh, 764 F.2d 188 (3d. Cir.1985) (Pennsylvania); Winston v. Sanders, 610 F.Supp. 176 (C.D.Ill.1985) (Illinois). The task becomes complicated, however, in states like Minnesota where more than one statute of limitations govern personal injury actions.

The parties argue, and the court agrees, that a choice must be made between two Minnesota statutes. Plaintiff favors Minn. Stat. § 541.05 subd. 1(5) (1984), a six-year statute “for any other injury to the person or rights of another, not arising on contract, and not hereinafter enumerated; ...” Defendants favor Minn.Stat. § 541.-07(1) (1984), a two-year statute “[f]or libel, slander, assault, battery, false imprisonment, or other tort resulting in personal injury____” The Minnesota Supreme Court has long held that Minn.Stat. § 541.-07(1), the two-year statute, applies to intentional tort actions, whereas Minn.Stat. § 541.05 subd. 1(5), the six-year statute, applies to negligence actions. See American National Liability Insurance Co. v. Reed Cleaners, 265 Minn. 503, 122 N.W.2d 178, 180 (1963); Villaume v. Wilkinson, 209 Minn. 330, 296 N.W. 176 (1941); Brown v. Village of Heron Lake, 67 Minn. 146, 69 N.W. 710 (1897). The relative positions of the parties is not surprising. Plaintiffs cause of action arose on December 11, 1980; the complaint was filed over three years and three months later on March 30, 1984. Thus, the action would be barred by the two-year statute, absent an estoppel as advocated by plaintiff, whereas under the six-year limitations period, the action is timely.

The United States Court of Appeals for the Eleventh Circuit faced a similar dilemma in Jones v. Preuit & Mauldin, 763 F.2d 1250 (11th Cir.1985). In Jones, a post- Wilson case, the Eleventh Circuit was required to choose the one Alabama limitations statute governing claims for recovery of damages for personal injury that federal courts should borrow for purposes of § 1983. As in the instant action, two Alabama statutes govern the limitations period for bringing personal injury suits, a six-year statute for intentional tort actions and a one-year statute for negligence actions. 763 F.2d at 1253-54. The choice of the proper and analogous state statute, for purposes of § 1983 claims, depends initially on whether the personal injury that is the essential nature of all § 1983 claims is more like an intentional tort action or a negligence action. Id. at 1254. The Eleventh Circuit concluded that the characterization of § 1983 claims given by the Supreme Court in Wilson resembles an action in intentional tort rather than negligence. Id. Nevertheless, nothing in the language or legislative history limits § 1983 solely to intentional deprivations of constitutional rights. Some § 1983 claims sound in intentional tort and others in negligence. Id. at 1255. Thus, the Eleventh Circuit concluded in Jones that the essential nature of a § 1983 personal injury claim cannot be determined simply by asking which of the state law causes of action for personal injury, such as intentional tort or negligence, could also be brought under § 1983. Id.

Instead, the Eleventh Circuit shifted its inquiry in Jones. “The appropriate characterization of Section 1983 personal injury claims must be determined by searching the legislative history of the statute and isolating the particular type of wrong that was most paradigmatic, the one category of wrongs that the legislators intended first and foremost to address.” Id. The Eleventh Circuit then analyzed the extensive legislative history of the Civil Rights Act of 1871. That review demonstrates that Congress considered intentional and direct acts of violence on the part of the Ku Klux Klan against black citizens in the Reconstruction South to be the paradigmatic wrong addressed by § 1983. Id. at 1255-56; see also Wilson v. Garcia, supra, 105 S.Ct. at 1947-48. Even in the modern era, based upon this court’s own experiences with civil rights actions, personal injuries based upon intentional acts make up the most significant subset of claims brought under § 1983. See also Jones v. Preuit, supra, 763 F.2d at 1255.

In Jones, the Eleventh Circuit concluded, on the basis of congressional intent and the Supreme Court’s opinion in Wilson v. Garcia, that a § 1983 claim should be characterized as a personal injury action along the lines of an intentional tort, and would thus be subject to the Alabama statute of limitations for intentional torts. 763 F.2d at 1256. This court finds the Eleventh Circuit’s analysis in Jones persuasive and analogous to the instant action, and likewise concludes that a § 1983 claim should be characterized as a personal injury action along the lines of an intentional tort for statute of limitations purposes. Accordingly, for § 1983 claims brought in Minnesota, this court will borrow the two-year limitations period of Minn.Stat. § 541.07(1).

B. Retroactivity

The choice of the applicable Minnesota limitations period for § 1983 claims does not end the court’s inquiry. The court’s holding above was dictated by the Supreme Court’s April 17, 1985 decision in Wilson v. Garcia, supra, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254. Thus, Minnesota’s two-year statute of limitations would apply to a § 1983 action based upon a cause arising subsequent to Wilson. The instant action, however, arises from incidents occurring prior to the Wilson decision. In addition, this action was filed pri- or to Wilson. Thus, the court must now decide whether Wilson should be applied retroactively. Because plaintiff’s action was filed more than three years and three months after the cause arose, the action is saved only if Wilson applies prospectively. Although the parties have not addressed the issue of the retroactive application of Wilson, it is incumbent upon the court to confront the issue here.

The retroactive effect of Wilson v. Garcia is not analyzed in Justice Stevens’s opinion for the Supreme Court. Subsequently, lower courts have split on the issue. Compare Smith v. City of Pittsburgh, 764 F.2d 188 (3d Cir.1985) (applies Wilson retroactively in Pennsylvania) with Winston v. Sanders, 610 F.Supp. 176 (C.D. Ill.1985) (applies Wilson prospectively in Illinois). See also Jackson v. City of Bloomfield, 731 F.2d 652, 654 (10th Cir. 1984) (en banc) (applies Garcia v. Wilson, 731 F.2d 640 (10th Cir.1984) (en banc), aff'd Wilson v. Garcia, — U.S.-, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985) prospectively in New Mexico); Abbitt v. Franklin, 731 F.2d 661, 663 (10th Cir.1984) (en banc) (applies Garcia prospectively in Oklahoma).

The Supreme Court has outlined three factors relevant to the nonretroactive application of judicial decisions.

First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied ... or by deciding an issue of first impression whose resolution was not clearly foreshadowed____ Second, it has been stressed that “we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” ... Finally, we have weighed the inequity imposed by retroactive application, for “[wjhere a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the ‘injustice or hardship’ by a holding of nonretroactivity.”

Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349, 355, 30 L.Ed.2d 296 (1971) (citations omitted). This “approach has been utilized where changes in statutes of limitations or other aspects of the timeliness of a claim are at issue.” Occhino v. United States, 686 F.2d 1302, 1308 n. 7 (8th Cir. 1982).

The first prong of the Chevron analysis is whether Wilson v. Garcia overruled a past precedent on which the parties may have relied. Prior to Wilson, the Eighth Circuit had held “that where the § 1983 claimant alleges acts which may constitute both a state tort and the deprivation of a constitutional right, the appropriate statute of limitations is not that which applies to state tort actions.” Occhino v. United States, supra, 686 F.2d at 1307, citing Garmon v. Foust, 668 F.2d 400, 406 (8th Cir.1982). In Occhino, the Eighth Circuit specifically applied Minnesota’s six-year limitations period for statutory actions, Minn.Stat. § 541.05 subd. 1(2) (1982), rather than Minnesota’s two-year limitations period for intentional torts, Minn.Stat. § 541.07(1) (1982), to § 1983 actions. Occhino v. United States, supra, 686 F.2d at 1307-08; see also Garmon v. Foust, supra, 668 F.2d at 406 n. 11 (“period of limitations for actions based upon liability created by statute ... may appropriately govern an unlimited federal civil rights action”). Clearly, Wilson v. Garcia overrules past precedents of the Eighth Circuit as embodied in Occhino and Garmon.

The inconsistency between Wilson and Occhino weighs heavily against the retroactive application of Wilson. This conclusion is consistent with the results reached in other circuits where courts have declined to apply Wilson retroactively because plaintiffs could justifiably have relied upon contrary prior precedent in those circuits. See, e.g., Winston v. Sanders, supra, 610 F.Supp. at 178, cf. Jackson v. City of Bloomfield, supra, 731 F.2d at 654 (prospective application of 10th Circuit’s decision in Garcia); Abbitt v. Franklin, supra, 731 F.2d at 663 (same result as Jackson v. City of Bloomfield). The Third Circuit’s contrary conclusion on this factor in Smith v. City of Pittsburgh, supra, 764 F.2d at 194-95, is distinguishable because there was no definitive ruling on the appropriate Pennsylvania statute of limitations prior to the time that plaintiff filed suit.

The second Chevron factor requires an examination of the purposes of the rule announced in Wilson v. Garcia. The Supreme Court’s decision in Wilson promotes many purposes. The decision was designed to promote the broad remedial purpose of § 1983 and the policies of repose embodied in statutes of limitations. Wilson v. Garcia, supra, 105 S.Ct. at 1945. In addition, “federal interests in uniformity, certainty, and the minimization of unnecessary litigation all support” the Court’s result in Wilson. Id. at 1947. This court “cannot say that retrospective application to bar plaintiff’s claims at this point in the litigation would either hamper or promote these goals.” Jackson v. City of Bloomfield, supra, 731 F.2d at 655; accord Smith v. City of Pittsburgh, supra, 764 F.2d at 196.

The final factor in the Chevron test asks whether retroactivity would result in substantial inequities in the action. At the time this action was filed, Occhino v. United States, supra, 686 F.2d 1302, stood for the proposition that Minnesota’s six-year limitations period for statutory actions governed § 1983 claims. Plaintiff was therefore justified in relying on Occhino to conclude that her action was timely. A retroactive application of Wilson, in contrast, would bar plaintiff’s action. Such a result would be unjust and would “foreclose this Plaintiff from her day in court in regard to her complaint under § 1983.” Winston v. Sanders, supra, 610 F.Supp. at 179. This court “will not bar plaintiff’s right to [her] day in court when [her] action was timely under the law in effect at the time [her] suit was commenced.” Jackson v. City of Bloomfield, supra, 731 F.2d at 655.

Based upon a consideration of the Chevron factors, this court'concludes that the command of Wilson v. Garcia that § 1983 claims be characterized as personal injury actions for limitations purposes should not be applied retroactively in this action. By applying Wilson prospectively, this court holds that plaintiff’s § 1983 claim is not time barred.

III. POSTDEPRIVATION REMEDIES

Defendants City and Caldwell argue next that plaintiff Cook’s § 1983 due process claim must be dismissed because an adequate postdeprivation remedy exists under state law. Viewing plaintiff’s complaint in the light most favorable to plaintiff, Cook’s § 1983 claim alleges a deprivation of a liberty interest without due process of law in violation of the fourteenth amendment to the United States Constitution. Plaintiff’s counsel, as noted above, agreed at oral argument with this characterization of Cook’s § 1983 claim.

In Hanson v. Larkin, this court recently held that “when a state provides an adequate, postdeprivation remedy in tort for an unauthorized, intentional deprivation of a liberty interest, that remedy itself constitutes the due process required by the fourteenth amendment.” 605 F.Supp. 1020, 1025 (D.Minn.1985) (Alsop, J.). Under the Hanson rationale, an intentional deprivation of a liberty interest does not violate the fourteenth amendment due process clause when the deprivation results from a “random and unauthorized act” by a state official, a predeprivation hearing is impossible, and the state provides an adequate postdeprivation remedy. Id. at 1025-26. The analysis underlying Hanson need not be repeated here. See generally Hudson v. Palmer, — U.S.-, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984); Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981); Thibodeaux v. Bordelon, 740 F.2d 329 (5th Cir.1984); Gilmere v. City of Atlanta, 737 F.2d 894 (11th Cir.1984), reh’g en banc granted, 737 F.2d 912 (1984).

The court concludes that Hanson is analogous to the factual allegations of the instant action. Cook’s claim of a liberty deprivation arises from defendant Robinson’s alleged intentional acts of sexual misconduct. This sort of deprivation resulted from a “random and unauthorized act,” exactly the kind of state action to which Hanson applies.

Cook, however, argues that her claim does not involve random and unauthorized acts. Instead, Cook contends that the allegedly negligent supervision of Robinson by the City and Caldwell was neither random nor unauthorized, but was the official policy of the Minneapolis Department of Civil Rights. The court finds plaintiff’s position untenable. Even assuming that the City and Caldwell were negligent in supervising Robinson, and that their negligence constituted a City policy, Robinson’s alleged acts of sexual assault were neither calculated by the City or Caldwell, nor dictated by City policy. On the contrary, the City cannot “anticipate and control in advance the random and unauthorized intentional conduct of its employees____” Hudson v. Palmer, supra, 104 S.Ct. at 3203. Robinson’s alleged sexual assault of Cook is precisely the kind of random and unauthorized act contemplated by Hanson.

In protecting against the alleged liberty deprivation at issue here, it was impossible for Minnesota to provide an adequate, predeprivation due process hearing. Thus, under the Hanson analysis, the court must now determine whether the postdeprivation tort remedies of the State of Minnesota available to Cook satisfy due process.

As to the conduct of Robinson, Minnesota law provides adequate postdeprivation remedies. Sexual misconduct is actionable in tort as an assault and battery under Minnesota law. See Patzwald v. Patrick, 188 Minn. 557, 248 N.W. 43 (1933); Frey v. McManus, 154 Minn. 175, 191 N.W. 392 (1923). Minnesota also provides an independent cause of action for the tort of intentional infliction of emotional distress. Hubbard v. United Press International, Inc., 330 N.W.2d 428, 437-40 (Minn.1983); see also Langeland v. Farmers State Bank of Trimont, 319 N.W.2d 26, 31-33 (Minn.1982) (no recovery for negligent infliction of emotional distress absent showing of physical injury or physical danger).

With respect to defendant Caldwell, it appears from the complaint and from the argument of counsel that he is being sued in his official capacity and not individually. Under § 1983, a judgment against a public servant in his official capacity imposes liability on the entity that he represents, provided the public entity received notice and an opportunity to be heard. Brandon v. Holt, — U.S.-, 105 S.Ct. 873, 878, 83 L.Ed.2d 878 (1985). Thus, the postdeprivation remedies available against Caldwell are the same as those available against the City.

With respect to the City, Minn.Stat. § 466.02 (1984) provides in part that “every municipality is subject to liability for its torts and those of its officers, employees and agents acting within the scope of their employment or duties whether arising out of a governmental or proprietary function.” Thus, Cook has a postdeprivation remedy against the City for any torts committed by Robinson within the scope of his employment.

Cook does not claim, nor does it appear otherwise, that the remedy against the City is inadequate. This court therefore concludes that the State of Minnesota provides an adequate postdeprivation remedy in tort for the intentional deprivation of a liberty interest at issue in this action. This remedy constitutes the due process required by the fourteenth amendment. Accordingly, Cook’s § 1983 due process claim against the City and Caldwell will be dismissed.

IV. CITY CUSTOM OR POLICY

Finally, defendants City and Caldwell argue that plaintiff has failed to plead or prove a custom or policy of the City which caused a deprivation of a “right, privilege or immunity” actionable under § 1983. Given the court’s holding on the postdeprivation remedy issue, this argument need not be addressed. Nevertheless, the court finds merit in defendants’ argument and will therefore discuss this issue because it provides an alternative basis for dismissing plaintiff’s § 1983 claim against the City and Caldwell.

The analysis which follows presumes, for the sake of argument, that Cook has established a deprivation of a constitutional right. In order to hold the City and Caldwell liable under § 1983, however, Cook must also establish that the City and Caldwell were the persons who caused Cook to be subjected to the deprivation. In Monell v. New York City Department of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978), the Supreme Court held that municipal liability under § 1983 could only be imposed for injuries inflicted pursuant to government “policy or custom.” Id. at 694, 98 S.Ct. at 2037.

Defendants City and Caldwell contend that Cook has failed to allege or prove a municipal policy or custom of the City which subjects them to liability under § 1983. Defendants rely primarily upon the Supreme Court’s recent decision in City of Oklahoma City v. Tuttle, — U.S.-, 105 S.Ct. 2427, 85 L.Ed.2d 791 (1985). In Tuttle, the widow of a man shot by a police officer brought a § 1983 action against the officer and his employer city. The Court held that it was reversible error to instruct the jury that they could infer from a single unusually excessive use of force that it was attributable to inadequate training or supervision amounting to deliberate indifference or gross negligence on the part of the officials in charge.

Writing for the plurality, Justice Rehnquist explains the relationship between a single incident of unconstitutional activity and municipal policy or custom:

Proof of a single incident of unconstitutional activity is not sufficient to impose liability under Monell, unless proof of the incident includes proof that it was caused by an existing, unconstitutional municipal policy, which policy can be attributed to a municipal policymaker. Otherwise, the existence of the unconstitutional policy, and its origin, must be separately proved. But where the policy relied upon is not itself unconstitutional, considerably more proof than the single incident will be necessary in every case to establish both the requisite fault on the part of the municipality, and the causal connection between the “policy” and the constitutional deprivation.

Id., 105 S.Ct. at 2436 (footnotes omitted). In regard to causation, the plurality opinion observed:

The fact that a municipal “policy” might lead to “police misconduct” is hardly sufficient to satisfy Monell’s requirement that the particular policy be the “moving force” behind a constitutional violation. There must be at least an affirmative link between the training inadequacies alleged, and the particular constitutional violation at issue.

Id. at 2436-37 n. 8 (emphasis in the original). The court finds the Tuttle plurality’s analysis directly on point here.

In the instant action, Cook argues that the grossly negligent hiring, training, and supervision of Robinson constituted a custom or policy of the City which was the moving force behind the alleged deprivation of constitutional rights. Robinson was employed by the Minneapolis Department of Civil Rights from May 27, 1975 through July 13, 1976 and from October 22, 1979 through October 1, 1981. Prior to his employment with the City, Robinson had been charged and convicted on various felony counts related to the passing of forged or worthless checks. Robinson had no prior record for crimes involving violence, force, or sexual assault. Up until the date of the underlying incident, only one complaint of misconduct was made against Robinson in his capacity as an investigator with the City Department of Civil Rights. It did not involve sexual misconduct. Defendant Caldwell was not involved in either the hiring or rehiring of Robinson. Based on this record, Cook contends that the City was grossly negligent in hiring, training, and supervising Robinson, and that such action constituted a policy of the City.

Cook has not demonstrated that the policy which purportedly subjects the City to liability under § 1983, namely, grossly negligent hiring, training, and supervision practices, is an unconstitutional policy. The court therefore concludes that the purported policy is not itself unconstitutional. In such circumstances, under Tuttle, considerably more proof than a single incident is necessary to establish the requisite fault on the part of the municipality. Here, Cook relies on a single incident, Robinson's alleged sexual assault, in an attempt to establish a policy of grossly negligent hiring, training, and supervision practices. No other proof of this policy has been presented by plaintiff. Based upon Tuttle, the court is unable to infer a municipal policy from the single incident of Robinson's alleged sexual assault.

Furthermore, under Tuttle, the court cannot rely on a single incident to establish the causal connection between the policy and the constitutional deprivation. Thus, proof of a single incident of sexual assault does not establish that the City’s purported policy of negligent hiring, training, and supervision caused plaintiff’s alleged deprivation of liberty without due process of law.

The Supreme Court’s decision in Tuttle is dispositive of Cook’s § 1983 claim against the City and Caldwell. Because Cook relies on a single incident, the court concludes that plaintiff has failed to prove a custom or policy of the City which caused a deprivation of a right, privilege or immunity actionable under § 1983. Accordingly, on this additional basis, the court will dismiss Cook’s § 1983 claim against the City and Caldwell.

Y. STATE LAW CLAIMS

In addition to her § 1983 claim, Cook also alleges state law claims for negligence against the City and Caldwell. Because plaintiff’s federal claim as to these defendants will be dismissed, federal question jurisdiction no longer exists as to the claims against these defendants. The court will therefore dismiss the remaining pendent state claims against the City and Caldwell without prejudice for lack of subject matter jurisdiction. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966).

In sum, the court will grant the motion of defendants City and Caldwell for summary judgment.

Upon the foregoing, and upon all files, records and proceedings herein,

IT IS ORDERED That the motion of defendants City of Minneapolis and George Caldwell for summary judgment be and the same hereby is in all things granted.

IT IS FURTHER ORDERED That plaintiff’s § 1983 claim against the City and Caldwell be and the same hereby is dismissed with prejudice.

IT IS FINALLY ORDERED That plaintiff’s state law claims against the City and Caldwell be and the same hereby are dismissed without prejudice for lack of subject matter jurisdiction.


author: CONABOY, District Judge.

text:
    Ramon E. WILLIAMS, Petitioner, v. U.S. PAROLE COMMISSION, Defendant.
    Civ. No. 84-1183.
    United States District Court, M.D. Pennsylvania.
    Aug. 16, 1985.

      Robert Nolan, Asst. U.S. Atty., Scranton, Pa., for the government.
    Ramon Williams, pro se.
   MEMORANDUM AND ORDER

CONABOY, District Judge.

We have received a Magistrate’s Report in the above-captioned matter. The Magistrate’s Report includes a recommendation as to the proper disposition of this case. Petitioner Williams has filed timely exceptions to the contents of the Magistrate’s Report. We have considered these exceptions, the Report itself, and the case file in reaching our decision herein.

BACKGROUND

Petitioner is a federal prisoner under sentence of 18 years imprisonment. That sentence is a result of his conviction in 1974 on bank robbery and related charges. He was paroled from this sentence in October of 1979 on condition that he remain under supervision until 1991. In early September of 1982 he was arrested in Michigan on various state charges which included a weapons violation. This incident provoked revocation of his parole by the United States Parole Commission (hereinafter the Commission). Said revocation gave rise to this habeas corpus action pursuant to 28 U.S.C. § 2241. Petitioner is currently incarcerated at U.S.P. Lewisburg as a result of this new criminal behavior which the Commission has rated as category 5 severity under the guidelines in effect in 1983. This rating resulted in a finding by the Commission that Petitioner should serve 72 months in prison with a presumptive parole date of September 2, 1988. Petitioner contends that the Commission violated its own guidelines in reaching this computation. Petitioner takes the position that if the appropriate guidelines had been applied to him he would have had to serve no more than 44 months unless the Commission could state a rationale for taking him beyond the guidelines. This, however, is an over-simplification of Petitioner’s case and we shall consider what we perceive to be the five separate aspects of his claim sequentially.

I

Petitioner’s first argument in support of his application is that the Commission should not have found him guilty of possession of a sawed-off shotgun since that charge was dismissed by the prosecuting authorities in Hillsdale, Michigan. Petitioner had originally been charged with said weapons violation, felonious assault, breaking and entering an occupied dwelling with intent to commit a felony, and felonious assault by knife. Petitioner ultimately pleaded no contest to an amended charge of malicious destruction of property and disorderly conduct. He was sentenced to 90 days incarceration and the remaining charges were dismissed. A federal parole violation warrant was executed on December 27, 1982 and Petitioner entered federal custody where he remains.

It is beyond question that the Commission has the authority to find that an individual committed acts in violation of his parole notwithstanding the fact that related criminal charges have been dismissed. This is true provided such finding is supported by a preponderance of the evidence. See 18 U.S.C. § 4214(d). It is for the Commission to decide whether such a preponderance exists. Our task is merely to determine whether the Commission abused its broad discretion by inquiring as to whether there is a rational basis in the record for the Commission’s conclusion. See Zannino v. Arnold, 531 F.2d 687 at 691 (3d Cir.1976). We find that a rational basis does exist in support of the Commission’s conclusion that Petitioner did possess a sawed-off shotgun during the incident which led to his Michigan convictions.

In “Petitioner’s Exceptions to the Report of the Magistrate” it is contended that it was irrational for the Commission to rely upon the statements made by one Carolyn Wood on the night of Petitioner’s arrest as opposed to the self-contradictory testimony she offered at Petitioner’s parole revocation hearing. This Court cannot agree. In his effort to denigrate Miss Wood’s initial statement that he had threatened her life with a sawed-off shotgun, Petitioner states “... the record is clear that Carolyn Wood was hysterical the night of my arrest and did not recover until much later.” We cannot, however, fault the Commission’s decision to accord greater weight to Miss Wood’s initial representations than to her subsequent recantation. On the contrary, we think there is a great likelihood that the truth emerged “in the heat of the moment” rather than after a lapse of time which quite possibly permitted unfathomable influences to change the shape of her testimony. Human experience teaches us that people often speak truthfully when under great stress. We must conclude, then, that considering Miss Wood’s testimony and the fact that the investigating officers recovered a sawed-off shotgun at the scene of Petitioner’s arrest, it was not irrational for the Commission to find that Petitioner had possessed said weapon. Where conflicting evidence is presented in a parole revocation hearing, the issue of the reliability of such evidence is properly a matter for the Commission. Lewis v. United States Parole Commission, 448 F.Supp. 1327 (E.D.Mich. 1978). The Commission is vested with broad discretion with respect to such credibility determinations. Iuteri v. Nardoza, 732 F.2d 32, 38 (1984). Thus, we find no fault with the Commission’s finding that Petitioner committed the weapons violation alluded to above.

II

Petitioner’s second argument in support of his application is that the Commission’s failure to advise him of its finding that he possessed a sawed-off shotgun, until he received a corrected notice of action on October 11, 1984, so prejudiced his defense efforts as to amount to a denial of due process. Here again, this Court disagrees. It is true that the notice of action of October 11, 1984 was the first document which mentioned the weapons violation in the form of a formal charge. However, the record clearly indicates that Petitioner was not prejudiced by this procedural defect since he was earlier advised that the Commission considered a weapons violation to be part and parcel of his new criminal activity. Moreover, he and his attorney addressed this issue at length at his parole revocation hearing. Therefore, the Respondent contends that the corrected notice of action of October 11, 1984 cures any procedural error in this case. We agree based upon our perception that Petitioner received de facto notice of the weapons charge and an opportunity to be heard thereon. Due process demands no more.

Ill

Petitioner’s third claim in support of his application is that the Administrative Hearing Examiner, the Regional Commissioner, and the National Commissioners did not have authority to disagree with the hearing panel’s assessment that a preponderance of the evidence did not exist to show that Petitioner had possessed the shotgun. Petitioner bases this claim on the fact that the Commission took no action within the 21 day period prescribed by 18 U.S.C. § 4214(e). The record does verify the fact that some 41 days did elapse between the time of Petitioner’s hearing and the time he received notification of the Commission’s decision to supersede the recommendation of the hearing panel that Petitioner be reincarcerated and paroled effective September 2, 1983. The Magistrate was of the opinion that since “... petitioner has not established that he was substantially prejudiced by this procedural error involving a mere passage of time ... ”, that he is entitled to no relief on this aspect of his claim. Petitioner argues that:

... The examiners, as the Regional Commissioner’s representatives, made a decision which she then had 21 days within which to disagree. By not doing so within that time frame, I contend that she thereby affirmed the panel’s decision. There appears to be more involved here than a “mere passage of time”. It has to do with the finality of the decision. The law and applicable criteria either mean something or they do not. (See Docket Item 34 at page 14).

While we note the ring of logic in Petitioner’s argument, we are also aware that the relief this Court can grant in this situation is limited to ordering a new parole hearing for the Petitioner. See Bush v. Kerr, 554 F.Supp. 726, 730 (1982), citing Billiteri v. U.S. Board of Parole, 541 F.2d 938 (1976). This would seem to be an exercise in futility since we have already ruled that Petitioner’s complaint regarding the sufficiency of the evidence relied upon by the Commission to find that he possessed a shotgun is without merit. Accordingly, we will not grant a new hearing on this basis since the outcome of such hearing would not, in this Court’s view, be in doubt.

IY

Petitioner’s fourth argument in support of his application is that under the terms of this Court’s decision in U.S. ex rel. Forman v. McCall, Civil Number 81-0553 (M.D.Pa. September 14, 1984), the Commission should have applied the guidelines in existence in 1982 (when Petitioner committed his latest offense) as opposed to the amended guidelines of 1983. It is generally true that the decision in Forman— which was issued after remand by the Third Circuit Court of Appeals and which did make new law — requires the Parole Commission to focus upon the guidelines as they exist at the time an offense is committed as the proper point of departure in determining one’s presumptive parole date. However, a subsequent decision in the Middle District, Leonzi v. U.S. Parole Commission, Civil Number 84-1684 (M.D.Pa. May 24, 1985 per Judge Rambo), has stated that if Forman is applied retroactively to parole decisions made outside this district when an offender is transferred into this district, the result will be a deleterious effect on the already strained resources of the Commission. Thus, Leonzi holds that Forman should be applied only to hearings conducted after September 14, 1984 — the date Forman was decided — and to petitions which raised an ex post facto issue and were pending on that date. We think the reasoning in Leonzi is appropriate and should be followed.

In our legal system, which is based on precedent, judicial decisions generally apply retroactively. But such application is not automatic nor — for very good reasons — is it Constitutionally compelled. The basic reason for retroactive application, in most instances, is the protection and enhancement of the truth-finding process — or the trial. If the “new” decision is one which certainly will make the factfinding process more accurate, then the reason for retroactive application is obvious — because it enhances the fundamental concept in American Criminal Justice that one is innocent until proven guilty beyond a reasonable doubt. But if the “new” decision is one that affects procedural matters or, as in this case, one that only conceivably could help a defendant in a discretionary area, then the question of its retroactivity must be considered in a different context.

In Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), where the conceptual and jurisprudential theories of retroactive application are reviewed in detail, we are instructed as follows:

Once the premise is accepted that we are neither required to apply, nor prohibited from applying, a decision retrospectively, we must then weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective-operation will further or retard its operation.

And, again, in commenting on the administrative difficulties which would be caused by a retrospective application of the exclusionary rule announced in Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), the Court in Linkletter, supra, announced:

Finally, there are interests in the administration of justice and the integrity of the judicial process to consider. To make the rule of Mapp retrospective would tax the administration of justice to the utmost. Hearings would have to be held on the excludability of evidence long since destroyed, misplaced or deteriorated. If it is excluded, the witnesses available at the time of the original trial will not be available or if located their memory will be dimmed. To thus legitimate such an extraordinary procedural weapon that has no bearing on guilt would seriously disrupt the administration of justice.

See, also Tehan v. Shott, 382 U.S. 406, 86 S.Ct. 459, 15 L.Ed.2d 453 (1966), and Johnson v. New Jersey, 384 U.S. 719, 86 S.Ct. 1772, 16 L.Ed.2d 882 (1966).

Following these guidelines the Supreme Court in 1984 in Solem v. Stumes, 465 U.S. 638, 104 S.Ct. 1338, 79 L.Ed.2d 579 (1984), held the criteria to be followed in considering the question of retroactive application of a new decision implicates the following:

(a) The purpose to be served by the new standards.
(b) The extent of the reliance by law enforcement authorities on the old standards.
(c) The effect on the administration of justice of a retroactive application of the new standards.

See, also Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967). Applying this reasoning here, we find it would be inappropriate to require retroactive application of the “Forman Rule”. The guidelines have been in use and followed by the Parole Commission since 1973 and applied in thousands of instances. There is considerable dispute on the question of the application of the ex post facto clause of the United States Constitution to the guidelines, and thus one cannot say the Commission was unreasonable in presuming their validity. Thus, the Commission justifiably relied on their validity in terms of Solem, supra.

Moreover, the use of the guidelines has no effect on the trial in any given case, and thus no impact on the Defendant’s original criminal conviction. In fact, the Commission may not in any instance increase the sentence beyond the maximum imposed by the sentencing court. It may by its grace or discretion reduce the time presumed to be served.

We must inquire, then, whether applying the “Forman Rule” retroactively would seriously impede the Commission’s work and result in multitudinous hearings which in most instances would not change prior results. The Commission conducts hearings on a regular bi-monthly basis. In a recent 12 month period the Commission conducted 514 initial parole hearings and 102 revocation hearings at U.S.P. Allen-wood and U.S.P. Lewisburg alone. Thus, considering the Commission’s current caseload, it is plain that retroactive application of the “Forman Rule” would, in the terms of Solem, supra, have a significant negative impact on the administration of justice. We cannot justify this negative impact in a context where the complaint does not implicate the fundamental issue of a petitioner’s innocence or guilt. We, find, therefore, that since this Petitioner’s hearing was held out of the Middle District and before September 14, 1984, that he has stated no claim under the rationale of Forman as further delineated in Leonzi. We emphasize that Forman is only to be applied prospectively.

y

Petitioner’s fifth argument in support of his application is that the Commission exceeded its authority by placing a detainer against him before his state conviction. This resulted in his incarceration pending disposition of state charges against him. Petitioner contends that Hopper v. U.S. Parole Commission, 702 F.2d 842 (9th Cir.1983), supports his position that the lodging of this detainer was impermissible prior to his conviction and that "... such unauthorized procedure interferred (sic) with his state pretrial release rights, thereby triggering the sixty-day provision of 18 U.S.C. § 4214(a)(1)(B).” Assuming, arguendo, this is so, the Hopper Court stated:

Even if Hopper were denied any statutory rights to a timely parole revocation and probable cause hearings, however, he would not be entitled to habeas relief in this case. The courts grant habeas relief because of delay where the petitioner demonstrates that the delay was unreasonable and prejudicial ... citations ... Hopper must demonstrate that he was prejudiced by the delay between the time the warrant was issued and the time of his conviction on the state charge (emphasis ours); at that time Hopper’s conviction constituted probable cause for the purposes of a preliminary hearing, and the USPC had express authority to place the detainer. 18 U.S.C. § 4214(b)(1).

Thus, the case Petitioner cites in support of his argument that the USPC illegally placed the detainer against him also requires him to make a showing that he was somehow prejudiced.

Our review of the case file has convinced this Court that he cannot show any prejudicial effect stemming from the delay between the time the detainer was placed and the time he pleaded guilty to the amended information. Therefore, without taking any position as to whether the 9th Circuit or 11th Circuit has rendered the correct statement of law on when these detainers may be placed, we find that Petitioner’s claims of prejudice flowing from the fact that he was denied bail due to the federal detainer lodged against him are speculative, unsupportable and wholly inadequate to convince this Court that had Petitioner been free pending trial the result would have been otherwise.

In accord with the rationale above, we adopt the Magistrate’s Report as our own opinion in this matter.

      . Miss Wood was the complainant whose representations led to Petitioner’s arrest. Her testimony was corroborated by that of Ruth Place and Kristina Heck.

      . See Docket Item 34 at page 2.

      . See Docket Item 11, Exhibit “A" at page 15.

      . Id., Exhibits "C" and "E”.

      . Id., Exhibit “H” at page 3.

      . Docket Item 29 at page 12.

      . Where the offense is a parole violation, as in the instant case, the guidelines which should be applied are those in existence when the parole violation was committed. See Woodmansee v. Miller, 619 F.Supp. 28 (M.D.Pa. 1985 per Chief Judge Nealon).

      . We note that Petitioner's parole decision was made in Indiana. We note, too, that a review of two other decisions of this court indicates that one might possibly conclude that we meant to find that the "Forman Rule” should be applied retroactively. See Harris v. U.S.P.C., Civil Number 84-0840 (M.D.Pa. December 12, 1984) and Forsyth v. U.S.P.C., Civil Number 85-0220 (M.D.Pa. July 30, 1985). However, the retroactive application question was neither raised by any of the parties nor considered by this court at the time of the decision in those cases. The Forsyth matter is back before this Court on procedural grounds and we will, in fact, withdraw our original opinion in that matter and dismiss the Forsyth application for relief because of our finding of non-retroactivity of the Forman Rule. The Harris case is on appeal on other grounds and we will await the decision of the Appellate Court in that matter.

      . The petitioner’s hearing took place long before September 14, 1984 — the date of the Forman decision.

      . See Docket Item 30, Leonzi Exhibit at page 5.

      . Docket Item 26 at page 24. It appears the 60 day provision was not adhered to in this case.

      . Goodman v. Keohane, 663 F.2d 1044 (11th Cir.1981), holds that the U.S.P.C. does have authority to lodge detainers against parolees charged with state offenses prior to their convictions.

      . Docket Item 17 at pages 4 and 5.


author: JAMES LAWRENCE KING, Chief Judge.

text:
    Edward R. SCHARP, individually and as representative of a class of similarly situated persons, Plaintiff, v. CRALIN & CO., INC., Defendant.
    No. 85-631-CIV-KING.
    United States District Court, S.D. Florida.
    Aug. 16, 1985.

      Patricia E. Coward, Ruden, Barnett, McClosky, Schuster & Russell, P.A., Miami, Fla., for plaintiff.
    Jonathan B. Reisman, Reisman & Bryn, Miami, Fla., for defendant.
   ORDER GRANTING DEFENDANT’S MOTION TO DISMISS COUNT II, AU THOUGH DENYING MOTION TO DISMISS COUNTS I & III, OF PLAINTIFF’S AMENDED COMPLAINT; ORDER DENYING DEFENDANT’S MOTION TO COMPEL ARBITRATION AND THEREFORE DIRECTING IT TO ANSWER WITHIN 20 DAYS

JAMES LAWRENCE KING, Chief Judge.

THIS CAUSE arises before the Court upon the defendant’s (1) motion to dismiss plaintiff’s amended complaint (hereinafter complaint) pursuant to Rule 12(b)(6), Fed.R. Civ.P.; and (2) renewed motion to compel arbitration of plaintiff’s federal securities claims. Since the Court has jurisdiction pursuant to 15 U.S.C. §§ 77v & 78aa, the subject motions shall be considered respectively.

Plaintiff alleges the following securities violations in his complaint:

Count I § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, (hereinafter § 10(b) , & Rule 10b-5);
Count II § 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a), (hereinafter § 17(a)); and
Count III § 12(2) of the Securities Act of 1933, 15 U.S.C. §771 (2), (hereinafter § 12(2)).

The circumstances leading up to the alleged federal securities violations, as set. forth in plaintiff’s complaint, may be summarized as follows:

In August of 1984, David Sharps, acting within the scope of his employment as registered representative of defendant, contacted plaintiff and advised him that if he would purchase shares of common stock of Family Health Systems, Inc., (hereinafter shares) from or through defendant, it would agree to repurchase the shares at any time for the same consideration paid by plaintiff. In reliance thereon, plaintiff purchased shares and has since demanded defendant to honor its commitment and repurchase its shares, to which the defendant has refused.

Defendant argues in support of its motion to dismiss that plaintiff’s complaint should be dismissed under Rule 12(b)(6) since (1) the § 10(b), Rule 10b-5, and § 12(2) allegations fail to meet the condition precedent under Rule 9(b), Fed.R. Civ.P.; and (2) an intermediary broker, such as the defendant, cannot be liable under § 12(2) since (a) it only applies to an offeror-seller and (b) no privity exists between the parties as purchaser and seller; and (3) § 17(a) fails to provide a private cause of action. As for defendant’s first argument, the issue is whether the plaintiff properly alleged with particularity the circumstances constituting the alleged fraud. After reviewing Counts I and III, the Court finds that Rule 9(b) has been satisfied. Summer v. Land & Leisure, Inc., 571 F.Supp. 380 (S.D.Fla.1983).

In addressing defendant’s second argument, the Court must first determine whether it is deemed a seller under § 12(2). In deciding this issue, the defendant must (1) be in privity with the plaintiff/purchaser or (2) participate in the buy-sell transaction to the extent that its conduct is a substantial factor in causing the transaction to take place. Pharo v. Smith, 621 F.2d 656, 667 (5th Cir.1980); Junker v. Crory, 650 F.2d 1349, 1360 (5th Cir.1981). Plaintiff argues that dismissal would be premature at this stage of the proceedings since discovery will affirmatively show that the defendant was the “motivating force” in the sale of the shares. At this stage of the discovery process, the Court cannot say that the defendant is, or is not, deemed a seller under § 12(2). Therefore, defendant’s motion to dismiss Count II is likewise denied.

As for defendant’s third argument that no private cause of action exists under § 17(a), the central issue is whether Congress intended to create a private cause of action under § 17(a). See, e.g., Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975) (four-part test enunciated to determine when private right of action should be implied by the courts); although, the Supreme Court later holds that the four factors under Ash are not entitled to equal weight since central inquiry is whether Congress intended to create a private cause of action, Touch Ross & Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979); Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982). It appears that the issue has not been decided by this Circuit, Delta Coal Program v. Libman, 743 F.2d 852, 854 (11th Cir.1984), although this district has found that no private right of action exists under § 17(a). See Ferguson v. Chromalloy American Corp., Fed.Sec.L.Rep. ¶ 92.015 (CCH) (S.D.Fla. April 8, 1985); Fallani v. American Water Corporation, 574 F.Supp. 81 (S.D.Fla.1983); Summer, supra accord, Sheftelman v. Jones, 605 F.Supp. 549 (N.D.Ga.1984); Landry v. All American Assurance Company, 688 F.2d 381 (5th Cir.1982) (after an extensive analysis of the issue, the court of appeals held that no private right of action existed under § 17(a)); Shull v. Dain, Kalman & Quail, 561 F.2d 152 (8th Cir.1977); contra, Newman v. Prior, 518 F.2d 97, 99 (4th Cir. 1975); Kirshner v. United States, 603 F.2d 234, 241 (2nd Cir.1978) (but see Yoder v. Orthomolecular Nutrition Institute, Inc., 751 F.2d 555, 559 n. 3 (2nd Cir.1985) (the court’s finding an implied right of action under § 17(a) may be open to reexamination in light of recent Supreme Court decisions discussing implied rights of action)); Stephenson v. Calpine Conifer II, 652 F.2d 808, 815 (9th Cir.1981); cf, Peoria Union Stock Yards Co. v. Penn Mutual Life Insurance Co., 698 F.2d 320, 323 (7th Cir.1983) (“[w]hether section 17(a) can be enforced by private damage suit is an open question in this circuit ... but it is not a terribly important question” since the relief under § 17(a) is also available under § 10(b)); Ohio v. Peterson, 651 F.2d 687, 689 n. 1 (10th Cir.1981) (observed that there was “considerable doubt” as to whether there exists an implied right of action under § 17(a)); the Supreme Court has refused to resolve the issue, Herman & MacLean v. Huddleston, 459 U.S. 375, 378 n. 2, 103 S.Ct. 683, 685 n. 2, 74 L.Ed.2d 548 (1983); Plaintiffs Memorandum in Opposition to Defendant’s Motion to Dismiss, August 2, 1985, at 3 n. 1 (other decisions finding a private right of action under § 17(a)).

Upon this Court’s review of the excellent briefs submitted by the parties, the case law cited in support of their respective positions and after tracing the legislative history of § 17(a), the Court finds that Congress did not intend to create an implied private right of action under § 17(a) of the Securities Act of 1933; consequently, we expressly adopt the well reasoned Fifth Circuit opinion in Landry, supra. See also In Re Diasonics Securities Litigation, 599 F.Supp. 447 (N.D.Cal.1984) (addressing the anomaly between § 10(b) and § 17(a)(2) & (3) in that the former requires scienter and the latter does not).

As for defendant’s motion to compel arbitration, it argues that Counts I and II are subject to arbitration under the customer agreement (hereinafter agreement), Federal Arbitration Act (hereinafter FAA), 9 U.S.C. § 2, although concedes that Count III is nonarbitrable in light of Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953). Since Counts II and III are no longer in issue, the Court will address the arbitrability of Count I. In addressing the arbitrability of plaintiff’s § 10(b) and Rule 10b-5 claim, the issue is whether the recent U.S. Supreme Court case of Dean Witter Reynolds Inc. v. Byrd, — U.S.-, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985), notwithstanding Belke v. Merrill Lynch, Pierce, Fenner & Smith Inc., 693 F.2d 1023 (11th Cir.1982), and Sibley v. Tandy Corporation, 543 F.2d 540 (5th Cir.1976) (wherein the Eleventh and former Fifth Circuit held § 10(b) and Rule 10b-5 claims to be nonarbitrable under the FAA), compels this Court to rule contrary to Belke and Sibley. At the outset, the Court finds that defendant’s motion to compel arbitration must be denied on two counts: (1) Byrd being but dicta, Belke and Sibley are yet controlling; and (2) pursuant to the parties agreement, plaintiff reserved the right to proceed in the federal forum.

After tracing the procedural history of the nonarbitrability of § 10(b) and Rule 10b-5 claims, and the doubts cast on the soundness of Belke and Sibley in light of Byrd and other post-Byrd district court decisions, see Roberts v. Lehman Brothers Kuhn Loeb Inc., Case No. 84-1421-Civ-King (S.D.Fla. July 15, 1985) (notwithstanding post-Byrd district court decisions finding § 10(b) & Rule 10b-5 claims arbitrable, motion for stay pending appeal from order denying motion to compel arbitration was denied), the defendant argues that (1) § 10(b) & Rule 10b-5 are subject to arbitration in light of Byrd and post-Byrd decisions; and (2) pursuant to the arbitration clause of the agreement, the plaintiff agreed to submit “any controversy” with the defendant to arbitration, notwithstanding the savings provision which allegedly preserves plaintiff’s right to proceed in this forum.

As for defendant’s first argument, it concedes that if the Court was to find Belke and Sibley still controlling it would be compelled to deny its motion. For the reasons set forth in Divco Construction and Realty Corporation, Inc. v. Merrill Lynch, Pierce, Fenner & Smith Inc., Case No. 83-1393-Civ-King (S.D.Fla. April 26, 1985) and later in Roberts, (S.D.Fla. June 22, 1985) (after an extensive analysis of Byrd, the FAA, and the case law concerning the FAA and the arbitrability of § 10(b) & Rule 10b-5, the Court found said claims to be nonarbitrable), supra, the Court finds Belke and Sibley still the law in this circuit “until overruled by the United States Supreme Court or the United States Court of Appeals for the Eleventh Circuit sitting en banc. See, e.g., Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc).” Roberts, July 15, 1985, at 3, supra. As for defendant’s second argument, the Court finds that plaintiff did not agree to submit “any controversy” to arbitration.

In May of 1984, the plaintiff entered into an agreement with the defendant which contained an arbitration clause. This clause provided that

any controversy between us arising out of your business or this agreement shall be submitted to arbitration____ This provision is not intended to waive any rights which the undersigned may have to elect to take legal action as to any matter or claim arising under the Federal Securities Laws, (emphasis supplied).

In response to defendant’s assertion that plaintiff waived his right to seek judicial recourse, plaintiff argues that under the last sentence of the arbitration clause, it clearly indicates that he did not waive his right to sue the defendant for claims arising under the federal securities laws. We agree. The conflict over the parties interpretation of the arbitration clause is precisely why the Securities Exchange Commission promulgated Rule 15c2-2, 17 C.F.R. § 240. 15c2-2, (hereinafter Rule 15c2-2), effective December 28, 1983, and announced that the

adoption of [Rule 15c2-2] prohibits the use in broker-dealer customer agreements of provisions purporting to bind public customers to the arbitration of furture disputes arising under the federal securities laws. The Commission’s rule codifies its longstanding view that such clauses are inconsistent with the deceptive practice prohibitions of section 10(b) (15 U.S.C. 78j(b)) and section 15(c) (15 U.S.C. 78o(c)) of the Securities Exchange Act of 1934. Id.

Rule 15c2-2 states that

[i]t shall be a fraudulent, manipulative or deceptive act or practice for a broker or dealer to enter into an agreement with any public customer which purports to bind the customer to the arbitration of future disputes between them arising under the federal securities laws, or to have in effect such an agreement, pursuant to which it effects transactions with or for a customer. Id.

In summarizing Rule 15c2-2, the Securities Exchange Commission held that “[t]he rule also requires broker-dealers to disclose to existing public customers that they are not precluded by such [predispute arbitration] clauses from [seeking] judicial recourse with respect to those claims.” Id. Consequently, the Court finds that pursuant to the express non-waiver provision as set forth under the arbitration clause the defendant shall be bound by its agreement and, therefore, plaintiff shall be allowed to pursue its § 10(b) and Rule 10b-5 claim in this forum.

Accordingly, and for the aforementioned reasons, it is

ORDERED and ADJUDGED as follows:

1. Defendant’s motion to dismiss Count II of plaintiff’s amended complaint is hereby GRANTED; Count II is hereby STRICKEN. As for Counts I & III, its motion to dismiss said counts is hereby DENIED.

2. Defendant’s motion to compel arbitration is hereby DENIED. Therefore, the defendant has 20 days from the date of this order to answer plaintiff’s amended complaint, Counts I & III.