text:
    PIPER ACCEPTANCE CORPORATION, a Florida corporation, Plaintiff, v. William E. SLAUGHTER, Janice H. Slaughter, Dennis C. Hayzlett and Catharine C. Hayzlett, individuals, Defendants. Dennis C. HAYZLETT and Catharine C. Hayzlett, Third-Party Plaintiffs, v. BELLAS AVIATION, INC. d/b/a Rocky Mountain Piper, Anthony G. Bellas, Gerard A. Bellas, Stella K. Bellas, Daniel J. Bellas, Bangor Punta Corporation and its Subsidiaries, Piper Aircraft Corporation, Rocky Mountain Aircraft, Inc., Rocky Mountain Piper, Inc., a Colorado corporation, Alfred Anderson, Michael Littman and Dan Bellas, Third-Party Defendants.
    No. 84-K-907.
    United States District Court, D. Colorado.
    Jan. 7, 1985.

      Brian A. Magoon, John R. Reha, McMartin, Burke, Loser & Fitzgerald, P.C., Englewood, Colo., for plaintiff and defendant Bangor Punta.
    Peter R. Bornstein, Berenbaum & Weinshienk, Denver, Colo., for defendants Hayzlett.
    Lance Astrella, Denver, Colo., for Rocky Mountain Aircraft.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Defendants and third-party plaintiffs Dennis C. and Catharine C. Hayzlett entered into an agreement for the sale and leaseback of an airplane on or about December 23, 1981. In their third-party complaint the Hayzletts allege that this transaction involved the sale of a security by improper and fraudulent means. The airplane was manufactured by Piper Aircraft, a wholly owned subsidiary of Bangor Pun-ta Corporation, and sold by Piper Aircraft’s authorized dealer, Bellas Aviation. The transaction was financed by Piper’s financing affiliate, Piper Acceptance Corporation. The leaseback provided for Bellas Aviation to have exclusive use of the airplane in operations such as flying lessons and charters to the public. In September 1982, Bellas Aviation transferred its interest in the airplane to Rocky Mountain Aircraft. Thereafter, Rocky Mountain Aircraft took over the operations of Bellas Aviation.

Piper Acceptance filed this suit in May, 1984 seeking recovery for breach of contract. The Hayzletts filed their answer, counterclaim and third-party complaint on June 20, 1984 alleging fraud and securities violations associated with the sale and leaseback of the airplane. The third-party complaint sets forth five separate claims for relief as follows: the first claim alleges various misrepresentations in violation of §§ 10(b), 15(c)(1) and 20(a) of the Securities Exchange Act of 1934 and the regulations promulgated thereunder; the second claim alleges violations of federal securities registration requirements giving rise to claims under §§ 12(1) and 15 of the Securities Act of 1933; the third claim for relief alleges violations of §§ 12(2) and 15 of the Securities Act of 1933; the fourth claim alleges violations of Colorado securities laws, Colo. Rev.Stat. § 11-51-125 (1984 Cum.Supp.); and the fifth claim for relief alleges common law fraud. Before me now are motions to dismiss, for a more definite statement and for summary judgment filed by third-party defendants Bangor Punta Corporation, Rocky Mountain Aircraft, Inc. and Piper Acceptance Corporation.

Personal Jurisdiction

The uncontested affidavits submitted by Bangor Punta indicate that it is a Delaware corporation with its principal place of business in Greenwich, Connecticut. At no time material has Bangor Punta conducted business within the State of Colorado as contemplated by the Colorado long-arm statute, Colo.Rev.Stat. § 13-1-124 (1973). Accordingly, Bangor Punta argues that it does not have sufficient contacts with Colorado to provide for personal jurisdiction in this court. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

This position, however, misconstrues the jurisdictional basis underlying the Hayzlett’s federal securities claims. Jurisdiction here is founded on specific statutory provisions authorizing nationwide service of process. Fed.R.Civ.P. 4(f). A claim under federal securities laws “may be brought in the district wherein any act or transaction constituting the violation occured.” 15 U.S.C. § 78aa. Service of process is, therefore, not constrained by the limitations of the Colorado long-arm statute or the minimum contacts requirements of International Shoe, but is “co-extensive with the boundaries of the United States.” See F.T.C. v. Jim Walter Corp., 651 F.2d 251, 256 (5th Cir.1981). Thus, the fairness requirements embodied in due process are satisfied if the party contesting personal jurisdiction is a resident of the United States, “the sovereign that has created the court.” Stafford v. Briggs, 444 U.S. 527, 554, 100 S.Ct. 774, 789, 63 L.Ed.2d 1 (1980) (Stewart, J., dissenting). “Here the sovereign is the United States, and there can be no question but that ... [Bangor Punta] ... has sufficient contacts with the United States to support the fairness of the exercise of jurisdiction over him by a United States Court.” Fitzsimmons v. Barton, 589 F.2d 330, 333 (7th Cir.1979).

Relying upon Oxford First Corp. v. PNC Liquidating Corp., 372 F.Supp. 191 (E.D.Pa.1974) Bangor Punta suggests that an additional standard of fairness should be applied to determine if due process is met through nationwide service of process. This, however, misconstrues the fairness requirement underlying personal jurisdiction. The fairness issues raised in Oxford relate to the appropriateness of litigating a case in a specific forum and not the power of a sovereign to exercise power over a litigant by asserting jurisdiction. The issues of fairness raised in Oxford and by Bangor Punta go to the issue of venue not jurisdiction. See Fitzsimmons, 589 F.2d at 334-35; Clement v. Pehar, 575 F.Supp. 436, 438-39 (N.D.Ga.1983). Bangor Punta does not contest venue in this court pursuant to 28 U.S.C. § 1404(a).

In the alternative, Bangor Punta argues that nationwide service of process pursuant to § 78aa extends only to the Hayzletts’ federal securities claims and does not grant jurisdiction over Bangor Punta with regard to the pendent state law claims. See, e.g., Wilensky v. Standard Beryllium Corp., 228 F.Supp. 703, 705-6 (D.Mass.1964). While there is authority for this position, a more reasoned view extends personal jurisdiction concerning the federal claims to related and ancillary state claims. See International Controls Corp. v. Vesco, 593 F.2d 166, 175 n. 5 (2d Cir.), cert. denied, 442 U.S. 941, 99 S.Ct. 2884, 61 L.Ed.2d 311 (1979), Robinson v. Penn Central Co., 484 F.2d 553 (3d Cir.1973), Emerson v. Falcon Mfg., Inc., 333 F.Supp. 888 (S.D.Tx.1971); C. Wright, Law of Federal Courts § 10 at p. 32 (4th Ed. 1983). Each of the Hayzletts’ claims arise out of a common nucleus of operative facts. Moreover, the Hayzletts did not initially invoke the jurisdiction of this court, rather their claims arise in the nature of compulsory counterclaims. They should, therefore, not be prejudiced for initially failing to file suit in state court in Colorado or Delaware. Accordingly, I recognize pendent jurisdiction over all claims asserted under the laws of the State of Colorado. I also exercise ancillary personal jurisdiction over Bangor Punta with regard to the state law claims.

Statutes of Limitations

Third-party defendants argue that the Hayzletts’ second and fourth claims for relief are barred by the relevant statutes of limitations. The second claim, asserted under §§ 12(1) and 15 of the Securities of 1933, must be brought within one year of the violation. 15 U.S.C. § 77m. The Hayzletts’ counterclaim indicates that the relevant contract for the purchase of the airplane was entered in December, 1981. No other facts concerning the timing of the alleged securities violation are found in the June, 1984, counterclaim. The Hayzletts are under an obligation to plead affirmatively facts indicating compliance with the limitations period. See Hagert v. Glickman, Lurie, Eiger & Co., 520 F.Supp. 1028, 1033 (D.Mn.1981); Kroungold v. Triester, 407 F.Supp. 414, 417-18 (E.D.Pa.1975). The pleadings indicate only that the violation occurred some two and one-half years before to the assertion of the claim. The second claim is, therefore, time barred.

Third-party defendants also argue that the Hayzletts’ state securities claims, asserted in the fourth claim for relief, are time barred. Colorado statutes clearly provide that allegations of improper registration have a two year limitation, while allegations of fraud and misrepresentation have a three year limitation. Colo.Rev. Stat. § 11-51-125(8). Accordingly, state law claims alleging improper securities registration are dismissed. The motions to dismiss other state claims as time barred are denied.

Successor Liability

Third-party defendant Rocky Mountain Aircraft was not incorporated until September 29, 1981, almost one year after the occurance of the events underlying the Hayzletts’ allegations. The Hayzletts acknowledge that under normal circumstances Rocky Mountain Aircraft could, not be liable for actions taken before its corporate existence.

The Hayzletts argue that Rocky Mountain Aircraft’s liability derives from its knowing acceptance of the fruits of fraud. See U.S. v. Carbon County Land Co., 46 F.2d 980, 986 (10th Cir.1931). That is, as the successor to Bellas Aviation, Rocky Mountain Aircraft should be held liable for the actions of Bellas Aviation. The general rule, however, provides for non-liability of successor corporations. The risk of loss falls upon the injured party. See Hickman v. Thomas C. Thompson Co., 592 F.Supp. 1282, 1283-84 (D.Colo.1984). The Hayzletts have alleged no facts suggesting that Rocky Mountain Aircraft was not a bona fide purchaser for value of Bellas Aviation’s interests. Nor have they alleged any facts giving rise to an exception to the general rule of non-liability of successor corporations. Accordingly, Rocky Mountain Aircraft’s motion for summary judgment is granted.

Failure to State a Claim

Bangor Punta and Piper Acceptance argue that the Hayzletts’ claim should be dismissed for failure to state a claim upon which relief can be granted. In particular, the third-party defendants argue that the Hayzletts have not presented facts supporting claims of conspiracy, aiding and abetting or controlling person liability to link them to the alleged primary securities violations. They also argue that allegations of fraud have not been pled with particularity as required by Rule 9(b), Fed. R.Civ.P.

Rule 8(a), Fed.R.Civ.P., requires that claims for relief contain “... (2) a short and plain statement of the claim showing that the pleader is entitled to relief....” Rule 8(e)(1) requires that pleading to be “simple, concise, and direct. No technical forms of pleading or motions are required.” The facts supporting the party’s claim need not be set out in detail. All that is required is that the defendant is given fair “notice of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957).

For the defendant to prevail on a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6), it must appear, “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Id. at 45-46, 78 S.Ct. at 102; see also Mitchell v. King, 537 F.2d 385, 386 (10th Cir.1976). All facts, as distinguished from conclusory allegations, must be construed in favor of the plaintiff. See Swanson v. Bixler, 750 F.2d 810, at 812 (10th Cir.1984); Gardner v. Toilet Goods Ass’n, 387 U.S. 167, 172, 87 S.Ct. 1526, 1529, 18 L.Ed.2d 704 (1967). So long as the plaintiff may offer evidence to support a legally recognized claim for relief, the motion to dismiss should be denied. Conley v. Gibson, 355 U.S. at 41, 78 S.Ct. at 99, 2 L.Ed.2d at 80.

The documents attached to the complaint filed by Piper Acceptance as well as the allegations of corporate ownership and control among Bellas Aviation, Piper Acceptance and Bangor Punta are sufficient to overcome the motion to dismiss.

Rule 9(b), however, requires that allegations of fraud be set out with particularity. The Hayzletts’ counterclaims present only the vaguest information as to the fraudulent acts. None of the requisite information required by the rule is alleged. See Trussell v. United Underwriters Ltd., 228 F.Supp. 757, 774 (D.Colo.1964). The Hayzletts need present facts indicating the identity of the particular individuals who made the allegedly fraudulent misrepresentations, when such misrepresentations occurred and the basic substance of the misrepresentations. Nevertheless, the Hayzletts’ counterclaim adequately presents the basic nature of the misrepresentations and the consequences which they suffered. Accordingly, the sanction of dismissal is not appropriate, but the motion for a more definite statement is granted. See Dusesoi v. United Refining Co., 540 F.Supp. 1260, 1272-73 (W.D.Pa.1982).

THEREFORE, IT IS ORDERED THAT:

1. Bangor Punta’s motion to dismiss is denied;

2. The second claim for relief as asserted in the Hayzletts’ counterclaim is dismissed as time barred;

3. All state law claims asserting improper securities registration are dismissed as time barred and the motion to dismiss all other state law claims is denied;

4. Rocky Mountain Aircraft’s motion for summary judgment is granted;

5. The motion for a more definite statement is granted.

It is further ordered that the third-party plaintiffs shall file an amended counterclaim, consistent with this order, within fifteen (15) days of the date of this order. Third-party defendants shall file an answer to the amended counterclaim within fifteen (15) days of service.

      . In many instances I would decline jurisdiction over state claims pendent to federal securities claims because the state claims tend improperly to expand the scope and coverage of federal law and because the assertion of parallel but differing claims tends to confuse a jury. See Anastasi v. American Petroleum, Inc., No. 82-K-841, slip op. at 2 (D.Colo. Dec. 24, 1984), relying upon, Kerby v. Commodity Resources, Inc., 395 F.Supp. 786 (D.Colo.1975). As noted, however, the Hayzletts’ claims are in the nature of compulsory counterclaims to an action filed by Piper Acceptance Corp. The Hayzletts should not be prejudiced for not filing suit in state court.

      . Because I find for Rocky Mountain Aircraft on the issue of successor liability I do not specifically address other defenses raised. However, one point merits clarification. Rocky Mountain Aircraft argues that Colo.Rev.Stat. §§ 11-51-123 and 11-51-125(1) do not provide for a private right of action. I so held in Philbosian v. First Financial Securities Corp., 550 F.Supp. 61, 64 (D.Colo.1982). That opinion relied upon Judge Arraj’s order in Goldblatt v. Dean Witter & Co., Inc., No. C-2699, slip op. at 2 (D.Colo. Aug. 31, 1971) (Arraj, J.) and Judge Matsch’s opinion in Heard v. E.F. Hutton & Co., No. 75-M-362, slip op. at 1 (D.Colo. July 31, 1975) (Matsch J.). Both of these orders pre-dated the 1981 amendments to the Colorado securities laws which provide in part: "Any person who recklessly, knowingly, or with an intent to defraud sells or buys a security in violation of 11-51-123 is liable to the person buying or selling a security in connection with the violation for such legal or equitable relief which the court deems appropriate....” Colo.Rev.Stat. § 11-51-125(2) (1984 Cum.Supp.). Accordingly, the holding in Philbosian was erroneous as applied to Colorado statutes as amended.


source: Caselaw Access Project

author: CAFFREY, Chief Judge.

license: Public Domain

text:
    Paul N. PAPAS, II, Plaintiff, v. George BERTRUM, et al., Defendants.
    Civ. A. No. 84-0719-C.
    United States District Court, D. Massachusetts.
    Jan. 8, 1985.
    Paul N. Papas, II, pro se.
    Jeffrey R. Martin, Asst. U.S. Atty., Newton Center, Mass., for defendants.
   MEMORANDUM

CAFFREY, Chief Judge.

This is a civil action filed pro se by self-described “sovereign forced impecunious plaintiff Paul N. Papas, II” against the Honorable John J. McNaught, the Honorable Lawrence Cohen, former Assistant United States Attorney James Dineen, Agent Bertram of the Federal Bureau of Investigation, and a number of “presently , unknown defendants.” The matter is presently before the court on the basis of plaintiff’s objections to the recommendation of Magistrate Alexander that the complaint be dismissed.

Upon consideration of the motion to dismiss, the Magistrate’s recommendation, the amended complaint, and documents filed by plaintiff with reference to the motion and the Magistrate’s recommendation, I rule as follows:

1. The case as against the Honorable John J. McNaught and the Honorable Lawrence Cohen should be dismissed on the basis of the doctrine of judicial immunity.

2. The case as against former Assistant United States Attorney Dineen should be dismissed on the grounds of prosecutorial immunity.

3. The case as to the other defendants should be dismissed a) for failure to state a claim on the basis of which relief may be granted because the complaint contains only conclusory allegations and fails to allege any facts, which if proved, would afford a basis for the granting of relief, Fisher v. Flynn, 598 F.2d 663, 665 (1st Cir.1979); and b) the case as against the defendant referred to in paragraph 3 should also be dismissed as being both frivolous and malicious within the meaning of 28 U.S.C. § 1915(d). See Papas v. Shaw, Civil Action No. 83-3790-T, (a suit against plaintiff’s former wife and her relatives); Papas v. Berg, Civil Action No. 84-720-Mc (a suit against prison officials); Papas v. Lovett, First Circuit No. 84-8021 (a suit against a court clerk); Papas v. Richardson, MBD 84-272 (a suit against state court judges).

The records of this Court indicate that plaintiff pleaded guilty to an offense involving cocaine before the Honorable Robert E. Keeton of this Court and was sentenced to the custody of the Attorney General for a period of 5 years plus a special parole term of 3 years.

Plaintiff also plead guilty to various firearm offenses before the Honorable W. Arthur Garrity of this Court for which he received a sentence of 2 years and 2 years probation. The above-cited cases make it clear that plaintiff is seeking retaliation by instituting litigation, however frivolous, against everyone who had even the most tenuous relationship to his arrest, conviction, and incarceration.

Order accordingly.


author: TERENCE T. EVANS, District Judge.

text:
    Donald J. KOSSMAN, Plaintiff, v. CALUMET COUNTY, Defendant. Warran JODAR, Plaintiff, v. CALUMET COUNTY, Defendant. Rodney OTT, Plaintiff, v. CALUMET COUNTY, Defendant.
    Civ. A. Nos. 81-C-419, 83-C-1669 and 84-C-879.
    United States District Court, E.D. Wisconsin.
    Jan. 9, 1985.

      Robert Lutz and Derek McDermott, Bonk, Lutz, Hertel, Burnett & McDermott, Wilford W. Elliott, Chilton, Wis., for plaintiffs.
    David Leo Uelmen and Goldberg, Previant, Uelmen, Gratz, Miller & Brueggeman, Milwaukee, Wis., M.E. Mellor, Corporation Counsel, New Holstein, Wis., for defendant.
   DECISION and ORDER

TERENCE T. EVANS, District Judge.

These three consolidated cases were tried to the court in December of 1984 and January of 1985. The plaintiffs are three former Deputy Sheriffs (one, however, has been reinstated) from Calumet County, Wisconsin. All have brought suit against the County, charging that its mandatory retirement age of 55 for deputy sheriffs violates the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq. Although I have a great deal of sympathy for the County in these cases as it tries to make some sense out of what is an almost impossible maze and mismatch of judicial opinions and legislative determinations, I find for the plaintiffs and direct that judgment be entered in favor of each of them as provided herein.

Donald Kossman was born June 28,1925. He started working as a Deputy Sheriff in Calumet County in 1957. Shortly after reaching age 55, on December 31, 1980, he was terminated pursuant to the County’s “mandatory retirement policy.” At the time of his termination, Kossman held the position of Sergeant-Investigator with the department.

Warren Jodar was born on September 21, 1926. He was hired by the County in 1958, and was terminated pursuant to the policy on October 1, 1981.

Rodney Ott was born on April 6, 1927, and was hired by the County in 1963. Ott was terminated pursuant to the policy on June 30, 1982. Without prejudice to the rights of the county to claim that its actions were proper in this case, it reinstated Ott as a Deputy Sheriff on March 26, 1984. At the time of his termination in 1982, Ott held the position of Sergeant-Traffic Officer, the same position that had been held by Jodar.

Calumet is a small mideastern county in Wisconsin. Its 1970 population was 27,604. In 1980, its population was 30,867. Despite its relatively small size, it is, of course, subject to the provisions of the age discrimination law. EEOC v. Wyoming, 460 U.S. 226, 103 S.Ct. 1054, 75 L.Ed.2d 18 (1983).

The Act prohibits discrimination on the basis of age against all persons within the protected age group, now ages 40 through 70. The issue in this case is whether Calumet County’s mandatory retirement age policy falls within the Act’s exception for cases “where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business ....” 29 U.S.C. § 623(f)(1). The county has the burden of proving the bona fide occupational qualification (BFOQ) defense that it raises in this case. I find that the credible evidence in this case falls far short of that necessary to carry the burden. Having listened to and observed the plaintiffs, I am convinced that they are fully able to discharge the duties of a Calumet County deputy sheriff despite their respective ages. Accordingly, I reject the defense and find in favor of the plaintiffs.

In Orzel v. City of Wauwatosa Fire Dep’t, 697 F.2d 743 (7th Cir.1983), — a case that involved the application of a mandatory retirement age of 55 to an assistant fire chief — the Court of Appeals for this Circuit held that it was not enough for an employer “to show that it made a good faith judgment concerning the safety needs of its citizens” when it enacted the mandatory retirement policy. The Court in Orzel rejected the argument that the employer’s “mandatory retirement policy should be upheld as long as that policy is ‘not the result of an arbitrary belief lacking in objective reason or rationale’....” If a good faith judgment, based simply on some loose correlation between the needs of the job and the effects of age were enough to bring a mandatory retirement policy within the BFOQ exception the Act would have, as the Court noted, little effect. More is required of a defendant seeking the protection of a BFOQ defense.

Obviously, some of the duties of a Calumet County Deputy Sheriff require quick, strenuous, and sometimes vigorous physical activity, and sometimes the conditions of employment are hazardous. Certainly also, one’s ability to respond diminishes with age. In this case, the county has done little more than attempt to establish some inverse correlation between age and job fitness. It has not done so, and even if it did it would not be enough to carry its burden.

Many of the duties performed by a Calumet County Deputy Sheriff, a police officer in a small, rural, and sparsely populated county, are not particularly dangerous. There is nothing in the record that convinces me to the degree of proof required, that one’s ability to perform the tasks of a Calumet County Deputy Sheriff are diminished to such an extent at age 55 that it is “reasonably necessary” to the normal operation of the Sheriff’s Department that the officer be relieved of his duties.

In a similar case tried in the Western District of Wisconsin, Judge Shabaz found that three Deputy Sheriffs employed by Crawford County were entitled to reinstatement, as their discharge by the county violated the Age Discrimination In Employment Act. Judge Shabaz rejected the defense of Crawford County that its action was justified as a BFOQ. Against the “not clearly erroneous” standard, the Court of Appeals for this Circuit affirmed Judge Shabaz in Heiar v. Crawford County, Wisconsin, 746 F.2d 1190 (7th Cir.1984).

Crawford County, which lies in the southwestern corner of Wisconsin, had a 1980 population of 16,556. It is hard to believe that the duties of a deputy vary significantly in Crawford and Calumet Counties. Also, if the law in this area is to have any redeeming value, it must afford some reasonable certainty to those trying to avoid violating it. In my judgment, it would be disastrous to find that deputy sheriffs could be retired involuntarily at 55 in Calumet County but not in Crawford County. Also, what would the policy be in the other 70 counties in Wisconsin? Inconsistent results in interpreting this area of the law would not serve the public interest.

In addition to a finding of liability in this case, the plaintiffs urge that I find the actions of the county to be “wilful” under the Act. A finding of “wilfulness” entitles the plaintiffs to liquidated, or double, damages. Considering the murky area of the law in which the issue in this case is raised and the obvious unfairness inherent in the decision of Congress to exempt federal personnel in the law enforcement area from the requirements of the Act, a finding of wilfulness in this case is out of the question. See the dissent of Judge Gibson in Heiar v. Crawford County, supra.

In conclusion, I find that the action of the defendant in retiring Kossman, Jodar and Ott violated the Age Discrimination in Employment Act. All are entitled to an award of back pay set off against the pension payments, unemployment compensation, and other income that they received during the period following their termination. Also, I find that each plaintiff should receive an award of interest to make them whole. Because substantial stipulations have been reached in these cases insofar as the damage figures are concerned, I will give the parties an opportunity to negotiate further and present to the court a stipulated bottom line damage plus interest award for each plaintiff. Hopefully, an agreement can be reached as to each and a judgment entered accordingly. If the parties are unable to agree on the amount of damages plus interest, they must file their respective positions with me on or before February 5, 1985, and appear at a hearing to argue the point on February 11, 1985, at 1:30 p.m. In addition, as prevailing parties, each plaintiff is entitled to an award of attorney’s fees. Like the damage figures, the parties should attempt to reach an agreement on the sum and failing that, they should follow the same procedure outlined above in resolving the general damage question in this case.

Simply for guidance on the attorneys’ fees issue, I think it appropriate to note that I believe this case, at least certainly the trial aspect of it, was not too well focused. It took 4 days of trial to put in the evidence, twice the time I was told it would take when the case was pretrialed. Some of the trial time was wasted on matters of general irrelevancy. The issue in this case, if properly focused, should have been presented in no more than the two days originally set as an estimate. This observation may warrant consideration by counsel on the issue of attorney’s fees.


author: LASKER, District Judge.

text:
    T.G.I. EAST COAST CONSTRUCTION CORP., Plaintiff, v. FIREMAN’S FUND INSURANCE COMPANY and National Preferred Risks, Inc., Defendants. and Titan Group, Inc., Additional Defendant On Counterclaim. FIREMAN’S FUND INSURANCE COMPANY, Third-Party Plaintiff, v. COTRONEO & COLLETTI CONCRETE, INC., Colletti & Laguidara, Inc., individually and as co-venturers doing business under the name of Cotroneo & Colletti Concrete, Inc. and Colletti & Laguidara, Inc., a Joint Venture, Vincent Colletti, and Orlando Cotroneo, Third-Party Defendants.
    No. 80 Civ. 1120 (MEL).
    United States District Court, S.D. New York.
    Jan. 9, 1985.
    See also D.C., 534 F.Supp. 780.

      Shea & Gould, New York City, for defendant Nat. Preferred Risks, Inc.; Richard F. Czaja, Fran M. Jacobs, New York City, of counsel.
    M. Carl Levine, Morgulas & Forman, New York City, for plaintiff; Howard M. Rosen, New York City, of counsel.
   LASKER, District Judge.

I.

T.G.I. East Coast Construction Corp. (“TGI”) is a general contractor which contracted with the Town of Parsippany-Troy Hills for the construction of an advanced wastewater treatment plant in 1977. It negotiated an agreement with Cotroneo & Colletti Concrete Inc. (“C & C”) as subcontractor to do the concrete work on the project. Upon learning that C & C was not in a position to secure a bond for $6 million dollars (the value of the job), TGI and C & C agreed to divide the concrete work into two overlapping subcontracts of approximately $3 million dollars each designated as Phase I and Phase II. Each of the subdivided subcontracts required that C & C furnish a payment and performance bond in the amount of the subcontract price: the Phase I bond was to be furnished forthwith, and at the same time, C & C was to furnish TGI with a commitment that a bond for Phase II would be furnished at a later date.

In response to the requirement for a commitment as to Phase II bonding, C & C arranged for its insurance agent, National Preferred Risks Inc. (“National”) to write the following letter dated June 30, 1977 to TGI (the June 30 letter), which is quoted as written:

Please be advised that upon successful completion of 80% of phase I concrete work, Parsippany Wastewater Treatment Plant, awarded to the above captioned, in the amount of $2,720,000. We will provide a Performance and Payment bond for the second phase in the amount of $2,988,000.
This bond will be executed on a form suitable to us as surety and subject to our normal underwriting requirements. The oblegee [sic] under the bond will be T.G.I. East Coast Construction Corporation.

Although the parties knew that National was an insurance agent that did not itself underwrite bonds, TGI accepted the letter and it entered into the two subcontracts with C & C that summer.

In September, 1977, C & C provided TGI with payment and performance bonds for Phase I of the project. The bonding was issued by Fireman’s Fund as surety. For reasons not material here, commencement of the work on Phase I was delayed for almost one year until August 4, 1978. Phase II began in December, 1978. In September, 1979, Phase I was 80% completed.

In the period between National’s letter of June 30, 1977 and September, 1979 (when Phase I was 80% completed and TGI expected a Phase II bond to issue), C & C experienced serious financial difficulties that impaired and ultimately killed its ability to obtain further bonding. Fireman’s Fund, the surety for C & C on Phase I, notified National in 1978 of suspensions of C & C’s bonding line of credit. In July, 1979, without a Phase II bond ever having issued, Fireman’s Fund advised National that it would no longer bond C & C at all. National allegedly never informed TGI of these facts.

At the point of 80% completion of Phase I in September, 1979, TGI made demands upon C & C to furnish the Phase II bond. At no time did TGI make any demands on National directly. C & C failed to produce the bond before abandoning the job unfinished due to financial difficulties in December, 1979. TGI then declared C & C in default and instituted suit against both Fireman’s Fund and National to recover damages incurred to complete Phase II. TGI’s complaint against National alleges that the June 30 letter was a representation either willfully false or negligently made upon which it reasonably relied to its detriment.

II.

National moves for summary judgment on the grounds that 1) TGI could not, as a matter of law, reasonably rely upon the June 30 letter as a representation that C & C would be unconditionally bonded for Phase II upon 80% completion of Phase I regardless of C & C’s financial status at the time; 2) when TGI permitted C & C to remain on the job without a Phase II bond from September, 1979 until the December abandonment, it waived any right it might otherwise have had to rely upon on any alleged representations contained in the June 30 letter from National; and 3) TGI’s claim that National breached a duty to advise TGI of C & C’s bonding status is unpleaded, and in any event, unactionable because National owed no duty to TGI that would mandate such disclosure.

Reasonable Reliance

National argues that TGI could not, as a matter of law, reasonably rely on its June 30 letter as a representation that C & C would be bonded for Phase II upon 80% completion of Phase I if C & C was not financially sound at that time because (a) the letter itself stated that the bond was “subject to our normal underwriting requirements” which were not met in this instance, and (b) any reliance on National’s June 30 letter as a bonding commitment was unreasonable because it was contrary to TGI’s own company policy to accept an agent’s letter as a bonding commitment.

In support of its motion, National has submitted the deposition of Joseph Vallone, Fidelity and Surety Manager of Fireman’s Fund, which states that “normal underwriting requirements” in the industry are “to have a financially sound principal with experience in the field in which they are ... requiring the bond.” On the basis of this evidence National contends that the letter represented that C & C would be bonded upon satisfaction of two conditions, namely, 80% completion of Phase I and C & C meeting normal underwriting requirements of financial soundness. National argues that, because C & C was not financially sound upon the date of 80% completion of Phase I, TGI could not reasonably rely upon National to furnish the bond. In response, TGI contends that it understood the phrase, “subject to our normal bonding requirements” to refer to mere technicalities of the bonding companies, and that reliance upon National to provide bonding for C & C upon the 80% date regardless of its financial condition was therefore reasonable.

For the purposes of argument, TGI’s belief in its construction of the meaning of the June 30 letter is accepted as true. The issue then would be whether TGI was reasonable in its belief. Objectively viewed, the letter clearly communicated that Phase II bonding was subject to a condition of “normal underwriting requirements.” As we see it, such language should at least have put TGI on notice to inquire into its precise meaning before TGI could reasonably assume that the phrase referred to irrelevant technicalities. We therefore conclude that if TGI relied on the June 30 letter as a representation that National would provide Phase II bonding upon the 80% completion date regardless of the financial status of C & C at that time, its reliance was unreasonable. Accordingly, National is entitled to summary judgment on this ground.

Waiver

National also argues that TGI waived any rights of reasonable reliance when it permitted C & C to remain on the job unbonded from the Phase I 80% completion date in September, 1979 until C & C’s abandonment in December. TGI contends that it did not waive its reliance because (a) the waiver was not in writing as required by the contract between C & C and TGI; and (b) TGI made demands on C & C during that period to produce the bond.

TGI’s contention that any waiver as to National had to be in writing is without substance. The provision in the contract between C & C and TGI that waivers must be written is not binding upon National which was not a party to that contract.

A requirement in a subcontract that the subcontractor provide bonding is waived by the contractor if he knowingly permits the subcontractor to proceed with the work unbonded. See Sehlbert Mechanical Corp. v. Kessel/Duff Construction Corp., 79 A.D.2d 680, 433 N.Y.S.2d 866 (2nd Dept.1980); Hevenor v. Union Ry., 204 A.D. 535, 198 N.Y.S. 409 (1st Dept.1923). The waiver is implied by law because the conduct of the contractor is inconsistent with an intent to enforce his rights. See id.

TGI contends that its demands upon C & C to produce a bond renders this well-established rule inapplicable. However, here the claim of reasonable reliance is asserted by the contractor against the bonding agent, and it is the agent who asserts waiver against TGI because TGI did not make a demand on the agent for production of a bond. In this context, TGI’s conduct as to National was inconsistent with an intent to continue reliance upon National directly. This is so because TGI permitted C & C to continue on the job unbonded without making a demand on National for the bond. See, e.g., Lesser v. Cord, 349 F.2d 490 (8th Cir.1965) (Blackmun, J.) (contractor waived right of reasonable reliance upon agent to produce bond by permitting subcontractor to work unbonded). As TGI’s conduct as to National was inconsistent with an intent to continue reliance upon National, we conclude that TGI thereby waived its reliance upon National. National is therefore entitled to summary judgment on this ground as well.

Wrongful Conduct

TGI asserts, for the first time in its affidavits in opposition to this motion, that its claim against National goes beyond reasonable reliance upon the June 30 letter to a claim of “wrongful conduct” by National for which TGI suffered damages. National objects to the claim as unpleaded and unactionable. A review of the complaint supports National’s argument that the claim is not pleaded. Moreover, TGI cites no authority and we know of none that would require the affirmative action which TGI claims it was National’s duty to undertake. Indeed, the authority seems to be to the contrary. See, e.g., White v. Guarente, 43 N.Y.2d 356, 363, 372 N.E.2d 315, 319, 401 N.Y.S.2d 474, 478 (1977) (a negligent misrepresentation or omission is not actionable unless the maker is bound by a “relation of duty” to the other party).

For the foregoing reasons, National’s motion for summary judgment is granted and the complaint is dismissed as to National.

It is so ordered.

      . In April, 1978 and again in July and October, 1978, Fireman’s Fund notified National that it placed a temporary stop order suspending C & C's bonding line of credit because of its inability to obtain financial reports from C & C and because C & C had already exceeded its bonding capacity of $5-6 million.

      . A permanent stop order issued in July, 1979 when Fireman’s Fund notified National that it would no longer bond C & C because it had suffered financial losses for two years running, its net worth and working capital had continued to drop for three years in a row, its financial statements were prepared by two different accountants and were uncertified, and it had not submitted underwriting information regularly and promptly. No bond was issued for Phase II before Fireman’s Fund cut off C & C’s bonding.

      . TGI alleges that it was unaware of C & C’s financial difficulties until August or September, 1979 when it became known that C & C was not paying its suppliers.

      . TGI asserts additional claims against Fireman’s Fund relating to both the Phase I and Phase II subcontractors.

      . National’s Affidavit in Support of Motion, filed October 20, 1983 at Exhibit F.

      . TGI's Affidavit in Opposition to Motion, filed November 21, 1981 at Exhibit M.

      . National's remaining contention is that TGI could not reasonably rely upon an agent’s letter as a bonding commitment because it was contrary to TGI’s own policy to require either the bond itself or a letter from an underwriter as a commitment. This assertion presents questions of fact that are not appropriate for summary disposition. The fact that TGI may have generally relied upon alternative forms of commitment in the past cannot be dispositive on the issue of whether or not TGI so relied in this instance.

      . More specifically, TGI alleges that National’s failure to advise Fireman’s Fund of the Phase II bonding caused C & C to use up its bonding capacity on other jobs, thus becoming unable to obtain the Phase II bond for the TGI project. TGI also alleges that National’s failure to inform TGI of the temporary stop orders on C & C bonding in April, 1978 — before the commencement of Phase I and the December, 1978 commencement of Phase II — caused TGI to continue reliance on C & C being bonded to its detriment. It argues that if TGI had known of C & C's inability to secure a bond at that time, it could have replaced C & C on Phase II without incurring damages later.


author: HENRY WOODS, District Judge.

text:
    MISSOURI PACIFIC RAILROAD COMPANY, Plaintiff, v. CHAMPLIN & WELLS, INC., Defendant, v. NORTHEASTERN FIRE INSURANCE COMPANY OF PENNSYLVANIA, Third-Party Defendant.
    No. LR-C-82-588.
    United States District Court, E.D. Arkansas, W.D.
    Jan. 9, 1985.

      Michael G. Thompson, Little Rock, Ark., for plaintiff.
    Joe O’Bryan, Cabot, Ark., for Champlin & Wells, Inc., defendant.
    Bert N. Darrow, Cabot, Ark., for Northeastern Fire Insurance Co. of Pennsylvania, third-party defendant.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

HENRY WOODS, District Judge.

FINDINGS OF FACT

1. The plaintiff is a Delaware corporation with its principal place of business in the State of Missouri and is duly authorized to conduct business in the State of Arkansas.

2. The defendant, Champlin & Wells, Inc., is an Arkansas Corporation with its principal place of business in Lonoke County, Arkansas.

3. The amount in controversy exceeds the sum of $10,000.00, exclusive of interest and costs.

4. The third-party defendant, Northeastern Fire Insurance Company of Pennsylvania (herein “Northeastern”), is an insurance corporation organized and existing under the laws of Pennsylvania.

5. On or about August 20, 1975, the plaintiff and Champlin & Wells entered into an agreement entitled “Miscellaneous Work Contract,” pursuant to which Champlin & Wells undertook to furnish equipment and labor for the purpose of unloading and handling the plaintiff’s track material and for the further purpose of loading and securing the plaintiff’s track panels on its cars at the plaintiff’s track panel facility in North Little Rock, Arkansas.

6. On February 3, 1978, Clifford W. Clarke, a trackman employed by the plaintiff, while acting in the scope of his employment, was removing certain items of equipment from one of the plaintiff’s rail ears, when he was injured after having been struck in the back of the neck by a piece of heavy metal known as a “rail dog.”

7. On February 3, 1978, the “rail dog” which injured Clifford W. Clarke was attached to a tow motor machine which, at the time of the injury, was owned by Champlin & Wells and operated by its employee, Steve Conder.

8. On February 3, 1978, Steve Conder was an employee of Champlin & Wells, and was acting within the course and scope of his employment.

9. Clifford W. Clarke made a claim against the plaintiff for the injury sustained by him on February 3, 1978, under the provisions of the Federal Employer’s Liability Act, alleging that the plaintiff failed to discharge its non-delegable duty to provide him with a safe place in which to work.

10. The plaintiff notified Champlin & Wells and Northeastern of the accident of February 3, 1978, and of the injuries suffered by Clifford W. Clarke as a result thereof, including his subsequent claim, and demanded that Champlin & Wells and Northeastern assume liability for the payment of the claim.

11. Champlin & Wells and Northeastern declined to accept responsibility for the handling and the payment of the claim of Clifford W. Clarke, and the plaintiff thereafter entered into negotiations with Clifford W. Clarke for the purpose of settling his claim.

12. On or about August 27, 1979, the plaintiff consummated a settlement agreement with Clifford W. Clarke in the amount of $150,000.00 plus doctor, medical and hospital expenses in the amount of $5,514.34. A release consummating the settlement was executed by Mr. Clarke, pursuant to which the plaintiff was released and pursuant to which Clarke released all claims which he may have had against Champlin & Wells and its agents, servants, and employees.

13. The plaintiffs settlement agreement with Clifford W. Clarke, whereby Clarke was paid a total of $155,514.34, was reasonable and proper under the circumstances in this case.

14. By entering into the settlement agreement with Clifford W. Clarke, the plaintiff discharged the common liability which it and Champlin & Wells had to Clifford W. Clarke.

15. The injury to Clarke was serious and permanent. He sustained a ruptured cervical intervertebral disc which required surgical intervention and a fusion. These injuries caused substantial wage loss, loss of earning capacity, and medical expenses. This settlement of an FELA case, venue for which is in any jurisdiction in which Missouri Pacific operates, involving severe injuries was eminently fair and reasonable. If anything, the settlement was on the low side.

16. The occurrence was caused by the joint negligence of Steve Conder, an employee of Champlin & Wells acting within the scope of his employment, and Clifford Clarke’s own negligence.

17. I apportion the negligence between Clarke and Conder as follows: Conder 95% and Clarke 5%.

18. Conder was not a borrowed servant of Missouri Pacific Railroad Company. See Bell Transportation Co. v. Morehead, 246 Ark. 170, 437 S.W.2d 234 (1969).

19. Champlin & Wells had a valid contract of liability insurance with the third-party defendant, Northeastern Fire Insurance Company of Pennsylvania, under which the latter had the duty to defend the Clarke claim and to pay any final judgment or reasonable settlement.

20. Northeastern Fire’s failure to defend the Clarke claim has resulted in Champlin & Wells’ being obligated for attorney’s fees in the sum of $3,000.00, and Champlin & Wells is entitled to judgment against Northeastern in this sum.

CONCLUSIONS OF LAW

1. Champlin & Wells, Inc. and Missouri Pacific Railroad Company are joint tort-feasors with regard to the injury sustained by Clifford Clarke.

2. The settlement made by Missouri Pacific was reasonable and prudent. Champlin & Wells is liable to Missouri Pacific for 95% of this settlement or $147,-738.62 on a theory of contribution, pursuant to Ark.Stat.Ann. §§ 34-1001-1009.

3. Champlin & Wells, having filed a third-party complaint based upon its contract of insurance with Northeastern Fire Insurance Company of Pennsylvania (DX 1), is entitled to judgment over against Northeastern Fire Insurance Co. of Pennsylvania in the sum of $147,738.62 on its third-party complaint.

4. Champlin & Wells is also entitled to judgment against Northeastern Fire for $3,000.00 in attorney’s fees incurred in defending all aspects of this claim, which was the responsibility of the former’s insurance carrier.

5. Champlin & Wells may also be liable to Missouri Pacific under a theory of contractual indemnity, based upon paragraph (5) of the “Miscellaneous Work Contract” (PX 15) between these parties. This provision indemnifies Missouri Pacific against the negligence of its own agents and servants. Such a provision is valid in Arkansas, but the language must be clear, unequivocal and certain. Pickens-Bond, Construction Co. v. North Little Rock Electric Co., 249 Ark. 389, 459 S.W.2d 549 (1970). There may be a question as to whether this contract meets such a test. The language is probably sufficient. However, I decline to reach this question in view of my holding that Champlin & Wells, Inc. is liable under a theory of negligence and contribution.

6. I reject the theory of common law indemnity based upon the alleged passive negligence of Missouri Pacific and the active negligence of Champlin & Wells, Inc. In states permitting contribution among joint tort-feasors proportionate to fault, the theory of common law indemnity based on active-passive negligence has been almost universally abandoned. See Loose v. Offshore Navigation, Inc., 670 F.2d 493, 502 (5th Cir.1982); Kennedy v. City of Sawyer, 4 Kan.App.2d 545, 608 P.2d 1379 (1980), aff'd on this point by Kansas Supreme Court in 228 Kan. 439, 618 P.2d 788 (1980). See also Judge Roy’s opinion in Missouri Pacific Railroad Co. v. Star City Gravel Co., 452 F.Supp. 480 (E.D.Ark.1978). The Court of Appeals affirmed without the necessity of reaching this issue but stated that “the district court’s prediction of rejection of indemnity by Arkansas is entitled to great weight in this court.” 592 F.2d 455, 458 n. 3 (1979).

7. The third-party defendant argues that its contract of insurance does not cover indemnity arising by virtue of contract. While this may be true, the third-party defendant is clearly liable under an alternative theory, so it is not necessary for the Court to reach this question.

8. Northeastern was obliged under its contract to provide a defense for Champlin & Wells, its insured. Not having done so, it is liable to Champlin & Wells for attorney’s fees in the sum of $3,000.00.


author: FOREMAN, Chief Judge:

text:
    IDEAL STENCIL MACHINE AND TAPE CO., Plaintiff, v. Alberto MERCHIORI, International Staple and Machine Co., Umberto Monacelli, Shippers Supply & Service Co., and Maggie James, Defendants.
    Civ. No. 84-3120.
    United States District Court, S.D. Illinois, East St. Louis Division.
    Jan. 9, 1985.

      Phillip A. Montalvo, Belleville, Ill., for plaintiff.
    John A. Bock, Jr., Belleville, Ill., for defendants.
   MEMORANDUM AND ORDER

FOREMAN, Chief Judge:

Before the Court are defendant Alberto Merchiori’s Motion to Dismiss (Document No. 4), defendant International Staple & Machine Co.’s Motion to Dismiss (Document No. 6 and 8), defendant Shippers Supply & Service Co.’s Motion to Dismiss (Document No. 7), and defendant Umberto Monacelli’s Motion to Dismiss (Document No. 18).

In its complaint, the plaintiff alleges the following facts to support its RICO claims. For numerous years the plaintiff sold goods to Shippers Supply & Service Co. (Shippers Supply) a sole proprietorship owned and operated by Mr. and Mrs. Nixon. On August 15, 1983, unbeknownst to the plaintiff, the defendant International Staple and Machine Co. (International) purchased Shippers Supply. Thereafter, “defendant Shippers Supply, as an ‘enterprise,’ engaged in a ‘racketeering activity,’ in conspiracy and in concert with defendants Merchiori (agent of International and former president of plaintiff), International, Monacelli (president, treasurer, and chief executive officer of International), and James (branch manager of Shippers Supply) ...” to defraud the plaintiff by placing a number of orders with the plaintiff for various products totaling $24,342.35 and unlawfully converting the products to their own use. The plaintiff alleges that these goods traveled in interstate commerce and that the defendants utilized the United States mail in furtherance of these transactions. The plaintiff contends that these activities constitute mail fraud, wire fraud, conversion, and fraudulent misrepresentation, which amount to a pattern of racketeering activity.

A. PERSONAL JURISDICTION

The defendants raise a number of arguments in support of their Motions to Dismiss. Defendants International, Shippers Supply, and Umberto Monacelli contend that this Court lacks personal jurisdiction over them. International asserts that it is a corporation organized under the laws of Pennsylvania with its principle corporate offices in Butler, Pennsylvania, and that Shippers Supply is a wholly-owned branch of International which conducts its business in Georgia. Likewise, Monacelli asserts that he does not reside in Illinois and that he is an officer of International, a non-Illinois corporation.

Personal jurisdiction is based on a combination of two elements, amenability to jurisdiction and service of process. Ter ry v. Raymond International, Inc., 658 F.2d 398, 401 (5th Cir.1981), cert. denied, 456 U.S. 928, 102 S.Ct. 1975, 72 L.Ed.2d 443 (1982). Both must be present to authorize a district court to adjudicate the ease. Id. Amenability refers to the substantive reach of the forum’s jurisdiction. Amenability has both state law and federal constitutional significance. Service of process is the physical means by which jurisdiction is asserted. Applying these principles the courts have developed three tests to determine if a court possesses personal jurisdiction over a defendant: (1) the assertion of jurisdiction by the law of the forum; (2) conformity of this law with the Constitution; and (3) authority for the means of service of process. Id. The first two tests apply to amenability and the third test applies to service of process.

In a diversity case, the amenability portion of the above tests consists of the following analysis. First, state law (usually the state Long-Arm Statute or case law “doing business” requirement) must assert jurisdiction over the defendant for the cause of action at issue in the suit. Id. Second, the exercise of personal jurisdiction over the defendant must be consistent with the due process clause of the fourteenth amendment. This inquiry consists of deciding whether the defendant has minimum contacts with the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantive justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Terry, 658 F.2d at 401.

In a federal question case, the amenability position of the above tests become less complex. First, since federal statutes have force throughout the United States, the assertion of jurisdiction arises only in the context of nonresident alien. Id. Second, the exercise of personal jurisdiction over the defendant must be consistent with the due process clause of the fifth amendment, but the standards are similar to those of the fourteenth amendment. Holt v. Klosters Rederi A/S, 355 F.Supp. 354 (W.D.Mich.1973). The inquiry consists of deciding whether the defendant has minimum contacts with the United States such that the maintenance of the suit does not offend traditional notions of fair play and substantive justice. Obviously this constitutional standard would only be applied in cases where the defendant was a nonresident alien since every resident would have the requisite contacts with the United States. Further, with the existence of strict venue provisions, it is unnecessary to limit this constitutional minimum contacts inquiry to the state in which the district court sits. Any fairness argument by an United States resident would be eliminated by the venue provisions authorizing transfer. In Handley v. Indiana & Michigan Elec. Co., 732 F.2d 1265 (6th Cir.1984), the Sixth Circuit held that in a federal question case, the due process clause of the fifth amendment requires that it be “fair” for the defendant to litigate in the state where the district court sits. However, the Handley court did not consider the interplay of the venue provision. Pursuant to 28 U.S.C. § 1391(b) venue for a federal question case is proper only in the judicial district where all the defendants reside or where the claim arose. If the claim were brought in the judicial district where the defendant resides, then obviously there would be no personal jurisdiction problem. When the case is brought in the judicial district where the claim arose, severe unfairness to the defendant would justify the court transferring the case to the district in which the defendant resides. Unlike a diversity action where venue would be proper in the district where the plaintiff resides, in a federal question case the small likelihood of any unfairness is more than compensated for by the provision for transfer.

Thus, as a practical matter, the most significant restraint on the personal jurisdiction of federal courts in federal question cases is service of process, the third-part of the three part set. Terry, 658 F.2d at 403.

With regard to service of process prong of the above test, under Fed.R.Civ.P. 4 either federal or state methods of service are authorized. Congress has permitted nationwide service of process in several specialized statutes. See, e.g., 28 U.S.C. § 2361 (1978) (interpleader); 15 U.S.C. §§ 5, 22, 25 (1973) (federal antitrust laws); 15 U.S.C. § 77v(a) (1971) (federal securities laws). In those areas where Congress has not so provided, Fed.R.Civ.P. 4 authorizes that process can be served outside the state in which the district sits only under the state procedures for extraterritorial service or within the 100 mile area. Generally, this has permitted service on an out-of-state defendant pursuant to a state long-arm statute.

In the present case, the plaintiff brings a RICO action asserting this Court’s federal question jurisdiction. Therefore, as espoused above, the only relevant inquiry is whether the defendants can be properly served pursuant to Fed.R.Civ.P. 4 and state law. Generally, under Illinois law, service on an out-of-state defendant is permitted if the defendant does business in the state or submits to service by performing any one of the acts enumerated in the Illinois Long-Arm Statute. The Illinois Long-Arm Statute provides in pertinent part:

(a) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this State;
(2) The commission of a tortious act within this State; ...
(b) Service of process upon any person who is subject to the jurisdiction of the courts of this State, as provided in this Section, may be made by personally serving the summons upon the defendant outside this State, as provided in this Act, with the same force and effect as though summons had been personally served within this State.
(c) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him or her is based upon this Section...

Ill.Stat.Ann.Ch. 110, 112-209 (Smith-Hurd 1984).

There is nothing before this Court by way of affidavit or otherwise to indicate that the defendants do business in the State of Illinois. In order for jurisdiction to be conferred under the “transacting business” portion of this paragraph, the cause of action must arise from the transaction of the business that purports to give jurisdiction. Process Church of Final Judgment v. Sanders, 338 F.Supp. 1396 (N.D.Ill.1972). Where a contract is involved the courts look to where the solicitation took place, where the contract was negotiated, where it was to be performed, and where delivery under the contract was to take place. See Tabor & Co. v. McNall, 30 Ill.App.3d 593, 333 N.E.2d 562 (1975).

With regard to International, it clearly performed acts sufficient to constitute the transaction of business within the State of Illinois. From its own brief, International states that Shippers Supply is a name for a division of International. An affidavit of Marco Ziniti, sales manager of the plaintiff, indicates that all the orders that were placed by Shippers Supply were initiated by the defendants. All the orders were received in Illinois. Delivery was made from Illinois. Further, the very nature of this action arose out of these orders. Therefore the Court finds that International “transacted business” in Illinois for purposes of the Illinois Long-Arm Statute.

Based on information before it the Court is not in a position to decide whether Shippers Supply is in fact a legal entity. However, as a “division” of Inter-national, it was transacting business in the State of Illinois for purposes of the Illinois Long-Arm Statute. As an officer of International, Umberto Monacelli was transacting business within the State of Illinois for purposes of the Long-Arm Statute. Therefore, since service of process was proper on these defendants pursuant to the Illinois Long-Arm Statute, it meets the requirements of Fed.R.Civ.P. 4.

B. VENUE

The defendants also argue that venue is improper in this district. The special venue provision found in 18 U.S.C. § 1965 states that a RICO claim may be brought in the district where the defendant resides, is found, has an agent, or transacts his affairs. However, this venue provision is not intended to be exclusive, but rather is intended to liberalize the existing venue provisions of 28 U.S.C. § 1391(b). Van Shaick v. Church of Scientology of Cal., Inc., 535 F.Supp. 1125 (D.Mass.1982). 28 U.S.C. § 1391(b) provides that venue is proper where the claim arose. Although there is no precise test to determine where the claim arose, the Court is of the opinion that this claim arose in this district. As stated earlier in the jurisdictional context, the orders that form the basis for the RICO claim were placed in this district, the defendants' solicitation of the plaintiff’s business occurred in this district, and the nonpayment of the orders occurred in this district. See Munsingwear, Inc. v. Damon Coats, Inc., 449 F.Supp. 532 (D.Minn.1978). Therefore the Court holds that venue is proper in the Southern District of Illinois.

The defendants next contend that this action should be stayed pending a related state suit in which the plaintiffs are suing the defendants for recovery of the indebtedness on the orders. However, the defendant has not cited, nor has this Court found any case where a federal court stayed an action within its exclusive jurisdiction such as a RICO action. Therefore, the Court sees no reason to stay this RICO action.

C. CAUSE OF ACTION UNDER RICO

With regard to the substantive elements of the Motion to Dismiss, a number of issues are raised. The complaint alleges that Shippers Supply was the enterprise for RICO purposes. Shippers Supply is also a named defendant. The Seventh Circuit has recently held that the “enterprise” and the “person” must be distinct so that the enterprise is not a proper defendant in an action under 18 U.S.C. § 1962(c). Haroco, Inc. et al. v. American National Bank and Trust Co., et al., 747 F.2d 384 at 402 (7th Cir., 1984). Accordingly, Shippers Supply is DISMISSED from this action.

The defendants also argued that the plaintiff has failed to allege an organized crime nexus. However, the Seventh Circuit in Schacht v. Brown, 711 F.2d 1343 (7th Cir.), cert. denied, — U.S. -, 104 S.Ct. 508, 509, 78 L.Ed.2d 698 (1983), rejected the notion that RICO applies only to organized crime.

Finally, the defendants argue that the complaint fails to state a claim for relief under RICO. The Court agrees. In its complaint, the plaintiff alleges specifically that “Shippers Supply, as an ‘enterprise,’ engaged in a ‘racketeering activity,' in conspiracy and in concert with the defendants....” The Court has already held that Shippers Supply as the enterprise cannot be a named defendant. Additionally, the Court fails to find a provision of 18 U.S.C. § 1962 which grants a cause of action on the enterprise engaging in the pattern of racketeering activity. Section 1962(a) makes it unlawful for a person who has received income from a pattern of racketeering activity or collection of unlawful debt to invest any part of said income in an enterprise. Section 1962(b) makes it unlawful for a person to acquire an enterprise through a pattern of racketeering activity. Section 1962(c) makes it unlawful for a person to conduct an enterprise’s affairs through a pattern of racketeering activity. Section 1962(c) makes it unlawful for a person to conspire to violate any of the above provision. Although, the Court could try to “fit” the plaintiff's complaint into one of the provisions of § 1962, it does not feel obliged to do so even under the liberal pleading requirements of the Federal Rules of Civil Procedure. However, the Court will grant the plaintiff leave to amend its complaint.

Accordingly, the defendant’s Motion to Dismiss (Documents No. 4, 6, 7, 8, and 18) are GRANTED in part and DENIED in part. Defendant Shippers Supply is hereby DISMISSED from this action. The plaintiff’s complaint is hereby DISMISSED for failure to state a claim for relief under 18 U.S.C. § 1962. Plaintiff is GRANTED leave to amend its complaint within fifteen (15) days from the date of this Order.

IT IS SO ORDERED.

      . In this regard the state long-arm statute could be utilized twice. First, in a diversity action to assert jurisdiction over the out-of-state defendant for amenability purposes; and second to authorize service on the out-of-state defendant in both diversity and federal question cases.


author: NANGLE, Chief Judge.

text:
    Joseph GIANINO and Annette Gianino, Plaintiffs, v. AMERICAN CAN COMPANY, Defendant.
    No. 84-1262C(1).
    United States District Court, E.D. Missouri, E.D.
    Jan. 11, 1985.
    James S. Collins, II, St. Louis, Mo., for plaintiffs.
    Joseph H. Mueller, St. Louis, Mo., for defendant.
   MEMORANDUM

NANGLE, Chief Judge.

This case is now before this Court on defendant’s motion for summary judgment. Defendant contends that plaintiff was a statutory employee of defendant within the meaning of § 287.040(1) Mo.Rev.Stat. (1978) and, therefore, plaintiffs sole remedy against defendant is through Missouri’s Workers’ Compensation Law. This Court agrees and enters summary judgment in favor of defendant on plaintiff’s complaint.

I. BACKGROUND

Plaintiff’s cause of action arises out of an injury he sustained while unloading empty wooden pallets at defendant’s plant in Pevely, Missouri, on December 9, 1981. At the time of this occurrence plaintiff was employed by Bee Line Leasing Company as a truck driver. According to plaintiff’s complaint, at all relevant times plaintiff was operating his tractor-trailer truck pursuant to a leasing arrangement between Manufacturers Cartage Company and Bee Line Leasing Company. On December 9, 1981, plaintiff was using a steel rod formed into a hook to unload the pallets. The steel rod, which was supplied by defendant, allegedly failed and plaintiff fell backwards, sustaining injuries. Plaintiff subsequently brought a Workers’ Compensation claim against Bee Line Leasing and he received a total settlement of $11,469.14 on or about February 16, 1983. On April 25, 1984, plaintiff filed this action against American Can Company in the Circuit Court for the City of St. Louis and defendant thereafter removed this action to this Court. Plaintiff alleges in his complaint that defendant negligently caused his injuries.

II. STANDARD FOR SUMMARY JUDGMENT

Under Rule 56 of the Federal Rules of Civil Procedure, a movant is entitled to summary judgment if he can “show that there is no genuine issue as to any material fact and that [he] is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). See also Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). In passing on a motion for summary judgment, a court is required to view the facts and inferences that may be derived therefrom in the light most favorable to the non-moving party. Buller v. Buechler, 706 F.2d 844, 846 (8th Cir.1983); Vette Co. v. Aetna Casualty and Surety Co., 612 F.2d 1076, 1077 (8th Cir.1980). The burden of proof is on the moving party and a court should not grant a summary judgment motion unless it is convinced that there is no evidence to sustain a recovery under any circumstances. Buller, 706 F.2d at 846. However, under Rule 56(e), a party opposing a motion for summary judgment may not rest upon the allegations of his pleadings but “must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). See also 10A Wright, Miller and Kane, Federal Practice and Procedure: Civil 2d, § 2739 (1983).

III. DISCUSSION

Defendant argues in its motion for summary judgment that because plaintiff was a “statutory employee” of defendant, as that term is defined in § 287.040(1) Mo. Rev.Stat. (1978), plaintiff’s exclusive remedy against defendant is under the Missouri Workers’ Compensation Statute. Plaintiff does not take issue with the proposition that if plaintiff was defendant’s statutory employee, then plaintiff must proceed under the Missouri Workers’ Compensation Statute. Ferguson v. Air-Hydraulics Company, 492 S.W.2d 130, 135 (Mo.Ct. App.1973). Plaintiff does not take issue with defendant’s characterization of him as a statutory employee.

Section 287.040(1) Rev.Stat.Mo. (1978) provides, as follows:

Any person who has work done under contract on or about his premises which is an operation of the usual business which he there carries on shall be deemed an employer and shall be liable under this chapter to such contractor, his subcontractors, and their employees, when injured or killed on or about the premises of the employer while doing work which is in the usual course of his business.

“The purpose of [§ 287.040(1)] is to prevent an employer from evading workmen’s compensation liability by hiring independent contractors to perform the usual and ordinary work which his own employees would otherwise perform.” Miller v. Municipal Theatre Association of St. Louis, 540 S.W.2d 899, 906 (Mo.Ct.App.1976). Missouri courts that have considered this definition of “statutory employee” have derived the following three (3) essential elements:

(1) the work was performed under a contract; (2) the injury must have occurred on or about the premises of the employer; and (3) the injury must have occurred while the employee was doing work in the usual course of the business of the employer.

Ferguson, 492 S.W.2d at 135. See also Shireman v. Rainen Home Furnishers, Inc., 402 S.W.2d 64, 68 (Mo.Ct.App.1966). There is no question that the second element is satisfied, but plaintiff contests the existence of the first and third elements.

Plaintiffs argument that he was not working under a contract at the time of the accident is not entirely clear. However, plaintiff’s position appears to be that the contract element is not satisfied here, because: 1) the contract between Manufacturers Cartage Company and defendant makes no mention of the contract between Manufacturers Cartage and plaintiff’s employer, Bee Line Trucking Company; or 2) the contract between Manufacturers Cartage Company and Bee Line Trucking Company did not authorize any duties outside of the City of St. Louis. Aside from the fact that this Court believes the first point to be immaterial and the second point to be based on an incorrect interpretation of the contract between Manufacturers Cartage Company and Bee Line Trucking Company, plaintiff's argument that the contract element is not met here must be rejected for a more fundamental reason: the argument is at odds with plaintiff’s own allegations. Plaintiff alleges in ¶’s 3, 4 and 5 of his complaint that at all relevant times, including the time of the accident, plaintiff was a business invitee at defendant’s plant, plaintiff was employed by Bee Line, and plaintiff was operating a truck leased by Manufacturers Cartage Company. In addition, in his claim for Workmen’s Compensation, plaintiff stated that at the time of the accident he was acting in the course and scope of his employment as a truck driver for Bee Line. Under these facts, it is the opinion of this Court that there is no genuine issue of fact concerning whether plaintiff was working under a contract at the time of the accident.

A person working under a contract, however, is not a statutory employee within the meaning of § 287.040(1) Rev.Stat.Mo. (1978), unless the contract is one “ ‘which delegates to another the usual operation of the employer’s business.’ ” Crain v. Webster Electric Cooperative, 568 S.W.2d 781, 793 (Mo.Ct.App.1978) (quoting Ferguson, 492 S.W.2d at 136). Several standards have been utilized by Missouri courts to determine what constitutes “usual course of business.” In Montgomery v. Mine La Motte Corporation, 304 S.W.2d 885 (Mo.1957), the Supreme Court of Missouri defined the phrase as “an essential step in the normal operations of” a defendant employer. Id. at 888. Applying this test, the Montgomery Court held that the employee of a trucking firm which had contracted with defendant, a lead ore mining and processing firm, to load and transport ore between defendant’s plants was doing work which constituted defendant’s “usual course of business.” Id. In Bailey v. Morrison-Knudsen Company, 411 S.W.2d 178 (Mo.1967), the court similarly defined the phrase as acts “essential to get the work done.” Id. at 180. The Bailey court held that plaintiff, a pilot for a helicopter service who was injured while transporting personnel of defendant construction company to construction sites, was performing acts essential to the construction jobs and, thus, was performing the “usual business” of defendant. Id. Finally, in Wallace v. Porter DeWitt Construction Company, 476 S.W.2d 129 (Mo.Ct.App.1971), the court surveyed the various definitions and found a “commercial function” analysis to be the most helpful. Id. at 134. Under this analysis, the Wallace court asked whether:

[t]he work in which [plaintiff] was engaged ... enter[ed] directly into the commercial function of [defendant’s] usual business, [or] merely afforded facilities and causal convenience for the conduct of the business in which [defendant] was engaged.

Id. However, the Wallace court stated that it was necessary to undertake this “onerous judicial chore” only where the facts entered “the twilight zone of peripheral operations associated with the principal contractor’s operation.” Id. at 132. This “twilight zone” is in contrast to the “obvious areas of statutory employment” such as where:

the task delegated to the independent contractor is an essential element of the statutory employer’s usual business which the latter also executes with his own equipment and direct employees
....

Id. (emphasis added). In Wallace, the plaintiff was an employee of an oil refinery and was injured while in the process of delivering gasoline to defendant’s construction site. The Wallace court found that the plaintiff was not a statutory employee of the defendant because their relationship was more akin to that of a buyer and seller and because the plaintiff “was not to work in or participate in the actual operation of the usual business” of the defendant. Id. at 134.

Applying these principles to the facts of this case, it is the opinion of this Court that plaintiff was engaged in an activity which constituted the usual business of defendant. Plaintiff’s own deposition testimony, as well as defendant’s affidavit, obviate any issue of fact on this element. Defendant manufactures and sells cans. The activity of plaintiff at the time of the accident was unloading empty wooden pallets from his truck and guiding them onto a conveyor into defendant’s plant. Plaintiff stated in his deposition that defendant’s employees regularly worked beside him in this activity and were working beside him at the time of the accident. In addition, defendant provided plaintiff with the hook that he used to guide the pallets onto the conveyor. These facts fall into the “obvious area [ ] of statutory employment” identified in Wallace. Plaintiff was carrying on an activity which defendant executed with its own equipment and direct employees. There can be no serious question that the process of feeding empty wooden pallets into defendant’s plant, so that they could be loaded with cans for shipment to its customers, is part of the usual business of defendant. These facts are distinguishable from the buyer-seller situation that existed in Wallace.

The facts of the case at bar are also significantly distinguishable from those in Ferguson v. Air-Hydraulics Company, 568 S.W.2d 781 (Mo.Ct.App.1973). In Ferguson, the plaintiff was a truck driver employed by A, a trucking firm, and A had a lease agreement with B, a manufacturer of goods, whereby A provided drivers and trucks to B for the purpose of delivering B’s goods. The plaintiff in Ferguson was injured while helping an employee of the defendant, a buyer of B’s goods, unload the truck. The Ferguson court held that the plaintiff was not the defendant’s statutory employee because the relationship between B and the defendant was that of “buyer and seller rather than one of contract to unload ....” Id. at 136. In the case at bar, however, the relationship between Manufacturers Cartage Company and defendant was not that of a buyer and seller of goods, but that of delivering defendant’s goods to its customers and of returning defendant’s pallets to its plant, a relationship that obviously included unloading. This latter relationship encompassed the usual operation of defendant’s business.

Accordingly, it is the conclusion of this Court that plaintiff was defendant’s statutory employee at the time of the accident in question and that plaintiff’s sole remedy against defendant is through Missouri’s Worker’s Compensation Law. Defendant is entitled to summary judgment in its favor on plaintiff’s complaint.


author: JACKSON, District Judge.

text:
    Valencia WALKER, Plaintiff, v. UNITED STATES of America, Defendant.
    Civ. A. No. 83-3363.
    United States District Court, District of Columbia.
    Jan. 11, 1985.
    Harlow R. Case, Washington, D.C., for plaintiff.
    John H.E. Bayly, Jr., Asst. U.S. Atty., Washington, D.C., for defendant.
   DECISION AND ORDER

JACKSON, District Judge.

This is an action under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b),.2671 et seq., by four-year-old Steven H. Walker and his mother, Valencia Walker, for medical malpractice alleged to have occurred in the course of Steven’s birth at the Walter Reed Army Medical Center in November of 1980. Plaintiffs claim that the hospital, acting by its resident physician who managed Valencia Walker’s labor and delivery, was negligent in allowing the mother’s labor to proceed in such a manner that a low forceps delivery became necessary which, in turn, although properly performed, necessarily inflicted traumatic injury to a facial nerve on the infant’s left side. Upon the facts found as hereinafter set forth in accordance with Fed.R.Civ.P. 52(a), following trial without jury, and the conclusions of law drawn therefrom, for the reasons stated the Court will enter judgment for defendant.

I.

Valencia Walker, a military wife in the final month of her first pregnancy to be carried to term, presented at the obstetrics ward of Walter Reed Army Medical Center shortly before midnight, November 17, 1980. Her contractions had begun at approximately 10:00 p.m., and her membranes had ruptured spontaneously immediately prior to admission. Upon admission her cervix was found to have dilated to four centimeters and was completely effaced. The baby was at the minus two station.

Shortly after admission she was seen by Franklin Crane, M.D., the first-year resident in obstetrics who would manage her through to a vaginal delivery a few minutes after 2:00 a.m. Upon his initial examination Dr. Crane made two findings of particular significance to him: Ms. Walker’s vaginal discharge contained meconium of “pea soup” consistency, and “decelerations” in fetal heart tones were auscultated by fetascope. Dr. Crane concluded that the baby’s status should be followed continuously by internal fetal monitor, in his words, “as soon as possible!”, and he made a progress note to that effect which, unfortunately, he failed both to time and to implement. By interpolation and inference, however, it is reasonably clear that Dr. Crane had completed his evaluation of Ms. Walker and determined an internal fetal monitor to be indicated at about 12:35 a.m. An external monitor lead was placed about Ms. Walker’s abdomen at approximately that time, but it was not until 1:30 a.m. that Dr. Crane attached the internal monitor lead to the baby’s scalp. Fetal heart rate was recorded at that moment as 147, but sometime between 1:30 and 1:45 a.m., Dr. Crane perceived (presumably from the internal monitor) patterns of fetal heart rate decelerations he described as “mixed/variable,” and at least one episode of fetal tachycardia (to 190), which he characterized on his own as “fetal distress.” At 1:45 a.m. he ordered Ms. Walker taken to the delivery room where, at 2:04 a.m., he delivered Steven, using low forceps and making a midline episiotomy under local anesthesia.

Steven Walker weighed slightly more than five pounds at birth. The umbilical cord was wrapped once about his neck. His Apgar scores were seven and eight (at one and five minutes, respectively), and he bore no superficial evidence of trauma secondary to the application of the forceps.

Steven’s in-hospital postnatal record does not reflect any evidence of facial nerve pathology. However, at an early outpatient clinic visit on December 10, 1980, the examining pediatrician noted Steven to have an “asymmetry” of his mouth when crying. The condition, a lower motor neuron paralysis of a branch of the seventh facial nerve, known as “Bell’s palsy,” persists to this date. It is not noticeable except when Steven cries or laughs, and it is neither dysfunctional nor disfiguring; it is, however, perceptible, has not improved, and may be permanent. It is that injury for which plaintiffs make claim here. Steven Walker is otherwise apparently neurologically normal.

II.

Plaintiffs contend that Steven’s facial asymmetry is secondary to the trauma inflicted by the blade of Dr. Crane’s forceps upon the left side of his head as he was being delivered. They do not contend that Dr. Crane negligently manipulated the forceps or used excessive force; indeed, they concede that the use of forceps was indicated in the circumstances, and that some trauma unavoidably accompanies their use. They contend, rather, that Dr. Crane (and, through him, the defendant United States) was negligent in failing to attach the internal fetal monitor which Dr. Crane himself recognized as necessary to give early and accurate forewarning of conditions endangering the fetus. According to plaintiffs, Ms. Walker presented at the hospital in “high risk” circumstances: she was marginally premature; her membranes had ruptured spontaneously prior to admission; labor was progressing more rapidly than normally anticipated in a nulliparous patient; vaginal discharge showed “pea soup” meconium; and auscultation by feta-scope suggested aberrant decelerations in fetal heart rate. Each condition is known on occasion to predispose to, portend, or accompany “fetal distress” (which, for purposes of this case, would occur upon an interruption in fetal oxygenation), although none of them, singly or in combination, indicates that fetal distress is actually present. Nevertheless, the need for careful monitoring is acknowledged by both sides, and it is for the hour or so when the more accurate internal fetal monitor was not in operation that plaintiffs seek to hold the hospital accountable. It is their theory that, during that period, actual fetal distress developed, to which Dr. Crane and the nurses were oblivious until it was finally detected upon insertion of the internal monitor, prompting a precipitous delivery per vagina (the only mode then available, the infant’s head having engaged), with the use of fo'rcepts then being imperative to extract the baby as quickly as possible. Had the internal monitor been in place when it should have been, the plaintiffs contend, the fetal distress would have been detected earlier, when caesarean section remained not only a viable alternative but the treatment of choice.

The hospital concedes that the internal monitor should have been inserted, as Dr. Crane noted, “as soon as possible.” Assuming no more urgent demands upon Dr. Crane’s time and attention intruded — and there is no evidence they did — reasonable care in the circumstances required him to insert the internal monitor lead immediately upon completion of his initial examination. Nevertheless, the hospital says, nothing of significance occurred during the interval of a magnitude to justify a surgical delivery. Consequently, the failure to attach the internal monitor earlier did not result in a failure to do a caesarean section and is not, therefore, the proximate cause of any injury to Steven occurring in the course of the low forceps vaginal delivery.

III.

The United States is liable under the Federal Tort Claims Act “in the same manner and to the same extent as a private individual under like circumstances,” 28 U.S.C. § 2674, and its liability is to be determined “in accordance with the law of the place where the act or omission occurred.” 28 U.S.C. §§ 1346(b), 2672. Under District of Columbia law a plaintiff in a medical malpractice case bears the burden of proof on three issues: the applicable standard of care, a deviation from that standard by the defendant, and a causal relationship between the deviation and the plaintiff’s injury. Meek v. Shepard, 484 A.2d 579 at 581 (D.C.1984). In cases such as this, expert testimony is necessary to prove both a departure from the standard of care and its causal connection with the harm complained of. See Washington Hospital Center v. Martin, 454 A.2d 306, 308 (D.C.1982); Quick v. Thurston, 290 F.2d 360, 362 (D.C.Cir.1961) (en banc).

Plaintiffs’ expert evidence consisted of the testimony (by deposition) of Dr. Richard F. Morton, currently Associate Director of Medical Services for the March of Dimes Birth Defects Foundation in New York, but from 1956 through 1968 a practicing obstetrician (although not Board-certified) on the West Coast. In Dr. Morton’s opinion, Ms. Walker’s meconium show and the fetal heart deceleration noted by Dr. Crane at 12:35 a.m. were, in and of themselves, indicative of fetal distress and mandated an immediate, i.e., within 30 minutes, C-section as an “obstetrical emergency.”

Plaintiffs’ other expert, Dr. David C. Abramson, Board-certified in pediatrics and in peri- and neonatal medicine, was, from 1970 through 1978, Chairman of the Perinatal Medicine Division, Department of Pediatrics, at Georgetown University Medical Center. (He is currently Director of Emergency Medicine at a general hospital in suburban Washington, D.C.) In Dr. Abramson’s opinion, Ms. Walker represented a “high risk” case, but not the obstetrical emergency perceived by Dr. Morton. Dr. Abramson believed that a “careful trial of labor” was appropriate (contemplating, of course, effective fetal monitoring). He could not say when, if ever, a C-section actually became necessary, however, because the fetal monitor tracings were not available for examination. He found the failure to activate an internal fetal monitor, the need for it having been recognized by Dr. Crane, to have been below the standard of obstetrical care as he has observed it from the vantage point of a “member” of the perinatal “team” concerned primarily with fetal health.

Defendant’s expert, Brocket Muir, Jr., M.D., has been a practicing obstetrician in the Washington, D.C., metropolitan area for over 17 years. He is Board-certified in obstetrics and gynecology, is a member of the clinical faculty at Georgetown University Medical Center, and delivers, he estimates, some 250-300 babies a year. To Dr. Muir, the findings on admission, namely, the presence of meconium and fetal heart rate decelerations, are of themselves of “little meaning.” Decelerations, if corresponding to maternal contractions, are, in fact, “reassuring”; it is the loss of “beat-to-beat variability” in fetal heart rate, or “late” decelerations, i.e., those which follow (rather than coincide with) a contraction, which the profession regards as ominous. Meconium, even “pea soup” meconium, merely raises the “index of suspicion.” While it can signify fetal distress, it does not invariably do so, nor is fetal distress always accompanied by meconium staining. All that was professionally required upon Ms. Walker’s admission, according to Dr. Muir, was close monitoring, a fact recognized by Dr. Crane. Dr. Muir agreed with Dr. Abramson that, once the need for it was recognized, the failure to insert the internal monitor for an hour was substandard. He disagreed, however, with the suggestion that a caesarean section was indicated at any point in the labor. None of the signs which prompted Dr. Crane to order Ms. Walker to the delivery room and to perform the low forceps delivery were, in his opinion, diagnostic of fetal distress. At most, he said, they reflected a fetus “under stress” from any of the myriad sources accompanying the normal birth process, most likely, in this case, a transient hypoxia secondary to either the rapidity of the labor or the nuchal cord. But the most convincing evidence of record that fetal distress was never present, according to Dr. Muir, is Steven’s elevated Apgar scores at birth, his normal postnatal course and (except for the peripheral nerve deficit) his normal neurological status today.

The Court credits the testimony of Dr. Muir to the extent of finding no true fetal distress to have occurred at any time during the course of Ms. Walker’s labor when surgical delivery was an option, and, thus, no indication for a section ever to have been present, even if unperceived. The hospital record, such as it is, supports the finding. Although the fetal monitor tracings are missing, the nursing notes in the hospital record reflect that the external monitor was in operation from 12:30 a.m. forward. The fetal heart rate, recorded at half-hour intervals (presumably from the external monitor, possibly by fetascope) remained between 144 and 147, well within normal limits. Although fetal tachycardia and late decelerations were detected by Dr. Crane shortly after activation of the internal monitor at 1:30 a.m., upon the mother’s arrival in the delivery room at 1:45 a.m. the fetal heart rate had returned to 147. Nineteen minutes later Ms. Walker delivered Steven, weighing five pounds one ounce. His Apgar scores of seven and eight were indicative of a normal, healthy child, which, save for the facial asymmetry, it is undisputed that Steven is today.

Steven’s immediate postnatal and current normal neurological status are the most persuasive evidence that the signs Dr. Crane suspected as indicating “fetal distress” — and, perhaps injudiciously, entered as such on the chart — were not, in fact, fetal distress at all. They were, most probably, the result of transient episodes of hypoxia related to the rapidity of labor and tension on the nuchal umbilical cord as the infant descended the birth canal, which did not commence until shortly before birth and were not of a duration sufficient to threaten permanent cerebral injury. The Court finds nothing to have occurred while the internal fetal monitor remained unconnected which would have indicated a caesarean section, even were Dr. Crane’s failure to place it in operation deemed to have been negligent. Caesarean sections, presenting, as they do, significant risks for the mother, are generally not performed absent indications for them. Thus, the failure to attach the internal fetal monitor cannot be found to be the proximate cause of the failure to have delivered Steven Walker by caesarean section, nor, it necessarily follows, of any injury done to him in the course of the properly-performed low forceps vaginal delivery. The Court concludes that plaintiffs have failed to prove, by a preponderance of the evidence, that defendant’s failure to make timely connection of an internal fetal monitor was the proximate cause of such seventh cranial nerve deficit as Steven Walker possesses today, and it is, therefore, this 10th day of January, 1985,

ORDERED, that judgment be entered for defendant.

      . The medical record times are regrettably unreliable throughout, having been entered, as they were, by different people using unknown timepieces. At least one entry — a standard series of “labor orders” — appears to have been timed in advance of Dr. Crane’s authorizing signature.

      . Defendant’s neurological expert expressed his opinion that the condition is "developmental,” not traumatic, in origin, and is merely a manifestation of a normal asymmetry which everyone possesses to some degree in various bodily parts. It is unnecessary here, however, to determine the etiology of Steven's seventh nerve paralysis.

      . Forceps are usually unnecessary to remove an infant from the mother’s womb via an abdominal incision.

      . During the night of November 17-18, 1980, Dr. Crane managed five deliveries — two of them premature breeches with complications — but he does not contend that he was overextended. Plaintiffs did not attempt to raise an issue of inadequate staffing prior to trial and, consequently, were not permitted to do so at trial.

      . Dr. Morton abandoned the practice of obstetrics more than a decade before this case presented. Since receiving a graduate degree in public health in 1971, he has been an academic professor of epidemiology and preventive medicine and has had no personal experience with fetal monitoring equipment which came into use after he left practice.

      . The fetal monitor tracings have not been located, but their absence does not give rise to adverse inferences. According to the secretary to the chief of the hospital’s obstetric service who was assigned responsibility for cataloguing and microfilming a backlog of tracings in early 1980, the Valencia Walker tracings were among a number misplaced in the process, most likely never having been returned by the microfilming firm. There is, however, no evidence that they were deliberately destroyed, or that the hospital was less than reasonably diligent in attempting to locate them.

      . Ms. Walker remembers no monitoring of any sort until approximately 45 minutes before she delivered, but hospital routine required the use of external monitors (which are applied by nurses) in all cases, and the nursing notes affirmatively reflect an external monitor to have been in operation as of "0030 hrs.”