author: FARNAN, District Judge.

text:
    Donald J. WALSH, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.
    Civ. A. No. 84-620-JJF.
    United States District Court, D. Delaware.
    Dec. 31, 1985.

      Frederick T. Haase, Jr., of Roeberg & Associates, Wilmington, Del., for plaintiff.
    F. Alton Tybout, of Tybout, Redfearn, Casarino & Pell, Wilmington, Del., for defendant.
   FARNAN, District Judge.

Presently before the Court is Plaintiff Donald J. Walsh’s (hereinafter “Walsh”) Motion for Partial Summary Judgment on Count I of his Complaint against Defendant, State Farm Mutual Automobile Insurance Company (hereinafter “State Farm”). In Count I, Walsh seeks a judgment declaring that he has $100,000 per person, $300,-000 per accident, of uninsured/underinsured motorist insurance in two State Farm automobile insurance policies, Numbers 414 1879 A26 08B and 414 4574 E14 08B (hereinafter “State Farm Policies”). Walsh’s claim presents the issue of whether or not State Farm complied with the mandate of 18 Del.C.Ann. § 3902(b) which requires insurers to offer their insureds increased uninsured/underinsured motorist coverage.

BACKGROUND

On January 27, 1983, Walsh allegedly suffered serious injuries while a passenger in a pickup truck driven by his cousin, Paul E. Oakes, Jr. (hereinafter “Oakes”). Oakes apparently caused his vehicle to cross the center-line of Delaware Route 9, in Delaware City, Delaware, and collide head-on with another vehicle (Walsh Opening Brief at 5). Walsh’s alleged injuries include brain damage, multiple fractures, lacerations and scarring for which medical bills in excess of $34,000 have been accumulated (Walsh Opening Brief at 5). Oakes was insured by Colonial Insurance Company of California for the minimum amount then required by Delaware law, $10,000 per person, $20,000 per accident, of bodily injury liability insurance. Oakes’ insurance carrier paid to Walsh the maximum amount available under his policy, i.e. $10,000 (Walsh Opening Brief at 7).

On the date of the accident, Walsh resided in his parents’ home, and thus was covered by the basic uninsured motorist benefits of their State Farm policies. However, Oakes was not an uninsured motorist but, an underinsured motorist, because his bodily injury liability insurance limits were not adequate to fully compensate Walsh for the injuries he sustained. The Walshes’ State Farm policies did not provide any underinsured motorist coverage. In an effort to establish underinsured coverage, Walsh asks this Court to (1) declare that State Farm failed to make the offer of higher limits of uninsured/underinsured motorist coverage in connection with the State Farm policies as required by 18 Del. C.Ann. § 3902(b); and (2) reform the State Farm policies to provide $100,000 per person, $300,000 per accident, of uninsured/underinsured motorist coverage.

State Farm contends that it did make an offer in compliance with the requirements of Section 3902(b), but the Walshes rejected it.

THE OFFER.

State Farm contends it mailed offers of higher uninsured motorist coverage to Walsh’s parents on two occasions. The first offer was included with the September 20, 1981 and March 20, 1982 premium notices for the State Farm policies. The second offer by State Farm was later in time and after Section 3902(b) had been amended to specifically include underinsured motorist coverage in uninsured motorist coverage. Both State Farm and Walsh agree the second offer is controlling for the purposes of the instant motion (State Farm Answering Brief at 4; Walsh Reply Brief at 2). The second offer by State Farm was mailed to Walsh’s parents with their October and December 1982 premium notices.

State Farm’s second offer consisted of two documents. The first document was an 8/2 inch by IOV2 inch pink-colored sheet of paper, folded into thirds pamphlet style, and captioned “CHANGE IN UNINSURED AND UNDERINSURED COVERAGE” (hereinafter the “Pamphlet”). The other document was the semi-annual Premium Notice (hereinafter the “Premium Notice”).

The first page of the Pamphlet described the amendment to Section 3902(b) requiring insurance companies to provide underinsured motor vehicle protection to all policyholders who carried uninsured motor vehicle coverage. The first page continued with a description of uninsured motorist coverage and an explanation of how State Farm’s underinsured motorist coverage protects the insured when involved in a collision with a person whose insurance is inadequate to fully compensate the State Farm policyholder. The inside of the first page contained five unnumbered paragraphs and a highlighted “box”. The first three paragraphs advised the policyholder of various matters relating to the addition of underinsured coverage to the insured’s present uninsured coverage.

The remaining two paragraphs stated as follows:

You may purchase Coverage U with limits up to the level of your Bodily Injury Liability (Coverage A) limits or $100,000 per person/$300,000 per accident, whichever is lower. Please refer to the enclosed Premium Notice for possible offer of higher Coverage U limits. If there is no premium quoted and you want Coverage U with limits equal to your Coverage A limits, please see your agent. (Emphasis added).
If you have any questions, or if other bodily injury limits are desired, please see your agent.
POLICYHOLDER INFORMATION SERVICE

The highlighted “box” stated:

The explanatory section of this brochure contains only a general description of the changes in coverage and is not a statement of contract. All coverages are subject to the insuring agreements, exclusions and conditions of the policy and applicable endorsements, including the endorsement contained herein. (Emphasis added).

The remainder of the Pamphlet was the endorsement which became part of the insured’s policy, describing the amended uninsured coverage.

The second document was the State Farm Premium Notice. The Premium Notice allegedly advised policyholders to “See insert (the Pamphlet) regarding changes in uninsured motor vehicle coverage, Coverage U, and underinsured motor vehicle coverage, Coverage W.” State Farm Answering Brief at 7. State Farm asserts language on the Premium Notice informed policyholders that if they wanted uninsured motor vehicle coverage (which now included underinsured motor vehicle coverage), with bodily injury limits equal to the bodily injury limits of the policyholder’s basic liability policy, the policyholder should check a space on the Premium Notice, and pay the indicated premium. The premium to be paid represented the total cost of the policy, including the higher uninsured/underinsured motorist coverage. The Court was unable to review the Premium Notice sent to the Walshes, because State Farm destroys the returned portion of all Premium Notices as part of its normal business procedures. The Walshes acknowledged receipt of the Premium Notice, but cannot recall whether it contained the language described by State Farm.

State Farm submits the mailing of the Pamphlet and the Premium Notice satisfy the requirements for an offer of underinsured motorist coverage as required by Section 3902(b).

DISCUSSION.

I. Summary Judgment.

The Third Circuit characterizes summary judgment as “a drastic remedy”, Ness v. Marshall, 660 F.2d 517, 519 (3rd Cir.1981) (quoting Tomalewski v. State Farm Life Insurance Company, 494 F.2d 882, 884 (3rd Cir.1974)), thus it has articulated strict standards for granting summary judgment. In deciding a Motion for Summary Judgment, the District Court does not decide issues of fact; it determines whether any genuine issue of material fact exists. Ness v. Marshall, 660 F.2d at 519 (citing Ransburg Electro-Coating Corp. v. Lansdale Finisher, Inc., 484 F.2d 1037, 1039 (3rd Cir.1973) and Lockhart v. Hoenstine, 411 F.2d 455, 458 (3rd Cir.), cert. denied, 396 U.S. 941, 90 S.Ct. 378, 24 L.Ed.2d 244 (1969)). The party opposing the motion cannot “rely merely upon bare assertions, conclusory allegations, or suspicions”, Ness v. Marshall, 660 F.2d at 519 (citations omitted), nor “upon the mere allegations or denials of his pleadings.” Sunshine Books, Ltd. v. Temple University, 697 F.2d 90, 96 (3rd Cir.1982) (quoting F.R.Civ.P. 56(e), and, citing First National Bank of Arizona v. Cities Service Company, 391 U.S. 253, 289, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968)); accord Gans v. Mun dy, 762 F.2d 338, 341 (3rd Cir.1985). However, the moving party has the burden of proving that no genuine issues of material fact exist. Gans v. Mundy, 762 F.2d at 341 (quoting Adickes v. Kress & Company, 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1969)).

In reviewing the facts presented by the parties, the District Court “must on the one hand closely scrutinize the affidavits, depositions, and exhibits submitted by the [moving parties], while on the other, indulgently treat those proffered by the [non-moving parties].” Tunis Brothers Company, Inc. v. Ford Motor Company, et al., 763 F.2d 1482, 1488-89 (3rd Cir.1985). Thus, any factual inferences drawn from the evidence submitted by the parties must be “viewed in the light most favorable to the party opposing the motion”, Continental Insurance Company v. Bodie, 682 F.2d 436, 438 (3rd Cir.1982) (quoting Hollinger v. Wagner Mining Equipment Company, 667 F.2d at 405, and, Goodman v. Mead Johnson & Company, 534 F.2d 566, 573 (3rd Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977)), and any reasonable inferences in favor of the non-moving party must be made. Id. at 438 (quoting Peterson v. Lehigh Valley District Council, United Brotherhood of Carpenters & Joiners, 676 F.2d 81, 84 (3rd Cir.1982)). Further, any doubts about the existence of genuine issues of material fact must be resolved against the moving party. Continental Insurance Company v. Bodie, 682 F.2d at 438 (quoting Hollinger v. Wagner Mining Equipment Company, 667 F.2d 402, 405 (3rd Cir.1981), Ness v. Marshall, 660 F.2d at 519, and, Tomalewski v. State Farm Life Insurance Company, 494 F.2d at 884).

In this case, the submissions of the parties indicate there are no genuine issues of material fact, and thus, the remedy of summary judgment is appropriate on the issue of the adequacy of State Farm’s offer under Section 3902(b).

II. Validity of State Farm’s Offer.

In determining whether to grant summary judgment, this Court must predict whether the Supreme Court of Delaware would construe the language of the two-part offer (Pamphlet and Premium Notice) of State Farm as constituting a legally adequate Section 3902(b) offer, and the return by the Walshes of that Premium Notice as an affirmative rejection of the offer. O'Hanlon v. Hartford Accident & Indemnity Company, 522 F.Supp. 332, 335 (D.Del.1981), aff'd., 681 F.2d 807 (3rd Cir. 1982).

The Supreme Court of Delaware recently described the background to the State Legislature's enactment of Section 3902(b). Arms v. State Farm Mutual Automobile Insurance Company, 477 A.2d 1060 (Del. 1984). Section 3902 was intended to provide insured motorists with compensation when they were injured by uninsured or underinsured motorists. Arms, 477 A.2d at 1063-64. The offer required by Section 3902(b) reflected the perception that insurance policies are “classic examples of contracts of adhesion”. Arms, 477 A.2d at 1065. Thus, “[t]he prospect of overbearing [was] sufficiently great that Section 3902(b) was enacted to require dissemination of important information which many consumers, other than the most diligent, might not discover.” Id.

Judicial standards in Delaware generally require insurance companies to be extremely careful when dealing with consumers. The Supreme Court of Delaware has recognized the inherent inequality in the insurer-insured contractual relationship. Hallowell v. State Farm Mutual Insurance Company, 443 A.2d 925 (Del.1982); Steigler v. Insurance Company of North America, 384 A.2d 398 (Del.1978). Delaware Courts have construed insurance contracts in favor of the insured and “strongly against the insurer” who drafted it. Hallowell, 443 A.2d at 926; Steigler, 384 A.2d at 400.

The Delaware Superior Court gave substance to these general principles when it held that, in Section 3902(b) disputes, insurance companies have the burden of proving that the increased coverage was affirmatively offered and affirmatively rejected. Burton v. Coleman, No. 82C-JA-116, Slip Op. at 3 (Del.Super.Ct. July 12, 1984); Schwartz, et al. v. Centennial Insurance Company, et al., No. 5350, Slip Op. at 4 (Del.Ch.Ct. February 27, 1981).

State Farm alleges that it affirmatively offered increased coverage to the Walshes and they affirmatively rejected it. It is undisputed that an offer was made. The issue for this Court is to determine whether State Farm’s offer met the requirements of Section 3902(b).

In Morris v. Allstate Insurance Company, No. 82C-OC-23 (Del.Super.Ct. July 10, 1984), the Delaware Superior Court enunciated standards with which insurance companies must comply in order to make a legally adequate Section 3902(b) offer. In Morris, the court said that the statute imposes an affirmative duty on insurers to make the offer in such a manner that the insured can make an informed decision. Morris, Slip Op. at 3, 4 (citing O’Hanlon, 552 F.Supp. 332 (D.Del.1981)). In elaborating, the court stated:

An informed decision can be made only if all the facts reasonably necessary for a person to be adequately informed to make a rationale, knowledgeable and meaningful determination ... One element which is essential to the exercise of a meaningful choice is the cost of the coverage ... [T]he communication must clearly offer to issue the specific coverage, that offer must be made in the same manner and with as much emphasis as the insurer’s other coverage, and if there is oral discussion of any of the proposed coverage, it should include oral reference to the offer of uninsured motorist coverage.

Id. at 4-5.

In applying that standard to an insurance application, the court found that the offer of increased uninsured motorist coverage was not legally adequate. Id. at 5. The disputed offer stated that increased uninsured motorist coverage “was available”, and gave the liability limits. There was no oral discussion of the offered coverage. Id. The court found that “the language lack[ed] the affirmative force of a meaningful offer, as contemplated by the statute.” Id. The court also found that the cost of the increased coverage was not quoted. Id. The court concluded that there was no “meaningful offer” as required by Section 3902(b).

It is clear that Delaware Courts require a clear and unequivocal offer that permits the insured to make a knowledgeable decision whether to accept or reject the insurer’s offer. The courts further require that the insurer be able at some later time, when challenged, to be able to affirmatively establish that such a process has taken place.

This Court, like the Morris court, is reluctant to undertake the task of specifying an exact means by which a Section 3902(b) offer must be made. However, an insurer should be able to clearly demonstrate that it has communicated the following to its insured: (1) a clear and unequivocal offer to issue the specific coverage contemplated by Section 3902(b); and (2) the cost of the coverage being offered.

Further, for an insurer to establish an affirmative rejection by the insured, it should be able to demonstrate that the insured: (1) received the communications outlined above; and (2) affirmatively rejected the insurer’s offer for the specific coverage offered.

State Farm argues that it met its burden of affirmatively offering the increased underinsured motorist coverage when it mailed to the Walshes the Pamphlet and the Premium Notice which were described previously. State Farm argues that the Court should consider these two documents together as constituting the affirmative offer required by Section 3902(b), because the Premium Notice provided the only element missing from the Pamphlet, i.e. the cost of the coverage.

The Court is not persuaded by State Farm’s argument that the Pamphlet and the Premium Notice together constitute a legally adequate offer. Assuming that the Premium Notice contained the necessary cost quotation, it still must be subject to the offeratory language contained in the Pamphlet.

An examination of the Pamphlet reveals it lacked the “affirmative force of a meaningful offer.” Morris, at 5. On the inside of the first page, one of the explanatory paragraphs refers the insured “to the enclosed Premium Notice for possible offer of higher Coverage U limits.” The disclaimer in the “box” on the same inside page reads this is not a “statement of contract”, and contains the salutory comment “please see your agent.” These statements are ambiguous at best and certainly do not demonstrate that the Pamphlet is presenting a clear and unequivocal offer to issue the coverage contemplated by Section 3902(b).

The use of a two document format with each document containing references to the other in itself is confusing to the typical consumer. However, combined with qualifying statements such as “possible offer” and “this is not a statement of contract”, it becomes fatal to State Farm’s effort to comply with Section 3902(b).

Moreover, State Farm cannot demonstrate the Walshes’ Premium Notices cured the Pamphlet’s deficiencies. The Walshes’ Premium Notices allegedly contained the following statement:

SEE INSERT REGARDING CHANGES IN UNINSURED MOTOR VEHICLE COVERAGE, COVERAGE U AND UNDERINSURED MOTOR VEHICLE COVERAGE, COVERAGE W.
COVERAGE U NOW INCLUDES MOTOR VEHICLE PROTECTION.
IF YOU WANT COVERAGE U WITH BODILY INJURY LIMITS OF $XXX, XXX/XXX AND PROPERTY DAMAGE OF FIVE THOUSAND, CHECK HERE _ AND PAY $XXX.XX. RETURN THIS PART OF YOUR NOTICE WITH YOUR PAYMENT.
IF OTHER BODILY INJURY LIMITS ARE DESIRED, PLEASE SEE YOUR AGENT IMMEDIATELY.

(State Farm Brief at 7). According to State Farm, the first set of X’s indicated the increased liability limits available, and the second set indicated the total premium, including the cost of the increased coverage elected. Id. In its brief, State Farm acknowledges the importance of a cost quotation in all Section 3902(b) offers. However, in deposition, testimony by its Regional Operations Supervisor, Ridgely T. Brown, Jr., State Farm conceded that not all Premium Notices contained cost quotations. Brown testified that no cost was shown wherever the computer could not determine the liability limits (State Farm Brief at 8, citing Brown Deposition at 21-22). State Farm urges the Court to accept Brown’s opinion that the Walsh’s cost quotation was easily computed, and therefore was printed on their Premium Notices by the computer. Brown’s opinion is an essential element of State Farm’s argument because the cost language was printed on the portion of the Premium Notice which the Walshes had to return with their payment. As discussed earlier, these portions of the Walshes’ Premium Notice are not available for examination at this time.

At oral argument, and in his brief, Walsh asserted that his parents did not know whether their Premium Notices contained price quotations, whether they checked the additional coverage, and whether they paid the higher premium. State Farm has presented no evidence challenging Walsh’s or his parents’ credibility. In Burton v. Coleman, 82 C-JA-116, Slip Op. at 3, an insurance company’s only evidence that a plaintiff had received a Section 3902(b) mailing was a list containing the plaintiff’s name and last known address. When the case was before the Superior Court on the plaintiff’s Motion for Partial Summary Judgment, the court held that, “(i)n the absence of factors casting doubt on the credibility of specific testimony of non-receipt of a notice, that testimony is likely to prevail over general evidence of the mailing of a notice.” Burton, at 3. Similarly, this Court finds that, absent specific challenges to the Walsh’s statements, and absent other-documentation that the Walshes’ Premium Notice contained a price quotation, State Farm cannot carry its burden of proving that the necessary cost quotation was included in the Walshes’ Premium Notices. The inability to carry its burden of proof regarding the cost quotation alone is sufficient to defeat State Farm’s claim that it made an adequate Section 3902(b) offer.

The Court believes that more than the Pamphlet and Premium Notice were required for State Farm to meet its statutory obligation. Here, State Farm has not been able to affirmatively demonstrate that it made a clear, unequivocal offer, including a price quotation, so that the Walshes could intelligently decide whether or not to purchase uninsured motorist coverage.

III. Affirmative Rejection.

Delaware Courts have interpreted Section 3902(b) as imposing upon the insured the burden of proving that the insured affirmatively rejected a Section 3902(b) offer. Arms v. State Farm Mutual Automobile Insurance, 477 A.2d 1060, 1066 (Del.1984); Schwartz v. Centennial Insurance Company, et al., No. 5350 (1977), Slip Op. at 8 (Del.Ch.Ct. September 28, 1981). Having found that the two documents relied upon by State Farm as constituting .their offer to the Walshes under Section 3902(b) are inadequate, this Court does not reach the question of whether or not State Farm can establish that there was an affirmative rejection.

CONCLUSION.

Walsh requests that this Court enter a declaratory judgment that the uninsured motorist limits of his parents’ policies are the same as their personal liability limits were at the time of the accident, $100,-000 per person and $300,000 per accident.

The Declaratory Judgment Act grants courts the right to enter a declaratory judgment where an “actual controversy” exists. 28 U.S.C. § 2201 (1982). The decision whether to grant or deny declaratory relief is within the sound discretion of the court. Brillhart v. Excess Insurance Company of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620 (1942), cited in Spivey Company v. Travellers Insurance Company, 407 F.Supp. 916, 917 (E.D.Pa.1976). A declaratory judgment establishing the limits of liability in an insurance policy is appropriate. Aetna Life Insurance Company of Hartford, Connecticut v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 464, 81 L.Ed. 617 (1936), cited in Bird v. Penn Central Company, 351 F.Supp. 700, 701 (E.D.Pa.1972).

Resolving all factual inferences in favor of State Farm, its offer did not constitute a valid Section 3902(b) offer under that statute and the case law interpreting it. Thus, Walsh is entitled to a declaration that his parents’ policy limits for uninsured motorist coverage are equal to the personal injury liability limits on their basic policy at the time of his accident. An Order will be entered in accordance with this Opinion.

      . The Walshes owned two State Farm automobile insurance policies. Policy number 414 1879 A26 08B was purchased on January 26, 1978, in the names of Dorothy A. Walsh and William P. Walsh, Jr. This policy covered a 1977 Oldsmobile Cutlass. Policy number 414 4574 E14 08B was purchased on March 22, 1978, in the name of Dorothy A. Walsh. This policy covered a 1972 Volkswagen. Both policies could be automatically renewed every six months upon payment of the premium, and were in full force at the time of the accident.

      . As amended effective August 18, 1982, 18 Del. C.Anno. § 3902(b) read in part:
      Every insurer shall offer to the insured the option to purchase additional coverage for personal injury or death up to a limit of $300,000 but not to exceed the limits for personal injury set forth in the basic policy. Such additional insurance shall be underinsured coverage.

      . See 21 Del.C.Anno. § 2118.

      . 18 Del.C.Anno. § 3902(a)(3)(A) provides that: an uninsured motorist in Delaware is one who carries a bodily injury liability lower than the $10,000 statutory minimum. See also, 21 Del.C. Anno. § 2902(b)(2) (1979).

      . In O’Hanlon v. Hartford Accident & Indemnity Company, 522 F.Supp. 332, 335 (D.Del. 1981), cited with approval in Arms, 477 A.2d at 1064, the District Court stated that the General Assembly “sought to assure that each motorist would be advised of this right" to contract "for higher uninsured motorist coverage." (Emphasis in original).

      . State Farm did not dispute in its brief or at oral argument the liability limits reported by Walsh in his complaint.


source: Caselaw Access Project

author: VARNER, District Judge.

license: Public Domain

text:
    Donna Huff KIRBY, Plaintiff, v. John MARSH, etc., Defendant.
    Civ. A. No. 85V-1137-S.
    United States District Court, M.D. Alabama, S.D.
    Dec. 31, 1985.

      Jack W. Smith, Dothan, Ala., for plaintiff.
    John C. Bell, U.S. Atty., Kenneth E. Vines, Asst. U.S. Atty., Montgomery, Ala., for defendant.
   ORDER

VARNER, District Judge.

This cause is now before the Court on Defendant’s motion filed herein December 2, 1985, to reduce ad damnum and on the Plaintiff’s motion to dismiss counterclaim contained in Paragraph (1) of the Answer to Counterclaim filed herein December 16, 1985.

As grounds for his motion to reduce ad damnum, Defendant alleges that, since the administrative claim filed in this cause only claimed damages in the amount of $350,-000.00, Plaintiff should now be precluded from seeking additional damages pursuant to 28 U.S.C. § 2675(b). Thus, the issue presented to this Court is whether a plaintiff may come into federal court under the Federal Tort Claims Act and seek damages in excess of those originally claimed in the administrative process, even though prior to the time of the federal agency’s final determination of the claim plaintiff had amended her claim so as to increase the ad damnum clause therein. Having considered the pleadings hereto filed by the parties, as well as oral argument in open Court on December 30, 1985, this Court is of the opinion that, for reasons expressed below, said motion to reduce ad damnum should be denied.

For purposes of the motion to reduce ad damnum, the relevant facts are as follows. On July 27, 1984, Plaintiff filed a claim with the Secretary of the United States Army for alleged damages arising out of an automobile accident occurring on June 7, 1984, in Henry County, Alabama. This administrative claim sought damages in the amount of $350,000.00. On September 5, 1985, Plaintiff filed an amendment to her claim which increased the ad damnum clause therein to $1,000,000.00. Thereafter, on September 19, 1985, Plaintiff filed her complaint in this Court seeking damages in the latter stated amount. On September 23, 1985, Defendant Secretary denied Plaintiff’s administrative claim.

Title 28 U.S.C. § 2675(b) provides:

“An action under this section shall not be instituted for any sum in excess of the amount of the claim presented to the federal agency, * *

From the above-stated facts, it is clear that the amount of the claim presented to the federal agency prior to the agency’s final determination thereon was $1,000,000.00. Though it might be argued that Plaintiff was untimely or delayed unreasonably in so filing her amendment, the fact still remains that the amount of the claim sought here does not exceed that amount denied by the federal agency on September 23, 1985. Accordingly, 28 U.S.C. § 2675(b) does not preclude Plaintiffs claim in this Court for $1,000,000.00.

Accordingly, it is ORDERED by this Court that Defendant’s motion to reduce ad damnum filed herein December 2, 1985, be, and the same is hereby, denied.

It is further ORDERED by this Court that Plaintiff’s motion to dismiss counterclaim contained in Paragraph (1) of the Answer to Counterclaim filed herein December 16, 1985, be, and the same is hereby, denied.

      . This Court takes notice of the fact that, pursuant to 28 U.S.C. § 2675(a), the failure of a federal agency to make final disposition of a claim within six months after it is filed shall, at the option of the claimant at any time thereafter, be deemed a final denial of the claim. However, the parties herein are not contending, nor do the pleadings demonstrate, that Plaintiff exercised her option to do so at the time she filed her amendment on September 5, 1985. Thus, at such time, Plaintiffs claim before the administrative agency was still pending and subject to being amended.


author: MORAN, District Judge.

text:
    Oliver J. KENDALL, Plaintiff, v. C.F. INDUSTRIES, INC., a Delaware corporation, Defendant.
    No. 84 C 2553.
    United States District Court, N.D. Illinois, E.D.
    Jan. 2, 1986.
    Celeste E. Kralovec, Foss, Schuman & Drake/Cohen & Bullard, Chicago, 111., for plaintiff.
    Roger L. Taylor, Ronald J. Ciardiello, Kirkland & Ellis, Chicago, 111., for defendant.
   MEMORANDUM AND ORDER

MORAN, District Judge.

Both sides in this age discrimination suit have moved for summary judgment. Defendant C.F. Industries claims that it fired plaintiff Kendall for misconduct, but the Illinois Department of Labor found otherwise. On C.F. Industries’ appeal a state court affirmed an unemployment compensation award to Kendall. Plaintiff’s motion now argues that under 28 U.S.C. § 1738, which gives state court judgments the same full faith and credit in federal courts that they have in the courts of the state from which they are taken, that affirmance estops defendant in this suit from offering any evidence of the alleged misconduct as a legitimate nondiseriminatory reason for the discharge. Therefore, plaintiff has a prima facie case of discrimination which stands unrebutted. Defendant maintains to the contrary, that the unemployment compensation hearing is irrelevant to an age discrimination suit. C.F. Industries asserts that Kendall has shown no evidence that he was fired because of his age, while it has offered evidence of misconduct, and so summary judgment for defendant is appropriate.

The court finds that Illinois would not apply issue preclusion under these circumstances because of the different standards, evidentiary burdens, and policy goals of the two actions. However, the prior judgment finding no misconduct makes the issue of discriminatory discharge a disputed one. We deny both motions.

I. BACKGROUND

C.F. Industries recruited plaintiff as their director of corporate office facilities in 1976, when he was 55 years old. His performance was satisfactory, or better, each year, and when C.F. Industries reduced its forces by at least 180 persons in early 1983, Kendall kept his position. Then in July 1983 Kendall was fired. One of the employees under Kendall’s direct supervision was also a school board treasurer and had used company time and facilities to work on the school board budget. Such use was a violation of defendant’s Code of Corporate Conduct. An anonymous note made plaintiff’s superiors aware of the situation and both that employee and plaintiff were fired. Defendant maintains that Kendall must have known of the violation, and failure to report a code violation is itself a violation. Kendall’s position is that he knew that the employee was a school board treasurer, and had been for eight years, but not that he had done school board work on company time. Kendall, 62 years old at the time, was replaced by a 38-year-old.

When Kendall applied for unemployment compensation his application was initially denied because ostensibly he was fired for misconduct. At a hearing before an unemployment referee, however, that denial was reversed. The referee found that Kendall “was discharged not for misconduct connected with the work,” and granted him benefits. The Illinois Department of Labor’s Review Board adopted that decision. C.F. Industries appealed to the Lake County Circuit Court, but it found the decision “not contrary to the manifest weight of the evidence.” C.F. Industries v. Illinois Department of Labor, No. 84 MR 148 (Circuit Court of Lake County, Illinois, February 25, 1985).

If that judgment bars defendant from asserting the same argument of misconduct here, then, simply, plaintiff wins. Although the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., was not passed as part of the Civil Rights Act of 1964, its substantive provisions are interpreted using case law applicable to Title VII of that Act. Trans World Airlines, Inc. v. Thurston, 469 U.S. -, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985). Absent direct evidence of discrimination, a plaintiff proceeds under the formula of shifting burdens set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). Plaintiff first makes out a prima facie case which creates a rebuttable presumption of unlawful discrimination. Defendant then has the opportunity to rebut with evidence of a legitimate nondiseriminatory reason for his action. If he does, then plaintiff must show that the alleged reason is a pretext. Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981); Parker v. Federal National Mortgage Ass’n, 741 F.2d 975 (7th Cir.1984). In this action, if C.F. Industries is estopped from offering evidence of Kendall’s alleged misconduct, Kendall can establish a prima facie case. He was in the protected class of persons 40 to 70, and until the incident he was doing his job well enough to meet his employer’s legitimate expectations. If there was no misconduct, then that evaluation of his performance would still apply at the time he was fired. He was nevertheless discharged and he was replaced by someone outside the protected class. Cf. LaMontagne v. American Convenience Products, Inc., 750 F.2d 1405 (7th Cir. 1984). With misconduct unable to serve as defendant’s legitimate nondiscriminatory reason, then the presumption of discrimination stands unrebutted and plaintiff carries the judgment. Burdine, 450 U.S. at 254, 101 S.Ct. at 1094.

II. ISSUE PRECLUSION

The heart of our inquiry, then, is the preclusive effect of the Illinois unemployment compensation proceedings on this suit. Under 28 U.S.C. § 1738 the federal courts, in a suit on a federal statute, must give a state court judgment the same preclusive effect which the courts of the state would give it, unless Congress has expressly or impliedly created an exception for that statute. Kremer v. Chemical Construction Corp., 456 U.S. 461, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982); Krison v. Nehls, 767 F.2d 344 (7th Cir.1985). The federal court must apply both the concept of claim preclusion (res judicata), Migra v. Warren City School Dist. Board of Education, 465 U.S. 75, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984), and of issue preclusion (collateral estoppel), Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). Preclusion extends to judgments which review the decisions of state administrative agencies. In Kremer, plaintiff could not pursue a federal employment discrimination suit because he had lost an appeal from a finding of the New York Human Rights Division that his employer had not engaged in unlawful discrimination. 456 U.S. at 466-467, 102 S.Ct. at 1889-1890. However, preclusion does not follow automatically from every state court affirmance of an administrative action. In Jones v. City of Alton, a municipal civil service commission decision, affirmed on appeal to state court, had determined that a policeman was fired for misconduct. The Seventh Circuit declined to give that judgment preclusive effect in his employment discrimination suit. 757 F.2d 878 (7th Cir. 1985). See also Ross v. Communications Satellite Corp., 759 F.2d 355 (4th Cir.1985) (state court finding of employee misconduct for unemployment compensation purposes did not preclude his Title VII action for relatiatory discharge). Application of section 1738 requires a careful examination of the preclusion law of the state which issued the judgment. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. -, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985); Jones, 757 F.2d at 884.

The analysis, therefore, must turn to Illinois law of issue preclusion. In Illinois law, as in the law of former adjudication generally, claim preclusion or “estoppel by judgment” (elsewhere known as res judicata proper) operates only in a second action between the same parties on the same claim. Where in the second action either a party or the claim differs from the first, the question is one of issue preclusion, also called collateral estoppel or “estoppel by verdict.” Jones, 757 F.2d at 879 n. 1; Spiller v. Continental Tube Co., 95 Ill.2d 423, 447 N.E.2d 834, 69 Ill.Dec. 399 (1983). Cf. A. Vestal and M. Hill, Preclusion in Labor Controversies, 35 Okla.L.Rev. 281 (1982). In the case at bar, both a party and the claim are different. The first action was between C.F. Industries and the Illinois Department of Labor, over an award of unemployment compensation to Kendall. The present action is between Kendall and C.F. Industries, on a claim of age discrimination.

The present case at least presents an opportunity for the application of issue preclusion. An issue of fact or law may be precluded when it has actually been litigated and its • determination was essential to the prior judgment. Casson v. Nash, 54 Ill.App.3d 783, 370 N.E.2d 564, 12 Ill.Dec. 760 (1st Dist.1977). The issue of Kendall’s misconduct was contested at the Department of Labor hearing. It was essential, since Kendall could not have received unemployment compensation if C.F. Industries had proved misconduct. Illinois has found collateral estoppel effect not only in judgments affirming administrative determinations but in administrative determinations themselves — even those from another state. Raper v. Hazelett & Erdal, 114 Ill.App.3d 649, 449 N.E.2d 268, 70 Ill.Dec. 394 (1st Dist.1983); cf. Unger v. Consolidated Foods Corp., 693 F.2d 703 (7th Cir. 1982).

However, issue preclusion, or collateral estoppel, involves considerations of fairness to the party against whom it is applied. Illinois does not use issue preclusion where it would “result in an injustice to the party against whom it is asserted under the circumstances of the case. Collateral estoppel is not a rigid doctrine and should be applied only as fairness and justice require under the circumstances of each case.” Fred Olson Motor Service v. Container Corp., 81 Ill.App.3d 825, 830, 401 N.E.2d 1098, 1101-1102, 37 Ill.Dec. 5, 8-9 (1st Dist.1980). See also Jones, 757 F.2d at 885; Redfern v. Sullivan, 111 Ill. App.3d 372, 444 N.E.2d 205, 67 Ill.Dec. 166 (4th Dist.1983); Rotogravure Service, Inc. v. Borrowdale, 77 Ill.App.3d 518, 395 N.E.2d 1143, 32 Ill.Dec. 762 (1st Dist.1979).

Fairness concerns apply with particular force here since plaintiff is using issue preclusion offensively. In general, offensive collateral estoppel has a greater potential for unfairness, and Illinois courts have rarely allowed it. Fred Olson, 81 Ill.App.3d at 830-831, 401 N.E.2d at 1102, 37 Ill.Dec. at 9; Fearon v. Mobil Joliet Refining Corp., 131 Ill.App.3d 1, 475 N.E.2d 549, 86 Ill.Dec. 335 (1st Dist.1984); Kemling v. Country Mutual Insurance Co., 107 Ill. App.3d 516, 437 N.E.2d 1253, 63 Ill.Dec. 331 (2d Dist.1982). Kendall was not a party to the prior judgment and so is asserting offensive collateral estoppel in this action. In these circumstances that distinction may be somewhat technical, since the prior proceedings were about Kendall and the award went to Kendall. However, Kendall is also trying to use the prior judgment to recover again from a defendant who has previously lost. In a closely analogous situation, an Illinois court denied issue preclusion. Godare v. Sterling Steel Casting Co., 103 Ill.App.3d 46, 430 N.E.2d 620, 58 Ill.Dec. 588 (5th Dist.1981). Godare, the plaintiff, had previously been found totally and permanently disabled for recovery under the Workmen’s Compensation Act. As in the case at bar, his employer had appealed the administrative determination and lost. Sterling Steel Casting Co. v. Industrial Commission, 74 Ill.2d 273, 384 N.E.2d 1326, 24 Ill.Dec. 168 (1979). The court refused to let Godare use that judgment to preclude the issue of his total disability in an action for pension benefits under a collective bargaining agreement. Godare, 103 Ill.App.3d at 51-52, 430 N.E.2d at 623-624, 58 Ill.Dec. at 591-592. Illinois collateral estoppel law thus requires us to be alert for unfairness to the defendant even when plaintiff was involved in the prior hearing.

In light of these concerns this court does not think that Illinois would use the prior judgment as a bar to defendant’s allegations of Kendall’s misconduct in the present case. Under Illinois law an issue is precluded only when it is identical to one previously adjudicated, when the preclusion is asserted against a party to the prior action or one in privity with him, when that party had a full and fair opportunity to litigate the issue in the prior proceeding, and when the former suit went to a final judgment on the merits. Raper, 114 Ill. App.3d at 652, 449 N.E.2d at 270-271, 70 Ill.Dec. at 396-397. When plaintiff is using issue preclusion offensively, the court must be highly sensitive to these factors, making intensive inquiry into the facts and circumstances of both past and present litigation. Notably, the court must be certain that the issue is truly identical, Hassett Storage Warehouse v. Board of Election Commissioners, 69 Ill.App.3d 972, 387 N.E.2d 785, 25 Ill.Dec. 909 (1st Dist.1979), and that defendant has no opportunities for litigating the issue available to him in the second action which were not available in the first. Fred Olson, 81 Ill.App.3d at 831, 401 N.E.2d at 1102, 37 Ill.Dec. at 9; Fearon, 131 Ill.App.3d at 7, 475 N.E.2d at 554, 86 Ill.Dec. at 340. Plaintiff’s attempt to use issue preclusion here cannot pass those tests.

The issue of Kendall’s misconduct as a possible legitimate nondiscriminatory reason for his discharge in an ADEA suit is not identical to the issue of his misconduct as grounds for denying him unemployment compensation. In Illinois, when different standards are applied to the same facts in reaching a legal conclusion, the issues are not identical for purposes of issue preclusion. Godare, 103 Ill.App.3d at 51, 430 N.E.2d at 623, 58 Ill.Dec. at 591. Cf. Ross, 759 F.2d at 362 (applying same principle in Maryland law to differences between unemployment compensation and Title VII); Brady v. Thurston Motor Lines, 753 F.2d 1269 (4th Cir.1985) (standard of voluntary termination for state unemployment compensation found inappropriate to determining whether termination was voluntary for purposes of backpay award in employment discrimination suit); Vestal and Hill, supra, at 361. One ground for the denial of collateral estoppel in Godare was a difference in standards. For workmen’s compensation, the standard for total disability was inability to perform services for which a reasonably stable market existed; for the pension agreement, it was inability to engage in any occupation or employment. The variation meant that the issues were not identical. 103 Ill.App.3d at 51-52, 430 N.E.2d at 623-624, 58 Ill.Dec. at 591-592.

The difference in standards in the matter before this court is, if anything, greater. In order to block an award of unemployment compensation, an employer must show that the employee’s misconduct was in wanton or wilful disregard of the employer’s interests. Ordinary negligence or errors in judgment do not suffice; the employer must show a deliberate violation of the employer’s rules or negligence manifesting an intent to disregard employee responsibilities. Winklmeier v. Board of Review, 115 Ill.App.3d 154, 450 N.E.2d 353, 70 Ill.Dec. 880 (5th Dist.1983). The standard for misconduct as a legitimate nondiscriminatory reason for a discharge would be far lower. Any lawful reason for a discharge meets defendant’s burden of production in an ADEA suit, including personality conflicts and lack of communication. LaMontagne, 750 F.2d at 1409, 1414; Parker, 741 F.2d at 979. In the words of Godare, “when these different standards are applied to the same facts, the same conclusion will not necessarily be reached.” 103 Ill.App.3d at 51, 430 N.E.2d at 634, 58 Ill.Dec. at 592.

Similarly, C.F. Industries did not have an opportunity to litigate the issue on the same terms in which it appears in the present litigation. In Illinois, where the second action uses procedures or evidence not available in the first, issue preclusion should not apply. In Godare, a second ground for the denial of collateral estoppel was a difference in evidence permissible in the two proceedings. The administrative hearing allowed evidence of plaintiff’s age, experience and employment capabilities, as well as medical testimony, whereas under the terms of the pension agreement only medical opinions could be heard. 103 Ill. App.3d at 51-52, 430 N.E.2d at 624, 58 Ill.Dec. at 592. In Fred Olson, preclusive effect was denied because the Dead Man’s Act limited the available evidence in the first action but not in the second. 81 Ill. App.3d at 831, 401 N.E.2d at 1102, 37 Ill. Dec. at 9. Again, the difference in opportunities between the two actions in the matter before us is, if anything, greater than in these Illinois precedents. In the unemployment compensation proceedings C.F. Industries had the burden of proof for its assertion of misconduct. Be-Mac Transport Co., Inc. v. Grabiec, 20 Ill. App.3d 345, 314 N.E.2d 242 (1st Dist.1974). In this ADEA action, however, they would have merely a burden of production: an articulation by admissible evidence of a legitimate nondiscriminatory reason, in order to carry the case forward. LaMontagne, 750 F.2d at 1409; Burdine, 450 U.S. at 254-255, 101 S.Ct. at 1094. Judging from materials submitted for this motion, defendant can meet this far lesser burden. Under Illinois law he should not be precluded from the attempt.

The different standards and opportunities relate to the differing policy considerations served by these two proceedings, which also make this case inappropriate for issue preclusion. Where the two actions provide truly different remedies promoting distinct policies, issues and opportunities to litigate ordinarily will not be identical and collateral estoppel usually should not apply. Ross, 759 F.2d at 362; In re Wheat Rail Freight Rate Antitrust Litigation No. MDL 534, 579 F.Supp. 517, 542 (N.D.Ill.1984). This consideration applies with particular force when administrative proceedings designed to enforce specific statutory goals are involved. Collateral estoppel was appropriate in Kremer because the state court judgment affirmed a “human rights agency which was charged with responsibility for the very subject matter the plaintiff wanted to raise in federal court, employment discrimination.” Jones, 757 F.2d at 886. Both the agency and the federal statute served the same policy goals. In Jones, however, the agency finding of misconduct came from a civil service commission concerned with sufficient cause for a discharge. The court found that Illinois law would not cut off litigation of the issue of employment discrimination on the basis of a decision from an agency not primarily concerned with discrimination. 757 F.2d at 882, 886. Compare Rosenfeld v. Department of Army, 769 F.2d 237 (4th Cir.1985) (Civil Service Commission finding of disability as reason for discharge did not estop plaintiff from alleging age discrimination as reason in ADEA suit); Ross, 759 F.2d at 361-362; Brady, 753 F.2d at 1277; Vestal and Hill, supra, at 323-327.

In the present case plaintiff seeks to apply issue preclusion from a proceeding serving one distinct policy to an action on another. Unemployment compensation is intended to ease burdens on unemployed workers and the law is interpreted with this policy goal in mind. Ill.Rev.Stat. ch. 48, ¶ 300 (1985); Be-Mac, 20 Ill.App.3d at 358, 314 N.E.2d at 249; Huggins v. Board of Review, 10 Ill.App.3d 140, 294 N.E.2d 32 (1st Dist.1973). The ADEA prohibits discharge of workers on the basis of their age, as one aspect of preventing age discrimination in employment, and should be interpreted with that policy goal in mind. 29 U.S.C. § 623(a); Thurston, 469 U.S. at -, -, 105 S.Ct. at 621, 624; Lorillard v. Pons, 434 U.S. 575, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978). Age discrimination was not, and could not have been, litigated in the unemployment proceeding. Yet, thanks to the McDonnell-Douglas proof structure, that. proceeding would control the outcome of this age discrimination suit if issue preclusion is applied. Considering all the circumstances of this attempt to use collateral estoppel offensively, including the difference in issues, the difference in the burden placed on defendant, and the difference in policy goals, this court declines to apply issue preclusion.

III. THE MOTIONS

The analysis now may turn to the cross-motions for summary judgment. To succeed at summary judgment, a movant must show the absence of any genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970). If C.F. Industries can present evidence tending to show Kendall’s alleged misconduct, then the question of whether Kendall indeed engaged in misconduct becomes a disputed issue of material fact. Further, for summary judgment, inferences must be drawn in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). The evidence must therefore be construed favorably to C.F. Industries for the purposes of Kendall’s motion, and favorably to Kendall on C.F. Industries’ motion. As a result, neither motion can be granted.

For the purposes of Kendall’s motion, the existence even of a prima facie case becomes a disputed issue. The depositions filed by defendant serve as evidence in support of the allegations of misconduct. The treasurer’s office stood very close to Kendall’s, and testimony indicates that he visibly worked on school board matters there on several occasions. Construing that evidence most favorably to C.F. Industries, Kendall’s failure to stop such a misuse of company resources was misconduct, and misconduct can be viewed as a failure to perform up to his employer’s legitimate expectations. The misconduct would also function as a legitimate nondiscriminatory reason for Kendall’s termination. Kendall’s motion therefore must be denied.

Considered most favorably to Kendall for the purposes of C.F. Industries’ motion, however, the evidence also prevents summary judgment for the employer. To prevail, C.F. Industries must show that there is no evidence, not even circumstantial evidence, from which a trier of fact could reasonably infer that age was a determining factor in Kendall’s discharge. Parker, 741 F.2d at 980. A prior judgment which is not given preclusive effect may nevertheless be admitted as evidence in the second proceeding. The court, in its discretion, determines the weight to be given such a decision in light of the facts and circumstances of the case. Ross, 759 F.2d at 363. See also McDonald, 466 U.S. at 292 n.13, 104 S.Ct. at 1804 n. 13; Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 743-744 n. 22, 101 S.Ct. 1437, 1446 n. 22, 67 L.Ed.2d 641 (1981); Alexander v. Gardner-Denver Co., 415 U.S. 36, 60 n. 21, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974). Kendall argues that he could not have been fired for misconduct, and an Illinois unemployment referee, affirmed by an Illinois court, agreed with him. Construing that evidence in Kendall’s favor, there was no misconduct. Kendall therefore has a prima facie case for purposes of this motion. He was in the protected class, performing satisfactorily, discharged and replaced by a younger person.

Defendant, of course may respond to that prima facie case by asserting the alleged misconduct as a legitimate nondiscriminatory reason. The same judgment, however, serves as evidence that the reason was a pretext. In an age discrimination suit, “determining factor” does not mean sole factor. For example, if a younger man would have survived a similar incident, then Kendall would not have been discharged “but for” his age, and he is a victim of age discrimination. LaMontagne, 750 F.2d at 1409; Loeb v. Textron, Inc., 600 F.2d 1003 (1st Cir.1979). With the McDonnell-Douglas indirect method of proof a victim of age discrimination may “prevail without presenting any evidence that age was a determining factor in the employer’s motivation.” LaMontagne, 750 F.2d at 1409-1410 (emphasis in original). Instead, he may win by eliminating the claimed lawful motivation. He may show that the defendant’s reason has no basis in fact or did not motivate the discharge, or was insufficient to have motivated the discharge. Id. at 1414-1415.

Viewed in the light most favorable to Kendall, the judgment, along with Kendall’s testimony, says that he was not fired for misconduct. A trier of fact could reasonably infer that the incident was trivial and merely a pretext to move Kendall out for someone younger. In short, from the point of view of this motion as well, the reason for Kendall’s discharge is still a disputed issue of material fact. Cf. Maxfield v. Central States, Southeast and Southwest Areas Health, Welfare and Pension Funds, 559 F.Supp. 158 (N.D.Ill. 1982). Defendant’s motion for summary judgment must also be denied.

CONCLUSION

Plaintiff’s motion for summary judgment and defendant’s motion for summary judgment are both denied.

      . The statute applies only when there has been a state judicial proceeding, McDonald v. West Branch, 466 U.S. 284, 104 S.Ct. 1799, 80 L.Ed.2d 302 (1984), although in appropriate circumstances a court may also find an action precluded by the decision of a state administrative agency acting in a judicial capacity (called "administrative collateral estoppel”). Buckhalter v. Pepsi-Cola General Bottlers, Inc., 768 F.2d 842 (7th Cir.1985). We need not find whether those circumstances are present in this case, however, since C.F. Industries appealed the administrative award to a state trial court, thereby implicating section 1738. Kremer, 456 U.S. at 467, 102 S.Ct. at 1890.

      . Res judicata and collateral estoppel are intended to prevent parties from being exposed to multiple lawsuits, avoid inconsistent decisions and conserve judicial resources. Allen, 449 U.S. at 94, 101 S.Ct. at 414; Montana v. United States, 440 U.S. 147, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979). Even in cases of claim preclusion, fairness concerns occasionally take precedence over these policies. Particular facts and circumstances may require exceptions to the general rule. Patzer v. Board of Regents, 763 F.2d 851, 856 (7th Cir.1985) (Title VII claim had not merged into state court judgment affirming state agency finding of employment discrimination). Cases of issue preclusion require even more attention to the rights of the parties. When the prior action was between the same parties, each party will normally have had the opportunity and the incentive to litigate all issues against the other. Also, when the cause of action in the prior judgment was the same, so normally were the standards of substantive law, procedure and evidence. Neither is necessarily true when a party or the action was different. An issue may take on greater importance with the second party than it had in the first, or the nature of the action may not have given the same opportunity to litigate the issue. Application of issue preclusion thus depends far more on the exercise of the court's equitable discretion than claim preclusion. Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); Parks v. Pavkovic, 753 F.2d 1397 (7th Cir.1985).

      . Offensive issue preclusion, or offensive collateral estoppel, occurs when a plaintiff not a party to a prior judgment nevertheless asserts it in an attempt to win against a defendant who has previously lost on the issue to someone else. Historically, collateral estoppel, like res judicata, required "mutuality”: it applied only between the parties to the former adjudication or to those in privity with them. Illinois, following the modern trend, no longer requires mutuality in all cases. Illinois State Chamber of Commerce v. Pollution Control Board, 78 Ill.2d 1, 398 N.E.2d 9, 34 Ill.Dec. 334 (1979). However, Illinois courts must make a more careful and sensitive inquiry into the appropriateness of issue preclusion when mutuality is not present. Coulter v. Renshaw, 94 Ill. App.3d 93, 418 N.E.2d 489, 49 Ill.Dec. 635 (2d Dist.1981). In particular, the cases distinguish between defensive and offensive issue preclusion. When a defendant asserts collateral estoppel to bar litigation of an issue by a plaintiff who has already failed to carry his burden of proof on it against someone else, the policy goals such as preventing multiple lawsuits and conserving judicial resources are usually served. The same is not true of offensive collateral estoppel. It does not encourage the conservation of judicial resources and may in fact induce multiple lawsuits. Courts should allow it only after careful consideration of all the facts and circumstances. Parklane Hosiery, 439 U.S. at 329-331, 99 S.Ct. at 650-651. The Supreme Court has not yet considered offensive collateral estoppel in the context of a discrimination suit. Allen, supra, and Kremer, supra, involved the defensive use of issue preclusion. The Seventh Circuit recently rejected an attempt to use it: Parks, 753 F.2d at 1404.


text:
    Ronald BATTLE, Plaintiff, v. William ISAAC, Chairman, Federal Deposit Insurance Corporation, Defendant.
    No. 84 C 271.
    United States District Court, N.D. Illinois, E.D.
    Jan. 2, 1986.

      Paddy Harris McNamara, Chicago, 111., for plaintiff.
    Ann L. Wallace, Asst. U.S. Atty., Chicago, 111., Ingeborg G. Chaly, Senior Atty., Federal Deposit Ins. Corp., Washington, D.C., for defendant.
   MEMORANDUM AND ORDER

MORAN, District Judge.

This case presents the question of whether an unappealed finding by the State Unemployment Commission that a federal employee was fired for misconduct bars him from suing his employer for race discrimination and retaliatory discharge under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2, 2000e-3. This court concludes that since plaintiff has not yet had his “day in court” on the precise issues of discrimination and retaliation, it does not. However, his claim can only survive if he can supply this court with evidence supporting his allegations that employees with similar misconduct on their records were not fired.

DISCUSSION

The plaintiff, Ronald Battle, started with the Federal Deposit Insurance Corporation (FDIC) in Chicago as a Bank Examiner Student Assistant (GG-4) in 1974 and rose to Bank Examiner Assistant (GG-9) by 1978. There his career stalled. He and another black bank examiner filed a class action suit against the FDIC, alleging discrimination in its promotion policies in 1980, which was certified in 1983. See Allen v. Isaac, 99 F.R.D. 45, amended 100 F.R.D. 373 (N.D.Ill.1983). The case was recently tried before Judge Hart.

About one month before the certification was announced, Battle was fired. The problem was travel expense vouchers which he had submitted for six days in December of 1982. They showed him driving his own car to various job assignments, when in fact he had ridden with a coworker. Battle maintains that he accidentally made a clerical error, but the FDIC found an intentional falsification and terminated him. When Battle applied for unemployment compensation, the claims adjudicator, the hearing referee and the board of review of the Illinois Department of Labor all agreed that he was disqualified from benefits because he had violated employer policy.

Defendant FDIC argues that it is entitled to summary judgment because the employment compensation proceedings have collaterally estopped Battle from claiming wrongful discharge, retaliation and racial discrimination. This court denied an earlier motion for summary judgment grounded on substantially the same argument. Battle v. Isaac, No. 84 C 271 (N.D.Ill. June 28, 1985). Shortly thereafter the Seventh Circuit decided Buckhalter v. Pepsi-Cola General Bottlers, Inc., 768 F.2d 842 (7th Cir. 1985), which held that an Illinois Human Rights Commission determination had preclusive effect on a Title VII suit. Defendant’s new motion is in effect a request to reconsider in light of Buckhalter.

The analysis must begin with things which Buckhalter did not do. First, contrary to the impression that both plaintiff and defendant seem to have, that case did not hold that unappealed state administrative determinations have the same preclusive effect which would be given to a state court judgment under 28 U.S.C. § 1738. Section 1738 requires federal courts in suits on federal statutes to give a state judicial proceeding the same effect in matters of claim and issue preclusion which the courts of the state would give it, unless Congress has created an exception for that federal statute. Kremer v. Chemical Construction Corp., 456 U.S. 461, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982). A § 1738 question therefore is decided on the preclusion law of the state which issued the judgment. Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. -, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985). Buck-halter, however, specifically rejected any application of § 1738 to administrative determinations. Section 1738 covers only state court judgments, i.e., judicial proceedings. If a state agency determination has not been appealed to a state court, § 1738 does not apply. The preclusive effect of the determination is a matter of federal law, although courts can of course look to state law, as well as cases involving § 1738, for guidance. 768 F.2d at 849; see also McDonald v. City of West Branch, 466 U.S. 284, 104 S.Ct. 1799, 80 L.Ed.2d 302 (1984). In other words, Buckhalter applied administrative res judicata as a matter of federal, not Illinois, law. 768 F.2d at 853.

Second, Buckhalter did not hold that every state agency determination involving a Title VII plaintiff had preclusive effect as to all matters which could have been litigated before it. Analysis still begins with the presumption that federal courts are the best place to resolve questions of discrimination. Rosenfeld v. Department of the Army, 769 F.2d 237, 239 (4th Cir.1985). Buckhalter held, rather, that a state administrative agency ruling may be given preclusive effect in an employment discrimination suit when (1) the agency acted in a judicial capacity, 768 F.2d at 850, (2) the parties had a full and fair opportunity to litigate their claim before the agency, 768 F.2d at 852, and (3) the principles of claim or issue preclusion law, such as identical parties and identical claims and issues, apply on the facts to bar the claim or issue. 768 F.2d at 852-853.

In the instant case one cannot be certain that any prong of that three-pronged test is definitely satisfied. The agency apparently acted in a judicial capacity. But in Buckhalter, the proceeding was conducted just as a trial in a state court would have been: pretrial discovery, “exhaustive memoranda of law,” testimony, cross-examination, some 90 exhibits and documents, a 680-page transcript, and a 14-page opinion by the Administrative Law Judge. 768 F.2d at 851. In this case Battle was represented by an attorney and the referee took testimony, but the one-page referee’s decision and the other surroundings are hardly as judicially elaborate as those in Buckhalter.

We may set that question aside, however, since in any case the second and third prongs have not been met. Battle did not have a full and fair opportunity to litigate his claim of race discrimination before an agency which deals with unemployment compensation. In Buckhalter the plaintiff had taken his claim of racial discrimination to the state agency charged with hearing claims of discrimination, the Illinois Human Rights Commission. The state statute on which his claim was grounded was substantially similar to Title VII, and the Commission even used the legal framework for burden of proof which federal courts use in discrimination cases. 768 F.2d at 843, 851. Cf. Kremer, 456 U.S. at 467, 102 S.Ct. at 1890; Parker v. National Corp. for Housing Partnerships, 619 F.Supp. 1061 (D.D. C.1985). In the instant case, Battle was facing an agency which administers unemployment insurance. It could well have found a claim of disparate treatment irrelevant. Cf. Jones v. City of Alton, 757 F.2d 878, 882-883 (7th Cir.1985). Under 42 U.S.C. § 2000e-16, a Title VII action is the exclusive remedy for a federal employee charging discrimination in employment. Cf. Rosenfeld, 769 F.2d at 240. State administrative agencies have no jurisdiction over Title VII claims. Patzer v. Board of Regents, University of Wisconsin, 763 F.2d 851, 857 (7th Cir.1985). There is no indication in either the referee’s decision or the Board’s opinion that a claim of discriminatory treatment was either raised or considered.

. Also, under ordinary principles of the law of preclusion, the result of an unemployment action would not bar a discrimination claim. Res judicata and collateral estoppel fundamentally seek to ensure that a plaintiff has one day in court on his claim, but only one. Township of Hopewell v. Volpe, 446 F.2d 167, 170 (3d Cir.1971); Hooper v. United States, 326 F.2d 982, 985 (Ct.Cl. 1964). To that end the law of preclusion calls for an examination of the parties, claims and issues in both the prior litigation and the case now being brought. The closer they are to being identical, the more likely that the first judgment will block the second. For example, the court in Buck-halter emphasized that the claim of race discrimination which had been before the agency was identical to the claim of race discrimination being brought before the court under Title VII. 768 F.2d at 853; see also Patzer, 763 F.2d at 855.

In a case of administrative preclusion, the inquiry for the second and third prongs of the Buckhalter test will tend to yield the same result. An agency’s decision is more likely to have preclusive effect when the agency has responsibility for the subject matter the plaintiff is raising in federal court. On the other hand, if the agency’s prime responsibility lies elsewhere, the claims and issues actually litigated will tend to be different. Jones, 757 F.2d at 886. Under ordinary principles of preclusion law, even when the issues appear to be factually similar, if the statutes on which the actions are based are different and serve different purposes, then one cannot assume that issues will be identical. Ross v. Communications Satellite Corp., 759 F.2d 355, 362 (4th Cir.1985). The instant case provides an example. The issue before the agency was whether Battle had engaged in the misconduct of which he was accused. Once it had determined that he had, its work was done. That, however, is not the only question for purposes of a discrimination suit. If persons of other races falsify travel vouchers but do not get fired for it, as Battle alleges, then Battle can be a victim of discrimination even though the FDIC had good cause to terminate him. See Jones, 757 F.2d at 886; Ross, 759 F.2d at 362.

The difference means that Battle is not estopped on the issues of retaliatory discharge and discrimination. The Ross court, in a § 1738 case, found that Maryland law would not estop a plaintiff who had lost his claim for unemployment benefits from bringing a Title VII action alleging retaliatory discharge. The issues were not identical because the statutes and policies were not identical. 759 F.2d at 362. Similarly, this court today found that Illinois law would not estop an employer who had challenged an award of unemployment benefits to its former employee, and lost, from alleging the same misconduct as a legitimate nondiscriminatory reason in the employee’s age discrimination suit. Kendall v. C.F. Industries, Inc., 624 F.Supp. 1102 (N.D.Ill.1986). Unemployment proceedings have different opportunities to litigate, different standards, and different policies to serve, compared to discrimination suits. In particular, a claimant for unemployment benefits loses if he has been justly fired. The same claimant could still win a discrimination suit by proving that his employer should have fired more people. Jones, 757 F.2d at 887.

Buckhalter, therefore, does not indicate that Battle’s loss of benefits estops him from bringing these claims. While the agency may have been functioning in a judicial capacity, he did not have a full and fair opportunity to litigate the issues of retaliatory discharge and discrimination there, because those issues are different from misconduct.

This" court, however, does not take the unemployment determination lightly. It recognizes the heavy burden of proof placed on employers in such a proceeding. Since the law there is interpreted according to its policy goal of easing the burden on workers, Be-Mac Transport Co. v. Grabiec, 20 Ill.App.3d 345, 314 N.E.2d 242 (1st Dist.1974), an employer must show that the employee wantonly or willfully disregarded his employer’s interest. Winklmeier v. Board of Review, 115 Ill.App.3d 154, 450 N.E.2d 353, 70 Ill.Dec. 880 (5th Dist.1983). An employer defending against a discrimination suit, on the other hand, has at most a burden of production. If plaintiff makes out a prima facie case of discrimination, the employer must then produce a legitimate nondiscriminatory reason. Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981). Since the FDIC has met the far heavier burden of an Illinois Unemployment Compensation hearing, it will have no difficulty showing that it had a legitimate nondiscriminatory reason for firing Battle.

This case can therefore still be resolved at summary judgment. Battle has as yet submitted no evidence to support his allegations that he was treated differently from his co-workers because of his race or because he had filed suit. In other words, he does not yet have a prima facie case. Because he is entitled to his “day in court” on these issues, his claim survives estoppel as a matter of law. But the decision today only gives him an opportunity to submit such evidence. While the non-moving party has the benefit of all favorable inferences on a motion for summary judgment, he cannot simply rest on his pleadings. See Ross, 759 F.2d at 364-365. Evidence tending to show that Battle was treated in a manner disparate from that in which white bank examiners with inflated travel vouchers or similar transgressions were treated would tend to support the discrimination claim. Cf. Jones, 757 F.2d at 883. Evidence tending to show a causal connection between his filing suit and his discharge would tend to support the retaliation claim. Cf. Ross, 759 F.2d at 365. Since defendants moved for summary judgment only on collateral estoppel grounds, however, the absence of such evidence is not now an issue.

CONCLUSION

Defendant’s motion for summary judgment is denied.

      . A recent Fourth Circuit case which found that plaintiff was estopped from litigating a constitutional claim by his state unemployment compensation proceedings is not to the contrary. Stall v. Bourne, 774 F.2d 657 (4th Cir.1985). First, the claim in that case was a First Amendment question, not a Title VII one. The plaintiff alleged that he had lost municipal employment because he supported the wrong candidate for school board chairman. Second, he had appealed the administrative finding to state court, thus implicating § 1738 and South Carolina law. Third, the court expressly found that he had raised the First Amendment issue before the agency and been given full and fair opportunity to litigate it.


author: NICKERSON, District Judge.

text:
    PRENTICE CORPORATION, Plaintiff, v. Joseph MARTIN, Defendant.
    No. 85 C 1635.
    United States District Court, E.D. New York.
    Jan. 2, 1986.
    Edwards & Angelí, New York City, (David M. Olasov, of counsel), for plaintiff.
    Robert Topper, New York City, for defendant.
   MEMORANDUM AND ORDER

NICKERSON, District Judge.

Plaintiff moves for summary judgment pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, and defendant cross-moves for summary judgment pursuant to Rule 56(b).

Plaintiff claims that defendant is personally liable for a judgment plaintiff obtained against Related Industries, Inc., (Related) in a prior lawsuit. In addition plaintiff seeks punitive damages and asserts that in the prior lawsuit defendant intentionally misrepresented its status as a New York corporation.

Defendant is the president, chief operating officer, and principal shareholder of Related, which was organized as a New York corporation on September 19, 1977. On June 24, 1981 the Secretary of the State of New York involuntarily dissolved Related pursuant to section 203-a of the New York State Tax Law for failure bo pay franchise taxes. Related was reinstated to corporate status on January 1,1985. After the dissolution and before reinstatement, defendant, purporting to act on behalf of Related, entered into two contracts with plaintiff. Following Related’s breach of contract, plaintiff obtained a judgment of $98,280.36. Prentice Corp. v. Related In dustries, No. 84-0725, (E.D.N.Y. Oct. 23, 1984). Familiarity with this court’s memorandum in the matter is assumed. To date Related has paid $6,903.22 on the judgment.

Plaintiff argues that defendant is personally liable for the judgment against Related because he entered into the contracts at issue after the dissolution, and under the New York Business Corporation Law he lacked authority to do so. Defendant does not deny that the contracts were entered into before the reinstatement. He contends that he is not personally liable because plaintiff and Related entered into the contracts in their corporate capacities. In addition, he says that he did not know of Related’s dissolution until November 1984, after this court’s judgment.

Section 203-a of the New York State Tax Law provides that a corporation may be involuntarily dissolved by proclamation of the Secretary of New York State for failure to file reports or to pay taxes. Section 203-a(7) provides that a corporation may be reinstated to its full corporate status upon filing a certificate that it has paid all franchise taxes, penalties, and interest charges. Under the New York Business Corporation Law a dissolved corporation, including one dissolved pursuant to section 203-a of the Tax Law, may not carry on any business except that necessary to wind up its affairs, N.Y.Bus.Corp.Law §§ 1005(a)(1), 1009.

Both the Business Corporation Law and section 203-a of the Tax Law are silent as to the consequences of conducting business in violation of section 1005(a)(1). There is no consistent pattern in the holdings of the New York Courts on the matter. Plaintiff relies mainly on a decision of the Supreme Court, Putnam County, Poritzky v. Wachtel, 176 Misc. 633, 27 N.Y.S.2d 316 (N.Y. Sup.Ct.1941). There, without discussion or citation of judicial authority, the court held defendant personally liable for debts he incurred on behalf of a dissolved corporation.

However, the Court of Appeals of the State of New York has recognized that where a dissolved corporation “carries on its affairs and exercises corporate powers as before, it is a de facto corporation ..., and ordinarily no one but the state may question its corporate existence.” Grazo v. Maid of the Mist Steamboat Co., 303 N.Y. 516, 524, 104 N.E.2d 882, 887 (1952). That dictum was, of course, delivered in a case where minority stockholders objected to the revival of a corporation whose charter was inadvertantly allowed to expire.

Somewhat closer on the facts is Sacks v. Anne Realty Co., 131 Misc. 117, 225 N.Y.S. 370 (N.Y.Sup.Ct.1927), in which the plaintiffs sued for damages the directors of a purported corporation that entered into a contract with plaintiffs. In fact the purported corporation had not completed its organization as required by law. The court held that since the corporation was de facto it had “a substantial legal existence as a corporate entity” and possessed “the same powers and same liabilities as a de jure corporation in relation to all persons, except the State,” and the plaintiffs had no claim against the directors personally. The court also held that a person who has dealt with an association so as to “admit its legal existence as a body corporate” is estopped to deny its corporate existence.

The corollary of the Sacks case is seen in D & W Central Station Alarm Co. v. Copymasters, Inc., 122 Misc.2d 453, 457, 471 N.Y.S.2d 464, 466 (N.Y.Civ.Ct.1983). There a defendant corporation, was dissolved pursuant to section 203-a of the Tax Law for failure to pay franchise taxes but continued to operate, reincorporating by filing a new certificate of incorporation. It sought to avoid a liability incurred to plaintiff between dissolution and reincorporation. The court held that the defendant after its dissolution was a de facto corporation and could not avoid liability on the theory it had no existence. Indeed, the court said, the corporation was estopped from doing so.

It is true that none of these decisions is precisely in point except the Poritzky case. However, this court is persuaded from the tenor of the other opinions in New York that the Poritzky opinion does not fairly represent this state’s law. The dictum in the Grazo case, supra, that ordinarily no one but the state may question a de facto corporation’s existence seems particularly pertinent in the case of a dissolution under section 203-a of the Tax Law.

The good sense of restricting a plaintiff, absent fraud, to his remedy against the corporation where an involuntary dissolution has occurred for failure to pay taxes is illustrated by Held v. Crosthwaite, 260 F. 613 (2d Cir.1919). There, just as here, the plaintiff sought to recover against the directors of a corporation on a contract entered into by them in the name of and on behalf of a corporation whose charter had been revoked pursuant to a New Jersey law for nonpayment of taxes. The charter was thereafter reinstated when the corporation paid its taxes. The District Judge, Augustus N. Hand, entered judgment for defendants, and the Court of Appeals affirmed, holding that the reinstatement validated the acts of the directors “as if the charter had never been repealed.”

The Held case construed the New Jersey and not the New York statutes. But its reasoning is persuasive. The object of the legislation in both states was “the collection of revenue for the state.” 260 F. at 616

In the light of the substantial judicial authority that generally only the state may question corporate existence, see Grazo v. Maid of the Mist Steamboat Co., supra; A.A. Sutain Ltd. v. Montgomery Ward Co., 22 A.D.2d 607, 257 N.Y.S.2d 724 (N.Y. App.Div.1965); Bowditch v. 57 Laight St. Corp., 111 Misc.2d 255, 443 N.Y.S.2d 785 (N.Y.Sup.Ct.1980), it is fair to infer that the legislature, had it wished to encourage payment of taxes by permitting private parties to recover against the individuals who act on behalf of the dissolved corporation, would have said so. Yet here neither the Business Corporation Law nor the Tax Law expressly imposes personal liability on them.

In contrast courts outside New York that have imposed personal liability on such individuals generally have done so pursuant to explicit statutory provisions. See, e.g., Moore v. Occupational Safety & Health Review Com’n, 591 F.2d 991 (4th Cir.1974) (interpreting Virginia law); Estate of Plepel v. Industrial Metals, Inc., 115 Ill. App.3d 803, 71 Ill.Dec. 365, 450 N.E.2d 1244 (Ill.App.Ct.1983), Kessler Distributing Co. v. Neill, 317 N.W.2d 519 (Iowa Ct.App.1982).

In the present case both parties agree that Related held itself out as a corporation and purported to exercise the powers and functions of a corporation in its dealings with plaintiff. Plaintiff’s remedy is only against Related unless the defendant acted fraudulently or in bad faith. In the latter event, defendant may be held personally liable. See Held, 260 F. at 617.

Plaintiff alleges that defendant deliberately misrepresented Related’s corporate status to it and to the court. Defendant denies the fraud. Since there is a material issue of fact concerning defendant’s alleged fraudulent conduct, the motions of both parties for summary judgment are denied.

So ordered.


author: ROBERT D. POTTER, Chief Judge.

text:
    Donnie Ray HICKS, Petitioner, v. R.L. REESE, Superintendent, Mecklenburg Unit I, and the Attorney General of the State of North Carolina, Respondents.
    No. C-C-84-677-P.
    United States District Court, W.D. North Carolina, Charlotte Division.
    Jan. 8, 1986.

      Danny Ray Hicks, Charlotte, N.C., pro se.
    Barry McNeil, State of N.C., Dept, of Justice, Raleigh, N.C., for respondents.
   ORDER

ROBERT D. POTTER, Chief Judge.

THIS MATTER is before the Court upon Respondents’ Answer to Petition and Motion to Dismiss, filed January 28, 1985.

Petitioner was indicted May 2, 1983 by a Gaston County Grand Jury for fraudulently setting fire to a dwelling house in violation of N.C.Gen.Stat. § 14-65 (1981). He was tried and found guilty as charged during the August 8, 1983 Session of Gaston County Superior Court before the Honorable Claude S. Sitton. Petitioner was sentenced to three years, the presumptive prison term for Petitioner’s Class H felony pursuant to N.C.Gen.Stat. § 15A-1340.4(f) (1983) on August 10, 1983.

On December 20, 1984 Petitioner was allowed to file this habeas corpus action in forma pauperis. In his Petition, Petitioner alleges that his rights against the deprivation of liberty without due process of law as guaranteed under the fourteenth amendment of the United States Constitution were violated by the trial court for the following reasons: (1) the State was not required to elect its theory of the crime, to wit, whether Petitioner burned the dwelling or procured another to do so — thus, allowing the jury too much latitude in deliberating and allowing the State to introduce irrelevant and prejudicial evidence; (2) the trial court admitted evidence that Petitioner had solicited another to burn his dwelling when there was no evidence that another had burned it; and (3) the evidence was insufficient to sustain the conviction.

Respondents state in their Answer and Motion to Dismiss that each of Petitioner’s contentions are without merit and should be dismissed. The Court agrees and is of the opinion that Petitioner’s petition for habeas corpus relief should be

DISMISSED.

The Petitioner’s rights were not violated by the trial court’s failure to require the State to elect its theory of the crime, that is, whether Petitioner burned the dwelling or procured another to do so; and, Petitioner’s rights were not violated by the trial court’s instruction to the jury that

to find the defendant guilty of fraudulently causing the burning of his dwelling house, the State must prove four things beyond a reasonable doubt. First, that the defendant intentionally set fire to or caused the burning of the dwelling house at 200 Valley Street, Stanley, North Carolina.

(Tr. p. 278.)

The relevant statute makes it unlawful for a person to “wantonly and willfully or for a fraudulent purpose set fire to or burn or cause to be burned____” a dwelling house. N.C.Gen.Stat. § 14-65 (1981) (emphasis added). The indictment specifically charged that Petitioner “for a fraudulent purpose cause[d] to be burned the dwelling house located at 200 Valley Street____” (ROA p. 1.)

An indictment which charges in a single count that the accused burned and, or procured to be burned the building in question is not improper. See Miles v. State, 160 Fla. 523, 36 So.2d 182 (1948). Thus, both the indictment and the instruction were consistent with the statute in that Petitioner could be found guilty if the jury found beyond a reasonable doubt that he caused his dwelling house to be burned, whether he set the fire himself or procured another to do so.

The evidence supported both the allegation in the indictment and the instruction. Joe Allen Guy, an acquaintance of Petitioner, testified that Petitioner asked him if he was interested in burning Petitioner’s house for $2,000.00. (Tr. p. 164.) Petitioner testified that he was within a mile to a mile and a quarter from his house at the time of the fire. (Tr. p. 257.)

There is no indication that the jury was confused on the elements of the offense as provided by the statute, nor is there any indication that the evidence introduced by the State was irrelevant. To the contrary, the State’s evidence was very relevant to its burden of proof on each element of the statute.

The Petitioner’s rights were not violated by the trial court’s admitting into evidence testimony that Petitioner had solicited Joe Allen Guy to burn his dwelling house. The testimony simply showed Petitioner’s intent to burn his house. Further, the Fourth Circuit Court of Appeals has held that the admissibility of evidence in state trials normally does not involve constitutional issues and that a federal question is presented by such only in circumstances opposing fundamental fairness or infringing upon specific constitutional protections. Grundler v. North Carolina, 283 F.2d 798, 802 (4th Cir.1960), cert. denied, 362 U.S. 917, 80 S.Ct. 670, 4 L.Ed.2d 738 (1960); see also, Chance v. Garrison, 537 F.2d 1212 (4th Cir.1976). The admission of Guy’s testimony that Petitioner had solicited him to burn Petitioner’s house was relevant toward Petitioner’s intent and motive for the offense charged, and did not constitute an attack on fundamental fairness.

With respect to Petitioner’s last claim, the Court is of the opinion that the evidence was sufficient to sustain the conviction. The standard of review is whether, after viewing all the evidence in light most favorable to the prosecution, any rational trier of fact could find the essential elements of the crime beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). The reviewing court is to consider circumstantial as well as direct evidence and allow the government the benefit of all reasonable inferences from facts proven to facts sought to be established. United States v. Tresvant, 677 F.2d 1018 (4th Cir.1982).

To convict Petitioner of the crime charged, the State was required to prove that: (1) Petitioner intentionally set fire to or caused the burning; (2) of a dwelling house occupied by him; (3) for a fraudulent purpose. See N.C.Gen.Stat. § 14-65 (1981); State v. Brackett, 306 N.C. 138, 291 S.E.2d 660 (1982); and State v. Cash, 234 N.C. 292, 67 S.E.2d 50 (1951).

The evidence at trial showed that a week before the fire Petitioner solicited another to burn the house for $2,000.00. (Tr. p. 164.) Petitioner was within a mile to a mile and a quarter from his house at the time of the fire. (Tr. p. 257.) Petitioner failed to offer any evidence to explain his request of another to burn his house or his absence from where he was staying when the fire started. There was expert testimony that the fire was started with gasoline. Further Petitioner had quit his job three days before the fire (Tr. p. 224) and on the date of the fire had tried to sell his house but was unsuccessful. (Tr. pp. 143-144.)

Petitioner cites State v. Tew, 62 N.C.App. 190, 302 S.E.2d 633, disc. rev. denied, 309 N.C. 464, 307 S.E.2d 370 (1983) to support his contention that the evidence was insufficient. In that case the North Carolina Court of Appeals held the evidence was insufficient to convict defendants of burning a building in violation of N.C.Gen.Stat. § 14-62 where the State failed to place either defendant at or near the scene of the building during the day and a half that preceeded the fire. The instant case differs, however, in that Petitioner’s own testimony put him in a close proximity to the house when it was burned.

Petitioner also cites State v. Blizzard, 280 N.C. 11, 184 S.E.2d 851 (1971) and State v. King, 264 N.C. 578, 142 S.E.2d 130 (1965) in support of his contention that the evidence at trial was insufficient to sustain the conviction. For the reasons stated above, however, the Court is of the opinion that the evidence was sufficient and no case law appears to lead to any other conclusion.

IT IS, THEREFORE, ORDERED that the petition for habeas corpus relief be, and the same hereby is DISMISSED.


author: VAN SICKLE, Senior District Judge.

text:
    Verdjie B. LARSON, individually and as Executrix of the Estate of Robert Larson, Plaintiff, v. Vincent R. LARSON, Audrey H. Larson, and the United States of America, Defendants. and UNITED STATES of America, Plaintiff, v. Vincent R. LARSON; Audrey H. Larson; Prairie Farms; Verdjie Larson, individually and as Personal Representative of the Estate of Robert Larson; The Federal Land Bank of Saint Paul; Farmers Union Elevator, Co., Velva, North Dakota; and Continental Grain Company, Defendants.
    Civ. No. A4-83-152, A4-83-179.
    United States District Court, D. North Dakota, Northwestern Division.
    Jan. 8, 1986.

      James A. Reisnour, Jamestown, N.D., Gary Annear, Ass’t U.S. Atty., Fargo, N.D., for plaintiff.
    Gary Annear, Ass’t U.S. Atty., Fargo, N.D., James R. Jungroth, Jamestown, N.D., for Verdjie Larson.
    Michael G. Sturdevant, Minot, N.D., for Vincent R. and Audrey H. Larson.
   ORDER

VAN SICKLE, Senior District Judge.

The above entitled actions concern a common subject: notes and mortgages given by Vincent R. Larson and Audrey H. Larson to Verdjie Larson and Robert Larson, and to the United States of America, acting through the Small Business Administration (SBA). Both the SBA and Verdjie Larson hold mortgages on certain property owned by Vincent R. Larson and Audrey H. Larson. Both the SBA and Verdjie Larson have sued to foreclose those mortgages.

Civil No. A4-83-152 was filed in a state court on or about July 14, 1983. It was removed to this court on August 22, 1983. The complaint in that action seeks foreclosure of the mortgage held by Verdjie Larson as well as a judgment against Vincent R. Larson and Audrey H. Larson for the amount owing on notes given to Verdjie Larson and Robert Larson.

Civil No. A4-83-179 was filed in this court on October 6, 1983. The complaint in that action seeks foreclosure of the mortgage held by SBA as well as a judgment against Vincent R. Larson, Audrey H. Larson, and Prairie Farms for the amount owing on a note given to SBA.

By order dated May 29, 1985, this court denied the motion for summary judgment filed by Verdjie Larson in Civil No. A4-83152, having determined that factual questions concerning application of the doctrine of marshalling assets precluded summary judgment.

On stipulation of the answering parties, the two actions were consolidated for all purposes by order dated September 3, 1985.

By order dated October 17, 1985, this court granted a second motion for summary judgment filed by Verdjie Larson in Civil No. A4-83-152, having determined from affidavit evidence presented in support of the motion that the doctrine of marshalling assets did not apply, and that the mortgage held by Verdjie Larson was superior to the mortgage held by SBA.

By order dated October 21, 1985, this court ordered that SBA show cause why Civil No. A4-83-179 should not be dismissed as moot.

SBA, in response to this court’s order to show cause, asserts that Civil No. A4-83-179 is not moot because SBA is entitled to judgment on the promissory note executed by Vincent R. Larson and Audrey H. Larson as well as foreclosure of its mortgage. SBA also states:

Thus, it is submitted that any judgment should recite the facts as the Court found them in the motion for summary judgment but in addition, should grant the United States its judgment of foreclosure and judgment on the promissory note as prayed for in the Complaint with a period of redemption as prayed for in Case No. A4-83-152 of one year. Since the two cases are consolidated into Case No. A4-83-152, the United States would have no objection if Case No. A4-83-179 were closed as there is nothing for the Court to determine in Case No. A4-83179.

SBA has not, however, moved for judgment in its favor in either case and this court cannot enter judgment in its favor absent some action on its part. SBA’s position would suggest that consolidation of the two eases results in their merger into one action. This is not, however, an accurate characterization. Consolidation does not merge the suits into a single cause; the actions do not lose their separate identity because of consolidation. C. Wright & A. Miller, Federal Practice and Procedure: Civil § 2382 (1971), quoting Johnson v. Manhattan Railway Co, 289 U.S. 479, 53 S.Ct. 721, 77 L.Ed. 1331 (1933). Having considered SBA’s response to this court's order to show cause, this court finds that dismissal of Civil No. A4-83-179 is not in order at this time. This court will direct the entry of judgment in Civil No. A4-83152.

For .the foregoing reasons, IT IS ORDERED:

1) . SBA’s request that Civil No. A4-83179 not be dismissed as moot is granted.
2) . The Clerk shall enter judgment in Civil No. A4-83-152 in accordance with 11 3 below.
3) . The real estate described in the mortgage given by Vincent R. Larson to Robert Larson and Verdjie Larson, which mortgage is dated November 29, 1978, may be sold at a judicial sale at the earliest date allowed under law. That sale shall be conducted by the United States Marshal for the District of North Dakota in accordance with applicable law. Proceeds from the sale of the property shall be applied first to the costs and disbursements of the sale, second to the indebtedness owing to Verdjie Larson and the Estate of Robert Larson, and, if any balance remains, it shall be turned over to this court for distribution pursuant to law.