author: NANGLE, Chief Judge.

text:
    CURRENT-JACKS FORK CANOE RENTAL ASSOCIATION, Plaintiff, v. William CLARK, Secretary of the Interior; G. Ray Arnett, Assistant Secretary of the Interior For Fish, Wildlife and Parks; Russell H. Dickenson, Director, National Park Service; Charles H. Odegaard, Regional Director, National Park Service; Arthur L. Sullivan, Superintendent, Ozark National Scenic Riverways; Tom B. Bedell; Donald Black; Eunice Burkhart; Marlin McClintock; Gene Phelps; Dwayne Snider; Ozark Hills Canoe Rental and Sales, Inc., a Missouri Corporation; Running River Riding Stables, Inc., a Missouri Corporation, and Scenic Rivers Canoe Rental, Inc., a Missouri Corporation, Defendants.
    No. S84-0018C(1).
    United States District Court, E.D. Missouri, Southeastern Division.
    March 6, 1985.

      David J. Newburger, James P. Gamble, Newburger & Vossmeyer, St. Louis, Mo., for plaintiff.
    Thomas E. Dittmeier, U.S. Atty. by Joseph B. Moore, Asst. U.S. Atty., St. Louis, Mo., Winston V. Buford, Eminence, Mo., Mark L. Richardson, Poplar Bluff, Mo., for defendants.
   MEMORANDUM

NANGLE, Chief Judge.

This matter is before the Court on plaintiffs application for a preliminary injunction. Plaintiff asks the Court in its final brief to enter a permanent injunction as to Count I alone, and the Interior Department defendants have consented to submission of the Count I issues to the Court for a ruling on the merits. This Court will, therefore, consolidate plaintiffs request for a preliminary injunction with a consideration of the case on its merits.

The parties have submitted an extensive record, including stipulated testimony of several witnesses, the full administrative record and numerous exhibits. In addition, this Court conducted an evidentiary hearing on August 31, 1984. Plaintiff and the Interior Department defendants have filed briefs. Defendant Black asserts that he has nothing to add to the government’s brief. Defendants Eunice Burkhart, Gene Phelps, Ozark Hills Canoe Rental & Sales, Inc., Running River Riding Stables, Inc. and Scenic Rivers Canoe Rental, Inc. have submitted stipulated testimony which was objected to by plaintiff. Defendants Be-dell, McClintock and Snider have neither answered the complaint nor filed anything else with the Court. Having considered the material submitted by the parties as well as the evidence adduced at the hearing, and being fully advised in the premises, the Court hereby enters the following findings of fact and conclusions of law.

A. FINDINGS OF FACT

1. Current-Jacks Fork Canoe Rental Association (Canoe Rental Association), plaintiff herein, is an unincorporated association comprised of holders of permits and contracts issued by the National Park Service (NPS), for canoe, shuttle and related concession operations within the Ozark National Scenic Riverways (ONSR) in the State of Missouri. Members of the Association reside in the Eastern and Southeastern Divisions of the Eastern District of Missouri.

2. At the time this action was filed, defendant William Clark was Secretary of the Interior. Defendant G. Ray Arnett was Assistant Secretary of the Interior for Fish, Wildlife and Parks. Defendant Russell E. Dickenson was Director of the NPS. Defendant Charles H. Odegaard was Regional Director of the NPS for the region in which the ONSR is located. Defendant Arthur L. Sullivan was Park Superintendent for the ONSR. These defendants are referred to collectively as the Interior Department defendants.

3. Defendants Burkhart and Phelps are residents of the Eastern Division of the Eastern District of Missouri. Defendants Bedell, Black, McClintock and Snider are residents of the Southeastern Division of the Eastern District of Missouri. Defendant Ozark Hills Canoe Rental & Sales, Inc. is a Missouri corporation with its principal place of business in the Eastern Division of the Eastern District of Missouri. Defendants Running River Riding Stables, Inc. and Scenic Rivers Canoe Rental, Inc. are Missouri corporations with their principal places of business in the Southeastern Division of the Eastern District of Missouri. Defendants Bedell, Black, Burkhart, Phelps, Ozark Hills Canoe Rental & Sales, Inc., Running River Riding Stables, Inc. and Scenic River Canoe Rental, Inc. are engaged in the business of providing canoe, shuttle and other related services in the ONSR, while defendants McClintock and Snider have not previously engaged in such business. These defendants are referred to collectively as Previously Unpermitted Operators.

4. The Secretary of the Interior, through the NPS issued concession contracts to provide canoe, shuttle and related services to the general public within the ONSR to two members of plaintiff, and concession permits for the same services to the remaining members of plaintiff. These contracts and permits were effective January 1, 1979, to December 31, 1983, and were extended through March 31, 1984, or until such time as replacement contracts or permits were executed.

5. All members of Canoe Rental Association received satisfactory ratings from the Interior Department defendants for their business operations, prior to the negotiation and execution of replacement contracts.

6. The Interior Department defendants issued “Statements of Requirements (SOR) (Prospectuses)” for the negotiation of the replacement concession contracts and permits. The Prospectuses specifically stated that the “customary preferential right of renewal [is] not applicable in this case.” The Prospectuses further called upon prospective concessioners to submit bids to the Interior Department by January 31, 1984.

7. The Interior Department defendants accepted bids from Canoe Rental Association members as well as from the Previously Unpermitted Operators, and on March 2, 1984, these defendants notified the members of both groups of their intent to negotiate and execute concession permits and contracts with them. According to the latest information supplied by the parties, the permits have been issued, while the contracts are awaiting execution.

8. The members of the Canoe Rental Association did not receive a right of preference in the negotiation of the new contracts and permits. This was because the Interior Department defendants interpreted an opinion of the Eighth Circuit Court of Appeals, Free Enterprise Canoe Renters Assoc. v. Watt, 711 F.2d 852 (8th Cir.1983), as directing them to place the Previously Unpermitted Operators on an equal footing with Canoe Rental Association members with respect to the issuance of new contracts and permits.

9. Additionaly, the Interior Department defendants created districts within the ONSR. Under the terms of the new contracts and permits, concessioners are not generally licensed to provide services beyond the boundaries of their district. Furthermore, the Interior Department defendants resolved to commence enforcement of a policy prohibiting operators from subleasing to colleagues outside their particular district. The Prospectuses imposed other restrictions upon the business operations of the various concessioners, as well.

10. As a result of the issuance of permits to the Previously Unpermitted Operators, Canoe Rental Association members’ businesses have been damaged. The stipulated testimony of four members of plaintiff Association was submitted to the Court. The testimony indicates that Canoe Rental Association members lost business to the Previously Unpermitted Operators during the 1984 season. The creation of the district system which is outlined in the Prospectuses spawned an adverse impact upon plaintiff members, as well. Operators are now enjoined from engaging in their previous practice of providing services in an adjoining district when poor canoeing conditions exist in their own. In addition, two operators submitted testimony that they lost a shower, laundromat and wood lot concession. One other operator likewise provided testimony that he was compelled to consolidate two separate businesses into a single district, and that he sustained a decrease in the volume of business as a result.

B. CONCLUSIONS OF LAW

This Court has jurisdiction of this case pursuant to 28 U.S.C. §§ 1331, 1343. Plaintiff asserts that defendants violated its fifth amendment due process rights by departing from the specifications set forth in 16 U.S.C. §§ 3, 20c, 20d and 36 CFR §§ 51.1-51.7.

This is an action by Canoe Rental Association against the Interior Department defendants and the Previously Unpermitted Operators for declaratory and injunctive relief. Plaintiff alleges that defendants usurped their constitutional and statutory rights by denying its members a right of preference with the negotiation of new concession contracts and permits. Plaintiff seeks a preliminary injunction enjoining defendants from implementing and operating under the newly issued concession permits, and a directive for defendants to negotiate a new set of permits and contracts which afford plaintiff such preference rights.

The statutes to which plaintiff refers in arguing that its members are entitled to a right of preference are 16 U.S.C. §§ 20c and 20d. The former section relates to the addition of new or expanded services within a national park to those services previously provided by a single concessioner. Section 20d, concerns new and renewal contracts and permits for existing services. This section provides:

The Secretary shall encourage continuity of operation and facilities and services by giving preference in the renewal of contracts or permits and in the negotiation of new contracts or permits with the concessioners who have performed their obligations under prior contracts or permits to the satisfaction of the Secretary. To this end, the Secretary, at any time in his discretion, may extend or renew a contract or permit, or may grant a new contract or permit to the same concessioner upon the termination or surrender before expiration of a prior contract or permit. Before doing so, however, and before granting extensions, renewals or new contracts pursuant to the last sentence of § 20c of this title, the Secretary shall give reasonable public notice of his intention so to do and shall consider and evaluate all proposals received as a result thereof.

36 CFR § 51.3(b) supplies insight into the meaning and application of the right of preference. This section provides:

“Right Of Preference” refers to the right of existing satisfactory concessioners to a preference in the renewal or negotiation of a new contract or permit covering substantially the same accommodations, facilities and services as provided by the concessioner under the terms of its existing contract or permit. Prior to the expiration or termination of a contract or permit a determination shall be made based on annual evaluations, as to whether or not the concessioner is entitled to a preference in the renewal of its contract or permit. An unsatisfactory rating, results in the loss of the right of preference.

36 CFR § 51.3(b).

In addition, 36 CFR § 51.1 et seq. describes the appropriate application and mechanics of the right of preference. Section 51.5 calls upon the government to issue a fact sheet rather than a Prospectus to the concessioner possessing the right of preference. Competitors may submit bids, yet holders of the preference rights must be given opportunities to meet the final proposals of the competitors.

Plaintiff submits that its members were denied their due right of preference in the negotiation of the 1984 contracts and permits. The Interior Department defendants concede this much, via the testimony of defendant Sullivan. Also, plaintiff provides several exhibits in the form of correspondence from the Interior Department defendants, in which these defendants set forth their intentions not to extend a right of preference to plaintiff members. In view of this factor, the question for this Court’s resolution is whether plaintiff is entitled to an injunction.

The guidelines available for determining whether a permanent injunction should issue include the same factors applicable to motions for preliminary injunctive relief, which were articulated by the Eighth Circuit in Dataphase Systems, Inc. v. C.L. Systems, Inc., 640 F.2d 109 (8th Cir.1981). See Minnesota Public Interest Research Group v. Butz, 358 F.Supp. 584 (D.Minn. 1973), affd, 498 F.2d 1314 (8th Cir.1974); Coleman v. Block, 580 F.Supp. 194 (D.N.D. 1984). These factors include: 1) whether there is a substantial probability that movant will succeed at trial; 2) whether the moving party will suffer irreparable injury absent the injunction; 3) the harm to other interested parties if the relief is granted; and 4) the effect on the public interest. Dataphase at 112. See also Local Cartage Association v. Highway, City and Air Freight Drivers, 574 F.Supp. 1573, 1580 (E.D.Mo.1983). The only modification which should be given to these Dataphase guidelines when a court is ruling on an application for permanent injunction, is that instead of considering the likelihood of success on the merits, the court must render an actual determination of the merits. In the opinion of this Court, application of these factors to the facts of this case warrants issuance of a permanent injunction.

1. Success On The Merits

This Court concludes that plaintiff has successfully demonstrated its entitlement to relief on the merits. In reading the applicable statute, 16 U.S.C. § 20d, this Court is convinced that granting a right of preference to existing concessioners is mandatory, not discretionary.

Section 20d is the statute which describes the application of the right of preference to new and renewal contracts. The first sentence is couched in mandatory language, and requires the Secretary of the Interior to give preference in the issuance of the new and renewal of contracts or permits to those concessioners who previously performed their obligations in a satisfactory manner. The next sentence is framed in discretionary terms. “To this end, the Secretary, at any time in his discretion, may extend or renew a contract or permit, or may grant a new contract or permit to the same concessioner upon the termination or surrender before expiration of a prior contract or permit.” This particular sentence concerns renewing or extending contracts, while any mention of preference rights is lacking. Furthermore, the sentence begins with “to this end.” This language indicates that the sentence provides an additional suggestion as to how the Secretary may perform his statutory duty of encouraging continuity of operation and facilities. Thus, the giving of preference in new or renewal contracts or permits is mandatory, while the decision to renew a contract or permit is discretionary.

This interpretation of the statute is borne out by the legislative history, as well.

Section 20d directs the Secretary to give preference to satisfactorily established operators in a national park system area when the time comes for the renewal or extension of contracts, or for the negotiation of new contracts. It authorizes him to extend or renew old contracts and to grant a new contract before the expiration of the old one if the need therefor arises.

S.Rep. No. 765, 89th Cong., 1st Sess. 6th (1965), reprinted in (1965) U.S.Code Cong. & Ad.News 3489, 3494. The history suggests that the right of preference in § 20d is mandatory, and the remainder of the section relates to the decision of the Secretary to extend or renew contracts or permits.

The Interior Department defendants do not take issue with this particular interpretation, but rather stand upon some statements contained in Free Enterprise Canoe Renters Assoc. of Missouri v. Watt, 711 F.2d 852 (8th Cir.1983). Free Enterprise concerned the right of certain canoe operators to provide services in the ONSR without permits. The court held that the NPS could validly regulate canoe traffic on the ONSR by issuing permits. As a final note, however, the court stated:

Nonetheless, we expect no discrimination in the future when permits come up for renewal. At oral argument, counsel for the government represented that when the current permits expire, non-concessioned operators will be able to compete with the concessioners for permit renewals on equal footing and on the basis of objective and published criteria. We accept this representation.8

Id. at 858. In addition, the court explicitly stated in the footnote, “we recognize that 16 U.S.C. § 20d (1976) authorizes a renewal preference for existing concessioners. However, the statute does not require the Secretary to honor the preference. It provides that ‘the Secretary, at any time in his discretion, may extend or renew a contract or permit.’ (emphasis added).” Id. at 858 n. 8.

The Court denied a request by the government for clarification on these particular statements in the opinion. In so ruling, the Court interpreted a statement by the government that the unpermitted operators would receive a fair opportunity to compete with the permitted operators, as mandating equal treatment of both permitted and unpermitted operators in future negotiations. Id. at 858. Defendant Sullivan testified that these statements in the Free Enterprise opinion motivated the Interior Department defendants to deny Canoe Rental Association members their right of preference.

This Court concludes that the Free Enterprise language relied upon by the Interior Department defendants is dicta. The permitted operators were not before the court, and the interpretation given to the statute by the court was unnecessary for resolution of the case.

Fort Sumter Tours, Inc. v. Andrus, 564 F.2d 1119 (4th Cir.1977), additionally supports the plaintiff’s position. In Fort Sumter, a concessioner sued to prevent the Department of Interior from issuing a contract to another. The parties did not dispute the existence of the plaintiff’s right of preference to negotiate the renewal of the prior agreement. The controversy rather centered around the content of that preference. The court in fact stated, “[i]n essence, § 20d grants preferential renewal rights to those existing concessioners who have performed their obligations under pri- or contracts in a manner satisfactory to the Secretary.” Id. at 1121.

The only other decision relating to a § 20d right of preference is Canyoneers, Inc. v. Clark, 596 F.Supp. 106 (D.Ariz. 1984). In Canyoneers, the court ruled that the concessioner had a right of preference to bid on a new concession, but that the NPS was not obligated to continue a service which it had resolved to eliminate. The Interior Department defendants argue that in creating the district system herein, the government altered the contract or permit specifications to which plaintiff members must comply. These defendants contend that under Canyoneers, the new terms are not arbitrary or capricious, or beyond their authority to impose.

Although the government clearly has a right to alter specifications or to change the conditions under which new contracts or permits are issued, the Interior Department defendants may not deny Canoe Rental Association members their statutorily mandated right of preference. The regulations provide that a right of preference shall apply to new contracts or permits “covering substantially the same accomodations, facilities and services as provided by the concessioner under the terms of its existing contract or permit.” 36 C.F.R. § 51.3(b). This Court determines that the new contracts and permits are substantially similar as to require a right of preference. Canyoneers is also distinguishable because it involved cancellation of a contract or permit for substantially the same services. Furthermore, this Court concludes that the issue raised by plaintiff is not the fight of the government to establish districts. This matter remains undisputed. Rather, the issue centers around the failure of the Interior Department defendants to extend a right of preference to Canoe Rental Association members when the Previously Unpermitted Operators received licenses by the Government to provide services in the ONSR.

This Court concludes that plaintiff has established its burden of showing its entitlement to relief on the merits. The Court reads 16 U.S.C. § 20d as creating a mandatory right of preference for satisfactory performance when concession contracts or permits are renewed or extended. The members of plaintiff performed the obligations of their prior contracts and permits in a satisfactory manner. The Interior Department defendants admit they did not afford Canoe Rental Association members the mandated preference because of their reliance upon the Free Enterprise decision. Such reliance was misplaced, however.

2. Threat Of Irreparable Injury

Plaintiff not only has established that defendants’ actions pose a threat of irreparable injury, but it has established that a number of its members have already sustained some injury. Four members of Canoe Rental Association supplied testimony that they lost business to the Previously Unpermitted Operators as a result of the issuance of permits to the latter group, combined with the new restrictions. These concessioners moreover, opined that adherence to the contracts and permits currently in effect will produce additional business losses, but more importantly, a loss of goodwill. The Interior Department defendants merely suggest that plaintiff members could not have sustained injury given the fact they were awarded contracts and permits. Yet, they do not dispute the claimed loss of goodwill or the assessment of other-such losses.

In addition, under Heublein, Inc. v. FTC, 539 F.Supp. 123, 128 (D.Conn.1982) and Community Nutrition Institute v. Butz, 420 F.Supp. 751, 754 (D.D.C.1976), plaintiff need not establish irreparable injury on the facts of this case. In actions to enjoin continued violations of federal statutes, once a movant establishes the likelihood of prevailing on the merits, irreparable harm to the public is presumed. This presumption is rebuttable, however, by evidence that the threatened injury is not irreparable. Gresham v. Windrush Partners, Ltd., 730 F.2d 1417, 1423 (11th Cir. 1984). Defendants have presented no evidence to rebut plaintiff’s showing of injury, however.

3. Harm To Defendant If Injunction Is Granted

Defendants argue that a balance of the equities and potential harm to them favor denial of an injunction. The Interior Department defendants assert that an injunction would inure to the detriment of the public in that, seven new operators would be foreclosed from providing services to the public. The Previously Unpermitted Operators claim that they would indeed sustain severe damage upon the award of an injunction to the Canoe Rental Association. An injunction would preclude these defendants from continuing to operate under the existing permits.

This Court concludes that the balance of the equities weighs in favor of plaintiff, however. First of all, the record is clear that the Canoe Rental Association members performed their obligations under their previous permits and contracts in a satisfactory manner. There is no evidence that the public was not or will not be adequately served by denying the Previously Unpermitted Concessioners a right to operate in the future. Furthermore, in Free Enterprise, 711 F.2d at 857, the Eighth Circuit specifically held that the Department of Interior’s prior decision to limit allocation of additional canoes to those concessioners with contracts or permits was not arbitrary or capricious. The court noted that “[a]lthough it may seem unfair that [the previously unpermitted operators] must cease operating within the ONSR until they obtain permits, they began operating without permits at their own risk.” Id. at 858. There is evidence that many plaintiff members have been operating for a number of years and have invested much into their businesses. The Previously Unpermitted Operators, by contrast, have been legally providing the concession services for a year at best, during the pendency of the instant litigation. There is little evidence as to the resources that these defendants have invested into their businesses. Furthermore, because this case was filed shortly after the 1984 Prospectuses were issued, and before the defendant concessioners received permits, any investments on behalf of the newly permitted operators, were likewise a risk.

This Court, therefore, concludes that the balance of equities favors granting the requested injunction. Plaintiff members were the only authorized concessioners for a number of years. They provided their services in a satisfactory manner, and there is convincing evidence that the Free Enterprise opinion was the motivation behind the Department of Interior defendants’ decision not to afford plaintiff members a right of preference.

4. Effect On The Public Interest

The final factor is whether the public interest supports the issuance of an injunction. Here, there is a strong public interest in ensuring the implementation of the Congressionally proclaimed policy of providing for a continuity in services to the public and in ensuring that the concessioners receive their statutorily mandated right of preference. These reasons justify injunctive relief.

C. CONCLUSION

For the foregoing reasons, an injunction is entered this day directing the Interior Department defendants to afford plaintiff members a right of preference under 16 U.S.C. § 20d. This injunction does not preclude the Interior Department defendants from awarding contracts and permits to the Previously Unpermitted Operators. Nor does it enjoin such defendants from adopting its district system and related restrictions as a means of controlling canoe traffic in the ONSR. The injunction merely requires the Interior Department defendants to offer Canoe Rental Association members a right of preference as described in 16 U.S.C. § 20d and the accompanying regulations, in the negotiation of new and renewal contracts and permits.

Finally, Count II is an estoppel claim. Plaintiff concedes in its brief that it has not presented detailed evidence on this point. Yet, during the evidentiary hearing, this Court expressed its desire to hear the entire case. This Court will, therefore, proceed to decide Count II as well, and concludes that it should be dismissed.

Plaintiff essentially claims that the Interior Department defendants guaranteed the Canoe Rental Association members that if additional canoe rental authorizations became available at the ONSR, plaintiff members would be awarded such new authorizations. Defendant Sullivan testified that he made no such representations, while Darrel Blackwell and Gary W. Smith submitted stipulated testimony to the contrary. Even if such guarantee was made, plaintiff cannot succeed on the merits. The government may not be estopped by misrepresentations or misinformation given by its agents in the absence of affirmative misconduct. Free Enterprise Canoe Renters Assoc. v. Watt, 711 F.2d 852, 857 (8th Cir.1983); Abbott v. Harris, 610 F.2d 563, 564-65 (8th Cir.1979); Leimbach v. Califano, 596 F.2d 300, 305 (8th Cir.1979). Given the fact that the government’s decision not to extend a right of preference to plaintiff’s members was based upon the Free Enterprise decision, this Court concludes that the Interior Department defendants did not engage in affirmative misconduct. Accordingly, Count II is without merit and is, therefore, dismissed.


source: Caselaw Access Project

author: SHABAZ, District Judge.

license: Public Domain

text:
    STATE OF WISCONSIN, Plaintiff, v. WISCONSIN WINNEBAGO INDIAN TRIBE, Defendant.
    No. 84-C-839-S.
    United States District Court, W.D. Wisconsin.
    March 6, 1985.

      John F. Truby, Asst. Dist. Atty., for Sauk County, Baraboo, Wis., for plaintiff.
    James E. Doyle, Jr., Webb, Weiden, Doyle & Ritz, Madison, Wis., for defendant.
   ORDER

SHABAZ, District Judge.

The plaintiff State of Wisconsin moves for remand of this action to the Sauk County Circuit Court, the court from which the action was removed by the defendant Wisconsin Winnebago Indian Tribe on October 19, 1984.

Title 28 U.S.C. § 1441(a) provides that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants to the district court of the United States for the district and division embracing the place where such action is pending.” This case involves Wisconsin’s attempted enforcement of a Wisconsin criminal statute prohibiting commercial gambling, Wis.Stat. § 945.03 (1981-82), through a civil forfeiture proceeding in state court pursuant to Wis.Stats. § 973.075 and 973.076 (1981-82). The defendant Tribe contends that the Court has original jurisdiction over this action pursuant to 28 U.S.C. § 1331, as it arises under the laws, Constitution, or treaties of the United States, specifically the Act of August 15, 1953, ch. 505 § 4, 67 Stat. 589 (codified at 18 U.S.C. § 1162 and 28 U.S.C. § 1360), popularly referred to as P.L. 280; that statute grants several states, including Wisconsin, authority they would not otherwise have (see McClanahan v. State Tax Commission of Arizona, 411 U.S. 164, 93 S.Ct. 1257, 36 L.Ed.2d 129 (1973)) to enforce their criminal laws against tribes and tribal members and to hear private civil disputes involving Indians.

Defendant’s position is creative, but fundamentally flawed. A. state court’s assumption of jurisdiction over a state prosecution of an individual or organization under its criminal laws, or over a civil forfeiture proceeding designed to enforce those laws, is purely an exercise of state sovereignty. Now, it may be true that a state court’s assumption of jurisdiction in a particular case will run afoul of Indian sovereignty or federal supremacy such that those doctrines of federal law may provide a defense in state court, see State v. Lemieux, 106 Wis.2d 484, 317 N.W.2d 166 (Wis. App.1982), or the basis for an independent action in federal court challenging the state prosecution, see Barona Group of Capitan Grande Band, etc. v. Duffy, 694 F.2d 1185 (9th Cir.1982); Seminole Tribe of Florida v. Butterworth, 658 F.2d 310 (5th Cir.1981); Oneida Tribe of Indians of Wis. v. State of Wisconsin, 518 F.Supp. 712 (W.D.Wis. 1981). But to go one step further and hold that the state court action “arises under” federal law would not only confuse the issue of jurisdiction to review the propriety of a state prosecution under federal law with the issue of jurisdiction to decide the merits of such a prosecution, it would also in the course of that confusion throw open the doors of the federal courts to entertain the merits of every state prosecution arguably entered into under the authority of P.L. 280. That result would be absurd.

To summarize: P.L. 280 and the body of federal law of which it is a part may provide a defense in a state court action; the statute may also provide the basis for an independent federal court action for declaratory judgment and injunctive relief; but P.L. 280 does not provide for original jurisdiction in the district court over the merits of the challenged state court action itself. Thus, the forfeiture action removed here does not fall within the Court’s removal jurisdiction and must be remanded for lack of jurisdiction.

Accordingly,

ORDER

IT IS ORDERED that the motion of the plaintiff State of Wisconsin requesting that this action be remanded to the Sauk County Circuit Court for further proceedings is GRANTED and this case is REMANDED to the Circuit Court for Sauk County.

       Although this particular lawsuit may very well fall within the authority delegated to Wisconsin by Congress in P.L. 280 as civil enforcement of a criminal/prohibitory state law. See 18 U.S.C. § 1162.


author: WEXLER, District Judge.

text:
    Rose SILVERMAN, Stephen Silverman and Joan Devine, a/k/a Joan Herman, Plaintiffs, v. Benjamin CENTER, Joseph Ingraldi, Bert Goldman, Irving Schnitzer, Individually and as Custodian of the Assets of Stewart Avenue Associates, a Dissolved New York Partnership, The Equitable Life Assurance Society of the United States and Long Island Trust Company, a New York Corporation, Mortgagees, Defendants.
    No. CV 84-4792.
    United States District Court, E.D. of New York.
    March 6, 1985.
    Bernstein, Bernstein & Stein, Fort Lauderdale, Fla., Kerner & DeVries, New York City, for plaintiffs.

      Blodnick, Schultz & Abramowitz, P.C., Lake Success, N.Y., for defendants Ingraldi & Goldman.
    Lloyd D. Feld, Armonk, N.Y., for defendant Center.
    Irving Schnitzer, pro se.
   WEXLER, District Judge.

Plaintiff Rose Silverman and her two adult children, Stephen Silverman and Joan Devine, bring this action by way of Order to Show Cause to stay arbitration of an accounting of the business and property of Stewart Avenue Associates, a partnership. Mrs. Silverman is the widow of one of the partners and his successor in interest. The other two plaintiffs have interests in the partnership through a trust terminated in November 1984. The partnership terminated when Mr. Silverman died and the arbitration was called to resolve accounting issues in the liquidation and dissolution of the partnership and its assets. The defendants in this action have interests in the partnership or in property held by the partnership.

Plaintiffs’ ground subject matter jurisdiction in this Court on diversity of citizenship. 28 U.S.C. § 1332. Rose Silverman is averred to be a citizen of Florida, Stephen Silverman a citizen of Virginia, and Joan Devine a citizen of Maryland. Defendants are alleged to be citizens of New York. The partnership agreement was entered into under the laws of New York, and the property at the heart of the controversy is a commercial property located at 750 Stewart Avenue in Garden City, New York. The partnership agreement contains an arbitration clause that has been invoked in the liquidation and dissolution.

On December 10, 1985 plaintiffs applied for an Order to Show Cause, which was granted and set down for a December 19, 1984 hearing. Most of the parties appeared on that date, and decision was reserved.

Review of the papers submitted reveals that on September 21, 1984 Rose Silverman applied to the New York Supreme Court for a stay of arbitration on the same grounds as presented here. The stay was denied and the matter ordered to arbitration. The partnership had previously been ordered to arbitration in 1983 on a motion by Benjamin Center in Nassau County Supreme Court. Clearly, this state law action, now before this Court pursuant to diversity of citizenship, has been adjudicated by the state courts. It would appear from Justice Brucia’s decision of October 13,1983 (No. 8368/83, N.Y.Sup.Ct., Nassau County) and Justice Wilk’s decision of November 1,1984 (No. 21911/83, N.Y.Sup.Ct., New York County) that not only is the issue of arbitration res judicata, but the petition for the stay of arbitration in particular is res judicata. The facts and arguments presented in the state court actions are the same and there is identity of parties and interests with the action now before this Court.

Plaintiffs did not in their application for an Order to Show Cause or elsewhere indicate that there had been earlier proceedings before the state courts or that an earlier application to the New York Supreme Court to stay arbitration had been denied. Plaintiffs did attach as Exhibit 1 a copy of defendant Center’s Demand for Arbitration, which mentions the Supreme Court order of October 14, 1983. But plaintiffs’ counsel states in Paragraph 9 of his affidavit: “No prior application has been made to this or any other court for the relief to Quiet Title and for Partition, and no court has taken and retained jurisdiction over the subject property.” While these assertions may be technically correct, on the whole the paragraph is disingenuous for what it omits. Nor does plaintiffs’ counsel at any point address the issue of how and when a federal court may interfere in actions decided by or pending before a state court. Counsel merely has submitted a letter stating in conclusory fashion that this action is somehow new and different.

The Court is here presented with a state cause of action with subject matter jurisdiction based on diversity of citizenship. Hence, this Court would act as a state court in deciding the plaintiffs’ action, something it is no more competent to do than any other New York court. Plaintiffs having had their claims heard and adjudicated once are not entitled to a re-adjudication of the same state claims in a federal district court. Nor are they entitled to parse elements of the action and present them piecemeal to various courts. The instant action is res judicata and plaintiffs will not be allowed to go from court to court until they get the decision they seek. Moreover, whatever issues are as yet unresolved have been ordered to arbitration by the state court pursuant to an arbitration clause. The Court can detect no ground to justify its interference in proceedings before the state court or the arbitrator, or reason to divide up the action between state and federal courts. The Court concludes that principles of res judicata dictate dismissal of this suit.

Defendants Benjamin Center, Joseph Ingraldi, and Bert Goldman in their opposition to plaintiffs’ application for a stay ask for attorneys’ fees and assessment of double costs against plaintiffs pursuant to Rule 11, Fed.R.Civ.P. The plaintiffs’ counsel’s complete lack of candor in presenting the circumstances and legal proceedings leading to the arbitration indicates bad faith and intent to abuse the procedures of the Court. Counsel’s late-profferred justification does nothing to erase this. The Court concludes that an award of attorneys’ fees and costs against counsel for plaintiffs is warranted.

Accordingly, the plaintiffs’ application for a stay or arbitration is denied. The Clerk of the Court is hereby ordered to dismiss plaintiffs’ action. Attorneys for the defendants appearing in this action are directed to submit affidavits as to fees and costs.

SO ORDERED.


text:
    CAROL BARNHART, INC., Plaintiff, v. ECONOMY COVER CORP., Defendant.
    No. CV 83-5372.
    United States District Court, E.D. New York.
    March 6, 1985.

      Blum, Kaplan, Friedman, Silberman & Beran, New York City, for plaintiff.
    Bierman, Bierman & Peroff, New York City, for defendant.
   MEMORANDUM AND ORDER

WEXLER, District Judge.

Carol Barnhart, Inc., a designer and manufacturer of store display forms, asks for reargument, pursuant to Local Rule 3(j), of this Court’s earlier grant of partial summary judgment in favor of Economy Cover Corporation, a manufacturer of display forms and accessories. At issue is the copyrightability of four half-torso clothing display forms created by plaintiff and copied by defendant. In granting summary judgment this Court held that the four display forms were utilitarian articles with no conceptually or physically separable artistic elements, hence not entitled to copyright.

First, plaintiff disputes the Court’s analysis of the prima facie evidence provided by the grant of registration. Carol Barnhart, Inc. v. Economy Cover Corp., 594 F.Supp. 364, 370 (E.D.N.Y.1984). Plaintiff calls this an unsupported finding of fact that calls for reargument. The Court does not consider or intend its reasoning to be a finding of fact. The statute dictates that the certificate of registration is “prima facie evidence of the validity of the copyright.” 17 U.S.C. § 410(c). Nevertheless, the Court of Appeals has held that a certificate of registration is hot an irrebuttable presumption of copyright validity. Durham Industries, Inc. v. Tomy Corp., 630 F.2d 905, 908 (2d Cir.1980). Specifically, the Court declared, “Where other evidence on the record casts doubt on the question, validity will not be assumed.” Id. Notably, the district court in Durham Industries had held a copyright invalid on a motion for summary judgment, and the Court of Appeals affirmed.

The question of “validity” goes to a number of elements, including originality, authorship, copyrightability, and compliance with statutory formalities. Under the 1976 Act, § 410(c) bestows prima facie validity on works registered within five years of publication, but leaves it to the discretion of the court what weight registration after five years of publication should be given. While originality and authorship may be obscured by the passage of time, copyrightability is not. For while authorship and originality are, at least initially, questions of fact, copyrightability is largely an application of law to undisputed facts in the form of the object sought to be copyrighted. Norris Industries, Inc. v. International Telephone and Telegraph Corp., 696 F.2d 918, 922 (11th Cir.), cert. denied, — U.S. —, 104 S.Ct. 78, 78 L.Ed.2d 89 (1983). This prompts the Court to question whether the weight given the certificate of registration with regard to copyrightability should be affected by the five-year rule. Be that as it may, the propriety summary of judgment as a resolution to the issue of copyrightability is recognized. Kieselstein-Cord v. Accessories by Pearl, Inc., 632 F.2d 989 (2d Cir.1980).

In deciding the copyrightability issue the Court was reviewing an application of the law to the facts as embodied in the four display forms at issue. 2 M. Nimmer on Copyright § 7.21[A] at 7-151 (Matthew Bender & Co. 1984). Thus, in the course of its determination, the Court reviewed the Copyright Office’s procedure in granting registration to the four Barnhart display forms. The Court does not wish to quibble over semantics. Nevertheless, it does not consider its discussion of the certificates of registration to be more than dicta and an elucidation of its legal reasoning in rejecting plaintiff’s argument that the grant of certificates of registration was dispositive of the issue of copyrightability. It is the considered opinion of the Court that should the language that plaintiff quoted with objection be excised, the reasoning and judgment of the Court would not be altered or diminished. For while the Court perhaps erred in construing § 410(c) to give it discretion in weighing the certificates of registration, Barnhart v. Economy Cover, 594 F.Supp. at 367, it did not misinterpret the import, effect, or example of the case law in this and other circuits. Therefore, reargument based on the use of the registration certificates is unwarranted.

Finally, in its effort to gain reargument, Carol Barnhart, Inc. presents the certificates of registration from the Copyright Office for two other of its creations. Plaintiff contends these support its arguments that the four display forms at issue here are copyrightable art in the expert opinion of the Copyright Office, and that such opinion should be accorded great deference by this Court.

The Court is not impressed by the copyright of models of a foot and “draped towel.” Neither object is at issue here, neither has been reviewed by a court for copyright-ability, neither is sold as a display form for shirts, sweaters, and jackets. These submissions do not constitute relevant new evidence or newly uncovered law. They are not a basis for granting reargument.

Accordingly, plaintiff’s motion for reargument of the Court’s grant of summary judgment dismissing Count I of the complaint is denied.

SO ORDERED.


author: BENJAMIN F. GIBSON, District Judge.

text:
    James HIDENFELTER and Mable Hidenfelter, Plaintiffs, v. DIRECTOR, FEDERAL EMERGENCY MANAGEMENT AGENCY, Defendant.
    No. K81-396 CA.
    United States District Court, W.D. Michigan, S.D.
    March 6, 1985.

      Joseph W. Hayes, Stevens & Hayes, Coldwater, Mich., for plaintiffs.
    Thomas J. Gezon, Chief Asst. U.S. Atty., Grand Rapids, Mich., for defendant.
   OPINION

BENJAMIN F. GIBSON, District Judge.

This ease was tried without a jury before the Court in May of 1984. Plaintiffs brought this civil action to obtain benefits under a policy of flood insurance covering their house located on property along the shore of Lake Michigan. The flood insurance was obtained under provisions of the National Flood Insurance Act, 42 U.S.C. § 4001 et seq. Plaintiffs claim that high lake levels and wave action caused flooding of their property by the waters of Lake Michigan eroding the land that supported the foundation of their house to the point that the house is now uninhabitable. They seek insurance benefits in the amount of the face value of the policy claiming that the present condition of the house has resulted in compensable losses exceeding the policy limits.

The defendant in this action is the director of the Federal Emergency Management Agency (FEMA), the agency responsible for administering the National Flood Insurance Program. FEMA challenged plaintiffs’ right to recover under the insurance policy on two grounds: first, that plaintiffs’ have failed to satisfy a contractual prerequisite to bringing this suit by failing to submit a formal “proof of loss” within sixty days of the claimed loss; and, second, that the damage to plaintiffs’ house was not the result of erosion caused by flooding as defined in the policy of insurance. In addition, FEMA argued that plaintiffs’ had failed to mitigate their damages and that plaintiffs’ suffered damages in an amount less than the face value of the insurance policy. As required by Fed. R.Civ.P. 52(a), the Court’s findings of fact and conclusions of law are stated below.

FINDINGS OF FACT

In 1966, plaintiffs purchased the property located at 38 Evergreen Bluff in South Haven Township, Michigan. At the time they purchased the property, their lot measured over 200 feet deep by 77 feet wide and sat on a bluff approximately 75 feet above Lake Michigan. The bluff itself was covered by vegetation and there was 30-40 feet of beach at the base of the bluff. Plaintiffs’ house sat approximately 120 feet from the edge of the bluff and there was a three-story observation tower located between the house and the bluff.

When the National Flood Insurance Act was amended to provide coverage under the National Flood Insurance Program for losses caused by erosion due to flooding, plaintiffs obtained coverage for the observation tower and their house. As of the date of the trial in this matter, plaintiffs were still participating in this federal flood insurance program.

Plaintiffs have made three claims under the National Flood Insurance Program. Their first claim was filed in 1975 when recession of the bluff as a result of erosion undermined the observation tower to the point that it was in imminent danger of falling over the bluff. At that time, plaintiffs contacted their insurance agent to file a claim. A notice of loss was submitted and an adjuster investigated the claim on behalf of the insurer. In January, 1976, shortly after plaintiffs signed a proof of loss that had been prepared and submitted to them by agents of the insurer, that claim was settled for $4000, the face amount of the policy on the observation tower.

Plaintiffs filed their second and third claims, which are the subject of this lawsuit, in October of 1976 and January of 1978 claiming that erosion had rendered the house uninhabitable. At the time of the October 26, 1976 claim, only a portion of the rear porch attached to the house had been undermined. However, by the time plaintiffs filed their claim in 1978, the foundation of the house itself had been undermined by erosion. Although plaintiffs submitted a notice of claim with respect to this loss, they never submitted a proof of loss.

In spite of never having received a proof of loss, defendant investigated plaintiffs' 1976 and 1978 claims. As stated in Defendant’s Exhibit I, plaintiffs were advised that they would not receive payment for any loss associated with their claim in 1976 because there had been no physical damage to the dwelling. After plaintiffs’ 1978 claim had been investigated, defendant offered á little over $200 in settlement of the claim concluding that the loss was limited to damages to the rear porch which had been severely undermined as a result of erosion. Sometime after July 7, 1978, almost séven months after plaintiffs filed their claim, a proof of loss for $200.79 was sent to plaintiffs for damage to the porch. Plaintiffs did not accept the offer of $200.79 and did not sign and return the proof of loss. Defendants finally rejected plaintiffs’ claim by a letter dated April 1, 1981.

The plaintiffs testified to the changes that occurred in the bluff from 1968 through 1978. During this period, the rate of erosion was substantially higher than that encountered by plaintiffs in prior years. Initially, the vegetation on the bluff was lost and attempts to replace the vegetation to slow the rate of soil loss proved futile. As the process continued, the bluff became undermined causing large portions to fall into the lake. It was as a result of this process that the observation deck was eventually undermined and fell into the lake and in 1978, a portion of the house became undermined. Experts for both parties related the high rate of erosion at the Hidenfelter property to high water levels on Lake Michigan during this period.

Water levels on Lake Michigan are affected by several factors. Storm activity, exclusive of wave action, can cause them to rise several feet in a matter of hours and wave action can cause even higher water levels to be achieved. While storms and wave action may rapidly and temporarily increase water levels on Lake Michigan, because of its immense size, lake water levels respond more slowly to increases in water volume attributable to precipitation, and stormwater runoff, or losses attributable to evaporation and water outflow.

Lake Michigan water levels also exhibit a seasonal cycle with low water levels occurring in late winter because precipitation is stored on land in the form of snow while high water levels occur in summer after the snow has melted and entered the lake as runoff. Lake levels also fluctuate over longer periods of time. Although some observers have postulated various multiyear cycles to explain long-term variations in lake levels, at this point no multi-year cycles of higher or lower than average water levels have been conclusively identified.

During the period from 1966 to 1974 average monthly water levels on Lake Michigan were generally rising with the highest water level ever recorded on Lake Michigan occurring in 1973. The evidence submitted during the trial demonstrated that from April, 1969 to December, 1976, the average monthly water levels on Lake Michigan were continuously above Lake Michigan’s mean water level calculated for the period 1900 through 1983. See Defendant’s Exhibits D and 0. Beginning in late 1974 and running through 1978, average monthly water levels on Lake Michigan were generally declining. See Defendant’s Exhibit D.

CONCLUSIONS OF LAW

The National Flood Insurance Program was instituted pursuant to the National Flood Insurance Act, 42 U.S.C. § 4001 et seq., to provide low cost flood insurance to homeowners and small businesses that may suffer losses through damage to real and personal property from flooding. Plaintiffs brought this lawsuit to recover benefits under a policy of flood insurance issued under the National Flood Insurance Program after their claim was rejected by FEMA. Jurisdiction over this civil action is provided by 42 U.S.C. § 4072.

The Standard Flood Insurance Policy issued to plaintiffs describes the requirements for filing a claim in Paragraph N which provides in part:

Requirements in Case of Loss — The insured shall give written notice, as soon as practicable, to this Company of any loss.... Within 60 days after the loss, unless such time is extended in writing by this Company, the insured shall render to this Company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following: the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or exposures of said property since the issuing of this policy, by whom and for what purpose any building herein described and the several parts thereof were occupied at the time of loss.

Paragraph S of the Standard Flood Insurance Policy provides in relevant part:

Action Against the Company —No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after the date of mailing of notice of disallowance or partial disallowance of the claim.

As of the date of the trial in this matter, plaintiffs had not filed a proof of loss as required by Paragraph N of the insurance contract. Defendant contends that their failure to do so is an absolute bar to this lawsuit while plaintiffs argue that the government should be estopped from asserting that the required proof of loss has not been filed.

Although as a general rule the government cannot be estopped by acts of its agents, see e.g. Federal Crop Insurance Corporation v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947), United States v. River Coal Co., Inc., 748 F.2d 1103, 1108 (6th Cir.1984), as the Sixth Circuit observed in Rogers v. Tennessee Valley Authority, 692 F.2d 35, 37 (6th Cir. 1982) “[t]he doctrine of equitable estoppel as applied to the government has undergone considerable development since FCIC v. Merrill, supra.” In several recent cases, the doctrine has been applied to prevent the government from unfairly asserting the failure to file a proof of loss as a defense to claims under flood insurance policies issued pursuant to the National Flood Insurance Act. E.g. Meister Bros., Inc. v. Macy, 674 F.2d 1174 (7th Cir.1982); Quesada v. Director, Federal Emergency Management Agency, 577 F.Supp. 695 (S.D.Fla.1983), aff’d, Quesada v. Director, Federal Emergency Management Agency, 753 F.2d 1011 (11th Cir.1985) (per curiam with Tjoflat, J. dissenting); Bolton v. Giuffrida, 569 F.Supp. 30 (N.D.Cal.1983); Dempsey v. Director, Federal Emergency Management Agency, 549 F.Supp. 1334 (E.D.Ark.1982). But see West Augusta Development Corp. v. Giuffrida, 717 F.2d 139 (4th Cir.1983). Synthesizing the standards outlined in those cases, the Court concludes that the government may be es-topped from denying that plaintiffs submitted the proof of loss required under the insurance policy if plaintiffs have demonstrated that they were affirmatively misled into thinking that the filing was unnecessary by agents of FEMA, there is no prejudice to the insurer, and the insurer was otherwise on notice of the claim and the information that would have been provided in the proof of loss. See Quesada, 577 F. Supp. at 698.

The record shows that plaintiffs made three claims under their flood insurance policies and in each case the same procedure was followed. The investigation of the claim began when plaintiffs submitted a notice of loss describing the nature of their claim. The insurer, either the National Flood Insurers Association or FEMA, would select an adjuster to investigate the claim and at the conclusion of the investigation, if the insurer decided to settle the claim, it would submit its proposed settlement in conjunction with a proof of loss for plaintiffs to sign. This procedure was followed when plaintiffs filed their claim for the loss of their observation tower in 1975 and resulted in plaintiffs’ claim being settled for the face amount of the insurance policy. While plaintiffs’ 1976 claim was denied in its entirety before the sixty-day period for filing the proof of loss had run, when plaintiffs filed their claim in 1978, agents for FEMA continued to process the claim and some time on or after July 10, 1978 sent a proof of loss in the amount of $200.79 to plaintiffs as a proposed settlement for their claim. Defendant’s Exhibit G. Even though plaintiffs refused to accept and sign this proof of loss, FEMA did not deny plaintiffs’ claim until April 1, 1981, and did so, not because of plaintiffs’ failure to file the required proof of loss, but because FEMA had determined that the loss was not covered under the insurance policy. Defendant’s Exhibit J.

It was only when this civil action was filed that FEMA raised the failure to file the proof of loss as a defense to plaintiffs’ claim. Prior to that, FEMA had followed procedures indicating that plaintiffs need not submit a proof of loss and reinforced this impression by preparing and submitting a proof of loss to plaintiffs after the 60-day period had run. The Court concludes that under the circumstances of this case, FEMA’s conduct affirmatively misled plaintiffs into believing that filing the proof of loss was unnecessary. The Court also finds that FEMA was not prejudiced by plaintiffs’ failure to file the proof of loss within 60 days as required by the insurance policy. At the time the notice of loss was filed, FEMA knew that plaintiffs were claiming the total loss of their house. Furthermore, through its investigation of this claim, FEMA knew everything that plaintiffs were required to provide in the proof of loss. This is evident from FEMA’s submission of the proof of loss which plaintiffs rejected when they rejected FEMA’s settlement offer of $200.79. For these reasons, the Court concludes that the doctrine of equitable estoppel should be applied in this case to prevent FEMA from asserting plaintiffs’ failure to file a proof of loss as a defense to their claim.

The Court now considers the merits of plaintiffs’ claim. In this lawsuit plaintiffs allege a total loss of their house as a result of flood-related erosion. The Standard Flood Insurance Policy issued to plaintiffs insured them against direct losses by “flood” which is defined by the policy as follows:

Wherever in this policy the term “flood” occurs, it shall be held to mean
A. A general and temporary condition of partial or complete inundation of normally dry land areas from:
1. The overflow of inland or tidal waters.
2. The unusual and rapid accumulation of runoff of surface waters from any source.
3. Mudslides (i.e., mudflows) which are proximately caused or precipitated by accumulations of water on or under the ground.
B. The collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by waves or currents of water exceeding the cyclical levels which result in flooding as defined in A-l above.

While Paragraph B quoted above provides that the insurance policy covers losses caused by erosion which is the result of flooding, Paragraph D of the insurance contract makes it explicit that the insurer is not liable for any losses caused by “landslide or any other earth movement except mudslide or erosion as is covered under the peril of flood.” Based on its reading of the insurance contract, the Court concludes that only erosion caused by flooding, as that term is defined in the insurance policy, is covered under the policy and no coverage is provided for ongoing erosion occurring along the Lake Michigan shoreline. Therefore, in this civil action plaintiffs must establish by a preponderance of the evidence that their loss was the result of flood-related erosion to prevail on their claim.

The evidence clearly established that plaintiffs suffered some damage to their house as a result of erosion. While the record shows that erosion is an ongoing process along the Lake Michigan shoreline, the evidence also demonstrates that the rate of erosion at the Hidenfelter property increased dramatically during the period from 1969 through 1976 in part as a result of high water levels on Lake Michigan. The only issue is whether the erosion which caused damage to plaintiffs’ house was “flood” related as that term is defined in the insurance contract.

In light of the evidence produced at trial regarding the normal fluctuations in Lake Michigan water levels, the Court concludes that the high water levels during the period from mid-1969 through 1976 did not constitute a flood as that term is defined in the insurance policy. Consequently, the Court rejects any argument that those high water levels on Lake Michigan brought all of the erosion occurring during this period within the coverage of Paragraph B of the insurance policy.

This conclusion is supported by the legislative history of the 1973 amendments to the National Flood Insurance Act which extended protection under the Standard Flood Insurance Policy to losses caused by abnormal erosion. In describing the new provision, the report of the Senate Banking, Housing and Urban Affairs Committee states:

As the debate on the house floor made clear, such erosion coverage is appropriate for the purposes of this program only to the extent that it is flood-related; that is, suddenly caused by an unusually high water level in a natural body of water, accompanied by a severe storm, or by an unanticipated force of nature, such as a flash flood or an abnormal tidal surge, or by some similarly unusual and unforeseeable event. The amendment is not intended to provide coverage for the losses incurred when properties built too close to shorelines are eventually damaged as a result of normal and continuous wearing away of land by ordinary wave action. If the loss is gradual and takes place over the course of years, it would not be covered.

S.Rep. No. 583, 93rd Cong., 1st Sess., reprinted in 1973 U.S.Code Cong. & Ad. News 3217, 3229. Plaintiffs have not demonstrated that the damage to their house was proximately caused by any event which fits the definition of a “flood” under the insurance policy.

For the reasons stated above, this Court concludes that plaintiffs have failed to establish by a preponderance of the evidence that they are entitled to benefits under the Standard Flood Insurance Policy issued to them under the National Flood Insurance Act. Accordingly, judgment is hereby entered in favor of the defendant and against plaintiffs.


author: McLAUGHLIN, District Judge.

text:
    Elizabeth TORRES, Plaintiff, v. Eusebio TORRES and John Kessler, Defendants.
    No. 84 CV 2947.
    United States District Court, E.D. New York.
    March 6, 1985.

      Santangelo, Santangelo & Cohen by Marc A. Bernstein, New York City, for plaintiff.
    Rivkin, Leff & Sherman by Craig J. Bruno, Garden City, N.Y., for defendants.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

Plaintiff in this diversity action seeks damages for injuries allegedly suffered when the car, driven by defendant Eusebio Torres, in which she was a passenger was hit by defendant Kessler’s car. Defendant Kessler moves to dismiss the claim against him, on the ground that the Court lacks jurisdiction over his person. Fed.R.Civ.P. 12(b)(2). Plaintiff, in turn, requests that, in the event the Court determines that it lacks personal jurisdiction over defendant Kessler, the Court transfer this action to the Middle District of Pennsylvania. 28 U.S.C. § 1404(a).

Facts

The accident occurred in Pennsylvania on January 6, 1984. Plaintiff is a citizen of Puerto Rico. Defendant Torres, who has not appeared in the action, is a citizen of New York. Defendant Kessler, is a citizen of Pennsylvania.

Discussion

Clearly, this Court lacks personal jurisdiction over defendant Kessler, a Pennsylvania domiciliary who lacks any contact with New York that would be sufficient to form a basis for extra-territorial service of process. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Vehicle and Traffic Law § 253, New York’s nonresident motorist statute, is inapplicable since the accident did not occur in New York. Moreover, plaintiff has pointed to no provision of New York’s long-arm statute which would provide a basis for personal jurisdiction over defendant Kessler. See C.P.L.R. § 302(a).

Indeed, plaintiff has put forth no argument whatsoever as to the Court’s personal jurisdiction. Instead, plaintiff relies on the argument that defendant has waived his right to assert the jurisdictional defect since his 12(b) motion was untimely. I am not persuaded by this argument.

According to plaintiff’s proof of service, plaintiff’s process-server affixed the summons and complaint to defendant’s door on August 18, 1984, and then mailed copies to defendant on August 23, 1984. On September 26, 1984, Kessler served plaintiff with the instant motion to dismiss.

Assuming arguendo that plaintiff’s use of the “nail and mail” statute was proper, defendant’s thirty days in which to appear or serve an answer began to run ten days after plaintiff filed proof of service. C.P.L.R. § 308. See Copper v. Prokos, 51 Misc.2d 757, 273 N.Y.S.2d 890, 891 (Suffolk County 1966). There is no evidence, however, as to when proof of service was actually filed. The first documentation that process was served was submitted on October 29, 1984, as an exhibit to plaintiff’s sur-reply affirmation. Accordingly, proof of service is deemed to have been filed with the Court on that date. Thus, technically, defendant made the instant motion before his time to respond had even begun to run.

Moreover, even if service was proper under the federal rules, a point I need not decide, plaintiff’s waiver argument is nonetheless inappropriate. Where, as here, a defendant asserts the defense of lack of personal jurisdiction in his first responsive pleading, the federal courts have been reluctant to deem the defense waived merely because the pleading was served a few days late. See Foss v. Klapka, 95 F.R.D. 521, 522 (E.D.Pa.1982); United Advertising Agency, Inc. v. Robb, 391 F.Supp. 626, 631 (M.D.N.C.1975); C. Wright and A. Miller, 5 Federal Practice and Procedure, § 1391 at 856 (1984). In any event, this seems to be an appropriate instance in which to invoke the Court’s discretionary power to enlarge the time for serving an answer. Fed.R.Civ.P. 6(b). See C. Wright and A. Miller, § 1346 at 529. Accordingly, I find that defendant has not waived the defense of lack of personal jurisdiction.

Plaintiff requests, however, that, in lieu of dismissal, the Court transfer the action to the Middle District of Pennsylvania. 28 U.S.C. § 1404(a). Clearly, this Court “has [the] power to transfer the case even if there is no personal jurisdiction over the defendants, and whether or not venue is proper in [this] district, if a transfer would be in the interest of justice.” Volk Corp. v. Art-Pak Clip Art Service, 432 F.Supp. 1179, 1181 (S.D.N.Y.1977) (footnotes omitted). See Corke v. Sameiet M.S. Song of Norway, 572 F.2d 77, 80 (2d Cir.1978).

Although defendant Kessler in his reply affirmation, did not address plaintiff’s request to transfer, he essentially conceded in his original motion papers that the Middle District of Pennsylvania is the correct forum. Defendant noted that, as a Pennsylvania resident, he is subject to the jurisdiction of that Court, that the accident occurred there, and that the key witnesses and treating physicians reside there. Indeed, defendant asserted that he would suffer undue hardship if the matter were tried outside Pennsylvania.

Clearly, venue would be proper in the Middle District of Pennsylvania. 28 U.S.C. § 1391(a). Finally, it is noted that defendant Torres, who has not appeared in this action, would be subject to the jurisdiction of a federal court in Pennsylvania under Pennsylvania’s non-resident motorist statute. 75 P.S. § 2001. See Burbank v. Grant, 56 F.R.D. 484, 486 (E.D.Pa.1972). While it appears that the interests of justice would be served by transferring the entire action to the Middle District of Pennsylvania, I am presently reluctant to transfer the claim against defendant Torres because it is unclear whether he has been given notice and an opportunity to be heard. Cf. Mobil Corp. v. Securities and Exchange Commission, 550 F.Supp. 67, 69 (S.D.N.Y.1982).

Accordingly, it is hereby ORDERED that within ten (10) days of the date of this Order plaintiff shall file with the Court proof of service on defendant Torres of the summons and complaint, plaintiff’s motion to transfer and a copy of this Order. Notice is hereby given that if no opposition is filed by defendant Torres within twenty (20) days of the filing of proof of service, the action will be transferred to the Middle District of Pennsylvania. Failure of plaintiff to comply with this Order will result in dismissal of the claim against defendant Torres for failure to prosecute. Fed.R.Civ.P. 41(b).

SO ORDERED.

      . Clearly, where service is made pursuant to a state statute authorizing extra-territorial service pf process, the time within which a defendant must answer is measured according to the period prescribed by the state statute. Fed.R.Civ.P. 12(a).

      . In her moving papers, plaintiff argues further that service on defendant Kessler was valid under Fed.R.Civ.P. 4(c)(2)(C)(ii) which authorizes service by mail. A defendant served pursuant to this Rule would be required to respond within 20 days of service of process. Fed.R.Civ.P. 12(a). Although it is questionable whether plaintiff has complied with the requirements of that rule, I need not decide the point in view of my decision to transfer the claim to the Middle District of Pennsylvania. Cf. Corke v. Sameiet M.S. Song of Norway, 572 F.2d 77, 78 n. 4 (2d Cir.1978); Essex Crane Rental Corp. v. Vic Kirsch Construction Company, Inc., 486 F.Supp. 529, 532 (S.D.N.Y.1980).

      . This case dramatically illustrates the mischief of the rule that personal jurisdiction over a defendant is not a prerequisite to a transfer. Although the rule is settled in this Circuit, it remains an open inducement to the sloppy service of process so evident in this case. Apart from constitutional difficulties with asserting jurisdiction — even jurisdiction to transfer — over a defendant who lacks any contacts with New York, I see no reason in logic or policy why this Court should become a clearing house for lawsuits that should have been started elsewhere.


text:
    MEINEKE DISCOUNT MUFFLER SHOPS, INC., Plaintiff, v. Patsy A. NOTO and Jopat Auto Center, Inc., Defendants.
    No. 82 CV 0015.
    United States District Court, E.D. New York.
    March 6, 1985.
    Schmeltzer, Aptaker & Sheppard, P.C. by Stephen Horn, Ted Pearce, Gen. Counsel, Washington, D.C., for plaintiff.
    Ohrenstein & Brown by Steven E. Dreyer, New York City, for defendants.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

Plaintiff, Meineke Discount Muffler Shops, Inc. (“Meineke”), a franchisor, moves for a preliminary injunction terminating defendants’ franchise, or in the alternative, for the appointment of a receiver pendente lite. For the reasons set forth below, plaintiff’s motions are denied.

Facts

In the underlying action, commenced in 1982 by Order of Attachment, Meineke seeks damages and the termination of its contractual relationship with defendants-franchisees. The cause of the friction among the parties is an allegation that defendants have committed a substantial breach of contract and are guilty of fraud. Essentially, Meineke claims that defendants have concealed revenues from Meineke and have deprived Meineke of its royalties.

Three years ago, this Court ordered Meineke to continue treating defendants as franchisees during the pendency of this litigation. In return, defendants gave assurances that all revenues would be placed in a new bank account, and that Meineke would be paid the royalties properly due.

Meineke contends that defendants have continuously breached this agreement, and thus seeks a preliminary injunction terminating the franchise relationship. Acting on its suspicions that defendants were continuing to engage in fraud, Meineke caused an investigation to be undertaken during the period, May-July 1984. The results of that investigation, which form the basis of the instant motion, were placed before this Court at a hearing on October 29, 1984.

Meineke’s proof for the most part consisted of the testimony of an investigator and several of defendants’ customers. Meineke established that Walter Ross, defendants’ former shop manager, had been collecting money for work performed on customers’ cars without issuing the customers Meineke receipts and without accounting for such sales to Meineke. Apparently, Ross was offering customers bargain rates if they would agree to forego the traditional Meineke receipt and deal in cash only. Ross did, however, issue certain customers a Meineke business card on which he indicated the amount they paid for the services.

Defendant Noto testified that upon learning of this scheme, he promptly fired Ross. Although Noto was arguably within earshot of one conversation between Ross and Meineke’s investigator, Meineke has been unable to establish that Noto had knowledge of or was involved in Ross’ scheme.

Discussion

The courts in this Circuit have been reluctant to grant preliminary injunctive relief where, as here, the injunction would in effect award plaintiff the ultimate relief sought. See Knapp v. Walden, 367 F.Supp. 385, 388 (S.D.N.Y.1973).

The Second Circuit has recently indicated:

The purpose of a preliminary injunction is to preserve the status quo pending the final determination of a dispute. It is well-settled in this Circuit that the party seeking injunctive relief must establish that the injunction is necessary to prevent irreparable harm and that he is likely to prevail on the merits of the underlying controversy.

Arthur Guinness & Sons, PLC v. Sterling Publishing Company, Inc., 732 F.2d 1095, 1099 (2d Cir.1984) (citation omitted).

It seems clear to this Court that Meineke has demonstrated a likelihood that it will succeed on the merits of its claim. Indeed, the Court so indicated on January 5, 1982, in passing upon an ex parte writ of attachment. Meineke, however, has not established that an injunction “is necessary to prevent irreparable harm.” Id.

Meineke asserts that defendants’ dishonesty will undermine the goodwill Meineke enjoys among consumers and will cause a loss of confidence among other franchisees. Cf. Interphoto Corporation v. Minolta Corporation, 417 F.2d 621, 622 (2d Cir.1969). A party seeking a preliminary injunction, however, must put forth clear proof of an imminent threat of irreparable injury and not mere unsupported speculation. Jack Kahn Music Co., Inc. v. Baldwin Piano & Organ Company, 604 F.2d 755, 761 (2d Cir.1979). Plaintiff simply has not met that burden.

Alternatively, Meineke requests that the Court appoint a receiver pendente lite to take charge of defendants’ business. Defendants, while opposing plaintiff’s request, concede that the appointment of a receiver is preferable to a preliminary injunction in preserving the status quo.

“The appointment of a receiver pendente lite lies in the discretion of the Court and the applicant bears a heavy burden to establish an actual need therefor.” Securities & Exchange Commission v. Republic National Life Co., 378 F.Supp. 430, 438 (S.D.N.Y.1974). In assessing plaintiff’s burden, I am directed to the admonition that “the appointment of a receiver ‘is, like an injunction, an extraordinary remedy, and ought never to be made except in cases of necessity, and upon a clear showing that ... emergency exists, in order to protect the intereste of the plaintiff in the property.’ ” Wickes v. Belgian American Educational Foundation, Inc., 266 F.Supp. 38, 40 (S.D.N.Y.1967).

In the instant case, the fraudulent activities cited by Meineke are attributable to an employee who has since been fired. The Court has not been advised of any complaints of “off the books” transactions occurring after Walter Ross left defendants’ employ. Thus, although plaintiff may well succeed on the merits of its underlying claim, it has not carried its burden of convincing the Court that the appointment of a receiver pendente lite is necessary to protect its interests.

Accordingly, plaintiff’s motions are denied. SO ORDERED


author: MacMAHON, District Judge.

text:
    OLIN CORPORATION, Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, the Hanover Insurance Company (as successor to Massachusetts Bonding and Insurance Company), American Home Assurance Company, American Re-Insurance Company, Certain Underwriters at Lloyd’s, London, Commercial Union Insurance Company (as successor to Employers’ Liability Assurance Corporation, Ltd., and Employers Commercial Union Insurance Company of America), Continental Casualty Company, Employers Insurance of Wausau a Mutual Company, Falcon Insurance Company (as successor to Employers’ Surplus Lines Insurance Company), Federal Insurance Company, Fireman’s Fund Insurance Company, Great American Insurance Company, the Home Insurance Company, Lexington Insurance Company, London & Edinburgh Insurance Company Limited, National American Insurance Company of New York (as successor to Stuyvesant Insurance Company), National Union Fire Insurance Company of Pittsburgh, North River Insurance Company, Northbrook Excess and Surplus Insurance Company, and Transit Casualty Company, Defendants.
    No. 84 Civ. 1968 (LFM).
    United States District Court, S.D. New York.
    March 6, 1985.

      Kissam, Halpin & Genovese by James J. Harrington and Norma B. Levy, New York City, for plaintiff.
    Davis, Polk & Wardwell by Guy Miller Struve, Paul R. Koepff, Cheryl L. Poliak, Daniel L. Brockett, and Lisa Huestis, New York City, for defendant Insurance Company of North America.
   OPINION

MacMAHON, District Judge.

Plaintiff Olin Corporation (“Olin”) moves, pursuant to Rule 56, Fed.R.Civ.P., for partial summary judgment against defendant Insurance Company of North America (“INA”) declaring that INA is liable for 100% of Olin’s defense costs incurred defending the underlying claims. INA cross-moves for partial summary judgment declaring that defense costs should be paid either equally or proportionately by INA, Olin, and the three other primary insurers, namely, Hanover Insurance Company (“Hanover”), National Union Fire Insurance Company (“National”), and Employer’s Insurance of Wausau (“Wausau”). Under Rule 53(e), Fed.R. Civ.P., INA also seeks reversal of the rulings of the Special Master sustaining certain claims of settlement privilege asserted by Olin under Rule 408, Fed.R.Evid.

FACTS

This action arises from several suits brought against Olin for bodily injury and property damage resulting from dichlorodiphenyltrichloroethane (“DDT”). The individual plaintiffs, numbering in the thousands, alleged that their injuries occurred during the period 1947 to the date of the filing of the suit. Olin defended the suits at a cost of $7.3 million and settled with the majority of the plaintiffs for $24 million. Olin seeks to recover defense costs on this motion.

Olin first became involved in the manufacture of DDT in 1954, when it acquired the Calabama Chemical Company which had been manufacturing the chemical since 1947. Olin ceased production of DDT on June 30, 1970.

Massachusetts Bonding and Insurance Company, now Hanover, provided primary insurance coverage to Olin from January 1, 1954 to January 1, 1956. INA provided coverage from at least June 1, 1955 through January 1, 1974, although there is a dispute as to the existence and applicability of INA policies covering the period from 1947 to 1954. During the period January 1, 1974 to March 1, 1977, Wausau provided primary insurance coverage to Olin. National has provided primary insurance coverage from March 1, 1977 to date.

DISCUSSION

Defense Costs

We cannot resolve issues of fact on a motion for summary judgment. Heyman v. Commerce & Industry Ins. Co., 524 F.2d 1317, 1319 (2d Cir.1975). The burden is on the moving party to demonstrate the absence of any material factual issue genuinely in dispute. Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 444 (2d Cir.1980). Where a contract, including an insurance contract, is susceptible of at least two fairly reasonable meanings, the parties have a right to present extrinsic evidence, and, thus, summary judgment is precluded. Schering v. Home Ins. Co., 712 F.2d 4, 9 (2d Cir.1983).

Olin asserts that INA is liable for the entire defense costs of the DDT cases even though there were periods during which Olin was uninsured or self-insured. Essentially, Olin argues that once a carrier is at risk, provided the insurer has not excluded the possibility that an uncovered claim is pleaded in a complaint, it is liable for all defense costs on all claims, potentially covered as well as potentially uncovered. Once a policy is triggered, the insurer must pay defense costs for all claims.

INA admits that it is liable for some of the defense costs, but argues that Olin is liable for defense costs for claims arising during the period 1947 to 1954, when Olin was uninsured or self-insured, and for claims arising during 1971 to 1974 under an endorsement to policy SRL 2217 in which Olin agreed to share defense costs.

It is well settled that the duty to defend is broader than the duty to indemnify. American Home Pdts. Corp. v. Liberty Mut. Ins. Co., 565 F.Supp. 1485, 1499 (S.D.N.Y.1983), aff’d. as mod., 748 F.2d 760 (2d Cir.1984). An insurance company has a duty to defend, even meritless suits, “so long as they could conceivably result in a liability covered by the policy” but “has no duty to defend claims which may have merit, but for which liability coverage does not exist because injury occurred outside the policy period.” Id., 565 F.Supp. at 1499.

In light of this broad duty to defend, INA is liable for defense costs, even for claims which appear meritless, so long as the policy is triggered. The INA comprehensive general liability policies issued to Olin applied to occurrences or accidents during the respective policy periods. The question for us is whether INA’s policies are triggered.

Coverage is triggered upon the occurrence of an injury in fact during the policy period. Id., 748 F.2d at 765. To establish liability, “the insured must prove the cause of the occurrence (accident or exposure), the result (injury, sickness, or disease), and that the result occurred during the policy period.” Id., 565 F.Supp. at 1497. The occurrence must arise during the policy period and may take place at any or all points from exposure to manifestation. Id., 565 F.Supp. at 1497-98.

The question of whether the occurrences arose during the policy period is yet to be determined. Neither party has offered sufficient evidence on whether the results (injury, sickness, or disease) occurred during the period of INA’s policy. Since it cannot be determined whether INA’s coverage is triggered, we cannot determine the extent of its duty to defend and summary judgment is precluded.

The endorsement to primary policy SRL 2217 provided that (1) if INA does not pay any indemnity, then Olin must pay all defense costs, and (2) if INA does make such a payment, INA and Olin will share proportionately the payment of defense costs. This endorsement altered INA’s general duty to defend for the time period January 1, 1971 to January 1, 1974. Whether INA or Olin is responsible for defense costs for the period covered by this endorsement hinges on INA’s obligation to make indemnity payments in the underlying actions. Since INA’s payments are yet to be determined,, summary judgment is precluded.

INA further argues that Olin is liable for defense costs which should be attributable to other primary insurance carriers because of Olin’s agreements with those carriers to pay their defense costs. However, before determining whether Olin is liable for those costs, we must determine whether the policies of Wausau, National, and Hanover are triggered.

Wausau argues that its liability for defense costs depends on its indemnity liability under the Retention Endorsement Provision of its contract with Olin. It also argues that the contract’s Pollution Exclusion excuses it from any liability because the underlying claims do not allege that the discharge of DDT was sudden and accidental as covered in the policy. It is not clear, in light of these provisions and the facts as they are currently presented, whether Wausau’s policy is triggered.

National claims that its contract with Olin was not for insurance, but rather was for services only. It claims that there was no transfer of risk since Olin agreed to indemnify National for any losses or expenses. These are more than bare conclusory statements and legitimately raise issues of fact as to whether National’s policy is triggered.

It is also not clear whether Hanover’s policies, which allegedly covered the time period January 1, 1954 to January 1, 1956, are effective. The validity and completeness of the submitted policies can only be determined after the presentation and examination of the surrounding extrinsic evidence.

Issues. of fact are raised as to whether the policies of these three carriers are triggered. These factual disputes, therefore, preclude any determination of Olin’s liability under these policies. In addition, little discovery has been conducted with respect to these three carriers. Summary judgment should not be granted while the parties opposing judgment seek discovery of potentially favorable information. Schering v. Home Ins. Co., supra, 712 F.2d at 10.

Special Master’s Rulings

INA also seeks an order reversing the rulings of the Special Master finding that various documents concerning discussions by counsel representing Olin, INA, Wausau, and Hanover, held from November 1981 to December 1982, were privileged and protected from discovery pursuant to Rule 408, Fed.R.Evid. The Special Master also ruled that the settlement privilege prevented INA from obtaining discovery of an amendment to the Wausau policy concerning the extent to which Wausau would pay defense costs.

Rule 408 provides that evidence of conduct or statements made in compromise negotiations is not admissible to prove liability or invalidity of the claim, although it may be admissible on other grounds, including to prove bias or prejudice of a witness. The purpose of the rule is to encourage full and frank disclosure between the parties in order to promote settlements rather than protracted litigation.

INA contends that the discussions were not settlement negotiations, but rather were business communications since there was no litigation filed or even contemplated at the time. INA claims that the insurers met with Olin to discuss the nature of the claims asserted and the merits of the underlying lawsuits; the discussions related to the various insurers’ positions with respect to their reservation of rights as to coverage. If these were merely business communications which were relevant and material, they would be discoverable. Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th Cir. 1977). However, we agree with the findings of the Special Master that these were settlement negotiations concerning the rights and liabilities of the insurers to defend and to indemnify the underlying claims against Olin.

Olin contemplated that litigation might be necessary when the involved insurers refused to defend or to indemnify the DDT claims. Olin, as well as the three primary insurers, retained outside counsel who were involved in the settlement discussions. Moreover, in a January 1982 letter to counsel for Wausau, counsel for INA conceded that litigation was possible. These discussions were more than mere business communications between company officials, as in Big 0 Tire Dealers, and constituted settlement negotiations to avoid the litigation of a potentially costly and complex suit.

In the alternative, INA argues that the exclusion under Rule 408 applies and the documents should be disclosed since they are relevant and material to Olin’s claim of bad faith against INA and are admissible to impeach and to show bias. While Rule 408 may not exclude evidence that shows the bad faith failure of an insurance carrier to settle, Urico v. Parnell Oil Co., 708 F.2d 852, 854-855 (1st Cir. 1983), INA fails to recognize that Olin’s claim for bad faith refers to INA’s failure to defend the DDT claims and not to INA’s failure to settle.

INA has also failed to support its contentions adequately that the evidence may be used to impeach or to show bias. In addition, counsel for INA were present at the negotiations, and, to the extent admissible, their witnesses will be able to testify without discovery of Olin’s privileged documents.

INA’s contention that discovery of the Wausau primary policy amendment is necessary to show motive and bias of Wausau with respect to this litigation is also without merit. Although the issue of appropriate shares of defense costs is presently pending, discovery of the terms of the agreement between Olin and Wausau is denied in order to safeguard the policy favoring settlements. Bottaro v. Hatton Associates, 96 F.R.D. 158 (E.D.N.Y.1982). However, to advance this litigation, Olin is required to reveal only the “bottom line” information of its agreement with Wausau.

Accordingly, summary judgment is denied to both parties. INA’s motion to reverse the rulings of the Special Master is also denied.

So ordered.


author: WEBER, District Judge.

text:
    F. Killings BEY and Thomas Christian, Jr., Plaintiffs, v. SCHNEIDER SHEETMETAL, INC., Defendant.
    Civ. A. No. 84-872.
    United States District Court, W.D. Pennsylvania.
    March 7, 1985.

      John O. Gunn, Pittsburgh, Pa., for plaintiffs.
    William P. Getty, David A. Luptak, Pittsburgh, Pa., for defendant.
   OPINION

WEBER, District Judge.

This case is again before the court on defendant’s motion for summary judgment supported by brief and evidentiary materials. Plaintiffs have responded with a brief in opposition, unsupported by evidentiary materials except for those previously attached exhibits to the complaint.

Defendant has again asserted its claim that plaintiffs have failed to file timely charges of discrimination with the Equal Employment Opportunity Commission (EEOC) and therefore fail to state a claim upon which relief can be granted under Title VII. In support, defendant provides the deposition testimony of plaintiffs themselves. The prior opinion of this court, 596 F.Supp. 319, relied on plaintiffs’ affidavits which provide information different from that contained in their more recent deposition testimony. The deposition testimony indicates that both plaintiffs believed at the time of their layoffs on November 16, 1982 and November 30, 1982 that they were being racially discriminated against. (Bey Dep. Tr. at 28-29; Christian Dep. Tr. at 37). In prior affidavits the plaintiffs contended:

... 7. On or about July 20, 1983 I, ... was informed that no work was available to me at alternate job sites.
8. Subsequently, I learned that white sheetmetal workers had been assigned to perform work at alternate job sites.

In deposition testimony, Mr. Bey indicated that he gained his knowledge by driving past Schneider Sheetmetal job sites. He admitted that he has no information as to whether any white employees were hired or transferred to the job sites which he observed between his layoff in November, 1982, and his rehire in November, 1983 (Bey Dep. Tr. at 42-43).

Thomas Christian named two white employees who were transferred to another job site following his layoff on November 16, 1982. These individuals told Mr. Christian in late November 1982 that they had been transferred from the job where Christian had worked, to another project. (Christian Dep. Tr. at 30-33). At the time these individuals were transferred, Christian was disabled and receiving Workmen’s Compensation benefits, which he claimed and received from the time of his layoff through December 13, 1982 (Christian Dep. Exhibit 1).

This testimony makes it clear that the facts on which plaintiffs rely to support their charges of discrimination were apparent to them in November, 1982 (Christian Dep. Tr. at 33). However, they did not file charges with the EEOC until December 14, 1983.

From this new information that has been provided to the court, we find that plaintiffs have failed to file timely charges with the EEOC and therefore failed to state a Title VII claim. Moffett v. Bolger, 527 F.Supp. 1098 (W.D.Pa.1981); Wetzel v. Liberty Mutual Insurance Company, 511 F.2d 199 (3d Cir.1975). However, the administrative procedures required in a Title VII suit create no judicial barrier to a suit under the Civil Rights Act. Johnson v. Host Enterprise, Inc., 470 F.Supp. 381, 383-384 (E.D.Pa.1979); Young v. International Tel. & Tel. Co., 438 F.2d 757, 763 (3d Cir.1971). Further, the remedies available under Title VII and under § 1981, although related, and directed to most of the same ends are separate, distinct and independent. Johnson v. Railway Express Agency, 421 U.S. 454, 459-60, 95 S.Ct. 1716, 1719-20, 44 L.Ed.2d 295 (1975). Therefore, plaintiffs’ untimely filing of EEOC charges have no effect on their right to proceed under their § 1981 theory, which must be brought in Pennsylvania within six years from the accrual date. Alston v. Allegheny Ludlum Steel Corp., 449 F.Supp. 553 (W.D.Pa.1978).

Defendant next argues that there is no genuine issue of material fact for trial. In support of this argument, defendant analyzes plaintiffs’ allegations and evidence in support thereof. Plaintiffs allege in their Amended Complaint, their affidavits and brief that the defendant selectively discriminated against blacks in the recall process. Defendant has provided plaintiffs’ subsequent admissions to show that neither plaintiff can provide any evidence of a discriminatory failure to recall or rehire them. (Bey Dep. Tr. at 42-43; Christian Dep. Tr. at 30-33; Christian Dep. Exhibit 1). Rather plaintiffs appear to describe a situation in which employees on defendant’s payroll at the time were transferred to new job sites as they became open. Plaintiffs appear to object to the transfer of currently employed white employees in lieu of defendant’s rehiring them. Plaintiffs admit that they have no right to recall under the collective bargaining agreement. (Bey Dep. Tr. at 9; Christian Dep. Tr. at 10). The rights which plaintiffs assert appear to be based on their understanding of Executive Order 11246, Section 202. (Christian Dep. Tr. at 10)

Plaintiffs have come forward with no evidence of any white employee who was recalled or hired during the relevant period, or of any discriminatory employment practice. On this summary judgment motion we must view the facts in the light most favorable to the plaintiffs. However this does not mean that plaintiffs may rest on the allegations of their pleadings, bare assertions or conclusory allegations, suspicions or doubts. Rather they must, by affidavit or otherwise set forth specific facts showing there is a genuine issue for trial. Ness v. Marshall, 660 F.2d 517, 519 (3d Cir.1981). Plaintiffs have not done this despite the closing of discovery and filing of their pretrial narrative and, therefore, we must grant summary judgment in favor of defendants on the § 1981 claim as well.

An appropriate order will issue.

      . Defendants argue and we agree that there is no private right of action to enforce affirmative action obligations under this Executive Order. Black Grievance Committee v. Philadelphia Electric Company, 79 F.R.D. 98, 103, n. 2 (E.D.Pa. 1978); Jackson v. University of Pgh., 405 F.Supp. 607, 611 (W.D.Pa.1975). However, we do not assume that this is the theory on which plaintiffs base their claim since it has not been pleaded.


author: REYNOLDS, Chief Judge.

text:
    The AUSTER COMPANY, Plaintiff, v. MORRIS GOLDMAN, INC., Defendant.
    Civ. A. No. 84-C-927.
    United States District Court, E.D. Wisconsin.
    March 8, 1985.
    Steven R. Radtke, Chicago, Ill., for plaintiff.
    James Adashek, Milwaukee, Wis., for defendant.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

This is an appeal pursuant to 7 U.S.C. § 499g(c) from an order of the Secretary of Agriculture. The case involves a shipment of cherries from the appellant (“Auster”) to the respondent (“Goldman”) in June, 1982. The Secretary of Agriculture, by Judicial Officer Donald A. Campbell, found that there had been a novation to the original contract and ruled in favor of Goldman. An evidentiary hearing on the appeal was held on February 7, 1985, and both sides submitted written arguments. After reviewing all the evidence and considering the arguments of counsel, I conclude that the Secretary of Agriculture correctly ruled in favor of Goldman.

The cherries arrived in Milwaukee on June 15, 1982, the day they were ordered, after Goldman had closed for the day. The cherries were stored overnight in the cooler of a neighboring produce company. On the morning of June 16, the cherries were inspected by Goldman and found to contain excessive spoilage. The testimony and phone records presented by Goldman support the appellee’s version of the telephone conversation that occurred that morning. I find that Auster agent William Doyle agreed to a novation of the original oral contract by telling Morris Goldman and Richard Halbeck that Goldman should handle the cherries for Auster’s account.

Auster argues that once Goldman accepted the cherries by unloading them, Goldman owed the full contract price. Auster emphasizes the cherries were never independently inspected and Goldman provided no dump certificate for the spoiled cherries. At the outset, the Court notes that the acceptance and dump certificate issues were not raised in the Notice of Appeal, which noted only that the evidence did not support a finding of novation, and that the Secretary refused to reconsider based on additional evidence showing the condition of other lots of cherries.

Whether the cherries were accepted or even partially sold prior to the novation is not relevant, and the case law cited by Auster is inapposite. Goldman has fully accounted for the disposition of each box of cherries, including an invoice evidencing the 75 boxes which were dumped, and has tendered the proceeds to Auster less the standard 10% commission for produce sold on account. Evidence related to the condition of other cherries is also not relevant. Goldman had no duty to order a formal inspection after Auster agreed to the novation. Viewing the evidence as a whole, I find that Goldman was authorized to sell the cherries for Auster’s account, and that Goldman fully complied with the terms of that agreement.

Auster has not accepted the amount tendered by Goldman. Consequently, judgment will be entered in favor of Auster for $3,034.80. Furthermore, Goldman’s reasonable attorneys’ fees on appeal will be taxed as costs pursuant to 7 U.S.C. § 499g(c).

IT IS THEREFORE ORDERED that the decision of the Secretary of Agriculture is affirmed.