author: LEISURE, District Judge:

text:
    Hermine HANLIN, Plaintiff, v. Marvin MITCHELSON, Defendant.
    No. 84 Civ. 2443 (PEL).
    United States District Court, S.D. New York.
    Dec. 5, 1985.

      Hermine Hanlin, pro se.
    Clair & Daniele, Bernard Clair, New York City, for defendant.
   OPINION

LEISURE, District Judge:

This matter is before the Court on plaintiff’s motion to compel further discovery, defendant’s cross-motion for summary judgment and plaintiff’s cross-motion to amend the complaint.

Plaintiff, Hermine Hanlin, has asserted a malpractice claim against defendant, Marvin Mitchelson, Esq., arising out of his legal representation of plaintiff in a prior arbitration proceeding. Plaintiff was the managing agent for a singing group, The Manhattans. After a dispute arose out of the partnership agreement between plaintiff and The Manhattans, plaintiff sued the group for breach of contract. Pursuant to the partnership agreement’s arbitration clause the matter was heard and decided by a panel of arbitrators from the American Arbitration Association. During the arbitration proceedings, a counterclaim was made to recover monies that Ms. Hanlin allegedly took from a joint bank account she had with a member of the group, Kenneth Kelly. Ms. Hanlin asserts in this case that Mr. Mitchelson negligently handled this part of the proceeding because he allegedly failed to object to the admission of testimony about this transaction.

Plaintiff initially asserted three claims against Mr. Mitchelson: “intimidation” or intentional infliction of emotional distress, defamation and negligence, or legal malpractice. Defendant moved for summary judgment pursuant to Fed.R.Civ.P. 56, or alternatively, to dismiss the complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6). By memorandum decision, Hon. David N. Edelstein, United States District Judge of this Court, granted defendant’s Rule 12(b)(6) motion and dismissed both the “intimidation” and defamation claims. Judge Edelstein also granted defendant’s summary judgment motion for all but one of plaintiff’s malpractice allegations. Hanlin v. Mitchelson, No. 84 Civ. 2443, slip. op. at 2 (S.D.N.Y. Aug. 23, 1984). Judge Edelstein framed plaintiff’s remaining claim in the following terms:

Plaintiff alleges that at the arbitration defendant negligently failed to object to the counterclaim of one Kenneth Kelly for $26,000.00, on the ground that it was a “personal” matter beyond the scope of the arbitration agreement. The arbitration panel eventually ordered plaintiff to pay Mr. Kelly the sum of $26,750.00____ If this claim was indeed a personal matter beyond the scope of the arbitration, defendant might be liable to plaintiff for not objecting to the panel’s consideration of this claim. Defendant’s memorandum conspicuously omits any response to this allegation.

Id. This allegation of plaintiff’s original complaint is the only claim still at issue in this case.

Turning to the matter presently before the Court, the motion to compel discovery arose out of a deposition of defendant taken by plaintiff on December 20, 1984, beginning at 10:00 a.m. Defendant’s counsel adjourned the deposition at 12:20 p.m. on the ground that the deposition had degenerated into harassment of his client. On December 21, 1984, plaintiff moved under Fed.R.Civ.P. 37 for an order compelling continuation of the deposition before a United States Magistrate. Defendant submitted papers in opposition to plaintiff’s motion to compel and cross-moved for summary judgment dismissing plaintiff’s remaining claim. Defendant’s submission included a copy of Judge Edelstein’s decision, a copy of the entire transcript of the December 20, 1984 deposition, copies of excerpts from the transcript of the arbitration hearing, and portions of “Claimant’s Reply Brief” prepared and submitted by defendant as part of the arbitration proceedings.

Thereafter, on February 20, 1985, plaintiff moved pursuant to Fed.R.Civ.P. 15(a) for leave to serve an amended complaint. The proposed amended complaint alleges that defendant failed to appeal or confirm the arbitration award thereby allowing the statute of limitations to expire.

For the reasons presented below, plaintiff’s motions to compel a second deposition and to amend the complaint are denied. Defendant’s motion for summary judgment is granted and the complaint is dismissed.

The Motion to Compel Discovery

Consistent with Judge Edelstein’s prior order, plaintiff was entitled to inquire into only one aspect of her contention that the defendant negligently represented her in his professional capacity. Specifically, this issue, related to the arbitration panel’s finding that Ms. Hanlin had to return approximately $26,000 to Kenneth Kelly, one of the group’s members. A careful reading of the deposition transcript demonstrates that Ms. Hanlin had a full and fair opportunity to explore this issue with Mr. Mitchel-son. The deposition transcript reveals that, although the questioning began in a good faith attempt to depose Mr. Mitchel-son, the proceeding deteriorated into a vexatious, repetitive and haranguing inquisition beyond the scope of the issues in the case. After what appeared to have been an exhaustion of the $26,000 issue, plaintiff insisted on pursuing several unrelated issues, including why Mr. Mitchelson did not appeal the final arbitration decision and whether Mr. Mitchelson was unable to represent her adequately due to his purported bias about her alleged embezzlement of funds. Finally, when asked a question about the representation he provided, Mr. Mitchelson answered that he provided plaintiff with the best defense of which he was capable. Plaintiff stated that she agreed. Deposition Tr. at 41.

My review of the deposition transcript leads me to conclude that resumption of the deposition would be inefficacious. Plaintiff’s motion is therefore denied.

In denying this motion, however, the Court must consider whether defendant’s counsel proceeded in a proper and orderly fashion when he adjourned the deposition. In essence, what is before the Court is a motion by defendant to terminate the examination under Fed.R.Civ.P. 30(d). Rule 30(d) provides:

Motion to Terminate or Limit Examination. At any time during the taking of the deposition, on motion of a party or of the deponent and upon a showing that the examination is being conducted in bad faith or in such manner as unreasonably to annoy, embarrass, or oppress the deponent or party, the court in which the action is pending ... may order the officer conducting the examination to cease forthwith from taking the deposition____ If the order made terminates the examination, it shall be resumed thereafter only upon the order of the courtin which the action is pending. Upon demand of the objecting party or deponent, the taking of the deposition shall be suspended for the time necessary to make a motion for an order.

Rule 30(d) is the only provision allowing the interruption of a deposition. The proper procedure to follow when an objection is raised to a question propounded in a deposition is for the attorney who raises the objection to note his objection but to allow the question to be answered. Perrignon v. Bergen Brunswig Corp., 77 F.R.D. 455, 461 n. 4 (N.D.Cal.1978), citing Ralston Purina Co. v. McFarland, 550 F.2d 967, 973-74 (4th Cir.1977).

The problem presented in this case is that, although several aspects of the instant deposition fall squarely within the Rule 30(d) requirement of unreasonableness and oppression of the deponent, defense counsel never made a Rule 30(d) motion to the Court to terminate the examination. In fact, defense counsel went so far as to arrogate to himself the right to terminate the examination in a unilateral fashion without consideration of the applicable legal authority. Deposition Tr. at 79-82. This tactic contravenes the requirement that an application to terminate must be made to the court.

It is not the prerogative of counsel, but of the court, to rule on objections. Indeed, if counsel were to rule on the propriety of questions, oral examinations would be quickly reduced to an exasperating cycle of answerless inquiries and court orders. Alternatively, if the plaintiffs’ attorney believed that the examination was being conducted in bad faith ... or that the deponents were being needlessly annoyed, embarrassed, or oppressed, he should have halted the examination and applied immediately to the ex parte judge for a ruling on the questions, or for a ruling on the questions or for a protective order, pursuant to Rule 30(d).

Shapiro v. Freeman, 38 F.R.D. 308, 311—12 (S.D.N.Y.1965) (footnotes omitted). While the Court deems it appropriate to deny plaintiff’s motion to resume the deposition, counsel for defendant is admonished that in the future he should endeavor to adhere conscientiously to the orderly procedures governing the conduct of depositions provided for in the Federal Rules of Civil Procedure.

The Motion for Summary Judgment

Next, defendant has moved to dismiss plaintiff’s allegation that defendant negligently failed to object to the questioning about Kenneth Kelly’s counterclaim for $26,750 on the ground that it was a “personal” matter beyond the scope of the arbitration. Both parties rely on New York legal authorities in their papers, as it appears New York law applies in this case. An action for legal malpractice requires proof of the following elements: negligence by the attorney that proximately caused the loss sustained and proof of actual damages. See e.g., Freschi v. Grand Coal Venture, 564 F.Supp. 414, 415 (S.D.N. Y.1983); O’Brien v. Spuck, 99 A.D.2d 910, 911, 472 N.Y.S.2d 514, 516-17 (3d Dep’t 1984); Fidler v. Sullivan, 93 A.D.2d 964, 965, 463 N.Y.S.2d 279, 280 (3d Dep’t 1983); Mendoza v. Schlossman, 87 A.D.2d 606, 607, 448 N.Y.S.2d 45, 46 (2d Dep’t), appeal withdrawn, 57 N.Y.2d 778 (1982). Thus, in order to prevail, plaintiff must demonstrate that but for the alleged acts of malpractice, she would have been able to recover or proceed in a manner other than that which actually occurred. See, e.g., Parker, Chapin, Flattau & Klimpl v. Daelen Corp., 59 A.D.2d 375, 378-79, 399 N.Y.S.2d 222, 224 (1st Dep’t 1977); Becker v. Julien, Blitz & Schlesinger, P.C., 95 Misc.2d 64, 68, 406 N.Y.S.2d 412, 414 (Sup.Ct.N.Y.Co.1977), modified on other grounds, 66 A.D.2d 674, 411 N.Y.S.2d 17 (1st Dep’t 1978), motion for appeal dismissed, 47 N.Y.2d 761, 417 N.Y.S.2d 464, 391 N.E.2d 300 (1979). There is no question that plaintiff sustained a loss. However, as I explain below, the loss was not incurred due to Mr. Mitchelson’s lack of diligence in her defense.

Defendant’s alleged failure to object during the arbitration hearings cannot substantiate a claim of legal malpractice for several reasons. First, although defendant did not object to the questions that led to plaintiff’s testimony during the arbitration hearing about the Kelly transaction, he did object to the relevancy of this information in the post-hearing Reply Brief submitted on plaintiff’s behalf. Second, there were legitimate reasons for defendant not to object during the hearing. The counterclaim for the $26,750 had not been asserted formally until a claim was made for it in The Manhattans’ post-hearing Memorandum of Law. Plaintiff’s testimony about the transaction appeared to be relevant with respect to the fiduciary relationship that existed between Ms. Hanlin in her capacity as business manager for The Manhattans and the initial counterclaim that they had asserted against her. Indeed, plaintiff herself testified that the group’s breach of contract led her to believe that she could offset the group’s debt to her by taking the money from Mr. Kelly’s account. Arbitration Tr. at 629-31. Thus plaintiff’s own testimony demonstrates that the Kelly claim was not necessarily personal in nature and therefore did not constitute a subject beyond the scope of the arbitration agreement.

In this light, had Mr. Mitchelson not objected at all, no legitimate legal malpractice claim would exist. Mr. Mitchelson ignored the subject during cross-examination in part as a reaction to The Manhattans’ counsel’s “continued wavering on this topic.” He did not want to underscore the same.

Nor did I wish to emphasize this most troublesome aspect of the litigation for it was obvious to me that, whether or not the issue could be heard by the Panel, the occurrence in and of itself evinced only negative implications as it affected the singing group’s claim that plaintiff had never acted in their best interest. Insofar as a good part of the case turned on credibility, I believed it to be in plaintiff’s litigation interests to “steer away” from the shoals of this potentially devastating testimony.

Defendant’s Supp.Aff. at 3. It is well settled that an attorney cannot be held liable for malpractice for discretion exercised during the course of a litigation.

In a litigation a lawyer is well warranted in taking chances. To some extent litigation is a game of chance. The conduct of a lawsuit involves questions of judgment and discretion as to which even the most distinguished members of the profession may differ. They often present subtle and doubtful questions of law. If in such cases a lawyer errs on a question not elementary or conclusively settled by authority, that error is one of judgment for which he is not liable.

Byrnes v. Palmer, 18 A.D. 1, 4, 45 N.Y.S. 479, 481-82 (2d Dep’t 1897), aff'd, 160 N.Y. 699, 55 N.E. 1093 (1899). See also, Fidler v. Sullivan, 93 A.D.2d 964, 463 N.Y.S.2d 279, 281 (3d Dep’t 1983) (trial counsel’s errors and omissions are insufficient to support an action for malpractice, citing Byrnes v. Palmer, supra); Parksville Mobile Modular, Inc. v. Fabricant, 73 A.D.2d 595, 422 N.Y.S.2d 710, 717 (2d Dep’t 1979) (“an attorney may take chances”, citing Byrnes v. Palmer, supra), appeal dismissed, 49 N.Y.2d 801 (1980); Siegel v. Kranis, 29 A.D.2d 477, 479, 288 N.Y.S.2d 831, 834 (2d Dep’t 1968), modified on other grounds, 34 A.D.2d 988, 312 N.Y.S.2d 540 (2d Dep’t 1970); Rapuzzi v. Stetson, 160 A.D. 150, 157, 145 N.Y.S. 455, 461 (3d Dep’t 1914). Mr. Mitehelson’s decision about how he should handle the matter that arose involved questions of judgment and discretion concerning trial tactics. Any error that he may have committed does not amount to malpractice.

This is relevant to a third factor. It is undisputed that defendant did not learn about the transaction, which occurred in or around January of 1982, until The Manhattans’ lawyer elicited this information from Ms. Hanlin during the arbitration hearing. Deposition Tr. at 27. An attorney does have the responsibility to “investigate and prepare every phase” of his client’s case. Parksville Mobile Modular, Inc., supra, 73 A.D.2d at 598, 422 N.Y.S.2d at 715. However, an attorney should not be held liable for his ignorance due to a client’s failure to apprise him of all of the facts. Id.

These considerations lead me to conclude that there are no material questions of fact to be resolved on plaintiff’s claim of legal malpractice. Fed.R.Civ.P. 56(e). Defendant’s motion for summary judgment with respect to plaintiff’s last remaining claim is granted.

Plaintiffs Motion to Amend the Complaint

Fed.R.Civ.P. 15(a) requires the court to grant leave to amend a pleading freely “when justice so requires.” Leave to amend should be freely given “[i]n the absence of any apparent or declared reason— such as undue delay, bad faith or dilatory motive on the part of the movant, ... undue prejudice to the opposing party by virtue of allowance of the amendment, futility of the amendment, etc.” Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962); See Poloron Products, Inc. v. Lybrand Ross Bros. & Montgomery, 72 F.R.D. 556, 560 (S.D.N.Y.1976).

Plaintiff’s proposed new cause of action alleges that defendant committed malpractice by not confirming the arbitration award in accordance with New York law. N.Y.Civ.Prac.Law § 7510 (McKinney 1980). Section 7510 provides as follows: “The court shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in Section 7511.” A court properly may dismiss a petition to confirm an arbitration award that is filed after the one-year period for making such an application has expired. Teacher’s Ass’n of Tarry-towns v. Tarrytown Board of Education, 59 A.D.2d 890, 399 N.Y.S.2d 45, 46 (2d Dep’t.1977). It is true that the one-year limitation to confirm has expired and no application to confirm has been made. The arbitration decision was rendered on December 23, 1982, and a clarification of the award was rendered on February 18, 1983. The final date to confirm the award presumably was on or around February 17, 1984. On these facts alone, plaintiff would have a claim.

However, there are three reasons which preclude plaintiff from obtaining leave to amend her complaint. The purpose of amending a pleading “is to assert matters that were overlooked or were unknown ... at the time ... [of the] original complaint or answer.” Smiga v. Dean Witter Reynolds, Inc., 766 F.2d 698, 703 (2d Cir.1985), citing 6 C. Wright & A. Miller, Federal Practice and Procedure: Civil § 1473 (1971). Ms. Hanlin filed the complaint in this action on April 6, 1984, at which time the statute of limitations for confirming the award had already expired. Therefore, the matter existed and was known to Ms. Hanlin at the time of the original complaint. Although the original complaint refers to defendant’s representation that there was no basis for a good faith appeal of the arbitration award, nowhere does she allude to defendant’s failure to confirm the award. Second, allowing an amendment would be prejudicial to defendant because discovery has been completed and plaintiff waited until after the summary judgment motion was filed to assert this claim. Ansam Associates, Inc. v. Cola Petroleum, Ltd., 760 F.2d 442, 446 (2d Cir.1985).

Third, count twenty-four of the original complaint alleges that in May 1983, between the date of the arbitrators’ decision and the expiration of the time to confirm, plaintiff “retained another attorney” to pursue her claim that defendant’s negligence had forced her to forfeit her right to appeal. Exhibits L, N, and P, attached to the complaint, indicate that the allegations contained in plaintiff’s proposed amended complaint are frivolous. See Lerman v. Chuckleberry Publishing, Inc., 544 F.Supp. 966, 968 (S.D.N.Y.1982) (unless a proposed amendment is clearly frivolous or legally insufficient on its face, the substantive merits of a claim or defense should not be considered on a motion to amend), rev’d on other grounds sub nom., Lerman v. Flynt Distributing Co., 745 F.2d 123 (2d Cir.1984), cert. denied,—U.S.-, 105 S.Ct. 2114, 85 L.Ed.2d 479 (1985).

The exhibits to the original complaint indicate that before the time in which to confirm the award expired, Ms. Hanlin twice requested that Mr. Mitchelson refund to her his fee of $25,000. See Exhibit L, Letter from Hermine Hanlin to Marvin Mitchelson, Esq. (March 28, 1983); Exhibit N, Letter from Hermine Hanlin to Marvin Mitchelson, Esq. (April 6, 1983). Those requests are the equivalent of the termination of the attorney-client relationship. This conclusion would have been confirmed on May 24, 1983 when Mr. Mitchelson received a letter from Neal Rosenberg, Esq. indicating that Mr. Rosenberg had been retained by plaintiff in the matter of the arbitration award and to inquire into defendant’s failure to apply for a modification of the award. See Exhibit P, Letter from Neal Howard Rosenberg, Esq., to Marvin Mitchelson, Esq. (May 24, 1983). Under these circumstances, it is clear that plaintiff had fired defendant and hired other counsel to handle the matter. To permit plaintiff to amend her complaint to assert this meritless claim would be an exercise in futility. Accordingly, plaintiff’s motion for leave to amend the complaint is denied.

Conclusion

Plaintiff’s motion to resume defendant’s deposition is denied. Plaintiff’s motion to amend the complaint is denied. Defendant’s motion for summary judgment dismissing the complaint is granted.

SO ORDERED.

      . Article XVI of the Partnership Agreement states "that disputes arising under this agreement ... shall be submitted to arbitration in accordance with the arbitration laws of the State of New York.”

      . The following documents have been reviewed in the determination of these motions: plaintiffs complaint, dated April 6, 1984, and the exhibits thereto, Judge Edelstein’s August 23, 1984 decision, plaintiff’s motion to compel discovery dated December 21, 1984, defendant’s motion for summary judgment dated January 7, 1985, the transcript of the December 20, 1984 deposition of defendant taken by plaintiff, portions of the transcript of the arbitration proceedings dated June 9 and 10, 1982, the post-arbitration hearing briefs, plaintiff's motion to amend the complaint dated February 20, 1985, defendant's affidavit in opposition to the cross-motion dated March 1, 1985, plaintiffs letter to the Court dated July 17, 1985, defendant’s letter to the Court dated July 25, 1985, defendant’s supplementary affidavit dated August 21, 1985 and plaintiffs supplementary affidavit dated August 26, 1985.


source: Caselaw Access Project

author: H. FRANKLIN WATERS, Chief Judge.

license: Public Domain

text:
    CONSOLIDATED NATURALS, INC., an Arkansas Corporation; and M & M Sales, Inc., an Arkansas Corporation, Plaintiffs, v. WM. T. THOMPSON CO., a Missouri Corporation, Defendant.
    Civ. No. 85-5140.
    United States District Court, W.D. Arkansas, Fayetteville Division.
    Dec. 5, 1985.

      Ronald L. Boyer, of Croxton & Boyer, Rogers, Ark., for plaintiffs.
    Hillary Rodham Clinton and Jerry C. Jones, of Rose Law Firm, Little Rock, Ark., for defendant.
   MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

The issue before the court is whether this matter should be stayed pending arbitration of the disputes which have arisen as a result of two separate contracts entered into between the plaintiffs and the defendant. The first of the contracts between plaintiff, Consolidated Naturals, Inc. (Consolidated), appoints Consolidated “as a nonexclusive distributor to sell and distribute Thompson’s products to companies and firms such as retailers which resell the products to retail customers.” In the agreement, Consolidated agrees to purchase certain products from defendant, Wm. T. Thompson Co. (Thompson), and to do the things necessary to distribute these products to retailers. The second contract, dated November 2, 1984, purports to appoint the other plaintiff, M & M Sales, Inc. (M & M), as Thompson’s broker with the exclusive right to act as its broker within a prescribed territory. The agreement provides that the broker will maintain a business organization necessary to solicit and promote the sale of Thompson products, and that the broker will be paid for its services “a commission of five percent (5%) of the net invoice value of shipments by Broker of Thompson products to retailers and distributors located in the Territory.”

The two contracts contain identical arbitration clauses as follows:

10. Any dispute between the parties hereto arising under or out of this Agreement shall be settled by arbitration under the then applicable Commercial Arbitration Rules of the American Arbitration Association, which shall govern the method of selecting arbitrators and the procedure of the arbitration. All arbitration proceedings shall be conducted in Los Angeles, California. Any award made pursuant to arbitration may be entered as a judgement by any court of competent jurisdiction on the application of any party to said arbitration. The person(s) or tribunal conducting the arbitration shall have the authority to award fees and costs, as it, in its sole descretion [sic], deems appropriate.

In addition to agreeing that any disputes arising between them would be arbitrated, the parties further explicitly agreed that “the provisions of this agreement for all purposes shall be governed by the laws of the State of California.” (¶ 12 of each Agreement).

It is alleged, and it appears to be agreed, that the purpose of the agreements was to provide a vehicle through which Thompson’s natural food products would be distributed to a mass merchandiser, Wal-Mart Corporation. Each of these agreements provided that they would be in effect for a period of one year, but that either party could “at any time upon thirty (30) days prior notice in writing to the other terminate this agreement for any reason whatsoever.” (¶ 7 of each Agreement). This litigation arose because Thompson terminated the agreements pursuant to this clause by means of a letter of termination dated March 15, 1985. This termination letter was attached to the complaint as Exhibit C.

Plaintiffs brought this lawsuit seeking damages on the following legal theories: (1) that the agreements between the parties represent franchises under Arkansas law and that the agreements were wrongfully terminated; (2) that Thompson breached its agreement with M & M; (3) that Thompson wrongfully terminated the agreements with the plaintiffs; (4) that plaintiffs have incurred expenses under the contracts and have benefited the defendant and are entitled to restitution on a quantum meruit theory; and (5) that Thompson tortiously interfered with plaintiffs’ business relationship with Wal-Mart.

Defendant Thompson then moved that the court stay the proceedings pending arbitration. Also, apparently as a precautionary measure because it was not certain that a motion to stay was a responsive pleading within the provisions of the Federal Rules of Civil Procedure, Thompson also moved to dismiss the matter. In the portion of the motion relating to stay of the proceedings, Thompson only requested that the court “stay plaintiffs’ complaint and the trial of any action thereon until arbitration has been had in accordance with the terms of the agreements pursuant to 9 U.S.C. § 3.” Defendant did not ask that this court enforce the arbitration clause or in any other manner enforce the agreements between the parties.

In their brief filed in this matter, plaintiffs seemed to concede that the disputes between the parties are of the general type covered by the Federal Arbitration Act. In this respect, plaintiffs say:

Plaintiff is willing to concede that the transactions which gave birth to this lawsuit are within Congress’s power to regulate under the Commerce Clause of the United States Constitution, given the extremely broad interpretation the courts have given this clause. Therefore, were it not for the two grounds that the Plaintiffs have for revoking this provision of the contract, these issues and causes of action would be referrable to arbitration as provided by the writings evidencing a portion of the contract between the parties. It is, however, the position of the Plaintiffs that the Arkansas Wingo Act prohibits the Defendant from using an Arkansas court to enforce the arbitration clause of its contract and that the Arkansas Franchise Act renders this provision void and therefore removes it from the coverage of the Federal Arbitration Act.

WINGO ACT

Plaintiffs assert that the defendant is prohibited from enforcing the arbitration provisions of the contract by reason of the provisions of what is known as the Wingo Act, Ark.Stats.Ann. 64-1202. This provision of Arkansas law prohibits a foreign corporation which does business in Arkansas without properly qualifying in this state from enforcing its contracts in the courts of Arkansas. This contention has no merit for at least two reasons. In the first place, as pointed out above, defendant does not request that this court enforce its contracts. Defendant has not asked that this court order the plaintiffs to do anything. Instead, it has merely asked the court to stay the proceedings pending arbitration as is required by a federal statute, section 3 of the Federal Arbitration Act. In other words, defendant does not request that the arbitration provisions be enforced. Rather, it has simply asked the court to take the action which Congress required by passage of section 3 of the Federal Arbitration Act. That section provides that the federal courts will stay any proceeding involving disputes which the parties have agreed to arbitrate until such arbitration is had.

Thus, the court believes that plaintiffs’ reliance upon the Wingo Act is misplaced. If the motion for stay of proceedings is granted, the court will not be ordering anyone to do anything. Instead, it will merely stay these proceedings until the disputes are arbitrated as provided for in the agreements.

In any event, even if the Wingo Act would generally apply to proceedings such as this one, the court is convinced that that Act would still not bar the court from staying these proceedings. The contracts in dispute clearly contemplate transactions in interstate commerce, and as indicated above, the plaintiffs appear to concede this is true in their briefs. The Arkansas Supreme Court and the federal courts of Arkansas have previously held that this act does not preclude foreign corporations not authorized to do business in this state from suing in the courts of this state on contracts made outside the state. See Brown Broadcast, Inc. v. Pepper Sound Studios, Inc., 242 Ark. 701, 416 S.W.2d 284 (1967), and United Press Int'l, Inc. v. Hemreich, 241 Ark. 36, 406 S.W.2d 317 (1966). Furthermore, the courts have also held that the Act does not prevent action in contracts relating to transactions in interstate commerce. See Rose’s Mobile Homes, Inc. v. Rex Finance Corp., 383 F.Supp. 937 (W.D. Ark.1974).

For the reasons stated above, the court finds that the Wingo Act does not bar the defendant from moving, pursuant to section 3 of the Federal Arbitration Act, for a stay of proceedings pending arbitration, or deter this court in any way from staying such proceedings if it appears that the Federal Arbitration Act applies.

ARKANSAS FRANCHISE ACT

The plaintiffs next contend that the provisions of the Arkansas Franchise Act, Ark.Stats.Ann. §§ 70-808 et seq., and particularly section 70-813 of such Act, “renders the arbitration clause of the contractual relationship between the parties revocable.” It is not at all clear either from a reading of plaintiffs’ brief or the Act the basis for such contention, even if the Act applies to the relationship between the parties. In any event, the court is convinced that the Act does not apply to the relationship created by the agreements which were attached to the complaint.

Ark.Stats.Ann. § 70-808 clearly and unambiguously provides that “franchise” shall mean “a written or oral agreement for a definite or indefinite period, in which a person grants to another person a license to use a trade name, trademark, service mark or related characteristic within an exclusive territory, or to sell or distribute goods or services, within an exclusive territory. ” (emphasis supplied). A mere reading of paragraph 1 of the agreement between Consolidated and Thompson should remove all doubt about whether that provision creates a relationship which comes within the meaning of “franchise” as defined by the Arkansas Franchise Practices Act. That provision clearly and explicitly provides that the arrangement between the parties will be that of a “non-exclusive distributor.” Thus, the agreement between Consolidated and Thompson does not create a franchisor-franchisee relationship between the parties covered by the Arkansas Franchise Practices Act.

The court is equally convinced that the agreement between M & M and Thompson likewise does not create a relationship which is covered by the Act. The Act provides that, in order for a relationship to be considered a “franchise,” the person must be granted “a license to use a trade name, trademark, service mark or related characteristic within an exclusive territory, or to sell or distribute goods or services within an exclusive territory.” The agreement between M & M and Thompson clearly does not create such a relationship. Instead, it appoints M & M as a broker, and “grants to broker the exclusive right to act as broker for the solicitation of shipments of products of Thompson to retailers and distributors.” It obviously does not contemplate the exclusive use of a trade name, trademark, service mark or related characteristic within the territory, nor does it provide that M & M will have the exclusive right to sell or distribute goods or services within an exclusive territory. Instead, it grants M & M only the right to solicit shipments, and does not even grant it the right to make any sales as that term is normally understood. Paragraph 4 of the agreement provides that: “All orders of products of Thompson taken by broker from buyers shall be at prices and upon terms as specified from time to time by Thompson. Broker shall forward all orders promptly to Thompson, and each order shall be subject to Thompson’s acceptance.” M & M was a broker authorized to solicit shipments, and nothing more. It was not given the exclusive right to sell goods within the territory, and in fact, clearly had no right to make any sales. It could solicit orders which could be either accepted or refused by Thompson. The relationship was not a franchise as that term is defined in the Arkansas Franchise Act.

Similar issues were faced by the Supreme Court of Wisconsin in Foerster, Incorporated v. Atlas Metal Parts Company, 105 Wis.2d 17, 313 N.W.2d 60 (1981), and the Court of Appeals for the Seventh Circuit in Wilburn v. Cartwright, 719 F.2d 262 (7th Cir.1983). In these cases, the courts, construing the Wisconsin Fair Dealership Law with strikingly similar provisions, held that a manufacturer’s representative is not a “dealer” within the meaning of that Act because a manufacturer’s representative was authorized only to solicit orders and was not granted the right to sell or distribute goods as was required in order for the Act to apply.

OTHER CONTENTIONS OF PLAINTIFFS

Plaintiffs also contend that portions of their alleged cause of action based upon quantum meruit and tortious interference with business relationship do not arise out of the agreements and, thus, are not arbitrable. In addition, they contend that they are entitled to a jury trial on the question of arbitrability pursuant to the provisions of 9 U.S.C. § 4.

The court will consider the “easiest” contention first. Plaintiffs’ reliance upon section 4 of the Federal Arbitration Act is totally misplaced. Section 4 provides that a party to an arbitration agreement may petition a federal court to enforce the provisions of the agreement. In other words, the party who desires to arbitrate pursuant to an agreement may ask a federal court with jurisdiction to order the other party to comply with the terms of the agreement and arbitrate. Section 4 then goes on to provide that, under certain circumstances, a party is entitled to a jury trial to determine whether the particular question is arbitrable. Neither party in this case has asked this court to enforce the arbitration proceedings, thus, plaintiffs’ contention that they are entitled to a jury in this case is without merit.

Plaintiffs’ additional arguments that an alleged cause of action for tortious interference with contracts and one based on quantum meruit do not arise under the contract and are not arbitrable also appear to be without merit. Courts have broadly-interpreted the Federal Arbitration Act holding that it encompasses almost every conceivable dispute that arises out of the contract, including the breach of a fiduciary duty, breach of contract, tortious interference with contractual relationships, fraud in inducement, unconscionability, and unjust enrichment. Janmort Leasing, Inc. v. Econo-Car Int’l, Inc., 475 F.Supp. 1282 (E.D.N.Y.1979). In any event, the court does not believe that it is necessary for it to determine those issues, since, as already indicated, neither party has asked this court to do anything other than to stay any further proceedings in this matter until arbitration is had in the time and manner agreed to by the parties.

SUMMARY

9 U.S.C. § 3 directs that federal courts such as this one, after once determining that the parties have agreed to arbitration, “stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.” Courts construing the act have consistently held that arbitration clauses placed in contracts by the parties are to be liberally construed in favor of arbitration, and doubts are to be resolved so as to require it. Lundgren v. Freeman, 307 F.2d 104 (9th Cir.1962); Metro Indus. Painting Corp. v. Terminal Const. Co., 287 F.2d 382 (2d Cir.1961), cert. denied, 368 U.S. 817, 82 S.Ct. 31, 7 L.Ed.2d 24. See also Lundell v. Massey-Ferguson Services N.V., 277 F.Supp. 940 (N.D.Iowa 1967); Greenwich Marine, Inc. v. S.S. Alexandra, 225 F.Supp. 671 (D.C.N.Y.1964), aff'd, 339 F.2d 901 (2nd Cir.1965); Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402 (2d Cir.1959), cert. dismissed, 364 U.S. 801, 81 S.Ct. 27, 5 L.Ed.2d 37. Thus, the court believes that it has no choice but to stay these proceedings irrespective of how the court might feel about whether that is the most expeditious and economical path to be followed in this case. It should be remembered that the parties made the agreement, not the court, and the court is convinced that the plaintiffs agreed to arbitrate any disputes in Los Angeles, California, in the manner provided by paragraph 10 of the respective agreements. Once having done so, they have no right to attempt to litigate those issues in this or any other court until the arbitration process is completed, and this court has no right to allow them to do so. An order will be entered staying any further proceedings in this matter until proof is furnished to the court that the arbitration process required by the agreements between the parties is completed.

This matter will be placed in an inactive status pending the disposition of the arbitration process, without prejudice to the right of the parties to reopen the proceedings for good cause shown for the entry of any stipulation or order, or for any other purpose required to obtain a final determination of the litigation.


author: LUONGO, Chief Judge.

text:
    William S. RICKARDS, Jr. and Colette S. Rickards v. The UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; Samuel R. Pierce, Jr., Secretary of the United States Department of Housing and Urban Development; Joseph Russell, Chief, Loan Management Branch, Philadelphia Area Office; and Southeast Mortgage Company.
    Civ. A. No. 85-2226.
    United States District Court, E.D. Pennsylvania.
    Dec. 5, 1985.

      Mark A. Kaufman, Chester, Pa., for plaintiffs.
    Edward T. Ellis, Asst. U.S. Atty., Philadelphia, Pa., for defendants.
   OPINION

LUONGO, Chief Judge.

Plaintiffs, William and Colette Rickards, seek judicial review of the decision of the United States Department of Housing and Urban Development (“HUD”) rejecting their application for an assignment of their mortgage. The parties have filed cross-motions for summary judgment. For the reasons which follow, I will remand the matter to HUD for reconsideration.

In April 1983, plaintiffs purchased a home with a loan secured by a mortgage which was assigned to mortgagee Southeast Mortgage Company in May 1983. The mortgage was insured by HUD pursuant to § 221(d)(2) of the National Housing Act. See 12 U.S.C. § 1709. After falling three months behind on their payments, plaintiffs were notified by'Southeast Mortgage Company on June 12, 1984, that it intended to foreclose on the mortgage.

Pursuant to § 1715u of Title 12 of the United States Code, the Secretary of HUD is authorized to accept an assignment of the loan and security on any HUD-insured mortgage for the purpose of avoiding foreclosure. See 12 U.S.C. § 1715u, 24 C.F.R. §§ 203.650-60. The request for assignment may come from the mortgagee or mortgagor. 24 C.F.R. § 203.652. In this instance, Southeast Mortgage Company did not request the assignment because it determined that the plaintiffs were not eligible.

HUD may only accept assignment of a mortgage when six conditions are satisfied. 24 C.F.R. § 203.650(a). The operative requirement for the purposes of this action is that the default must have been “caused by circumstances beyond the mortgagor’s control which render the mortgagor unable to correct the delinquency within a reasonable time or make full mortgage payments.” 24 C.F.R. § 203.650(a)(5). Plaintiffs applied to HUD for an assignment of their mortgage. HUD rejected the application. The Rickards then commenced the instant action for review of HUD’s decision, contending that HUD’s determination was arbitrary, capricious, and an abuse of discretion.

In reviewing HUD’s decision, my role is limited to determining whether the agency’s action was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A); Anderson v. United States Dept. of Housing and Urban Development, 701 F.2d 112 (10th Cir.1983). The reviewing court must “consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment ... but may not substitute its judgment for that of the agency.” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 824, 28 L.Ed.2d 136 (1971).

In its initial rejection of plaintiffs’ request for an assignment, HUD stated that it could not accept the assignment because it had determined that the default was not caused by circumstances beyond the plaintiffs’ control, and further, that there was no reasonable prospect that the plaintiffs would be able to resume full mortgage payments after a temporary period of reduced or suspended payments. Pursuant to plaintiffs’ request, an appeal conference was held at the HUD office on November 20, 1984. In its letter of January 17, 1985, notifying plaintiffs of its final decision to reject their application, HUD stated that the loss of income resulting from Mr. Rickards’ job dismissal was the cause of the default, and that plaintiffs had failed to demonstrate that this was a circumstance beyond their control.

The facts in the administrative record are as follows: William Rickards was dismissed from his job on February 20, 1984. His employer stated that he was fired for leaving work without permission and failing to punch his time card as required. Rickards applied for unemployment benefits which were denied by the referee of the Pennsylvania Unemployment Compensation Board of Review on the ground that Rickards had been dismissed for “willful misconduct.” The Pennsylvania Unemployment referee found that Rickards had earlier been warned regarding violations of work rules and knew or should have known that his actions would result in termination. Section 402(c) of the Pennsylvania Unemployment Law provides that a claimant who is dismissed for “willful misconduct,” i.e., actions of an intentional or deliberate nature which violate the employer’s rules or standards of conduct, is ineligible for benefits. 43 P.S. § 802(e) (1964).

Plaintiffs assert that HUD impermissibly accepted the referee’s decision as dispositive of whether termination of employment was a circumstance beyond Mr. Rickards’ control. But the administrative record also contains a statement by Mr. Rickards’ employer that Rickards was dismissed for leaving work without permission and for not punching out his time card as required. The determination of the Unemployment Compensation Board of Review was, accordingly, not the sole basis for HUD’s finding that Mr. Rickards’ termination was not a circumstance beyond his control and, in any event, it was proper for the agency to consider the referee’s decision, along with Rickards’ failure to appeal, as evidence that the circumstances of termination were within his control.

There was also evidence in the administrative record that on March 11, 1983, William Rickards was involved in an altercation at about 1:00 a.m. while driving home from work on Route 252 near Newtown, Pennsylvania. According to Rickards, two youths ran his car into the curb and physically threatened him. While attempting to defend himself, Rickards allegedly stabbed one of the men in the stomach. Rickards was arrested on June 23, 1983 on charges arising out of this incident. A jury convicted Rickards of assault in November 1983. Rickards incurred $4,576.30 in legal fees and costs in his defense. Thereafter, the trial judge granted Rickards a new trial. At the second trial, Mr. Rickards entered into a plea bargain and received a sentence of three years’ probation for pleading guilty to the assault charge.

Plaintiffs contend that HUD failed to consider the altercation and subsequent arrest and conviction as a cause of his job termination. At the HUD conference held on November 20, 1984, Mr. Rickards expressed the belief that his dismissal came about because of his arrest and conviction for assault. On the initial HUD application, Rickards made no such assertion. Plaintiffs produced no evidence to indicate that Mr. Rickards’ arrest and conviction caused the job loss. It could not have been due to time lost in connection with the proceedings, because the record indicates that Rickards missed only six days of work between the date of the incident and the date of his trial, and he did not miss any time in the months immediately preceding, during, or following his trial.

In their brief, plaintiffs assert that as a result of the stress of Mr. Rickards’ trial, he suffered “a maladaptive reaction with impaired occupational functioning.” Plaintiffs assert that this ailment was a cause of Mr. Rickards’ job termination, and was a circumstance beyond his control. Although plaintiffs claim that they raised this issue at the appeal conference and that “it [was] not reflected in the notes taken by HUD,” it appears that this issue was raised for the first time in their brief filed in this court. The contention therefore merits no consideration, and further, there is no support for it in the record.

Plaintiffs also assert that HUD failed to consider Mr. Rickards’ arrest and conviction as a possible cause of the default on the mortgage. In their initial HUD application the plaintiffs stated that “[h]igh legal fee expenditure depleted all cash reserves.” Plaintiffs produced a statement dated November 13, 1984, showing that $4,050.00 in legal fees had been paid to that date, with an unpaid balance of $326.30. The statement does not reflect when the payments were made. A bank statement dated November 12, 1984, showing a zero savings account balance, was also submitted by the plaintiffs, but no detail was offered to show expenditures from that savings account for legal expenses or otherwise.

HUD determined that Mr. Rickards’ job termination was the cause of the default. Rickards was dismissed on February 20, 1984. The plaintiffs made mortgage payments on March 5, 1984, March 30, 1984, and on May 31, 1984. This last payment, made possible by a gift from Rickards’ church, was applied to March 1984. Although the record indicates that the plaintiffs had frequently been late in making mortgage payments, they had never before been three months behind in their payments and the mortgage company for the first time declared the mortgage in default after Mr. Rickards lost his job.

When an administrative decision is subject to judicial review, the agency must indicate the grounds for its decision so that the court may properly determine whether the agency has abused its discretion. See Matlovich v. Secretary of the Air Force, 591 F.2d 852, 857 (D.C.Cir.1978). The HUD examiner wrote “(the accident does not apply)” under the section for comments regarding the applicants’ failure to meet the eligibility criteria. It is not at all clear from that notation whether the incident was considered by the HUD examiner and rejected as a potential cause of the default, or whether the incident was determined by the examiner to be entitled to no consideration at all.

The Supreme Court has stated that a reviewing court must assure itself that the agency’s decision was “based on a consideration of the relevant factors.” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. at 415, 91 S.Ct. at 823. A decision of “less than ideal clarity” will be upheld if the agency’s rationale “may reasonably be discerned.” Bowman Transportation, Inc. v. Arkansas-Best Freight Systems, Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 442, 42 L.Ed.2d 447 (1974), reh. denied, 420 U.S. 956, 95 S.Ct. 1340, 43 L.Ed.2d 433 (1975).

In Butler v. HUD, 595 F.Supp. 1041 (E.D.Pa.1984), the plaintiffs purchased a home which was financed by a HUD-insured mortgage. In 1970, Mr. Butler was severely injured, became partially disabled, and plaintiffs’ joint income declined. In 1982, after being threatened with foreclosure, plaintiffs applied to have their mortgage assigned to HUD. HUD rejected the request, determining that the default had not been caused by reasons beyond the control of the plaintiffs and that it was not reasonable to consider any injury that had occurred twelve years before as a possible cause of the default.

In that case, the district court held that HUD’s failure to consider whether Mr. Butler’s injuries could have caused the default was arbitrary, capricious and an abuse of discretion. The court noted that the circumstances leading to the inability of the mortgagor to remain current may have been set in motion several months or years prior to the actual default. As an illustration, the court posited that an unexpected illness and the resulting expenses and/or loss of income could deplete a mortgagor’s savings, making the mortgagor vulnerable to default. In the instant case, Rickards might have had sufficient savings to enable him to continue making mortgage payments despite losing his job had he not incurred substantial legal fees as a result of the incident, assuming that the legal fees might have been paid out of the Rickards’ savings. See Butler, 595 F.Supp. at 1045-46. Cf. James v. HUD, Civil Action No. 4-81-457 (D.Minn., April 1, 1982) (court determined that HUD erroneously rejected plaintiff’s illness, which caused her to deplete her savings, as a cause of her default).

The explanation for HUD’s decision in this case is certainly of “less than ideal clarity.” I am unable to discern what the HUD examiner meant by “(the accident does not apply).” See Lukens Steel Co. v. Kreps, 477 F.Supp. 444, 458 (E.D.Pa.1979) (“[i]t is not the Court’s function to search the record for something which might support the agency’s decision, if the agency itself has not clearly set forth its reasons.”) (emphasis in original). I am unwilling, and I do not consider it within my province, to speculate as to whether the agency considered the possible effect of Rickards’ legal expenses on the default. The matter will be remanded to the agency for clarification of its treatment of the legal expense issue.

Plaintiffs also contend that HUD failed to consider Mrs. Rickards’ loss of seasonal employment and complications due to pregnancy as potential causes of the default. Mrs. Rickards worked from October 1983 to January 1984 at a seasonal job. She earned approximately $45.00 a week. Mrs. Rickards’ loss of income was not mentioned in plaintiffs’ initial application to HUD or at the appeal conference of November 20, 1984. Plaintiffs were able to make mortgage payments from June 1983 to October 1983 when Mrs. Rickards was not working. Plaintiffs assert that Mrs. Rickards’ physical problems associated with her pregnancy were a cause of the default since they left her “unable to find other work,” but plaintiffs failed to produce any documentation of her physical condition.

The HUD Handbook for administration of mortgage assignment programs provides examples of reasons for default which would be considered beyond a mortgagor’s control. These include “[cjurtailment of family income, such as unemployment or underemployment ... or other loss of income due to divorce, illness or death.” In its supplemental brief, HUD asserts that it considered all of the circumstances surrounding plaintiffs’ default, stating that “[t]here is no evidence whatsoever that HUD did not consider every one of the factors which the mortgagors give as a reason for the default.” This statement misconstrues HUD’s burden of demonstrating that it has considered all of the relevant factors. I must satisfy myself that HUD did consider all of the relevant factors in denying the plaintiffs’ request for an assignment, and this must be done by an examination of the record. The record is not entirely clear as to how HUD treated Mrs. Rickards’ unemployment and alleged complications due to pregnancy, two conditions specifically noted in the HUD Handbook. See Weigant v. HUD, Mise. Action No. 84-0839 (E.D.Pa., January 10, 1985) (court remanded assignment decision to HUD for clarification because agency failed to explain how it dealt with illness of the mortgagor’s wife and resulting loss of income). Since the matter is being remanded, the agency should avail itself of the opportunity to resolve any remaining doubt that it considered and rejected the pregnancy problem as a cause of default.

Plaintiffs also contend that HUD failed to consider Mr. Rickards’ alcohol and drug problems as possible causes of the default. Mr. Rickards entered a facility for treatment of his chemical dependency on August 24, 1984 and was released on November 18, 1984. The date of default on the mortgage was May 1, 1984, thirty days after April 1, 1984, which was the due date of the last unpaid installment of the mortgage. See Ferrell v. Pierce, Civil Action No. 73-C-334 (N.D.Ill., March 22, 1985) (describing proper calculation of date of default). Only circumstances occurring prior to the date of default may be considered in determining assignment eligibility. It appears that plaintiffs furnished no information as to when Mr. Rickards became addicted. All that appears in the record is that the problem began sometime after Mr. Rickards lost his job. Although plaintiffs produced no evidence to show how Mr. Rickards’ drug and/or alcohol addiction caused the default in May of 1984, there is nothing in HUD’s ruling reflecting that it considered and rejected this as a potential cause of the default. Again, since the matter is being remanded, it would be well for HUD to clarify whether it did consider and reject this claim.

When an agency decision fails to address all the relevant factors, even a “restrained exercise of judicial review is impossible.” See City Federal Savings & Loan Association v. Federal Home Loan Bank Bd., 600 F.2d 681, 689 (7th Cir.1979). When the failure of an agency to explain its action frustrates effective judicial review, the court may remand the matter to the agency for clarification of the record. 600 F.2d at 689; Lukens Steel Co. v. Kreps, ill F.Supp. at 458. Because HUD’s explanation for its rejection of the Rickards’ application for an assignment of their mortgage is incomplete and unclear, this action will be remanded for HUD’s reconsideration and explanation in accordance with the views expressed herein.

      . In a letter to HUD dated July 30, 1984, Southeast stated that it did not feel that the Rickards qualified for an assignment because it saw “no prospect for mortgagor to pay this loan in full by maturity date." (Administrative Record at 69). The letter also stated that “[w]e feel that this default was caused by circumstances beyond his control.” However, in the HUD form which Southeast filled out and returned to HUD, dated July 27, 1984, Southeast noted that the default was not' caused by circumstances beyond the mortgagor’s control. (A.R. at 70) (emphasis added). It is clear that the first notation was in error since the matter of assignment was ultimately referred to HUD for decision.

      . Plaintiffs claim that the referee’s decision should be accorded little weight by HUD because under Pennsylvania law a person who is dismissed from employment for violating a work rule is to be denied benefits regardless of extenuating circumstances. This is a misstatement of the law. See Frumento v. Unemployment Compensation Board of Review, 466 Pa. 81, 351 A.2d 631 (1976) (refusal by an employee to comply with an employer’s rule or demand is not willful misconduct if its application to the employee’s circumstances is unreasonable). See also Philadelphia County Board of Assistance v. Commonwealth, 64 Pa.Commw. 451, 440 A.2d 693 (1982).

      . In his statement to the police, Rickards stated that he took out his pocket knife to defend himself as the men came closer and "the driver of the vehicle came closer to me after that until he felt the knife pressing against his stomach. At which time he backed up____” (A.R. at 17).

      . In fact, in their initial application to HUD for an assignment, plaintiffs stated that "[h]usband tried and acquitted in court in Nov. 1983."

      . It is the responsibilitv of the mortgagor to provide HUD with all of the information it needs to make a decision concerning an assignment request. 24 C.F.R. § 203.654. Plaintiffs were notified in their preliminary rejection letter that they had to submit additional information in order to obtain a favorable determination by HUD.

      . Counsel for HUD asserts that the notes of the November 20, 1984 conference “demonstrate that these other circumstances were considered.” However, no mention of Mrs. Rickards’ unemployment or pregnancy is contained in the notes summarizing the conference.


author: EDWARD C. REED, Jr., District Judge.

text:
    WOMEN’S FEDERAL SAVINGS AND LOAN ASSOCIATION OF CLEVELAND, Plaintiff, v. NEVADA NATIONAL BANK, Defendant.
    No. CV-R-82-360-ECR.
    United States District Court, D. Nevada.
    Dec. 6, 1985.
    As Amended Dec. 11, 1985.
    See also, 607 F.Supp. 1129 and — F.R.D. —.
    Sala, McAuliffe, White & Long by Jack I. McAuliffe, Reno, Nev., for plaintiff.
    Gary M. Nelson, Reno, Nev., for defendant.
   ORDER

EDWARD C. REED, Jr., District Judge.

The plaintiff has moved pursuant to NRS 18.010 for an award of attorney fees. It asks for $49,228.50, representing fees billed by its counsel and actually paid by the plaintiff. It also asks for $3,137.16 for expenses that cannot be allowed as taxable costs, apparently on the ground that the defendant’s denial that it had breached the Loan Participation Agreement between the parties must have been made in bad faith, because the Court, after trial, found that the defendant did violate that Agreement. Allegedly, the defendant’s refusal to admit its violations required substantial additional effort on the part of the plaintiff’s attorney, both during discovery and in trial.

In opposition to the motion, the defendant points out that the plaintiff obtained a judgment for only $3,918.63 in damages. This was in light of claims for relief seeking recission of the Loan Participation Agreement, return of the money the plaintiff had loaned (over two million dollars) in connection with that Agreement, and damages including almost a million dollars in interest payments received by the defendant from secondary financing of the plaintiff’s borrower.

Further, the defendant has disclosed that on November 15, 1984, it made an offer of judgment pursuant to Fed.R.Civ.P. 68, offering to allow judgment to be taken against it for $5,000.00 plus taxable costs. Since the offer exceeded the amount of the judgment finally obtained by the plaintiff, the defendant urges the Court to exercise its discretion by either refusing to award any attorney fees to the plaintiff or by limiting them to legal services performed prior to the offer of judgment.

In reply, the plaintiff emphasizes that the defendant’s violations of the Loan Participation Agreement were substantial and material.

Counsel for the plaintiff has filed itemized documentation of the attorney fees it charged and was paid by the plaintiff. The documentation reflects the date each service was rendered, the nature of the services, the time expended, the identity of the person or persons who performed the services and the hourly rate for the services. The senior partner billed at the rate of $125.00 per hour, another partner at $100.00 per hour, and associates at an hourly rate of $80.00.

The defendant has calculated that the plaintiff incurred $26,844.50 in attorney fees subsequent to the date of the offer of judgment. Subtracting that figure from the total of $49,228.50, the sum of $22,-384.00 represents the sum of the attorney fees incurred prior to the offer of judgment. The defendant urges that $22,-384.00 be considered by the Court as the upper limit of any attorney fee award to the plaintiff.

The parties agree that in a diversity action, such as this, state law governs the award of attorney fees. See Shakey’s, Inc. v. Covalt, 704 F.2d 426, 435 (9th Cir.1983). NRS 18.010(2)(a) provided, at the time here pertinent, that the court may make an allowance of attorney fees to the plaintiff as prevailing party when the plaintiff has not recovered more than $10,000.00 (raised to $20,000.00 by the 1985 Nevada Legislature). The making of such an award is discretionary. Schulz v. Lamb, 591 F.2d 1268, 1272 (9th Cir.1978).

As to the plaintiff’s request to recover $3,137.16 in expenses that are not taxable as costs, generally attorney fees are not costs unless made so by statute, which is not the case here. See Mariner v. Milisich, 45 Nev. 193, 200 P. 478, 479 (1921); Monolith Portland Midwest Co. v. Kaiser Aluminum & C. Corp., 407 F.2d 288, 293 (9th Cir.1969). The Court did not find that the defendant herein acted in bad faith. An award for expenses would not be appropriate as part of the resolution of the plaintiff’s motion for allowance of attorney fees.

A plaintiff may be considered the prevailing party for attorney fee purposes if it succeeds on any significant issue in litigation which achieves some of the benefit it sought in bringing the suit. Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983); Lummi Indian Tribe v. Oltman, 720 F.2d 1124, 1125 (9th Cir.1983). Here, the plaintiff succeeded in proving the most significant issue involved in the litigation; that is, that the defendant breached the Loan Participation Agreement. The plaintiff is the prevailing party.

Nevada cases are not too instructive as to the factors to be used in determining the amount of fee to be awarded. The relevance of the amount involved, the character of the services rendered, and the time expended has been noted. Peccole v. Luce & Goodfellow, Inc., 66 Nev. 360, 212 P.2d 718, 728 (1949). Millions of dollars are involved in the transaction between the parties hereto. Skilled legal services were required in this vigorously contested case, which involved complex legal issues far removed from an ordinary action to enforce an agreement. The time expended by the plaintiff’s attorneys was reasonably necessary for the effective prosecution of its claims.

Other factors that may be applicable are included in the so-called Kerr factors. They are listed in Rivera v. City of Riverside, 763 F.2d 1580, 1581 at n. 1 (9th Cir.1985). One is the preclusion of other employment by the attorneys due to acceptance of the case. A law firm the size of the plaintiff’s attorneys’ cannot devote more than four hundred billable hours to a case without suffering in its ability to service other clients at the same time. Another Kerr factor is whether the fee was fixed or contingent. An allowance may be more liberal in a contingent fee case, because the attorney gets nothing if his client doesn’t prevail. Here, the plaintiff’s attorneys were compensated by the hour, which weighs against anything but a moderate award.

The suggestion by the defendant that the Court, in the exercise of its discretion, allow no attorney fees to the plaintiff is rejected. This litigation arose from manifest breaches of agreement by the defendant. The plaintiff had good reason to worry about the safety of a very sizeable investment. Plain good business judgment called for the retention of local attorneys under the circumstances. See City of Las Vegas v. Cragin Industries, Inc., 86 Nev. 933, 478 P.2d 585, 590 (1970).

A good starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. Hensley v. Eckerhart, supra, 461 U.S. at 433, 103 S.Ct. at 1939; Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1027 (9th Cir.1985). The number of hours expended in this litigation by the plaintiff’s attorneys was reasonable in light of the complexity and size of the case and its strongly contested nature. The hourly charges were well within the range of prevailing market rates in the Reno area for such employment.

The plaintiff’s claims for relief involved related remedies potentially applicable to the same transaction. In such a case, where it has obtained substantial relief the fee award need not be reduced merely because it didn’t prevail as to each of its contentions. Rivera v. City of Riverside, at 763 F.2d 1582. This lawsuit should not be viewed as a series of discrete claims. Rather, the focus should be on the significance of the relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation. Hensley v. Eckerhart, at 461 U.S. 435, 103 S.Ct. at 1940. Thus, the extent of the plaintiff’s success is a crucial factor. Transgo, Inc. v. Ajac Transmission Parts Corp., supra at 1027. This is so even though there need not be a direct relationship between the amount of damages and the amount of attorney fees. Rivera v. City of Riverside, at 1583. A reduced fee award is appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole. Hensley v. Eckerhart, 461 U.S. at 440, 103 S.Ct. at 1943.

The plaintiff did enjoy significant success in this litigation. For example, of the twelve disputed issues of fact listed in the Pretrial Order, the plaintiff established nine. Of the fourteen issues of law listed in that Order, the plaintiff prevailed as to eight. Nevertheless, the relief he obtained was limited in comparison to the scope of the litigation. Because the claims for relief were so interrelated to a common factual setting, the Court cannot identify specific hours of time expended by the plaintiff’s attorney that should be eliminated. Therefore, it will reduce the award to account for the limited success by exercising its equitable judgment in the light of the applicable considerations. See Hensley v. Eckerhart, at 436-437, 103 S.Ct. at 1941.

IT IS, THEREFORE, HEREBY ORDERED that the plaintiff's Motion to Assess Attorney Fees is GRANTED and the plaintiff is allowed the sum of $17,500.00 as a reasonable attorney fee.

IT IS FURTHER ORDERED that the Clerk shall enter judgment in favor of plaintiff and against defendant in the said sum of $17,500.00 as and for a reasonable attorney fee.


author: GENE CARTER, District Judge.

text:
    PGP MUSIC, Plaintiff, v. DAVRIC MAINE CORPORATION, Defendant.
    Civ. No. 85-0276 P.
    United States District Court, D. Maine.
    Dec. 6, 1985.
    John W. Philbrick, Portland, Me., for plaintiff.
    Richard E. Poulos, Portland, Me., for defendant.
   ORDER GRANTING PLAINTIFF’S MOTION TO STRIKE DEFENDANT’S DEMAND FOR A JURY TRIAL

GENE CARTER, District Judge.

In this action for copyright infringement, plaintiffs seek a permanent injunction and “such statutory damages as to the Court shall appear just, as specified in 17 U.S.C. § 504(c)(1).” Section 504(c) provides:

(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $250 or more than $10,000, as the court considers just.
(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court, in its discretion may increase the award of statutory damages to a sum of not more than $50,000.

Defendant has demanded a jury trial and plaintiff, with this motion, has moved to strike the demand on the grounds that the relief sought, including the statutory damages, is equitable.

In 1957, the Court of Appeals for the First Circuit decided that a claim for statutory damages under 17 U.S.C. § 101, the predecessor to the statute addressed here, was a claim invoking the equity jurisdiction of the Court. Chappell & Co., Inc. v. Palermo Cafe Co., 249 F.2d 77 (1st Cir. 1957). Courts outside this circuit have split on the issue, and there is a significant amount of learned discourse on each side. Compare, e.g., Glazier v. First Media Corp., 532 F.Supp. 63 (D.Del.1982) (statutory damages equitable) with Chappell & Co., Inc. v. Pumpernickel Pub, Inc., 79 F.R.D. 528 (D.Conn.1977) (statutory damages legal).

After considering the arguments on both sides, the Court is persuaded that the conclusion’ reached by the First Circuit Court of Appeals in 1957 is still correct. The statute does not specifically answer the question whether a jury trial is permitted. As many courts have pointed out, however: “The very language of this section suggests equitable relief. The Court is to exercise its discretion in determining what is just.” Rodgers v. Breckenridge Hotels Corp., 512 F.Supp. 1326, 1327 (E.D.Mo.1981); Glazier, 532 F.Supp. at 65. The idea that the discretionary nature of the relief is an important factor finds some support in Curtis v. Loether, 415 U.S. 189, 94 S.Ct. 1005, 39 L.Ed.2d 260 (1974). In that ease, the Supreme Court held that section 812 of Title VIII of the Fair Housing Act, providing for the award of actual damages and not more than $1,000 punitive damages, sets forth a legal remedy. The Court stated that it “need not, and [does] not, go so far as to say that any award of monetary relief must necessarily be ‘legal’ relief.” Id.. at 194, 94 S.Ct. at 1008. It then went on to distinguish cases in which the Courts of Appeals had found the back pay remedy in Title VII cases to be equitable relief: “In Title VII cases, also, the courts have relied on the fact that the decision whether to award back pay is committed to the discretion of the trial judge. There is no comparable discretion here; if a plaintiff proves unlawful discrimination and actual damages, he is entitled to judgment for that amount.” Id. at 197, 94 S.Ct. at 1010.

Section 504 has one provision allowing recovery of actual damages which is analogous to the legal damages found in Loether. Any statutory damage award under section 504(c), however, is a matter of judicial discretion. Glazier v. First Media Corp., 532 F.Supp. at 67. An award under section 504(c), therefore, is more analogous to the equitable remedy distinguished by the Court in Loether.

Despite the disagreement in the federal courts on this issue, this Court sees no reason to deviate from the course set by the First Circuit Court of Appeals long ago. When the complaint seeks injunctive relief and statutory damages, “the whole case before the district court [is] equitable in nature.” Chappell & Co. v. Palermo Cafe Co., 249 F.2d at 79. There is, therefore, no right to a jury trial.

Accordingly, it is ORDERED that plaintiff’s motion to strike defendant’s demand for a jury trial is hereby GRANTED.

      . There is no dispute that plaintiffs request for an injunction does not entitle it to a jury trial.


author: SHABAZ, District Judge.

text:
    G.M.W., INC., Plaintiff, v. FLAMBEAU PAPER CORP., d/b/a Flambeau Paper Co., Defendant.
    No. 85-C-339-S.
    United States District Court, W.D. Wisconsin.
    Dec. 9, 1985.

      Steven L. Stolper, Polacheck & Harris, Milwaukee, Wis., for plaintiff.
    Michael S. Varda, DeWitt, Sundby, Huggett, Schumacher & Morgan, Madison, Wis., for defendant.
   MEMORANDUM AND ORDER

SHABAZ, District Judge.

On November 7, 1985, this diversity action for monetary relief was tried before the Court. The Court has jurisdiction pursuant to 28 U.S.C. § 1332.

FINDINGS OF FACT

The plaintiff G.M.W., Inc., a Minnesota corporation, is a Chapter 7 debtor, having filed its petition for relief on April 12, 1983. It was formerly engaged in the business of freight hauling, with its principal office and place of business located at 800 Norwest Bank Center, St. Paul, Minnesota.

The defendant Flambeau Paper Corp., d/b/a Flambeau Paper Co., is a Wisconsin corporation with its principal offices and place of business at Park Falls, Wisconsin, engaged in the manufacture of printing paper other than newsprint.

Between April 17, 1980, and March 9, 1983, plaintiff provided transportation services to the defendant, during which time plaintiff was a common carrier regulated by the Interstate Commerce Commission (ICC).

During this period 173 shipments occurred for which plaintiff seeks from defendant the additional amount of $22,-729.21 in undercharges for freight hauling services.

The bills of lading which correctly describe the items shipped, origins, destinations, and dates the items were placed for shipping with plaintiff by the defendant were received in evidence without objection in the following categories:

Exhibit A, consisting of those shipments to the Twin Cities, refers to the posted tariff appropriate to those shipments, and totals $15,929.27
Exhibit B, consisting of those shipments to Chicago, refers to the posted tariff appropriate to those shipments, and totals 2,827.06
Exhibit C, consisting of those shipments to Chanhassen, Minnesota, refers to the posted tariff appropriate for those shipments, and totals 2,799.26
Exhibit D, consisting of miscellaneous shipments, refers to the posted tariffs appropriate for those shipments, and totals 1,058.30
Exhibit E, consisting of further miscellaneous shipments, refers to the posted tariffs appropriate for those shipments, and totals 115.32
For a total claimed undercharge of $22,729.21

For which the defendant denies liability.

The defendant’s liability for undercharges on these numerous (173) freight shipments is grounded on those provisions set forth in 49 U.S.C. §§ 11706(a) and (g):

§ 11706. Limitation on actions by and against common carriers
(a) A common carrier providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission under chapter 105 of this title must begin a civil action to recover charges for transportation or service provided by the carrier within 3 years after the claim accrues.
Í¡C S¡! S¡t * * *
(g) A claim related to a shipment of property accrues under this section on delivery or tender of delivery by the carrier.

This time is extended for an additional two years because of the plaintiff’s debtor proceedings.

11 U.S.C. § 108. Extension of time
(a) If applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an agreement fixes a period within which the debtor may commence an action, and such period has not expired before the date of the filing of the petition, the trustee may commence such action only before the latter of—
(1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or
(2) two years after the order for relief.

The defendant, of course, cries “foul,” among other things arguing that because of lapse of time the defendant can no longer recover any undercharges from its customers.

The Court finds, however, that the applicable tariffs have been filed with the ICC and published, as have those commodity rates which are controlling. Further, the rates are not ambiguous, were always available to the defendant for examination, and the bills of lading correctly describe the shipments.

The Court further finds that the plaintiff is within the time requirements for the commencement of this proceeding, but that there existed between the parties an unpublished practice known as “overflow protection” for shipments to Chicago, Chanhassen and the Twin Cities. This standard pattern and practice existing between the parties and the defendant’s predecessors for over ten years provided a lower rate than the tariff would have allowed. The defendant, during the period of time it received services from plaintiff, was never advised of the claim now being pursued; the course of dealing between the parties was not for the purpose of promoting rate discrimination, and finally, the course of dealing existing between the parties, if acceptable, would have modified the applicable tariff rates on file with the ICC, and that defendant relied upon those practices existing between the parties.

In spite of defendant’s protestations to the contrary and its opposition to the 1915 Supreme Court decision, nonetheless the following is controlling as it concerns the actions of this Court:

Under the Interstate Commerce Act, the rate of the carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext. Shippers and travelers are charged with notice of it, and they as well as the carrier must abide by it, unless it is found by the Commission to be unreasonable. Ignorance or misquotation of rates is not an excuse for paying or charging either less or more than the rate filed. This rule is undeniably strict and it obviously may work hardship in some cases, but it embodies the policy which has been adopted by Congress in the regulation of interstate commerce in order to prevent unjust discrimination.
* s*s * * :je j}:
Neither the intentional nor accidental misstatement of the applicable published rate will bind the carrier or shipper. The lawful rate is that which the carrier must exact and that which the shipper must pay. The shipper’s knowledge of the lawful rate is conclusively presumed.

Louisville & Nashville Railroad Company v. Maxwell, 237 U.S. 94, 35 S.Ct. 494, 59 L.Ed. 853.

The following decisions further defeat the defendant’s request that this Court exercise legislative as well as equitable pronouncements and adopt the practice of the parties instead of the published tariffs.

This court has previously noted that the anti-discrimination provision in 49 U.S.C. § 6(7) is so strong “that the courts have generally refused to recognize an otherwise justifiable defense of estoppel.”

Missouri Pacific Railroad Company v. Rutledge Oil Company, 669 F.2d 557 (8th Cir.1982).

Under the Interstate Commerce Act, freight charges incurred pursuant to a filed tariff are accorded a legally superi- or status; that of a law. The only defense which can be raised to a carrier’s suit for these legal charges is that the services have been paid for, that the services were not rendered, that the services were charged under an inapplicable tariff schedule, or that the rates were unreasonable.

In re Penn Central Transportation Company, 477 F.2d 841 (3rd Cir.1973).

The Court must further determine that the circumstances addressed by the Court in Consolidated Freightways Corp. of Del. v. Admiral Corp., 442 F.2d 56 (7th Cir.1971), are totally different from the fact situation in this case, and for this reason the defense of estoppel is not applicable in light of the previous decisions cited.

In requesting this Court to exercise equitable and legislative powers, rather than the law which may be applicable, defendant’s counsel brings to this Court’s attention a practice followed by the parties. Defendant argues that the plaintiff should not be allowed to recover undercharges in this situation, for it would amount to an unreasonable practice.

The defendant strenuously argues it would not be reasonable for plaintiff to recover according to the applicable rates under the circumstances found to exist.

The reasonableness of practice, however, is exclusively within the jurisdiction of the Interstate Commerce Commission, and cannot be addressed to this Court.

In its decision Number 37635, dated March 13, 1985, the ICC recognized its authority to waive undercharges in order to prevent unreasonable practices. In its decision concerning rail carriers, the Commission referred to 49 U.S.C. § 10701(a):

§ 10701. Standards for rates, classifications, routes, rules, and practices
A ... practice related to transportation or service provided by a carrier subject to the jurisdiction of the Interstate Commerce Commission under chapter 105 of this title must be reasonable ____
Upon finding that a practice is unreasonable, we may order the carrier to stop the violation. This language is broad enough to confer on us the power to prevent a carrier from the practice of unreasonably collecting undercharges
Nevertheless, there is support for absolving shippers from liability to pay the tariff rate in particularly egregious circumstances.

The Buckeye Cellulose Corporation v. Louisville & Nashville Railroad Company, Interstate Commerce Commission, March 13, 1985.

Before making that reference which the Court believes to be appropriate, the doctrine of primary jurisdiction should be briefly discussed.

“The doctrine of primary jurisdiction ... is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties.” United States v. Western Pacific Railroad, 352 U.S. 59, 63, 77 S.Ct. 161, 165, 1 L.Ed.2d 126 (1956) (Western Pacific). The doctrine is applicable in federal courts when an action “requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.” Id. at 64, 77 S.Ct. at 165. Application of the doctrine results in suspension of the judicial process “pending referral of such issues to the administrative body for its views.” Id. See also General American Tank Car Corp. v. El Dorado Terminal Co., 308 U.S. 422, 433, 60 S.Ct. 325, 331, 84 L.Ed. 361 (1940) (proper procedure is to stay the proceedings).
Whether the doctrine requires the ICC to pass on the construction of a particular tariffs requirements “depends on whether the question raises issues of transportation policy which ought to be considered by the Commission in the interests of a uniform and expert administration of the regulatory scheme laid down by th[e] Act.” Western Pacific, 352 U.S. at 65, 77 S.Ct. at 166. It is a question of law, reviewable de novo.

United States v. Yellow Freight System, Inc., 762 F.2d 737, 741 (9th Cir.1985).

The Court agrees that the primary jurisdiction doctrine does not apply if the ICC has already construed a particular tariff or clarified its underlying factors. To this Court’s knowledge, the ICC has never construed the terms of overflow protection, nor the egregious policy followed by the plaintiff in this and similar cases which now appear to fill the Federal Reporter.

The doctrine has been applied, for example, when an action otherwise within the jurisdiction of the court raises a question of the validity of a rate or practice included in a tariff filed with an agency, e.g., Danna v. Air France, 463 F.2d 407 (CA2 1972); Southwestern Sugar & Molasses Co. v. River Terminals Corp., 360 U.S. 411, 417-418 [79 S.Ct. 1210, 1214-1215, 3 L.Ed.2d 1334] (1959), particularly when the issue involves technical questions of fact uniquely within the expertise and experience of an agency—such as matters turning on an assessment of industry conditions, e.g. United States v. Western Pacific R. Co. supra, at 66-67 [77 S.Ct. at 166],

Nader v. Allegheny Airlines, 426 U.S. 290, 96 S.Ct. 1978, 48 L.Ed.2d 643 (1975).

There is indeed an excellent review of the situation analogous to this case in Western Transportation Company v. Wilson Co., Inc., 682 F.2d 1227 (7th Cir.1982) where the Seventh Circuit Court of Appeals gave the shipper a second chance to have those unreasonable circumstances of which it complained reviewed by the Interstate Commerce Commission. Certain portions of that decision are set forth in part as follows:

A common carrier regulated by the Interstate Commerce Commission may not receive a different compensation for its services from the rate specified in the applicable tariff, and if by mistake it charges a lower rate it may sue under 28 U.S.C. § 1337 to recover the undercharge. The carrier’s right to recover is quite unaffected by the usual limitations on contract actions based on mistake. “The shipment being an interstate one, the freight rate was that stated in the tariff filed with the Interstate Commerce Commission. The amount of the freight charges legally payable was determined by applying this tariff rate ... [and] thus, they were fixed by law. No contract of the carrier could reduce the amount legally payable; or release from liability a shipper who had assumed an obligation to pay the charges. Nor could any act or omission of the carrier (except the running of the statute of limitations) estop or preclude it from enforcing payment of the full amount by a person liable therefor.”
This is a harsh rule. Courts strain against it. A favorite device is to find that a tariff is ambiguous and then interpret it to reach a result that the court considers just. That is what the district court did in this case. The plaintiff, Western Transportation Company, is a motor carrier regulated by the ICC. It went bankrupt, and in connection with its bankruptcy hired a consulting firm to comb through its invoices looking for under charges—with results that are showing up with increasing frequency in the Federal Reporter, (citations omitted)

After determining that the favored device of ambiguity was of no avail to the defendant, the court then stated at page 1231 as follows:

But it does not follow that the shipper is necessarily without any remedy in a case like this. A tariff provision has to be reasonable. If it is not, it violates the statute; and the Commission, either on its own initiative or on complaint, “shall take appropriate action to compel compliance with” the statute. If the notation requirement is, as it appears to be, entirely pointless, the Commission can be expected to set aside this part of the tariff—thus knocking the props out from under Western’s case—if asked to do so. Wilson should have done what Iowa Beef Processors, Inc., another of Western’s customers, did when sued by Western in bankruptcy court on the very tariff in issue in this case—ask for a stay of the court proceedings and then ask the Commission to declare the notation requirement unreasonable. The Commission did so. Incidentally, the Commission also found the tariff to be unambiguous— that is why it had to reach the issue of reasonableness—and this finding should have carried great weight with the district court in the present ease, (citations omitted)

On November 1, 1985, this Court denied the defendant’s motion to refer portions of its objections to the ICC for determination.

The Court was of the opinion that any reference would only partially resolve the matter.

Its further examination of those authorities which have been herein quoted indicates that a reference to the ICC for its determination as to whether or not plaintiff’s practices and entire course of conduct was reasonable is the appropriate .method for the disposition of this controversy.

Rather than to require the defend-, ant to file an appropriate complaint with the ICC concerning the practices of the plaintiff which it believes to be unreasonable, this Court reconsiders its previous denial of reference and now refers the entire matter to the ICC for a determination as to whether plaintiff is engaged in a practice so unreasonable, to include the determination of ambiguity, notwithstanding the finding of this Court, that the undercharges sought should be disallowed.

In making this reference, the Court has attempted to determine whether or not it would be appropriate to stay the proceedings until the ICC has made an appropriate determination. This is unnecessary, for any determination made by the Commission may be further reviewed.

Further authority is found for reference and dismissal, rather than a stay, in Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (1952), in which the Supreme Court addressed itself to an analogous situation:

Having concluded ... the present case involves questions within the general scope of the Maritime Board’s jurisdiction. An order of the Board will be subject to review by a United States Court of Appeals, with opportunity for further review in this Court on writ of certiorari____ We believe that no purpose will here be served to hold the present action in abeyance in the District Court while the proceeding before the Board and subsequent judicial review or' enforcement of its order are being pursued. A similar suit is easily initiated later, if appropriate. Business-like procedure counsels that the Government’s complaint should now be dismissed____ (citations omitted)
Accordingly,

ORDER

IT IS ORDERED that this case is transferred to the Interstate Commerce Commission for its determination as to whether the practice of G.M.W., Inc. is unreasonable to the extent that undercharges will not be allowed recovery.

IT IS FURTHER ORDERED that the defendant shall be responsible for perfecting the record of this reference as though it had initiated the complaint on its own initiative.

IT IS FURTHER ORDERED that upon completion of proceedings before the Interstate Commerce Commission this case may be returned to this Court for that dispositive order which may be appropriate.