author: SCOTT 0. WRIGHT, Chief Judge.

text:
    Robert A. SANDERS, Plaintiff, v. DANIEL INTERNATIONAL CORPORATION, Defendant.
    No. 84-4447-CV-C-5.
    United States District Court, W.D. Missouri, C.D.
    April 12, 1985.
    Richard G. Callahan, Rost & Callahan, Jefferson City, Mo., for plaintiff.
    John E. Burruss, Jr., Hendren & Andrae, Jefferson City, Mo., for defendant.
   ORDER

SCOTT 0. WRIGHT, Chief Judge.

This diversity action currently awaits resolution of two matters—plaintiff’s motion to strike paragraph 5 of defendant’s answer and defendant’s motion for summary judgment. Defendant asserts that plaintiff’s malicious prosecution action, filed in this Court December 27, 1984, is barred by the applicable five-year Missouri statute of limitations, RSMo. § 516.120 (1978). Plaintiff concedes the passage of the limitation period, however, maintains the application of a “savings statute,” RSMo. § 516.230, facilitates the prosecution of his lawsuit. For the following reasons, defendant’s motion will be sustained.

This lawsuit has followed a long and storied path to this Court. Pursuant to a 1978 theft of construction tools from the Callaway Nuclear Plant jobsite, Callaway County Prosecutor (now Judge) Gene Hamilton brought criminal charges against plaintiff. The charges, however, were dismissed shortly thereafter. Plaintiff successfully maintained a malicious prosecution suit against Hamilton in Phelps County, Missouri Circuit Court (on change of venue). The jury awarded plaintiff $100,-000 in actual damages and $250,000 in punitives. The Missouri Court of Appeals (Southern District) affirmed, but the Missouri Supreme Court, en banc, per the opinion of Justice Welliver “re-examined the law of malicious prosecution [in Missouri]” and declared the verdict-directing instruction used by plaintiff (MAI 16.01 (1981)) to incorrectly state the “malice” required to maintain such an action. After a 27-page opinion, the Missouri Supreme Court “reverse^] and remand[ed]” plaintiffs action for a new trial consistent with their December 18, 1984 opinion.

The parties are in apparent agreement as to the applicable Missouri statute of limitations (RSMo. § 516.120) and the fact that this Court will apply it in the instant case. See Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Furthermore, there is no dispute that the instant federal action was indeed filed beyond the limitation date prescribed by RSMo. § 516.120. Plaintiff necessarily relies on RSMo. § 516.230 “Further savings in cases of nonsuits, etc.” as a vehicle by which to maintain this diversity action.

RSMo. § 516.230, commonly referred to as a “savings statute” affords prospective plaintiffs a one-year grace period in which to commence a new action if a previously filed, timely, lawsuit results in a nonsuit or after verdict for plaintiff the judgment is arrested or reversed on appeal or error. Relying on RSMo. § 516.230, plaintiff has filed a complaint in this Court that completely tracks the petition previously filed in the circuit court. Defendant insists that the suit is time-barred, as it was filed more than 5 years after the accrual of plaintiffs cause of action. Moreover, defendant maintains that the Missouri savings statute is inapplicable in that plaintiffs judgment was reversed and remanded to Phelps County Circuit Court, where it presently awaits re-trial. Defendant argues that the savings statute was neither designed, nor is it necessary, to facilitate the refiling of lawsuits, which though reversed were remanded and are currently “alive” in another forum. The Court agrees.

Despite the dearth of judicial interpretation of RSMo. § 516.230, the Court reaches its conclusion by examining the language and purpose of RSMo. § 516.230, as explained by a venerable decision of the Missouri Supreme Court.

The determination of the scope of RSMo. § 516.230 depends on a declaration of its purpose. It is reasonable to conclude that in providing for “Further savings in cases of nonsuit, etc.” the Missouri legislature intended to ensure that a plaintiff would not encounter a procedural bar to the [re]trial on the merits of a previously, timely, filed lawsuit terminated by reason beyond plaintiff’s foresight or control. The savings statute neither re-creates nor resurrects a cause of action, it merely “saves” a plaintiff from the unfair effect of [delayed] termination of his action for reasons that could have been corrected had they been addressed earlier, i.e., prior to the running of the statute of limitations. Although savings statutes are remedial, and liberally construed, it is unnecessary for this Court to strain the effect of RSMo. § 516.230 beyond reason in an effort to eliminate obstacles invoked to escape trial upon the merits of a cause. Cf. Guffey v. Mehan, 457 F.2d 777, 778 (8th Cir.1972). This action will indeed be tried on the merits; the action presently pends in Phelps County Circuit Court. The continued viability of the lawsuit there demonstrates the inapplicability of RSMo. § 516.230 to the situation encountered by plaintiff.

By the clear language of the Missouri Supreme Court’s opinion, this action was reversed and remanded for a new trial. The Missouri Supreme Court has previously been compelled to adjudicate the effect and office of a formal award of a new trial with a remanding of a cause for further proceedings in a lower court. See e.g., Donnell v. Wright, 199 Mo. 304, 97 S.W. 928 (1906). This singular decision, aged yet unchallenged, leads this Court to conclude that without suffering a reversal (as it is used in RSMo. § 516.230)—an independent step, complete in and of itself not to be followed by a new trial—plaintiff herein may not avail himself of the savings provisions found in RSMo. § 516.230.

By its language, RSMo. § 516.230 encompasses only “nonsuits” and “reversals.” As the Missouri Supreme Court carefully explains, a plaintiffs judgment reversed on defendant’s appeal, with no final judgment entered by the Appellate Court, and no award of a new trial—simply a reversal and nothing more—is treated as a nonsuit. Donnell v. Wright, 97 S.W. at 930. The Missouri Supreme Court acknowledged that while the Circuit Court in such an instance is not repossessed of jurisdiction to go on in the same case, the plaintiff may again file suit, within a year, pursuant to the “savings statute,” RSMo. § 516.230 (then RSMo. § 4285 (1895)). See also Wente v. Shaver, 350 Mo. 1143, 169 S.W.2d 947, 953 (1943). (Legislative intent of RSMo. § 516.230 is to ensure plaintiff a day in court to try merits of his cause, where prior proceedings fall short of that or judgment is reversed on error or appeal). Reversal of a judgment in plaintiff’s favor, without more, is tantamount to a nonsuit, thus implicating the savings-statute. Donnell v. Wright, 97 S.W. at 930. Conversely, the reversal of plaintiff’s judgment with a remand for new trial is more than a non-suit, and thus beyond the contemplation of the “savings” provisions of RSMo. § 516.230.

Law and logic dictate this result. The [reversal and] remanding for new trial obviates the need for such a savings provision. Plaintiff is of no need to refile the [remanded] lawsuit. Indeed, in such cases, the lawsuit remains viable in the Circuit Court to which the [Appellate] Court remands the action. The savings-statute should not confer the windfall plaintiff seeks herein. Once choosing the forum in which to litigate his aetion, plaintiff will not be allowed to remove it, in mid-stream as it were, to federal court through the use of a savings statute designed to ameliorate the prejudicial effect the inevitable passage of time works upon the prior dismissal of a lawsuit.

The reversal and remand of plaintiff’s prior judgment precludes plaintiff’s use of RSMo. § 516.230. The language of the statute clearly contemplates only situations of nonsuit and [mere] reversal. The remand of this action to the Phelps County Circuit Court obviates plaintiff’s need for a “savings-statute” and further convinces this Court that it is unnecessary and improper to stretch the scope of RSMo. § 516.230 beyond logic and the plain language of the statute. Plaintiff desires to apply this statute to these facts in an attempt to “save” himself from re-trying this action in the Circuit Court of Phelps County, Missouri, where it presently pends trial. This the statute was not designed to do.

Conclusion

Applying the 5-year Missouri statute of limitations as this Court must, and further finding the “savings” provision of RSMo. § 516.230 inapplicable to plaintiff’s suit, the Court finds plaintiff’s suit to be time-barred.

Accordingly, it is hereby

ORDERED that plaintiff’s complaint be dismissed as time-barred by the applicable statute of limitations.

      . This Court acknowledges that it now faces the rather unenviable and difficult task of defining the scope of the Missouri "savings statute," RSMo. § 516.230. However, abstention or deferral of the task would avoid resolution of the instant issue; the remand of plaintiffs lawsuit to Phelps County, Mo. Circuit Court and its present viability there prevents the issue from being raised in the Missouri state courts. Notwithstanding the “virtually unflagging obligation" of a federal court to accept jurisdiction, the Court is nevertheless compelled to acknowledge and apply the Missouri statute of limitation in a diversity action of this type in response to a challenge to the timeliness of plaintiff’s federal action.

      . Donnell v. Wright, 199 Mo. 304, 97 S.W. 928 (1906).

      . The Missouri Supreme Court in Donnell noted that an appellate court disposes of a case in one of [only] four ways—by the “award of a new trial,” “reverse,” "affirm the judgment of the circuit court,” or "give such judgment as such court ought to have given” or as to the appellate court “shall seem agreeable to law." The Court’s effort to distinguish between mere "reversal” and “reversal and remand” is particularly enlightening of the instant facts and contentions.


source: Caselaw Access Project

author: DUHE, District Judge.

license: Public Domain

text:
    Roger HORTON v. SUN EXPLORATION AND PRODUCTION COMPANY, et al.
    Civ. A. No. 83-2391.
    United States District Court, W.D. Louisiana, Lafayette-Opelousas Division.
    April 15, 1985.
    Ralph E. Kraft, Lafayette, La., for third-party plaintiff.
    John P. Cooper, New Orleans, La., for third-party defendant.
   MEMORANDUM RULING

DUHE, District Judge.

This matter arises out of injuries sustained by plaintiff, Roger Dean Horton, in an accident on December 16, 1982 in the course of his employment aboard a Sun Exploration and Production Company (“Sun”) fixed platform on the Outer Continental Shelf of Louisiana. Horton recovered compensation payments from his employer, Pressure Services, Inc. (“PSI”) pursuant to the Longshoremen’s and Harbor Workers’ Compensation Act (“LHWCA”), 33 U.S.C. § 901 et seq., and subsequently brought this action against multiple defendants, including Cameo Wireline, Inc. (“Cameo”). Cameo has since made a third-party claim against PSI.

PSI, citing Pippen v. Shell Oil Co., 661 F.2d 378 (5th Cir.1981), now moves pursuant to Federal Rule of Civil Procedure 12(b)(6) that this Court dismiss Cameo’s third-party action for failure to state a claim upon which relief may be granted, on the grounds that § 905(a) of the LHWCA provides that employer is liable exclusively to its employees, in the absence of an express or implied contract of indemnity between a third-party claimant and the employer. Cameo responds by arguing that the recent decision of the U.S. Supreme Court in Lockheed Aircraft Corporation v. United States, 460 U.S. 190, 103 S.Ct. 1033, 74 L.Ed.2d 911 (1983) effectively overruled Pippen by permitting third-party claims against the U.S. (the employer) under § 8116(c) of the Federal Employees Compensation Act (FECA), 5 U.S.C. § 8101 et seq., which is modeled on and is analogous to § 905(a) of the LHWCA.

§ 905 of the LHWCA provides, in pertinent part:

(a) The liability of an employer prescribed in § 904 of this title shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, or anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death ...
(b) In the event of injury to a person covered under this chapter caused by the negligence of the vessel, then such person, or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party in accordance with the provisions of § 933 of this title, and the employer shall not be liable to the vessel for damages directly or indirectly and any agreements or warranties to the contract shall be void, (emphasis added).

In Pippen, supra, the Fifth Circuit affirmed the trial court’s granting of a motion for summary judgment against a third party that had made indemnification claims against the § 905(a) employer. Nevertheless, Pippen stands for a proposition entirely different from that which PSI asserts. The Pippen Court declared that:

[SJuits for indemnity that are not “on account of” the employee’s injury are not barred by Section 905(a). Thus, for instance, a suit for contract-based indemnity (based either on an express or implied contract) would not be barred by Section 905(a) ... In the event of a suit by a third party against the employer based on a contract of indemnity—express or implied—the recovery against the employer is not on account of the injury—it is on account of the contract of indemnity. Similarly, though we have no such situation before us here, some types of tort claims for indemnity would apparently not be barred by § 905(a). The Court in Holden v. Placid Oil Co., 473 F.Supp. 1097 (E.D.La.1979), for instance, held that “if a claim of indemnity founded in tort is premised on an alleged duty owed by the indemnitor directly to the indemnitee, such a claim is not barred by § 905(a). As is the case with claims of indemnity founded in contract, then, where a duty or obligation sounding in tort exists directly between the indemnitor and indemnitee, recovery of indemnity based on this duty or obligation is not ‘on account of’ the employee’s injury, and hence is not proscribed by § 905(a).” Id. at 1100-01 (emphasis in the original). Since Shell Oil has not presented any evidence of an obligation in tort between it and Superior Electric [the employer] that would cause Superior Electric to be liable to Shell Oil for indemnity, the district court’s summary judgment on this ground was proper. ... In addition, it appears that an action by Shell Oil against Superior Electric based on an express or implied contract of indemnification is also not barred by Section 905(b). That section expressly cuts off indemnity only to a ‘vessel’ and makes no specific reference to the right of a third-party nonvessel, such as Shell Oil, to bring an indemnity action against the employer. 661 F.2d at 386-87 (emphasis added).

Thus, this Court concludes that Pippen stands for the proposition that a § 905(a) employer is subject to non-vessel third-party indemnification claims arising out of contract (implied or express) or an obligation in tort between the employer and third party. The soundness of this view is made even more apparent by the decision of the Supreme Court in Lockheed, supra.

Section 8116(c) of the FECA provides, in pertinent part:

The liability of the United States ... under [the FECA] with respect to the injury or death of an employee is exclusive and instead of all other liability of the United States ... to the employee, his legal representative, spouse, dependents, next of kin, and any other person otherwise entitled to recover damages from the United States ... because of the injury or death.

In Lockheed, the Supreme Court held that § 8116(c) does not bar third-party indemnity actions against the United States (the employer), and reasoned that:

“[T]here is no evidence whatever that Congress was concerned with the rights of unrelated third parties, much less of any purpose to disturb settled doctrines of tort law affecting the mutual rights and liabilities of private parties in indemnity cases, [citations omitted] Section 8116(c) was intended to govern only the rights of employees, their relatives, and people claiming through or on behalf of them. These are the only categories of parties who benefit from the ‘quid pro quo’ compromise that FECA adopts, [citation omitted] 103 S.Ct. at 1037.

The Court then examined third-party indemnification claims against employers under the LHWCA, since § 8116(c) of the FECA “was modeled on the analogous” § 905(a) of the LHWCA, Id, 103 S.Ct. at 1036, and the underlying rationale “is essentially the same,” Id. The Court observed that:

Under the amended LHWCA, an injured longshoreman’s employer is no longer liable to a shipowner for tort damages that the shipowner has paid the employee. See 33 U.S.C. § 905(b). Congress thus overruled the result in Ryan [Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956)], supra, and abolished the shipowner’s indemnity action. But in so doing, Congress also abolished the injured employee’s seaworthiness remedy against the shipowner—a strict-liability action that the Court had recognized in Seas Shipping Co. v. Sieracki [328 U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099 (1946) ] [citation omitted]. In other words, Congress abolished the third-party indemnity action only in conjunction with a ‘quid pro quo’ to benefit the third parties. 103 S.Ct. at 1038.

The 1972 amendments only barred vessel-owner indemnification actions against employers. LHWCA employers, then, are exposed to non-vessel third-party indemnification liability arising out of contractual or delictual obligations between the indemnitee and employer.

Applying the principles of Pippen and Lockheed to the facts a.t bar, it is clear that as a matter of law Cameo has stated a claim against PSI for which relief can be granted. Whether Cameo will be able at trial to establish the existence of a contractual or delictual obligation between it and PSI which exposes PSI to indemnification liability is, of course, an entirely different question. Nevertheless, Cameo, having stated a third-party claim upon which relief can be granted, is entitled to prevail on the instant motion.

Accordingly, PSI’s motion to dismiss Cameo’s third-party claim is hereby denied.


author: SCOTT O. WRIGHT, Chief Judge.

text:
    Lenzie NASH, Plaintiff, v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, Defendant.
    No. 84-4197-CV-C-5.
    United States District Court, W.D. Missouri, C.D.
    April 22, 1985.

      David Kite, Jefferson City, Mo., for plaintiff.
    Edward Funston, III, Asst. U.S. Atty., Kansas City, Mo., for defendant.
   ORDER

SCOTT O. WRIGHT, Chief Judge.

This is a proceeding under Title II of the Social Security Act, 42 U.S.C. § 401 et seq. Section 405(g) of the Act provides for judicial review of a final decision of the Secretary of Health and Human Services. Plaintiff’s application for a period of disability and disability insurance benefits was denied initially and upon reconsideration. Following a request for a hearing, the same was held before Administrative Law Judge William E. Zleit. Plaintiff was represented by counsel. The decision of the ALJ was adverse to plaintiff, and the Appeals Council affirmed on April 13, 1984. Thus, the decision of the ALJ stands as a final decision of the Secretary.

The case now pends on cross-motions for summary judgment. For the following reasons, defendant’s motion will be granted and the decision of the Secretary affirmed.

Plaintiff is a 62-year-old man with a high school education. He last worked in November of 1981 when he was laid-off as a truck driver. Other previous work included a job as a machinist and as a mobile home salesman. At one time, plaintiff owned and operated a mobile home dealership. Plaintiff quit his job as a mobile home salesman, and refuses to return, due to the pressure and stress he encounters in dealing with customers. Plaintiff denies, however, any problems relating to others on a social level. Plaintiff’s previous work required medium exertion, or less, as described in the Dictionary of Occupational Titles.

Plaintiff was hospitalized in August of 1982 for the “heart problem” on which he now bases his disability application. Plaintiff was admitted to the hospital with chest pain and shortness of breath. Plaintiff was diagnosed as having a mild left axis deviation with questionable left ventricular hypertrophy pattern. He was released four days later.

The medical evidence of record could be described as abbreviated, at best. It consists of plaintiff’s hospital records and discharge summary, including the results of two stress/treadmill tests performed on plaintiff during his hospitalization and shortly thereafter. The only other evidence of record is plaintiff’s testimony and three letters written by plaintiff’s osteopath, Kenneth Ridgeway, D.C.

The discharge summary of September 20, 1982, concedes the possibility of previous inferior wall myocardial infarction. The report reveals a “strongly positive” electrocardiographic stress test for arteriolateral ischemia at high levels of exertion. During the test plaintiff experienced shortness of breath but no angina. Plaintiff left the hospital without chest pain, was ambulatory, and experienced no aberrant heart rhythms. Plaintiff was prescribed nitroglycerin (for chest pain), however, has only used it “four or five” times since 1982. In the two months preceding the hearing plaintiff has not taken any nitro pills. The discharge summary (written by Kenneth Ridgeway, D.C.) offered no opinion as to possible or probable disability.

Plaintiff underwent a second stress-test on September 17, 1982. The report of this test noted improvement, found no arrythmia, and blood pressure normal at rest levels. Plaintiff was noted to have a poor tolerance to exercise, however.

The remainder of the “medical evidence” consists cf. three letters written by plaintiffs osteopath to plaintiffs lawyer, the Social Security Administration and to “whom it may concern.” Ridgeway has apparently been treating plaintiff since his admission to the hospital in 1982. He has seen plaintiff from time to time since then. Ridgeway maintains plaintiff is disabled, yet offers no support or explanation for his opinion beyond the previously described discharge summary.

The form and scope of judicial review of the defendant’s actions is statutorily defined and limited. Under 42 U.S.C. § 405(g), the Secretary’s decision is conclusive upon the Court if it is supported by substantial evidence. Alexander v. Weinberger, 536 F.2d 779 (8th Cir.1976); Yawitz v. Weinberger, 498 F.2d 956, 957 (8th Cir. 1974) . This standard of substantial evidence is defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Russell v. Secretary of HEW, 540 F.2d 353, 356 (8th Cir.1976); Brinker v. Weinberger, 522 F.2d 13, 17 (8th Cir.1975). This standard of review “is more than a mere rubberstamp of the Secretary’s decision, and is more than a mere search for the existence of substantial evidence supporting the Secretary’s decision.” McMillian v. Schweiker, 697 F.2d 215, 220 (8th Cir.1983). The substantiality of the evidence must take into account whatever the record fairly detracts from its weight. Id.

The claimant has the initial burden of establishing the existence of a disability as defined by 42 U.S.C. § 423(d)(1). In order to meet the statutory definition, the claimant must show (1) that he has a medically determinable physical or mental impairment that will either last for at least twelve months or result in death, (2) that he is unable to engage in any substantial gainful activity, and (3) that this inability is a result of his impairment. Timmerman v. Weinberger, 510 F.2d 439, 442 (8th Cir. 1975) .

If the claimant establishes that his impairment is so severe that he cannot engage in his former occupation, the burden shifts to the Secretary to prove that the claimant can perform some other kind of substantial gainful employment. Johnson v. Califano, 572 F.2d 186, 187 (8th Cir. 1978).

The ALJ acknowledged plaintiffs history of heart problems, yet concluded that plaintiff did not have an impairment or combination of impairments listed, in or medically equivalent to, one in Appendix 1, Subpart P of Regulation 4. Plaintiff lives with his wife and is able to adequately care for his personal needs. The AU specifically noted plaintiffs daily activities, including walking one mile (per his doctor’s orders), raking leaves, fishing and/or reading. Plaintiff’s testimony also revealed that his condition had not changed, i.e., not deteriorated, since his initial hospitalization. Specifically recalling plaintiff’s testimony that he could lift up to 100 lbs, repeatedly lift 40 lbs every one-half hour for eight hours, and sit all day, the AU found plaintiff’s impairment did not prevent him from doing his past relevant work. The Court thus finds substantial evidence in the record to support the Secretary’s denial of disability and disability benefits.

The resolution of conflicts in the evidence is a job for the Secretary, not the courts. See Janka v. Secretary of H.E.W., 589 F.2d 365, 368, 369 (8th Cir.1978). Moreover, as the final arbiter of disability, the Secretary is not bound by Dr. Ridge-way’s conclusions and opinions on the ultimate issue of disability. Id. The ultimate decision as to whether plaintiff’s heart condition is so severe as to be disabling is one for the Secretary to make.

Although the ALJ should generally afford great weight to the opinion of a treating physician, the AU herein could properly discount Dr. Ridgeway’s opinions. Medical reports unsupported by any medically acceptable clinical or laboratory diagnostic data or findings may properly be discounted by the trier of fact. See Janka, supra, 589 F.2d at 369. The AU may give whatever weight he deems warranted to Ridgeway’s letters, which are devoid of even minimal medical evidence or support. Accord, Dressel v. Califano, 558 F.2d 504, 506 (8th Cir.1977). Moreover, Ridgeway’s opinion contradicts his discharge summary and plaintiff’s own testimony that his condition had not changed.

The ALJ must give serious consideration to a claimant’s subjective evidence of disabling pain, regardless of [lack of] objective corroboration. The AU may disbelieve plaintiff’s subjective complaint so long as specific credibility findings are made. See Easley v. Schweiker, 558 F.Supp. 967, 972 (W.D.Mo.1983).

Here, the ALJ found no clinical evidence of impairment which could reasonably be expected to cause such pain or shortness of breath as to limit plaintiff’s ability to do past relevant (medium) work. The AU specifically noted plaintiff’s testimony regarding his ability to repeatedly lift significant amounts of weight, and his sporadic use of nitro pills, were inconsistent with plaintiff’s claim for disability.

Conclusion

Plaintiff’s two stress test results are insufficient on their face to qualify as disabling under 20 C.F.R. Pt. 404, Appendix 1. The ultimate determination' of disability is for the Secretary to make and the AU acted properly in discounting Dr. Ridge-way’s opinion regarding disability. The ALJ made specific credibility findings in support of his conclusion, that plaintiff’s subjective complaints were not disabling. The Secretary’s decision is supported by substantial evidence in the record and must be affirmed.

Therefore, it is hereby

ORDERED that defendant’s motion for summary judgment is granted, costs to be borne by the respective parties.

      . Exhibit # 15, dated 12-3-82
      "To Whom it may Concern,
      I enclose discharge summary of Mr. Nash’s hospitalization. Mr. Nash is completely and totally disabled at this time and will be for the remainder of his life.
      Sincerely,
      /s/ Kenneth D. Ridgeway, D.C.”
      Exhibit # 16, dated 2-15-83
      Dear Ms. Harris,
      Mr. Lenzie Nash is under my care for acute coronary artery disease. He appears at my office with a determination that states that the medical evidence given shows he is able to do a large range of work. He can lift 25 pounds frequently with a maximum of 50 pounds. He can work standing 6 hours of an 8-hour day. This is certainly an error! Mr. Nash has severe coronary disease which is quite limiting despite medical therapy. He most assuredly meets the correct criteria for social security disability.
      If I have been in error in not completing the forms properly please forward the proper forms to me so that I might do this immediately.
      Sincerely,
      /s/ Kenneth D. Ridgeway, D.C.”
      The July 15, 1983 letter to plaintiff's attorney stated that
      "... Mr. Nash will continue to be disable(sic) for the remainder of his life due to angina pectoris.”
      The letter describes plaintiff’s medications, and medical history and is, again, signed by Kenneth D. Ridgeway, D.C.


author: GLASSER, District Judge:

text:
    Joseph STERTZ, et al., Plaintiffs, v. GULF OIL CORPORATION, Defendant, and Donald Hodel, Secretary of the Department of Energy, as Stakeholder, and United States of America, Intervenor-Counterclaimant.
    No. 78 Civ. 1813.
    United States District Court, E.D. New York.
    April 24, 1985.
    Null and Null, Banks Brown, Westbury, N.Y., for plaintiffs.
    Lord, Day & Lord, John Castles, New York City, for Gulf Oil.
    Barry Sheingold, Office of Gen. Counsel, Dept. of Energy, Washington, D.C., for Dept. of Energy.
    Asst. U.S. Atty. Thomas Battistoni, E.D. N.Y., Brooklyn, N.Y., for U.S.
   MEMORANDUM AND ORDER

GLASSER, District Judge:

The United States Department of Energy (DOE) has moved this Court for an order pursuant to Rule 54(b) of the Federal Rules of Civil Procedure directing the Clerk of the Court to enter a judgment in favor of DOE and against Gulf Oil Corporation which includes prejudgment interest and which would grant such additional relief as will be amplified hereafter.

The history of the protracted proceedings between the parties has been set out in a Memorandum and Order dated June 14, 1984 (Slip Op. Cv. 78-1813), familiarity with which is assumed. By that Order, interest was directed to be calculated on a fund of $42.24 million at 12% per annum for the period commencing March 6, 1980 and ending March 26, 1984. The DOE seeks entry of partial final judgment on the June 14, 1984 Order and for clarification of that Order so as to provide for:

1. $24,662,490.92 which represents 12% per annum interest on the $42.24 million from March 6, 1980 to March 26, 1984 compounded annually.

2. “Prejudgment” interest at the rate of 12% per annum for lost use of the interest which has been accruing on the $24,662,-490.92 from March 26, 1984 (when Gulf paid the $42.24 million to DOE) to June 14, 1984 (the date of the Order referred to).

8. Post-judgment interest from June 14, 1984 to the date the judgment is paid at a rate determined by 28 U.S.C. § 1961.

Gulf does not oppose the motion insofar as it seeks the entry of a judgment pursuant to Rule 54(b) Fed.R.Civ.P. Gulf does, however, contest the amounts sought to be embraced by that judgment. Discussion

A. Interest from March 6, 1980 to March 26, 198b—Simple or Compound?

A determination of this issue is dependent upon the intent of this Court when, in its Order of June 14, 1984, it said: "As to the rate of interest, I see no reason for departing from the 12% ordered by Judge Platt as security in the event that the injunction was wrongfully issued.” (Slip op. at p. 14). The rate of interest intended was 12% per annum, not compounded. That intent reflects the general rule that, absent a contract or statute to the contrary, compound interest should not be allowed. Cherokee Nation v. United States, 270 U.S. 476, 490, 46 S.Ct. 428, 433, 70 L.Ed. 694 (1926). The motion of the DOE is granted and partial final judgment is directed to be entered as to interest on $42.24 million from March 6, 1980 to March 26, 1984 at the rate of 12% per annum simple interest in the sum of $20,552,-944.90.

B. Prejudgment Interest from March 26, 198b to June 14, 1984

In the Order of June 14, 1984, it was observed that were it not for the over-breadth of the injunction obtained by Gulf, the right of the DOE to the $42.24 million fund would have been secured and the right to the interest earned by that fund would similarly have vested in the DOE (Slip op. pp. 13-14). It necessarily follows, therefore, that as of March 26, 1984, DOE had an interest which was vested in, at the very least, the sum of $62,792,944.90 which is the total of $42.24 million plus simple interest at 12% from March 6, 1980 to March 26, 1984.

The DOE contends it is entitled to the sum it could have earned but lost on the interest that should have been paid by Gulf on the $42.24 million. The DOE characterizes that sum as prejudgment interest and relies upon a galaxy of cases which discuss the propriety of awarding such interest. Gulf opposes such an award on a variety of grounds.

Gulf argues first, that to direct such award would be to compound interest. If, as indicated, DOE was entitled to receive the sum of $20,552,944.90 on March 26, 1984, then as of that date, it acquired the right to assert a new obligation as against Gulf, which was distinct from the rights and obligations existing between them prior to that date. That new obligation was to pay prejudgment interest which the Court could be asked to impose upon Gulf. That the obligation is a new one is made manifest by the fact that it may or may not be imposed in the exercise of judicial discretion. See, e.g., Rolf v. Blyth, Eastman Dillon & Co. Inc., 637 F.2d 77, 86-87 (2d Cir.1980). Federal statute (28 U.S.C. § 1961) provides only for post-judgment interest. Although the decision whether to award prejudgment interest here is governed by federal law, federal courts look to state law in order to determine the appropriate rate. Lodges 743 and 1746, etc. v. United Aircraft, 534 F.2d 422, 446 (2d Cir.1975), cert. denied 429 U.S. 825, 97 S.Ct. 79, 50 L.Ed.2d 87 (1976). Were the Court to look to N.Y.C.P.L.R. § 5004, it would determine that the appropriate rate of interest is 9% per annum. The interest which might thus be awarded is an accretion to a sum which as of March 26, 1984 was added to and merged with the $42.24 million and lost its character for any meaningful purpose as principal or income. For these reasons, Gulfs contention that an award of prejudgment interest would be compounding interest is not persuasive.

Gulf also contends that since the amount as to which prejudgment interest is sought was unliquidated, an award of such interest would be improper. Gulf relies on Continental Bank & Trust Co. v. American Bonding Co., 630 F.2d 606 (8th Cir.1980); Mann & Parker Lumber Co. v. Wel-Dri & Moore Dry Kiln Co. of Oregon, 579 F.2d 973 (6th Cir.1978) and Duplate Corp. v. Triplex Safety Glass Co. of North America, 298 U.S. 448, 56 S.Ct. 792, 80 L.Ed. 1274 (1936). The observation regarding interest in Triplex was dicta and made in the context of a complex problem of damages in a patent infringement suit. All that was said by the Court on the issue appears at p. 459, 56 S.Ct. at p. 797: “If, however, an award of damages upon the basis of a reasonable royalty becomes appropriate again, we think that interest should run from the date when the damages are liquidated and not, as by the present decree, from the date of the last infringement.” I would be loathe to formulate the general rule on prejudgment interest advanced by Gulf on the basis of that enigmatic sentence from Triplex.

The observation as to prejudgment interest in American Banking was also made in the context of a complex problem of damages and after concluding that the district court’s award comported neither with Missouri statutory nor common law, the Court went on to say: “Absent statutory or contractual authorization, prejudgment interest is not generally allowed on an unliquidated claim, such as the claim at bar. Recovery of prejudgment interest may be allowed only for liquidated claims under these circumstances for an amount ‘readily ascertainable by computation or by determination according to a recognized standard.’ ” 630 F.2d at 612. The clear distinction between the cases aside, when on March 26,1984 Gulf transferred $42.24 million to the DOE, it could readily have ascertained, at a minimum, the amount of interest on that sum at 12% simple interest per annum. That sum, at the very least, could have been deposited in an interest bearing escrow account pending the resolution by the Court of the interest issue which was clearly contemplated by the settlement of March 20, 1984. Gulf was aware of the terms of the preliminary injunction obtained on its motion to secure the DOE against “all damages ... by reason of the preliminary injunction ... not exceeding the sum of $42.24 million plus 12% per annum interest” in the event of a final determination that Gulf was not entitled to the preliminary injunction.

More persuasive than Triplex, American Bonding and Wel-Dri (which is also clearly distinguishable) and more to the point than either of those cases is Blau v. Lehman, 368 U.S. 403, 82 S.Ct. 451, 7 L.Ed.2d 403 (1962), which was an action to recover “short swing” profits earned from securities transactions and in which the Court said that “interest is not recovered according to a rigid theory of compensation for money withheld but is given in response to considerations of fairness. It is denied when its exaction would be inequitable.” 368 U.S. at 414, 82 S.Ct. at 457. Given the circumstances surrounding the dispute between the parties and its litigated history to date, considerations of fairness compel me to conclude that interest should be awarded from March 26, 1984 to June 14, 1984 on the sum heretofore determined, namely, $20,552,944.90, at the rate of 9% per annum, not compounded.

I make no determination of the motion insofar as it relates to post-judgment interest. Such interest requires no judicial determination, being adequately regulated by 28 U.S.C. § 1961 and, in the event of an appeal, by Rule 37 of the Rules of Appellate Procedure. See, e.g., Wright, Miller & Kane, Federal Practice and Procedure § 2661 at 129 and eases cited in fn. 6 and 7.

In sum, all claims between the Department of Energy (in the name of Donald Hodel, Secretary of Energy, Stakeholder, and the United States of America, intervenor-counterclaimant) and Gulf Oil Corporation, defendant, having been finally resolved in this action, and there being no just reason for delay, pursuant to Rule 54(b) Fed.R.Civ.P., the Clerk is hereby directed to enter judgment in accordance with the Memorandum and Order filed June 14, 1984 and to enter judgment dated June 14, 1984 in favor of the Department of Energy and against Gulf Oil Corporation for:

(1) $20,552,944.90 representing 12% per annum simple interest for the period commencing March 6, 1980 and ending March 26, 1984 on the sum of $42.24 million;

(2) Prejudgment interest to be calculated on the sum of $20,552,944.90 in an amount representing 9% per annum, simple interest, for the period commencing March 27, 1984 and ending June 14, 1984.

For the reasons indicated in the footnote, I hereby recuse myself with respect to any future proceedings in this case and the Clerk of the Court is also directed to refer all such proceedings to the Judge to whom it shall be reassigned in accordance with Rule 4 of the Rules for the Division of Business Among District Judges in the Eastern District.

SO ORDERED.

      . The Court was advised by letter dated July 18, 1984 from counsel for Gulf Oil Corporation that on June 15, 1984, a certificate of merger was filed with the Delaware Corporation Commission. The effect thereof was that Gulf became a wholly owned subsidiary of Standard Oil Of California (now Chevron). I advised the parties that pursuant to 28 U.S.C. § 455 my disqualification from presiding over future proceedings was required because my spouse has a financial interest in Chevron.
      On July 30, 1984, I was advised by letter from Gulf s counsel that by virtue of a "hold-separate" agreement between the Federal Trade Commission and Chevron, Gulf maintains a separate corporate identity for operation purposes. That letter also expressed the view that given the size of Gulf and Chevron, the possibility that my spouse’s equity interest in Chevron could be "substantially affected” by the proceeding was highly doubtful and that given my familiarity with the case it was hoped that I would not conclude that § 455 mandated my recusal.
      Mindful of a discussion of 28 U.S.C. § 455 which recently appeared in 101 F.R.D. 373 (1984), I requested an opinion from the Judicial Ethics Committee on the following questions:
      1. May I grant partial judgment under Rule 54(b) of the Fed.R.Civ.P. on my Order of June 14, 1984?
      2. May I amend that Order to clarify whether interest should be simple or compound?
      3. May I rule on an application for pre-judgment interest?
      By letter dated October 23, 1984 from the Advisory Committee on Codes of Conduct of the Judicial Conference of the United States to which my inquiry was referred, the view was expressed that the Canons do not preclude my acting with respect to rulings made before the basis for disqualification occurred to clarify or complete the disposition of those earlier rulings. "The Rule 54(b) motion, for example, would appear intimately related to a ruling" I previously made. I am of the view that a determination with respect to interest as being simple or compound and with respect to prejudgment interest would similarly be in the nature of clarifying or completing my June 14th ruling and I will, therefore, pass upon the motion to that extent.


author: TOM S. LEE, District Judge.

text:
    Della MIXON, Plaintiff, v. PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY and Burlington Industries, Inc., Defendants.
    Civ. A. No. E84-0023(L).
    United States District Court, S.D. Mississippi, E.D.
    April 26, 1985.

      Donald C. Doman, Jr., Biloxi, Miss., George C. Williams, Quitman, Miss., for plaintiff.
    James F. Steele, Gulfport, Miss., Richard Foreman, Jackson, Miss., for defendants.
   MEMORANDUM OPINION

TOM S. LEE, District Judge.

On February 16, 1982, the plaintiff, Della Mixon, injured her back during the course of her employment with Burlington Industries, Inc. (Burlington). She received workers’ compensation benefits and returned to work. Her back injury was aggravated on September 20, 1982. Plaintiff filed a claim with Provident Life and Accident Insurance Company (Provident), which provides coverage under a group medical insurance policy through Burlington. On the claim form, plaintiff stated that the injury was work-related and, in answer to the question, “Has or will claim be filed under Workmen’s Compensation Act or similar law”, answered both “yes” and “no”. By letter dated October 29, 1982, Provident rejected the claim, stating, “Expense incurred as a result of occupational injury, sickness or disease is not covered.” Plaintiff then initiated an action against Burlington before the Mississippi Workmen’s Compensation Commission. In their answer, Burlington and its workers’ compensation carrier denied that the September injury was an aggravation of the earlier injury.

Plaintiff’s attorney wrote Cathryne Sciple, Personnel Administrative Supervisor of Burlington, to inform her that workers’ compensation coverage had been denied. The letter further stated that denial of coverage by both the workers’ compensation carrier and the group health plan insurer was considered to be a “failure to deal in good faith.” Plaintiff’s attorney also wrote Nancy Armstrong, Unit. Leader Medical Claims for Provident, who responded on January 27, stating:

The expenses related to the back injury have not been considered for payment since we assumed the Workman’s Compensation carrier would continue coverage. It is our policy, upon submission of the denial from Workman’s Compensation, we will cover any expenses not covered by their carrier. We have been furnished no proof of denial from our insured.
* * * * * *
Please have Mrs. Mixon furnish a copy of all incurred losses with a copy of the denial from her carrier and we will be happy to reconsider liability.

Plaintiff’s attorney sent Armstrong a copy of Burlington’s answer in the workers' compensation proceedings as well as copies of plaintiff’s medical bills. Following receipt of the information, neither Burlington nor Provident did anything in order to process the claim. In her deposition, Armstrong stated that Sciple had instructed her not to proceed further. On December 20, 1984 the Workmen’s Compensation Commission approved a lump sum settlement of plaintiff’s claims of $52,000.00 and payment of her medical bills of approximately $34,000.00.

Plaintiff brought suit against Provident on February 8, 1984 and, by amended complaint, against Burlington on October 25, 1984. She alleges that the defendants were liable for actual and punitive damages for tortious breach of contract, breach of fiduciary duties and fraud in the inducement.

All of the plaintiffs claims arise from the defendants’ refusal to pay medical costs incurred during the period between the accident and payment of benefits by the workers’ compensation carrier. The Provident policy states that “expenses in connection with bodily injuries arising from or in the course of employment” or “expenses in connection with illnesses for which benefits are provided under any workers’ compensation act or similar law” are not covered. Accordingly, defendants had no responsibility to pay benefits for work-related claims.

Plaintiff charges that the defendants had a procedure by which benefits were paid if the workers’ compensation carrier denied a claim. This alleged procedure was intended to insure that the claimant could pay outstanding bills. The basis for plaintiff’s conclusion that such a procedure existed is page 116 of a manual entitled “Occupational Injuries and/or Workers Compensation Coverage as it Might Affect the Group Plan” which states in part:

Injury during employment at Burlington or some other employer is not covered under the group plan even if there is no coverage under workers compensation. Cases judged by the workers compensation carrier to be non-occupational may be submitted for consideration under the group plan as a sickness claim—not accident claim. Submit copy of workers compensation denial letter with the group claim.

The plaintiff argues that the defendants acted in bad faith in failing to allow her the benefit of this procedure.

The case is before the court on the motion for summary judgment filed by Burlington. The court determines that, as a matter of law, defendant did not act in bad faith and, accordingly, is not liable to the plaintiff for punitive damages. In Mississippi, punitive damages are not favored and should be allowed only with caution and within narrow limits. Consolidated American Life Insurance Co. v. Toche, 410 So.2d 1303, 1304-05 (Miss.1982). In connection with breach of contract actions, punitive damages are not recoverable unless “attended by intentional wrong, insult, abuse, or such gross negligence as to consist of an independent tort.” Standard Life Insurance Co. v. Veal, 354 So.2d 239, 248 (Miss.1977). Punitive damages, as well as compensatory damages for mental distress or economic loss, are not recoverable if the insurance company had a legitimate or arguable reason for denying the claim. See Blue Cross & Blue Shield v. Campbell, 466 So.2d 833, 836-37 (Miss. 1085) (on petition for rehearing).

Burlington has established that the procedure on which plaintiff relies provides for the reconsideration of a claim following denial by the workers’ compensation carrier. That procedure, however, is not intended to provide coverage whenever benefits are not available under workers’ compensation. The plaintiff has continually maintained that the second accident was work-related. Because the Provident policy expressly excludes coverage of work-related accidents, Provident could reasonably deny coverage upon reconsideration of the claim. Burlington was perhaps careless in the way in which it handled correspondence with the plaintiff during the course of these proceedings. Carelessness, however, does not rise to the level of bad faith required for plaintiff to prevail on her claim.

It is the opinion of this court that no genuine questions of material fact remain and that the defendant’s motion for summary judgment should be granted. A separate judgment shall be entered according to the local rules.

      . Since the time of this accident, plaintiff has maintained and continues to maintain that the September accident was an aggravation of the previous accident and was not a new injury.

      . Plaintiff, relying on Dearman v. Prudential Ins. Co., 727 F.2d 479 (5th Cir.1984), alleges that Burlington is the agent of Provident. The court does not rule on this issue because it determines that summary judgment in favor of Burlington is appropriate on other grounds.

      . The complaint charged that the plaintiff was entitled to compensatory damages for the defendants’ failure to provide benefits and for mental and emotional distress as well as punitive damages.

      . The actual policy has not been submitted with the motion for summary judgment. The above quoted language is from the defendant’s brief and is not challenged by the plaintiff. The plaintiff admits that work related injuries are excluded from coverage.


text:
    James W. STANLEY, Jr., Plaintiff, v. MISSOURI STATE BOARD OF LAW EXAMINERS, Defendant.
    No. 83-4434-CV-C-5.
    United States District Court, W.D. Missouri, Central Division.
    May 3, 1985.
    James W. Stanley, Blevins, Pierce & Stanley, North Little Rock, Ark., for plaintiff.
    P. Pierre Dominique, Jefferson City, Mo., for defendant.
   ORDER

SCOTT 0. WRIGHT, Chief Judge.

Pending before the Court are defendant’s motion to dismiss and plaintiff’s motion for summary judgment. Plaintiff James W. Stanley is a practicing attorney in North Little Rock, Arkansas, and a member in good standing of the Arkansas Bar. Defendant Missouri State Board of Law Examiners is an agency set up by the Missouri Supreme Court for the purpose of regulating admission to the Missouri Bar. See Mo.Sup.Ct.R. 8. In 1983, plaintiff submitted to defendant an application for admission to the Missouri Bar. This application was rejected for the express reason that plaintiff did not meet the residency requirement set forth in Mo.Sup.Ct.R. 8.13. Plaintiff appealed defendant’s decision to the Missouri Supreme Court, which upheld its residency rule and affirmed the action taken by defendant. The instant lawsuit followed. The essential issue before the Court is whether the residency requirement set forth in Mo.Sup.Ct.R. 8.13 is violative of plaintiff’s federal constitutional rights.

I. The Piper Decision

This case is controlled by the United States Supreme Court’s recent decision in Supreme Court of New Hampshire v. Piper, — U.S. —, 105 S.Ct. 1272, 84 L.Ed.2d 205 (1985), where the Court struck down a New Hampshire Supreme Court rule which required residency in the state as a condition precedent to admission to the state bar. The Court reasoned that the residency requirement contravened the Privileges and Immunities Clause of the United States Constitution by denying non-residents of New Hampshire the opportunity to practice their profession within the state on terms of substantial equality with state residents. Id. at 1276-81. In reaching its conclusion, the Court rejected the state’s arguments that its residency rule was justified because non-resident attorneys “would be less likely: (i) to become, and remain, familiar with local rules and procedures; (ii) to behave ethically; (iii) to be available for court proceedings; and (iv) to do pro bono and other volunteer work.” Id. at 1279. The policy interests underlying Mo.Sup.Ct.R. 8.13 are indistinguishable from the interests asserted by the state in Piper. Consequently, Piper dictates that Mo.Sup.Ct.R. 8.13 must fall beneath the weight of the Privileges and Immunities Clause.

Undaunted, defendant contends that Piper is distinguishable in two respects. First, defendant notes that Mo.Sup.Ct.R. 8.13 requires that an applicant intend to maintain an office for the full time practice of law in Missouri, while the New Hampshire rule contained no such provision. Second, defendant points out that the applicant in Piper lived only 400 yards from the New Hampshire border, while the plaintiff in the instant case lives approximately 200 miles from the Missouri border. The Court fails to see how either of these distinctions is in any sense material. As defendant notes, Justice White filed a concurring opinion in Piper in which he seems to stress the importance of the physical proximity of the applicant to the New Hampshire border. Nevertheless, the other seven members of the Piper majority did not rely on this fact; to the contrary, they gave every indication that the Privileges and Immunities Clause prohibits residency rules which operate against residents of distant states as well as adjacent states. See id. at 1280 (describing less restrictive alternatives available to states for dealing with lawyers who reside “at a great distance.”). Accordingly, the defendant’s arguments for distinguishing Piper from the instant case must be rejected.

II. Res Judicata

Defendant’s final argument is that the instant lawsuit is barred by the principle of res judicata because plaintiff has already litigated the identical issues in state court. If not for the Piper case, defendant’s res judicata argument would be an attractive one. It is true that plaintiff had unsuccessfully litigated the rejection of his bar application before the Missouri Supreme Court. In that litigation, plaintiff had specifically-claimed that Mo.Sup.Ct.R. 8.13 violated the Privileges and Immunities Clause of the United States Constitution. Under these circumstances, ordinary principles of res judicata dictate that plaintiff should be barred from relitigating this issue. See Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980); Southern Jam, Inc. v. Robinson, 675 F.2d 94 (5th Cir. 1982); see also 28 U.S.C. § 1738; Restatement, Second, Judgments § 86 (1982).

Here, however, plaintiffs constitutional claim comes within a well-established exception to the general rule of res judicata: a second action is not barred when the “judgment in the first action was plainly inconsistent with the fair and equitable implementation of a statutory or constitutional scheme.” Restatement, Second, Judgments § 26(l)(d) (1982). The Restatement's illustration of this exception to the rule is analogous to the instant case:

“A et al., black pupils and parents bring suit against the B board of education to invalidate and enjoin the operation of a state school “tuition grant” law on the ground that it fosters racial discrimination and is therefore unconstitutional. The court holds the law constitutional as applied and enters judgment for the defendant. Appeal is not taken, and is not warranted by the state of the law at the time of the judgment. Thereafter, the United States Supreme Court in another action between different parties strikes down as unconstitutional a similar tuition grant law of another state. A et al. then commenced a new action against the B board seeking the relief that was denied in the previous action. Whether or not the claims in the two actions by A et al. are regarded as the same, the second action is not barred by the first judgment. In a matter of such public importance the policy of nationwide adherence to the authoritative constitutional interpretation overcomes the policies supporting the law of res judicata.”

Id. § 26, comment e, illustration 6. In the instant case, it clearly would be inequitable to plaintiff and would undermine the Piper holding to rule that plaintiffs present lawsuit is barred because he had the foresight to challenge Missouri’s residency requirement in the state court system back in 1983. Accordingly, this Court holds that plaintiffs present lawsuit is not barred by the doctrine of res judicata.

III. Remedy

The final question to be decided by this Court concerns the remedy to which plaintiff is entitled. In his complaint, plaintiff sought an order enjoining defendant from applying Mo.Sup.Ct.R. 8.13 and requiring that plaintiff be admitted to the Missouri Bar. In his Supplemental Motion for Summary Judgment, plaintiff modified his prayer for relief and requested that the Court enjoin enforcement of the residency rule and direct defendant to find and recommend to the Missouri Supreme Court that plaintiff “fully meets the requirements for admission to the Missouri Bar.” In light of the ruling herein concerning the constitutionality of Mo.Sup.Ct.R. 8.13, this Court will, of course, enjoin defendant from denying plaintiff’s application to the Bar on the basis of that rule.

Nevertheless, this Court will not order that plaintiff be admitted to the Bar. Nor will the Court direct defendant to find that plaintiff “fully meets” the requirements for admission to the Bar. There has been no admission by defendant in this case that plaintiff satisfies all of the requirements for admission to the Bar; indeed, it appears that the Board of Law Examiners did not process plaintiff’s application once it determined that he was ineligible on non-residency grounds. In addition, the Court notes that every applicant for admission to the Bar must demonstrate that he is of good moral character. Such a determination necessarily involves the exercise of discretion on the part of the Board. This Court must be careful not to encroach upon that discretion. Therefore, the Court will decline making plaintiff a member of the Missouri Bar by judicial fiat; it should be sufficient to declare Mo.Sup.Ct.R. 8.13 unconstitutional and to enjoin defendant from enforcing Mo.Sup.CtR. 8.13 with respect to plaintiff’s application for admission to the Missouri Bar.

Accordingly, it is hereby

ORDERED that defendant’s motion to dismiss is overruled. It is further

ORDERED that plaintiff’s motion for summary judgment is sustained. It is further

DECLARED that Mo.Sup.CtR. 8.13 is unconstitutional. It is further

ORDERED that the Missouri State Board of Law Examiners, its agents, assigns, employees, representatives, successors and affiliates are enjoined from enforcing Mo.Sup.CtR. 8.13 with respect to plaintiff’s application for admission to the Missouri Bar.

      . Mo.Sup.Ct.R. 8.13 provides in relevant part: "No person shall be admitted to practice law in this State unless he is a bona fide resident of this State, or a resident of an adjoining county in an adjacent state who in good faith intends to maintain an office for the fulltime practice of law in this State.”

      . U.S. Const. Art. IV, § 2, cl. 1.


author: DECKER, District Judge.

text:
    Raymond E. GLASSMAN, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant.
    No. 84 C 6676.
    United States District Court, N.D. Illinois, E.D.
    May 6, 1985.
    Lee C. Korbakes, law offices of Lee C. Korbakes, Chicago, Ill., for plaintiff.
    Joseph Hasman, Daniel Engel, Peterson Ross Schloerb & Seidel, Chicago, Ill., for defendant.
   MEMORANDUM OPINION AND ORDER

DECKER, District Judge.

Raymond E. Glassman (Glassman) brought this libel action against his former employer, Metropolitan Life Insurance Company (Metropolitan), on the basis of diversity jurisdiction. Glassman alleges that a statement in a letter mailed by Metropolitan to policyholders formerly assigned to Glassman’s account was defamatory. The case is before the court on Metropolitan’s motion for judgment on the pleadings on the issue of libel or, alternatively, for partial summary judgment on the issue of conditional privilege.

I. Factual Background

The facts of this case are largely undisputed. Glassman worked for Metropolitan as a sales representative from 1978 until June 24, 1983, when his employment ended. Subsequently, Glassman operated as an independent insurance broker and succeeded in replacing some Metropolitan policies owned by his former customers.

In early August, 1983, Metropolitan mailed the letter at issue to all of plaintiffs former clients. The letter first informs the reader that Glassman was no longer authorized to transact business on Metropolitan’s behalf, since his employment with the company had terminated for unspecified reasons. The letter next introduces Glass-man’s successor, Ms. Kimsey, who would handle all of his accounts.

The rest of the letter discusses the topic of replacement of current Metropolitan policies. The letter states that “[periodically, it comes to our attention that some salespeople representing other insurance companies suggest canceling existing insurance policies and applying for new insurance.” Exhibit “A” to Complaint at 1. (Attached as appendix to this opinion.) The letter advises the reader of a number of perceived disadvantages to replacement. Then, in the specific portion of the letter attacked by plaintiff as libelous, Metropolitan issues the following warning with regard to so-called revolutionary offers—“In short, if you are shown an insurance plan that seems ‘too good to be true’, it probably is.” Id. at 2. Metropolitan closes by offering to help the reader compare policy benefits and make an informed decision.

Glassman’s complaint essentially alleges that Metropolitan, fearful of losing additional business to plaintiff, maliciously published the foregoing letter to injure his reputation by imputing fraud and lack of integrity in the conduct of his insurance business. Arguing that the letter is not defamatory as a matter of law under Illinois’ innocent construction rule, defendant moves for judgment on the pleadings. In the alternative, defendant moves for partial summary judgment on the grounds that the letter is conditionally privileged.

II. Discussion

On a motion for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c), all well-pleaded factual allegations in the complaint are deemed admitted, and the only question is whether the movant is entitled to judgment as a matter of law. Roberts v. Northern Trust Co., 550 F.Supp. 729, 730 (N.D.Ill.1982). In this case, Metropolitan will prevail only if the pleadings make it certain that the contested statement was not libelous. See A.D.E. Inc. v. Louis Joliet Bank and Trust Co., 742 F.2d 395, 396 (7th Cir.1984).

The preliminary determination of whether an allegedly defamatory statement is actually capable of defamatory meaning is one of law to be resolved by the court. Chapski v. Copley Press, 92 Ill.2d 344, 352, 65 Ill.Dec. 884, 442 N.E.2d 195 (1982). In addressing this threshold question, Illinois courts apply the “innocent-construction rule.” Id.; see also Fried v. Jacobson, 99 Ill.2d 24, 28, 75 Ill.Dec. 398, 457 N.E.2d 392 (1983). In recently modifying the rule, the Illinois Supreme Court held that:

a written ... statement is to be considered in context, with the words and implications therefrom given their natural and obvious meaning; if, as so construed, the statement may reasonably be innocently interpreted or reasonably be interpreted as referring to someone other than the plaintiff it cannot be actionable per se.

Chapski, 92 Ill.2d at 352, 65 Ill.Dec. 884, 442 N.E.2d 195. Under both prongs of the innocent construction rule, the court concludes that Metropolitan’s letter is not defamatory as a matter of law.

Whether the statement complained of is susceptible of innocent construction must be resolved by the court by viewing the statement stripped of innuendo. E.g., Audition Division, Ltd. v. Better Business Bureau, 120 Ill.App.3d 254, 256, 75 Ill.Dec. 947, 458 N.E.2d 115 (1983). In order to be defamatory, the statement must impute to plaintiff fraud or dishonesty in the operation of his business. The letter as a whole, however, does not accuse anyone, let alone plaintiff, of fraud, want of integrity, or improper conduct. The letter merely afforded Metropolitan an opportunity to reassure its customers of continuity in the wake of a personnel change and to reconfirm its business ties. Although the letter discounts the allure of competitive and “revolutionary”- policies, it does not charge plaintiff with engaging in any meddlesome activities. Moreover, the letter carefully refrains from disclosing the reasons for Glassman’s termination.

Glassman takes singular exception to the statement, “if you are shown an insurance plan that seems ‘too good to be true’, it probably is.” When considered in the context of the letter as a whole, the natural and plain meaning of these words is apparent. The statement is merely a derivative of the ancient and prudent maxim, caveat emptor. It is difficult to believe that the average reader would not understand it as such. Any correlation between the “too good to be true” language and plaintiff is ambiguous at most, and any possible insult of plaintiff is imaginary. Therefore, the court concludes that the “too good to be true” statement in particular and the letter as a whole may reasonably be interpreted as not imputing fraud or impropriety on Glassman’s part and are not actionable as a matter of law.

In addition, the allegedly defamatory statement may reasonably be interpreted as referring to someone other than Glass-man. The six-paragraph form letter only mentions Glassman’s name in the first paragraph, in connection with the termination of his agency. The bulk of the letter, as discussed, advises the reader of the perceived risks posed by replacement policies in general. Aside from the introduction of Ms. Kimsey in the second paragraph, the balance of the letter does not refer to any specific individual. Rather, the letter employs generic phrases, such as “some salespeople representing other insurance companies,” and passive language, exemplified by “offers are sometimes made” and “if you are shown.” Considered in context and given its natural and obvious meaning, this language refers to an indeterminate group of competitor insurance companies and salespeople going well beyond plaintiff. See Cartwright v. Garrison, 113 Ill.App.3d 536, 541, 69 Ill.Dec. 229, 447 N.E.2d 446 (1983). Therefore, under the second prong of the innocent construction rule, the “too good to be true” language is not actionable as a matter of law.

III. Conclusion

For the foregoing reasons, the court holds that defendant’s letter is not defamatory as a matter of law under the Illinois innocent construction rule. Accordingly, the court grants defendant’s motion for judgment on the pleadings and enters judgment in its favor.

APPENDIX

EXHIBIT A

Mr. James Konefal

612 Inverrary Ln.

Deerfield, II 60015

Dear Policyholder

We wish to inform you that Mr. Ray Glass-man no longer represents Metropolitan, his employment with the Company having terminated June 24, 1983. Accordingly, he is no longer authorized to accept premiums or transact business of any kind on our behalf.

Ms. Sue Kimsey has been assigned to service your insurance and assist you in developing sound Metropolitan plans of coverage for your personal or business needs. If you have any questions in this regard, please contact this office, mentioning her name, and she will promptly arrange to give you the advice and service you may be seeking.

Periodically, it comes to our attention that some salespeople representing other insurance companies, suggest canceling existing insurance policies and applying for new insurance. This practice is known as “replacement”, and sometimes is also accomplished by “freezing” the present contract, or by applying the values of the existing plan toward a newly purchased contract. Metropolitan believes that replacement is generally to your disadvantage, and you should be aware of the full impact of such a decision. In other words, you should keep in mind the following:

—The same benefits for a new contract will probably cost more than for comparable older ones.
—The costs of putting a new contract on the books of an insurance company—selling, underwriting and general acquisition costs—are generally charged against premiums paid during the early years, and this is reflected in lower cash values or an applicable surrender charge.
—Older contracts usually contain more favorable benefits and provisions than those now being issued, in particular the life income settlement.
—Loan interest rates may differ.
—The contestable period will start again, which could affect the payment of a death or disability claim.

Offers are sometimes made involving plans represented to be revolutionary. These plans are generally only variations of plans that have been available for many years. Frequently recommended for purchase in a replacement situation is either a Universal Life or a deposit term type plan. Universal Life plans are usually presented with high interest rates assumed which cannot be guaranteed for the life of the policy. Deposit term type plans often carry severe penalties if the contract is surrendered or lapsed before the deposit term maturity date. In short, if you are shown an insurance plan that seems “too good to be true”, it probably is.

If it is suggested that you cash surrender, borrow upon or change your present Metropolitan policy in a way that will affect its value, immediately contact this office and we will provide whatever information you need to assist you in comparing benefits and making the right decision.

Sincerely

      . Pursuant to Fed.R.Civ.P. 12(c), the court excludes the extraneous material filed by plaintiff and treats defendant’s motion solely as one for judgment on the pleadings.

      . Because plaintiff does not aver any special damages, his right to recover rests solely upon whether defendant's allegedly libelous letter is actionable per se and not per quod. See Fried v. Jacobson, 99 Ill.2d 24, 26, 75 Ill.Dec. 398, 457 N.E.2d 392 (1983). Even if a sufficient allegation of special damages could be teased from the complaint, plaintiff would run afoul of the rule that innuendo is not available to impute a libel to a writing that in itself is otherwise innocent of any defamatory meaning. See, e.g., Fulrath v. Wolfe, 250 Ill.App. 130, 134 (1928).

      . As an alternative analysis, the court raises sua sponte the possibility that the "too good to be true” language is a constitutionally protected expression of opinion. Cf. Chapski, 92 Ill.2d at 352, 65 Ill.Dec. 884, 442 N.E.2d 195; Catalano v. Pechous, 83 Ill.2d 146, 158, 50 Ill.Dec. 242, 419 N.E.2d 350 (1980). The court finds that the statement may reasonably be characterized as an opinion for a variety of reasons. First, it is an evaluative statement reflecting Metropolitan’s business judgment; second, many of its terms are indefinite, and any connection to the plaintiff is ambiguous to the average reader; and third, it is qualified by cautionary language, such as "probably.” See generally Oilman v. Evans, 750 F.2d 970, 978-84 & n. 18 (D.C.Cir. 1984) (en banc, per Starr, J.), petition for cert. filed, — U.S. —, 105 S.Ct. 2662, 86 L.Ed.2d 278 (1985).

      . In light of this opinion, the court need not decide whether defendant’s letter is conditionalIy privileged as a matter of law.


text:
    UNOCAL CORPORATION and Union Oil Company of California v. MESA PETROLEUM CO., Mesa Partners II, Mesa Asset Co., Mesa Eastern, Inc., CY-41, Inc., Jack-41 Inc., T. Boone Pickens, Jr., Cyril Wagner, Jr., and Jack E. Brown.
    Civ. A. No. 85-1004 L.
    United States District Court, W.D. Louisiana, Lafayette-Opelousas Division.
    May 9, 1985.
    Randall W. Wilson, Terrell W. Oxford, William H. White, Thomas M. Rollins, and Thomas W. Paterson, Susman, Godfrey & McGowan, Houston, Texas; Daniel K. Mayers, James S. Campbell, and David Westin, Wilmer, Cutler & Pickering, Washington, D.C.; Jasmina Theodore, Union Oil Co., Los Angeles, California; Phillip A. Wittmann, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, Louisiana; David R. Frohn, Camp, Carmouehe, Barsh, Hunter, Gray, Hoffman & Gill, Lafayette, Louisiana, for plaintiffs.
    William R. Burke, Jr. and Theodore F. Weiss, Jr., Baker & Botts, Houston, Texas; William C. Pelster, Michael L. Weiner, and William J. Guzick, Skadden, Arps, Slate, Meager & Flom, New York City; Michael R. Mangham and Louis R. Davis, Broadhurst, Brook, Mangham & Hardy, Lafayette, Louisiana, for defendants.
   MEMORANDUM RULING

DUHE, District Judge.

On April 11, 1985, (with amendments on April 12 and April 18, 1985), plaintiff’s, Unocal Corporation and Union Oil Company of California (hereinafter called “Unocal”), filed this proceeding against Mesa Petroleum Company, Mesa Partners II, Mesa Asset Co., Mesa Eastern, Inc., Cy-41, Inc., Jack-41, Inc., T. Boone Pickens, Jr., Cyril Wagner, Jr. and Jack E. Brown (hereinafter referred to as “Mesa”), seeking damages and injunctive relief preventing the takeover of Unocal by Mesa and preventing Mesa from voting its shares of Unocal at the Unocal shareholder’s meeting to be held May 13, 1985. Unocal asserts that Mesa’s attempt to take over Unocal and its previous attempts to take over other major oil companies constitute an unlawful conspiracy to restrain trade in domestic oil and gas leasing and exploration on the Outer Continental Shelf in the Gulf of Mexico in violation of § 1 and 2 of the Sherman Act, 15 U.S.C. § 1, et seq.

Basically Unocal contends that defendants have conspired together to reduce competition by “restructuring” (greatly increase the debt to equity ratio of) numerous major oil companies, including Unocal, by attempting takeover. The result of the increased debt, according to plaintiffs, is to restrict the working capital available for purchasing of leases and for exploration thereby reducing competition for new leases and reducing funds available to develop existing leases on the Outer Continental Shelf of the Gulf of Mexico where both Unocal, Mesa and other targets of Mesa takeover attempts are active.

Unocal seeks injunctive relief pursuant to § 16 of the Clayton Act, 15 U.S.C. § 26 which provides in pertinent part:

“Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief ... against threatened loss' or damage by a violation of the antitrust laws ... when, and under the same conditions and principals as injunctive relief against threatened conduct that will cause loss or damage is granted by the courts of equity____”

Preliminary injunction begs extraordinary and drastic relief. It exists to protect plaintiff from irreparable injury and to preserve this Court’s power to render a meaningful decision after trial on the merits, but only when plaintiff clearly establishes by a preponderance of the evidence that the following prerequisites exist:

1. A substantial likelihood that plaintiff will prevail on the merits,
2. A substantial threat that plaintiff will suffer irreparable injury if the injunction is not granted,
3. That the threatened injury to plaintiff outweighs the threatened harm the injunction may do to defendant, and
4. That granting the preliminary injunction will not disserve the public interest. Canal Authority of State of Florida v. Callaway, 489 F.2d 567, 572 (5th Cir.1974).

Having carefully considered the law, the evidence submitted both by declaration and at the hearing and the briefs and oral argument of counsel, this Court remains unconvinced that plaintiff has established a substantial likelihood that it will prevail on the merits and a substantial threat that it will suffer irreparable injury unless the injunction is granted and, therefore, has denied plaintiff's request for a preliminary injunction without consideration of the two remaining prerequisites.

LIKELIHOOD OF SUCCESS

Has Unocal shown a substantial likelihood that it will establish that Mesa’s activity is an antitrust violation? Put another way, has Unocal shown that it is substantially likely to prove that Mesa seeks to lessen leasing and exploration competition on the Outer Continental Shelf in the Gulf of Mexico? Conceding to plaintiff, for the sake of brevity, all other issues involved in the likelihood of success question, this Court remains unconvinced on this point.

There is no doubt that the mergers which have recently occurred in the petrochemical industry have increased the resultant corporate entities’ debt substantially. There is likewise no doubt that increased debt requires a greater percentage of operating revenue be dedicated to debt service and that success in borrowing funds for leasing and exploration is not likely. Unocal, therefore, reasons that less money will be spent for leasing and exploration and, therefore, competition will be lessened. That may happen, but it likewise may not.

Unocal’s reasoning ignores market factors and would explain all changes in leasing and development expenditures on the Outer Continental Shelf in the Gulf of Mexico in recent years in terms of “restructure”. But the declining world price of oil and gas, excess world supplies of both, the dwindling number of low risk drilling prospects available, and the overall economic down-turn in this country and in most of the industrialized countries of the world all play a part. In fact, Exhibits C-2 and C-3 attached to the Keegan declaration submitted by plaintiff show substantial variations in the amount of funds spent on Outer Continental Shelf bids from year to year within the same companies long before Mesa began its takeover campaigns. Obviously market factors and management decisions alone are responsible for those variances.

While mergers obviously reduce the number of competitors that is not per se an antitrust violation.

Neither has there been any showing that companies, “restructured” or otherwise, could not shift the emphasis of their operations or take other measures which would keep the Outer Continental Shelf leasing and development budgets at whatever level the management of the company deemed appropriate in light of market conditions without regard to the increased debt. In short, there are too many other possible explanations that have nothing to do with the activities of Mesa, anti-competitive or not.

Additionally, even if the statistical data submitted by Unocal to show a reduction in Outer Continental Shelf expenditures by “restructured companies” be conceded to be solely as a result of the “restructuring” and that be conceded to be brought about entirely by anti-competitive activities of Mesa, there is no way to quantify the effect thereof on the industry as a whole. Indeed the effect would appear to be, at least at this point, inconsequential.

Unocal additionally argues that a number of mergers and other “restructuring” efforts which have been undertaken by companies in the industry which were not targets of Mesa takeover attempts were nonetheless brought about by the implied threat that such takeover attempts were possible. But again to attribute the cause of these mergers and other efforts to Mesa alone is to ignore completely the market factors at Work.

The Court is aware that an agreement or combination, the purpose of which is to restrain trade, is condemned by the Sherman Act whether the conspirators in fact succeed in their purpose or not. U.S. v. Socony-Vacuum Oil Co., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). In the case at bar, however, the extent to which the combination of defendants may or may not succeed in lessening competition is significant because plaintiff is attempting to use that evidence as evidence of the purpose of the agreement or combination of defendants. There is direct evidence that the defendants have combined together and agreed to acquire Unocal and have taken steps to accomplish their purpose just as they did with other companies on previous occasions. But plaintiff must also prove that the purpose (or the effect) of the combination is to restrain trade, otherwise, the combination is not violative of the Sherman Act. Plaintiff attempts to do this by introducing evidence tending to show that the effect of the attempted takeovers has been to reduce competition. It is there that the success or failure of the combination in restraining trade and lessening competition becomes significant. It is in establishing this fact that plaintiffs’ evidence fails. Plaintiff has failed to prove that the combination or agreement among the defendants is either intended to be in restraint of trade and competition or in fact accomplishes a restraint of trade and competition.

The evidence clearly shows that Mr. Pick-ens has fixed and firm notions concerning what is good for the industry and that Mesa has been instrumental in bringing such changes about. But the evidence does not convince this Court that Mesa’s activity is an antitrust violation. Mr. Pick-ens may not be the oil company shareholders’ champion, but neither is he shown to be an economic terrorist as some have suggested.

IRREPARABLE INJURY

What irreparable harm will befall Unocal (as opposed to Unocal’s management) as a result of Mesa’s actions if the preliminary injunction is not issued?

The shareholders of Unocal will decide to sell or not. If the takeover attempt is unsuccessful, the status quo will be maintained, Mesa will be the largest single stockholder of Unocal and the corporation will have incurred some additional debt in defending itself against the takeover attempt. Even Unocal does not contend that this is an irreparable injury.

If the takeover succeeds, Unocal will be owned and managed by Mesa and will have substantially increased debt. Unocal argues that the substantial increase in debt will reduce funds available for exploration and leasing and that some leases which it now holds (in one of the largest, if not the largest inventories of Outer Continental Shelf leases of any major company) may be lost and its ability to replace its reserves may be impaired. If so, this will result in the gradual liquidation of the company since any company with depletable assets slowly puts itself out of business if it does not regularly replace those assets. But this again is largely speculation. Unocal may well maintain its relative competitive position on the Outer Continental Shelf in the Gulf of Mexico depending upon what actions its competitors take. They may likewise cut back their leasing and exploration activity in response to market factors.

New management may run Unocal more efficiently than it is run by the present management. It may become a more efficient money earner for its shareholders than it is now. Whether it will or will not is entirely speculative.

Unocal contends that it will lose some of its lease inventory, especially its deep water leases because if its operating funds are cut back, it will not be able to drill those leases within the primary term and will, therefore, forfeit them back to the government and lose its investment therein. This assumes that Unocal would be unable to make farmout or joint operating agreements or joint venture agreements with other companies for the development of those leases. Whether it can or cannot is, at this point, entirely speculation. Unocal contends that it would not be able to do so because only it has the store of prior knowledge which establishes the value of those deep water leases. It points to the fact that it was the only bidder for those leases showing that other companies do not have the knowledge to establish the value for those tracts. Conceding that this is true does not resolve the problem. Unocal can make its store of information available just as it can make its leases available to potential partners, joint venturers or prospective purchasers. There is simply no showing that its leases will be lost as a result of Mesa’s activity.

Additionally, even if it be assumed that the leases will be lost, whether this constitutes an irreparable harm depends upon whether or not those leases would have been productive if drilled. It may well be that Unocal would spend vast sums of money in an effort to develop those leases only to find that the leases were not productive. If so, to lose those leases at the current stage would minimize Unocal’s losses and would therefore be a benefit rather than a detriment.

CONCLUSION

Being of the firm opinion that Unocal has not carried the burden of proof placed upon it to establish its entitlement to a preliminary injunction, this Court feels compelled to deny the request.

The necessity to decide the issues presented at the earliest possible date has made it impossible for the Court to treat the issues presented in the detail and to the extent that it would like, therefore, the Court reserves the right to expand on the reasons herein given at a later date should it consider that advisable.


text:
    YAZOO COUNTY, MISSISSIPPI and Yazoo County Port Commission, Plaintiffs, v. INTERNATIONAL SURPLUS LINES INSURANCE COMPANY, Defendant.
    Civ. A. No. J84-0666(L).
    United States District Court, S.D. Mississippi, Jackson Division.
    May 17, 1985.
    Vardaman S. Dunn, Cox & Dunn, Ltd., Jackson, Miss., for plaintiffs.
    Alex A. Alston, Jr., Barry S. Zirulnik, Thomas, Price, Alston, Jones & Davis, Jackson, Miss., for defendant.
   MEMORANDUM OPINION

TOM S. LEE, District Judge.

This cause is before the court on the motion of the defendant, International Surplus Lines Insurance Company (International), for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.' Based on consideration of the briefs submitted by the parties with attachments, it is the court’s opinion that the defendant’s motion for summary judgment should be granted.

In this case, the plaintiffs, Yazoo County, Mississippi (Yazoo County) and Yazoo County Port Commission (Port Commission), seek to recover attorneys’ fees that they incurred while defending a lawsuit filed against them, Suthoff v. Yazoo County Industrial Development Corp., 722 F.2d 133 (5th Cir.1983), cert. denied, — U.S. —, 104 S.Ct. 2389, 81 L.Ed.2d 347 (1984) (Suthoff lawsuit). The defendant denies any liability* for payment of the attorneys’ fees, claiming that neither Yazoo County nor the Port Commission are insureds under the insurance policy in question and alternately claiming that liability is excluded by an endorsement attached to the insurance policy barring any claims “arising from or attributable to or based upon any act(s) committed or alleged to have been committed prior to August 21, 1976”. International’s insurance policy is expressly designated as a “claims made basis” policy. This type of policy provides for indemnity, regardless of the date of the occurrence giving rise to the claim, if the act is discovered and reported to the insurer during the policy period. See Brander v. Nabors, 443 F.Supp. 764, 767 (N.D. Miss.), aff’d, 579 F.2d 888 (5th Cir.1978). This is to be distinguished from an “occurrence” policy which provides for indemnity, regardless of when the claim is made or reported, if the act giving rise to the claim occurred during the policy period. 443 F.Supp. at 767.

The first insurance agreement between Yazoo County and International extended from August 21, 1974 to August 27, 1977 and was officially designated as a “Directors & Officers Liability & Reimbursement Liability For Public Officials/Municipalities” policy. All subsequent policies between Yazoo County and International were expressly designated as “Public Officials And Employees Liability Insurance” on a “claims made basis”. All of the policies subsequent to the original agreement have an attached endorsement barring coverage for claims arising from acts committed or alleged to have been committed prior to August 21, 1976.

On or about February 16, 1979, the Suthoff lawsuit was filed against the claimants herein and several other defendants pursuant to 42 U.S.C. § 1983 alleging the deprivation of property rights under the Fifth and Fourteenth Amendments to the Constitution. Since International did not receive notice of this lawsuit until August 10, 1979, it denied an initial claim from Yazoo County for legal fees in the amount of $9,457.73, stating that Yazoo County had not properly complied-with the policy’s notice and consent provisions. On September 7, 1984, the instant action was commenced against International with plaintiffs demanding reimbursement of $80,-448.16 expended for legal fees. The plaintiffs do not dispute that the claim for indemnification arising from the Suthoff lawsuit is barred by the policy’s endorsement, since the acts complained of in the lawsuit occurred prior to August of 1976. See Suthoff, 722 F.2d at 134. However, plaintiffs contend that recovery of the legal fees incurred in defending the lawsuit are not barred.

An initial consideration is whether plaintiffs are insureds under the insurance policy. As stated previously, the policy is expressly entitled “Public Officials And Employees Liability Insurance”. The initial statements of the policy provide:

In consideration of the payment of the premium and subject to all of the terms, conditions and exclusions of this Policy, the Company agrees with the Insureds under Coverage A and the Public Entity under Coverage B as follows: (emphasis added)
I. Coverages A and B
A. The Company will pay on behalf of the Insureds all loss which the Insureds shall become legally obligated to pay for any claim or claims made against them during the policy period because of a Wrongful Act.
B. The Company will reimburse the Public Entity for all Loss for which the Public Entity shall be required by law to indemnify the Insureds for any claim or claims made against them during the policy period because of a Wrongful Act.

“Public entity” is defined as “that Municipality, Governmental Body, Department, or Unit, which is named in the Declarations and is legally constituted at the inception date of this Policy”. “Insureds” is defined as “all persons who were, now are or shall be lawfully elected or lawfully appointed officials and members of the Public Entity. The term ‘Insured’ shall include members of such commissions, boards, or other units operating by and under the jurisdiction of such governing body and within an appointment of the total operating budget indicated in the proposal form.” Considering the clear distinction made between the “public entity” and the “insureds” in the policy and the express statement that the public entity will only be reimbursed for losses for which it is required to indemnify the insureds, defined as elected or appointed officials of the public entity, for claims made against them, the court concludes that the express provisions of the policy do not extend coverage to Yazoo County or the Port Commission for claims made exclusively against them. In the Suthoff lawsuit, only Yazoo County and the Port Commission, and not any of their elected or appointed officials, were named defendants. Since no appointed or elected officials of Yazoo County or the Port Commission have suffered, as a result of the Suthoff lawsuit, any loss due to the rendering of a judgment against them or any loss incurred by the necessary payment of attorneys’ fees, the court concludes that the public entities’ claims against International are without merit. As stated in Brander v. Nabors, 443 F.Supp. at 769, “Courts will neither create an ambiguity where none exists nor make a new contract for the parties. [Citations omitted] If the policy language is clear, unequivocal, and, hence, unambiguous, its terms will be enforced ... since ‘[t]he power to make such contracts as the parties desire to make, when not prohibited by law or public policy, is a fundamental principle of the ... insurance business, and is essential to its successful conduct.’ ”

Yazoo County contends that it is an insured under the policy, arguing that the applicable policy, GP 12674, providing coverage from August 21, 1978 to August 21, 1979, is stated to be a renewal of GP 9410 which, in turn, was a renewal of GP 7039. Unlike the subsequent policies, Policy No. GP 7039 lists Yazoo County as the “named insured”. However, policy GP 12674 provides that “This Declarations Page and the Forms listed below and attached hereto, together with the completed and signed Proposal shall constitute the contract between the Insured(s) and the Company subject to ... endorsement I.” This language is consistent with case authority in Mississippi providing that, upon renewal, an original contract is superseded and the new agreement becomes the controlling document. McArthur v. Fillingame, 184 Miss. 869, 186 So. 828 (1939).

Even assuming arguendo that Ya-zoo County is a named insured under the policy, the court concludes that the County and Port Commission could not recover for attorneys’ fees expended in the defense of the lawsuit filed against them since the endorsement provides that all claims for acts occurring prior to August 1976 are barred. Yazoo County contends that the endorsement only states that “claims” are barred and alleges that a request for payment of attorneys’ fees is not a “claim” but a “loss” which the endorsement fails to bar. The endorsement provides in full:

It is hereby understood and agreed notwithstanding anything contained herein to the contrary, this policy does not cover any claim or claims arising from or attributable to or based upon any act(s) committed or alleged to have been committed prior to August 21, 1976.

The policy does not define ‘claim’ but defines ‘loss’ as “any amount which the Insureds are legally obligated to pay or which the Public Entity shall be required by law to pay as indemnity to the Insureds, for any claim or claims made against them, for Wrongful Acts and shall include but not be limited to damages, judgments, settlements and costs, cost of investigation and defense of legal actions____” As stated, “loss” covers any “claims” made against the Insureds including “defense of legal actions”. The policy unambiguously provides that a loss, including legal expenses incurred in defending a lawsuit arising out of any covered claim, will be paid. However, the underlying claim is not covered since it arose out of acts committed prior to 1976. Therefore, a loss of funds paid for legal representation arising out of the barred claim is not covered. As expressed in 7C J. Appleman, Insurance Law and Practice, § 4691 (W. Berdal ed. 1979), “Of course, an insurer could not be held liable for expenses incurred by the insured in defending a suit, where the claim made against the insured was not within policy coverage.”

The claimants assert that Yazoo County would not have purchased the insurance and paid the premiums on the policy unless coverage would be provided to that entity since the insurance would otherwise be of no benefit to Yazoo County. A similar argument was presented in Hedrick v. Blake, 531 F.Supp. 156, 160 (D.Delaware 1982). In that case, the insurance policy made a careful distinction between the “named insured” and the “insured”. The district court stated:

Counsel for Plaintiff argued strenuously that the repeated appearance of the name of the Town of Fenwick Island on the policy makes it one of the covered parties. Given the text of the policy, it seems more plausible that the underlying intention of the parties to the policy is to protect individual officers, the “insureds” under the policy, from civil liability incurred through their negligent or tortious acts committed during the course of their service with the police department. This type of coverage may well be essential to a town or municipality’s ability to recruit and keep qualified officers.

Id. at 160.

Lastly, Yazoo County contends that International waived the terms of the endorsement barring claims for acts committed prior to August of 1976 when the defendant refused reimbursement of an initial request for payment of legal fees on the stated ground that Yazoo County had failed to comply with certain notice and consent provisions of the policy. The law in Mississippi and the Fifth Circuit is that “conditions going to coverage or scope of a policy of insurance, as distinguished from those furnishing a ground for forfeiture, may not be waived by implication from conduct or action”. St. Paul & Marine Ins. Co. v. Vest Transp. Co., 500 F.Supp. 1365, 1380 (N.D.Miss.1980), aff’d, 666 F.2d 932 (5th Cir.1982) (emphasis deleted). The court interprets the endorsement as a provision relating to the scope of the policy which may not be waived. As is also well settled, the doctrine of waiver cannot be used to provide coverage where such coverage is excluded by the policy. 500 F.Supp. at 1380.

For the reasons stated herein, the court concludes that the defendant’s motion for summary judgment should be granted. A separate judgment will be submitted in accordance with the local rules.

      . The court in Brander v. Nabors, 443 F.Supp. 764 (N.D.Miss.), aff'd, 579 F.2d 888 (5th Cir. 1978), held that "claims made basis” insurance policies that limit the time within which a claim may be made against the insured neither violate Mississippi law nor offend public policy. 443 F.Supp. at 772, 773.