text:
    Earl R. WRIGHT, Sr., Katherine M. Wright, Burr Wright and Byron Wright, Plaintiffs, v. The NATIONAL BANK OF STAMFORD, Einar Eklund, John H. Friedmann and Govern, McDowell & Becker, Defendants.
    No. 83-CV-528.
    United States District Court, N.D. New York.
    Jan. 2, 1985.

      Jordan & Walster, Rural Legal Rights Foundation, Inc., Roxbury, N.Y., for plaintiffs; Herbert Jordan, Roxbury, N.Y., of counsel.
    Kernan & Kernan, P.C., Utica, N.Y., for defendants Govern, McDowell & Becker; John E. Hunt, Utica, N.Y., of counsel.
    Hancock & Estabrook, Syracuse, N.Y., for defendant The Nat. Bank of Stamford,, Einar Eklund and John H. Friedmann; Doreen A. Simmons, Syracuse, N.Y., of counsel.
   MINER, District Judge.

This action, alleging various federal constitutional deprivations, arises out of a defaulted loan and a private lender’s attempt at collection through repossession of collateralized property. The action is brought pursuant to 42 U.S.C. § 1983, and jurisdiction is predicated upon 28 U.S.C. §§ 1331, 1343. Before the Court is a motion by the defendant law firm Govern, McDowell & Becker (“GM & B”) for summary judgment, Fed.R.Civ.P. 56(b), as well as a motion by defendants The National Bank of Stamford (“Bank”), Einar Eklund and John H. Friedmann for summary judgment, Fed. R.Civ.P. 56(b). Oral argument on the motions was heard by the Court on June 22, 1984. Decision was reserved pending the submission by the parties of then untranscribed deposition transcripts. The final submissions of the parties were received by the Court on August 28, 1984, and the Court was advised of such by plaintiffs’ counsel on September 6, 1984.

II

Plaintiffs Earl and Katherine Wright own a dairy farm in Roxbury, New York. Plaintiffs Burr and Byron Wright are two of Earl and Katherine’s adult sons, residing and working on the farm. Defendants Eklund and Friedmann are respectively President and Vice-President of defendant Bank, located in Delaware County, New York. Defendant GM & B is a law partnership serving as counsel to the Bank. One of the firm’s partners, Robert H. McDowell, was a member of the Bank’s Board of Directors and owned a large share of its stock. He also held the office of County Attorney for Delaware County. Another partner, Carl F. Becker, held the post of Assistant County Attorney.

In connection with the operation of their farm, Earl and Katherine, in 1977, opened a line of credit at the Bank. In that same year, they signed security agreements collateralizing various farm equipment and their dairy stock. The security agreements provided that any sale of collateral without the Bank’s consent would constitute default, and in the event thereof, the Bank would retain all remedies available under the Uniform Commercial Code.

In 1979, plaintiffs’ dairy herd became infected with mastitis. Pursuant to New York law, seriously infected animals were required to be removed from the herd in order to avoid contaminating the milk supply and the other animals. By August of 1980, plaintiffs removed a majority of the animals from the herd, sold them for salvage, and replaced them with healthy animals. The sums received from the salvage sales were insufficient to replace all of the removed animals by outright purchase of healthy cows, and, therefore, plaintiffs replaced some of their herd with leased animals. According to the complaint, plaintiffs kept Bank officials aware of these events.

On August 13, 1980, Earl and Katherine executed a promissory demand note for $143,204.89, representing a consolidation of their total indebtedness to the Bank. According to plaintiffs, there also was executed a new security agreement which allegedly superseded the 1977 agreements. Unlike the earlier agreements, the 1980 agreement is said not to have specified sale of collateral as a grounds for default.

The Bank had become aware of plaintiffs’ sale of cattle and considered the note in default. It demanded payment on November 21, 1980, but was refused. On November 25th, on behalf of its client, GM & B prepared and served a summons and complaint on Earl and Katherine, demanding immediate possession of all the collateral. Also served was an Order to Show Cause, returnable the following day, temporarily restraining Earl and Katherine from disposing of any other collateral. Because of the short notice, plaintiffs were unable to retain counsel to appear on their behalf on the return date of the Order to Show Cause. They themselves appeared, however, and the court granted the Bank its requested injunction, restraining plaintiffs’ sale of any collateral.

That evening (November 26th), defendant Friedmann, accompanied by Carl Becker of GM & B and two uniformed deputies of the Delaware County Sheriff’s Office, arrived at the Wright farm with a cattle truck. According to defendants, Friedmann and Becker went to the farm for the purpose of securing the remaining cattle pursuant to the Bank’s “common law rights as a secured creditor and the aforesaid security agreement.” Simmons affidavit, ¶ 14. The law firm requested the presence of the deputies allegedly in fear of possible violence or breach of the peace. According to the complaint, “[o]ver the objection of plaintiff Earl Wright, and over the telephonic objection of his counsel, agents of the bank under the direction of Carl F. Becker and defendant Friedmann entered and remained upon plaintiffs’ property and loaded nine of plaintiffs’ cows onto the truck.” Complaint, II44.

Twenty-one days had now elapsed since plaintiffs had been served with the summons and complaint on November 25, 1980, and plaintiffs had yet to hear from their counsel. New counsel was retained, who received a two day extension of time — until December 17th — to answer the complaint. On December 18, 1980, one day after the extended time to answer had expired, GM & B applied for and obtained an ex parte default judgment. The order awarded to the Bank possession of various chattels, including the nine previously repossessed cows. According to the complaint, that order was based upon defendants’ representations that the Bank’s rights were governed by the 1977 security agreements rather than the 1980 agreement which assertedly would have disclosed to the judge that plaintiffs had substantial defenses to the Bank’s claim.

On December 19th, plaintiffs retained new counsel, who managed to obtain a stay of execution of the judgment and who moved by Order to Show Cause to vacate the default. That application was denied and the stay was dissolved on January 2, 1981. That same day, GM & B, acting in lieu of the county clerk pursuant to N.Y. Civ.Prac.Law § 5280(b), see infra note 10, prepared a writ of execution and delivered it to the sheriff. Pursuant to that writ, deputy sheriffs and defendants Eklund, Friedmann and GM & B appeared at plaintiffs’ farm and removed the remaining cows and most of the remaining equipment and machinery. Most of these items were later sold at public auction. On January 12, 1981, Earl and Katherine Wright filed a petition for bankruptcy.

This rather prosaic factual background lays the predicate for a host of constitutional and state law challenges. First, plaintiffs claim that the actions of defendants on November 26, 1980 “in entering plaintiffs’ property without judicial warrant in the company of armed and uniformed officers of the state, and remaining there and seizing plaintiffs’ cows without plaintiffs’ consent and over protest, were unlawful in that ...,”

(a) they constituted an unreasonable search and seizure in violation of the Fourth and Fourteenth Amendments ...;
(b) they deprived plaintiffs Earl and Katherine Wright of their property without due process of law ...;
(c) insofar as Section 9-503 of the New York Uniform Commercial Code purportedly authorized defendants’ actions, the said statute is invalid because it conflicts with the Fourth Amendment and the Due Process Clauses of the Fourteenth Amendment and the Constitution of New York;
(d) they constituted trespass upon plaintiffs’ real property and trespass to plaintiffs’ chattels ...;
(e) they constituted conversion of plaintiffs’ property____

Complaint, ¶ 71. Additional federal constitutional claims include the assertion that the December 19, 1980 default judgment was procured by fraud in violation of the due process clause of the fourteenth amendment and that it was granted and enforced without due process in that plaintiffs received no notice of the application for it. “Count U” of the complaint seeks redress for defendants’ seizure and subsequent sale of a John Deere bulldozer, allegedly owned by plaintiff Burr Wright, in satisfaction of the judgment against his parents.

Ill

On motions for summary judgment, the Court’s function “is not to resolve issues of fact but to determine whether any material factual issues are raised after resolving all questionable inferences in favor of the party against whom the judgment is sought. Only if no material factual issues exist may summary judgment be granted.” United States v. Matheson, 532 F.2d 809, 813 (2d Cir.), cert. denied, 429 U.S. 823, 97 S.Ct. 75, 50 L.Ed.2d 85 (1976); see also Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 444-45 (2d Cir.1980); Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317, 1319 (2d Cir. 1975). Although the moving party bears the burden of clearly establishing the nonexistence of any issue of fact that is material to a judgment in his favor, Adickes v. S.H. Kress & Co., 398 U.S. 144, 157-61, 90 S.Ct. 1598, 1608-10, 26 L.Ed.2d 142 (1970), the party opposing summary judgment “may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.” Fed.R.Civ.P. 56(e); In re B.D. International Discount Corp. v. Chase Manhattan Bank, N.A., 701 F.2d 1071, 1077 n. 11 (2d Cir.), cert. denied, — U.S. -, 104 S.Ct. 108, 78 L.Ed.2d 110 (1983).

As will be clear from the discussion below, plaintiffs have failed to come forward with any factual matter supporting their claimed constitutional deprivations. Plaintiffs have been content to rely merely on allegations which echo those contained in the complaint and which are without a scintilla of meaningful factual support. Accordingly, for the reasons set forth below, defendants’ motions for summary judgment must be granted.

IV

The threshold inquiry in a § 1983 action is twofold. The Court must consider both whether the conduct complained of was committed by a person acting under color of state law as well as whether that conduct deprived a person of rights privileges or immunities secured by the Constitution. Parratt v. Taylor, 451 U.S. 527, 535, 101 S.Ct. 1908, 1912, 68 L.Ed.2d 420 (1981); Adickes v. S.H. Kress & Co., 398 U.S. 144, 150, 90 S.Ct. 1598, 1604, 26 L.Ed.2d 142 (1970). After careful review of the undisputed facts which underly plaintiffs’ complaint, this Court is persuaded beyond any doubt that neither of these threshold showings has been made.

A. Color of State Law

It must first be noted that none of the defendants themselves are state officials. Nonetheless, “[a]ction taken by private individuals may be ‘under color of state law’ where there is ‘significant” state involvement in the action.” Howerton v. Gabica, 708 F.2d 380, 382 (9th Cir.1983). Plaintiffs rely on a number of allegations to support their various theories of state involvement. That reliance, however, is a strained one; there is neither legal nor factual merit to any claim of state involvement sufficient to support a § 1983 action.

According to plaintiffs, there are five factors which compel a finding of color of state law. First, plaintiffs point to defendants’ enlistment of the aid of the Sheriff to facilitate the seizure of the nine cows on November 26, 1980. Second, plaintiffs argue that the defendant attorneys used their positions as County Attorneys to induce the Sheriff to supply deputies for the seizure. Third, plaintiffs contend that defendants acted pursuant to a state statute, § 9-503 of the Uniform Commercial Code, in seizing the nine cows and selling them. Fourth, plaintiffs claim that the defendant attorneys acted under color of state law when they issued the execution pursuant to N.Y. Civ.Prac.Law § 5230(b). Finally, plaintiffs contend that defendants acted under color of state law in procuring and enforcing the default judgment. These five theories, individually or collectively, are utterly devoid of merit.

1. Presence of the deputies

The undisputed facts here amply support the conclusion that the presence of the deputies on the evening of the repossession falls far short of creating action under color of state law. First, it must be noted that even assuming the truth of plaintiffs’ claim that the defendant attorneys used their positions as County Attorneys to induce the Sheriff to supply deputies, that fact alone will not support a finding of color of state law. The appropriate inquiry must be directed to what, if anything, the deputies did once their involvement was procured. If that involvement is in itself insufficient to establish state action, the mere fact that the defendant attorneys used their official capacity to recruit them is irrelevant.

A review of the deposition transcripts and various affidavits makes it clear that the participation of the two deputy sheriffs in the repossession of the cows was so insignificant that as a matter of law it cannot be said to supply the necessary col- or of state law. At the outset, it should be noted that all those who were present at the time of the repossession and who would be available to testify have provided deposition testimony. Since discovery is now closed and no new evidence will be available at trial, summary judgment is particularly appropriate. Plaintiffs have not even suggested that additional testimony or evidence will be offered at trial to controvert the facts thus far established. In sum, their position is simply that “a fact question exists,” a convenient but unpersuasive position with respect to these motions. See In re B.D. International Discount Corp. v. Chase Manhattan Bank, N.A., 701 F.2d 1071, 1077 n. 11 (2d Cir.), cert. denied, — U.S. -, 104 S.Ct. 108, 78 L.Ed.2d 110 (1983); 10A C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure, § 2727, at 157 (1983); see also Perma Research and Development Co. v. The Singer Company, 410 F.2d 572, 578 (2d Cir.1969) (“summary judgment cannot be defeated by the vague hope that something may turn up at trial”).

Briefly, the undisputed facts surrounding the evening of the repossession are the following: (1) The two deputy sheriffs were requested by GM & B to meet the Bank party at the Wright farm as a precaution, i.e., to prevent a breach of the peace. See Deposition of Deputy Sheriff Charles A. Newman at 5, 11; Deposition of Sheriff Levon Telian at 12-15; Deposition of John H. Friedmann at 57; Affidavit of Carl Becker, 114; cf. Deposition of Helen Groves at 6-7 (policy of Sheriff was to send deputies to repossessions only to keep the peace); (2) Defendant Friedmann and attorney Becker arrived at the Wright farm and entered the home followed by Deputy Newman. The entry was apparently with consent. See, e.g., Deposition of GM & B at 34-35; (3) A conversation ensued between Earl Wright and Messrs. Friedmann and Becker, in which Earl noted his desire to contact his attorney. See GM & B deposition at 36; Friedmann deposition at 58; Deposition of Byron Wright at 46; (4) After some time elapsed and Earl was unable to contact his attorney, Becker indicated that they would like to start loading the cows; Earl said “all right” and asked Byron to go to the barn to identify which cows were to be taken. See Friedmann deposition at 59; GM & B deposition at 39; Byron Wright deposition at 48; (5) The party proceeded out to the barn to load the cows with some assistance from Byron Wright. See Byron Wright deposition at 49-50, 62; GM & B deposition at 39-40; Friedmann deposition at 59-60; (6) The loading proceeded without incident until another son informed the party that Earl had contacted his attorney and now wanted to speak with Becker. See GM & B deposition at 41; Friedmann deposition at 60; (7) Becker returned to the house, spoke with Earl’s attorney on the phone, and then returned to the barn where the loading of cows was continuing; (8) After Earl finished speaking with his attorney, he sent word out to the barn to stop loading the cows, a directive with which defendants immediately complied. See Friedmann deposition at 61-62; GM & B deposition at 43-44; Newman deposition at 16; Byron Wright deposition at 63-64.

What is significant about this scenario, and what is uncontradicted by any evidence, is the total lack of involvement by the deputy sheriffs. Other than their mere presence, they had absolutely no involvement in the repossession. See Newman deposition, passim; Newman affidavit, passim; Telian affidavit, ¶ 3; Byron Wright deposition at 52-53, 56, 60. Plaintiffs have adduced absolutely no evidence to suggest the existence of a factual dispute concerning the deputies’ de minimis involvement.

It is of course true that “[a]t some point, as police involvement becomes increasingly important, repossession by private individuals assumes the character of state action.” Howerton v. Gabica, 708 F.2d 380, 383 (9th Cir.1983). That point, however, has not been approached here. The only evidence in the record is that the deputies were passive onlookers, present only to avert any violence which, considering the circumstances, was reasonably to be anticipated. See Deposition of Sheriff Telian at 12-13 (Sheriff had experienced problems with the Wrights in the past). There are no allegations that the deputies actually aided in the repossession. Nor are there allegations that their mere presence somehow assisted in an essentially private undertaking. See Harris v. City of Roseburg, 664 F.2d 1121, 1127 (9th Cir.1981) (“We conclude that there may be a deprivation within the meaning of § 1983 not only when there has been an actual ‘taking’ of property by a police officer, but also when the officer assists in effectuating a repossession over the objection of a debtor or so intimidates a debtor as to cause him to refrain from exercising his legal right to resist a repossession”). Indeed, there could have been no such “intimidation” here, since plaintiffs eventually insisted that the repossession cease.

In short, the officers were merely present throughout the entire operation with the object of preventing a breach of the peace. That exigency never realized, their presence retained its passive character and therefore fell shy of creating action under color of state law. “[WJhere state involvement in private action constitutes no more than acquiescence or tacit approval, the private action is not transformed into state action....” United States v. Coleman, 628 F.2d 961, 964 (6th.Cir.1980).

Plaintiffs place considerable reliance on Howerton v. Gabica, 708 F.2d 380 (9th Cir.1983), and distinctions they urge are to be found in contrary cases. Such reliance, however, is unavailing. First, the facts of Howerton are sufficiently distinguishable from those present here. That case involved a § 1983 action against a landlord for an allegedly unlawful eviction under a state detainer statute. In reversing the district court’s dismissal of the action, the Ninth Circuit premised its holding on the fact that local police officers’ affirmative assistance in the physical eviction provided sufficient evidence of state action. Indeed, the court noted that the actions of the police “created an appearance that the police sanctioned the eviction.” 708 F.2d at 384. Unlike the deputies’ conduct here, the Kooskia police officers’ conduct in Howerton was overwhelmingly sufficient to support a finding of state action. For example, in examining the facts of the eviction, the court noted that the case “involve[d] more than a single incident of police consent to ‘stand by’ in case of trouble. Police were on the scene at each step of the eviction. Mr. Gabica testified that the police presence gave him the feeling he had the right to cut off the utilities. Moreover, the police officer actively intervened — he privately approached the Howertons and recommended that they leave the trailer-house.” 708 F.2d at 384. No such action may be found here. More importantly, Howerton itself arguably suggests that no state action may be found in circumstances like those present here. First, it reiterated the requirement that there be “significant” state action. 708 F.2d at 382; see also Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2754, 73 L.Ed.2d 482 (1982). Second, in distinguishing the facts before it from cases, like the present one, involving lesser state involvement, the court noted that the record before it was “replete with evidence that the Gabicas deliberately cloaked themselves with the authority of the state in effecting repossession ...,” finding that “the Gabicas repeatedly requested aid by the police to effect the eviction, and the police intervened at every step.” 708 F.2d at 384-85. The court was therefore not confronted with “[a] single request for the police to perform their peace-keeping functions [which] may not be sufficient to make a landlord a ‘joint actor’ with the state for section 1983 purposes.” Id.; see also Dahlberg v. Becker, 748 F.2d 85 at 92 (2d Cir.1984) (citing Howerton with approval).

Defendants rely on United States v. Coleman, 628 F.2d 961 (6th Cir.1980), and Menchaca v. Chrysler Credit Corp., 613 F.2d 507 (5th Cir.), cert. denied, 449 U.S. 953, 101 S.Ct. 358, 66 L.Ed.2d 217 (1980), both of which found no color of state law. Plaintiffs are correct in noting that both those cases involved somewhat less police participation than was present here. For example, in Coleman, the police, who had agreed to “stand by in case of trouble,” parked “down the street and around the corner” from the site of the private repossession. 628 F.2d at 963. In Menchaca, police did not arrive at the site of the private repossession until after they had been summoned to investigate an ensuing disturbance. The police also left prior to the actual repossession. 613 F.2d at 510. Conceding these factual differences, this Court is nonetheless persuaded that the legal principles embodied in those decisions compel a finding of no state action here.. While the deputies here were somewhat less removed from the repossession than were the police in either Coleman or Menchaca, their conduct nonetheless reflected “mere acquiescence ... to ‘stand by in case of trouble,’ ” and was therefore “insufficient to convert the repossession ... into state action.” United States v. Coleman, 628 F.2d at 964.

Finally, of some note is the decision in Rizzo v. Host Services of New York, Inc., 545 F.Supp. 1193 (E.D.N.Y.1982). There, three employees of defendant Host entered three airport bars which Host operated, and closed them for a surprise audit. Plaintiffs, six bartenders and a waiter then working in the bars, were directed to proceed to Host’s management office in the building. One of the Host employees telephoned Port Authority Police, and three officers arrived shortly thereafter. The officers spoke briefly with the Host employee. Apparently,

[sjome of the plaintiffs felt that the officers’ presence lent credence to defendants’ threats of arrest and imprisonment. However, the officers neither touched the plaintiffs nor attempted to prevent them from leaving. Even when defendant Christie, referring to plaintiff Fung, told the officers, “He is under arrest, I want him,” the officers did nothing____ Indeed, the officers did not even speak with any of the plaintiffs other than Rizzo and then only to protest that they were not involved with defendants’ refusal to allow Rizzo to leave the office in order to make a telephone call.
At approximately 10:30 p.m., the Port Authority police officers told defendant Newman either to press charges or to allow plaintiffs to leave. The police officers then left without making any arrests.

545 F.Supp. at 1194.

In granting defendants summary judgment, dismissing the § 1983 action alleging false arrest, the court found to be clearly lacking any action taken under color of state law. It held:

Had defendants entered into a conspiracy with the police to hold plaintiffs against their will doubtless the “state action” requirement would be fulfilled. But plaintiffs have advanced no proof that the presence of the police was part of a preconceived plan in which they participated. So far as the record shows, they were wholly blameless and took no action to detain plaintiffs. We may assume, without deciding, that plaintiffs remained in the offices in part due to a concern that they might be arrested. But the mere response of a police officer to a citizen’s call for assistance is not enough to transmogrify the citizen’s action into that of the state. To satisfy the state action requirement plaintiffs would, as a minimum, have to prove that the police were knowingly involved in a plan to deprive plaintiffs of their rights.
To the extent that the presence of the police tended to assist defendants’ allegedly unlawful purposes that presence did not establish “state action” any more than does the provision by the state to a litigant of a “neutral” judicial forum.

545 F.Supp. at 1194-95 (citations omitted).

2. Invocation of state procedures

The remaining grounds upon which plaintiffs premise their contention that defendants acted under color of state law are that defendants acted pursuant to a state self-help statute in repossessing the cows, that they acted pursuant to state law when they issued the execution, and that they acted similarly in procuring and enforcing the default judgment. With respect to all these grounds, two points are in order. First, the Supreme Court decision in Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982), makes untenable any such claims. Second, even if there were merit to this aspect of plaintiffs’ complaint, litigation of those claims here would be barred under principles of res judicata.

Under Lugar, the test for state action or action taken under color of state law is twofold:

First, the deprivation must be caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible____ Second, the party charged with the deprivation must be a person who may fairly be said to be a state actor. This may be because he is a state official, because he has acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the State.

457 U.S. at 937, 102 S.Ct. at 2754. In short, a party’s “mere invocation” of state procedures will result in a finding of color of state law only if that conduct is fairly attributable to the state. With respect to a state statute or procedure, such attribution may only be given where the statute at issue is challenged as, and found to be, unconstitutional. See id. at 937-42, 102 S.Ct. at 2754-57; Dahlberg v. Becker, 748 F.2d 85 at 90 (2d Cir.1984); see also Conway v. Village of Mount Kisco, New York, 750 F.2d 205 at 214 n. 12 (2d Cir.1984) (citing id.); Dahlberg v. Becker, 581 F.Supp. 855, 860-62 (N.D.N.Y.), aff'd, 748 F.2d 85 (2d Cir.1984).

Although plaintiffs herein challenge the constitutionality of various New York procedures, albeit, with less than precision, those challenges must fail. First, all three challenged procedures clearly are constitutional. Specifically, the self-help remedies contemplated by N.Y.U.C.C. § 9-503 have repeatedly been upheld in the face of constitutional attack. See, e.g., Gallets v. General Motors Acceptance Corp., 96 A.D.2d 756, 757, 465 N.Y.S.2d 319, 320 (4th Dep’t), appeal dismissed, 60 N.Y.2d 1014, 471 N.Y.S.2d 569, 459 N.E.2d 862 (1983); Crouse v. First Trust Union Bank, 86 A.D.2d 978, 978, 448 N.Y.S.2d 329, 330 (4th Dep’t 1982). The dearth of analysis offered by plaintiffs provides this Court with little reason to question this well-settled proposition.

With respect to N.Y.Civ.Prac.Law § 3215 and the claim that that provision conflicts with the due process clause, this Court is unable to fathom precisely how New York’s default procedures are constitutionally infirm. What is apparent, however, is that although plaintiffs’ complaint alleges the unconstitutionality of the statute, the real challenge is to defendants’ actions in procuring the default. Misuse of a state statute by a private individual does not, however, describe conduct that can be attributed to the state. Lugar v. Edmondson Oil Co., 457 U.S. at 940-41, 102 S.Ct. at 2755-56; Dahlberg v. Becker, 748 F.2d 85 at 90-91 (2d Cir.1984).

Finally, state action is not to be found in the provisions of N.Y.Civ.Prac.Law § 5230(b). There simply is no significance to the fact that in issuing the execution, the attorney is considered, for statutory purposes, to be an officer of the court. An attorney is always thought to be an officer of the court and yet his behavior is generally not thought to be imputed to the state. See Ragosta v. Vermont, 556 F.Supp. 220, 225-26 (D.Vt.1981), aff'd mem., 697 F.2d 296 (2d Cir.1982); Kovacs v. Goodman, 383 F.Supp. 507, 509 (E.D.Pa.1974), aff'd mem., 515 F.2d 507 (3d Cir. 1975); Kregger v. Posner, 248 F.Supp. 804, 806 (E.D.Mich.1966). To hold otherwise would be to impute to the state responsibility for the conduct of each and every one of its “court officers,” no matter how far removed from real state action. The procedure invoked here by the attorney is no different than any other variety of self-help procedures and its mere invocation does not constitute the state action necessary to maintain a § 1983 action. See Lugar v. Edmondson Oil Co., 457 U.S. at 438-39 & n. 21, 102 S.Ct. at 2755 & n. 21; Flagg Brothers, Inc. v. Brooks, 436 U.S. 149, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978). Because no constitutional infirmity has been alleged nor may be seen to inhere in § 5230(b), plaintiffs have failed to bring their claim within the holding of Lugar and their § 1983 claims must fail for want of state action.

B. Constitutional Deprivations

Even assuming that defendants’ actions here may be said to have been taken under color of state law, plaintiffs’ complaint would still be subject to dismissal for failure to establish the existence of any constitutional deprivation.

1. Res judicata

First, there can be no question that litigation of any such claims would be barred under principles of res judicata. Last Term’s Supreme Court decision in Migra v. Warren City School District Board of Education, — U.S. -, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984), requires the federal courts to apply state preclusion law in federal civil rights actions. Id., 79 L.Ed.2d at 896-98. That is, a prior state court judgment is to have the same preclusive effect in a subsequent federal civil rights action as it would have had in the state courts.

New York applies a “transactional analysis” approach in deciding res judicata issues. O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 445 N.Y.S.2d 687, 688, 429 N.E.2d 1158, 1159 (1981); Reilly v. Reid, 45 N.Y.2d 24, 27-31, 407 N.Y.S.2d 645, 647-49, 379 N.E.2d 172, 174-76 (1978); see also Heimbach v. Chu, 744 F.2d 11, 14 (2d Cir. 1984). “[OJnce a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy.” O’Brien v. City of Syracuse, 54 N.Y.2d at 357, 445 N.Y.S.2d at 688, 429 N.E.2d at 1159. Unlike collateral estoppel or issue preclusion, see Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 485-86, 414 N.Y.S.2d 308, 310-11, 386 N.E.2d 1328, 1330-31 (1979), res judicata bars claims that could have been raised but were not. Heimbach v. Chu, 744 F.2d at 14; Winters v. Lavine, 574 F.2d 46, 56 (2d Cir.1978).

A review of the Third Department’s May 24, 1984 decision, affirming orders which denied defendants’ (plaintiffs herein) motions to vacate their default, National Bank of Stamford v. Wright, 101 A.D.2d 963, 477 N.Y.S.2d 710 (3d Dep’t), permission to appeal denied, No. 46095 (3d Dep’t Nov. 14, 1984), makes indisputably clear that all those issues raised by plaintiffs here either were or could have been raised in the New York State courts. Accordingly, res judicata bars their renewed litigation here.

Plaintiffs are incorrect in their contention that their claim regarding a taking of property without due process was not decided by the state courts and is therefore not now precluded. Plaintiffs have confused collateral estoppel, or issue preclusion, with res judicata, or claim preclusion. Compare O’Brien v. City of Syracuse, 54 N.Y.2d at 357, 445 N.Y.S.2d at 688, 429 N.E.2d 1159 (1981) with Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d at 486, 414 N.Y.S.2d 308, 386 N.E.2d 1328 (1979). Because res judicata applies to this claim, arising as it does out of the precise facts as all the others, that is, the same “transaction,” the assertion of the claim here is barred. See Heimbach v. Chu, 744 F.2d at 14; Winters v. Lavine, 574 F.2d at 56.

So too are plaintiffs incorrect in their assertion (erroneously conceded by defendants, see Affirmation in Opposition to Motions for Summary Judgment at 10) that the Appellate Division’s decision “has no arguable effect on the events on the night of November 26, 1980.” It is clear from the December 19, 1980 order signed by Supreme Court Justice Robert Harlem (¶ 5), and the attempted answer and counterclaims dated December 19, 1980 (seventh affirmative defense), that the events of November 26, 1980 were certainly such as could have been raised in the state proceedings and are therefore now barred. “[Wjhere the same foundation facts serve as a predicate for each proceeding, differences in legal theory and consequent remedy do not create a separate cause of action.” Reilly v. Reid, 45 N.Y.2d at 28, 30, 407 N.Y.S.2d 645, 649, 379 N.E.2d 172, 176 (1978). There can be no question that the events of November 26th were so intimately connected with the facts underlying the default judgment that plaintiffs were required to raise all claims stemming from them in the state proceedings or later be barred from their litigation. The Appellate Division’s factual findings unquestionably preclude the entirety of plaintiffs’ present claims.

2. Due process deprivation

According to the complaint, defendants’ seizure of the cattle deprived plaintiffs of their property without due process of law. Requiring little argument is the proposition that “[njothing in [the Fourteenth] Amendment protects against all deprivations of life, liberty, or property by the State. The Fourteenth Amendment protects only against deprivations ‘without due process of law.’ ” Parratt v. Taylor, 451 U.S. 527, 537, 101 S.Ct. 1908, 1913, 68 L.Ed.2d 420 (1981) (quoting Baker v. McCollan, 443 U.S. 137, 145, 99 S.Ct. 2689, 2695, 61 L.Ed.2d 433 (1979)). Assuming that plaintiffs possessed a property interest in the seized cattle, it is nonetheless clear that any deprivation thereof was not without due process of law.

In Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981), the Supreme Court held that the due process clause of the fourteenth amendment is not violated when a state employee negligently deprives an individual of property, provided that the state makes available a meaningful postdeprivation remedy. The Court recognized that “either the necessity of quick action by the State or the impracticality of providing any meaningful predeprivation process can, when coupled with the availability of some meaningful means by which to assess the propriety of the State’s action at some time after the initial taking, satisfy the requirements of procedural due process.” 451 U.S. at 539, 101 S.Ct. at 1914 (footnote omitted). Just last Term, the Supreme Court extended its holding in Parratt to situations involving intentional deprivations of property. Hudson v. Palmer, — U.S. -, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984). Noting that it could “discern no logical distinction between negligent and intentional deprivations of property insofar as the ‘practicability’ of affording predeprivation process is concerned,” id., 104 S.Ct. at 3203, the Court held that “an unauthorized intentional deprivation of property by a state employee does not constitute a violation of the procedural requirements of the Due Process Clause of the Fourteenth Amendment if a meaningful postdeprivation remedy for the loss is available.” Id. at 3204.

Hudson v. Palmer makes clear that an intentional deprivation of property, like that alleged here, necessarily makes impractical any predeprivation hearing. A meaningful postdeprivation hearing therefore is all that is required. The availability of a state tort suit, for example, an action for replevin, provided plaintiffs with the necessary due process. See Vicory v. Walton, 721 F.2d 1062, 1064-65 (6th Cir.1983), cert. denied, — U.S. -, 105 S.Ct. 125, 83 L.Ed.2d 67 (1984). Indeed, plaintiffs were equally capable of obtaining state court review of the seizure in the very replevin action in which they were defendants. See National Bank of Stamford v. Wright, 101 A.D.2d 963, 477 N.Y.S.2d 710 (3d Dep’t 1984). In fact, in that action, these plaintiffs actually sought to interpose a challenge to the seizure in a proposed affirmative defense/counterclaim. Because of their defáult, however, that challenge was unsuccessful.

3. Fourth amendment violation

Finally, there is no merit to plaintiffs’ claim that defendants’ actions on the evening of November 26, 1980 constituted an unreasonable search and seizure in violation of the fourth amendment. First, the undisputed facts make clear that defendants’ presence on the farm on the evening of the 26th was entirely consensual. See, e.g., Friedmann deposition at 59; Newman deposition at 12-13, 27-28; Byron Wright deposition at 62; Becker deposition at 34-36, 39. Plaintiffs do not point to any facts even suggesting that the Bank party was ever on the premises over their objection. Indeed, the tenor of all the deposition testimony is to the contrary. Significantly, the depositions reveal that the moment objection was expressed to the party’s presence and the seizure of the cows, all activity ceased and the party exited without incident immediately. See, e.g., Newman deposition at 16; Friedmann deposition at 61-62; Byron Wright deposition at 63-64; Becker deposition at 43-44.

Even assuming the existence of a material factual dispute relative to the course of events on the evening of the repossession, there can be no doubt that because the repossession and attendant entry were effected pursuant to the security agreement, that is, the Bank’s legal right to take possession of its collateral, the seizure was indisputably consensual. See Shirley v. State National Bank of Connecticut, 493 F.2d 739, 741 (2d Cir.), cert. denied, 419 U.S. 1009, 95 S.Ct. 329, 42 L.Ed.2d 284 (1974).

V

This Court is persuaded beyond any doubt that no disputed issues of material fact exist precluding a grant of summary judgment. Plaintiffs have quite literally offered the Court not one scintilla of factual support to warrant a finding that these defendants acted under color of state law in the course of their purely private and legally justified repossession of the collateralized property. Plaintiffs’ election to rest on the mere allegations of their pleadings and an occassional reiteration of those same allegations in their attorney’s affidavit is grossly insufficient to withstand the instant motions. Not only have plaintiffs failed to supply the necessary factual support for their allegations of state involvement, but their legal theories as well are entirely devoid of merit. Quite simply, no action taken under color of state law sufficient to support a § 1983 action can be found here. Even if state action were present, there is absolutely no merit to the alleged constitutional deprivations suffered. Having disposed of the federal claims, the Court, in the exercise of its discretion, chooses to dismiss the pendent state law claims as well. See United Mine Workers v. Gibbs, 383 U.S. 715, 725-26, 86 S.Ct. 1130, 1138-39, 16 L.Ed.2d 218 (1966).

On balance, it is clear that the present case is precisely of a type not contemplated by the federal civil rights statutes. “The purpose of imposing private liability under § 1983 was not to bring into a federal court every tort claim with which state officials have some relationship no matter how attenuated. The objective was to discourage private participation in official lawlessness. That objective would not be served by permitting the maintenance of this suit in this court.” Rizzo v. Host Services of New York, Inc., 545 F.Supp. 1193, 1195 (E.D.N.Y.1982). Accordingly, defendants’ motions for summary judgment are granted and the complaint is dismissed.

It is so Ordered.

      . These defendants have moved in the alternative for an order compelling the production of certain documents pursuant to Fed.R.Civ.P. 37(a). In light of the within disposition of the summary judgment motions, however, a decision on this issue is unnecessary.

      . By letter dated December 18, 1984, plaintiffs’ counsel sought to "remind” the Court that a decision on the within motions has been pending nearly six months and that his clients are in their 70’s and in very poor health. The Court too, is troubled by how long disposition of this action has been pending. Counsel, however, doubtless needs himself to be reminded that decision on these motions was withheld at his request pending the belated submission of deposition transcripts after the close of discovery. Those submissions were not received and the Court notified of such until the 6th of September.

      . This theory of a “new” security agreement has already been rejected in the New York State court litigation in which plaintiffs were involved. See National Bank of Stamford v. Wright, 101 A.D.2d 963, 964, 477 N.Y.S.2d 710, 712 (3d Dep’t), permission to appeal denied, No. 46095 (3d Dep’t Nov. 14, 1984). That determination is, of course, entitled to res judicata effect here. See infra IV(B)(1).

      . In denying the application to vacate, the Supreme Court Justice found that plaintiffs herein had failed to set forth facts which would support their denials or defenses to the complaint. A second motion to vacate on the grounds that the judgment was obtained through fraud, misrepresentation and misconduct and that the judgment was void for lack of jurisdiction, was similarly denied by order dated September 23, 1983. By a unanimous decision dated May 24, 1984, the Appellate Division, Third Department, affirmed both of those orders finding no meritorious defenses to the Bank’s action for repossession and finding no evidence that the judgment was procured by fraud or misrepresentation. Permission to appeal that decision to the New York Court of Appeals was denied on November 14, 1984. See National Bank of Stamford v. Wright, 101 A.D.2d 963, 477 N.Y.S.2d 710 (3d Dep’t), permission to appeal denied, No. 46095 (3d Dep’t Nov. 14, 1984).

      . While Carl Becker of the defendant law firm is the County Attorney for Delaware County, the actions herein challenged do not arise out of any official conduct on his part.

      . This is not a case involving a conspiracy between state and private actors to effect a constitutional deprivation. Not only is no conspiracy alleged, but the facts adduced thus far fall short of those required to support such a theory. See Sommer v. Dixon, 709 F.2d 173, 175 (2d Cir.), cert. denied, — U.S. -, 104 S.Ct. 177, 78 L.Ed.2d 158 (1983); Angola v. Civiletti, 666 F.2d 1, 4 (2d Cir.1981).

      . Although counsel for plaintiffs has advised the Court that there is no “stipulation” that plaintiffs Earl and Katherine Wright will not testify at trial, see Supplemental Affirmation in Opposition to Motions for Summary Judgment, ¶ 3, there can be no question that neither one is likely to testify. Indeed, defense counsel has been so advised throughout the latter part of these proceedings. See, e.g., Deposition of Govern, McDowell & Becker by Carl F. Becker, Jr., at 61-64.

      . The statement by the officers in Rizzo that defendants should either press charges or allow plaintiffs to leave, is similar in effect to the statement made here by deputy Newman after Earl Wright indicated his desire that the repossession cease: "That's it. Close it down.” Newman deposition at 16. Contrary to plaintiffs’ suggestion, neither remark was sufficient to create state action.

      . It also has been repeatedly held that private self-help under § 9-503 does not give rise to state action. See, e.g., Shirley v. State National Bank of Connecticut, 493 F.2d 739 (2d Cir.), cert. denied, 419 U.S. 1009, 95 S.Ct. 329, 42 L.Ed.2d 284 (1974); Sciolino v. Marine Midland Bank-Western, 463 F.Supp. 128, 134 (W.D.N.Y.1979).

      . N.Y.Civ.Prac.Law § 5230(b) provides:
      Issuance. At any time before a judgment is satisfied or vacated, an execution may be issued from the supreme court, county court or a family court, in the county in which the judgment was first docketed, by the clerk of the court or the attorney for the judgment creditor as officer of the court, to the sheriffs of one or more counties of the state, directing each of them to satisfy the judgment out of the real and personal property of the judgment debtor and the debts due to him.

      . Indeed, even a cursory review of the Third Department’s factual recitation reveals a most remarkable similarity between that action and the present one. Particularly noteworthy is the court’s comment that "[defendants’ [plaintiffs herein] continued interest in vacating the default judgment stems from a desire to prevent that judgment from 'spawning any legal consequences,' such as its possible res judicata effect in a damage action defendants have brought in the United States District Court against plaintiff and its counsel [defendants herein] for claimed civil rights violations.” 101 A.D.2d at 964, 477 N.Y.S.2d at 712.

      . The determination of the existence of a property right will often times necessitate resort to state law. See Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). In the present case, it is all too clear that in light of their loan default, plaintiffs no longer retained any property interest in the seized cattle. This fact is of. course established by the res judicata effect of the state courts’ holdings.

      . The Court reasoned:
      The State can no more anticipate and control in advance the random and unauthorized intentional conduct of its employees than it can anticipate similar negligent conduct. Arguably, intentional acts are even more difficult to anticipate because one bent on intentionally depriving a person of his property might well take affirmative steps to avoid signalling his intent.
      104 S.Ct. at 3203.


source: Caselaw Access Project

author: MINER, District Judge.

license: Public Domain

text:
    Hassan KADAH, Plaintiff, v. UNITED STATES of America, Defendant.
    No. 81-CV-1253.
    United States District Court, N.D. New York.
    Jan. 2, 1985.
    See also D.C., 534 F.Supp. 469.

      Costello, Cooney & Fearon, Syracuse, for plaintiff; Warren W. Bader, Syracuse, N.Y., of counsel.
    Glenn L. Archer, Jr., Asst. Atty. Gen., Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendant; D. Patrick Mullarkey, Chief, Civ. Trial Section, Northern Region, Steven Lyons, Jonathan B. For-man, Washington, D.C., of counsel.
   MEMORANDUM-DECISION and ORDER

MINER, District Judge.

I

Invoking the jurisdiction conferred upon this Court by the provisions of 28 U.S.C. § 1346(a)(1) and § 7422 of the Internal Revenue Code of 1954 (“I.R.C.”), plaintiff Hassan Kadah (“Kadah”) seeks to recover the 100% penalty assessment he has paid pursuant to I.R.C. § 6672 in discharge of the unsatisfied withholding and Federal Insurance Contributions Act (“FICA”) tax liabilities of Custom Technology Corporation (“CTC”) for the third and fourth quarters of 1976 and the first quarter of 1977. The trial was conducted without a jury on May 3rd and 4th, 1984 and no post-trial submissions were received other than a letter from the Government filed on May 14,1984 and a supplemental trial memorandum filed by plaintiff on May 21, 1984. In response to an inquiry from the Court on September 26, 1984, both sides declined the opportunity to file further post-trial submissions. There follow the findings of fact and conclusions of law mandated by Fed.R.Civ.P. 52(a).

II

At all times relevant to this action, Kadah owned and operated Omnetics, Inc., located in Syracuse, New York. Omnetics was organized in 1971 and is a corporation engaged in the manufacture of electronic timers and phase controls. CTC was incorporated in 1974 in Santa Clara, California by Daniel Schell, William Robson and Richard Brewer. Its business involved the design and development of integrated circuits and microelectronic chips for other companies. In connection with his operation of Omnetics, Kadah required the services of design firms such as CTC from time to time. Although he had never transacted any business with CTC, Kadah learned about that company through its contacts at Monosil Corporation, another Santa Clara corporation engaged in electronic design work. Through these contacts, it came to Kadah’s attention that CTC had cash flow problems and needed capital for expansion. Sometime in July of 1976, Kadah met with Schell and Robson at the CTC premises and reviewed with them the operations and financial needs of their company. Apparently convinced that Omnetics would benefit thereby, Kadah decided to purchase a controlling interest in CTC and to provide it with necessary funds.

By resolution adopted on July 22, 1976 and agreed to in writing on the same date by the plaintiff, CTC authorized the sale of 520,000 of its shares to the plaintiff for the sum of $52,000. According to the resolution, plaintiff was to provide the corporation with “expansion capital” in the amount of $100,000, the sale was subject to verification that the short term liabilities of the company were not in excess of $50,000 and plaintiff was to have the opportunity to review unaudited balance sheets and profit and loss statements. Issuance of the shares to plaintiff was subject to the approval of the Commissioner of Corporations of the State of California. At the time of the adoption of the resolution, the Board of Directors consisted of Daniel Schell, William Robson, Richard Brewer, Joseph Brenner and Harold Robson.

In an application dated August 11, 1976, CTC sought the approval of the transfer of shares to plaintiff. Government’s Exhibit TIL. The application was signed by Daniel Schell as president and listed the name of plaintiff as Chairman of the Board of Directors of CTC. Although stock certificates were not delivered to him until some time later, it appears that plaintiff became the owner of his shares after state approval of the transfer sometime in early October of 1976 and that he began to direct the affairs of the company in his capacity as Chairman of the Board on or about October 5, 1976. On that day, plaintiff forwarded an inter-office memo to various employees with the request that they indicate their choice between a profit sharing and a stock option plan. Government’s Exhibit Q. He also asked for the cooperation of the employees in the operation of the business of CTC. By letter dated October 19, 1976, plaintiff accepted the resignation of Mr. Schell as president, Government’s Exhibit N, and, on October 21, 1976, he advised Mr. Schell regarding severance pay and the purchase by CTC of the 60,000 shares held by Schell. Government’s Exhibit K. In an inter-office memo dated October 19, 1976, plaintiff notified all CTC personnel of the Schell resignation, appointed an executive committee to manage operations, and made the following announcement: “As chairman, I shall seek filling the position of a president that [sic] can manage the affairs of CTC in a business manner. Until then I am assuming the responsibility of communicating with the executive committee to conduct the operations of CTC.” Government’s Exhibit M. On the same date, plaintiff furnished written instructions on operating procedure to the executive committee and advised committee members that “other matters relating to decisions effecting [sic] corporate directions on major committments [sic] and overall policy shall be directed to the attention of the chairman for disposition.” Government’s Exhibit L. William Robson was designated as chairman of the executive committee and reported to plaintiff.

In addition to his duties as Chairman of the Board, plaintiff assumed the duties of chief executive officer and so notified John Luke, vice president of American Microsystems, Inc., in a letter dated October 19, 1976. Government’s Exhibit O. Signing as Chairman of CTC, plaintiff wrote to the president of Computervision Corporation on October 20, 1976 regarding the development of a computer-aided design system for CTC. Government’s Exhibit BB. By corporate resolution dated November 12, 1976, and filed with the Bank of America, plaintiff was designated as president of CTC with check signing authority. Although he customarily delegated this authority to others, plaintiff was empowered to sign corporate checks either as chairman or president in several resolutions adopted during his tenure as a stockholder. Plaintiff actually drew checks on CTC accounts on only three occasions during the entire time he was associated with the company. During the period November, 1976 through March, 1977, payments were made by CTC to creditors other than the United States in sums of approximately $50,000 a month.

Sometime in mid-November, 1976, William Robson introduced plaintiff to George Earl Avery at a meeting held at the San Francisco airport. Avery recently had concluded a ten-year period of employment at American Microsystems, and the airport discussion centered around the possibility of Avery’s employment as president of CTC. About ten days after the airport meeting, Avery flew to Syracuse at plaintiff’s request to observe the Omnetics operation. He remained there for two days, and plaintiff told him that he wanted him to understand how the business of Omnetics was complementary to that of CTC. Plaintiff suggested that Avery be paid as a consultant to Omnetics for the purpose of evaluating CTC. In early December, 1976, plaintiff introduced Avery to CTC personnel as a consultant for Omnetics, although CTC ultimately paid the consulting fees. Plaintiff announced that CTC employees should turn to Avery for technical decisions in his absence, and he directed Avery to familiarize himself with the work, developmental activities and personnel at CTC. Avery maintained frequent telephone contact with plaintiff and discussed the status of various jobs with him.

On the occasion of a visit by plaintiff to San Diego in mid-December, 1976, Avery brought to plaintiffs attention the monthly financial reports of CTC showing the unpaid taxes. Plaintiff said he was aware of the situation and would address the problem in the near future. The annual shareholders meeting of CTC was held on December 28, 1976 at the offices of the corporation. Just before the meeting, Avery discussed the financial status of the corporation with plaintiff and expressed his concern with the past due taxes and with the cpmpany’s failure to meet current payroll taxes. Plaintiff responded that he would take care of the situation and that Avery should be satisfied with plaintiffs directions in the matter. Plaintiff chaired the stockholders meeting, and he was elected to the Board of Directors along with Avery and Richard Brewer. Government’s Exhibit T. The Board then met and appointed Avery as president, William Robson as vice president, Herbert Green, an attorney, as secretary-treasurer and plaintiff as chairman. Government’s Exhibit S. A discussion concerning unpaid federal taxes ensued. Mr. Green was assigned to contact the Internal Revenue Service to develop a schedule for the payment of the taxes. Plaintiff issued a direction that no payments were to be made until such a schedule was defined. Plaintiff was concerned with the corporation’s cash flow in general and required that no creditor be paid until the last possible moment.

Following the December meetings, Avery remained in close contact with plaintiff regarding the affairs of the corporation. These contacts occurred by telephone and on the occasions of plaintiff’s visits to CTC headquarters. Plaintiff specified which creditors should be paid and which creditors should not be paid. He was concerned not only with the cash flow situation but also with the progress of each job in which CTC was involved. A number of Omnetics employees were placed on the CTC payroll at plaintiff’s direction while they performed work for Omnetics. Avery wanted to bill Omnetics for overhead plus a normal profit margin, but plaintiff advised that only the overhead would be paid. When Avery protested that Omnetics was paying only fifty percent of overhead, plaintiff said that he owned the company and would do as he pleased. Plaintiff involved himself in negotiating contracts for CTC and in directing the work relating to those contracts. Avery continued to express his concern about the unpaid taxes and became increasingly anxious after the visit of an IRS representative in mid-January of 1977. Plaintiff again directed him not to make any payments until a payment schedule was negotiated by Herbert Green. Avery was unable to locate Green until mid-February of 1977 and then pressed him to resolve the tax issue. On March 4, 1977, Green wrote to plaintiff regarding the fiscal problems of CTC requiring plaintiff’s “immediate attention.” Among the items listed in the letter was the amount then due the Internal Revenue Service for 1976 payroll taxes — $38,877.57. Government’s Exhibit G.

Troubled by the possibility of personal liability for the payroll taxes, Avery called plaintiff in Syracuse on March 11 to inquire about the mounting tax arrears. Plaintiff said that he would handle the matter on his next visit to California. Avery advised that he would resign if more specific information were not forthcoming and plaintiff refused to make any commitment at that time. Accordingly, by letter dated the same day, Avery tendered his resignation to the Board of Directors, Government’s Exhibit F, with copies to plaintiff and Herbert Green. The resignation of William W. Robson as vice president of CTC was also tendered on March 11, 1977. Government’s Exhibit E. Among the reasons given by Robson for his resignation was CTC’s “inability to pay outstanding debts, including, but not limited to, back taxes to both Federal and State Governments____” The first item in the final status report addressed to plaintiff by George Avery relative to various matters pending at CTC was the following: “1. A meeting scheduled with Mrs. Freed of the I.R.S. for last Thursday was postponed and should be reestablished this week. Herb Green and I were to meet with her to discuss current status of CTC’s past due obligations.” Government’s Exhibit D.

On March 15, 1977, a special meeting of the Board of Directors was held at the corporate headquarters at Santa Clara, California. Plaintiff was present, along with Richard Brewer and Herbert Green, the corporate secretary. The resignations of Avery and Robson were accepted, Brewer was appointed president of the corporation, and necessary changes were directed regarding authorized signatories on the CTC bank accounts. Government’s Exhibit V. Negotiations for the sale of plaintiff’s interest in CTC to Brewer followed the Board meeting and culminated, on March 21, 1977, in an agreement for the sale of shares. Government’s Exhibit W. In accordance with the terms of the agreement, the following events took place on March 21: Plaintiff transferred his 520,000 shares to Brewer and Brewer executed a promissory note, payable in one year, in the amount of $52,000 in payment therefor; and a promissory note, in the sum of $30,-500, representing the CTC indebtedness to plaintiff, was executed by CTC to plaintiff and guaranteed by Brewer, payable in one year with interest at nine percent. Government’s Exhibit II. The agreement of sale required plaintiff to lend to Brewer or Brewer’s designee the sum of $20,000, within ninety days after execution of the agreement, upon the receipt of promissory notes personally executed by Brewer. The notes representing this loan were to bear interest at nine percent per annum, with payment to be made within one year after execution. In the agreement, Brewer represented that he was “familiar with all aspects of said corporation’s financial status and structure, as well as, and to the same extent as is Kadah____” Id. Although it is not clear from the evidence when plaintiff resigned as Chairman of the Board, a check dated March 29, 1977 in the sum of $1,509.50 was drawn by plaintiff on the CTC account at Bank of America payable to himself. Government’s Exhibit AA.

On or about July 1,1977, plaintiff paid to CTC the last $5,000 of the $20,000 he had promised to lend Brewer or his designee. Between September 21, 1976 and July 1, 1977, plaintiff had loaned a total of $70,000 to CTC. Before making the final payment, plaintiff inquired if arrangements had been made for the liquidation of the indebtedness to the IRS. Brewer replied in the affirmative, and it appears that he had in fact made some agreement for regular installment payments. Due to default in these payments by CTC, a delegate of the Secretary of the Treasury made an assessment against plaintiff for a 100% penalty in the amount of $38,524.40 with respect to the unpaid withholding and FICA taxes of CTC for the third and fourth quarters of 1976 and the first quarter of 1977, pursuant to § 6672 of the I.R.C. The assessment was made on February 2, 1981 and a notice with demand for payment of the assessment was given to plaintiff on the same day. On April 10, 1981, the United States received partial payment of the 100% penalty assessment and, on December 18, 1982, the Government received from plaintiff $42,508.39, representing the balance of the assessment plus interest. Plaintiff duly filed claims for refund and the claims were disallowed by the IRS. Plaintiff commenced this action on November 16, 1981 and filed his supplemental complaint on August 2, 1982.

Ill

An employer is required to deduct and withhold social security and income taxes from wages paid to employees, 26 U.S.C. §§ 3102(a), 3402(a), and such taxes must be held by the employer as a special fund in trust for the United States, id. § 7501(a). A payroll tax return reporting the withheld taxes must be filed by the employer every calendar quarter and is due on the last day of the first month following the quarter. I.R.S. Reg. § 31.6011(a)-4. The tax liability of the employer arises when the wages are paid, rather than on the due date of the tax return. Tiffany v. United States, 228 F.Supp. 700, 702 (D.N.J. 1963). To protect the Government against losses sustained by the failure of employers to remit the taxes, § 6672 of the I.R.C., 26 U.S.C. § 6672, was enacted to provide another source from which to collect the funds. Sorenson v. United States, 521 F.2d 325, 328 (9th Cir.1975). Section 6672 provides, in pertinent part, as follows:

Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.

26 U.S.C. § 6672(a). The 100% penalty liability established by this statute must be paid upon notice and demand by the Secretary or his delegate and is assessed and collected in the same manner as other taxes. Id. § 6671(a).

A “person,” as referred to in § 6672 of the I.R.C., includes a corporate officer or employee who is under a duty to collect, account for or pay over the trust fund taxes. Id. § 6671(b). It is not necessary that a responsible person be invested with the routine duties of collection and payment; it is sufficient if he has the authority to avoid the default giving rise to the statutory violation. Harrington v. United States, 504 F.2d 1306, 1312 (1st Cir.1974). In approaching the issue of personal responsibility for non-payment of withheld taxes,

the courts have tended to disregard the mechanical functions of the various corporate officers, and, instead, have searched for the person or persons who could have seen to it that the taxes were paid, a person with ultimate authority over expenditures of corporate funds who can fairly be said to be responsible for the corporation’s failure to pay over its taxes.

Commonwealth National Bank v. United States, 665 F.2d 743, 752 (5th Cir.1982) (quoting Annot., 22 A.L.R.3d 8, 50 (1968)). Those corporate officers who are directly involved in making decisions as to the payment of creditors and disbursement of funds generally are those who hold the power to see to the payment to the Government of the taxes withheld. Braden v. United States, 318 F.Supp. 1189, 1193-94 (S.D.Ohio 1970), aff'd, 442 F.2d 342 (6th Cir.1972), cert. denied, 404 U.S. 912, 92 S.Ct. 229, 30 L.Ed.2d 185 (1973) (citing Monday v. United States, 421 F.2d 1210, 1214 (7th Cir.), cert. denied, 400 U.S. 821, 91 S.Ct. 38, 27 L.Ed.2d 48 (1970)). Liability has been extended to those having significant authority to determine what bills should be paid from corporate funds and when payment should be made. Pacific National Insurance Co. v. United States, 422 F.2d 26, 30-31 (9th Cir.), cert. denied, 398 U.S. 937, 90 S.Ct. 1838, 26 L.Ed.2d 269 (1970); United States v. Graham, 309 F.2d 210, 212 (9th Cir.1962).

In determining whether an individual is responsible for the collection or remittance of corporate trust fund taxes, the following factors have been considered relevant: the duties of the individual according to the corporation’s by-laws; the ability of the individual to sign corporate checks; the status of the individual as officer, director or shareholder; the ability of the individual to control the financial affairs of the corporation; the authority of the individual to hire and fire employees; the stake of the individual in the success of the corporation; the identity of the individual paying the corporate creditors; and the identity of the signer of the corporate tax returns. Braden v. United States, 318 F.Supp. 1189, 1194 (S.D.Ohio 1970), aff'd, 442 F.2d 342 (6th Cir.1972), cert. denied, 404 U.S. 912, 92 S.Ct. 229, 30 L.Ed.2d 185 (1973); Datlof v. United States, 252 F.Supp. 11, 32-33 (E.D.Pa.1966); see United States v. Sotelo, 436 U.S. 268, 279-80 nn. 12-13, 98 S.Ct. 1795, 1802 nn. 12-13, 56 L.Ed.2d 275 (1978).

A responsible person acts “willfully” within the meaning of I.R.C. § 6672 when he voluntarily, consciously and intentionally decides not to remit the withheld funds. Kalb v. United States, 505 F.2d 506, 511 (2d Cir.1974), cert. denied, 421 U.S. 979, 95 S.Ct. 1981, 44 L.Ed.2d 471 (1975) (citing Monday v. United States, 421 F.2d 1210, 1216 (7th Cir.), cert. denied, 400 U.S. 821, 91 S.Ct. 38, 27 L.Ed.2d 48 (1970)). Neither criminal intent nor intent to defraud is required, but only the voluntary and intentional decision not to collect or pay over. Bloom v. United States, 272 F.2d 215, 223 (9th Cir.1959), cert. denied, 363 U.S. 803, 80 S.Ct. 1236, 4 L.Ed.2d 1146 (1960); Scott v. United States, 354 F.2d 292, 295, 173 Ct.Cl. 650 (1965). The will-fullness requirement is met when it is shown that there was a conscious and deliberate choice on the part of the responsible person to prefer other creditors over the Government. Monday v. United States, 421 F.2d 1210, 1216 (7th Cir.), cert. denied, 400 U.S. 821, 91 S.Ct. 38, 27 L.Ed.2d 48 (1970). “Monday also points out, as has to be the case, that willful conduct ‘may also indicate a reckless disregard for obvious or known risks.’ ” Kalb v. United States, 505 F.2d at 511 (quoting Monday v. United States, 421 F.2d at 1215). “Willful conduct also includes failure to investigate or to correct mismanagement after having notice that withholding taxes have not been remitted to the Government.” Kalb v. United States, 505 F.2d at 511. However, proof of simple negligence does not satisfy the willful conduct requirement imposed by the statute. Dudley v. United States, 428 F.2d 1196, 1200 (9th Cir.1970).

IV

A. The Plaintiff as Responsible Person

The evidence clearly establishes plaintiffs responsibility for payment of the withheld taxes from the time he took control of CTC in early October of 1976 until he terminated his connection with the corporation at the end of March, 1977. He immediately assumed the title of Chairman of the Board of Directors, a position, according to the corporate by-laws, in which he was presiding officer of the body responsible for controlling all the business and affairs of the corporation. Government’s Exhibit DDD. In addition, he was the majority shareholder of CTC and was at all times authorized to sign corporate checks. He had the greatest stake in the success of the corporation and, although not personally present at all times, maintained an active interest in managing the company’s business activities. The financial affairs of the corporation were within his sole control, and the decision to hire George Avery as president was his alone. After he accepted the resignation of Daniel Schell as president and before Avery was hired, he made it clear that he would make all decisions relating to “corporate directions on major commitments and overall policy,” and he alone appointed the executive committee charged with managing day-to-day operations. He assumed the duties of chief operating officer and became directly involved in dealings with CTC’s customers. Plaintiff loaned funds to the corporation, and continued to infuse it with capital on a regular basis.

From the time that Avery became associated with CTC, first as a consultant and then as president, he was at all times subject to the direction and control of plaintiff. Avery maintained frequent telephone contact with plaintiff and regularly reported to him on the status of company business both by telephone and in person on those occasions when plaintiff was present at company headquarters. Although plaintiff did not sign the tax returns, unaudited financial statements prepared by the certified public accountants retained by the corporation were available to plaintiff at all times, and directions for the payment of various items of corporate indebtedness were given to Avery by the plaintiff. Government’s Exhibits A, C, Z, 00. That plaintiff considered himself answerable to no one in respect of the affairs of CTC is apparent from his treatment of CTC as an adjunct to the operation of his other corporation, Omnetics, the work of which was performed by CTC at fifty percent of cost at plaintiff’s insistence.

As to plaintiff’s claim that he cannot in any event be responsible for trust fund taxes accruing between March 22, 1977 and March 31, 1977 by reason of the sale of his stock to Richard Brewer on March 21, 1977 the evidence is that plaintiff continued to have check-signing authority and continued to loan money to the corporation after March 21. Plaintiff signed a check payable to himself for more than $1,500 on March 29,1977, and there is no indication that plaintiff resigned as Chairman of the Board before March 31. In short, other than the sale of his shares on March 21 and the terms of his agreement with Brewer relating thereto, there is no evidence respecting the termination of plaintiffs functions in the corporation prior to March 31, 1977.

B. The Plaintiffs Willful Failure to Remit

It is apparent from the testimony and the exhibits that plaintiff, as a responsible person, made a conscious and deliberate choice to prefer other creditors over the Government during the period in question. While corporate bills in amounts averaging $50,000 per month were being paid, and while various sums of money were being loaned to the corporation by plaintiff, the trust funds were not remitted to the Government. Plaintiff gave specific instructions to Avery that creditors were not to be paid until the last possible moment and that no payments were to be made to the Government until a schedule was worked out by Herbert Green. The Court credits Mr. Avery’s testimony that he repeatedly brought the matter to plaintiff’s attention and that plaintiff just as frequently postponed consideration of the matter, even after Mr. Green himself advised plaintiff that the payroll tax arrears required plaintiff’s “immediate attention.” When plaintiff refused to make any firm commitment respecting the payment of taxes, both Avery and Robson resigned. From the very beginning of his association with CTC, plaintiff was aware of the defaults in remitting withholding and FICA taxes, and he made the decision to disregard the problem in the face of increasing liabilities. There is no question that plaintiff was fully aware of the tax arrears during the entire time he was a responsible person. Even before he took control of the corporation, the financial statements available to him reflected the taxes when due.

Relying on Feist v. United States, 607 F.2d 954, 221 Ct.Cl. 531 (1979), plaintiff claims that the element of willfulness is negated by the assurances given him by Brewer, the purchaser of his shares, that the tax obligations would be paid; by his agreement to loan $20,000 within ninety days after the sale of the shares, allegedly to satisfy tax obligations; and by Brewer’s arrangement with the IRS to pay the tax liability in installments. In Feist, the controlling stockholder in a department store chain sold his shares to a reputedly reliable company. On or about the date of transfer, the seller discovered that the payroll taxes for a portion of one quarter had not been paid. He notified the purchasers of the delinquency and was assured that the taxes would be paid at once. When the sale was consummated as scheduled, there were sufficient funds in the corporate bank accounts and in the several hundred cash registers in the company’s stores to satisfy the tax obligations. As a result of a theft from the bank account, a seizure of merchandise, and an adjudication of bankruptcy, the debt to the Government never was paid by the corporation and the IRS looked to the seller for satisfaction. In granting summary judgment to the plaintiff on the question of willfulness, the Court held:

It would be a complete disregard of business reality to hold that plaintiff could or should have suspended, at the last minute, closing transactions carefully negotiated and scheduled for transfer of ownership of the business, in order to collect the cash in the cash registers at a time when the stores were open for business, and to interrupt the firm’s normal business operations____ Unlike a multitude of other cases,- where the evidence showed that the responsible person preferred other creditors over the Government or subjected the funds to business risks, or recklessly disregarded the employer’s obligation, the fact that plaintiff, upon learning of the delinquency at the eleventh hour, entered into an agreement with apparently responsible business persons indicates that plaintiff intended and reasonably expected that the Shepard Company would and could pay over the taxes to the Government.

United States v. Feist, 607 F.2d at 962-63.

There are significant differences between the factual situation revealed in Feist and those found in the case at bar. Most significant is the lack of sufficient funds in the CTC accounts to satisfy the obligation to the Government at the time of plaintiff’s stock transfer to Brewer. Although plaintiff claims that his understanding was that the $20,000 in additional funds to be advanced by him would go toward the past due payroll taxes, there was no basis for such an understanding. Plaintiff agreed to loan the $20,000 to Richard Brewer “or his designee” and that designee could have been any person or entity. Moreover, the money was to be loaned over a period of time, and it was not until after the sale that Brewer entered into the installment arrangement with the IRS on behalf of CTC, an arrangement ultimately not honored by Brewer or CTC. Although plaintiff claims that he understood Brewer to be a millionaire, there is no proof that he undertook an investigation to verify that understanding. There was no basis for any reasonable expectation on the part of plaintiff that CTC or Brewer would or could pay over the substantial obligations due the Government accrued during plaintiff’s stewardship at CTC. The case at bar falls within the “multitude of cases” where the evidence demonstrates a preference of other creditors over the Government. Finally, the defaults in the case at bar occurred over a fairly long period of time, while the default in Feist was for only a portion of one quarter.

C. The Third Quarter of 1976

Although plaintiff entered into an agreement for the purchase of shares in CTC on July 22, 1976, he did not become involved in the affairs of the company until early in October, 1976. Within the definitions described in section III, supra, plaintiff could not have become a responsible person until he began directing the business of the corporation in October. The only exception is found in the holding that

a “responsible person” under § 6672 may violate the “pay over” requirement of that statute by willfully failing to pay over trust funds collected prior to his accession to control when at the time he assumed control the corporation has funds impressed with a trust under § 7501, but that § 7501 does not impress a trust on after-acquired funds, and that the responsible person consequently does not violate § 6672 by willfully using employer funds for purposes other than satisfaction of the trust-fund tax claims of the United States when at the time he assumed control there were no funds with which to satisfy the tax obligation and the funds thereafter generated are not directly traceable to collected taxes referred to by that statute.

Slodov v. United States, 436 U.S. 238, 259-60, 98 S.Ct. 1778, 1791, 56 L.Ed.2d 251 (1978). The financial statements of CTC clearly demonstrate that, at the time plaintiff assumed control of the corporation in October, no funds were available in the corporate treasury with which to pay the trust fund taxes. It was just for the purpose of bringing cash to the company that plaintiff was first approached by those then operating the CTC business. Any funds generated by the business after plaintiff took charge, and any cash infused by plaintiff by way of loans or stock purchases, certainly cannot be said to be “directly traceable” to collected taxes. Plaintiff has established that he is not liable for the penalty assessment imposed upon him for the third quarter of 1976.

The Government’s claim that “even if Hassan Kadah was not willful until February or March of 1977, he would still be liable for the 100 percent penalty for all of the quarters involved since payments for wages and other creditors made during that period were in excess of the unpaid tax liabilities for the periods involved herein,” United States’ Proposed Conclusions of Law If 32, is rejected. The cases cited by the Government, Garsky v. United States, 600 F.2d 86 (7th Cir.1979); Kizzier v. United States, 598 F.2d 1128 (8th Cir.1979); Mazo v. United States, 591 F.2d 1151 (5th Cir.), cert. denied, 444 U.S. 842, 100 S.Ct. 82, 62 L.Ed.2d 54 (1979), in support of this proposition, all involved individuals who were responsible persons during all relevant calendar quarters and whose liability therefore was extended to unencumbered funds received after they became aware of defaults occurring during previous quarters. As has been demonstrated, plaintiff was not a responsible person during the third quarter of 1976.

V

Since plaintiff has sustained his burden of proof regarding his entitlement to recover the penalty assessment he has paid for the third quarter of 1976, United States v. Lease, 346 F.2d 696 (2d Cir.1965), judgment shall be entered in his favor in the amount so paid. If the parties cannot agree on the proper amount, an application to the Court to fix the correct sum will be entertained. Plaintiff has failed to carry his burden of proof with respect to his claims to recover the penalty assessments for the fourth quarter of 1976 and the first quarter of 1977, and judgment shall enter in favor of defendant as to those claims.

It is so Ordered.

      . The 100% penalty assessment against Kadah was made on February 2, 1981 in the amount of $38,524.40 and a notice with demand for payment was given on the same date. On April 10, 1981, the United States received $100 in partial payment of the assessment and, on December 18, 1982, the Government received $42,508.39 in full payment of the balance of the assessment plus interest. Claims for refund were duly filed but disallowed by the Internal Revenue Service.

      . Only two witnesses testified at the trial — plaintiff Hassan Kadah and George Avery, who was hired by Kadah as a consultant for, and later as president of CTC. A statement of undisputed facts was filed as part of the pre-trial stipulation on April 1, 1983, and numerous exhibits were received in evidence. Deposition testimony also was submitted for the Court’s consideration.

      . The resolution, Government’s Exhibit JJ, included a representation by plaintiff that he would not alter the policies of the corporation with regard to the employment of Schell and Robson, that he would consent to an amendment to provide that all stockholders retain their proportionate interests on any further issuance of shares, and that 20% of the corporate profits would be paid to employees on a profit sharing incentive plan.

      . There were 13,000 shares outstanding at the time of the application and the holdings were as follows: Daniel Schell, 6,000 shares; William Robson, 6,000 shares; Joseph Brenner, 500 shares; Richard Brewer, 500 shares.

      . By virtue of a 10 for 1 stock split on October 14, 1976, Schell and Robson became the owners of 60,000 shares each and Brenner and Brewer became the owners of 5,000 shares each. All continued to own their shares throughout the period in question with the exception of Schell, whose ownership was terminated in December of 1976. Although plaintiffs stock certificate was delivered to him during the last week in October, 1976, Government's Exhibit MM, it was not signed by the president and secretary until December 29, 1976, Government’s Exhibit II.

      . The letter included the following advice: “Your attention is called to the fact that, as to the tax items, the officers and directors of the company may be personally chargeable with the portion thereof that is attributable to employee withholdings." Government's Exhibit G.

      . In this letter, Avery expressed his "extreme concern about damage to [his] professional reputation resulting from Custom Technology Corporation’s inability to pay outstanding obligations including, but not limited to, past due taxes to both State and Federal Governments resulting from a lack of financing as previously promised by Hassan Kadah.” Government’s Exhibit F.