text
stringlengths 1
11.6M
| created_timestamp
stringlengths 0
22
| text_chunks
listlengths 1
5.55k
| url
stringlengths 24
213
| domain
stringclasses 1
value | link
stringclasses 1
value |
|---|---|---|---|---|---|
DETAILED ACTION
Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . 2. The text of those sections of Title 35 U.S. Code not included in this section can be found in the prior office action. 3. The prior office actions are incorporated herein by reference. In particular, the observations with respect to claim language, and response to previously presented arguments. 4. This Office action is in response to communications received on August 30, 2021. Claims 1-3, 6-10, 13-16, 19 and 20 are pending and addressed below.
Response to Arguments Applicant’s amendments are sufficient to overcome the claim objections set forth in the previous office action. Applicant’s amendments are sufficient to overcome the 35 U.S.C. 112(a) rejections set forth in the previous office action. Applicant’s filing of a proper terminal disclaimer on 8/30/2021 is sufficient to overcome the nonstatutory double patenting rejections set forth in the previous office action. Applicant’s amendments are sufficient to overcome the 35 U.S.C. 102/103 rejections set forth in the previous office action. EXAMINER’S AMENDMENT 9. An examiner’s amendment to the record appears below. Should the changes and/or additions be unacceptable to applicant, an amendment may be filed as provided by 37 CFR 1.312. To ensure consideration of such an amendment, it MUST be submitted no later than the payment of the issue fee. Authorization for this examiner’s amendment was given in a telephone interview with Matt Hong (Reg. No. 74,035) on 02 September 2021. The application has been amended as follows:
Listing of Claims:
Claim 1 (Currently Amended) A system for authorization of resource requests using cryptographic computations, the system comprising: a memory device with computer-readable program code stored thereon; a communication device; and a processing device operatively coupled to the memory device and the communication device, wherein the processing device is configured to execute the computer-readable program code to: receive, from a user computing system, a request to access a resource or process; assess a magnitude of potential impact of the request to access the resource or process; ; [[,]] detect that the user computing system has completed the one or more authorization steps, wherein prompting the user computing system to complete the one or more authorization steps comprises prompting the user computing system to compute a set of cryptographic hash values, the set comprising a first subset and a second subset, wherein the detecting that the user computing system has completed the one or more authorization steps comprises: computing hash values for the first subset to produce known hash output values; receiving, from the user computing system, the set of cryptographic hash values; and comparing the set of cryptographic hash values with the known hash output values; perform integrity verification of one or more data files by comparing the set of cryptographic hash values with one or more corresponding stored hash values;
grant the request to access the resource or process.
receiving, from a user computing system, a request to access a resource or process; assessing a magnitude of potential impact of the request to access the resource or process; based on the magnitude of potential impact, prompting the user computing system to complete one or more authorization steps; [[,]] detecting that the user computing system has completed the one or more authorization steps, wherein prompting the user computing system to complete the one or more authorization steps comprises prompting the user computing system to compute a set of cryptographic hash values, the set comprising a first subset and a second subset, wherein the detecting that the user computing system has completed the one or more authorization steps comprises: computing hash values for the first subset to produce known hash output values;
comparing the set of cryptographic hash values with the known hash output values; performing integrity verification of one or more data files by comparing the set of cryptographic hash values with one or more corresponding stored hash values;
granting the request to access the resource or process.
Claim 14 (Currently Amended) A computer-implemented method for authorization of resource requests using cryptographic computations, wherein the method comprises: receiving, from a user computing system, a request to access a resource or process; assessing a magnitude of potential impact of the request to access the resource or process; based on the magnitude of potential impact, prompting the user computing system to complete one or more authorization steps; [[,]] detecting that the user computing system has completed the one or more authorization steps,
computing hash values for the first subset to produce known hash output values; receiving, from the user computing system, the set of cryptographic hash values; and comparing the set of cryptographic hash values with the known hash output values; perform integrity verification of one or more data files by comparing the set of cryptographic hash values with one or more corresponding stored hash values;
granting the request to access the resource or process.
Allowable Subject Matter 10. Independent claims 1, 8 and 14 are allowed. Dependent claims 2, 3, 6, 7, 9, 10, 13, 15, 16, 19 and 20 are allowed based on their dependency.
No reason for allowance is needed as the record is clear. According to MPEP 1302.14 (I): "In most cases, the examiner's actions and the applicant's replies make evident the reasons for allowance, satisfying the "record as a whole" proviso of the rule. This is particularly true when applicant fully complies with 37 CFR 1.111 (b) and (c) and 37 CFR 1.133(b). Thus, where the examiner's actions clearly point out the reasons for rejection and the applicant's reply explicitly presents reasons why claims are patentable over the reference, the reasons for allowance are in all probability evident from the record and no statement should be necessary."
12. Any comments considered necessary by applicant must be submitted no later than payment of the issue fee and, to avoid processing delays, should preferably accompany the issue fee. Such submissions should be clearly labeled “Comments on Statement of Reasons for Allowance."
Conclusion The prior art made of record and not relied upon is considered pertinent to applicant's disclosure. Chan (U.S. Patent No. 10,887,107) – cited for teaching providing a proof of work challenge in response to a request – Abstract Roscoe et al. (U.S. Pub. No. 2021/0194702) – cited for teaching authenticating using subsets of hashes – Abstract
Any inquiry concerning this communication or earlier communications from the examiner should be directed to THADDEUS J PLECHA whose telephone number is (571)270-7506. The examiner can normally be reached on M-F 8-4:30. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Taghi Arani can be reached on 571-272-3787. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. | 2021-10-05T08:35:23 | [
"DETAILED ACTION Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . 2. The text of those sections of Title 35 U.S. Code not included in this section can be found in the prior office action. 3. The prior office actions are incorporated herein by reference. In particular, the observations with respect to claim language, and response to previously presented arguments. 4. This Office action is in response to communications received on August 30, 2021. Claims 1-3, 6-10, 13-16, 19 and 20 are pending and addressed below.",
"Response to Arguments Applicant’s amendments are sufficient to overcome the claim objections set forth in the previous office action. Applicant’s amendments are sufficient to overcome the 35 U.S.C. 112(a) rejections set forth in the previous office action. Applicant’s filing of a proper terminal disclaimer on 8/30/2021 is sufficient to overcome the nonstatutory double patenting rejections set forth in the previous office action. Applicant’s amendments are sufficient to overcome the 35 U.S.C. 102/103 rejections set forth in the previous office action. EXAMINER’S AMENDMENT 9. An examiner’s amendment to the record appears below. Should the changes and/or additions be unacceptable to applicant, an amendment may be filed as provided by 37 CFR 1.312. To ensure consideration of such an amendment, it MUST be submitted no later than the payment of the issue fee. Authorization for this examiner’s amendment was given in a telephone interview with Matt Hong (Reg. No. 74,035) on 02 September 2021.",
"The application has been amended as follows: Listing of Claims: Claim 1 (Currently Amended) A system for authorization of resource requests using cryptographic computations, the system comprising: a memory device with computer-readable program code stored thereon; a communication device; and a processing device operatively coupled to the memory device and the communication device, wherein the processing device is configured to execute the computer-readable program code to: receive, from a user computing system, a request to access a resource or process; assess a magnitude of potential impact of the request to access the resource or process; ; [[,]] detect that the user computing system has completed the one or more authorization steps, wherein prompting the user computing system to complete the one or more authorization steps comprises prompting the user computing system to compute a set of cryptographic hash values, the set comprising a first subset and a second subset, wherein the detecting that the user computing system has completed the one or more authorization steps comprises: computing hash values for the first subset to produce known hash output values; receiving, from the user computing system, the set of cryptographic hash values; and comparing the set of cryptographic hash values with the known hash output values; perform integrity verification of one or more data files by comparing the set of cryptographic hash values with one or more corresponding stored hash values; grant the request to access the resource or process.",
"receiving, from a user computing system, a request to access a resource or process; assessing a magnitude of potential impact of the request to access the resource or process; based on the magnitude of potential impact, prompting the user computing system to complete one or more authorization steps; [[,]] detecting that the user computing system has completed the one or more authorization steps, wherein prompting the user computing system to complete the one or more authorization steps comprises prompting the user computing system to compute a set of cryptographic hash values, the set comprising a first subset and a second subset, wherein the detecting that the user computing system has completed the one or more authorization steps comprises: computing hash values for the first subset to produce known hash output values; comparing the set of cryptographic hash values with the known hash output values; performing integrity verification of one or more data files by comparing the set of cryptographic hash values with one or more corresponding stored hash values; granting the request to access the resource or process. Claim 14 (Currently Amended) A computer-implemented method for authorization of resource requests using cryptographic computations, wherein the method comprises: receiving, from a user computing system, a request to access a resource or process; assessing a magnitude of potential impact of the request to access the resource or process; based on the magnitude of potential impact, prompting the user computing system to complete one or more authorization steps; [[,]] detecting that the user computing system has completed the one or more authorization steps, computing hash values for the first subset to produce known hash output values; receiving, from the user computing system, the set of cryptographic hash values; and comparing the set of cryptographic hash values with the known hash output values; perform integrity verification of one or more data files by comparing the set of cryptographic hash values with one or more corresponding stored hash values; granting the request to access the resource or process.",
"Allowable Subject Matter 10. Independent claims 1, 8 and 14 are allowed. Dependent claims 2, 3, 6, 7, 9, 10, 13, 15, 16, 19 and 20 are allowed based on their dependency. No reason for allowance is needed as the record is clear. According to MPEP 1302.14 (I): \"In most cases, the examiner's actions and the applicant's replies make evident the reasons for allowance, satisfying the \"record as a whole\" proviso of the rule. This is particularly true when applicant fully complies with 37 CFR 1.111 (b) and (c) and 37 CFR 1.133(b). Thus, where the examiner's actions clearly point out the reasons for rejection and the applicant's reply explicitly presents reasons why claims are patentable over the reference, the reasons for allowance are in all probability evident from the record and no statement should be necessary.\"",
"12. Any comments considered necessary by applicant must be submitted no later than payment of the issue fee and, to avoid processing delays, should preferably accompany the issue fee. Such submissions should be clearly labeled “Comments on Statement of Reasons for Allowance.\" Conclusion The prior art made of record and not relied upon is considered pertinent to applicant's disclosure. Chan (U.S. Patent No. 10,887,107) – cited for teaching providing a proof of work challenge in response to a request – Abstract Roscoe et al. (U.S. Pub. No. 2021/0194702) – cited for teaching authenticating using subsets of hashes – Abstract Any inquiry concerning this communication or earlier communications from the examiner should be directed to THADDEUS J PLECHA whose telephone number is (571)270-7506. The examiner can normally be reached on M-F 8-4:30.",
"Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Taghi Arani can be reached on 571-272-3787. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system.",
"Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000."
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-09-19.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 1:18-CV-03943-GLR Doci£g{§gltF§lC-E]S Filed 12/20/18 Page 1 of 3
ALAN BET'I`EN
CHERYL L. MATTHEWS
SAGAL, FILBERT, QUASNEY & BETTEN, P.A. §{‘$?§§_‘;I§;§;§¥,,R 600 WASHINGTON AvENUE, sUITE 300 DANIEL W~QUASNEY TOWSON, MARYLAND 21204 °F C°“"SEL LETECIA ROLLINS KIMBERLY A. MANUELIDES lucK M. GRAMS'4 Telephone: 4 10-823 ~ l 8 8 1 sTANLEY 1. MoneriN MrNi)Y MEZ sALER FaXZ 410-823~8032 __
HOWARD CASSIN
*Admitted in MD and PA h (1951- 2005)
August 20, 2015
R. Brady Locher, Esq.
Assistant County Attorney
Perrnits, Approvals and Inspections County Office Building
111 West Chesapeake Avenue Towson, Maryland 21204
RE: Citation CC15()0406 Petition for Special Hearing, Case No. 2015-0223-SPH Property: 14 Aigburth Road
Dear Brady:
AS you knoW, on January 29 of this year, Baltimore County issued a Code Enforcement Correction Notice directing, among other things, that the owner of 14 Aigburth, Friends of Lubavich, Inc., “Obtain a Change of Occupancy permit for a change of ‘use of residential dwelling... [and] Cease the illegal House of Worship/Religious Institution Without the benefit of meeting the RTA requirements .. [and] Cease the illegal operation of a Comrnunity Building Without the benefit of a Special EXception Hearing.” The Notice Was converted to a Citation on March 2.
As you also know, at the same time the Citation Was issued, Rabbi Rivkin, Who resides in 14 Aigburth (the “Property”) together With his Wife and their four children, Was in the process of seeking building permit approval for an addition on the home. Rabbi Rivkin Was advised and l subsequently have confirmed that until the Citation is cleared, no plans will be accepted by the County, much less processed.
Alan Betten, Rabbi Rivkin and I met With you and Carl Richards on March 9 to discuss the Citation and Rabbi Rivkin’s building plans. After explaining to you the current use of the house by the Rabbi and his family and their anticipated use of the addition, you and Carl recommended that We tile a Petition fora Special Hearing to confirm the use of the Property as a parsonage. Action on the Citation Would be stayed pending the outcome of the Special Hearing.
This We did. On April `14th We filed a Petition for a Special Hearing, seeking “confirmation of continued use as a residential parsonage, With accessory use for religious Worship and religious education.” A hearing on the Petition commenced on June 19 and
F:\BALT\KMANUEL|DES\Rivkin 73883.01\|lrto b |ocher.doc
R Brady&O%ge1: 133 C\/- 03943- GLR Document 1- 1 Filed 12/20/18 Page 2 of 3
Page 2 August 20, 2015
continued on June 25. EXtensive testimony was taken with regard to the Property’ s current use, e.g., Rabbi Rivkin and his wife both testified that they lived in the horne with their children. They take their meals there; they sleep there; they do not open the house to Strangers; they conduct their religious work off-site, on the Goucher and Towson campuses; like most other families, particularly Orthodox Jewish families, they host dinner for family and friends on Friday nights. In short, as observed by Judge Beverungen in his opinion, “Rabbi Rivken (.sic) testified that the property is not used as a synagogue or community building. . .”
No one, not a single person at the hearing testified in contradiction to the Rabbi or Mrs. Rivkin. Rather, instead, the community testimony focused on the community’s concerns about what the Property might be used for in the future were the building plans approved. Such concerns, noted Judge Beverungen at the hearing, were not germane to the issue of present use.
The Petition was denied, but not because the home is not being used as a residence. The Petition was denied because, in Judge Beverungen’s opinion, the home was not affiliated with a church and therefore, Judge Beverungen concluded, it was not a parsonage. Specifically, “[i]t is simply not sufficient that the horne be owned by a religious organization and lived in by a clergy member and his family. . .No evidence was presented to establish that Rabbi Rivkin is formally affiliated with or is in charge of that synagogue and congregation.” As part of his analysis Judge Beverungen determined that the Property was not being used as a house of worship, which by itself would have justified its being a parsonage. Attached is a copy of Judge Beverungen’s _ opinion for your convenience
During the hearing, Judge Beverungen also stated that it was clear to him- and there was no contradiction presented by any of the opposing witnesses- that the Property Was not being used as a community hall.
lt is hard to imagine what more Rabbi and Mrs. Rivkin need to do to establish the fact that they do in fact reside in the home in which they live. The horne was held not to be a parsonage because it was unaffiliated with a church. Rabbi Rivkin has no congregation, so the home cannot itself be a church, or a synagogue. It is not open to the public and has no open hours, so it cannot be a public meeting house.
Having followed the County’s suggestion that a hearing be held on the use of the Property, and that hearing having clearly illuminated the Rivkin’s use of their horne as such, it confounds reason to require that the Rivkins go through the hearing process or, any other procedure, yet again for the purpose of clearing the Citation. The County cannot lawfully simply refuse to consider the evidence before it concerning the use of the Property. Under such circurnstances, the County is duty bound to withdraw the Citation as improvidently issued and we request that the County do so.
It further confounds logic for the County to continue to refuse consideration of the Rivkins’ building plans and indeed for the County to refuse to so much as accept the plans for consideration As noted by Judge Beverungen in his Order on Motion for Reconsideration, this
R. Brady&%%%e1: S-qc_V-O3943-GLR Document1-1 Fl|ed12/20/18 Page3of3
Page 3 August 20, 2015
point there Should be no impediment to the Rivkins having the right to Simply deliver and file their plans. A copy of Judge Beverungen’s Order is also attached
Please let us know what specific obj ection(s) the County has to Rabbi and l\/Irs. Rivkin’s submitting their building plans for review, comment and approval by the County so that the Rivkins, like any other citizens of this County, may exercise their rights to improve their home as
they deem fit so long as the plans they propose are compliant with applicable County zoning and building codes.
Very,truly yours,
` erly A. anuelides | 2018-12-20 | [
"Case 1:18-CV-03943-GLR Doci£g{§gltF§lC-E]S Filed 12/20/18 Page 1 of 3 ALAN BET'I`EN CHERYL L. MATTHEWS SAGAL, FILBERT, QUASNEY & BETTEN, P.A. §{‘$?§§_‘;I§;§;§¥,,R 600 WASHINGTON AvENUE, sUITE 300 DANIEL W~QUASNEY TOWSON, MARYLAND 21204 °F C°“\"SEL LETECIA ROLLINS KIMBERLY A. MANUELIDES lucK M. GRAMS'4 Telephone: 4 10-823 ~ l 8 8 1 sTANLEY 1. MoneriN MrNi)Y MEZ sALER FaXZ 410-823~8032 __ HOWARD CASSIN *Admitted in MD and PA h (1951- 2005) August 20, 2015 R. Brady Locher, Esq. Assistant County Attorney Perrnits, Approvals and Inspections County Office Building 111 West Chesapeake Avenue Towson, Maryland 21204 RE: Citation CC15()0406 Petition for Special Hearing, Case No.",
"2015-0223-SPH Property: 14 Aigburth Road Dear Brady: AS you knoW, on January 29 of this year, Baltimore County issued a Code Enforcement Correction Notice directing, among other things, that the owner of 14 Aigburth, Friends of Lubavich, Inc., “Obtain a Change of Occupancy permit for a change of ‘use of residential dwelling... [and] Cease the illegal House of Worship/Religious Institution Without the benefit of meeting the RTA requirements .. [and] Cease the illegal operation of a Comrnunity Building Without the benefit of a Special EXception Hearing.” The Notice Was converted to a Citation on March 2. As you also know, at the same time the Citation Was issued, Rabbi Rivkin, Who resides in 14 Aigburth (the “Property”) together With his Wife and their four children, Was in the process of seeking building permit approval for an addition on the home. Rabbi Rivkin Was advised and l subsequently have confirmed that until the Citation is cleared, no plans will be accepted by the County, much less processed. Alan Betten, Rabbi Rivkin and I met With you and Carl Richards on March 9 to discuss the Citation and Rabbi Rivkin’s building plans. After explaining to you the current use of the house by the Rabbi and his family and their anticipated use of the addition, you and Carl recommended that We tile a Petition fora Special Hearing to confirm the use of the Property as a parsonage.",
"Action on the Citation Would be stayed pending the outcome of the Special Hearing. This We did. On April `14th We filed a Petition for a Special Hearing, seeking “confirmation of continued use as a residential parsonage, With accessory use for religious Worship and religious education.” A hearing on the Petition commenced on June 19 and F:\\BALT\\KMANUEL|DES\\Rivkin 73883.01\\|lrto b |ocher.doc R Brady&O%ge1: 133 C\\/- 03943- GLR Document 1- 1 Filed 12/20/18 Page 2 of 3 Page 2 August 20, 2015 continued on June 25. EXtensive testimony was taken with regard to the Property’ s current use, e.g., Rabbi Rivkin and his wife both testified that they lived in the horne with their children. They take their meals there; they sleep there; they do not open the house to Strangers; they conduct their religious work off-site, on the Goucher and Towson campuses; like most other families, particularly Orthodox Jewish families, they host dinner for family and friends on Friday nights.",
"In short, as observed by Judge Beverungen in his opinion, “Rabbi Rivken (.sic) testified that the property is not used as a synagogue or community building. . .” No one, not a single person at the hearing testified in contradiction to the Rabbi or Mrs. Rivkin. Rather, instead, the community testimony focused on the community’s concerns about what the Property might be used for in the future were the building plans approved. Such concerns, noted Judge Beverungen at the hearing, were not germane to the issue of present use. The Petition was denied, but not because the home is not being used as a residence. The Petition was denied because, in Judge Beverungen’s opinion, the home was not affiliated with a church and therefore, Judge Beverungen concluded, it was not a parsonage. Specifically, “[i]t is simply not sufficient that the horne be owned by a religious organization and lived in by a clergy member and his family. . .No evidence was presented to establish that Rabbi Rivkin is formally affiliated with or is in charge of that synagogue and congregation.” As part of his analysis Judge Beverungen determined that the Property was not being used as a house of worship, which by itself would have justified its being a parsonage. Attached is a copy of Judge Beverungen’s _ opinion for your convenience During the hearing, Judge Beverungen also stated that it was clear to him- and there was no contradiction presented by any of the opposing witnesses- that the Property Was not being used as a community hall.",
"lt is hard to imagine what more Rabbi and Mrs. Rivkin need to do to establish the fact that they do in fact reside in the home in which they live. The horne was held not to be a parsonage because it was unaffiliated with a church. Rabbi Rivkin has no congregation, so the home cannot itself be a church, or a synagogue. It is not open to the public and has no open hours, so it cannot be a public meeting house. Having followed the County’s suggestion that a hearing be held on the use of the Property, and that hearing having clearly illuminated the Rivkin’s use of their horne as such, it confounds reason to require that the Rivkins go through the hearing process or, any other procedure, yet again for the purpose of clearing the Citation. The County cannot lawfully simply refuse to consider the evidence before it concerning the use of the Property.",
"Under such circurnstances, the County is duty bound to withdraw the Citation as improvidently issued and we request that the County do so. It further confounds logic for the County to continue to refuse consideration of the Rivkins’ building plans and indeed for the County to refuse to so much as accept the plans for consideration As noted by Judge Beverungen in his Order on Motion for Reconsideration, this R. Brady&%%%e1: S-qc_V-O3943-GLR Document1-1 Fl|ed12/20/18 Page3of3 Page 3 August 20, 2015 point there Should be no impediment to the Rivkins having the right to Simply deliver and file their plans. A copy of Judge Beverungen’s Order is also attached Please let us know what specific obj ection(s) the County has to Rabbi and l\\/Irs. Rivkin’s submitting their building plans for review, comment and approval by the County so that the Rivkins, like any other citizens of this County, may exercise their rights to improve their home as they deem fit so long as the plans they propose are compliant with applicable County zoning and building codes. Very,truly yours, ` erly A. anuelides"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/53426229/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Title: From Thomas Jefferson to Cornelius Coningham, 12 November 1801 From: Jefferson, Thomas To: Coningham, Cornelius
Sir Washington Nov. 12. 1801. If the laws had permitted the application of the public money by way of loan to individuals suffering by unfortunate occurrences, I should have had great pleasure in administering relief against the untoward circumstances which render it desireable to yourself. but not a dollar can be applied but in conformity with an appropriation previously made by law, and rigourously exacted by the accounting officers. indeed your own good judgment will suggest to you how susceptable of abuse would be such a power of disposing of the public money, and how impossible to fix limits to the demands which would present themselves in that shape. these considerations will doubtless be a sufficient apology for the not doing in the present instance what you had deemed might be done. Accept my best wishes for your health & happiness. Th: Jefferson | 11-12-1801 | [
"Title: From Thomas Jefferson to Cornelius Coningham, 12 November 1801 From: Jefferson, Thomas To: Coningham, Cornelius Sir Washington Nov. 12. 1801. If the laws had permitted the application of the public money by way of loan to individuals suffering by unfortunate occurrences, I should have had great pleasure in administering relief against the untoward circumstances which render it desireable to yourself. but not a dollar can be applied but in conformity with an appropriation previously made by law, and rigourously exacted by the accounting officers. indeed your own good judgment will suggest to you how susceptable of abuse would be such a power of disposing of the public money, and how impossible to fix limits to the demands which would present themselves in that shape. these considerations will doubtless be a sufficient apology for the not doing in the present instance what you had deemed might be done. Accept my best wishes for your health & happiness. Th: Jefferson"
]
| https://founders.archives.gov/API/docdata/Jefferson/01-35-02-0496 | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Citation Nr: 1225529
Decision Date: 07/24/12 Archive Date: 07/30/12
DOCKET NO. 09-36 945 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Atlanta, Georgia
THE ISSUES
1. Entitlement to an initial rating greater than 20 percent for lumbar spine degenerative disc disease.
2. Entitlement to an initial rating higher than 10 percent for right lower extremity radiculopathy.
3. Entitlement to an initial compensable rating for left lower extremity radiculopathy.
3. Entitlement to a total disability rating based on individual unemployability.
REPRESENTATION
Appellant represented by: Georgia Department of Veterans Services
ATTORNEY FOR THE BOARD
C. Fetty, Counsel
INTRODUCTION
The Veteran performed active military service from June 1979 to October 1985; from May to October 1988; from March 2003 to July 2004; and, from January 2005 to July 2007. A DD-Form 214 verifies active military service from January 2005 to July 2007 with over 8 years of prior active service and over 3 years of prior inactive service. He served in Southwest Asia during the Persian Gulf War era and earned the Combat Action Badge.
This appeal arises to the Board of Veterans' Appeals (Board) from an October 2007-issued rating decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Atlanta, Georgia, that in pertinent part granted service connection for lumbar spine degenerative disc disease with laminectomy and retained hardware and assigned a 10 percent rating effective from July 20, 2007. That rating decision denied service connection for right lower extremity and left lower extremity radiculopathy. The Veteran filed a timely notice of disagreement (hereinafter: NOD) and clarifying correspondence indicating dissatisfaction with the initial rating for lumbar spine degenerative disc disease and the denial of service connection for bilateral lower extremity radiculopathy. His NOD also contains a claim for a total disability rating based on individual unemployability (hereinafter: TDIU).
In an October 2008-issued RO rating decision, TDIU was denied. In an October 2009 rating decision, the RO assigned a higher (20 percent) initial rating for the lumbar spine effective from July 2007, granted service connection for right and left lower extremity radiculopathy, assigned a 10 percent rating for the right lower extremity, and assigned a noncompensable rating for the left lower extremity, both effective from July 2007.
The Veteran's VA Form 9, Appeal to the Board of Veterans' Appeals, contains a request for a hearing before a Veteran's Law Judge. In November 2011, however, the Veteran withdrew his hearing request.
The United States Court of Appeals for Veterans Claims (Court) determined that where, as here, a claimant, raises the question of unemployability due to the disability for which an increased rating is sought, then part of the increased rating claim is an implied claim for a total disability rating based on individual unemployability (hereinafter referred to as TDIU). Rice v. Shinseki, 22 Vet. App. 447, 453-455 (2009). The Veteran has claimed that service-connected low back pain precludes employment. The Board has therefore added a TDIU claim to page 1 to reflect Board jurisdiction over this issue. The Board's jurisdiction derives from the Court's holding in Rice, regardless of whether the Veteran has failed to appeal a recent RO decision that denied entitlement to TDIU.
In VAOPGCPREC 6-96, VA's General Counsel held that when the issue of entitlement to an extra-schedular rating or a TDIU rating arises in connection with an appeal in an increased rating case, the Board is not precluded from issuing a final decision on the issue of an increased schedular rating and remanding the extra-schedular-rating or TDIU-rating issue to the RO.
Further development is needed to properly adjudicate the TDIU claim. Entitlement to TDIU is addressed in the REMAND portion of the decision below and is REMANDED to the RO via the Appeals Management Center (AMC), in Washington, DC.
FINDINGS OF FACT
1. For the entire appeal period, the thoracolumbar spine disability was manifested by forward flexion of no less than 50 degrees and combined range of motion of no less than 105 degrees after consideration of functional impairment after repetitive use, due to pain, fatigue, weakness, and lack of endurance.
2. Not shown is limited forward flexion, of the thoracolumbar spine, to 30 degrees or less, or unfavorable ankylosis of the entire spine, or unfavorable or favorable ankylosis of the entire thoracolumbar spine.
3. Throughout the appeal period, right lower extremity radiculopathy has been manifested by pain, numbness, motor weakness, absent ankle jerk, and sciatic nerve involvement that more nearly approximates severe incomplete paralysis.
4. Throughout the appeal period, left lower extremity radiculopathy has been manifested by pain, motor weakness, diminished ankle jerk, and sciatic nerve involvement that more nearly approximates moderate incomplete paralysis.
5. The evidence does not contain factual findings that demonstrate distinct time periods in which the service-connected disability exhibited diverse symptoms meeting the criteria for different ratings during the course of the appeal.
CONCLUSIONS OF LAW
1. For the entire appeal period, the criteria for an initial schedular rating greater than 20 percent for lumbar spine degenerative disc disease, intervertebral disc syndrome, degenerative arthritis, and lumbar laminectomy are not met. 38 U.S.C.A. §§ 1155, 5103A, 5107 (West 2002); 38 U.S.C.A. § 5103 (West 2002 & Supp.2011); 38 C.F.R. §§ 4.1, 4.3, 4.7, 4.10, 4.40, 4.45, 4.59, 4.71, Plate V, § 4.71a, Diagnostic Codes 5237, 5241, 5242 (2011).
2. For the entire appeal period, the criteria for a separate 40 percent rating for right lower extremity radiculopathy are met. 38 U.S.C.A. §§ 1155, 5103A, 5107 (West 2002); 38 U.S.C.A. § 5103 (West 2002 & Supp.2011); 38 C.F.R. §§ 4.1, 4.3, 4.7, 4.10, 4.124a, Diagnostic Code 8520 (2011).
3. For the entire appeal period, the criteria for a separate 20 percent rating for left lower extremity radiculopathy are met. 38 U.S.C.A. §§ 1155, 5103A, 5107 (West 2002); 38 U.S.C.A. § 5103 (West 2002 & Supp.2011); 38 C.F.R. §§ 4.1, 4.3, 4.7, 4.10, 4.124a, Diagnostic Code 8520 (2011).
REASONS AND BASES FOR FINDINGS AND CONCLUSIONS
VA must notify and assist claimants in substantiating claims for benefits. 38 U.S.C.A. §§ 5100, 5103A, 5107, 5126 (West 2002); 38 U.S.C.A. §§ 5102, 5103 (West 2002 & Supp. 2011); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2011). Upon receipt of a complete or substantially complete application for benefits, VA must notify the claimant and his representative of any information and any medical or lay evidence that is necessary to substantiate the claim. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b); Quartuccio v. Principi, 16 Vet. App. 183 (2002). VA must also inform the claimant of any information and evidence not of record that VA will seek to provide and that the claimant is expected to provide. This notice must be provided prior to an initial unfavorable decision. Mayfield v. Nicholson, 444 F.3d 1328 (Fed. Cir. 2006); Pelegrini v. Principi, 18 Vet. App. 112 (2004). In this case, adequate notice was provided in an October 2007 letter sent to the claimant prior to the initial unfavorable decision on his claim.
Regarding the claim for a higher initial rating for a low back disability, the NOD filed as to the initial rating does not trigger additional notice obligations under 38 U.S.C.A. § 5103 (a). See 38 C.F.R. § 3.159 (b) (3) (2011). Rather, the claimant's appeal of an initial rating triggers VA's duty to develop that claim, as set forth at 38 U.S.C.A. §§ 5104, 7105; 38 C.F.R. § 3.103. These require VA to advise the claimant of what evidence is necessary to obtain the maximum benefit allowed by the law. This notice has been given in a statement of the case (hereinafter: SOC).
The SOC provided the claimant with the relevant rating criteria for disabilities of the spine, as listed at various diagnostic codes. The claimant was informed of the evidence needed to achieve the next-higher schedular rating, and also to obtain even higher ratings for a low back disability. Thus, VA's duties under 38 U.S.C.A. §§ 5104 and 7105 have been satisfied.
The claimant challenges the initial evaluation assigned following the grant of service connection. In Dingess v. Nicholson, 19 Vet. App. 473 (2006), the Court held that in cases where service connection has been granted and an initial disability rating and effective date have been assigned, the typical service-connection claim has been more than substantiated, it has been proven, thereby rendering section 5103(a) notice no longer required because the purpose that the notice is intended to serve has been fulfilled. Id. at 490-91. Because the notice that was provided before service connection was granted was legally sufficient, VA's duty to notify in this case has been satisfied.
VA also has a duty to assist the claimant in the development of the claim. This duty includes assisting the claimant in obtaining service medical records and pertinent treatment records and providing an examination when necessary. 38 U.S.C.A. § 5103A; 38 C.F.R. § 3.159.
All necessary development has been accomplished and adjudication may proceed without unfair prejudice to the claimant. See Bernard v. Brown, 4 Vet. App. 384 (1993). VA has obtained all available VA out-patient treatment reports and Social Security Administration (SSA) records. The claimant was afforded VA medical examinations. The claimant has not identified, and the record does not otherwise indicate, any additional existing evidence that is necessary for fair adjudication of the claims that has not been obtained. Hence, no further notice or assistance to the claimant is required to fulfill VA's duty to assist in the development of the claims. Smith v. Gober, 14 Vet. App. 227 (2000), aff'd 281 F.3d 1384 (Fed. Cir. 2002).
Higher Initial Lumbar Spine Rating
Disability ratings are based upon the average impairment of earning capacity, as determined by a schedule for rating disabilities. 38 U.S.C.A. § 1155; 38 C.F.R. Part 4 (2011). Diagnostic codes identify the various disabilities. 38 C.F.R. Part 4. The entire medical history is reviewed when making disability evaluations. 38 C.F.R. § 4.1; Schafrath v. Derwinski, 1 Vet. App. 589, 592 (1995).
38 C.F.R. § 4.2 contains guidance concerning variation in examination reports during an appeal period. It states that different examiners will not describe the same disability in the same language. It is the responsibility of the rating specialist to interpret reports of examination in light of the whole recorded history, reconciling the various reports into a consistent picture so that the current rating may accurately reflect the elements of disability present. Each disability must be considered from the point of view of the veteran seeking work. If a diagnosis is not supported by the findings on the examination report or if the report does not contain sufficient detail, it is incumbent upon the rating board to return the report as inadequate for evaluation purposes. 38 C.F.R. § 4.2 (2011). Bierman v. Brown, 6 Vet. App. 125, 129 (1994).
Where there is a question as to which of two ratings shall be applied, the higher rating will be assigned if the disability picture more nearly approximates the criteria required for that rating. 38 C.F.R. § 4.7.
For disabilities evaluated on the basis of limitation of motion, VA is required to apply the provisions of 38 C.F.R. §§ 4.40, 4.45, pertaining to functional impairment. The Court has instructed that in applying these regulations, VA should obtain examinations in which the examiner determined whether the disability was manifested by weakened movement, excess fatigability, or incoordination, including during flare-ups. Such inquiry is not to be limited to muscles or nerves. These determinations are, if feasible, to be expressed in terms of the degree of additional range-of-motion loss due to any weakened movement, excess fatigability, or incoordination. DeLuca v. Brown, 8 Vet. App. 202, 206 (1995).
38 C.F.R. § 4.59 addresses painful motion. A portion of § 4.59 states:
The intent of the schedule is to recognize painful motion with joint or periarticular pathology as productive of disability. It is the intention to recognize actually painful, unstable, or malaligned joints, due to healed injury, as entitled to at least the minimum compensable rating for the joint. Crepitation either in the soft tissues such as the tendons or ligaments, or crepitation within the joint structures should be noted carefully as points of contact which are diseased. Flexion elicits such manifestations. The joints involved should be tested for pain on both active and passive motion, in weight-bearing and nonweight-bearing and, if possible, with the range of the opposite undamaged joint.
When § 4.59 is raised by the claimant or reasonably raised by the record, even in non-arthritis contexts, the Board should address its applicability. See Robinson v. Peake, 21 Vet. App. 545, 552 (2008) (the Board is required to consider all issues raised either by the claimant or reasonably by the record), aff'd sub nom. Robinson v. Shinseki, 557 F.3d 1355 (Fed. Cir. 2009); Schafrath v. Derwinski, 1 Vet. App. 589, 593 (1991) (applicable provisions of law and regulation should be addressed when they are made "potentially applicable through the assertions and issues raised in the record"). Burton v. Shinseki, 25 Vet. App. 1 (2011).
In Fenderson v. West, 12 Vet. App. 119, 126-7 (1999), the Court distinguished a claim for an increased rating from that of a claim arising from disagreement with the initial rating assigned after service connection was established.
In Hart v. Mansfield, 21 Vet. App. 505, 510 (2007), the Court held that where the evidence contains factual findings that demonstrate distinct time periods in which the service-connected disability exhibited diverse symptoms meeting the criteria for different ratings during the course of the appeal, the assignment of staged ratings would be necessary.
Degenerative disc disease of the lumbar spine has been rated 20 percent disabling for the entire appeal period under Diagnostic Codes 5242-5241. Spine disabilities are rated under the General Rating Formula for Diseases and Injuries of the Spine set forth as follows:
5235 Vertebral fracture or dislocation
5236 Sacroiliac injury and weakness
5237 Lumbosacral or cervical strain
5238 Spinal stenosis
5239 Spondylolisthesis or segmental instability
5240 Ankylosing spondylitis
5241 Spinal fusion
5242 Degenerative arthritis of the spine (see also Diagnostic Code 5003)
5243 Intervertebral disc syndrome
Also available are ratings based on the duration of incapacitating episodes of intervertebral disc syndrome over the past 12 months. Because incapacitating episodes of intervertebral disc syndrome are not shown, this rating method need not be discussed further. Also available is the procedure for combining, under 38 C.F.R. § 4.25, separate evaluations of the chronic orthopedic and neurologic manifestations, which will be discussed below.
With or without symptoms such as pain (whether or not it radiates), stiffness, or aching in the area of the spine affected by residuals of injury or disease
Unfavorable ankylosis of the entire spine.......................................100
Unfavorable ankylosis of the entire thoracolumbar spine...........................................................................................50
Unfavorable ankylosis of the entire cervical spine; or, forward flexion of the thoracolumbar spine 30 degrees or less; or, favorable ankylosis of the entire thoracolumbar spine.....................................................................40
Forward flexion of the cervical spine 15 degrees or less; or, favorable ankylosis of the entire cervical spine. .........................................30
Forward flexion of the thoracolumbar spine greater than 30 degrees but not greater than 60 degrees; or, forward flexion of the cervical spine greater than 15 degrees but not greater than 30 degrees; or, the combined range of motion of the thoracolumbar spine not greater than 120 degrees; or, the combined range of motion of the cervical spine not greater than 170 degrees; or, muscle spasm or guarding severe enough to result in an abnormal gait or abnormal spinal contour such as scoliosis, reversed lordosis, or abnormal kyphosis.. ........................................................................................20
Forward flexion of the thoracolumbar spine greater than 60 degrees but not greater than 85 degrees; or, forward flexion of the cervical spine greater than 30 degrees but not greater than 40 degrees; or, combined range of motion of the thoracolumbar spine greater than 120 degrees but not greater than 235 degrees; or, combined range of motion of the cervical spine greater than 170 degrees but not greater than 335 degrees; or, muscle spasm, guarding, or localized tenderness not resulting in abnormal gait or abnormal spinal contour; or, vertebral body fracture with loss of 50 percent or more of the height.............................................................................................................10
Note (1): Evaluate any associated objective neurologic abnormalities, including, but not limited to, bowel or bladder impairment, separately, under an appropriate diagnostic code.
Note (2): (See also Plate V.) For VA compensation purposes, normal forward flexion of the cervical spine is zero to 45 degrees, extension is zero to 45 degrees, left and right lateral flexion are zero to 45 degrees, and left and right lateral rotation are zero to 80 degrees. Normal forward flexion of the thoracolumbar spine is zero to 90 degrees, extension is zero to 30 degrees, left and right lateral flexion are zero to 30 degrees, and left and right lateral rotation are zero to 30 degrees. The combined range of motion refers to the sum of the range of forward flexion, extension, left and right lateral flexion, and left and right rotation. The normal combined range of motion of the cervical spine is 340 degrees and of the thoracolumbar spine is 240 degrees. The normal ranges of motion for each component of spinal motion provided in this note are the maximum that can be used for calculation of the combined range of motion.
Note (3): In exceptional cases, an examiner may state that because of age, body habitus, neurologic disease, or other factors not the result of disease or injury of the spine, the range of motion of the spine in a particular individual should be considered normal for that individual, even though it does not conform to the normal range of motion stated in Note (2). Provided that the examiner supplies an explanation, the examiner's assessment that the range of motion is normal for that individual will be accepted.
Note (4): Round each range of motion measurement to the nearest five degrees.
Note (5): For VA compensation purposes, unfavorable ankylosis is a condition in which the entire cervical spine, the entire thoracolumbar spine, or the entire spine is fixed in flexion or extension, and the ankylosis results in one or more of the following: difficulty walking because of a limited line of vision; restricted opening of the mouth and chewing; breathing limited to diaphragmatic respiration; gastrointestinal symptoms due to pressure of the costal margin on the abdomen; dyspnea or dysphagia; atlantoaxial or cervical subluxation or dislocation; or neurologic symptoms due to nerve root stretching. Fixation of a spinal segment in neutral position (zero degrees) always represents favorable ankylosis.
Note (6): Separately evaluate disability of the thoracolumbar and cervical spine segments, except when there is unfavorable ankylosis of both segments, which will be rated as a single disability.
The medical evidence, including three VA orthopedic compensation examinations discussed below, do not reflect unfavorable ankylosis of the entire spine, unfavorable ankylosis of the entire thoracolumbar spine, forward flexion of the thoracolumbar spine limited to 30 degrees or less, or, favorable ankylosis of the entire thoracolumbar spine.
An August 2007 QTC referral compensation examination report reflects a complaint of constant low back pain radiating to both legs. The examining physician noted that there was no functional impairment resulting from these low back pains; however, and somewhat confusingly, the examiner then listed several activities of daily living that were precluded because of low back pain. Precluded by low back pain were: household chores such as vacuuming, cooking, and climbing stairs; and, outdoor activities such as gardening and pushing a lawn mower. The examiner then reported additional functional impairment after repetitive use due to pain, fatigue, weakness, and lack of endurance; but, no incoordination.
With respect to the laminectomy scar over the lower back, the physician found "scarring and pain" that caused no functional impairment. Except for pain, the scar was otherwise asymptomatic.
The August 2007 diagnoses were: degenerative disc disease; status post laminectomy with retained hardware; no radiculopathy; and, scar of lower back with subjective evidence of pain.
In December 2007, a VA physician reported that an October 2007 magnetic resonance imaging study showed an element of arachnoiditis at L5 and mild degenerative disc disease at L4-5 and L3-4. The dosage of the painkiller, gabapentin, was increased. Also prescribed were narcotics, tramadol, non-steroidal anti-inflammatories, and muscle relaxers. The physician noted pain in the right leg and reduced right ankle jerks. The Veteran walked with an antalgic gait favoring the right leg and he used a cane. The physician stated, "Unless his pain improves, I am not sure he could return to work."
A September 2008 QTC referral compensation examination report reflects a complaint of constant numbness and low back pain that travels up and down the spine and to both legs and both calves. These low back pains limited the Veteran's ability to sit, stand, and walk. He had not worked since 2005. Low back pain precluded the following: household chores such as vacuuming, cooking, taking out trash, and climbing stairs; and, outdoor activities such as shopping, gardening, and pushing a lawn mower. The physician also found additional functional impairment, after repetitive use, due to pain, fatigue, weakness, and lack of endurance.
With respect to the laminectomy scar of the lower back, it measured 10-cm by 0.2-cm. It was not tender or otherwise symptomatic.
The lower extremities were neurologically normal, including sensory functions, but, the physician then reported the presence of radiculopathy, mostly likely involving the sciatic nerve, and numbness in the lateral right foot.
The diagnoses were intervertebral disc syndrome with radiculopathy, most likely involving the sciatic nerve; status post laminectomy with retained hardware; degenerative disc disease; and, scar of the lower back.
In March 2009, the RO received records from SSA. These reflect that the Veteran's service-connected low back disability has precluded employment since September 2006.
In April 2009, a VA physician reported that the service-connected laminectomy and diskectomy had caused lumbar spine arachnoiditis, which is causing chronic pain in both legs, reduction of leg strength, and reduction in the ability to walk. Despite multiple treatments and therapies, including transcutaneous electrical nerve stimulation (TENS), his condition had not improved. The result was prolonged bilateral S1 radiculopathies.
A May 2009 VA compensation examination report reflects that the Veteran reported pain shooting to both legs, but more often to the right leg. The examiner tested for thoracolumbar spine range of motion and noted that ankle reflexes were absent on the right and diminished to 1+ on the left. Sensation of the right leg was impaired. The impressions were lumbar spine degenerative arthritis; chronic low back pain; post L5-S1 laminectomy and fusion; and, radiculopathy in the S1 pattern.
The above-mentioned medical evidence is persuasive, as it is based on accurate facts and is supported by rationale. See Nieves-Rodriguez v. Peake, 22 Vet. App. 295 (2008) (a medical opinion that contains only data and conclusions is accorded no weight); also see Reonal v. Brown, 5 Vet. App. 458, 461 (1993) (medical opinion based upon an inaccurate factual premise has no probative value).
From the above facts, it appears that throughout the appeal period, the thoracolumbar spine disability has never shown forward flexion of less than 50 degrees or combined range of motion less than 105 degrees. Also not shown is unfavorable ankylosis of the entire spine, or unfavorable or favorable ankylosis of the entire thoracolumbar spine. Because functional impairment of the lumbar spine, including consideration of painful motion under 38 C.F.R. § 4.59, the tenets of DeLuca, and additional functional impairment after repetitive use due to pain, fatigue, weakness, and lack of endurance, the disability still does not more nearly approximate the next higher rating criteria offered for the thoracolumbar spine. While it is true that fixation and fusion surgery has resulted in a stiffer thoracolumbar spine, there is no evidence that this stiffness is the equivalent of favorable ankylosis of the entire thoracolumbar spine, or forward flexion limited to 30 degrees or less, such as to warrant the next higher, 40 percent, schedular rating.
With respect to rating bilateral lower extremity radiculopathy, VA's rating schedule sets forth that neuritis, cranial or peripheral, characterized by loss of reflexes, muscle atrophy, sensory disturbances, and constant pain, at times excruciating, is to be rated on the scale provided for injury of the nerve involved, with a maximum equal to severe incomplete paralysis. Absent organic changes, the maximum rating will be moderate, unless sciatic nerve involvement is shown. 38 C.F.R. § 4.123 (2011). In this case, sciatic nerve involvement is shown and the rating may thus exceed the rating for severe incomplete paralysis.
A note at 38 C.F.R. § 4.124a, reflects that for disease of the peripheral nerves, the term "incomplete paralysis" when used with peripheral nerve injuries indicates a degree of lost or impaired function that is substantially less than that which is described in the criteria for an evaluation for complete paralysis given with each nerve, whether due to varied level of the nerve lesion or to partial regeneration. When the involvement is wholly sensory, the rating should be for the mild, or at most, the moderate degree. The ratings for the peripheral nerves are for unilateral involvement; when bilateral combine with application of the bilateral factor.
Diagnostic Code 8520 is analogous to lower extremity radiculopathy because the anatomical area of the neurologic deficits more nearly approximates the level of disability produced by sciatica when considering functional impairment, anatomical location, and symptomatology. 38 C.F.R. § 4.20.
Keeping in mind that wholly sensory manifestations warrant a rating for mild, or at most, a moderate disability, the radiating pains to the lower extremities with weakness, numbness, and impaired ankle jerks, are not only sensory, but motor as well. While some examiners failed to detect radiculopathy, the April 2009 VA treating physician's letter clearly reports chronic pain in both legs and reduction of strength in each leg due to the service-connected low back disability. Numbness in the right lower extremity has been reported several times.
Under Diagnostic Code 8520, a 10 percent evaluation is warranted for mild incomplete paralysis of the sciatic nerve. A 20 percent evaluation requires moderate incomplete paralysis. A 40 percent evaluation requires moderately severe incomplete paralysis. A 60 percent evaluation requires severe incomplete paralysis with marked muscular atrophy. 38 C.F.R. § 4.124(a), Diagnostic Code 8520.
Regarding the right lower extremity, because pain, numbness, motor weakness, absent ankle jerk, and sciatic nerve involvement are shown, the disability more nearly approximates severe incomplete paralysis. Thus, a 40 percent rating under Diagnostic Code 8520, for the right lower extremity is warranted for the entire appeal period.
Turning to the left lower extremity, because pain, motor weakness, diminished ankle jerk, and sciatic nerve involvement are shown, the disability more nearly approximates moderate incomplete paralysis. Thus, the criteria for a 20 percent rating are more nearly approximated. A 40 percent rating is not warranted because, unlike the right side, neither foot numbness nor a complete absence of ankle jerks in the left lower extremity is shown.
Turning to the service-connected laminectomy scar, the RO has already assigned a 10 percent rating for the entire appeal period. While one VA compensation examiner reported the scar as painful, another examiner did not find it painful. Under Diagnostic Code 7804, one or two scars that are painful warrant a 10 percent evaluation. Three or four painful scars warrant a 20 percent rating 38 C.F.R. § 4.118, Diagnostic Code 7804 (2011). Because there is only one painful scar, the criteria for a rating greater than 10 percent are not more nearly approximated.
After consideration of all the evidence of record, the Board finds that for the entire appeal period a 40 percent schedular rating should be granted for the lumbar spine under Diagnostic Code 5242. For the entire appeal period, a separate 40 percent schedular rating should be granted for radiculopathy of the right lower extremity. For the entire appeal period, a separate 20 percent schedular rating should be granted for radiculopathy of the left lower extremity.
The evidence does not contain factual findings that demonstrate distinct time periods in which the service-connected disability exhibited diverse symptoms meeting the criteria for different ratings during the course of the appeal. The assignment of staged ratings therefore is not necessary. Hart, supra.
Extraschedular Consideration
The provisions of 38 C.F.R. § 3.321(b) provide that where the disability picture is so exceptional or unusual that the normal provisions of the rating schedule would not adequately compensate the Veteran for his service-connected disability, an extra-schedular evaluation will be assigned. This will be addressed further in the REMAND portion of the decision.
The Court has stressed that consideration of whether a claimant is entitled to an extraschedular rating is a three-step inquiry. Thun v. Peake, 22 Vet. App. 111, 115 (2008), aff'd, 572 F.3d 1366 (Fed.Cir.2009). The first step is to determine whether the "evidence before VA presents such an exceptional disability picture that the available schedular evaluations for that service-connected disability are inadequate." Id. If the adjudicator determines that this is so, the second step of the inquiry requires the adjudicator to "determine whether the claimant's exceptional disability picture exhibits other related factors," such as marked interference with employment or frequent periods of hospitalization. Id. at 116. Finally, if the first two steps of the inquiry have been satisfied, the third step requires the adjudicator to refer the claim to the Under Secretary for Benefits or the Director of the Compensation and Pension Service for a determination of whether an extraschedular rating is warranted. Id.
Moreover, in Thun v Shinseki, 572 F.3d 1313 (Fed. Cir. 2009), the Federal Circuit interpreted and then affirmed the Court's three-part test to determine whether an extra-schedular rating is warranted. The Federal Circuit stressed that (1) the established schedular criteria must be inadequate to describe the severity and symptoms of the claimant's disability; (2) the case must present other indicia of an exceptional or unusual disability picture, such as marked interference with employment or frequent periods of hospitalization; and (3) the award of an extra-schedular disability rating must be in the interest of justice.
Additionally, if the claimant or the record reasonably raises the question of whether the Veteran is unemployable due to the disability for which an increased rating is sought, then part and parcel to that claim for an increased rating is whether a total rating based on individual unemployability (TDIU) as a result of that disability is warranted. Rice v. Shinseki, 22 Vet. App. 447 (2009). In this case, the record does not reasonably raise the question of unemployability, nor has the claimant raised this issue.
In this case, the disability has not been shown, or alleged, to cause such difficulties as marked interference with employment or to warrant frequent periods of hospitalization or to otherwise render impractical the application of the regular schedular standards. In the absence of evidence of such factors, the Board is not required to remand this matter to the RO for the procedural actions outlined in 38 C.F.R. § 3.321(b) (1). See Bagwell v. Brown, 9 Vet. App. 157, 158-9 (1996); Floyd v. Brown, 9 Vet. App. 88, 96 (1996); Shipwash, 8 Vet. App. at 227. See also VAOPGCPREC. 6-96.
ORDER
An initial schedular rating greater than 20 percent for lumbar spine degenerative disc disease, intervertebral disc syndrome, degenerative arthritis, and lumbar laminectomy is denied.
An initial 40 percent schedular rating for right lower extremity radiculopathy is granted, subject to the laws and regulations governing payment of monetary benefits.
An initial 20 percent schedular rating for left lower extremity radiculopathy is granted, subject to the laws and regulations governing payment of monetary benefits.
REMAND
TDIU
The Veteran has requested TDIU. TDIU may be assigned, where the schedular rating is less than total, when the Veteran is unable to secure or follow a substantially gainful occupation as a result of service-connected disabilities, provided that if there is only one such disability, such disability shall be ratable as 60 percent or more and if there are two or more disabilities, there shall be at least one disability ratable at 40 percent or more and sufficient additional disability to bring the combined rating to 70 percent or more. 38 C.F.R. § 4.16(a) (2011). With consideration of the grant herein, the Veteran meets the schedular criteria for TDIU. In this case, the TDIU claim has not been developed for Board review. In accordance with the Court's holding in Rice, supra, the TDIU claim is remanded for the procedural actions outlined in 38 C.F.R. § 4.16(a).
Extra-schedular Consideration
The Veteran claims that low back symptoms have caused marked interference with employment. Some medical evidence supports this claim and the Veteran is considered competent to report his symptoms. 38 C.F.R. § 3.159; Jandreau v. Nicholson, 492 F.3d 1372, 1377 (Fed. Cir. 2007). The provisions of 38 C.F.R. § 3.321(b) provide that where the disability picture is so exceptional or unusual that the normal provisions of the rating schedule would not adequately compensate the Veteran for his service-connected disability, an extra-schedular evaluation will be assigned. Where the Veteran has alleged or asserted that the schedular rating is inadequate or where the evidence shows exceptional or unusual circumstances, the Board must specifically adjudicate the issue of whether an extra-schedular rating is appropriate, and if there is enough such evidence, the Board must direct that the matter be referred to the VA Central Office for consideration. Colayong v. West 12 Vet. App. 524, 536 (1999); Shipwash v. Brown, 8 Vet. App. 218, 227 (1995).
The Court has stressed that consideration of whether a claimant is entitled to an extra-schedular rating is a three-step inquiry. Thun v. Peake, 22 Vet. App. 111, 115 (2008), aff'd, 572 F.3d 1366 (Fed. Cir. 2009). The first step is to determine whether the "evidence before VA presents such an exceptional disability picture that the available schedular evaluations for that service-connected disability are inadequate." Id. If the adjudicator determines that this is so, the second step of the inquiry requires the adjudicator to "determine whether the claimant's exceptional disability picture exhibits other related factors," such as marked interference with employment or frequent periods of hospitalization. Id. at 116. Finally, if the first two steps of the inquiry have been satisfied, the third step requires the adjudicator to refer the claim to the Under Secretary for Benefits or the Director of the Compensation and Pension Service for a determination of whether an extraschedular rating is warranted. Id.
In Thun v Shinseki, 572 F.3d 1366 (Fed. Cir. 2009), the Federal Circuit interpreted and affirmed the Court's three-part test to determine whether an extra-schedular rating is warranted. The Federal Circuit stressed that Court's three-part test sets forth the following three elements: (1) the established schedular criteria must be inadequate to describe the severity and symptoms of the claimant's disability; (2) the case must present other indicia of an exceptional or unusual disability picture, such as marked interference with employment or frequent periods of hospitalization; and (3) the award of an extra-schedular disability rating must be in the interest of justice. Id, at 1368.
The Federal Circuit also stressed:
The regulation's use of the phrase "upon field station submission," suggests, at a minimum, that the regional offices and the Board were intended to play some role in evaluating a claim for an extra-schedular rating. Permitting the regional offices and the Board to issue a "field station submission" in which they recommend extra-schedular consideration still reserves to the Under Secretary and the Director the ultimate authority to approve those recommendations based on whether the Veteran should receive an extra-schedular rating "to accord justice."
Id, at 1370.
Accordingly, this case is remanded to the AMC for the following action:
1. The AMC should develop the TDIU claim as necessary, including providing an examination to determine whether service connected disabilities preclude securing or following a substantially gainful occupation. All indicated tests and studies should be conducted and all findings described. The examiner should elicit a history of relevant symptoms from the Veteran. The claims file must be made available to the examiner for review and the examination report should reflect that such review was accomplished. The examiner should address whether it is at least as likely as not (50 percent or greater probability), that the Veteran's service-connected disabilities preclude securing or following a substantially gainful occupation, considering his education and occupational experience but without consideration of her/his age. A rationale for any opinion should be given.
2. Following the above, the AMC or RO should review all the relevant evidence and re-adjudicate the TDIU claim. If the desired benefits are not granted, the AMC or RO should submit it to the Director, Compensation and Pension Service, for extra-schedular consideration in accordance with 38 C.F.R. § 3.321 (b).
3. Following the above, if the desired benefits are not granted, the AMC or RO should issue an appropriate supplemental statement of the case (SSOC). The Veteran and his representative should be afforded an opportunity to respond to the SSOC before the claims folders are returned to the Board.
The Veteran has the right to submit additional evidence and argument on the matter or matters the Board has remanded to the regional office. Kutscherousky v. West, 12 Vet. App. 369 (1999). If an examination is scheduled, failure to report for a scheduled examination, without good cause, may have adverse consequences on the claim. 38 C.F.R. § 3.655(b) (2011).
This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board or by the Court for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2011).
______________________________________________
MILO H. HAWLEY
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs | 07-24-2012 | [
"Citation Nr: 1225529 Decision Date: 07/24/12 Archive Date: 07/30/12 DOCKET NO. 09-36 945 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Atlanta, Georgia THE ISSUES 1. Entitlement to an initial rating greater than 20 percent for lumbar spine degenerative disc disease. 2. Entitlement to an initial rating higher than 10 percent for right lower extremity radiculopathy. 3. Entitlement to an initial compensable rating for left lower extremity radiculopathy. 3. Entitlement to a total disability rating based on individual unemployability.",
"REPRESENTATION Appellant represented by: Georgia Department of Veterans Services ATTORNEY FOR THE BOARD C. Fetty, Counsel INTRODUCTION The Veteran performed active military service from June 1979 to October 1985; from May to October 1988; from March 2003 to July 2004; and, from January 2005 to July 2007. A DD-Form 214 verifies active military service from January 2005 to July 2007 with over 8 years of prior active service and over 3 years of prior inactive service. He served in Southwest Asia during the Persian Gulf War era and earned the Combat Action Badge.",
"This appeal arises to the Board of Veterans' Appeals (Board) from an October 2007-issued rating decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Atlanta, Georgia, that in pertinent part granted service connection for lumbar spine degenerative disc disease with laminectomy and retained hardware and assigned a 10 percent rating effective from July 20, 2007. That rating decision denied service connection for right lower extremity and left lower extremity radiculopathy.",
"The Veteran filed a timely notice of disagreement (hereinafter: NOD) and clarifying correspondence indicating dissatisfaction with the initial rating for lumbar spine degenerative disc disease and the denial of service connection for bilateral lower extremity radiculopathy. His NOD also contains a claim for a total disability rating based on individual unemployability (hereinafter: TDIU). In an October 2008-issued RO rating decision, TDIU was denied. In an October 2009 rating decision, the RO assigned a higher (20 percent) initial rating for the lumbar spine effective from July 2007, granted service connection for right and left lower extremity radiculopathy, assigned a 10 percent rating for the right lower extremity, and assigned a noncompensable rating for the left lower extremity, both effective from July 2007. The Veteran's VA Form 9, Appeal to the Board of Veterans' Appeals, contains a request for a hearing before a Veteran's Law Judge.",
"In November 2011, however, the Veteran withdrew his hearing request. The United States Court of Appeals for Veterans Claims (Court) determined that where, as here, a claimant, raises the question of unemployability due to the disability for which an increased rating is sought, then part of the increased rating claim is an implied claim for a total disability rating based on individual unemployability (hereinafter referred to as TDIU). Rice v. Shinseki, 22 Vet. App. 447, 453-455 (2009). The Veteran has claimed that service-connected low back pain precludes employment. The Board has therefore added a TDIU claim to page 1 to reflect Board jurisdiction over this issue. The Board's jurisdiction derives from the Court's holding in Rice, regardless of whether the Veteran has failed to appeal a recent RO decision that denied entitlement to TDIU. In VAOPGCPREC 6-96, VA's General Counsel held that when the issue of entitlement to an extra-schedular rating or a TDIU rating arises in connection with an appeal in an increased rating case, the Board is not precluded from issuing a final decision on the issue of an increased schedular rating and remanding the extra-schedular-rating or TDIU-rating issue to the RO.",
"Further development is needed to properly adjudicate the TDIU claim. Entitlement to TDIU is addressed in the REMAND portion of the decision below and is REMANDED to the RO via the Appeals Management Center (AMC), in Washington, DC. FINDINGS OF FACT 1. For the entire appeal period, the thoracolumbar spine disability was manifested by forward flexion of no less than 50 degrees and combined range of motion of no less than 105 degrees after consideration of functional impairment after repetitive use, due to pain, fatigue, weakness, and lack of endurance. 2. Not shown is limited forward flexion, of the thoracolumbar spine, to 30 degrees or less, or unfavorable ankylosis of the entire spine, or unfavorable or favorable ankylosis of the entire thoracolumbar spine. 3. Throughout the appeal period, right lower extremity radiculopathy has been manifested by pain, numbness, motor weakness, absent ankle jerk, and sciatic nerve involvement that more nearly approximates severe incomplete paralysis.",
"4. Throughout the appeal period, left lower extremity radiculopathy has been manifested by pain, motor weakness, diminished ankle jerk, and sciatic nerve involvement that more nearly approximates moderate incomplete paralysis. 5. The evidence does not contain factual findings that demonstrate distinct time periods in which the service-connected disability exhibited diverse symptoms meeting the criteria for different ratings during the course of the appeal. CONCLUSIONS OF LAW 1. For the entire appeal period, the criteria for an initial schedular rating greater than 20 percent for lumbar spine degenerative disc disease, intervertebral disc syndrome, degenerative arthritis, and lumbar laminectomy are not met.",
"38 U.S.C.A. §§ 1155, 5103A, 5107 (West 2002); 38 U.S.C.A. § 5103 (West 2002 & Supp.2011); 38 C.F.R. §§ 4.1, 4.3, 4.7, 4.10, 4.40, 4.45, 4.59, 4.71, Plate V, § 4.71a, Diagnostic Codes 5237, 5241, 5242 (2011). 2. For the entire appeal period, the criteria for a separate 40 percent rating for right lower extremity radiculopathy are met. 38 U.S.C.A. §§ 1155, 5103A, 5107 (West 2002); 38 U.S.C.A. § 5103 (West 2002 & Supp.2011); 38 C.F.R. §§ 4.1, 4.3, 4.7, 4.10, 4.124a, Diagnostic Code 8520 (2011). 3. For the entire appeal period, the criteria for a separate 20 percent rating for left lower extremity radiculopathy are met.",
"38 U.S.C.A. §§ 1155, 5103A, 5107 (West 2002); 38 U.S.C.A. § 5103 (West 2002 & Supp.2011); 38 C.F.R. §§ 4.1, 4.3, 4.7, 4.10, 4.124a, Diagnostic Code 8520 (2011). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS VA must notify and assist claimants in substantiating claims for benefits. 38 U.S.C.A. §§ 5100, 5103A, 5107, 5126 (West 2002); 38 U.S.C.A. §§ 5102, 5103 (West 2002 & Supp. 2011); 38 C.F.R. §§ 3.102, 3.156(a), 3.159 and 3.326(a) (2011). Upon receipt of a complete or substantially complete application for benefits, VA must notify the claimant and his representative of any information and any medical or lay evidence that is necessary to substantiate the claim. 38 U.S.C.A.",
"§ 5103(a); 38 C.F.R. § 3.159(b); Quartuccio v. Principi, 16 Vet. App. 183 (2002). VA must also inform the claimant of any information and evidence not of record that VA will seek to provide and that the claimant is expected to provide. This notice must be provided prior to an initial unfavorable decision. Mayfield v. Nicholson, 444 F.3d 1328 (Fed. Cir. 2006); Pelegrini v. Principi, 18 Vet. App. 112 (2004). In this case, adequate notice was provided in an October 2007 letter sent to the claimant prior to the initial unfavorable decision on his claim. Regarding the claim for a higher initial rating for a low back disability, the NOD filed as to the initial rating does not trigger additional notice obligations under 38 U.S.C.A. § 5103 (a). See 38 C.F.R.",
"§ 3.159 (b) (3) (2011). Rather, the claimant's appeal of an initial rating triggers VA's duty to develop that claim, as set forth at 38 U.S.C.A. §§ 5104, 7105; 38 C.F.R. § 3.103. These require VA to advise the claimant of what evidence is necessary to obtain the maximum benefit allowed by the law. This notice has been given in a statement of the case (hereinafter: SOC). The SOC provided the claimant with the relevant rating criteria for disabilities of the spine, as listed at various diagnostic codes. The claimant was informed of the evidence needed to achieve the next-higher schedular rating, and also to obtain even higher ratings for a low back disability.",
"Thus, VA's duties under 38 U.S.C.A. §§ 5104 and 7105 have been satisfied. The claimant challenges the initial evaluation assigned following the grant of service connection. In Dingess v. Nicholson, 19 Vet. App. 473 (2006), the Court held that in cases where service connection has been granted and an initial disability rating and effective date have been assigned, the typical service-connection claim has been more than substantiated, it has been proven, thereby rendering section 5103(a) notice no longer required because the purpose that the notice is intended to serve has been fulfilled. Id. at 490-91. Because the notice that was provided before service connection was granted was legally sufficient, VA's duty to notify in this case has been satisfied. VA also has a duty to assist the claimant in the development of the claim. This duty includes assisting the claimant in obtaining service medical records and pertinent treatment records and providing an examination when necessary. 38 U.S.C.A.",
"§ 5103A; 38 C.F.R. § 3.159. All necessary development has been accomplished and adjudication may proceed without unfair prejudice to the claimant. See Bernard v. Brown, 4 Vet. App. 384 (1993). VA has obtained all available VA out-patient treatment reports and Social Security Administration (SSA) records. The claimant was afforded VA medical examinations. The claimant has not identified, and the record does not otherwise indicate, any additional existing evidence that is necessary for fair adjudication of the claims that has not been obtained.",
"Hence, no further notice or assistance to the claimant is required to fulfill VA's duty to assist in the development of the claims. Smith v. Gober, 14 Vet. App. 227 (2000), aff'd 281 F.3d 1384 (Fed. Cir. 2002). Higher Initial Lumbar Spine Rating Disability ratings are based upon the average impairment of earning capacity, as determined by a schedule for rating disabilities. 38 U.S.C.A. § 1155; 38 C.F.R. Part 4 (2011).",
"Diagnostic codes identify the various disabilities. 38 C.F.R. Part 4. The entire medical history is reviewed when making disability evaluations. 38 C.F.R. § 4.1; Schafrath v. Derwinski, 1 Vet. App. 589, 592 (1995). 38 C.F.R. § 4.2 contains guidance concerning variation in examination reports during an appeal period. It states that different examiners will not describe the same disability in the same language. It is the responsibility of the rating specialist to interpret reports of examination in light of the whole recorded history, reconciling the various reports into a consistent picture so that the current rating may accurately reflect the elements of disability present. Each disability must be considered from the point of view of the veteran seeking work. If a diagnosis is not supported by the findings on the examination report or if the report does not contain sufficient detail, it is incumbent upon the rating board to return the report as inadequate for evaluation purposes. 38 C.F.R. § 4.2 (2011).",
"Bierman v. Brown, 6 Vet. App. 125, 129 (1994). Where there is a question as to which of two ratings shall be applied, the higher rating will be assigned if the disability picture more nearly approximates the criteria required for that rating. 38 C.F.R. § 4.7. For disabilities evaluated on the basis of limitation of motion, VA is required to apply the provisions of 38 C.F.R. §§ 4.40, 4.45, pertaining to functional impairment. The Court has instructed that in applying these regulations, VA should obtain examinations in which the examiner determined whether the disability was manifested by weakened movement, excess fatigability, or incoordination, including during flare-ups. Such inquiry is not to be limited to muscles or nerves. These determinations are, if feasible, to be expressed in terms of the degree of additional range-of-motion loss due to any weakened movement, excess fatigability, or incoordination.",
"DeLuca v. Brown, 8 Vet. App. 202, 206 (1995). 38 C.F.R. § 4.59 addresses painful motion. A portion of § 4.59 states: The intent of the schedule is to recognize painful motion with joint or periarticular pathology as productive of disability. It is the intention to recognize actually painful, unstable, or malaligned joints, due to healed injury, as entitled to at least the minimum compensable rating for the joint. Crepitation either in the soft tissues such as the tendons or ligaments, or crepitation within the joint structures should be noted carefully as points of contact which are diseased. Flexion elicits such manifestations. The joints involved should be tested for pain on both active and passive motion, in weight-bearing and nonweight-bearing and, if possible, with the range of the opposite undamaged joint. When § 4.59 is raised by the claimant or reasonably raised by the record, even in non-arthritis contexts, the Board should address its applicability. See Robinson v. Peake, 21 Vet. App.",
"545, 552 (2008) (the Board is required to consider all issues raised either by the claimant or reasonably by the record), aff'd sub nom. Robinson v. Shinseki, 557 F.3d 1355 (Fed. Cir. 2009); Schafrath v. Derwinski, 1 Vet. App. 589, 593 (1991) (applicable provisions of law and regulation should be addressed when they are made \"potentially applicable through the assertions and issues raised in the record\"). Burton v. Shinseki, 25 Vet. App. 1 (2011). In Fenderson v. West, 12 Vet. App. 119, 126-7 (1999), the Court distinguished a claim for an increased rating from that of a claim arising from disagreement with the initial rating assigned after service connection was established. In Hart v. Mansfield, 21 Vet. App. 505, 510 (2007), the Court held that where the evidence contains factual findings that demonstrate distinct time periods in which the service-connected disability exhibited diverse symptoms meeting the criteria for different ratings during the course of the appeal, the assignment of staged ratings would be necessary. Degenerative disc disease of the lumbar spine has been rated 20 percent disabling for the entire appeal period under Diagnostic Codes 5242-5241. Spine disabilities are rated under the General Rating Formula for Diseases and Injuries of the Spine set forth as follows: 5235 Vertebral fracture or dislocation 5236 Sacroiliac injury and weakness 5237 Lumbosacral or cervical strain 5238 Spinal stenosis 5239 Spondylolisthesis or segmental instability 5240 Ankylosing spondylitis 5241 Spinal fusion 5242 Degenerative arthritis of the spine (see also Diagnostic Code 5003) 5243 Intervertebral disc syndrome Also available are ratings based on the duration of incapacitating episodes of intervertebral disc syndrome over the past 12 months.",
"Because incapacitating episodes of intervertebral disc syndrome are not shown, this rating method need not be discussed further. Also available is the procedure for combining, under 38 C.F.R. § 4.25, separate evaluations of the chronic orthopedic and neurologic manifestations, which will be discussed below. With or without symptoms such as pain (whether or not it radiates), stiffness, or aching in the area of the spine affected by residuals of injury or disease Unfavorable ankylosis of the entire spine.......................................100 Unfavorable ankylosis of the entire thoracolumbar spine...........................................................................................50 Unfavorable ankylosis of the entire cervical spine; or, forward flexion of the thoracolumbar spine 30 degrees or less; or, favorable ankylosis of the entire thoracolumbar spine.....................................................................40 Forward flexion of the cervical spine 15 degrees or less; or, favorable ankylosis of the entire cervical spine. .........................................30 Forward flexion of the thoracolumbar spine greater than 30 degrees but not greater than 60 degrees; or, forward flexion of the cervical spine greater than 15 degrees but not greater than 30 degrees; or, the combined range of motion of the thoracolumbar spine not greater than 120 degrees; or, the combined range of motion of the cervical spine not greater than 170 degrees; or, muscle spasm or guarding severe enough to result in an abnormal gait or abnormal spinal contour such as scoliosis, reversed lordosis, or abnormal kyphosis.. ........................................................................................20 Forward flexion of the thoracolumbar spine greater than 60 degrees but not greater than 85 degrees; or, forward flexion of the cervical spine greater than 30 degrees but not greater than 40 degrees; or, combined range of motion of the thoracolumbar spine greater than 120 degrees but not greater than 235 degrees; or, combined range of motion of the cervical spine greater than 170 degrees but not greater than 335 degrees; or, muscle spasm, guarding, or localized tenderness not resulting in abnormal gait or abnormal spinal contour; or, vertebral body fracture with loss of 50 percent or more of the height.............................................................................................................10 Note (1): Evaluate any associated objective neurologic abnormalities, including, but not limited to, bowel or bladder impairment, separately, under an appropriate diagnostic code.",
"Note (2): (See also Plate V.) For VA compensation purposes, normal forward flexion of the cervical spine is zero to 45 degrees, extension is zero to 45 degrees, left and right lateral flexion are zero to 45 degrees, and left and right lateral rotation are zero to 80 degrees. Normal forward flexion of the thoracolumbar spine is zero to 90 degrees, extension is zero to 30 degrees, left and right lateral flexion are zero to 30 degrees, and left and right lateral rotation are zero to 30 degrees. The combined range of motion refers to the sum of the range of forward flexion, extension, left and right lateral flexion, and left and right rotation. The normal combined range of motion of the cervical spine is 340 degrees and of the thoracolumbar spine is 240 degrees.",
"The normal ranges of motion for each component of spinal motion provided in this note are the maximum that can be used for calculation of the combined range of motion. Note (3): In exceptional cases, an examiner may state that because of age, body habitus, neurologic disease, or other factors not the result of disease or injury of the spine, the range of motion of the spine in a particular individual should be considered normal for that individual, even though it does not conform to the normal range of motion stated in Note (2). Provided that the examiner supplies an explanation, the examiner's assessment that the range of motion is normal for that individual will be accepted. Note (4): Round each range of motion measurement to the nearest five degrees. Note (5): For VA compensation purposes, unfavorable ankylosis is a condition in which the entire cervical spine, the entire thoracolumbar spine, or the entire spine is fixed in flexion or extension, and the ankylosis results in one or more of the following: difficulty walking because of a limited line of vision; restricted opening of the mouth and chewing; breathing limited to diaphragmatic respiration; gastrointestinal symptoms due to pressure of the costal margin on the abdomen; dyspnea or dysphagia; atlantoaxial or cervical subluxation or dislocation; or neurologic symptoms due to nerve root stretching.",
"Fixation of a spinal segment in neutral position (zero degrees) always represents favorable ankylosis. Note (6): Separately evaluate disability of the thoracolumbar and cervical spine segments, except when there is unfavorable ankylosis of both segments, which will be rated as a single disability. The medical evidence, including three VA orthopedic compensation examinations discussed below, do not reflect unfavorable ankylosis of the entire spine, unfavorable ankylosis of the entire thoracolumbar spine, forward flexion of the thoracolumbar spine limited to 30 degrees or less, or, favorable ankylosis of the entire thoracolumbar spine. An August 2007 QTC referral compensation examination report reflects a complaint of constant low back pain radiating to both legs. The examining physician noted that there was no functional impairment resulting from these low back pains; however, and somewhat confusingly, the examiner then listed several activities of daily living that were precluded because of low back pain. Precluded by low back pain were: household chores such as vacuuming, cooking, and climbing stairs; and, outdoor activities such as gardening and pushing a lawn mower. The examiner then reported additional functional impairment after repetitive use due to pain, fatigue, weakness, and lack of endurance; but, no incoordination.",
"With respect to the laminectomy scar over the lower back, the physician found \"scarring and pain\" that caused no functional impairment. Except for pain, the scar was otherwise asymptomatic. The August 2007 diagnoses were: degenerative disc disease; status post laminectomy with retained hardware; no radiculopathy; and, scar of lower back with subjective evidence of pain. In December 2007, a VA physician reported that an October 2007 magnetic resonance imaging study showed an element of arachnoiditis at L5 and mild degenerative disc disease at L4-5 and L3-4. The dosage of the painkiller, gabapentin, was increased. Also prescribed were narcotics, tramadol, non-steroidal anti-inflammatories, and muscle relaxers. The physician noted pain in the right leg and reduced right ankle jerks.",
"The Veteran walked with an antalgic gait favoring the right leg and he used a cane. The physician stated, \"Unless his pain improves, I am not sure he could return to work.\" A September 2008 QTC referral compensation examination report reflects a complaint of constant numbness and low back pain that travels up and down the spine and to both legs and both calves. These low back pains limited the Veteran's ability to sit, stand, and walk. He had not worked since 2005. Low back pain precluded the following: household chores such as vacuuming, cooking, taking out trash, and climbing stairs; and, outdoor activities such as shopping, gardening, and pushing a lawn mower. The physician also found additional functional impairment, after repetitive use, due to pain, fatigue, weakness, and lack of endurance.",
"With respect to the laminectomy scar of the lower back, it measured 10-cm by 0.2-cm. It was not tender or otherwise symptomatic. The lower extremities were neurologically normal, including sensory functions, but, the physician then reported the presence of radiculopathy, mostly likely involving the sciatic nerve, and numbness in the lateral right foot. The diagnoses were intervertebral disc syndrome with radiculopathy, most likely involving the sciatic nerve; status post laminectomy with retained hardware; degenerative disc disease; and, scar of the lower back. In March 2009, the RO received records from SSA. These reflect that the Veteran's service-connected low back disability has precluded employment since September 2006. In April 2009, a VA physician reported that the service-connected laminectomy and diskectomy had caused lumbar spine arachnoiditis, which is causing chronic pain in both legs, reduction of leg strength, and reduction in the ability to walk. Despite multiple treatments and therapies, including transcutaneous electrical nerve stimulation (TENS), his condition had not improved.",
"The result was prolonged bilateral S1 radiculopathies. A May 2009 VA compensation examination report reflects that the Veteran reported pain shooting to both legs, but more often to the right leg. The examiner tested for thoracolumbar spine range of motion and noted that ankle reflexes were absent on the right and diminished to 1+ on the left. Sensation of the right leg was impaired. The impressions were lumbar spine degenerative arthritis; chronic low back pain; post L5-S1 laminectomy and fusion; and, radiculopathy in the S1 pattern. The above-mentioned medical evidence is persuasive, as it is based on accurate facts and is supported by rationale. See Nieves-Rodriguez v. Peake, 22 Vet. App. 295 (2008) (a medical opinion that contains only data and conclusions is accorded no weight); also see Reonal v. Brown, 5 Vet.",
"App. 458, 461 (1993) (medical opinion based upon an inaccurate factual premise has no probative value). From the above facts, it appears that throughout the appeal period, the thoracolumbar spine disability has never shown forward flexion of less than 50 degrees or combined range of motion less than 105 degrees. Also not shown is unfavorable ankylosis of the entire spine, or unfavorable or favorable ankylosis of the entire thoracolumbar spine. Because functional impairment of the lumbar spine, including consideration of painful motion under 38 C.F.R.",
"§ 4.59, the tenets of DeLuca, and additional functional impairment after repetitive use due to pain, fatigue, weakness, and lack of endurance, the disability still does not more nearly approximate the next higher rating criteria offered for the thoracolumbar spine. While it is true that fixation and fusion surgery has resulted in a stiffer thoracolumbar spine, there is no evidence that this stiffness is the equivalent of favorable ankylosis of the entire thoracolumbar spine, or forward flexion limited to 30 degrees or less, such as to warrant the next higher, 40 percent, schedular rating. With respect to rating bilateral lower extremity radiculopathy, VA's rating schedule sets forth that neuritis, cranial or peripheral, characterized by loss of reflexes, muscle atrophy, sensory disturbances, and constant pain, at times excruciating, is to be rated on the scale provided for injury of the nerve involved, with a maximum equal to severe incomplete paralysis.",
"Absent organic changes, the maximum rating will be moderate, unless sciatic nerve involvement is shown. 38 C.F.R. § 4.123 (2011). In this case, sciatic nerve involvement is shown and the rating may thus exceed the rating for severe incomplete paralysis. A note at 38 C.F.R. § 4.124a, reflects that for disease of the peripheral nerves, the term \"incomplete paralysis\" when used with peripheral nerve injuries indicates a degree of lost or impaired function that is substantially less than that which is described in the criteria for an evaluation for complete paralysis given with each nerve, whether due to varied level of the nerve lesion or to partial regeneration. When the involvement is wholly sensory, the rating should be for the mild, or at most, the moderate degree. The ratings for the peripheral nerves are for unilateral involvement; when bilateral combine with application of the bilateral factor. Diagnostic Code 8520 is analogous to lower extremity radiculopathy because the anatomical area of the neurologic deficits more nearly approximates the level of disability produced by sciatica when considering functional impairment, anatomical location, and symptomatology. 38 C.F.R.",
"§ 4.20. Keeping in mind that wholly sensory manifestations warrant a rating for mild, or at most, a moderate disability, the radiating pains to the lower extremities with weakness, numbness, and impaired ankle jerks, are not only sensory, but motor as well. While some examiners failed to detect radiculopathy, the April 2009 VA treating physician's letter clearly reports chronic pain in both legs and reduction of strength in each leg due to the service-connected low back disability. Numbness in the right lower extremity has been reported several times. Under Diagnostic Code 8520, a 10 percent evaluation is warranted for mild incomplete paralysis of the sciatic nerve. A 20 percent evaluation requires moderate incomplete paralysis. A 40 percent evaluation requires moderately severe incomplete paralysis. A 60 percent evaluation requires severe incomplete paralysis with marked muscular atrophy.",
"38 C.F.R. § 4.124(a), Diagnostic Code 8520. Regarding the right lower extremity, because pain, numbness, motor weakness, absent ankle jerk, and sciatic nerve involvement are shown, the disability more nearly approximates severe incomplete paralysis. Thus, a 40 percent rating under Diagnostic Code 8520, for the right lower extremity is warranted for the entire appeal period. Turning to the left lower extremity, because pain, motor weakness, diminished ankle jerk, and sciatic nerve involvement are shown, the disability more nearly approximates moderate incomplete paralysis. Thus, the criteria for a 20 percent rating are more nearly approximated. A 40 percent rating is not warranted because, unlike the right side, neither foot numbness nor a complete absence of ankle jerks in the left lower extremity is shown. Turning to the service-connected laminectomy scar, the RO has already assigned a 10 percent rating for the entire appeal period.",
"While one VA compensation examiner reported the scar as painful, another examiner did not find it painful. Under Diagnostic Code 7804, one or two scars that are painful warrant a 10 percent evaluation. Three or four painful scars warrant a 20 percent rating 38 C.F.R. § 4.118, Diagnostic Code 7804 (2011). Because there is only one painful scar, the criteria for a rating greater than 10 percent are not more nearly approximated.",
"After consideration of all the evidence of record, the Board finds that for the entire appeal period a 40 percent schedular rating should be granted for the lumbar spine under Diagnostic Code 5242. For the entire appeal period, a separate 40 percent schedular rating should be granted for radiculopathy of the right lower extremity. For the entire appeal period, a separate 20 percent schedular rating should be granted for radiculopathy of the left lower extremity.",
"The evidence does not contain factual findings that demonstrate distinct time periods in which the service-connected disability exhibited diverse symptoms meeting the criteria for different ratings during the course of the appeal. The assignment of staged ratings therefore is not necessary. Hart, supra. Extraschedular Consideration The provisions of 38 C.F.R. § 3.321(b) provide that where the disability picture is so exceptional or unusual that the normal provisions of the rating schedule would not adequately compensate the Veteran for his service-connected disability, an extra-schedular evaluation will be assigned. This will be addressed further in the REMAND portion of the decision. The Court has stressed that consideration of whether a claimant is entitled to an extraschedular rating is a three-step inquiry. Thun v. Peake, 22 Vet.",
"App. 111, 115 (2008), aff'd, 572 F.3d 1366 (Fed.Cir.2009). The first step is to determine whether the \"evidence before VA presents such an exceptional disability picture that the available schedular evaluations for that service-connected disability are inadequate.\" Id. If the adjudicator determines that this is so, the second step of the inquiry requires the adjudicator to \"determine whether the claimant's exceptional disability picture exhibits other related factors,\" such as marked interference with employment or frequent periods of hospitalization. Id. at 116. Finally, if the first two steps of the inquiry have been satisfied, the third step requires the adjudicator to refer the claim to the Under Secretary for Benefits or the Director of the Compensation and Pension Service for a determination of whether an extraschedular rating is warranted. Id. Moreover, in Thun v Shinseki, 572 F.3d 1313 (Fed.",
"Cir. 2009), the Federal Circuit interpreted and then affirmed the Court's three-part test to determine whether an extra-schedular rating is warranted. The Federal Circuit stressed that (1) the established schedular criteria must be inadequate to describe the severity and symptoms of the claimant's disability; (2) the case must present other indicia of an exceptional or unusual disability picture, such as marked interference with employment or frequent periods of hospitalization; and (3) the award of an extra-schedular disability rating must be in the interest of justice. Additionally, if the claimant or the record reasonably raises the question of whether the Veteran is unemployable due to the disability for which an increased rating is sought, then part and parcel to that claim for an increased rating is whether a total rating based on individual unemployability (TDIU) as a result of that disability is warranted. Rice v. Shinseki, 22 Vet. App. 447 (2009).",
"In this case, the record does not reasonably raise the question of unemployability, nor has the claimant raised this issue. In this case, the disability has not been shown, or alleged, to cause such difficulties as marked interference with employment or to warrant frequent periods of hospitalization or to otherwise render impractical the application of the regular schedular standards. In the absence of evidence of such factors, the Board is not required to remand this matter to the RO for the procedural actions outlined in 38 C.F.R. § 3.321(b) (1). See Bagwell v. Brown, 9 Vet. App. 157, 158-9 (1996); Floyd v. Brown, 9 Vet. App. 88, 96 (1996); Shipwash, 8 Vet.",
"App. at 227. See also VAOPGCPREC. 6-96. ORDER An initial schedular rating greater than 20 percent for lumbar spine degenerative disc disease, intervertebral disc syndrome, degenerative arthritis, and lumbar laminectomy is denied. An initial 40 percent schedular rating for right lower extremity radiculopathy is granted, subject to the laws and regulations governing payment of monetary benefits. An initial 20 percent schedular rating for left lower extremity radiculopathy is granted, subject to the laws and regulations governing payment of monetary benefits. REMAND TDIU The Veteran has requested TDIU. TDIU may be assigned, where the schedular rating is less than total, when the Veteran is unable to secure or follow a substantially gainful occupation as a result of service-connected disabilities, provided that if there is only one such disability, such disability shall be ratable as 60 percent or more and if there are two or more disabilities, there shall be at least one disability ratable at 40 percent or more and sufficient additional disability to bring the combined rating to 70 percent or more. 38 C.F.R. § 4.16(a) (2011). With consideration of the grant herein, the Veteran meets the schedular criteria for TDIU. In this case, the TDIU claim has not been developed for Board review. In accordance with the Court's holding in Rice, supra, the TDIU claim is remanded for the procedural actions outlined in 38 C.F.R. § 4.16(a).",
"Extra-schedular Consideration The Veteran claims that low back symptoms have caused marked interference with employment. Some medical evidence supports this claim and the Veteran is considered competent to report his symptoms. 38 C.F.R. § 3.159; Jandreau v. Nicholson, 492 F.3d 1372, 1377 (Fed. Cir. 2007). The provisions of 38 C.F.R. § 3.321(b) provide that where the disability picture is so exceptional or unusual that the normal provisions of the rating schedule would not adequately compensate the Veteran for his service-connected disability, an extra-schedular evaluation will be assigned. Where the Veteran has alleged or asserted that the schedular rating is inadequate or where the evidence shows exceptional or unusual circumstances, the Board must specifically adjudicate the issue of whether an extra-schedular rating is appropriate, and if there is enough such evidence, the Board must direct that the matter be referred to the VA Central Office for consideration. Colayong v. West 12 Vet. App. 524, 536 (1999); Shipwash v. Brown, 8 Vet.",
"App. 218, 227 (1995). The Court has stressed that consideration of whether a claimant is entitled to an extra-schedular rating is a three-step inquiry. Thun v. Peake, 22 Vet. App. 111, 115 (2008), aff'd, 572 F.3d 1366 (Fed. Cir. 2009). The first step is to determine whether the \"evidence before VA presents such an exceptional disability picture that the available schedular evaluations for that service-connected disability are inadequate.\" Id. If the adjudicator determines that this is so, the second step of the inquiry requires the adjudicator to \"determine whether the claimant's exceptional disability picture exhibits other related factors,\" such as marked interference with employment or frequent periods of hospitalization. Id. at 116. Finally, if the first two steps of the inquiry have been satisfied, the third step requires the adjudicator to refer the claim to the Under Secretary for Benefits or the Director of the Compensation and Pension Service for a determination of whether an extraschedular rating is warranted. Id. In Thun v Shinseki, 572 F.3d 1366 (Fed. Cir.",
"2009), the Federal Circuit interpreted and affirmed the Court's three-part test to determine whether an extra-schedular rating is warranted. The Federal Circuit stressed that Court's three-part test sets forth the following three elements: (1) the established schedular criteria must be inadequate to describe the severity and symptoms of the claimant's disability; (2) the case must present other indicia of an exceptional or unusual disability picture, such as marked interference with employment or frequent periods of hospitalization; and (3) the award of an extra-schedular disability rating must be in the interest of justice. Id, at 1368. The Federal Circuit also stressed: The regulation's use of the phrase \"upon field station submission,\" suggests, at a minimum, that the regional offices and the Board were intended to play some role in evaluating a claim for an extra-schedular rating. Permitting the regional offices and the Board to issue a \"field station submission\" in which they recommend extra-schedular consideration still reserves to the Under Secretary and the Director the ultimate authority to approve those recommendations based on whether the Veteran should receive an extra-schedular rating \"to accord justice.\"",
"Id, at 1370. Accordingly, this case is remanded to the AMC for the following action: 1. The AMC should develop the TDIU claim as necessary, including providing an examination to determine whether service connected disabilities preclude securing or following a substantially gainful occupation. All indicated tests and studies should be conducted and all findings described. The examiner should elicit a history of relevant symptoms from the Veteran. The claims file must be made available to the examiner for review and the examination report should reflect that such review was accomplished. The examiner should address whether it is at least as likely as not (50 percent or greater probability), that the Veteran's service-connected disabilities preclude securing or following a substantially gainful occupation, considering his education and occupational experience but without consideration of her/his age.",
"A rationale for any opinion should be given. 2. Following the above, the AMC or RO should review all the relevant evidence and re-adjudicate the TDIU claim. If the desired benefits are not granted, the AMC or RO should submit it to the Director, Compensation and Pension Service, for extra-schedular consideration in accordance with 38 C.F.R. § 3.321 (b). 3. Following the above, if the desired benefits are not granted, the AMC or RO should issue an appropriate supplemental statement of the case (SSOC). The Veteran and his representative should be afforded an opportunity to respond to the SSOC before the claims folders are returned to the Board. The Veteran has the right to submit additional evidence and argument on the matter or matters the Board has remanded to the regional office. Kutscherousky v. West, 12 Vet. App. 369 (1999). If an examination is scheduled, failure to report for a scheduled examination, without good cause, may have adverse consequences on the claim.",
"38 C.F.R. § 3.655(b) (2011). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board or by the Court for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2011). ______________________________________________ MILO H. HAWLEY Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs"
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 1:20-mc-00199-JGK-OTW Document 3-51 Filed 04/24/20 Page 1 of 3
Exhibit YY Case 1:20-mc-00199-JGK-OTW Document 3-51 Filed 04/24/20 Page 2 of 3
EUROPE NEWS: Papa's back Private Equity Real Estate March 4, 2013 Monday 2:00 AM GMT
Copyright 2013 PEI Media Ltd. All Rights Reserved
Length: 564 words Highlight: Chris Papachristophorou, the former global head of opportunistic investing at RREEF, is back in the game with a goal to invest $2 billion of equity. PERE Magazine March 2013 issue.
Body
They say you can't keep a good man down. Hence, mere weeks after leaving Deutsche Bank following a 15-year stint, Chris Papachristophorou can be found working at a fresh investment management group with some $400 million of seed capital.
The former global head of opportunistic investments at RREEF Real Estate is launching a new investment management firm sponsored by BSG Real Estate (BSGRE), himself and others. BSGRE is the real estate arm of the Beny Steinmetz trusts and foundations, whose main activities are in natural resources and diamonds.
While BSGRE and Papachristophorou have completed more than $40 billion of deals in Europe and the US between them over the years, including BSGRE's investment in Canary Wharf in London, the new firm is a separate entity that hopes to capitalise on their joint experience. Through it, Papachristophorou said he aims to deploy up to $2 billion of equity in high- yielding investments throughout Europe, starting in Western markets such as France, Germany, Italy, Spain and the UK.
Papachristophorou is managing partner of the new firm as well as being chief executive officer of BSGRE. In addition, he has responsibility for BSGRE's broader activities, primarily two new joint ventures - one with Manhattan developer HFZ aimed at condominium development and redevelopment and the other with Austria's Signa Holdings to pursue high street retail opportunities in Germany.
The plan, Papachristophorou said, is to hire more real estate professionals in the London office to complement existing staff in Rome and Amsterdam. Already, the firm has added Luv Shah as senior principal. Shah's latest role was as a principal at New York's Ranieri Real Estate Partners. Prior to that, however, he worked under Papachristophorou at RREEF.
Speaking with PERE, Papachristophorou said it is not the current intention to raise a traditional blind-pool fund. Instead, the new firm would seek a variety of co-investment partners, such as other private equity funds, sovereign wealth funds, family offices and high-net-worth individuals.
"Historically, BSGRE has co-invested alongside partners but, with this new platform, we intend to take the lead role in originating and executing investments," Papachristophorou said. "A lot of investors are looking for strong operating partners - ones that can source, execute and manage investments as well as invest their own money - in order to co-invest with them as opposed to trying to re-invent the wheel by hiring a team." Case 1:20-mc-00199-JGK-OTW Document 3-51 Filed 04/24/20 Page 3 of Page 3 2 of 2 EUROPE NEWS: Papa's back
Initially, the goal is to invest 20 percent of the seed capital in each transaction, with 80 percent co-investment coming from a third party, although that share is flexible. The business could evolve into creating specific partnerships that extend beyond single-asset deals to tailored mandates for a series of investments in a particular market. There are three distinct strategies: distressed situations in which the underlying asset is good and is in a good location but where there is an issue with its capital structure; the redevelopment or repositioning of assets; and corporate and government restructurings that lead to sale-leasebacks of non-core assets or the sale of businesses with real estate.
Speaking on the expected volume of deals, Papachristophorou said: "The market is changing. The flow for higher-yielding investments in the last few months has grown exponentially."
Load-Date: September 30, 2013
End of Document | 2020-04-24 | [
"Case 1:20-mc-00199-JGK-OTW Document 3-51 Filed 04/24/20 Page 1 of 3 Exhibit YY Case 1:20-mc-00199-JGK-OTW Document 3-51 Filed 04/24/20 Page 2 of 3 EUROPE NEWS: Papa's back Private Equity Real Estate March 4, 2013 Monday 2:00 AM GMT Copyright 2013 PEI Media Ltd. All Rights Reserved Length: 564 words Highlight: Chris Papachristophorou, the former global head of opportunistic investing at RREEF, is back in the game with a goal to invest $2 billion of equity. PERE Magazine March 2013 issue. Body They say you can't keep a good man down. Hence, mere weeks after leaving Deutsche Bank following a 15-year stint, Chris Papachristophorou can be found working at a fresh investment management group with some $400 million of seed capital. The former global head of opportunistic investments at RREEF Real Estate is launching a new investment management firm sponsored by BSG Real Estate (BSGRE), himself and others. BSGRE is the real estate arm of the Beny Steinmetz trusts and foundations, whose main activities are in natural resources and diamonds. While BSGRE and Papachristophorou have completed more than $40 billion of deals in Europe and the US between them over the years, including BSGRE's investment in Canary Wharf in London, the new firm is a separate entity that hopes to capitalise on their joint experience.",
"Through it, Papachristophorou said he aims to deploy up to $2 billion of equity in high- yielding investments throughout Europe, starting in Western markets such as France, Germany, Italy, Spain and the UK. Papachristophorou is managing partner of the new firm as well as being chief executive officer of BSGRE. In addition, he has responsibility for BSGRE's broader activities, primarily two new joint ventures - one with Manhattan developer HFZ aimed at condominium development and redevelopment and the other with Austria's Signa Holdings to pursue high street retail opportunities in Germany. The plan, Papachristophorou said, is to hire more real estate professionals in the London office to complement existing staff in Rome and Amsterdam. Already, the firm has added Luv Shah as senior principal.",
"Shah's latest role was as a principal at New York's Ranieri Real Estate Partners. Prior to that, however, he worked under Papachristophorou at RREEF. Speaking with PERE, Papachristophorou said it is not the current intention to raise a traditional blind-pool fund. Instead, the new firm would seek a variety of co-investment partners, such as other private equity funds, sovereign wealth funds, family offices and high-net-worth individuals. \"Historically, BSGRE has co-invested alongside partners but, with this new platform, we intend to take the lead role in originating and executing investments,\" Papachristophorou said. \"A lot of investors are looking for strong operating partners - ones that can source, execute and manage investments as well as invest their own money - in order to co-invest with them as opposed to trying to re-invent the wheel by hiring a team.\" Case 1:20-mc-00199-JGK-OTW Document 3-51 Filed 04/24/20 Page 3 of Page 3 2 of 2 EUROPE NEWS: Papa's back Initially, the goal is to invest 20 percent of the seed capital in each transaction, with 80 percent co-investment coming from a third party, although that share is flexible.",
"The business could evolve into creating specific partnerships that extend beyond single-asset deals to tailored mandates for a series of investments in a particular market. There are three distinct strategies: distressed situations in which the underlying asset is good and is in a good location but where there is an issue with its capital structure; the redevelopment or repositioning of assets; and corporate and government restructurings that lead to sale-leasebacks of non-core assets or the sale of businesses with real estate. Speaking on the expected volume of deals, Papachristophorou said: \"The market is changing. The flow for higher-yielding investments in the last few months has grown exponentially.\" Load-Date: September 30, 2013 End of Document"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/137928804/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Title: To John Adams from Tristram Dalton, 25 May 1782 From: Dalton, Tristram To: Adams, John
Newburyport May 25th. 1782 Sir
I beg leave to intrude upon a few of your important moments, in behalfe of William Armstrong, late commander of a letter of marque Brig, belonging to me, and called, the little Porga; which vessel was captur’d the 3d Nov. last by a Cutter Privateer, belonging to the Island of Guernsey—whither Capt Armstrong and his company were carried, after being stripped almost naked, according to the custom of the privateer’s men from that Island. From thence They were sent to Portsmouth, and put on board a guard ship, called the Diligent, from that vessell most of them were order’d to Mill Prison, at Plymouth—but, by letters of March 7. 1782, from the chief Mate, who dates them in France, it appears Capt Armstrong, on his arrival in Portsmouth, was seperated from his own people, and put between decks of the Guard ship, with the British Seamen, and confined in Irons, on both legs, and not suffered to speak to one of his own men—no reason being given for this singular treatment. The Mate writes me he left Mill Prison 28th Feby—that he had not seen Capt Armstrong there, tho’ he heard he was sent to Plymouth to be examined—for what he does not say—neither can I conjecture. A Letter from his 3d Mate, dated in Mill Prison, Jany 10th, gives a full confirmation of the ill usage given his former commander—and that he was left on board the guard ship confined by both legs. Humanity, and Justice to a fellow Subject, demand my attention. I know not to whom, so properly, to apply, for investigating the cause of this singular treatment, and for releif to the unhappy Object of it, as to yourself—trusting, you’ll excuse my freedom in troubling you with the enquiry, both on public, and private, motives. On this affair, I beg leave, to detain you a moment longer—to acquaint that Capt Armstrong, was born in or near New Castle, Britain; came to this country before hostilities commenced with the British—being then a boy. Soon after that nation began capturing our property on the Seas, he was taken in a letter of Marque Ship bound to Philada—sent to New York—where he was put on Board the Somerset Ship of War—and was in her, when she was wrecked on Cape Cod. This event releasing him, he came to town, and put himself under his former master, a Capt Roberts, who, meeting with misfortunes, gave this lad his liberty. By his merit he got employ—and, before he was 20 years of age, commanded a letter of marque Brig, of mine, and captured a large Ship—afterwd was successful, in a privateer, untill this misfortune happen’d him. The Prisoners, whom he took, spoke, in the highest terms of praise, of the usage received from him. I know not a single circumstance of his conduct, that can have, justly, led to the uncommonly severe treatment inflicted on him. Being a young fellow of merit, and connected in my business, I feel anxious for his safety and welfare. When I look on it as an insult upon a Subject of the US of America a singular resentment arises in my breast. These motives induce me to ask the favor of your giving such directions as may appear best, both for his releif, and for preventing like usage to any other Subject of these States.
I shall forward Letters to Messr John de Neufville & Son, at Amsterdam, as will entitle you, if occasion for his use calls, to draw for such sums as may be necessary. Enclosed is a Letter for Capt Armstrong, which I wish might be handed him, if it can be done with propriety. It is open for your inspection. Permit me, Sir, before I conclude, to add one request more, which, I hope, will not appear improper, as it is made with a view of serving our country. Wishing to give the little aid in my power, at this critical period, I purpose, to attend the General Court this year, as one of the representatives of this Town, being appointed by a general Suffrage. The connections and views of these States being large and extensive, it is necessary that such information and knowledge be had by those entrusted with different departments, as may enable them to act with propriety—and for the good of the whole. From the fountain alone will such advices come pure and authentic—in proportion as they run thro’ different channels they become tainted, contracted, and at best uncertain. Ambitious to do the greatest possible service, in that station I am placed in, I shall earnestly seek every useful intelligence. With this view, may I presume to ask the particular favor of your having any advises, respecting public Affairs, communicated to me, which may appear to be necessary or proper, to guide my political conduct. In the high department, which must call for all your time, I cannot flatter myself with receiving your opinions and advice on any movements, made—or likely to be—tho’ beleive me, Sir, I should esteem them, not only as a very singular honor, but, in the first degree, useful and beneficial. Most of us are, literally, in the dark, as to political informations—which is the occasion of many errors in the general conduct. Advantages are taken by our internal enemies, who, thro’ the course of the war, have been better informed, than the friends of the Country have. The present proposals of the Parliament of G B, do not affect the people of this State, as that body might flatter themselves, they would. Independence is the full cry—and fixed determination. At present there seems not the least disposition to accept even a declaration of that from G B., with peace, unless the French are included in the Peace. The total Change of the British Ministry do not flatter our hopes; on the contrary, I think, it will cause greater caution, and more animated exertions—if so, the wishes of the friends to these States will be finally gratified.
I beg leave to acknowledge myself to be, with the greatest respect, and, if you please to permit, with the same sincerity of friendship which possessed my breast in our younger days, Your most obedient and very humble Servant
Tristram Dalton | 05-25-1782 | [
"Title: To John Adams from Tristram Dalton, 25 May 1782 From: Dalton, Tristram To: Adams, John Newburyport May 25th. 1782 Sir I beg leave to intrude upon a few of your important moments, in behalfe of William Armstrong, late commander of a letter of marque Brig, belonging to me, and called, the little Porga; which vessel was captur’d the 3d Nov. last by a Cutter Privateer, belonging to the Island of Guernsey—whither Capt Armstrong and his company were carried, after being stripped almost naked, according to the custom of the privateer’s men from that Island. From thence They were sent to Portsmouth, and put on board a guard ship, called the Diligent, from that vessell most of them were order’d to Mill Prison, at Plymouth—but, by letters of March 7.",
"1782, from the chief Mate, who dates them in France, it appears Capt Armstrong, on his arrival in Portsmouth, was seperated from his own people, and put between decks of the Guard ship, with the British Seamen, and confined in Irons, on both legs, and not suffered to speak to one of his own men—no reason being given for this singular treatment. The Mate writes me he left Mill Prison 28th Feby—that he had not seen Capt Armstrong there, tho’ he heard he was sent to Plymouth to be examined—for what he does not say—neither can I conjecture.",
"A Letter from his 3d Mate, dated in Mill Prison, Jany 10th, gives a full confirmation of the ill usage given his former commander—and that he was left on board the guard ship confined by both legs. Humanity, and Justice to a fellow Subject, demand my attention. I know not to whom, so properly, to apply, for investigating the cause of this singular treatment, and for releif to the unhappy Object of it, as to yourself—trusting, you’ll excuse my freedom in troubling you with the enquiry, both on public, and private, motives. On this affair, I beg leave, to detain you a moment longer—to acquaint that Capt Armstrong, was born in or near New Castle, Britain; came to this country before hostilities commenced with the British—being then a boy. Soon after that nation began capturing our property on the Seas, he was taken in a letter of Marque Ship bound to Philada—sent to New York—where he was put on Board the Somerset Ship of War—and was in her, when she was wrecked on Cape Cod. This event releasing him, he came to town, and put himself under his former master, a Capt Roberts, who, meeting with misfortunes, gave this lad his liberty. By his merit he got employ—and, before he was 20 years of age, commanded a letter of marque Brig, of mine, and captured a large Ship—afterwd was successful, in a privateer, untill this misfortune happen’d him.",
"The Prisoners, whom he took, spoke, in the highest terms of praise, of the usage received from him. I know not a single circumstance of his conduct, that can have, justly, led to the uncommonly severe treatment inflicted on him. Being a young fellow of merit, and connected in my business, I feel anxious for his safety and welfare. When I look on it as an insult upon a Subject of the US of America a singular resentment arises in my breast. These motives induce me to ask the favor of your giving such directions as may appear best, both for his releif, and for preventing like usage to any other Subject of these States. I shall forward Letters to Messr John de Neufville & Son, at Amsterdam, as will entitle you, if occasion for his use calls, to draw for such sums as may be necessary. Enclosed is a Letter for Capt Armstrong, which I wish might be handed him, if it can be done with propriety. It is open for your inspection. Permit me, Sir, before I conclude, to add one request more, which, I hope, will not appear improper, as it is made with a view of serving our country.",
"Wishing to give the little aid in my power, at this critical period, I purpose, to attend the General Court this year, as one of the representatives of this Town, being appointed by a general Suffrage. The connections and views of these States being large and extensive, it is necessary that such information and knowledge be had by those entrusted with different departments, as may enable them to act with propriety—and for the good of the whole. From the fountain alone will such advices come pure and authentic—in proportion as they run thro’ different channels they become tainted, contracted, and at best uncertain. Ambitious to do the greatest possible service, in that station I am placed in, I shall earnestly seek every useful intelligence.",
"With this view, may I presume to ask the particular favor of your having any advises, respecting public Affairs, communicated to me, which may appear to be necessary or proper, to guide my political conduct. In the high department, which must call for all your time, I cannot flatter myself with receiving your opinions and advice on any movements, made—or likely to be—tho’ beleive me, Sir, I should esteem them, not only as a very singular honor, but, in the first degree, useful and beneficial. Most of us are, literally, in the dark, as to political informations—which is the occasion of many errors in the general conduct. Advantages are taken by our internal enemies, who, thro’ the course of the war, have been better informed, than the friends of the Country have.",
"The present proposals of the Parliament of G B, do not affect the people of this State, as that body might flatter themselves, they would. Independence is the full cry—and fixed determination. At present there seems not the least disposition to accept even a declaration of that from G B., with peace, unless the French are included in the Peace. The total Change of the British Ministry do not flatter our hopes; on the contrary, I think, it will cause greater caution, and more animated exertions—if so, the wishes of the friends to these States will be finally gratified. I beg leave to acknowledge myself to be, with the greatest respect, and, if you please to permit, with the same sincerity of friendship which possessed my breast in our younger days, Your most obedient and very humble Servant Tristram Dalton"
]
| https://founders.archives.gov/API/docdata/Adams/06-13-02-0040 | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Exhibit 10.5 Execution Copy $24,000,000 REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT AMONG PNC BANK, NATIONAL ASSOCIATION AS LENDER AND AS AGENT AND NYTEX FDF ACQUISITION, INC., (AND UPON CONSUMMATION OF ACQUISITION PURSUANT TO THE ACQUISITION AGREEMENT) FRANCIS OAKS, L.L.C., AND FRANCIS’ DRILLING FLUIDS, LTD. AS BORROWERS NOVEMBER 23, 2010 Francis-Revolving Credit, Term Loan and Security Agreement
--------------------------------------------------------------------------------
Execution Copy TABLE OF CONTENTS
I DEFINITIONS 1 1.1. Accounting Terms 1 1.2. General Terms 1 1.3. Uniform Commercial Code Terms 24 1.4. Certain Matters of Construction 24 II ADVANCES, PAYMENTS 25 2.1. Revolving Advances 25 2.2. Procedure for Revolving Advances Borrowing 26 2.3. Disbursement of Advance Proceeds 28 2.4. Term Loan 29 2.5. Maximum Advances 29 2.6. Repayment of Advances 29 2.7. Repayment of Excess Advances 30 2.8. Statement of Account 30 2.9. Letters of Credit 30 2.10. Issuance of Letters of Credit 31 2.11. Requirements For Issuance of Letters of Credit 31 2.12. Disbursements, Reimbursement 32 2.13. Repayment of Participation Advances 33 2.14. Documentation 33 2.15. Determination to Honor Drawing Request 34 2.16. Nature of Participation and Reimbursement Obligations 34 2.17. Indemnity 35 2.18. Liability for Acts and Omissions 36 2.19. Additional Payments 37 2.20. Manner of Borrowing and Payment 37 2.21. Mandatory Prepayments 39 2.22. Use of Proceeds 39 2.23. Defaulting Lender 40 III INTEREST AND FEES 41 3.1. Interest 41 3.2. Letter of Credit Fees 41 3.3. Closing Fee and Facility Fee 42 3.4. Collateral Management Fee, Collateral Examination Fee and Fee Letter 42 3.5. Computation of Interest and Fees 43 3.6. Maximum Charges 43 3.7. Increased Costs 43 3.8. Basis For Determining Interest Rate Inadequate or Unfair 44 3.9. Capital Adequacy 45 3.10. Gross Up for Taxes 45 3.11. Withholding Tax Exemption 46 IV COLLATERAL: GENERAL TERMS 47 4.1. Security Interest in the Collateral 47 4.2. Perfection of Security Interest 47
i
--------------------------------------------------------------------------------
Execution Copy
4.3. Disposition of Collateral 47 4.4. Preservation of Collateral 48 4.5. Ownership of Collateral 48 4.6. Defense of Agent’s and Lenders’ Interests 49 4.7. Books and Records 49 4.8. Financial Disclosure 49 4.9. Compliance with Laws 50 4.10. Inspection of Premises 50 4.11. Insurance 50 4.12. Failure to Pay Insurance 51 4.13. Payment of Taxes 51 4.14. Payment of Leasehold Obligations 51 4.15. Receivables 52 4.16. Inventory 54 4.17. Maintenance of Equipment 55 4.18. Exculpation of Liability 55 4.19. Environmental Matters 55 4.20. Financing Statements 57 4.21. Rolling Stock and other Vehicles 57 V REPRESENTATIONS AND WARRANTIES 57 5.1. Authority 57 5.2. Formation and Qualification 58 5.3. Survival of Representations and Warranties 58 5.4. Tax Returns 58 5.5. Financial Statements 59 5.6. Entity Names 59 5.7. O.S.H.A. and Environmental Compliance 60 5.8. Solvency; No Litigation, Violation, Indebtedness or Default 60 5.9. Patents, Trademarks, Copyrights and Licenses 61 5.10. Licenses and Permits 62 5.11. Default of Indebtedness 62 5.12. No Default 62 5.13. No Burdensome Restrictions 62 5.14. No Labor Disputes 62 5.15. Margin Regulations 62 5.16. Investment Company Act 63 5.17. Disclosure 63 5.18. Delivery of Acquisition Agreement and Subordinated Loan Documentation 63 5.19. Swaps 63 5.20. Conflicting Agreements 63 5.21. Application of Certain Laws and Regulations 63 5.22. Business and Property of Borrowers 63 5.23. Section 20 Subsidiaries 64 5.24. Anti-Terrorism Laws 64 5.25. Trading with the Enemy 65 5.26. Federal Securities Laws 65
ii
--------------------------------------------------------------------------------
Execution Copy
VI AFFIRMATIVE COVENANTS 65 6.1. Payment of Fees 65 6.2. Conduct of Business and Maintenance of Existence and Assets 65 6.3. Violations 65 6.4. Government Receivables 65 6.5. Financial Covenants 65 6.6. Execution of Supplemental Instruments 66 6.7. Payment of Indebtedness 66 6.8. Standards of Financial Statements 66 6.9. Federal Securities Laws 66 6.10. Exercise of Rights 66 6.11. Defaults under the Acquisition or Subordinated Obligations Documents 66 6.12. Post-Closing Obligations 66 6.13. Nature of Business 67 VII NEGATIVE COVENANTS 67 7.1. Merger, Consolidation, Acquisition and Sale of Assets 67 7.2. Creation of Liens 67 7.3. Guarantees 67 7.4. Investments 67 7.5. Loans 67 7.6. Capital Expenditures 67 7.7. Distributions 68 7.8. Indebtedness 68 7.9. Nature of Business 69 7.10. Transactions with Affiliates 69 7.11. Leases 69 7.12. Subsidiaries 69 7.13. Fiscal Year and Accounting Changes 69 7.14. Pledge of Credit 69 7.15. Amendment of Certificate of Formation, Operating Agreement 69 7.16. Compliance with ERISA 69 7.17. Prepayment of Indebtedness 70 7.18. Anti-Terrorism Laws 70 7.19. Membership/Partnership Interests 70 7.20. Trading with the Enemy Act 70 7.21. Reserved 70 7.22. Other Agreements 71 VIII CONDITIONS PRECEDENT 71 8.1. Conditions to Initial Advances 71 8.2. Conditions to Each Advance 75 IX INFORMATION AS TO BORROWERS 76 9.1. Disclosure of Material Matters 76 9.2. Schedules 76 9.3. Environmental Reports 77 9.4. Litigation 77
iii
--------------------------------------------------------------------------------
Execution Copy
9.5. Material Occurrences 77 9.6. Government Receivables 78 9.7. Annual Financial Statements 78 9.8. Quarterly Financial Statements 78 9.9. Monthly Financial Statements 78 9.10. Other Reports 78 9.11. Additional Information 79 9.12. Projected Operating Budget 79 9.13. Variances From Operating Budget 79 9.14. Notice of Suits, Adverse Events 79 9.15. ERISA Notices and Requests 79 9.16. Additional Documents 80 9.17. Appraisals and Field Examinations 80 9.18. Background Check 80 X EVENTS OF DEFAULT 80 10.1. Nonpayment 81 10.2. Breach of Representation 81 10.3. Financial Information 81 10.4. Judicial Actions 81 10.5. Noncompliance 81 10.6. Judgments 81 10.7. Bankruptcy 81 10.8. Inability to Pay 82 10.9. Affiliate Bankruptcy 82 10.10. Material Adverse Effect 82 10.11. Lien Priority 82 10.12. Subordination Agreement Default 82 10.13. Subordinated Obligations Document Default 82 10.14. Cross Default 82 10.15. Breach of Guaranty 82 10.16. Change of Ownership 83 10.17. Invalidity 83 10.18. Licenses 83 10.19. Seizures 83 10.20. Operations 83 10.21. Pension Plans 83 XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT 84 11.1. Rights and Remedies 84 11.2. Agent’s Discretion 85 11.3. Setoff 85 11.4. Rights and Remedies not Exclusive 86 11.5. Allocation of Payments After Event of Default 86 XII WAIVERS AND JUDICIAL PROCEEDINGS 87 12.1. Waiver of Notice 87 12.2. Delay 87
iv
--------------------------------------------------------------------------------
Execution Copy
12.3. Jury Waiver 87 XIII EFFECTIVE DATE AND TERMINATION 87 13.1. Term 87 13.2. Termination 88 XIV REGARDING AGENT 88 14.1. Appointment 88 14.2. Nature of Duties 88 14.3. Lack of Reliance on Agent and Resignation 89 14.4. Certain Rights of Agent 90 14.5. Reliance 90 14.6. Notice of Default 90 14.7. Indemnification 90 14.8. Agent in its Individual Capacity 90 14.9. Delivery of Documents 91 14.10. Borrowers’ Undertaking to Agent 91 14.11. No Reliance on Agent’s Customer Identification Program 91 14.12. Other Agreements 91 XV BORROWING AGENCY 91 15.1. Borrowing Agency Provisions 91 15.2. Waiver of Subrogation 92 XVI MISCELLANEOUS 92 16.1. Governing Law 92 16.2. Entire Understanding 93 16.3. Successors and Assigns; Participations; New Lenders 95 16.4. Application of Payments 97 16.5. Indemnity 97 16.6. Notice 98 16.7. Survival 100 16.8. Severability 100 16.9. Expenses 100 16.10. Injunctive Relief 101 16.11. Consequential Damages 101 16.12. Captions 101 16.13. Counterparts; Facsimile Signatures 101 16.14. Construction 101 16.15. Confidentiality; Sharing Information 101 16.16. Publicity 102 16.17. Certifications From Banks and Participants; US PATRIOT Act 102 16.18. Non-Applicability of Chapter 346 102 16.19. BORROWERS’ WAIVER OF RIGHTS UNDER TEXAS DECEPTIVE TRADE PRACTICES ACT 103
v
--------------------------------------------------------------------------------
Execution Copy
LIST OF EXHIBITS AND SCHEDULES Exhibits
Exhibit 1.2 Borrowing Base Certificate Exhibit 2.1(a) Revolving Credit Note Exhibit 2.4 Term Note Exhibit 5.5(b) Financial Projections Exhibit 8.1(k) Financial Condition Certificate Exhibit 16.3 Commitment Transfer Supplement Schedules Schedule 1.2 Permitted Encumbrances Schedule 1.2(d) Prior Indebtedness Schedule 4.5 Equipment and Inventory Locations Schedule 4.15(h) Deposit and Investment Accounts Schedule 4.19 Real Property Schedule 5.1 Consents Schedule 5.2(a) States of Qualification and Good Standing Schedule 5.2(b) Subsidiaries; Capitalization Schedule 5.4 Federal Tax Identification Number Schedule 5.6 Prior Names Schedule 5.8(b) Litigation Schedule 5.8(d) Plans Schedule 5.9 Intellectual Property, Source Code Escrow Agreements Schedule 5.10 Licenses and Permits Schedule 5.14 Labor Disputes Schedule 5.22 Business Activities of Borrowers Schedule 6.12 Post-Closing Obligations Schedule 6.12(a) Vehicle Title Liens Schedule 7.3 Guarantees
vi
--------------------------------------------------------------------------------
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT This Revolving Credit, Term Loan and Security Agreement dated as of November 23, 2010 by and among NYTEX FDF ACQUISITION, INC., a corporation formed under the laws of the State of Delaware (“Holdings”) and, upon consummation of the acquisition pursuant to the Acquisition Agreement (defined below), FRANCIS OAKS, L.L.C., a limited liability company formed under the laws of the State of Louisiana (“Francis Oaks”), FRANCIS’ DRILLING FLUIDS, LTD., a business corporation incorporated under the laws of the State of Louisiana (“Francis Drilling”; and together with Holdings and Francis Oaks, individually, each a “Borrower” and collectively, jointly and severally, the “Borrowers”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, together with its successors and assigns in such capacity, the “Agent”). IN CONSIDERATION of the mutual covenants and undertakings herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrowers, Lenders and Agent hereby agree as follows: I DEFINITIONS. 1.1. Accounting Terms. As used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided, however, whenever such accounting terms are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined in accordance with GAAP as consistently applied in preparation of the audited financial statements of Francis Oaks and Francis Drilling for the fiscal year ended August 31, 2009. 1.2. General Terms. For purposes of this Agreement the following terms shall have the following meanings: “Accountants” shall have the meaning set forth in Section 9.7 hereof. “Acquisition Agreement” shall mean that certain Membership Interests Purchase Agreement (including all annexes, exhibits and schedules relating thereto), dated as of November 23, 2010 among Sellers, Holdings, Francis Oaks and Francis Drilling, as amended from time to time in accordance with this Agreement and in form and substance satisfactory to Agent. “Advances” shall mean and include the Revolving Advances, Letters of Credit, as well as the Term Loan. “Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who
--------------------------------------------------------------------------------
Execution Copy is a director, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise. “Agent” shall have the meaning set forth in the introductory paragraph to this Agreement and shall include its successors and assigns. “Agreement” shall mean this Revolving Credit, Term Loan and Security Agreement, as the same may be amended, amended and restated, extended, supplemented and/or otherwise modified from time to time. “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the higher of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day plus 1/2 of 1% and (iii) the Daily LIBOR Rate plus 1%. For purposes of this definition, “Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the Reserve Percentage. For the purposes of this definition, “Published Rate” shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the eurodollar rate for a one month period as published in another publication determined by Agent). “Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced). “Applicable Law” shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations, treaties, directives and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators. “Authority” shall have the meaning set forth in Section 4.19(d). “Authorized Officer” shall mean the President, Chief Financial Officer, Controller or other authorized officer approved by Agent. “Base Rate” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of
2
--------------------------------------------------------------------------------
Execution Copy interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC. “Blocked Accounts” shall have the meaning set forth in Section 4.15(h). “Blocked Account Bank” shall have the meaning set forth in Section 4.15(h). “Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof. “Borrower” or “Borrowers” shall have the meaning set forth in the introductory paragraph to this Agreement and shall extend to all permitted successors and assigns of such Persons. “Borrowers on a Consolidated Basis” shall mean the consolidation in accordance with GAAP of the accounts or other items of Borrowers and their respective Subsidiaries. “Borrowers’ Account” shall have the meaning set forth in Section 2.8. “Borrowing Agent” shall mean Francis Drilling. “Borrowing Base Certificate” shall mean a certificate in substantially the form of Exhibit 1.2 duly executed by an Authorized Officer of the Borrowing Agent and delivered to Agent, appropriately completed, by which such Authorized Officer shall certify to Agent the Formula Amount and calculation thereof as of the date of such certificate. “Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market. “Capital Expenditures” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures. “Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq. “Change of Control” shall mean (i) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of any Borrower to a Person who is not Sponsor or (ii) any merger or consolidation of or with any Borrower or sale of all or substantially all of the property or assets of any Borrower. For purposes of this definition, “control of Borrower” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity
3
--------------------------------------------------------------------------------
Execution Copy Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of any Borrower or (y) to direct or cause the direction of the management and policies of any Borrower by contract or otherwise. “Change of Ownership” shall mean (a) 50% or more of the Equity Interests of any Borrower is no longer, directly or indirectly, owned or controlled by (including for the purposes of the calculation of percentage ownership, any Equity Interests into which any Equity Interests of any Borrower held by Sponsor are convertible or for which any such Equity Interests of any Borrower or of any other Person may be exchanged and any Equity Interests issuable to Sponsor upon exercise of any warrants, options or similar rights which may at the time of calculation be held by Sponsor) Sponsor or (b) any merger, consolidation or sale of substantially all of the property or assets of any Borrower; provided that the sale by Holdings of any Equity Interest of any other Borrower shall be deemed a sale of substantially all of Holdings’ assets. “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, any Borrower or any of its Affiliates. “Closing Date” shall mean November 23, 2010 or such other date as may be agreed to in writing by the parties hereto. “Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect. “Collateral” shall mean and include all assets of Borrowers, whether now owned or hereafter acquired and wherever located, including, without limitation: (a) all Receivables; (b) all Equipment; (c) all General Intangibles; (d) all Inventory; (e) all Investment Property; (f) all Real Property; (g) all Subsidiary Stock; (h) the Leasehold Interests;
4
--------------------------------------------------------------------------------
Execution Copy
(i) all of each Borrower’s right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of each Borrower’s contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by any Borrower, all real and personal property of third parties in which such Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which any Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and any Borrower; (j) all of each Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by any Borrower or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f), (g), (h) or (i) of this definition; and (k) all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds. “Collateral Assignment of Acquisition Agreement” shall mean that certain Collateral Assignment of Acquisition Agreement, dated as of the Closing Date between Holdings and Agent, acknowledged by the Sellers, the form and substance of which shall be satisfactory to Agent. “Commitment Percentage” of any Lender shall mean the percentage set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 16.3(c) or (d) hereof. “Commitment Transfer Supplement” shall mean a document in the form of Exhibit 16.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement.
5
--------------------------------------------------------------------------------
Execution Copy “Compliance Certificate” shall mean a compliance certificate to be signed by an Authorized Officer of Borrowing Agent, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrowers with respect to such default and, such certificate shall have appended thereto calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8, 7.10 and 7.11. “Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on any Borrower’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, the Other Documents, the Subordinated Obligations Documents or the Acquisition Agreement, including any Consents required under all applicable federal, state or other Applicable Law. “Consolidated Current Assets” shall mean, as at any date of determination, the total assets of Borrowers and their Subsidiaries which may properly be classified as current assets on a consolidated balance sheet of Borrowers and their Subsidiaries in accordance with GAAP, excluding cash and cash equivalents. “Consolidated Current Liabilities” shall mean, as at any date of determination, the total liabilities of Borrowers and their Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Advance) on a consolidated balance sheet of Borrowers and their Subsidiaries in accordance with GAAP. “Contract Rate” shall have the meaning set forth in Section 3.1 hereof.. “Controlled Group” shall mean, at any time, each Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with any Borrower, are treated as a single employer under Section 414 of the Code. “Crowley Real Property” shall mean that certain real property located in Crowley, Louisiana and described in more detail on Schedule 4.19 attached hereto. “Customer” shall mean and include the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property or perform any services. “Customs” shall have the meaning set forth in Section 2.11(b) hereof. “Debt Payments” shall mean and include, for any period and calculated for all Borrowers on a consolidated basis, the sum of (without duplication) (a) all amounts actually incurred and payable during such period for interest on any Advances, Indebtedness, and the interest portion
6
--------------------------------------------------------------------------------
Execution Copy of any amount incurred under any Capitalized Lease Obligation and any “synthetic lease”, plus (b) all amounts incurred and payable for all fees, commissions and charges under this Agreement and with respect to any Advances, Funded Debt or other Indebtedness for borrowed money, plus (c) scheduled principal payments under any Capitalized Lease Obligation and any “synthetic lease”, plus (d) unscheduled principal payments paid during the period under any Capitalized Lease Obligations and any “synthetic lease”, plus (e) scheduled principal payments made with respect to any Funded Debt or other Indebtedness for borrowed money (other than the repayment of Revolving Advances), whether payable to the Agent, any Lender or any other Person, plus (f) unscheduled principal payments with respect to any Funded Debt or other Indebtedness for borrowed money (other than the repayment of Revolving Advances), whether payable to the Agent, any Lender or any other Person. “Default” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default. “Default Rate” shall have the meaning set forth in Section 3.1 hereof. “Defaulting Lender” shall have the meaning set forth in Section 2.23(a) hereof. “Depository Accounts” shall have the meaning set forth in Section 4.15(h) hereof. “Designated Lender” shall have the meaning set forth in Section 16.2(b) hereof. “Documents” shall have the meaning set forth in Section 8.1(h) hereof. “Dollar” and the sign “$” shall mean lawful money of the United States of America. “Domestic Rate Loan” shall mean any Advance that bears interest based upon the Alternate Base Rate. “Drawing Date” shall have the meaning set forth in Section 2.12(b) hereof. “Early Termination Date” shall have the meaning set forth in Section 13.1 hereof. “Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net income (or loss) of Borrowers on a Consolidated Basis for such period (excluding one-time non-cash gains and non-cash losses), plus (ii) all interest expense of Borrowers on a Consolidated Basis for such period, plus (iii) all charges against income of Borrowers on a Consolidated Basis for such period for federal, state and local taxes. “EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and Taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period. “Eligible Receivables” shall mean and include with respect to each Borrower, each Receivable of such Borrower arising in the Ordinary Course of Business and which Agent, in its sole credit judgment, shall deem to be an Eligible Receivable, based on such considerations as Agent may from time to time deem appropriate. A Receivable shall not be deemed eligible
7
--------------------------------------------------------------------------------
Execution Copy unless such Receivable is subject to Agent’s first priority perfected security interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence satisfactory to Agent. In addition, no Receivable shall be an Eligible Receivable if: (a) it arises out of a sale made by any Borrower to an Affiliate of any Borrower or to a Person controlled by an Affiliate of any Borrower; (b) it is due or unpaid more than (i) sixty (60) days after the original due date or (ii) ninety (90) days after the original invoice date; (c) fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder. Such percentage may, in Agent’s sole discretion, be increased or decreased from time to time; (d) any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached; (e) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing; (f) the sale is to a Customer outside (i) the continental United States of America or (ii) Canada (other than the province of Quebec), unless the sale is on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in its sole discretion; provided, however, that all such Receivables shall be payable in U.S. Dollars; (g) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper; (h) Agent believes, in its sole judgment, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay; (i) the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances; (j) the goods giving rise to such Receivable have not been delivered to and accepted by the Customer or the services giving rise to such Receivable have not been performed by the
8
--------------------------------------------------------------------------------
Execution Copy applicable Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale or the Receivable represents a progress or milestone billing or is otherwise contingent upon the applicable Borrower’s completion of any future performance or service; (k) the Receivable of the Customer, together with the other Receivables of the Customer, exceeds 30% of the total Eligible Receivables, or such other credit limit determined by Agent in its sole discretion, to the extent such Receivable exceeds such limit; (l) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim (other than Mud Contras up to $1,500,000 in the aggregate at any time) the Customer is also a creditor or supplier of a Borrower or the Receivable is contingent in any respect or for any reason; provided, however, with respect to any Receivable which is not subject to a Mud Contra, only to the extent of such offset, deduction, dispute, or counterclaim and (ii) with respect to any Receivable which is subject to a Mud Contra, only to the extent of the applicable Mud Contra for all Mud Contras which, in the aggregate, exceed $1,500,000; (m) the applicable Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto; (n) any return, rejection or repossession of the merchandise (other than the storage of Mud Inventory by the Borrowers for the benefit of a Customer, as agreed to by the Borrowers and such Customer) has occurred or the rendition of services has been disputed; (o) such Receivable is not payable to a Borrower; or (p) such Receivable is not otherwise satisfactory to Agent as determined in good faith by Agent in the exercise of its discretion in a reasonable manner. “Environmental Complaint” shall have the meaning set forth in Section 4.19(d) hereof. “Environmental Laws” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto. “Equipment” shall mean and include as to each Borrower all of such Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefore or accessions thereto. “Equity Documents” shall mean all documents executed in connection with the issuance of Holdings’ Equity Interests to Sponsor and Sponsor’s Equity Interests to Waypoint on or immediately prior to the Closing Date, including membership certificates, if any.
9
--------------------------------------------------------------------------------
Execution Copy “Equity Interests” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act). “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder. “Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto the interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Agent by dividing (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternative Source”), at approximately 11:00 a.m., London time two (2) Business Days prior to the first day of such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by Agent at such time (which determination shall be conclusive absent manifest error)) for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Reserve Percentage. The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error. “Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on the Eurodollar Rate. “Event of Default” shall have the meaning set forth in Article X hereof. “Excess Cash Flow” for any fiscal period shall mean EBITDA of Borrowers on a Consolidated Basis for such fiscal period, plus the amount, if any, by which Net Working Capital decreased during such fiscal period, minus the amount, if any, by which Net Working Capital increased during such fiscal period, minus Unfinanced Capital Expenditures made by Borrowers on a Consolidated Basis during such fiscal period minus cash taxes actually paid by Borrowers on a Consolidated Basis during such fiscal period and including any distributions to Waypoint with respect to the Subordinated Obligations Documents payable in accordance with Section 7.7 hereof, minus principal and interest payments on Funded Debt, minus management fees not otherwise deducted in calculating net income during such fiscal period.
10
--------------------------------------------------------------------------------
Execution Copy “Exchange Act” shall have the mean the Securities Exchange Act of 1934, as amended. “Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced. “Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced. “Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by PNC (an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the PNC at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to Borrowers, effective on the date of any such change. “Fixed Charge Coverage Ratio” shall mean and include, with respect to any period, the ratio of (a) (i) EBITDA minus (ii) Unfinanced Capital Expenditures made during such period, minus (iii) distributions and dividends (other than any Subordinated Obligations Payments included in clause (b) hereof) made during such period, minus (iv) cash taxes paid during such period, minus (v) management fees paid and not otherwise deducted in calculating net income (loss) during such period to (b) (i) all Debt Payments plus (ii) all Subordinated Obligations Payments made during such period. For purposes of determining the Fixed Charge Coverage Ratio, Capital Expenditures that are financed under Revolving Advances made pursuant to this Agreement shall be considered Unfinanced Capital Expenditures. “Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof. “Formula Amount” shall have the meaning set forth in Section 2.1(a).
11
--------------------------------------------------------------------------------
Execution Copy “Francis Drilling” shall have the meaning set forth in the introductory paragraph to this Agreement and shall extend to all permitted successors and assigns of such Person. “Francis Oaks” shall have the meaning set forth in the introductory paragraph to this Agreement and shall extend to all permitted successors and assigns of such Person. “Funded Debt” shall mean, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capitalized Lease Obligations, current maturities of long-term debt, revolving credit and short term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrower, the Obligations and, without duplication, Indebtedness consisting of guaranties of Funded Debt of other Persons. “GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time. “General Intangibles” shall mean and include as to each Borrower all of such Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to such Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables). “Governmental Acts” shall have the meaning set forth in Section 2.17. “Governmental Body” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government. “Guarantor” shall mean any Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “Guarantors” means collectively all such Persons. “Guarantor Security Agreement” shall mean any Security Agreement executed by any Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and substance satisfactory to Agent. “Guaranty” shall mean any guaranty of the obligations of Borrowers executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory to Agent.
12
--------------------------------------------------------------------------------
Execution Copy “Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof. “Hazardous Substance” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any other applicable Environmental Law and in the regulations adopted pursuant thereto. “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable federal and state laws now in force or hereafter enacted relating to hazardous waste disposal. “Hedge Liabilities” shall have the meaning provided in the definition of “Lender-Provided Interest Rate Hedge”. “Holdings” shall mean shall have the meaning set forth in the introductory paragraph of this Agreement. “Increased Tax Burden” shall mean the additional federal, state or local taxes assumed to be payable by a member of Holdings and/or Francis Oaks as a result of such Borrower’s status as a limited liability company, in each case, reasonably estimated by Holdings and/or Francis Oaks, as applicable, in respect of the quarterly estimated tax payments payable by such member and subsequently evidenced and substantiated by (and adjusted, if and to the extent required by Section 7.7, based upon) the tax returns filed by Holdings and Francis Oaks, as a limited liability company, with such taxes being calculated for all members at the highest marginal rate applicable to any member. “Indebtedness” of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise) and in any event, without limitation by reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred. “Ineligible Security” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended. “Intellectual Property” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, trade name application, domain name, domain name application, mask work, trade secret or license or other right to use any of the foregoing.
13
--------------------------------------------------------------------------------
Execution Copy “Intellectual Property Security Agreement” shall mean that certain Intellectual Property Security Agreement, dated as of the Closing Date between Borrowers and Agent, the terms and conditions of which shall be satisfactory to Agent. “Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b). “Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by any Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, such Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness. “Inventory” shall mean and include as to each Borrower all of such Borrower’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Borrower’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them. “Investment Property” shall mean and include as to each Borrower, all of such Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts. “Issuer” shall mean any Person who issues a Letter of Credit and/or accepts a draft pursuant to the terms hereof. “Leasehold Interests” shall mean all of each Borrower’s right, title and interest in and to the premises identified as leased properties on Schedule 4.19 hereto. “Lender” and “Lenders” shall have the meaning ascribed to such term in the introductory paragraph to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender. “Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. The liabilities of any Borrower to the provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder, guaranteed obligations under the Guaranty and secured obligations under the Guarantor Security Agreement and otherwise treated as Obligations for purposes of
14
--------------------------------------------------------------------------------
Execution Copy each of the Other Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents. “Letter of Credit Fees” shall have the meaning set forth in Section 3.2. “Letter of Credit Borrowing” shall have the meaning set forth in Section 2.12(d). “Letter of Credit Sublimit” shall mean $2,000,000. “Letters of Credit” shall have the meaning set forth in Section 2.9. “Licensor” shall mean any Person from whom any Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with such Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with such Borrower’s business operations. “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction. “Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Inventory. “Loan Party” shall mean, individually or collectively as the context requires, (i) Borrowers, (ii) any Guarantor and (iii) any other Person hereafter joined to this Agreement as a “Borrower”. “Material Adverse Effect” shall mean a material adverse effect on (a) the condition (financial or otherwise), results of operations, assets, business, properties or prospects of any Loan Party, (b) any Loan Party’s ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents. For purposes of this definition, references to “Loan Party” shall refer to any Real Property or business to be acquired by any Loan Party pursuant to the Acquisition Agreement, as the context shall require for periods prior to the Closing Date. “Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective.
15
--------------------------------------------------------------------------------
Execution Copy “Maximum Loan Amount” shall mean $24,000,000 less repayments of the Term Loan. “Maximum Revolving Advance Amount” shall mean $12,000,000. “Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective. “Modified Commitment Transfer Supplement” shall have the meaning set forth in Section 16.3(d). “Mortgage” shall mean, individually or collectively as the context requires, any deed of trust or mortgage on the Real Property securing the Obligations, in each case, together with all extensions, renewals, amendments, supplements, modifications, substitutions and replacements thereto and thereof and in form and substance satisfactory to Agent. “Mud Claim” shall mean any claim (whether or not asserted) by any Customer of Borrowers for any Mud Inventory which is held by Borrowers for the benefit of such Customer. “Mud Contra” shall mean, with respect to any actual or potential assertion of a Mud Claim by a Customer of Borrowers to reduce the payment obligations of such Customers to Borrowers, valued in an amount equal to the lesser of (i) the Mud Liability of Borrowers to such Customer and (ii) the Receivables (on an aggregated basis) owed to Borrowers by such Customer, in each case, as of any date of determination. “Mud Inventory” shall mean Inventory of Borrowers consisting of liquids and muds circulated through the wellbore during rotary drilling and workover operations to bring cuttings to the surface, to cool and lubricate the bit and drill stem, to control subsurface pressure, and to deposit mud cake along the borehole wall. “Mud Liability” shall mean an amount equal to the numbers of barrels of Mud Inventory subject to a Mud Claim of a Customer at any time, multiplied by the average per barrel retail sales price of Borrowers’ Mud Inventory for the thirty period immediately preceding the calculation date. “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA. “Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors (including any Borrower or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA. “Negative Pledge” shall mean those certain Negative Pledge Agreements, in each case, dated as of the Closing Date, between Borrowers and Agent, in recordable form and otherwise in form and substance satisfactory to Agent.
16
--------------------------------------------------------------------------------
Execution Copy “Net Working Capital” shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time. “NOLV Appraisal” shall have the meaning set forth in Section 9.17 hereof. “Note” shall mean each of the Term Note, the Revolving Credit Note and “Notes” shall mean collectively, the Term Note and the Revolving Credit, each as amended, restated, extended, supplemented or otherwise modified from time to time. “Obligations” shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by any Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition interest or other amounts is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, any and all of any Borrower’s Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Agent and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable attorneys’ fees and expenses and all obligations of any Borrower to Agent or Lenders to perform acts or refrain from taking any action. “Ordinary Course of Business” shall mean with respect to any Borrower, the ordinary course of such Borrower’s business as conducted on the Closing Date or as contemplated to be performed on Schedule 5.22 hereto. “Other Documents” shall mean each Mortgage, the Notes, the Questionnaire, any Guaranty, any Pledge Agreement, and any Negative Pledge, any Guarantor Security Agreement, the Lender Provided Interest Rate Hedge, the Collateral Assignment of Acquisition Agreement, the Intellectual Property Security Agreement, any Subordination Agreement and any and all other agreements, instruments and documents, including guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings
17
--------------------------------------------------------------------------------
Execution Copy heretofore, now or hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement. “Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b). “Parent” of any Person shall mean a corporation or other entity owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person. “Participant” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender. “Participation Advance” shall have the meaning set forth in Section 2.12(d). “Participation Commitment” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder. “Payee” shall have the meaning set forth in Section 3.10. “Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrowing Agent and to each Lender to be the Payment Office. “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor. “Pension Benefit Plan” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group. “Permitted Encumbrances” shall mean: (a) Liens in favor of Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or being Properly Contested; (c) Liens disclosed in the financial statements referred to in Section 5.5, the existence of which Agent has consented to in writing; (d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance;
18
--------------------------------------------------------------------------------
Execution Copy (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business; (f) Liens arising by virtue of the rendition, entry or issuance against any Borrower or any Subsidiary, or any property of any Borrower or any Subsidiary, of any judgment, writ, order, or decree for so long as each such Lien (x) is in existence for less than 20 consecutive days after it first arises or is being Properly Contested and (y) is at all times junior in priority to any Liens in favor of Agent; (g) mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested; (h) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof, provided that (x) any such lien shall not encumber any other property of any Borrower and (y) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount provided for in Section 7.6; and (i) Liens disclosed on Schedule 1.2; provided that such Liens shall secure only those obligations which they secure on the Closing Date (and extensions, renewals and refinancings of such obligations permitted by Section 7.8) and shall not subsequently apply to any other property or assets of any Borrower. “Person” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof). “Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan), maintained for employees of any Borrower or any member of the Controlled Group or any such Plan to which any Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees. “Pledge Agreement” shall mean, individually or collectively as the context requires (i) the Pledge Agreement, dated as of the Closing Date and executed by Sponsor in favor of Agent, granting Agent a Lien in the Equity Interests of Holdings; (ii) the Pledge Agreement, dated as of the Closing Date and executed by Holdings in favor of Agent, granting Agent a Lien in the Equity Interests of Francis Oaks, (iii) the Pledge Agreement, dated as of the Closing Date and executed by Francis Oaks in favor of Agent, granting Agent a Lien in the Equity Interests of Francis Drilling, and (iv) any other pledge agreement executed in favor of Agent after the Closing Date, in each case, in form and substance satisfactory to Agent and as amended, amended and restated, supplemented and/or otherwise modified from time to time in accordance with this Agreement.
19
--------------------------------------------------------------------------------
Execution Copy “PNC” shall have the meaning set forth in the introductory paragraph of this Agreement and shall extend to all of its successors and assigns. “Prior Indebtedness” means the Indebtedness and obligations specified on Schedule 1.2(d) hereof. “Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a) hereof. “Pro Forma Financial Statements” shall have the meaning set forth in Section 5.5(b) hereof. “Projections” shall have the meaning set forth in Section 5.5(b) hereof. “Properly Contested” shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith. “Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof. “Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof. “Questionnaire” shall mean the Questionnaire and Perfection Certificate and the responses thereto provided by Borrowers and delivered to Agent, and all amendments, supplements and modifications to the foregoing. For purposes of this definition, “Borrowers” shall refer to any Borrower and/or the Real Property or business to be acquired by any Borrower pursuant to the Acquisition Agreement, as the context shall require for periods prior to the Closing Date. “RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time.
20
--------------------------------------------------------------------------------
Execution Copy “Real Property” shall mean all of each Borrower’s right, title and interest in and to the owned and leased premises identified on Schedule 4.19 hereto or which is hereafter owned or leased by any Borrower. “Receivables” shall mean and include, as to each Borrower, all of such Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to such Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder. “Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i) hereof. “Register” shall have the meaning set forth in Section 16.3(e). “Reimbursement Obligation” shall have the meaning set forth in Section 2.12(b)hereof. “Release” shall have the meaning set forth in Section 5.7(c)(i) hereof. “Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder. “Required Lenders” shall mean Lenders holding at least fifty-one percent (51%) of the Advances and, if no Advances are outstanding, shall mean Lenders holding greater than fifty-one percent (51%) of the Commitment Percentages; provided, however, if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders. “Reserve Percentage” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”. “Revolving Advances” shall mean Advances made other than Letters of Credit and the Term Loan. “Revolving Credit Note” shall mean, collectively, the promissory notes referred to in Section 2.1(a) hereof. “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one and three-quarters percent (1.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three-quarters percent (2.75%) with respect to Eurodollar Rate Loans.
21
--------------------------------------------------------------------------------
Execution Copy “Rolling Stock” shall mean all trucks, trailers, other motor vehicles or construction equipment (including without limitation all cranes, bulldozers, loaders, tractors, forklifts, lifts and winches) that are used or capable of being used to transport Borrowers’ Inventory or Equipment or otherwise used by Borrowers in the Ordinary Course of Business. “SEC” shall mean the Securities and Exchange Commission or any successor thereto. “Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities. “Securities Act” shall mean the Securities Act of 1933, as amended. “Sellers” shall mean Michael G. Francis, Diana Istre Francis, Bryan Francis, Mackey Francis and Francis Oaks. “Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day. “Sponsor” shall mean NYTEX Energy Holdings, Inc., a Delaware corporation “Subcontractor Accounts Payable Reserve” shall mean a reserve established by Agent in an amount equal to all accounts payable to subcontractors of any Borrower. “Subordinated Obligations” shall mean and include all liabilities, loans, debts and other obligations of any Borrower owed to Waypoint. “Subordinated Obligations Documents” shall mean the Preferred Stock and Warrant Purchase Agreement, dated as of the date hereof, among Sponsor, Holdings and Waypoint, all Equity Interests (whether or not certificated) issued pursuant thereto and any Organizational Document of any Borrower which establish redemption, distribution or payment rights in favor of Waypoint, as amended, amended and restated, extended, supplemented and/or otherwise modified from time to time in accordance with the Subordination Agreement and this Agreement. “Subordinated Obligations Payments” shall mean and include all cash actually expended to make distributions or other payments in respect of the Subordinated Obligations as permitted by any Subordination Agreement and permitted pursuant to Section 7.7. “Subordination Agreement(s)” shall mean (a) any agreement among any Loan Party, a subordinating creditor or Equity Interest holder of such Loan party and Agent, on behalf other Lenders, pursuant to which, among other things, the obligations owing to a subordinated creditor or Equity Interest holder are subordinated to the prior payment and satisfaction of the Obligations, including, without limitation, the Subordination Agreement dated as of the Closing Date, among Agent, Borrowers and Waypoint, and (b) any note, indenture, note purchase agreement or similar instrument or agreement, pursuant to which the indebtedness evidenced thereby or issued thereunder is subordinated to the Obligations by the express terms of such note,
22
--------------------------------------------------------------------------------
Execution Copy indenture, note purchase agreement or similar instrument or agreement, in each case, in form and substance satisfactory to Agent in its sole discretion. “Subsidiary” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person. “Subsidiary Stock” shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by any Borrower (not to exceed 65% of the Equity Interests of any Foreign Subsidiary). “Term” shall have the meaning set forth in Section 13.1 hereof. “Term Loan” shall mean the Advances made pursuant to Section 2.4 hereof. “Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus two and one-half percent (2.50%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus three and one-half percent (3.50%) with respect to Eurodollar Rate Loans. “Term Note” shall mean, collectively, the promissory notes described in Section 2.4 hereof. “Termination Event” shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any Borrower or any member of the Controlled Group from a Multiemployer Plan. “Texas Finance Code” shall have the meaning set forth in Section 3.6 hereof. “Toxic Substance” shall mean and include any material present on the Real Property or the Leasehold Interests which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable federal or state laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
23
--------------------------------------------------------------------------------
Execution Copy “Trading with the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto. “Transactions” shall have the meaning set forth in Section 5.5 hereof. “Transferee” shall have the meaning set forth in Section 16.3(d) hereof. “Undrawn Availability” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii), minus (b) the sum of (i) the outstanding amount of Advances (other than the Term Loan) plus (ii) all amounts due and owing to any Borrower’s trade creditors which are outstanding more than sixty (60) days past the original due date plus (iii) fees and expenses for which Borrowers are liable but which have not been paid or charged to Borrowers’ Account plus (iv) all other past due Indebtedness. “Unfinanced Capital Expenditures” shall mean all Capital Expenditures of Borrower other than those made utilizing financing provided by the applicable seller or third party lenders. For the avoidance of doubt, Capital Expenditures made by a Borrower utilizing Revolving Advances shall be deemed Unfinanced Capital Expenditures. “Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof. “USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced. “Waypoint” shall mean Waypoint NYTEX, LLC, a Delaware limited liability company. “Week” shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday. 1.3. Uniform Commercial Code Terms. All terms used herein and defined in the Uniform Commercial Code as adopted in the State of Texas from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, the terms “accounts”, “chattel paper”, “commercial tort claims”, “instruments”, “general intangibles”, “goods”, “payment intangibles”, “proceeds”, “supporting obligations”, “securities”, “investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in the description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision. 1.4. Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. All references herein to Articles, Sections, Exhibits and
24
--------------------------------------------------------------------------------
Execution Copy Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in New York, New York. Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation”. A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders. Wherever the phrase “to the best of Borrowers’ knowledge” or words of similar import relating to the knowledge or the awareness of any Borrower or their respective representative officers or representatives are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of any Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of such Borrower or Seller and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by a covenant, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder. II ADVANCES, PAYMENTS. 2.1. Revolving Advances. (a) Amount of Revolving Advances. Subject to the terms and conditions set forth in this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make Revolving Advances to Borrowers in aggregate amounts outstanding at any time equal to such Lender’s Commitment Percentage of the lesser of (x) the Maximum Revolving Advance
25
--------------------------------------------------------------------------------
Execution Copy Amount less the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an amount equal to the sum of: (i) up to 85%, subject to the provisions of Section 2.1(b) hereof (“Receivables Advance Rate”), of Eligible Receivables, minus (ii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus (iii) such reserves (including the Subcontractors Accounts Payable Reserve and any reserve established in respect of Borrowers’ Hedge Liabilities) as Agent may reasonably deem proper and necessary from time to time; The amount derived from the sum of (x) Section 2.1(a)(y)(i) minus (y) Section 2.1(a)(y)(iii) at any time and from time to time shall be referred to as the “Formula Amount”. The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a). (b) Discretionary Rights. The Receivables Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Receivables Advance Rates or increasing or imposing reserves may limit or restrict Advances requested by Borrowing Agent. Agent shall give Borrowing Agent five (5) days prior notice of its intention to decrease the Receivables Advance Rates; provided, however, no Borrower shall have any right of action whatsoever against Agent for, and Agent shall not be liable for any damages resulting from, the failure of Agent to provide the prior notice contemplated in this sentence. The rights of Agent under this subsection are subject to the provisions of Section 16.2(b). 2.2. Procedure for Revolving Advances Borrowing. (a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00 a.m. on a Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due unless Borrowers have elected a Eurodollar Rate Loan therefore in accordance with subsection (b) below, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable. (b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such
26
--------------------------------------------------------------------------------
Execution Copy Advance to be borrowed, which amount shall be in an aggregate principal amount that is not less than $1,000,000 and integral multiples of $100,000 in excess thereof, and (iii) the duration of the first Interest Period therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two or three; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to any Borrower during the continuance of a Default or an Event of Default. After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than three (3) Eurodollar Rate Loans, in the aggregate. (c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term. Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 10:00 a.m. on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow. (d) Provided that no Default or Event of Default shall have occurred and be continuing, Borrowing Agent may, on the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefore. (e) At its option and upon written notice given prior to 10:00 a.m. at least three (3) Business Days’ prior to the date of such prepayment, any Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such
27
--------------------------------------------------------------------------------
Execution Copy prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, such Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof. (f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by any Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error. (g) Notwithstanding any other provision hereof, if any Applicable Law, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan. A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive absent manifest error. 2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s books. During the Term, Borrowers may use the Revolving Advances by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have been requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to the applicable Borrower on the day so requested by way of credit to such Borrower’s operating account at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been
28
--------------------------------------------------------------------------------
Execution Copy requested by any Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request. 2.4. Term Loan. (a) Term Loan. Subject to the terms and conditions of this Agreement, each Lender, severally and not jointly, will make a Term Loan to Borrowers in the sum equal to such Lender’s Commitment Percentage of $12,000,000. The Term Loan shall be advanced on the Closing Date and shall be, with respect to principal, payable as follows, subject to acceleration upon the occurrence of an Event of Default under this Agreement or termination of this Agreement: (a) commencing on December 1, 2010 and continuing on the first Business Day of each and every calendar month through thereafter, Borrowers shall pay to Agent equal monthly payments of principal in the aggregate amount of $142,857.14 (which amount has been agreed to by Borrowers and Lenders and based upon a seven year principal amortization schedule) and (b) the entire outstanding principal balance of this Term Loan, together with all accrued and unpaid interest, shall be due and payable in full on the last day of the Term, if not sooner paid, by Borrowers. The Term Loan shall be evidenced by one or more secured promissory notes (collectively, the “Term Note”) in substantially the form attached hereto as Exhibit 2.4. The Term Loan may consist of Domestic Rate Loans or Eurodollar Rate Loans, or a combination thereof, as Borrowing Agent may request. In the event that Borrowers desire to obtain or extend a Eurodollar Rate Loan or to convert a Domestic Rate Loan to a Eurodollar Rate Loan, Borrowing Agent shall comply with the notification requirements set forth in Sections 2.2(b) and (d) and the provisions of Sections 2.2(b) through (g) shall apply. Amounts repaid under the Term Loan may not be reborrowed. 2.5. Maximum Advances. The aggregate balance of Revolving Advances outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) or (b) the Formula Amount less, in each case, the aggregate Maximum Undrawn Amount of all issued and outstanding Letters of Credit. 2.6. Repayment of Advances. (a) The Revolving Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided. The Term Loan shall be due and payable as provided in Section 2.4 hereof and in the Term Note, subject to mandatory prepayments as herein provided. (b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received. In consideration of Agent’s agreement to conditionally credit Borrowers’ Account as of the next Business Day following Agent’s receipt of those items of payment, each Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one (1) Business Day after (i) the Business Day following Agent’s receipt of such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other form, the Business Day such payments constitute good funds in Agent’s
29
--------------------------------------------------------------------------------
Execution Copy account. Agent is not, however, required to credit Borrowers’ Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrowers’ Account for the amount of any item of payment which is returned to Agent unpaid. (c) All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 12:00 p.m. on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrowers’ Account or by making Advances as provided in Section 2.2 hereof. (d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim. 2.7. Repayment of Excess Advances. The aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred. 2.8. Statement of Account. Agent shall maintain, in accordance with its customary procedures, a loan account (“Borrowers’ Account”) in the name of Borrowers in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrowing Agent a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrowers during such month. The monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and shall constitute an account stated between Lenders and Borrowers unless Agent receives a written statement of Borrowers’ specific exceptions thereto within thirty (30) days after such statement is received by Borrowing Agent. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto. 2.9. Letters of Credit. Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of standby and/or trade letters of credit (“Letters of Credit”) for the account of any Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) or (y) the Formula Amount. The Maximum Undrawn Amount of outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest.
30
--------------------------------------------------------------------------------
Execution Copy 2.10. Issuance of Letters of Credit. (a) Borrowing Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent at the Payment Office, prior to 10:00 a.m., at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request. Borrowing Agent, on behalf of Borrowers, also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit. (b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twenty-four (24) months after such Letter of Credit’s date of issuance and in no event later than the last day of the Term. Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (the “UCP”) or the International Standby Practices (ISP98 International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”)), and any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Agent, and each trade Letter of Credit shall be subject to the UCP. (c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing Agent for a Letter of Credit hereunder. 2.11. Requirements For Issuance of Letters of Credit. (a) Borrowing Agent shall authorize and direct any Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each Letter of Credit. If Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit, the application therefore or any acceptance therefore. (b) In connection with all Letters of Credit issued or caused to be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or its designee, as its attorney, with full power and authority if a Default or an Event of Default shall have occurred, (i) to sign and/or endorse such Borrower’s name upon any warehouse or other receipts, letter of credit applications and acceptances, (ii) to sign such Borrower’s name on bills of lading; (iii) to
31
--------------------------------------------------------------------------------
Execution Copy clear Inventory through the United States of America Customs Department (“Customs”) in the name of such Borrower or Agent or Agent’s designee, and to sign and deliver to Customs officials powers of attorney in the name of such Borrower for such purpose; and (iv) to complete in such Borrower’s name or Agent’s, or in the name of Agent’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof. Neither Agent nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Agent’s or its attorney’s willful misconduct. This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding. 2.12. Disbursements, Reimbursement. (a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing, respectively. (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrowing Agent. Provided that Borrowing Agent shall have received such notice, Borrowers shall reimburse (such obligation to reimburse Agent shall sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00 p.m. on each date that an amount is paid by Agent under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by Agent. In the event Borrowers fail to reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 p.m. on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrowers shall be deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be made by Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the lesser of (x) Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) or (y) the Formula Amount, less, in each case, the Maximum Undrawn Amount of all Letters of Credit and subject to Section 8.2 hereof. Any notice given by Agent pursuant to this Section 2.12(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (c) Each Lender shall upon any notice pursuant to Section 2.12(b) make available to Agent an amount in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.12(d)) each be deemed to have made a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in that amount. If any Lender so notified fails to make available to Agent the amount of such Lender’s Commitment Percentage of such amount by no later than 2:00 p.m., on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Advances maintained as a Domestic Rate Loan on and after the fourth day following the
32
--------------------------------------------------------------------------------
Execution Copy Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.12(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.12(c) (i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing. (d) With respect to any unreimbursed drawing that is not converted into a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section 2.12(b), because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason, Borrowers shall be deemed to have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan. Each Lender’s payment to Agent pursuant to Section 2.12(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Lender in satisfaction of its Participation Commitment under this Section 2.12. (e) Each Lender’s Participation Commitment shall continue until the last to occur of any of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled and (z) all Persons (other than Borrowers) have been fully reimbursed for all payments made under or relating to Letters of Credit. 2.13. Repayment of Participation Advances. (a) Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrowers (i) in reimbursement of any payment made by Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent. (b) If Agent is required at any time to return to any Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrowers to Agent pursuant to Section 2.13(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate. 2.14. Documentation. Each Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent’s interpretations of any Letter of Credit issued on behalf of such Borrower and by Agent’s written regulations and customary practices relating to letters of credit, though Agent’s interpretations may be different from such Borrower’s own. In the event
33
--------------------------------------------------------------------------------
Execution Copy of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY ACT OR INACTIVE ARISING FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), in following the Borrowing Agent’s or any Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto. 2.15. Determination to Honor Drawing Request. In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth. 2.16. Nature of Participation and Reimbursement Obligations. Each Lender’s obligation in accordance with this Agreement to make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrowers to reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.16 under all circumstances, including the following circumstances: (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, any Borrower or any other Person for any reason whatsoever; (ii) the failure of any Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of Lenders to make Participation Advances under Section 2.12; (iii) any lack of validity or enforceability of any Letter of Credit; (iv) any claim of breach of warranty that might be made by Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, cross-claim, defense or other right which any Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit was procured);
34
--------------------------------------------------------------------------------
Execution Copy (v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been notified thereof; (vi) payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit; (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit; (viii) any failure by Agent or any of Agent’s Affiliates to issue any Letter of Credit in the form requested by Borrowing Agent, unless Agent has received written notice from Borrowing Agent of such failure within three (3) Business Days after Agent shall have furnished Borrowing Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice; (ix) any Material Adverse Effect on any Loan Party; (x) any breach of this Agreement or any Other Document by any party thereto; (xi) the occurrence or continuance of an insolvency proceeding with respect to any Loan Party; (xii) the fact that a Default or Event of Default shall have occurred and be continuing; (xiii) the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. 2.17. Indemnity. In addition to amounts payable as provided in Section 16.5, each Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which Agent or any of Agent’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED
35
--------------------------------------------------------------------------------
Execution Copy MATTER ARISING FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), other than as a result of (A) the gross negligence or willful misconduct of Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “Governmental Acts”). 2.18. Liability for Acts and Omissions. As between Borrowers and Agent and Lenders, each Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED MATTER ARISING FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY). In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent’s rights or powers hereunder. Nothing in the preceding sentence shall relieve Agent from liability for Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent or Agent’s Affiliates be liable to any Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit. Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court
36
--------------------------------------------------------------------------------
Execution Copy order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit. In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in its good faith and without gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to any Borrower or any Lender. 2.19. Additional Payments. Any sums expended by Agent or any Lender due to any Borrower’s failure to perform or comply with its obligations under this Agreement or any Other Document including any Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers’ Account as a Revolving Advance and added to the Obligations. 2.20. Manner of Borrowing and Payment. (a) Each borrowing of Revolving Advances shall be advanced according to the applicable Commitment Percentages of Lenders. The Term Loan shall be advanced according to the Commitment Percentages of Lenders. (b) Each payment (including each prepayment) by any Borrower on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata according to the applicable Commitment Percentages of Lenders. Each payment (including each prepayment) by any Borrower on account of the principal of and interest on the Term Note, shall be made from or to, or applied to that portion of the Term Loan evidenced by the Term Note pro rata according to the Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by any Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of Lenders to the Payment Office, in each case on or prior to 1:00 p.m., in Dollars and in immediately available funds. (c) (i) Notwithstanding anything to the contrary contained in Sections 2.20(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each
37
--------------------------------------------------------------------------------
Execution Copy borrowing of Revolving Advances shall be advanced by Agent and each payment by any Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 1:00 p.m., on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to its applicable Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances. (ii) Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate on outstanding Advances which it has funded. (iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances made during the Week immediately preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error. (d) If any Lender or Participant (a “benefited Lender”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion. (e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Commitment Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Rate (computed on the basis of a year of 360 days) during such
38
--------------------------------------------------------------------------------
Execution Copy period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent. A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder, on demand from Borrowers; provided, however, that Agent’s right to such recovery shall not prejudice or otherwise adversely affect Borrowers’ rights (if any) against such Lender. 2.21. Mandatory Prepayments. (a) Subject to Section 4.3 hereof, when any Borrower sells or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of Business, Borrowers shall repay the Advances in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made promptly but in no event more than one (1) Business Day following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent. The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied (i) first, to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof and (ii) second, to the remaining Advances in such order as Agent may determine, subject to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms hereof. (b) Borrowers shall prepay the outstanding principal installments of the Term Loan in the inverse order of maturities in an amount equal to twenty-five percent (25%) of Excess Cash Flow for each fiscal year commencing on or after September 1, 2010, payable upon delivery of the financial statements to Agent referred to in and required by Section 9.7 for such fiscal year but in any event not later than one hundred twenty (120) days after the end of each such fiscal year. In the event that the financial statement is not so delivered, then a calculation based upon estimated amounts shall be made by Agent upon which calculation Borrowers shall make the prepayment required by this Section 2.21(c), subject to adjustment when the financial statement is delivered to Agent as required hereby. The calculation made by Agent shall not be deemed a waiver of any rights Agent or Lenders may have as a result of the failure by Borrowers to deliver such financial statement. 2.22. Use of Proceeds. (a) On the Closing Date, Holdings shall apply the proceeds of the Advances made on the Closing Date to finance a portion of the consideration payable under the Acquisition Agreement and to refinance existing Indebtedness of Borrowers (other than Holdings). After the Closing Date, Borrowers (other than Holdings) shall apply the proceeds of Advances to (i) pay fees and expenses relating to the Transaction (including the Transaction Costs), and (ii) provide for their working capital needs and reimburse drawings under Letters of Credit. (b) Without limiting the generality of Section 2.22(a) above, no Loan Party nor any other Person which may in the future become party to this Agreement or the Other
39
--------------------------------------------------------------------------------
Execution Copy Documents as a Loan Party, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act. 2.23. Defaulting Lender. (a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Advance or (y) notifies either Agent or Borrowing Agent that it does not intend to make available its portion of any Advance (if the actual refusal would constitute a breach by such Lender of its obligations under this Agreement) (each, a “Lender Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which a Lender Default is in effect and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.23 while such Lender Default remains in effect. (b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are not Defaulting Lenders based on their respective Commitment Percentages, and no Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced by any Lender shall be increased as a result of such Lender Default. Amounts received in respect of principal of any type of Advances shall be applied to reduce the applicable Advances of each Lender (other than any Defaulting Lender) pro rata based on the aggregate of the outstanding Advances of that type of all Lenders at the time of such application; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, re-lend to a Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender. (c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents. All amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances outstanding or a Commitment Percentage. (d) Other than as expressly set forth in this Section 2.23, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.23 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder. (e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under this Agreement.
40
--------------------------------------------------------------------------------
Execution Copy III INTEREST AND FEES. 3.1. Interest. Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of each Interest Period. Interest charges shall be computed on the actual principal amount of Advances outstanding during the month at a rate per annum equal to (i) with respect to Revolving Advances, the applicable Revolving Interest Rate and (ii) with respect to the Term Loan, the applicable Term Loan Rate (as applicable, the “Contract Rate”). Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the applicable Contract Rate shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect. The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Obligations shall bear interest at the applicable Contract Rate plus two (2%) percent per annum the “Default Rate”). 3.2. Letter of Credit Fees. (a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by two and three-quarters percent (2.75%) per annum, such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day of each quarter and on the last day of the Term, and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together with any and all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter of Credit and Fees”). All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of Credit Fees and Acceptance Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Letter of Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional two percent (2%) per annum. On demand, Borrowers will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and each Borrower hereby
41
--------------------------------------------------------------------------------
Execution Copy irrevocably authorizes Agent, in its discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an account and to make and maintain deposits therein, or in an account opened by such Borrower, in the amounts required to be made by such Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of such Borrower coming into any Lender’s possession at any time. Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and such Borrower mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral. No Borrower may withdraw amounts credited to any such account except upon the occurrence of all of the following: (x) payment and performance in full of all Obligations, (y) expiration of all Letters of Credit and (z) termination of this Agreement. 3.3. Closing Fee and Facility Fee. (a) Closing Fee. Upon the execution of this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders a closing fee of $180,000, less that portion of the commitment fee of $60,000 and deposit fee of $50,000 heretofore paid by Borrowers to Agent remaining after application of such fee to Agent’s out of pocket costs, fees (including attorneys’ fees) and expenses. (b) Facility Fee. If, for any calendar quarter during the Term, the average daily unpaid balance of the Revolving Advances and undrawn amount of any outstanding Letters of Credit for each day of such calendar quarter does not equal the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to one quarter of one percent (0.25%) per annum on the amount by which the Maximum Revolving Advance Amount exceeds such average daily unpaid balance. Such fee shall be payable to Agent in arrears on the first day of each calendar quarter with respect to the previous calendar quarter. 3.4. Collateral Management Fee, Collateral Examination Fee and Fee Letter. (a) Collateral Management Fee. Borrowers shall pay Agent a collateral management fee equal to $2,000 per calendar month commencing on the first day of the calendar month following the Closing Date and on the first day of each calendar month thereafter during the Term. (b) Collateral Examination Fee. Borrowers shall pay to Agent on the first day of each month following any month in which Agent performs any collateral examination, including, without limitation, any field examination, collateral analysis or other business analysis, the need for which is to be determined by Agent and which monitoring is undertaken by Agent or for Agent’s benefit — a collateral examination fee in an amount equal to $850 per day for each person employed to perform such monitoring, plus all costs and disbursements incurred by Agent in the performance of such examination or analysis. The fees set forth in this Section 3.3 and 3.4 shall be in addition to any other fees, costs or expenses payable pursuant to any Other Document and each of the fees described in Sections 3.3 and 3.4 constitute part of the Obligations. Each of the fees described in Sections 3.3 and 3.4
42
--------------------------------------------------------------------------------
Execution Copy shall be deemed earned in full and non-refundable on the date when same is due and payable hereunder and shall not be subject to rebate or proration upon termination of this Agreement for any reason. 3.5. Computation of Interest and Fees. Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Contract Rate during such extension. 3.6. Maximum Charges. It is the intention of the parties to comply strictly with applicable usury laws. Accordingly, no rate change shall be put into effect that would result in a rate greater than the highest rate permitted by law. Notwithstanding anything to the contrary contained in this Agreement or in any Other Document, all agreements which either now are or which shall become agreements among any Borrower, Agent and Lenders are hereby limited so that in no contingency or event whatsoever shall the total liability for payments in the nature of interest, additional interest and other charges exceed the applicable limits imposed by any applicable usury laws. If any payments in the nature of interest, additional interest and other charges made under this Agreement or any Other Document are held to be in excess of the limits imposed by any applicable usury laws, it is agreed that any such amount held to be in excess shall be considered payment of principal hereunder, and the indebtedness evidenced hereby shall be reduced by such amount so that the total liability for payments in the nature of interest, additional interest and other charges shall not exceed the applicable limits imposed by any applicable usury laws, in compliance with the desires of Borrowers and Agent. This provision shall never be superseded or waived and shall control every other provision of this Agreement or any Other Document and all agreements among any Borrower and Agent and Lenders, or their respective successors and assigns. Unless preempted by federal law or as permitted under the sentence immediately following this sentence, the applicable Revolving Interest Rate, or Term Loan Interest Rate, from time to time in effect under this Agreement may not exceed the “weekly ceiling” from time to time in effect under Chapter 303 of the Texas Finance Code, as amended from time to time (the “Texas Finance Code”). If the applicable state or federal law is amended in the future to allow a greater rate of interest to be charged under this Agreement than is presently allowed by applicable state or federal law, then the limitation of interest hereunder shall be increased to the maximum rate of interest allowed by applicable state or federal law as amended, which increase shall be effective hereunder on the effective date of such amendment, and all interest charges owing to Lender by reason thereof shall be payable in accordance with Section 2.6 hereof. If by operation of this provision, Borrowers would be entitled to a refund of interest paid pursuant to this Agreement, each Lender agrees that it shall pay to Borrowers upon Agent’s request such Lender’s Commitment Percentage of such interest to be refunded, as determined by Agent. 3.7. Increased Costs. In the event that any Applicable Law, or any change therein or in the interpretation or application thereof, or compliance by any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall:
43
--------------------------------------------------------------------------------
Execution Copy (a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except for changes in the rate of tax on the overall net income of Agent or any Lender by the jurisdiction in which it maintains its principal office); (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or (c) impose on Agent or any Lender or the London interbank Eurodollar market any other condition with respect to this Agreement or any Other Document; and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrowers shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar Rate, as the case may be. Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrowing Agent, and such certification shall be conclusive absent manifest error. Notwithstanding the foregoing, for purposes of this Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives in connection therewith are deemed to have gone into effect and adopted thirty (30) days after the date of this Agreement. 3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the event that Agent or any Lender shall have determined that: (a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or (b) Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan, then Agent shall give Borrowing Agent prompt written or telephonic of such determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 10:00 a.m. two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate
44
--------------------------------------------------------------------------------
Execution Copy Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan. 3.9. Capital Adequacy. (a) In the event that Agent or any Lender shall have determined that any Applicable Law or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrowers shall pay upon demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law or condition. (b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrowing Agent shall be conclusive absent manifest error. 3.10. Gross Up for Taxes. If any Borrower shall be required by Applicable Law to withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each, individually, a “Payee” and collectively, the “Payees”), (a) the sum payable to such Payee or Payees, as the case may be, shall be increased as may be necessary so that, after making all required withholding or deductions, the applicable Payee or Payees receives an amount equal to the sum it would have received had no such withholding or deductions been made (the “Gross-Up Payment”), (b) such Borrower shall make such withholding or deductions,
45
--------------------------------------------------------------------------------
Execution Copy and (c) such Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall be obligated to make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete exemption with respect thereto pursuant to Section 3.11 hereof. 3.11. Withholding Tax Exemption. (a) Each Payee that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of Agent, each other Payee) agrees that it will deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code. The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person. (b) Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as follows: (A) each Payee which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by any Borrower hereunder for the account of such Payee; (B) each Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless Agent in its sole discretion shall permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by Agent). Each Payee which so delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrowing Agent or Agent. (c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any tax it deducts and withholds in accordance with regulations under §1441 of the Code.
46
--------------------------------------------------------------------------------
Execution Copy IV COLLATERAL: GENERAL TERMS 4.1. Security Interest in the Collateral. To secure the prompt payment and performance to Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges and grants to Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located. Each Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent’s security interest and shall cause its financial statements to reflect such security interest. Each Borrower shall promptly provide Agent with written notice of all commercial tort claims, such notice to contain the case title together with the applicable court and a brief description of the claim(s). Upon delivery of each such notice, such Borrower shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof. 4.2. Perfection of Security Interest. Each Borrower shall take all action that may be necessary or desirable, or that Agent may request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) immediately discharging all Liens other than Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credits and advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages, notices and assignments, in each case in form and substance satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest and Lien in and to the Collateral under the Uniform Commercial Code or other Applicable Law. By its signature hereto, each Borrower hereby authorizes Agent to file against such Borrower, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein). All charges, expenses and fees Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrowers’ Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders immediately upon demand. 4.3. Disposition of Collateral. Each Borrower will safeguard and protect all Collateral for Agent’s general account and make no disposition thereof whether by sale, lease or otherwise except (a) the sale of Inventory in the Ordinary Course of Business and (b) the disposition or transfer of obsolete and worn-out Equipment in the Ordinary Course of Business during any fiscal year having an aggregate fair market value of not more than $750,000 and only to the extent that the net cash proceeds of such disposition are remitted to Agent to, at the election of the Borrowers (evidenced by a certificate setting forth such election delivered to Agent within two (2) Business Days of any such disposition), either (x) be applied by Agent pursuant to Section 2.21 or (y) be applied to the outstanding Revolving Advances provided that Agent simultaneously institutes a reserve pursuant to Section 2.1(a)(y) in an amount equal to such net
47
--------------------------------------------------------------------------------
Execution Copy cash proceeds, which reserve shall be released upon the earlier to occur of (i) Borrowers request a Revolving Advance in amount equal to or less than the amount of such reserve within 90 days following such disposition to acquire replacement Equipment which shall be subject to Agent’s first priority security interest, in which case, Agent shall make, subject to the provisions of Section 8.2 and Article II hereof, a Revolving Advance available to Borrowers for such acquisition or (ii) 90 days following such disposition shall elapse, in which case, Agent shall immediately release such reserve and the proceeds of such disposition shall be applied by Agent pursuant to Section 2.21. 4.4. Preservation of Collateral. Following the occurrence of a Default or Event of Default in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem appropriate; (b) may employ and maintain at any of any Borrower’s premises a custodian who shall have full authority to do all acts necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use Borrowers’ owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through Borrowers’ owned or leased property. Each Borrower shall cooperate fully with all of Agent’s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct. All of Agent’s expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations. 4.5. Ownership of Collateral. (a) With respect to the Collateral, at the time the Collateral becomes subject to Agent’s security interest: (i) each Borrower shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest in each and every item of its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by each Borrower or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all respects; (iii) all signatures and endorsements of each Borrower that appear on such documents and agreements shall be genuine and each Borrower shall have full capacity to execute same; (iv) each Borrower’s Equipment and Inventory shall be located as set forth on Schedule 4.5 and shall not be removed from such location(s) without the prior written consent of Agent except with respect to (x) the sale of Inventory in the Ordinary Course of Business and (y) Equipment to the extent permitted in Section 4.3 hereof. (b) (i) There is no location at which any Borrower has any Inventory (except for Inventory in transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5 hereto contains a correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which Inventory of any Borrower is stored; none of the receipts received by any Borrower from any warehouse states that the goods covered thereby are to be delivered to
48
--------------------------------------------------------------------------------
Execution Copy bearer or to the order of a named Person or to a named Person and such named Person’s assigns; (iii) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each place of business of each Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the location, by state and street address, of all Real Property owned or leased by each Borrower, together with the names and addresses of any landlords. 4.6. Defense of Agent’s and Lenders’ Interests. Until (a) payment and performance in full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the Collateral shall continue in full force and effect. During such period no Borrower shall, without Agent’s prior written consent, pledge, sell (except Inventory in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral. Each Borrower shall defend Agent’s interests in the Collateral against any and all Persons whatsoever. At any time following demand by Agent for payment of all Obligations, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including: labels, stationery, documents, instruments and advertising materials. If Agent exercises this right to take possession of the Collateral, Borrowers shall, upon demand, assemble it in the best manner possible and make it available to Agent at a place reasonably convenient to Agent. In addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other Applicable Law. Each Borrower shall, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent’s order and if they shall come into any Borrower’s possession, they, and each of them, shall be held by such Borrower in trust as Agent’s trustee, and such Borrower will immediately deliver them to Agent in their original form together with any necessary endorsement. 4.7. Books and Records. Each Borrower shall (a) keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs; (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims; (c) on a reasonably current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on required payments and accruals for depreciation, obsolescence, or amortization of properties), which should be set aside from such earnings in connection with its business and (d) use its best efforts to obtain Lien Waiver Agreements with respect to all premises leased by a Borrower where books and records are stored. All determinations pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Borrowers. 4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes and directs all accountants and auditors employed by such Borrower at any time during the Term to exhibit and deliver to Agent and each Lender copies of any of such Borrower’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession,
49
--------------------------------------------------------------------------------
Execution Copy and to disclose to Agent and each Lender any information such accountants may have concerning such Borrower’s financial status and business operations. Each Borrower hereby authorizes all Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating to such Borrower, whether made by such Borrower or otherwise; however, Agent and each Lender will attempt to obtain such information or materials directly from such Borrower prior to obtaining such information or materials from such accountants or Governmental Bodies. 4.9. Compliance with Laws. Each Borrower shall comply with all Applicable Laws with respect to the Collateral or any part thereof or to the operation of such Borrower’s business the non-compliance with which could reasonably be expected to have a Material Adverse Effect. Each Borrower may, however, contest or dispute any Applicable Laws in any reasonable manner, provided that any related Lien is inchoate or stayed and sufficient reserves are established to the reasonable satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral. The assets of Borrowers at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets of Borrowers so that such insurance shall remain in full force and effect. 4.10. Inspection of Premises. At all reasonable times upon prior notice to Borrowers, provided no such notice is required in an Event of Default, Agent and each Lender shall have full access to and the right to audit, check, inspect and make abstracts and copies from each Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of each Borrower’s business. Agent, any Lender and their agents may enter upon any premises of any Borrower at any time during business hours and at any other reasonable time, and from time to time, upon prior notice to Borrowers, provided no such notice is required in an Event of Default, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of such Borrower’s business. 4.11. Insurance. The assets and properties of each Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of such Borrower so that such insurance shall remain in full force and effect. Each Borrower shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral. At each Borrower’s own cost and expense in amounts and with carriers acceptable to Agent, each Borrower shall (a) keep all its insurable properties and properties in which such Borrower has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to such Borrower’s including business interruption insurance; (b) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to such Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of such Borrower either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which such Borrower is engaged in business; and (e) furnish Agent with (i) copies of all policies and evidence of the maintenance of such policies
50
--------------------------------------------------------------------------------
Execution Copy by the renewal thereof at least thirty (30) days before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as a co-insured and lender loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a) and (c) above, and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice is given to Agent. In the event of any loss thereunder, the carriers named therein hereby are directed by Agent and the applicable Borrower to make payment for such loss to Agent and not to such Borrower and Agent jointly. If any insurance losses are paid by check, draft or other instrument payable to any Borrower and Agent jointly, Agent may endorse such Borrower’s name thereon and do such other things as Agent may deem advisable to reduce the same to cash. Agent is hereby authorized to adjust and compromise claims under insurance coverage referred to in clauses (a), and (b) above. All loss recoveries received by Agent upon any such insurance may be applied to the Obligations, in such order as Agent in its sole discretion shall determine. Any surplus shall be paid by Agent to Borrowers or applied as may be otherwise required by law. Any deficiency thereon shall be paid by Borrowers to Agent, on demand. 4.12. Failure to Pay Insurance. If any Borrower fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers’ Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations. 4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes, assessments and other Charges lawfully levied or assessed upon such Borrower or any of the Collateral including real and personal property taxes, assessments and charges and all franchise, income, employment, social security benefits, withholding, and sales taxes, unless the same are being Properly Contested. If any tax by any Governmental Body is or may be imposed on or as a result of any transaction between any Borrower and Agent or any Lender which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which, in Agent’s or any Lender’s opinion, may possibly create a valid Lien on the Collateral, Agent may without notice to Borrowers pay the taxes, assessments or other Charges and each Borrower hereby indemnifies and holds Agent and each Lender harmless in respect thereof. Agent will not pay any taxes, assessments or Charges to the extent that any applicable Borrower has Properly Contested those taxes, assessments or Charges. The amount of any payment by Agent under this Section 4.13 shall be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations and, until Borrowers shall furnish Agent with an indemnity therefor (or supply Agent with evidence satisfactory to Agent that due provision for the payment thereof has been made), Agent may hold without interest any balance standing to Borrowers’ credit and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent. 4.14. Payment of Leasehold Obligations. Each Borrower shall at all times pay, when and as due, its rental obligations under all leases under which it is a tenant, and shall otherwise
51
--------------------------------------------------------------------------------
Execution Copy comply, in all material respects, with all other terms of such leases and keep them in full force and effect and, at Agent’s request will provide evidence of having done so. 4.15. Receivables. (a) Nature of Receivables. Each of the Receivables shall be a bona fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of a Borrower, or work, labor or services theretofore rendered by a Borrower as of the date each Receivable is created. Same shall be due and owing in accordance with the applicable Borrower’s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by Borrowers to Agent. (b) Solvency of Customers. Each Customer, to the best of each Borrower’s knowledge, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Customer is obligated in full when due or with respect to such Customers of any Borrower who are not solvent such Borrower has set up on its books and in its financial records bad debt reserves adequate to cover such Receivables. (c) Location of Borrowers. Each Borrower’s chief executive office is located at 240 Jasmine Rd., Crowley, Louisiana 70526. Until written notice is given to Agent by Borrowing Agent of any other office at which any Borrower keeps its records pertaining to Receivables, all such records shall be kept at such executive office. (d) Collection of Receivables. Until any Borrower’s authority to do so is terminated by Agent (which notice Agent may give at any time following the occurrence and during the continuance of an Event of Default or a Default), each Borrower will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for Agent’s account, collect as Agent’s property and in trust for Agent all amounts received on Receivables, and shall not commingle such collections with any Borrower’s funds or use the same except to pay Obligations. Each Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness. (e) Notification of Assignment of Receivables. At any time after the occurrence and during the continuance of an Event of Default or Default, Agent shall have the right to send notice of the assignment of, and Agent’s security interest in and Lien on, the Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral. Thereafter, Agent shall have the sole right to collect the Receivables, take possession of the Collateral, or both. Agent’s actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be charged to Borrowers’ Account and added to the Obligations.
52
--------------------------------------------------------------------------------
Execution Copy (f) Power of Agent to Act on Borrowers’ Behalf. Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or any Borrower any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and each Borrower hereby waives notice of presentment, protest and non-payment of any instrument so endorsed. Each Borrower hereby constitutes Agent or Agent’s designee as such Borrower’s attorney with power (i) to endorse such Borrower’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) to sign such Borrower’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, assignments and verifications of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to sign such Borrower’s name on all financing statements or any other documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; (v) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to demand payment of the Receivables; (vi) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to enforce payment of the Receivables by legal proceedings or otherwise; (vii) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to exercise all of such Borrower’s rights and remedies with respect to the collection of the Receivables and any other Collateral; (viii) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to settle, adjust, compromise, extend or renew the Receivables; (ix) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) to prepare, file and sign such Borrower’s name on a proof of claim in bankruptcy or similar document against any Customer; (xi) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to prepare, file and sign such Borrower’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (xii) to do all other acts and things necessary to carry out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), unless done maliciously or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid. Agent shall have the right at any time following the occurrence of an Event of Default or Default, to change the address for delivery of mail addressed to any Borrower to such address as Agent may designate and to receive, open and dispose of all mail addressed to any Borrower. (g) No Liability. Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), unless such error or omission is the result of gross negligence or willful
53
--------------------------------------------------------------------------------
Execution Copy misconduct (as determined by a court of competent jurisdiction in a final non-applicable judgment) occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom. Following the occurrence of an Event of Default or Default, Agent may, without notice or consent from any Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof. Agent is authorized and empowered to accept following the occurrence of an Event of Default or Default, the return of the goods represented by any of the Receivables, without notice to or consent by any Borrower, all without discharging or in any way affecting any Borrower’s liability hereunder. (h) Establishment of a Lockbox Account, Dominion Account. All proceeds of Collateral shall be deposited by Borrowers into either (i) a lockbox account, dominion account or such other “blocked account” (“Blocked Accounts”) established at a bank or banks (each such bank, a “Blocked Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be selected by Borrowers and be acceptable to Agent in its sole discretion or (ii) depository accounts (“Depository Accounts”) established at Agent for the deposit of such proceeds. Borrowers, Agent and each Blocked Account Bank shall enter into a deposit account control agreement in form and substance satisfactory to Agent directing such Blocked Account Bank to transfer such funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank or by wire transfer to appropriate account(s) of Agent. All funds deposited in such Blocked Accounts shall immediately become the property of Agent and Borrowers shall obtain the agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited. Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement, including any claim of accord and satisfaction or release with respect to deposits accepted by any Blocked Account Bank thereunder. All deposit accounts and investment accounts of Borrowers and their Subsidiaries are set forth on Schedule 4.15(h). Borrowing Agent shall notify each Customer of any Borrower to send all future payments owed to a Borrower by such Customer, including, but not limited to, payments on any Receivable, to a Blocked Account, (i) with respect to any Person that is a Customer of any Borrower on the Closing Date, within thirty (30) days of the Closing Date and (ii) with respect to any Person that is not a Customer on the Closing Date, immediately upon such Person becoming a Customer of a Borrower. If any Borrower shall receive any collections or other proceeds of the Collateral, such Borrower shall hold such collections or proceeds in trust for the benefit of Agent and deposit such collections or proceeds into a Blocked Account within one (1) Business Day following such Borrower’s receipt thereof. (i) Adjustments. No Borrower will, without Agent’s consent, compromise or adjust any Receivables (or extend the time for payment thereof) or accept any returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore customary in the business of such Borrower. 4.16. Inventory. To the extent Inventory held for sale or lease has been produced by any Borrower, it has been and will be produced by such Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.
54
--------------------------------------------------------------------------------
Execution Copy 4.17. Maintenance of Equipment. The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved. No Borrower shall use or operate the Equipment in violation of any law, statute, ordinance, code, rule or regulation. Each Borrower shall have the right to sell Equipment to the extent set forth in Section 4.3 hereof. 4.18. Exculpation of Liability. Nothing herein contained shall be construed to constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof. Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of any Borrower’s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by any Borrower of any of the terms and conditions thereof. 4.19. Environmental Matters. (a) Borrowers shall ensure that the Real Property and all operations and businesses conducted thereon remains in compliance with all Environmental Laws and they shall not place or permit to be placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or appropriate governmental authorities. (b) Borrowers shall establish and maintain a system to assure and monitor continued compliance with all applicable Environmental Laws which system shall include periodic reviews of such compliance. (c) Borrowers shall (i) employ in connection with the use of the Real Property appropriate technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid permits under RCRA and any other applicable Environmental Laws. Borrowers shall use their best efforts to obtain certificates of disposal, such as hazardous waste manifest receipts, from all treatment, transport, storage or disposal facilities or operators employed by Borrowers in connection with the transport or disposal of any Hazardous Waste generated at the Real Property. (d) In the event any Borrower obtains, gives or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or any Borrower’s interest therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located or the United States Environmental Protection Agency (any such person or entity hereinafter the “Authority”), then Borrowing Agent shall, within five (5)
55
--------------------------------------------------------------------------------
Execution Copy Business Days, give written notice of same to Agent detailing facts and circumstances of which any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto. (e) Borrowing Agent shall promptly forward to Agent copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated or used by any Borrower to dispose of Hazardous Substances and shall continue to forward copies of correspondence between any Borrower and the Authority regarding such claims to Agent until the claim is settled. Borrowing Agent shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file under any Environmental Laws. Such information is to be provided solely to allow Agent to protect Agent’s security interest in and Lien on the Real Property and the Collateral. (f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and take all necessary action in order to safeguard the health of any Person and to avoid subjecting the Collateral or Real Property to any Lien. If any Borrower shall fail to respond promptly to any Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply with any of the requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent’s interest in the Collateral: (A) give such notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint. All reasonable costs and expenses incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement or any other agreement between Agent, any Lender and any Borrower. (g) Promptly upon the written request of Agent (which request will not be made more than one time during the Term, provided no such limitation is applicable upon the occurrence of an Event of Default), Borrowers shall provide Agent, at Borrowers’ expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent, to assess with a reasonable degree of certainty the existence of a Hazardous Discharge and the potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found on, under, at or within the Real Property. Any report or investigation of such Hazardous Discharge proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such estimates, individually or in the aggregate, exceed $100,000, Agent shall have the right to require Borrowers to post a bond, letter of credit or other security reasonably satisfactory to Agent to secure payment of these costs and expenses.
56
--------------------------------------------------------------------------------
Execution Copy (h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their respective employees, agents, directors and officers harmless from and against all loss, liability (INCLUDING, WITHOUT LIMITATION, ANY STRICT LIABILITY), damage and expense, claims, costs, fines and penalties, including attorney’s fees, suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, including any loss of value of the Real Property as a result of the foregoing (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender. Borrowers’ obligations under this Section 4.19 shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances. Borrowers’ obligation and the indemnifications hereunder shall survive the termination of this Agreement. (i) For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of each Borrower’s right, title and interest in and to its owned and leased premises. 4.20. Financing Statements. Except as respects the financing statements filed by Agent and the financing statements described on Schedule 1.2, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office 4.21. Rolling Stock and other Vehicles. With respect to each vehicle or item of Rolling Stock subject to a certificate of title statute acquired after the Closing Date, Borrowers shall deliver to Agent, in form and substance satisfactory to Agent: (i) a fully-executed, notarized power of attorney authorizing CT Corp to perfect liens on behalf of Agent; (ii) new unencumbered titles for each item of Rolling Stock within the earlier of (x) five (5) days of receipt by a Borrower of a new title certificate for Rolling Stock and (y) twenty-five (25) days of purchase; (iii) to the extent applicable, an odometer statement clearly identifying the current mileage for each item of Collateral; and (iv) to the extent applicable, an in-state garaging address for each item of Collateral. V REPRESENTATIONS AND WARRANTIES. References in this Article V to “Borrower(s)” shall refer to Borrowers and/or the business to be acquired by Borrowers pursuant to the transactions contemplated by the Acquisition Agreement, as context shall require for periods prior to the Closing Date. Each Borrower represents and warrants that the following statements are, and after giving effect to the transactions contemplated by the Acquisition Agreement will be, true, correct and complete: 5.1. Authority. Each Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective Obligations hereunder and thereunder. This Agreement, the Subordination Agreement and the Other
57
--------------------------------------------------------------------------------
Execution Copy Documents have been duly executed and delivered by each Borrower, and this Agreement, the Subordination Agreement and the Other Documents constitute the legal, valid and binding obligation of such Borrower enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally. The execution, delivery and performance of this Agreement and of the Other Documents (a) are within such Borrower’s limited company or limited liability company powers, as applicable, have been duly authorized by all necessary company action, are not in contravention of law or the terms of such Borrower’s certificate of formation or other applicable documents relating to such Borrower’s formation or to the conduct of such Borrower’s business or of any material agreement or undertaking to which such Borrower is a party or by which such Borrower is bound, including, without limitation, the Acquisition Agreement, (b) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of such Borrower under the provisions of any agreement, charter document, instrument, or operating agreement or other instrument to which such Borrower is a party or by which it or its property is a party or by which it may be bound, including under the provisions of the Acquisition Agreement. 5.2. Formation and Qualification. (a) Each Borrower is duly formed and in good standing under the laws of the state listed on Schedule 5.2(a) and is qualified to do business and is in good standing in the states listed on Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary for such Borrower to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect on such Borrower. Each Borrower has delivered to Agent true and complete copies of its certificate of formation and operating agreement and agrees to promptly notify Agent of any amendment or changes thereto. (b) The only Subsidiaries of the Loan Parties are listed on Schedule 5.2(b). The Equity Interests of each Borrower are presently held by the Persons identified on Schedule 5.2(b), in the numbers of shares or interests set forth thereon. 5.3. Survival of Representations and Warranties. All representations and warranties of such Borrower contained in this Agreement and the Other Documents shall be true at the time of such Borrower’s execution of this Agreement and the Other Documents, and shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto. 5.4. Tax Returns. Each Borrower’s federal tax identification number is set forth on Schedule 5.4. Each Borrower has filed all federal, state and local tax returns and other reports each is required by law to file and has paid all taxes, assessments, fees and other governmental charges that are due and payable. Federal, state and local income tax returns of each Borrower
58
--------------------------------------------------------------------------------
Execution Copy (other than Holdings) have been examined and reported upon by the appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years prior to and including the fiscal year ending August 31, 2006. The provision for taxes on the books of each Borrower is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Borrower has any knowledge of any deficiency or additional assessment in connection therewith not provided for on its books. 5.5. Financial Statements. (a) The pro forma balance sheet of Borrowers on a Consolidated Basis (the “Pro Forma Balance Sheet”) furnished to Agent on the Closing Date reflects the consummation of the transactions contemplated by the Acquisition Agreement and this Agreement (collectively, the “Transactions”) and is accurate, complete and correct and fairly reflects the financial condition of Borrowers on a Consolidated Basis as of the Closing Date after giving effect to the Transactions, and has been prepared in accordance with GAAP, consistently applied. The Pro Forma Balance Sheet has been certified as accurate, complete and correct in all material respects by an Authorized Officer of Borrowing Agent. All financial statements referred to in this subsection 5.5(a), including the related schedules and notes thereto, have been prepared, in accordance with GAAP, except as may be disclosed in such financial statements. (b) The twelve-month cash flow projections of Borrowers on a Consolidated Basis and their projected balance sheets as of the Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) (the “Projections”) were approved by an Authorized Officer of Borrowing Agent, are based on underlying assumptions which provide a reasonable basis for the projections contained therein and reflect Borrowers’ judgment based on present circumstances of the most likely set of conditions and course of action for the projected period. The cash flow Projections together with the Pro Forma Balance Sheet, are referred to as the “Pro Forma Financial Statements”. (c) The consolidated and consolidating balance sheets of Borrowers, their Subsidiaries and such other Persons described therein (including the accounts of all Subsidiaries for the respective periods during which a subsidiary relationship existed) as of August 31, 2009, and the related statements of income, changes in stockholder’s equity, and changes in cash flow for the period ended on such date, all accompanied by reports thereon containing opinions without qualification by independent certified public accountants, copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur and present fairly the financial position of Borrowers and their Subsidiaries at such date and the results of their operations for such period. Since August 31, 2009 there has been no change in the condition, financial or otherwise, of Borrowers or their Subsidiaries as shown on the consolidated balance sheet as of such date and no change in the aggregate value of machinery, equipment and Real Property owned by Borrowers and their respective Subsidiaries, except changes in the Ordinary Course of Business, none of which individually or in the aggregate has been materially adverse 5.6. Entity Names. No Borrower has been known by any other corporate name in the past five years and does not sell Inventory under any other name except as set forth on Schedule 5.6, nor has any Borrower been the surviving company of a merger or consolidation or acquired
59
--------------------------------------------------------------------------------
Execution Copy all or substantially all of the assets of any Person, with the exception of those assets acquired pursuant to the Acquisition Agreement during the preceding five (5) years. 5.7. O.S.H.A. and Environmental Compliance. (a) Each Borrower has duly complied with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act, RCRA and all other Environmental Laws; there have been no outstanding citations, notices or orders of non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations. (b) Each Borrower has been issued all required federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws. (c) (i) There are no visible signs of releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real Property or any premises leased by any Borrower; (ii) there are no underground storage tanks or polychlorinated biphenyls on the Real Property or any premises leased by any Borrower; (iii) neither the Real Property nor any premises leased by any Borrower has ever been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the Real Property or any premises leased by any Borrower, excepting such quantities as are handled in accordance with all applicable manufacturer’s instructions and governmental regulations and in proper storage containers and as are necessary for the operation of the commercial business of any Borrower or of its tenants. 5.8. Solvency; No Litigation, Violation, Indebtedness or Default. (a) Each Borrower is, and after giving effect to the Transactions, each Borrower will be solvent, able to pay its debts as they mature, and has, and after giving effect to the Transactions, will have capital sufficient to carry on its business and all businesses in which it is about to engage, and (i) as of the Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going concern basis) will be in excess of the amount of its liabilities. (b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or threatened litigation, arbitration, actions or proceedings which involve the possibility of having a Material Adverse Effect, and (ii) any liabilities or indebtedness for borrowed money other than the Obligations. (c) No Borrower is in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any Borrower in violation of any order of any court, Governmental Body or arbitration board or tribunal. (d) No Borrower nor any member of the Controlled Group maintains or contributes to any Plan other than (i) as of the Closing Date, those listed on Schedule 5.8(d)
60
--------------------------------------------------------------------------------
Execution Copy hereto and (ii) thereafter, as permitted under this Agreement. (i) No Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and each Borrower and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Plan; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither any Borrower nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and neither any Borrower nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither any Borrower nor any member of the Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan; (vii) neither any Borrower nor any member of a Controlled Group has incurred any liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither any Borrower nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix) each Borrower and each member of the Controlled Group has made all contributions due and payable with respect to each Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice period has not been waived; (xi) neither any Borrower nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than employees or former employees of any Borrower and any member of the Controlled Group; (xii) neither any Borrower nor any member of the Controlled Group maintains or contributes to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither any Borrower nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such liability; and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Plan. 5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent applications, trademarks, trademark applications, service marks, service mark applications, copyrights, copyright applications, design rights, trade names, trade name applications, assumed names, trade secrets, domain names, domain name applications and licenses owned or utilized by any Borrower are set forth on Schedule 5.9, are valid and have been duly registered or filed with all appropriate Governmental Bodies and constitute all of the intellectual property rights which are necessary for the operation of its business; there is no objection to or pending challenge to the
61
--------------------------------------------------------------------------------
Execution Copy validity of any such patent, trademark, copyright, design rights, trade name, domain name, trade secret or license and no Borrower is aware of any grounds for any challenge, except as set forth in Schedule 5.9 hereto. Each patent, patent application, patent license, trademark, trademark application, trademark license, service mark, service mark application, service mark license, design rights, copyright, copyright application and copyright license owned or held by any Borrower and all trade secrets used by any Borrower consist of original material or property developed by such Borrower or was lawfully acquired by such Borrower from the proper and lawful owner thereof. Each of such items has been maintained so as to preserve the value thereof from the date of creation or acquisition thereof. With respect to all software used by any Borrower, such Borrower is in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto. 5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state, provincial or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits could have a Material Adverse Effect. 5.11. Default of Indebtedness. No Borrower is in default in the payment of the principal of or interest on any Indebtedness or under any instrument or agreement under or subject to which any Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder. 5.12. No Default. No Borrower is in default in the payment or performance of any of its contractual obligations and no Default has occurred. 5.13. No Burdensome Restrictions. No Borrower is party to any contract or agreement the performance of which could have a Material Adverse Effect. Each Borrower has heretofore delivered to Agent true and complete copies of all material contracts to which it is a party or to which it or any of its properties is subject. No Borrower has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance. 5.14. No Labor Disputes. No Borrower is involved in any labor dispute; there are no strikes or walkouts or union organization of any Borrower’s employees threatened or in existence and no labor contract is scheduled to expire during the Term other than as set forth on Schedule 5.14 hereto. 5.15. Margin Regulations. No Borrower is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.
62
--------------------------------------------------------------------------------
Execution Copy 5.16. Investment Company Act. No Borrower is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company. 5.17. Disclosure. No representation or warranty made by any Borrower in this Agreement , the Subordinated Obligations Documents or in the Acquisition Agreement, or in any financial statement, report, certificate or any other document furnished in connection herewith or therewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to any Borrower or which reasonably should be known to such Borrower which such Borrower has not disclosed to Agent in writing with respect to the transactions contemplated by the Acquisition Agreement or this Agreement which could reasonably be expected to have a Material Adverse Effect. 5.18. Delivery of Acquisition Agreement and Subordinated Loan Documentation. Agent has received complete copies of the Acquisition Agreement (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof. None of such documents and agreements has been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant to a written agreement or instrument which has heretofore been delivered to Agent. Each of the representations and warranties of the Sellers set forth in the Acquisition Agreement are true and correct in all material respects as of the date hereof and are hereby made by Borrowers as if they were set forth herein in their entirety. 5.19. Swaps. No Borrower is a party to, nor will it be a party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination following an event of default thereunder are payable on an unlimited “two-way basis” without regard to fault on the part of either party. 5.20. Conflicting Agreements. No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents. 5.21. Application of Certain Laws and Regulations. Neither any Borrower nor any Affiliate of any Borrower is subject to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services. 5.22. Business and Property of Borrowers. Holdings did not engage in any business prior to the Closing Date. Upon and after the Closing Date, Borrowers do not propose to
63
--------------------------------------------------------------------------------
Execution Copy engage in any business other than those conducted on the Closing Date and those set forth on Schedule 5.22 and activities necessary to conduct the foregoing. On the Closing Date, each Borrower will own all the property and possess all of the rights and Consents necessary for the conduct of the business of such Borrower. 5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall not use any portion of the proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary. 5.24. Anti-Terrorism Laws. (a) General. Neither any Borrower nor any Affiliate of any Borrower is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. (b) Executive Order No. 13224. Neither any Borrower nor any Affiliate of any Borrower or their respective agents acting or benefiting in any capacity in connection with the Advances or other transactions hereunder, is any of the following (each a “Blocked Person”): (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224; (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224; (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224; (v) a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or (vi) a Person or entity who is affiliated or associated with a Person or entity listed above. Neither any Borrower nor to the knowledge of any Borrower, any of its agents acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.
64
--------------------------------------------------------------------------------
Execution Copy 5.25. Trading with the Enemy. No Borrower has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act. 5.26. Federal Securities Laws. Neither any Borrower nor any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered under the Exchange Act or (iii) has filed a registration statement that has not yet become effective under the Securities Act. VI AFFIRMATIVE COVENANTS. Each Borrower shall, until payment in full of the Obligations and termination of this Agreement: 6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees and expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may, without making demand, charge Borrowers’ Account for all such fees and expenses. 6.2. Conduct of Business and Maintenance of Existence and Assets. (a) Conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, trade names, trade secrets, domain names and trademarks and take all actions necessary to enforce and protect the validity of any intellectual property right necessary to the operations of the business of each Borrower or other right included in the Collateral; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect. 6.3. Violations. Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to any Borrower which could reasonably be expected to have a Material Adverse Effect. 6.4. Government Receivables. Take all steps necessary to protect Agent’s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between any Borrower and the United States, any state or any department, agency or instrumentality of any of them.
65
--------------------------------------------------------------------------------
Execution Copy 6.5. Financial Covenants. (a) Fixed Charge Coverage Ratio. Cause to be maintained a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, measured as of (a) November 30, 2010, for the fiscal quarter then most recently ended; (b) February 28, 2011, for the two fiscal quarter period then most recently ended; (c) May 31, 2011, for the three fiscal quarter period then most recently ended; (d) August 31, 2011 and as of the last day of each fiscal quarter thereafter, for the four fiscal quarter period then most recently ended. 6.6. Execution of Supplemental Instruments. Execute and deliver to Agent from time to time, within five (5) Business Days after demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may request, in order that the full intent of this Agreement may be carried into effect. 6.7. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and each Borrower shall have provided for such reserves as Agent may reasonably deem proper and necessary, subject at all times to any applicable subordination arrangement in favor of Lenders. 6.8. Standards of Financial Statements. Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments and the absence of footnotes) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein). 6.9. Federal Securities Laws. Promptly notify Agent in writing if any Borrower or any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act. 6.10. Exercise of Rights. Enforce all of its rights under the Acquisition Agreement and the Indemnification Agreement executed in connection therewith including, but not limited to, all indemnification rights and pursue all remedies available to it with diligence and in good faith in connection with the enforcement of any such rights. 6.11. Defaults under the Acquisition or Subordinated Obligations Documents. The Borrowing Agent shall provide Agent with prompt written notice upon the occurrence of any default or event of default under any of the Subordinated Obligations Documents, the Acquisition Agreement and/or any document executed in connection therewith. 6.12. Post-Closing Obligations. Borrowers shall cause the conditions set forth on Schedule 6.12 hereto to be satisfied in full, on or before the date specified for each such
66
--------------------------------------------------------------------------------
Execution Copy condition, time being of the essence, and each to be satisfactory, in form and substance as applicable, to Agent in its sole discretion. 6.13. Nature of Business. Carry on its business in substantially the same manner and in substantially the same fields of enterprise as set forth in Section 5.22. VII NEGATIVE COVENANTS. No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement: 7.1. Merger, Consolidation, Acquisition and Sale of Assets. (a) Enter into any merger, consolidation or other reorganization with or into any other Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit any other Person to consolidate with or merge with it. (b) Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (i) dispositions of Inventory and Equipment to the extent expressly permitted by Section 4.3 and (ii) any other sales or dispositions expressly permitted by this Agreement. 7.2. Creation of Liens. Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances. 7.3. Guarantees. Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) as disclosed on Schedule 7.3, (b) the endorsement of checks in the Ordinary Course of Business, and (c) guarantees of Indebtedness of the types permitted in Section 7.8. 7.4. Investments. Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, except (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least $500,000,000 or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, (d) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof and (e) the Acquisition Agreement. 7.5. Loans. Make advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or Affiliate except with respect to the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business. 7.6. Capital Expenditures. Contract for, purchase or make any expenditure or commitments for Capital Expenditures for (i) the twelve (12) months immediately following the Closing Date in an aggregate amount for all Borrowers in excess of $4,500,000 and (ii) each
67
--------------------------------------------------------------------------------
Execution Copy twelve (12) month period thereafter in excess of $5,000,000 provided, that no more than $500,000 of the Capital Expenditures permitted pursuant to clauses (i) and (ii) above shall be Unfinanced Capital Expenditures. 7.7. Distributions. Pay or make any distribution on any membership interests of any Borrower to any Person or apply any of its funds, property or assets to the purchase, redemption or other retirement of any membership interests, or of any options to purchase or acquire any such membership interests of any Borrower except that so long as: (a)(i) a notice of termination with regard to this Agreement shall not be outstanding, and (ii) no Event of Default or Default shall have occurred, and (iii) the purpose for such purchase, redemption or distribution shall be as set forth in writing to Agent at least ten (10) days prior to such purchase, redemption or distribution and such purchase, redemption or distribution shall in fact be used for such purpose, any Borrower shall be permitted to make distributions to its members in an aggregate amount equal to the Increased Tax Burden of its members; and (b)(i) a notice of termination with regard to this Agreement shall not be outstanding, and (ii) no Event of Default or Default shall have occurred or result after giving effect to such distribution, and (iii) the purpose for such distribution shall be as set forth in writing to Agent at least ten (10) days prior to such distribution and such distribution shall in fact be used for such purpose, and (iv) after giving effect to such distribution, Borrowers shall have Undrawn Availability of at least $2,000,000, and (v) such distributions are required by the Subordinated Obligations Documents and (vi) the Subordination Agreement among Borrowers, Agent and Waypoint is in full force and effect, Borrowers shall be permitted to make Subordinated Obligations Payments to Waypoint Capital. Subject to this Section 7.7, payments to members shall be made so as to be available when the tax is due, including in respect of estimated tax payments. In the event (x) the actual distribution to members made pursuant to this Section 7.7 exceeds the actual income tax liability of any member due to such Borrower’s status as a limited liability company (calculated based on the applicable IRS Form 1065 or such other applicable form filed by such Borrower), or (y) if such Borrower was a subchapter C corporation, such Borrower would be entitled to a refund of income taxes previously paid as a result of a tax loss during a year in which such Borrower is a limited liability company, then the members shall repay such Borrower the amount of such excess or refund, as the case may be, no later than the date the annual tax return must be filed by such Borrower (without giving effect to any filing extensions). In the event such amounts are not repaid in a timely manner by any member, then such Borrower shall not pay or make any distribution with respect to, or purchase, redeem or retire, any membership interest of such Borrower held or controlled by, directly or indirectly, such member until such payment has been made. 7.8. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to Lenders; (ii) Indebtedness incurred for Capital Expenditures permitted under Section 7.6 hereof; (iii) Indebtedness created under the Subordinated Obligations Documents (to the extent that the obligations of Borrower to Waypoint could be characterized as Indebtedness), provided that the Subordination Agreement is in full force and effect and has not been violated or repudiated by Waypoint; (iv) Indebtedness assumed under the Acquisition Agreement and (v) other Indebtedness not to exceed $250,000 in the aggregate at any time outstanding so long as such Indebtedness is subject to a Subordination Agreement in favor of Agent.
68
--------------------------------------------------------------------------------
Execution Copy 7.9. Nature of Business. Substantially change the nature of the business in which it is presently engaged, as set forth in Section 5.22, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business as presently conducted. 7.10. Transactions with Affiliates. Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except transactions disclosed to Agent, which are in the Ordinary Course of Business, on an arm’s-length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate, except Sponsor shall be entitled to an annual management fee of $750,000, payable in equal monthly installments of $62,500, so long as (x) no Default or Event of Default exists at the time of each such payment or after giving effect thereto, (y) Borrowers are in pro forma compliance with the covenants set forth in Section 6.5 both immediately before and after giving effect to each such payment installment and (z) Borrowers shall have Undrawn Availability of at least $2,000,000 both before and after giving effect to each such payment installment. 7.11. Leases. Enter as lessee into any lease arrangement for real or personal property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect thereto, aggregate annual rental payments for all leased property would exceed $900,000 in any one fiscal year in the aggregate for all Borrowers. 7.12. Subsidiaries. (a) Form any Subsidiary. (b) Enter into any partnership, joint venture or similar arrangement. 7.13. Fiscal Year and Accounting Changes. Change its fiscal year from August 31 or make any change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law. 7.14. Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever or use any portion of any Advance in or for any business other than such Borrower’s business as conducted on the date of this Agreement. 7.15. Amendment of Certificate of Formation, Operating Agreement. Amend, modify or waive any term or provision of its certificate of formation, organization or inception or operating agreement or bylaws, or any other constituent document (collectively, the “Organizational Documents”) unless required by law; provided, however, Borrowers shall provide written notice to Agent within five (5) Business Days of being required to make any such modification. 7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d) or any other Plan for which Agent has provided its prior written
69
--------------------------------------------------------------------------------
Execution Copy consent, (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “prohibited transaction”, as that term is defined in Section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any member of the Controlled Group to incur, any “accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where such event could result in any liability of any Borrower or any member of the Controlled Group or the imposition of a lien on the property of any Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Plan. 7.17. Prepayment of Indebtedness. Except as permitted pursuant to Section 7.21 hereof, at any time, directly or indirectly, prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness of any Borrower. 7.18. Anti-Terrorism Laws. No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to: (a) Conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person. (b) Deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224. (c) Engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law. Borrower shall deliver to Lenders any certification or other evidence requested from time to time by any Lender in its sole discretion, confirming Borrower’s compliance with this Section. 7.19. Membership/Partnership Interests. Elect to treat or permit any of its Subsidiaries to (x) treat its limited liability company membership interests or partnership interests, as the case may be, as securities as contemplated by the definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate its limited liability company membership interests or partnership interests, as the case may be. 7.20. Trading with the Enemy Act. Engage in any business or activity in violation of the Trading with the Enemy Act.
70
--------------------------------------------------------------------------------
Execution Copy 7.21. Reserved. 7.22. Other Agreements. Enter into any material amendment, waiver or modification of the Acquisition Agreement, the Subordinated Obligations Documents or any related agreements. VIII CONDITIONS PRECEDENT. 8.1. Conditions to Initial Advances. The agreement of Lenders to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Agent, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent: (a) This Agreement. Agent shall have received this Agreement, duly executed by each Borrower; (b) Pledge Agreement. Agent shall have received the Pledge Agreements duly executed by the parties named therein; (c) Negative Pledge Agreement. Agent shall have received the Negative Pledge Agreements, in each case, duly executed by the parties named therein (d) Pledge Equity Interests; Stock Certificates and Units Powers; Pledged Notes. Receipt by Agent of (i) any certificates representing the membership interests or Equity Interests or Capital Stock pledged pursuant to the Pledge Agreements, together with an undated stock power or until such power (or analogous power) for each membership interest or the shares, as applicable, executed in blank by an Authorized Officer of the pledgor thereof and (ii) each promissory note (if any) pledged to Agent pursuant to the Pledge Agreements endorsed in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof; (e) Intellectual Property Security Agreement. Agent shall have received the Intellectual Property Security Agreement duly executed by the parties named therein; (f) Notes. Agent shall have received the Notes duly executed and delivered by an authorized officer of each Borrower; (g) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by this Agreement, any related agreement or under law or reasonably requested by Agent to be filed, registered or recorded in order to create, in favor of Agent, a perfected security interest in or lien upon the Collateral shall have been properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and Agent shall have received an acknowledgment copy, or other evidence satisfactory to it, of each such filing, registration or recordation and satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto; (h) Company Proceedings of Borrowers. Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Managing Member or Managers, as applicable, of each Borrower authorizing (i) the execution, delivery and performance of this Agreement, the Notes, the Mortgage, any related agreements including any
71
--------------------------------------------------------------------------------
Execution Copy Other Document and the Acquisition Agreement (collectively the “Documents”) and (ii) the granting by each Borrower of the security interests in and liens upon the Collateral in each case certified by the Secretary or an Assistant Secretary of each Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate; (i) Incumbency Certificates of Borrowers. Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as to the incumbency and signature of the officers of each Borrower executing this Agreement, the Other Documents, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary; (j) Company Proceedings of each Guarantor. Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Managing Member of each Guarantor authorizing the execution, delivery and performance of the Guaranty, the Guaranty Security Agreement and each Other Document to which it is a party certified by the Secretary or an Assistant Secretary of each Guarantor as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate; (k) Incumbency Certificates of each Guarantor. Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Guarantor, dated the Closing Date, as to the incumbency and signature of the officers of each Guarantor executing this Agreement, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary; (l) Certificates. Agent shall have received a copy of the Articles or Certificate of Formation of each Borrower and each Guarantor, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of formation together with copies of the Operating Agreement of each Borrower and each Guarantor and all agreements of each Borrower’s and each Guarantor’s members certified as accurate and complete by the Secretary of each Borrower and such Guarantor; (m) Good Standing Certificates. Agent shall have received good standing certificates for each Borrower and each Guarantor dated not more than ten (10) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of each Borrower’s and each Guarantor’s jurisdiction of formation and each jurisdiction where the conduct of each Borrower’s and each Guarantor’s business activities or the ownership of its properties necessitates qualification; (n) Legal Opinion. Agent shall have (i) received the executed legal opinion of Strasburger & Price, LLP in form and substance satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Agreement, the Note, the Other Documents, and related agreements as Agent may reasonably require and Borrowers hereby authorize and direct such counsel to deliver such opinions to Agent and Lenders and (ii) been permitted to rely on the legal opinion received by Sponsor and Borrower in connection with the Acquisition in form and substance satisfactory to Agent which shall cover such matters incident
72
--------------------------------------------------------------------------------
Execution Copy to the transactions contemplated by the Acquisition Agreement and related agreements as Agent may reasonably require; (o) Third Party Consents. Receipt by Agent of evidence satisfactory to Agent that the Loan Parties have obtained all material consents and approvals of all Persons, including all requisite Governmental Bodies and counterparties to material contracts to the execution, delivery and performance of this Agreement, the Other Documents and the Acquisition Agreement; (p) No Litigation. (i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against any Loan Party or against the officers or directors of any Loan Party (A) in connection with this Agreement, the Other Documents, the Subordinated Obligations Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature materially adverse to any Loan Party or the conduct of its business or inconsistent with the due consummation of the Transactions shall have been issued by any Governmental Body; (q) Financial Condition Certificates. Agent shall have received an executed Financial Condition Certificate in the form of Exhibit 8.1(k). (r) Collateral Examination. Agent shall have completed Collateral examinations and received appraisals, the results of which shall be satisfactory in form and substance to Lenders, of the Receivables, Inventory, General Intangibles, Real Property, Leasehold Interest and Equipment of each Borrower and all books and records in connection therewith; (s) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior to the Closing Date hereunder, including pursuant to Article III hereof; (t) Pro Forma Financial Statements. Agent shall have received a copy of the Pro Forma Financial Statements which shall be satisfactory in all respects to Lenders; (u) Equity Documents and the Acquisition Agreement. Agent shall have received final executed copies of the Equity Documents and Acquisition Agreement, and all related agreements, documents and instruments as in effect on the Closing Date all of which shall be satisfactory in form and substance to Agent and the transactions contemplated by such documentation shall be consummated prior to or simultaneously with the making of the initial Advance; (v) Subordination Agreement. Agent shall have entered into a Subordination Agreement with Borrowers and Waypoint satisfactory in form and substance to Agent in its sole discretion; (w) Insurance. Agent shall have received in form and substance satisfactory to Agent, certified copies of Borrowers’ casualty insurance policies, together with loss payable endorsements on Agent’s standard form of lender loss payee endorsement naming Agent as
73
--------------------------------------------------------------------------------
Execution Copy lender loss payee, and certified copies of Borrowers’ liability insurance policies, together with endorsements naming Agent as a co-insured; (x) Title Insurance. Agent shall have received fully paid mortgagee title insurance policies (or binding commitments to issue title insurance policies, marked to Agent’s satisfaction to evidence the form of such policies to be delivered with respect to the Mortgage), in standard ALTA form, issued by a title insurance company satisfactory to Agent, each in an amount equal to not less than the fair market value of the Crowley Real Property subject to the Mortgage, insuring the Mortgage to create a valid Lien on the Crowley Real Property with no exceptions which Agent shall not have approved in writing and no survey exceptions; (y) Environmental Reports. Agent shall have received (i) “Environmental Questionnaire” prepared by independent environmental engineering firms for each parcel of Real Property owned or leased by any Borrower except for the Crowley Real Property and (ii) Environmental Reports with respect to the Crowley Real Property, each to be satisfactory to Agent in its sole discretion; (z) Payment Instructions. Agent shall have received written instructions from Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this Agreement; (aa) Blocked Accounts. Agent shall have received duly executed agreements establishing the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the collection or servicing of the Receivables and proceeds of the Collateral; (bb) Consents. Agent shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral, as Agent and its counsel shall deem necessary; (cc) No Adverse Material Change. (i) since August 31, 2009, there shall not have occurred any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect; (dd) Lien Waiver Agreements. Agent shall have received Lien Waiver Agreements satisfactory to Agent with respect to all premises leased by Borrowers at which any Collateral is located; (ee) Mortgage. Agent shall have received in form and substance satisfactory to Lenders (i) executed Mortgages in recordable form, (ii) a title policy for the Crowley Real Property and (iii) surveys for the Crowley Real Property; (ff) Guarantees and Other Documents. Agent shall have received (i) the executed Guarantees, (ii) the executed Guarantor Security Agreement, and (iii) the executed Other Documents, all in form and substance satisfactory to Agent;
74
--------------------------------------------------------------------------------
Execution Copy (gg) Prior Indebtedness. A payoff letter from each lender of any Prior Indebtedness, in form and substance satisfactory to Agent, together with such Uniform Commercial Code termination statements, releases of mortgage Liens and other instruments, documents and./or agreements necessary or appropriate to terminate any Liens in favor of any such lenders securing Prior Indebtedness which is to be indefeasibly paid in full on or prior to the Closing Date, as Agent may requested, duly executed and in recordable form, if applicable, and otherwise in form and substance satisfactory to Agent; (hh) Document and Diligence Review. Agent and its counsel shall have (i) reviewed all books and records, organization documents, third party financing agreements, customer agreements, material contracts of Borrowers including leases, union contracts, labor contracts, vendor supply contracts, license agreements and distributorship agreements (ii) reviewed the Loan Parties corporate and legal structure, and such contracts, agreements, references to structure shall be satisfactory to agent and its counsel, including, but not limited to, all terms, conditions and documentation related to the Equity Documents; (ii) Closing Certificate. Agent shall have received a closing certificate signed by the Chief Financial Officer of each Loan Party dated as of the date hereof, stating that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii) the Loan Parties on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred or is continuing; (jj) Borrowing Base. Agent shall have received evidence from Borrowers that the amount of Eligible Receivables is sufficient in value and amount to support Advances in the amount requested by Borrowers on the Closing Date; (kk) Prefund Examination. Agent shall have completed a prefunding examination of the Collateral, which examination shall include the verification and testing of Receivables and payables in respect of Mud Claims, the results of which shall be satisfactory to Agent in its sole discretion; (ll) Undrawn Availability. After giving effect to the initial Advances hereunder, Borrowers shall have Undrawn Availability of at least $2,000,000; and (mm) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower is in compliance with all pertinent federal, state, local or territorial regulations, including those with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act. (nn) Other. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the Transactions shall be satisfactory in form and substance to Agent and its counsel. 8.2. Conditions to Each Advance. The agreement of Lenders to make any Advance requested to be made on any date (including the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made:
75
--------------------------------------------------------------------------------
Execution Copy (a) Representations and Warranties. Each of the representations and warranties made by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date; (b) No Default. No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date and, in the case of the initial Advance, after giving effect to the consummation of the transactions contemplated by the Acquisition Agreement; provided, however that Agent, in its sole discretion, may continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default; and (c) Maximum Advances. In the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement. Each request for an Advance by any Borrower hereunder shall constitute a representation and warranty by each Borrower as of the date of such Advance that the conditions contained in this subsection shall have been satisfied. IX INFORMATION AS TO BORROWERS. Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on its behalf to, until satisfaction in full of the Obligations and the termination of this Agreement: 9.1. Disclosure of Material Matters. Immediately upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectibility of any portion of the Collateral, including any Borrower’s reclamation or repossession of, or the return to any Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor or any Lien, other than any Permitted Encumbrance, placed upon or asserted against any Borrower or any Collateral. 9.2. Schedules. (a) Deliver to Agent on or before the twentieth (20th) day of each month as and for the prior month (i) accounts receivable agings inclusive of reconciliations to the general ledger, (ii) accounts payable agings inclusive of reconciliations to the general ledger, (iii) Inventory reports (including Inventory perpetual reports) in form and substance acceptable to Agent, (iv) a Mud Liability schedule in form and substance satisfactory to Agent including, but not limited to, a listing by Customer showing the number of barrels of Mud Inventory held in storage multiplied by the average retail sale price of Mud Inventory sold during such month compared to the Receivables outstanding for such Customer, (v) a Borrowing Base Certificate in form and substance satisfactory to Agent (which shall be calculated as of the last day of the prior month and which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement) and (vi) an Undrawn Availability calculation;
76
--------------------------------------------------------------------------------
Execution Copy (b) No less than once each week, deliver to Agent on or before each Wednesday of each week as of the last Business Day of the previous week, or such other intervals and for such periods as the Agent may require, a Borrowing Base Certificate in form and substance satisfactory to Agent, that shall be calculated as of the last day of the prior week (which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement), and shall include in each instance, detailed description of sales, collections, credits, and shall include, if requested by Agent: (i) confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of shipment or delivery, (iv) Inventory reports, (v) a equipment by location report showing the location of the Borrowers’ Rolling Stock and (vi) such further schedules, documents, and/or information regarding the Collateral as Agent may require including, but not limited to, trial balances and test verifications. Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its interests hereunder. The items to be provided under this Section are to be in form satisfactory to Agent and executed by Borrowers and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and any Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify, or otherwise limit Agent’s Lien with respect to the Collateral. 9.3. Environmental Reports. Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.8, with a Compliance Certificate signed by an Authorized Officer of Borrowing Agent stating, to the best of his knowledge, that each Borrower is in compliance in all material respects with all federal, state and local Environmental Laws. To the extent any Borrower is not in compliance with the foregoing laws, the certificate shall set forth with specificity all areas of non-compliance and the proposed action such Borrower will implement in order to achieve full compliance. 9.4. Litigation. Promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting any Loan Party, whether or not the claim is covered by insurance, and of any litigation, suit or administrative proceeding, which in any such case affects the Collateral or which could reasonably be expected to have a Material Adverse Effect. 9.5. Material Occurrences. Promptly notify Agent in writing upon the occurrence of (a) any Event of Default or Default; (b) any event of default under the Subordinated Obligations Documents; (c) any event which with the giving of notice or lapse of time, or both, would constitute an event of default under the Subordinated Obligations Documents; (d) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or operating results of any Borrower as of the date of such statements; (e) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Borrower to a tax imposed by Section 4971 of the Code; (f) each and every default by any Borrower which might result in the acceleration of the maturity of any Indebtedness, including the names and addresses of the holders of such Indebtedness with respect to which there is a default existing or with respect to which the maturity has been or
77
--------------------------------------------------------------------------------
Execution Copy could be accelerated, and the amount of such Indebtedness; and (g) any other development in the business or affairs of any Loan Party which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action Borrowers propose to take with respect thereto. 9.6. Government Receivables. Notify Agent immediately if any of its Receivables arise out of contracts between any Borrower and the United States, any state, or any department, agency or instrumentality of any of them. 9.7. Annual Financial Statements. Furnish Agent within one hundred twenty (120) days after the end of each fiscal year of Borrowers, financial statements of Borrowers on a consolidated and consolidating basis including, but not limited to, statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by an independent certified public accounting firm selected by Borrowers and satisfactory to Agent (the “Accountants”). The report of the Accountants shall be accompanied by all management letters from the Accountants delivered or addressed to Borrowers. In addition, the reports shall be accompanied by a Compliance Certificate. 9.8. Quarterly Financial Statements. Furnish Agent within forty-five (45) days after the end of each fiscal quarter, an unaudited balance sheet of Borrowers on a consolidated and consolidating basis and unaudited statements of income and stockholders’ equity and cash flow of Borrowers on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers’ business. The reports shall be accompanied by a Compliance Certificate. 9.9. Monthly Financial Statements. Furnish Agent within thirty (30) days after the end of each month, an unaudited balance sheet of Borrowers on a consolidated and consolidating basis and unaudited statements of income and stockholders’ equity and cash flow of Borrowers on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers’ business. The reports shall be accompanied by a Compliance Certificate. 9.10. Other Reports. Furnish Agent as soon as available, but in any event within ten (10) days after the issuance thereof, (i) with copies of such financial statements, reports and returns as each Borrower shall send to its members and (ii) copies of all notices, reports, financial statements and other materials sent pursuant to the Subordinated Obligations Documents.
78
--------------------------------------------------------------------------------
Execution Copy 9.11. Additional Information. Furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Notes have been complied with by Borrowers including, without the necessity of any request by Agent, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s opening of any new office or place of business or any Borrower’s closing of any existing office or place of business, and (c) promptly upon any Borrower’s learning thereof, notice of any labor dispute to which any Borrower may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which any Borrower is a party or by which any Borrower is bound. 9.12. Projected Operating Budget. Furnish Agent, no later than thirty (30) days prior to the beginning of each Borrower’s fiscal years commencing with fiscal year 2011, a month by month projected operating budget and cash flow of Borrowers on a consolidated and consolidating basis for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), such projections to be accompanied by a certificate signed by an Authorized Officer of each Borrower to the effect that such projections have been prepared on the basis of sound financial planning practice consistent with past budgets and financial statements and that such officer has no reason to question the reasonableness of any material assumptions on which such projections were prepared. 9.13. Variances From Operating Budget. At Agent’s request, furnish Agent, concurrently with the delivery of the financial statements referred to in Section 9.7 and each monthly report, a written report summarizing all material variances from budgets submitted by Borrowers pursuant to Section 9.12 and a discussion and analysis by management with respect to such variances. 9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Loan Party by any Governmental Body or any other Person that is material to the operation of any Borrower’s business, (ii) any refusal by any Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any periodic or special reports filed by any Loan Party with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Loan party, or if copies thereof are requested by Lender, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Loan Party. 9.15. ERISA Notices and Requests. Furnish Agent with immediate written notice in the event that (i) any Borrower or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Borrower or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower or any member of the Controlled Group knows or has reason to know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction
79
--------------------------------------------------------------------------------
Execution Copy and the action which such Borrower or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by any Borrower or any member of the Controlled Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which any Borrower or any member of the Controlled Group was not previously contributing shall occur, (v) any Borrower or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice, (vi) any Borrower or any member of the Controlled Group shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (vii) any Borrower or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) any Borrower or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; or (ix) any Borrower or any member of the Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan. 9.16. Additional Documents. Execute and deliver to Agent, (i) upon request made in Agent’s sole discretion after the occurrence of an Event of Default, mortgages to Agent granting Agent Liens on all such Real Property owned by any Borrower as Agent shall request to secure the Obligations, and (ii) upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement. 9.17. Appraisals and Field Examinations. Permit Agent or Agent’s representatives to (a) perform desktop Collateral appraisals in form and substance satisfactory to Agent at Borrowers’ cost and expense as Agent deems appropriate in Agent’s sole discretion, to determine, among other things, the net orderly liquidation value of the Collateral, (b) perform full Collateral appraisals in form and substance satisfactory to Agent at Borrowers’ cost and expense as Agent deems appropriate in Agent’s sole discretion, and, to determine, among other things, the net orderly liquidation value of the Collateral (each appraisal contemplated in this Section 9.17 or performed by Agent prior to the Closing Date shall each be an “NOLV Appraisal”), and (c) conduct field examinations at Borrowers’ cost and expense as Agent deems appropriate in Agent’s sole discretion. Notwithstanding the foregoing, so long as no Event of Default or Default has occurred and is continuing, Borrower shall not be required to pay for more than one appraisal of the types described in Section 9.17(b) per calendar year. 9.18 Background Check. Agent shall have the right to conduct a background check on any new officer of any Borrower. X EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an “Event of Default”:
80
--------------------------------------------------------------------------------
Execution Copy 10.1. Nonpayment. Failure by any Borrower to pay any principal or interest on the Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any other liabilities or make any other payment, fee or charge provided for herein when due or in any Other Document; 10.2. Breach of Representation. Any representation or warranty made or deemed made by any Loan Party in this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made or deemed to have been made; 10.3. Financial Information. Failure by any Borrower to (i)(x) furnish financial information when due, or (y) when requested or (ii) permit the inspection of its books or records in accordance with this Agreement; 10.4. Judicial Actions. Issuance of a notice of Lien, levy, assessment, injunction or attachment against any Borrower’s Collateral or against a material portion of any Borrower’s other property which is not stayed or lifted within thirty (30) days; 10.5. Noncompliance. Except as otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or neglect of any Loan Party to perform, keep or observe any term, provision, condition, covenant herein contained, or contained in any Other Document or any other agreement or arrangement, now or hereafter entered into between Loan Party and Agent or any Lender, or (ii) failure or neglect of any Borrower to perform, keep or observe any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is not cured within ten (10) days from the occurrence of such failure or neglect; 10.6. Judgments. Any judgment or judgments are rendered against any Loan Party for an aggregate amount in excess of $250,000 or again all Loan Parties for an aggregate amount in excess of $250,000 and (i) enforcement proceedings shall have been commenced by a creditor upon such judgment, (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any such judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted Encumbrance); 10.7. Bankruptcy. Any Loan Party shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing;
81
--------------------------------------------------------------------------------
Execution Copy 10.8. Inability to Pay. Any Loan Party shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business; 10.9. Affiliate Bankruptcy. Any Affiliate or any Subsidiary of any Loan Party shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing; 10.10. Material Adverse Effect. Any change in any Loan Party’s results of operations or condition (financial or otherwise) which in Agent’s opinion has a Material Adverse Effect; 10.11. Lien Priority. Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority interest; 10.12. Subordination Agreement Default. (i) An event of default has occurred under the Subordination Agreement, which default shall not have been cured or waived within any applicable grace period, (ii) termination or breach of the Subordination Agreement by Borrower or Waypoint or (iii) the attempt by any Borrower or Waypoint to terminate or challenge the validity of its respective Obligations under the Subordination Agreement. 10.13. Subordinated Obligations Document Default. (i) The modification, termination or breach of any of the Subordinated Obligations Document Documents of any Borrower or (ii) the attempt by any Borrower or Waypoint to terminate or challenge the validity of the subordination and other provisions benefiting Agent or any Lender contained in any Subordinated Obligations Document. 10.14. Cross Default. A default of the obligations of any Loan Party under any agreement relating to Indebtedness of not less than $500,000 to which it is a party shall occur which adversely affects its condition, affairs or prospects (financial or otherwise) or a failure by an Loan Party to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of Indebtedness, which default or failure to pay is not cured within any applicable grace period; 10.15. Breach of Guaranty. Termination or breach of any Guaranty or Guaranty Security Agreement or similar agreement executed and delivered to Agent in connection with the Obligations of any Borrower, or if any Guarantor attempts to terminate, challenges the validity of, or its liability under, any such Guaranty or Guaranty Security Agreement or similar agreement;
82
--------------------------------------------------------------------------------
Execution Copy 10.16. Change of Ownership. Any Change of Ownership or Change of Control shall occur; 10.17. Invalidity. Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid and binding on any Loan Party, or any Loan Party shall so claim in writing to Agent or any Lender; 10.18. Licenses. (i) Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify any license, permit, patent, trademark or trade name of any Loan Party or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, trade name or patent and such proceedings shall not be dismissed or discharged within sixty (60) days, or (C) schedule or conduct a hearing on the renewal of any license, permit, trademark, trade name, domain name or patent necessary for the continuation of any Loan Party’s business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license, permit, trademark, trade name, domain name or patent, and such revocation or termination and non-replacement described in (A), (B) and (C) above would reasonably be expected to have a Material Adverse Effect; (ii) any agreement which is necessary or material to the operation of any Loan Party’s business shall be revoked or terminated and not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse Effect; 10.19. Seizures. Any portion of the Collateral shall be seized or taken by a Governmental Body, or any Loan Party or the title and rights of any Loan Party or Sponsor which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which might, in the opinion of Agent, upon final determination, result in impairment or loss of the security provided by this Agreement or the Other Documents; 10.20. Operations. The operations of any Loan Party’s manufacturing facility are interrupted at any time for more than forty-eight (48) hours during any period of five (5) consecutive days, unless such Loan Party shall (i) be entitled to receive for such period of interruption, proceeds of business interruption insurance sufficient to assure that its per diem cash needs during such period is at least equal to its average per diem cash needs for the consecutive three month period immediately preceding the initial date of interruption and (ii) receive such proceeds in the amount described in clause (i) preceding not later than thirty (30) days following the initial date of any such interruption; provided, however, that notwithstanding the provisions of clauses (i) and (ii) of this Section, an Event of Default shall be deemed to have occurred if such Loan Party shall be receiving the proceeds of business interruption insurance for a period of thirty (30) consecutive days; or 10.21. Pension Plans. An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with all other such events or conditions, any Borrower or any member of the Controlled Group shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect.
83
--------------------------------------------------------------------------------
Execution Copy XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT. 11.1. Rights and Remedies. (a) Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter (such default not having previously been cured), at the option of Required Lenders all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances and (iii) a filing of a petition against any Borrower in any involuntary case under any state or federal bankruptcy laws, all Obligations shall be immediately due and payable and the obligation of Lenders to make Advances hereunder shall be terminated other than as may be required by an appropriate order of the bankruptcy court having jurisdiction over such Borrower. Upon the occurrence of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process. Agent may enter any of any Borrower’s premises or other premises (including all Real Property identified on Schedule 4.19 hereto) without legal process and without incurring liability to any Borrower therefore, and Agent may thereupon, or at any time thereafter, conduct a public or private sale of the Collateral or in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require Borrowers to make the Collateral available to Agent at a convenient place, including, without limitation requiring a Borrower to disassemble and re-assemble Collateral in order to remove such Collateral to such place as Agent may deem advisable and convenient. With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect. Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give Borrowers reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable notification. At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by each Borrower. In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted permission to use all of each Borrower’s (a) trademarks, trade styles, trade names, trade name applications, domain names, domain name applications, patents, patent applications, copyrights, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of
84
--------------------------------------------------------------------------------
Execution Copy such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods. The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof. Noncash proceeds will only be applied to the Obligations as they are converted into cash. If any deficiency shall arise, Borrowers shall remain liable to Agent and Lenders therefore. (b) To the extent that Applicable Law imposes duties on Agent to exercise remedies in a commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially unreasonable for Agent (i) to fail to incur expenses reasonably deemed significant by Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as any Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of Collateral or to provide to Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral. Each Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by Agent would not be commercially unreasonable in Agent’s exercise of remedies against the Collateral and that other actions or omissions by Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b). Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to any Borrower or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b). 11.2. Agent’s Discretion. Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder. 11.3. Setoff. Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default
85
--------------------------------------------------------------------------------
Execution Copy hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Borrower’s property held by Agent and such Lender to reduce the Obligations. 11.4. Rights and Remedies not Exclusive. The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative. 11.5. Allocation of Payments After Event of Default. Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by Agent on account of the Obligations or any other amounts outstanding under any of the Other Documents or in respect of the Collateral may, at Agent’s discretion, be paid over or delivered as follows: FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of Agent in connection with enforcing its rights and the rights of Lenders under this Agreement and the Other Documents and any protective advances made by Agent with respect to the Collateral under or pursuant to the terms of this Agreement; SECOND, to payment of any fees owed to Agent; THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each of Lenders to the extent owing to such Lender pursuant to the terms of this Agreement; FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest; FIFTH, to the payment of the outstanding principal amount of the Obligations (including the payment or cash collateralization of any outstanding Letters of Credit); SIXTH, to all other Obligations and other obligations which shall have become due and payable under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus. In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Advances held by such Lender bears to the aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts available for distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by Agent in a cash collateral account and applied (A) first, to reimburse the Issuer from time to time for any drawings under such
86
--------------------------------------------------------------------------------
Execution Copy Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner provided in this Section 11.5. XII WAIVERS AND JUDICIAL PROCEEDINGS. 12.1. Waiver of Notice. Each Borrower hereby waives notice of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein. 12.2. Delay. No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default. 12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. XIII EFFECTIVE DATE AND TERMINATION. 13.1. Term. This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until November 23, 2015 (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate this Agreement at any time upon ninety (90) days’ prior written notice upon payment in full of the Obligations. In the event the Obligations are prepaid in full prior to the last day of the Term or Agent terminates this Agreement as a result of an Event of Default hereunder (the date of such occurrence hereinafter referred to as the “Early Termination Date”), Borrowers shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to (a) three percent (3.0%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the Closing Date to and including the date immediately preceding the first anniversary of the Closing Date, (b) two percent (2.0%) of the Maximum Loan Amount if the Early
87
--------------------------------------------------------------------------------
Execution Copy Termination Date occurs on or after the first anniversary of the Closing Date to and including the date immediately preceding the second anniversary of the Closing Date and (c) one percent (1.0%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the second anniversary of the Closing Date to and including the date immediately preceding the third anniversary of the Closing Date. 13.2. Termination. The termination of the Agreement shall not affect any Borrower’s, Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrowers’ Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of each Borrower have been indefeasibly paid and performed in full after the termination of this Agreement or each Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto. Accordingly, each Borrower waives any rights which it may have under the Uniform Commercial Code to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to each Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been indefeasibly paid in full in immediately available funds. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are indefeasibly paid and performed in full. XIV REGARDING AGENT. 14.1. Appointment. Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in Sections 3.3(a) and 3.4), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit of Lenders. Agent may perform any of its duties hereunder by or through its agents or employees. As to any matters not expressly provided for by this Agreement (including collection of the Note) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto. 14.2. Nature of Duties. Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its
88
--------------------------------------------------------------------------------
Execution Copy officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Borrower or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Borrower to perform its obligations hereunder. Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Borrower. The duties of Agent as respects the Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein. 14.3. Lack of Reliance on Agent and Resignation. Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of Loan Party in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of Loan Party. Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by any Borrower pursuant to the terms hereof. Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any Other Document, or of the financial condition of any Loan Party, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Note, the Other Documents or the financial condition of any Borrower, or the existence of any Event of Default or any Default. Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrowers. Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.
89
--------------------------------------------------------------------------------
Execution Copy 14.4. Certain Rights of Agent. If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders. 14.5. Reliance. Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care. 14.6. Notice of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders. 14.7. Indemnification. To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED MATTER ARISING FROM AGENT’S OR LENDER’S NEGLIGENCE OR STRICT LIABILITY); provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment). 14.8. Agent in its Individual Capacity. With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender. Agent may engage in business
90
--------------------------------------------------------------------------------
Execution Copy with any Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from any Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders. 14.9. Delivery of Documents. To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any Borrower pursuant to the terms of this Agreement which any Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders. 14.10. Borrowers’ Undertaking to Agent. Without prejudice to their respective obligations to Lenders under the other provisions of this Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid. Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement. 14.11. No Reliance on Agent’s Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws. 14.12. Other Agreements. Each of Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender. Anything in this Agreement to the contrary notwithstanding, each of Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders. XV BORROWING AGENCY. 15.1. Borrowing Agency Provisions. (a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent and in such capacity to borrow, sign and endorse notes, and execute and deliver all instruments, documents, writings and further assurances now or hereafter required
91
--------------------------------------------------------------------------------
Execution Copy hereunder, on behalf of such Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in accordance with the request of Borrowing Agent. (b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies Agent and each Lender and holds Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or gross (not mere) negligence by the indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable judgment). (c) All Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals and forbearance granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve its rights against any Borrower, the release by Agent or any Lender of any Collateral now or thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof. Each Borrower waives all suretyship defenses. 15.2. Waiver of Subrogation. Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such Borrower may now or hereafter have against the other Borrowers or other Person directly or contingently liable for the Obligations hereunder, or against or with respect to the other Borrowers’ property (including, without limitation, any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until termination of this Agreement and repayment in full of the Obligations. XVI MISCELLANEOUS 16.1. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas applied to contracts to be performed wholly within the State of Texas. Any judicial proceeding brought by or against any Borrower with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of Texas, United States of America, and, by execution and delivery of this Agreement, each Borrower accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made
92
--------------------------------------------------------------------------------
Execution Copy by registered mail (return receipt requested) directed to Borrowing Agent at its address set forth in Section 16.6 and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America, or, at Agent’s option, by service upon Borrowing Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the purpose of accepting service within the State of Texas. Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Borrower in the courts of any other jurisdiction. Each Borrower waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Borrower waives the right to remove any judicial proceeding brought against such Borrower in any state court to any federal court. Any judicial proceeding by any Borrower against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the County of Dallas, State of Texas. 16.2. Entire Understanding. (a) THIS AGREEMENT AND THE DOCUMENTS EXECUTED CONCURRENTLY HEREWITH CONTAIN THE ENTIRE UNDERSTANDING BETWEEN EACH BORROWER, AGENT AND EACH LENDER AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER HEREOF. ANY PROMISES, REPRESENTATIONS, WARRANTIES OR GUARANTEES NOT HEREIN CONTAINED AND HEREINAFTER MADE SHALL HAVE NO FORCE AND EFFECT UNLESS IN WRITING, SIGNED BY EACH BORROWER’S, AGENT’S AND EACH LENDER’S RESPECTIVE OFFICERS. Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged. Each Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement. (b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and Borrowers may, subject to the provisions of this Section 16.2 (b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall, without the consent of all Lenders affected thereby: (i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the Maximum Loan Amount.
93
--------------------------------------------------------------------------------
Execution Copy (ii) extend the maturity of any Note or the due date for any amount payable hereunder, or decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this Agreement. (iii) alter the definition of the term Required Lenders or alter, amend or modify this Section 16.2(b). (iv) release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement) having an aggregate value in excess of $1,000,000. (v) change the rights and duties of Agent. (vi) permit any Revolving Advance to be made if after giving effect thereto the total of Revolving Advances outstanding hereunder would exceed the Formula Amount for more than sixty (60) consecutive Business Days or exceed one hundred and five percent (105%) of the Formula Amount. (vii) increase the Receivables Advance Rates above the Receivables Advance Rates in effect on the Closing Date. (viii) release all or substantially all Guarantors. Any such supplemental agreement shall apply equally to each Lender and shall be binding upon Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon. In the event that Agent requests the consent of a Lender pursuant to this Section 16.2 and such consent is denied, then PNC may, at its option, require such Lender to assign its interest in the Advances to PNC or to another Lender or to any other Person designated by Agent (the “Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrowers. In the event PNC elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty five (45) days following such Lender’s denial, and such Lender will assign its interest to PNC or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as appropriate, and Agent. Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or (c) any other provision of this Agreement, Agent may at its discretion and without the consent of the Required Lenders, voluntarily permit the outstanding Revolving Advances at any time to exceed the Formula Amount by up to five percent (5.00%) of the Formula Amount for up to thirty (30)
94
--------------------------------------------------------------------------------
Execution Copy consecutive Business Days (the “Out-of-Formula Loans”); provided, that, such outstanding Advances do not exceed the Maximum Revolving Advance Amount. If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a). For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be “Eligible Receivables” becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral. In the event Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more than five percent (5.00%), Agent shall use its efforts to have Borrowers decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess. Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence. In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 16.2, Agent is hereby authorized by Borrowers and Lenders, from time to time in Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrowers on behalf of Lenders which Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not exceed one hundred and five percent (105%) of the Formula Amount. 16.3. Successors and Assigns; Participations; New Lenders. (a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each Lender, all future holders of the Obligations and their respective successors and permitted assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender. (b) Each Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances to other financial institutions (each such transferee or purchaser of a participating interest, a “Participant”). Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that Borrowers shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or
95
--------------------------------------------------------------------------------
Execution Copy other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrowers be required to pay any such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant. Each Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant’s interest in the Advances. (c) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may sell, assign or transfer all or any part of its rights and obligations under or relating to Revolving Advances and/or Term Loans under this Agreement and the Other Documents to one or more additional banks or financial institutions and one or more additional banks or financial institutions may commit to make Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less than $1,000,000, pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording. Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose. Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Each Borrower hereby consents to the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing. (d) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating to Revolving Advances and/or Term Loans under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each Participant and Purchasing Lender, each a “Transferee” and collectively the “Transferees”), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned (“Modified Commitment Transfer Supplement”), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording. Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a
96
--------------------------------------------------------------------------------
Execution Copy party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose. Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO. Each Borrower hereby consents to the addition of such Purchasing CLO. Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing. (e) Agent shall maintain at its address a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Advance recorded therein for the purposes of this Agreement. The Register shall be available for inspection by Borrowing Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO. (f) Each Borrower authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender’s possession concerning such Borrower which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement or in connection with such Lender’s credit evaluation of such Borrower. 16.4. Application of Payments. Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent that any Borrower makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Borrower’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender. 16.5. Indemnity. Each Borrower shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any
97
--------------------------------------------------------------------------------
Execution Copy of the foregoing arises out of the willful misconduct of the party being indemnified (as determined by a court of competent jurisdiction in a final and non-appealable judgment). WITHOUT LIMITING THE FOREGOING, (I) IT IS THE INTENTION OF EACH BORROWER, AND EACH BORROWER AGREES, THAT THE INDEMNITY PROVISIONS AND EXCULPATORY PROVISIONS CONTAINED IN THIS AGREEMENT SHALL APPLY WITH RESPECT TO LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SETTLEMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER (INCLUDING, WITHOUT LIMITATION, FEES AND DISBURSEMENTS OF COUNSEL), WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF ANY PARTY TO BE INDEMNIFIED AND, (II) THIS INDEMNITY SHALL EXTEND TO ANY LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING FEES AND DISBURSEMENTS OF COUNSEL) ASSERTED AGAINST OR INCURRED BY ANY OF THE INDEMNITEES DESCRIBED ABOVE IN THIS SECTION 16.5 BY ANY PERSON UNDER ANY ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF ANY BORROWER’S OR ANY OTHER PERSON’S FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS WASTE MATERIALS, INCLUDING HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE, OR OTHER TOXIC SUBSTANCES. Additionally, if any taxes (excluding taxes imposed upon or measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Borrowers on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees described above in this Section 16.5 harmless from and against all liability in connection therewith. 16.6. Notice. Any notice or request hereunder may be given to Borrowing Agent or any Borrower or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section. Any notice, request, demand, direction or other communication (for purposes of this Section 16.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 16.6) in accordance with this Section 16.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Section 16.6 hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 16.6. Any Notice shall be effective: (a) In the case of hand-delivery, when delivered;
98
--------------------------------------------------------------------------------
Execution Copy (b) If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested; (c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day); (d) In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine; (e) In the case of electronic transmission, when actually received; (f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such site) by another means set forth in this Section 16.6; and (g) If given by any other means (including by overnight courier), when actually received. Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy thereof to Agent, and Agent shall promptly notify the other Lenders of its receipt of such Notice. (A) If to Agent or PNC at: PNC Bank, National Association 2100 Ross Avenue, Suite 1850 Dallas, Texas 75201 Attention: Relationship Manager (Francis) Telephone: (214) 871-1265 Facsimile: (214) 871-2015 and to: PNC Bank, National Association Two Tower Center Blvd. East Brunswick, New Jersey 08816 Attention: Josephine Griffin Telephone: (732) 220-4388 Facsimile: (732) 220-4394
99
--------------------------------------------------------------------------------
Execution Copy with a copy to: PNC Bank, National Association PNC Agency Services PNC Firstside Center 500 First Avenue, 4th Floor Pittsburgh, Pennsylvania 15219 Attention: Lisa Pierce Telephone: (412) 762-6442 Facsimile: (412) 762-8672
with an additional copy to: Patton Boggs LLP 2000 McKinney Avenue, Suite 1700 Dallas, Texas 75201 Attention: Michelle Suarez Telephone: (214) 758-1500 Facsimile: (214) 758-1550 (B) If to a Lender other than Agent, as specified on the signature pages hereof. (C) If to Borrowing Agent or any Borrower: c/o NYTEX Energy Holdings, Inc. 12222 Merit Drive, Suite 1850 Dallas, Texas 75251 Attention: Mr. Kenneth Conte Telephone: (972) 770-4700 Facsimile: (972) 770-4701 with a copy to: Strasburger & Price, LLP 901 Main Street, Suite 4400 Dallas, Texas 75202 Attention: Mr. Kevin Woltjen Telephone: (214) 651-2344 Facsimile: (214) 659-4025 16.7. Survival. The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations. 16.8. Severability. If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible. 16.9. Expenses. All costs and expenses including reasonable attorneys’ fees (including the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on
100
--------------------------------------------------------------------------------
Execution Copy behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement, the Subordination Agreement or any consents or waivers hereunder or thereunder and all related agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights hereunder, under the Subordination Agreement and under all related agreements, documents and instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with any Loan party or Waypoint or (e) in connection with any advice given to Agent or any Lender with respect to its rights and obligations under this Agreement, the Subordination Agreement and all related agreements, documents and instruments, may be charged to Borrowers’ Account and shall be part of the Obligations 16.10. Injunctive Relief. Each Borrower recognizes that, in the event any Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy. 16.11. Consequential Damages. Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Loan Party (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document. 16.12. Captions. The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement. 16.13. Counterparts; Facsimile Signatures. This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. 16.14. Construction. The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto. 16.15. Confidentiality; Sharing Information. Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential
101
--------------------------------------------------------------------------------
Execution Copy information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Borrower other than those documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated. Each Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to such Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby authorizes each Lender to share any information delivered to such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 16.15 as if it were a Lender hereunder. Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement. 16.16. Publicity. Each Borrower and each Lender hereby authorizes Agent to make appropriate announcements of the financial arrangement entered into among Borrowers, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent shall in its sole and absolute discretion deem appropriate. 16.17. Certifications From Banks and Participants; US PATRIOT Act. Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act. 16.18. Non-Applicability of Chapter 346. Each Borrower and Agent hereby agree that, except for the opt-out provisions of Section 346.004 thereof, the provisions of Chapter 346 of the Texas Finance Code (regulating certain revolving credit loans and revolving tri-party accounts) shall not apply to this Agreement or any of the Other Documents.
102
--------------------------------------------------------------------------------
Execution Copy 16.19. BORROWERS’ WAIVER OF RIGHTS UNDER TEXAS DECEPTIVE TRADE PRACTICES ACT. EACH BORROWER HEREBY WAIVES ANY RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION § 17.41 ET SEQ. TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF THE BORROWERS OWN SELECTION, EACH BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. EACH BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT EACH PERSON (A) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO AGENT, AND (B) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. [Remainder of page left blank intentionally; signature pages follow]
103
--------------------------------------------------------------------------------
Execution Copy IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the day and year first above written.
BORROWERS:
NYTEX FDF ACQUISITION, INC. By: Name: Michael Galvis Title: President & Chief Executive Officer FRANCIS OAKS, L.L.C. By: Name: Michael Galvis Title: President & Chief Executive Officer FRANCIS’ DRILLING FLUIDS, LTD. By: Name: Kenneth K. Conte Title: Executive Vice President, Secretary & Treasurer
[Signature Page to Revolving Credit, Term Loan and Security Agreement]
--------------------------------------------------------------------------------
Execution Copy IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the day and year first above written.
AGENT AND LENDER:
PNC BANK, NATIONAL ASSOCIATION By: Name: Robert Reaser Title: Vice President
[Signature Page to Revolving Credit, Term Loan and Security Agreement]
--------------------------------------------------------------------------------
Execution Copy Schedule 6.12 Post-Closing Obligations
Condition Days After Closing to Complete 1. Vehicle Title Lien. With respect to each item of Collateral subject to a certificate of title statute and listed on Schedule 6.12(a) attached hereto, Borrowers shall have delivered to Agent, in form and substance satisfactory to Agent: (i) a fully-executed, notarized power of attorney authorizing CT Corp to perfect liens on behalf of Agent; (ii) an original title properly endorsed to such Borrower for each such item of Collateral; (iii) to the extent applicable, an odometer statement clearly identifying the current mileage for each item of Collateral; (iv) to the extent applicable, an in-state garaging address for each item of Collateral; and (v) evidence that Agent’s Lien has been duly noted thereon. 30 days 2. Perfect Agent’s Lien in Aircraft and Vessel. Perfect Agent’s Lien in all aircraft and marine vessels constituting Collateral. 30 days 3. Lien Waiver Agreements. With respect to each location leased by Borrowers set forth on Schedule 4.19, Borrowers shall have delivered to Agent, in form and substance satisfactory to Agent, a Lien Waiver Agreement pertaining to such location. 120 Business Days; provided, however, in the event that such condition is not satisfied for any location Agent shall either (i) institute a reserve pursuant to Section 2.1(a)(y)(iii) equal to three months rent for such location or (ii) declare a Default under Section 6.12. 4. Mortgage Release. Borrowers shall have delivered to Agent, in form and substance satisfactory to Agent, a Mortgage Release executed by Iberia Savings Bank. 60 days
--------------------------------------------------------------------------------
Execution Copy
Condition Days After Closing to Complete 5. Insurance Endorsements. Borrowers shall have delivered to Agent insurance endorsements, in form and substance satisfactory to Agent, naming Agent as an additional insured and lender loss payee as its interests may appear with respect to all property and liability insurance policies naming Borrowers as the insured entity. 30 days 6. Landlord Waivers. Borrowers shall have delivered to Agent fully executed landlord waivers, each in form and substance satisfactory to Agent in its sole discretion with respect to the premises located at each of the following: 60 days a. 103 N. Aransas St, Alice, TX b. 1149 W. Austin St., Kermit, TX c. Eads Ave, Weatherford, OK d. 3220 Metric Dr, Sulphur, LA e. 100 Asma Blvd., Building 1, Suite 151, Lafayette, LA f. Lot # 9, Marshall Subdivision, Cameron, LA g. Lot # 8, Marshall Subdivision, Cameron, LA h. Lot # 7, Marshall Subdivision, Cameron, LA i. Lot # 6, Marshall Subdivision, Cameron, LA j. 206 and 208 W Main, Alice, TX k. 208 W Main, Alice, TX (railspur) l. 9711 Exxon (Pvt) Rd, Intercoastal City, LA m. 2600 Second Street, Berwick, LA n. 1000 Hwy 1, Coushatta, LA o. 180 17th St, Fourchon East, Golden Meadow, LA p. 300 E Arlington, Ada, OK q. Port of Lake Charles, Lake Charles, LA r. 851 Yellowstone Industrial Park, Rock Springs, WY
--------------------------------------------------------------------------------
Execution Copy
Condition Days After Closing to Complete s. Airstrip, Crowley, LA 7. Local Counsel Opinion. Borrowers shall have delivered to Agent the executed legal opinion of Louisiana counsel opining on the Crowley Real Property in form and substance satisfactory to Agent. 2 weeks 8. Schedule to UCC Financing Statement. Borrowers shall have delivered to Agent a legible copy of the schedule attached to that certain UCC-1 financing statement filed by Cisco Systems Capital Corporation; file #01-101240 dated 7/26/10 in Acadia, LA. 30 days 9. Business Interruption Insurance. Borrowers shall have delivered to Agent evidence of business interruption insurance in the amount of $2,000,000 maintained by Borrowers. 120 days 10. Mortgagee Title Policy. Borrowers shall have delivered to Agent a mortgagee title policy for the Crowley Real Property. 20 days 11. Dissolution of Subsidiaries. Borrowers shall have delivered to Agent evidence of the dissolution of Francis Chemical Company, Superior Chemical Company and Pyburn Services, Inc. in form and substance satisfactory to Agent. 10 days
--------------------------------------------------------------------------------
Execution Copy Schedule 6.12(a) Vehicle Title Liens to be Perfected Post-Closing (see attached) | [
"Exhibit 10.5 Execution Copy $24,000,000 REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT AMONG PNC BANK, NATIONAL ASSOCIATION AS LENDER AND AS AGENT AND NYTEX FDF ACQUISITION, INC., (AND UPON CONSUMMATION OF ACQUISITION PURSUANT TO THE ACQUISITION AGREEMENT) FRANCIS OAKS, L.L.C., AND FRANCIS’ DRILLING FLUIDS, LTD. AS BORROWERS NOVEMBER 23, 2010 Francis-Revolving Credit, Term Loan and Security Agreement -------------------------------------------------------------------------------- Execution Copy TABLE OF CONTENTS I DEFINITIONS 1 1.1. Accounting Terms 1 1.2. General Terms 1 1.3. Uniform Commercial Code Terms 24 1.4.",
"Certain Matters of Construction 24 II ADVANCES, PAYMENTS 25 2.1. Revolving Advances 25 2.2. Procedure for Revolving Advances Borrowing 26 2.3. Disbursement of Advance Proceeds 28 2.4. Term Loan 29 2.5. Maximum Advances 29 2.6. Repayment of Advances 29 2.7. Repayment of Excess Advances 30 2.8. Statement of Account 30 2.9. Letters of Credit 30 2.10. Issuance of Letters of Credit 31 2.11. Requirements For Issuance of Letters of Credit 31 2.12. Disbursements, Reimbursement 32 2.13. Repayment of Participation Advances 33 2.14. Documentation 33 2.15. Determination to Honor Drawing Request 34 2.16. Nature of Participation and Reimbursement Obligations 34 2.17.",
"Indemnity 35 2.18. Liability for Acts and Omissions 36 2.19. Additional Payments 37 2.20. Manner of Borrowing and Payment 37 2.21. Mandatory Prepayments 39 2.22. Use of Proceeds 39 2.23. Defaulting Lender 40 III INTEREST AND FEES 41 3.1. Interest 41 3.2. Letter of Credit Fees 41 3.3. Closing Fee and Facility Fee 42 3.4. Collateral Management Fee, Collateral Examination Fee and Fee Letter 42 3.5. Computation of Interest and Fees 43 3.6. Maximum Charges 43 3.7. Increased Costs 43 3.8. Basis For Determining Interest Rate Inadequate or Unfair 44 3.9. Capital Adequacy 45 3.10. Gross Up for Taxes 45 3.11. Withholding Tax Exemption 46 IV COLLATERAL: GENERAL TERMS 47 4.1. Security Interest in the Collateral 47 4.2.",
"Perfection of Security Interest 47 i -------------------------------------------------------------------------------- Execution Copy 4.3. Disposition of Collateral 47 4.4. Preservation of Collateral 48 4.5. Ownership of Collateral 48 4.6. Defense of Agent’s and Lenders’ Interests 49 4.7. Books and Records 49 4.8. Financial Disclosure 49 4.9. Compliance with Laws 50 4.10. Inspection of Premises 50 4.11. Insurance 50 4.12. Failure to Pay Insurance 51 4.13. Payment of Taxes 51 4.14. Payment of Leasehold Obligations 51 4.15. Receivables 52 4.16. Inventory 54 4.17. Maintenance of Equipment 55 4.18. Exculpation of Liability 55 4.19. Environmental Matters 55 4.20. Financing Statements 57 4.21. Rolling Stock and other Vehicles 57 V REPRESENTATIONS AND WARRANTIES 57 5.1. Authority 57 5.2. Formation and Qualification 58 5.3.",
"Survival of Representations and Warranties 58 5.4. Tax Returns 58 5.5. Financial Statements 59 5.6. Entity Names 59 5.7. O.S.H.A. and Environmental Compliance 60 5.8. Solvency; No Litigation, Violation, Indebtedness or Default 60 5.9. Patents, Trademarks, Copyrights and Licenses 61 5.10. Licenses and Permits 62 5.11. Default of Indebtedness 62 5.12. No Default 62 5.13. No Burdensome Restrictions 62 5.14. No Labor Disputes 62 5.15. Margin Regulations 62 5.16. Investment Company Act 63 5.17. Disclosure 63 5.18. Delivery of Acquisition Agreement and Subordinated Loan Documentation 63 5.19. Swaps 63 5.20. Conflicting Agreements 63 5.21. Application of Certain Laws and Regulations 63 5.22. Business and Property of Borrowers 63 5.23. Section 20 Subsidiaries 64 5.24.",
"Anti-Terrorism Laws 64 5.25. Trading with the Enemy 65 5.26. Federal Securities Laws 65 ii -------------------------------------------------------------------------------- Execution Copy VI AFFIRMATIVE COVENANTS 65 6.1. Payment of Fees 65 6.2. Conduct of Business and Maintenance of Existence and Assets 65 6.3. Violations 65 6.4. Government Receivables 65 6.5. Financial Covenants 65 6.6. Execution of Supplemental Instruments 66 6.7. Payment of Indebtedness 66 6.8. Standards of Financial Statements 66 6.9. Federal Securities Laws 66 6.10. Exercise of Rights 66 6.11. Defaults under the Acquisition or Subordinated Obligations Documents 66 6.12. Post-Closing Obligations 66 6.13. Nature of Business 67 VII NEGATIVE COVENANTS 67 7.1.",
"Merger, Consolidation, Acquisition and Sale of Assets 67 7.2. Creation of Liens 67 7.3. Guarantees 67 7.4. Investments 67 7.5. Loans 67 7.6. Capital Expenditures 67 7.7. Distributions 68 7.8. Indebtedness 68 7.9. Nature of Business 69 7.10. Transactions with Affiliates 69 7.11. Leases 69 7.12. Subsidiaries 69 7.13. Fiscal Year and Accounting Changes 69 7.14. Pledge of Credit 69 7.15. Amendment of Certificate of Formation, Operating Agreement 69 7.16. Compliance with ERISA 69 7.17. Prepayment of Indebtedness 70 7.18. Anti-Terrorism Laws 70 7.19. Membership/Partnership Interests 70 7.20. Trading with the Enemy Act 70 7.21. Reserved 70 7.22. Other Agreements 71 VIII CONDITIONS PRECEDENT 71 8.1.",
"Conditions to Initial Advances 71 8.2. Conditions to Each Advance 75 IX INFORMATION AS TO BORROWERS 76 9.1. Disclosure of Material Matters 76 9.2. Schedules 76 9.3. Environmental Reports 77 9.4. Litigation 77 iii -------------------------------------------------------------------------------- Execution Copy 9.5. Material Occurrences 77 9.6. Government Receivables 78 9.7. Annual Financial Statements 78 9.8. Quarterly Financial Statements 78 9.9. Monthly Financial Statements 78 9.10. Other Reports 78 9.11. Additional Information 79 9.12. Projected Operating Budget 79 9.13. Variances From Operating Budget 79 9.14. Notice of Suits, Adverse Events 79 9.15. ERISA Notices and Requests 79 9.16. Additional Documents 80 9.17. Appraisals and Field Examinations 80 9.18. Background Check 80 X EVENTS OF DEFAULT 80 10.1.",
"Nonpayment 81 10.2. Breach of Representation 81 10.3. Financial Information 81 10.4. Judicial Actions 81 10.5. Noncompliance 81 10.6. Judgments 81 10.7. Bankruptcy 81 10.8. Inability to Pay 82 10.9. Affiliate Bankruptcy 82 10.10. Material Adverse Effect 82 10.11. Lien Priority 82 10.12. Subordination Agreement Default 82 10.13. Subordinated Obligations Document Default 82 10.14. Cross Default 82 10.15. Breach of Guaranty 82 10.16. Change of Ownership 83 10.17. Invalidity 83 10.18. Licenses 83 10.19. Seizures 83 10.20. Operations 83 10.21. Pension Plans 83 XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT 84 11.1. Rights and Remedies 84 11.2. Agent’s Discretion 85 11.3. Setoff 85 11.4. Rights and Remedies not Exclusive 86 11.5. Allocation of Payments After Event of Default 86 XII WAIVERS AND JUDICIAL PROCEEDINGS 87 12.1. Waiver of Notice 87 12.2. Delay 87 iv -------------------------------------------------------------------------------- Execution Copy 12.3.",
"Jury Waiver 87 XIII EFFECTIVE DATE AND TERMINATION 87 13.1. Term 87 13.2. Termination 88 XIV REGARDING AGENT 88 14.1. Appointment 88 14.2. Nature of Duties 88 14.3. Lack of Reliance on Agent and Resignation 89 14.4. Certain Rights of Agent 90 14.5. Reliance 90 14.6. Notice of Default 90 14.7. Indemnification 90 14.8. Agent in its Individual Capacity 90 14.9. Delivery of Documents 91 14.10. Borrowers’ Undertaking to Agent 91 14.11. No Reliance on Agent’s Customer Identification Program 91 14.12. Other Agreements 91 XV BORROWING AGENCY 91 15.1. Borrowing Agency Provisions 91 15.2. Waiver of Subrogation 92 XVI MISCELLANEOUS 92 16.1. Governing Law 92 16.2. Entire Understanding 93 16.3. Successors and Assigns; Participations; New Lenders 95 16.4. Application of Payments 97 16.5. Indemnity 97 16.6. Notice 98 16.7.",
"Survival 100 16.8. Severability 100 16.9. Expenses 100 16.10. Injunctive Relief 101 16.11. Consequential Damages 101 16.12. Captions 101 16.13. Counterparts; Facsimile Signatures 101 16.14. Construction 101 16.15. Confidentiality; Sharing Information 101 16.16. Publicity 102 16.17. Certifications From Banks and Participants; US PATRIOT Act 102 16.18. Non-Applicability of Chapter 346 102 16.19. BORROWERS’ WAIVER OF RIGHTS UNDER TEXAS DECEPTIVE TRADE PRACTICES ACT 103 v -------------------------------------------------------------------------------- Execution Copy LIST OF EXHIBITS AND SCHEDULES Exhibits Exhibit 1.2 Borrowing Base Certificate Exhibit 2.1(a) Revolving Credit Note Exhibit 2.4 Term Note Exhibit 5.5(b) Financial Projections Exhibit 8.1(k) Financial Condition Certificate Exhibit 16.3 Commitment Transfer Supplement Schedules Schedule 1.2 Permitted Encumbrances Schedule 1.2(d) Prior Indebtedness Schedule 4.5 Equipment and Inventory Locations Schedule 4.15(h) Deposit and Investment Accounts Schedule 4.19 Real Property Schedule 5.1 Consents Schedule 5.2(a) States of Qualification and Good Standing Schedule 5.2(b) Subsidiaries; Capitalization Schedule 5.4 Federal Tax Identification Number Schedule 5.6 Prior Names Schedule 5.8(b) Litigation Schedule 5.8(d) Plans Schedule 5.9 Intellectual Property, Source Code Escrow Agreements Schedule 5.10 Licenses and Permits Schedule 5.14 Labor Disputes Schedule 5.22 Business Activities of Borrowers Schedule 6.12 Post-Closing Obligations Schedule 6.12(a) Vehicle Title Liens Schedule 7.3 Guarantees vi -------------------------------------------------------------------------------- REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT This Revolving Credit, Term Loan and Security Agreement dated as of November 23, 2010 by and among NYTEX FDF ACQUISITION, INC., a corporation formed under the laws of the State of Delaware (“Holdings”) and, upon consummation of the acquisition pursuant to the Acquisition Agreement (defined below), FRANCIS OAKS, L.L.C., a limited liability company formed under the laws of the State of Louisiana (“Francis Oaks”), FRANCIS’ DRILLING FLUIDS, LTD., a business corporation incorporated under the laws of the State of Louisiana (“Francis Drilling”; and together with Holdings and Francis Oaks, individually, each a “Borrower” and collectively, jointly and severally, the “Borrowers”), the financial institutions which are now or which hereafter become a party hereto (collectively, the “Lenders” and individually a “Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, together with its successors and assigns in such capacity, the “Agent”).",
"IN CONSIDERATION of the mutual covenants and undertakings herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrowers, Lenders and Agent hereby agree as follows: I DEFINITIONS. 1.1. Accounting Terms. As used in this Agreement, the Other Documents or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided, however, whenever such accounting terms are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined in accordance with GAAP as consistently applied in preparation of the audited financial statements of Francis Oaks and Francis Drilling for the fiscal year ended August 31, 2009. 1.2. General Terms.",
"For purposes of this Agreement the following terms shall have the following meanings: “Accountants” shall have the meaning set forth in Section 9.7 hereof. “Acquisition Agreement” shall mean that certain Membership Interests Purchase Agreement (including all annexes, exhibits and schedules relating thereto), dated as of November 23, 2010 among Sellers, Holdings, Francis Oaks and Francis Drilling, as amended from time to time in accordance with this Agreement and in form and substance satisfactory to Agent. “Advances” shall mean and include the Revolving Advances, Letters of Credit, as well as the Term Loan. “Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who -------------------------------------------------------------------------------- Execution Copy is a director, managing member, general partner or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above.",
"For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the Equity Interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by ownership of Equity Interests, contract or otherwise. “Agent” shall have the meaning set forth in the introductory paragraph to this Agreement and shall include its successors and assigns. “Agreement” shall mean this Revolving Credit, Term Loan and Security Agreement, as the same may be amended, amended and restated, extended, supplemented and/or otherwise modified from time to time. “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the higher of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day plus 1/2 of 1% and (iii) the Daily LIBOR Rate plus 1%.",
"For purposes of this definition, “Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the Reserve Percentage. For the purposes of this definition, “Published Rate” shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the eurodollar rate for a one month period as published in another publication determined by Agent). “Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable Laws may from time to time be amended, renewed, extended, or replaced). “Applicable Law” shall mean all laws, rules and regulations applicable to the Person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations, treaties, directives and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators. “Authority” shall have the meaning set forth in Section 4.19(d).",
"“Authorized Officer” shall mean the President, Chief Financial Officer, Controller or other authorized officer approved by Agent. “Base Rate” shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of 2 -------------------------------------------------------------------------------- Execution Copy interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.",
"“Blocked Accounts” shall have the meaning set forth in Section 4.15(h). “Blocked Account Bank” shall have the meaning set forth in Section 4.15(h). “Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof. “Borrower” or “Borrowers” shall have the meaning set forth in the introductory paragraph to this Agreement and shall extend to all permitted successors and assigns of such Persons. “Borrowers on a Consolidated Basis” shall mean the consolidation in accordance with GAAP of the accounts or other items of Borrowers and their respective Subsidiaries. “Borrowers’ Account” shall have the meaning set forth in Section 2.8. “Borrowing Agent” shall mean Francis Drilling. “Borrowing Base Certificate” shall mean a certificate in substantially the form of Exhibit 1.2 duly executed by an Authorized Officer of the Borrowing Agent and delivered to Agent, appropriately completed, by which such Authorized Officer shall certify to Agent the Formula Amount and calculation thereof as of the date of such certificate.",
"“Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market. “Capital Expenditures” shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Lease Obligations, which, in accordance with GAAP, would be classified as capital expenditures. “Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.",
"“Change of Control” shall mean (i) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of any Borrower to a Person who is not Sponsor or (ii) any merger or consolidation of or with any Borrower or sale of all or substantially all of the property or assets of any Borrower. For purposes of this definition, “control of Borrower” shall mean the power, direct or indirect (x) to vote 50% or more of the Equity 3 -------------------------------------------------------------------------------- Execution Copy Interests having ordinary voting power for the election of directors (or the individuals performing similar functions) of any Borrower or (y) to direct or cause the direction of the management and policies of any Borrower by contract or otherwise.",
"“Change of Ownership” shall mean (a) 50% or more of the Equity Interests of any Borrower is no longer, directly or indirectly, owned or controlled by (including for the purposes of the calculation of percentage ownership, any Equity Interests into which any Equity Interests of any Borrower held by Sponsor are convertible or for which any such Equity Interests of any Borrower or of any other Person may be exchanged and any Equity Interests issuable to Sponsor upon exercise of any warrants, options or similar rights which may at the time of calculation be held by Sponsor) Sponsor or (b) any merger, consolidation or sale of substantially all of the property or assets of any Borrower; provided that the sale by Holdings of any Equity Interest of any other Borrower shall be deemed a sale of substantially all of Holdings’ assets. “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments, including all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, any Borrower or any of its Affiliates. “Closing Date” shall mean November 23, 2010 or such other date as may be agreed to in writing by the parties hereto.",
"“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.",
"“Collateral” shall mean and include all assets of Borrowers, whether now owned or hereafter acquired and wherever located, including, without limitation: (a) all Receivables; (b) all Equipment; (c) all General Intangibles; (d) all Inventory; (e) all Investment Property; (f) all Real Property; (g) all Subsidiary Stock; (h) the Leasehold Interests; 4 -------------------------------------------------------------------------------- Execution Copy (i) all of each Borrower’s right, title and interest in and to, whether now owned or hereafter acquired and wherever located, (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer relating to the Receivables; (iv) other property, including warranty claims, relating to any goods securing the Obligations; (v) all of each Borrower’s contract rights, rights of payment which have been earned under a contract right, instruments (including promissory notes), documents, chattel paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit and money; (vi) all commercial tort claims (whether now existing or hereafter arising); (vii) if and when obtained by any Borrower, all real and personal property of third parties in which such Borrower has been granted a lien or security interest as security for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and (x) any other goods, personal property or real property now owned or hereafter acquired in which any Borrower has expressly granted a security interest or may in the future grant a security interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between Agent and any Borrower; (j) all of each Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by any Borrower or in which it has an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e), (f), (g), (h) or (i) of this definition; and (k) all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h), (i) and (j) in whatever form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and tort claim proceeds.",
"“Collateral Assignment of Acquisition Agreement” shall mean that certain Collateral Assignment of Acquisition Agreement, dated as of the Closing Date between Holdings and Agent, acknowledged by the Sellers, the form and substance of which shall be satisfactory to Agent. “Commitment Percentage” of any Lender shall mean the percentage set forth below such Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender pursuant to Section 16.3(c) or (d) hereof. “Commitment Transfer Supplement” shall mean a document in the form of Exhibit 16.3 hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances under this Agreement. 5 -------------------------------------------------------------------------------- Execution Copy “Compliance Certificate” shall mean a compliance certificate to be signed by an Authorized Officer of Borrowing Agent, which shall state that, based on an examination sufficient to permit such officer to make an informed statement, no Default or Event of Default exists, or if such is not the case, specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing and the steps being taken by Borrowers with respect to such default and, such certificate shall have appended thereto calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8, 7.10 and 7.11. “Consents” shall mean all filings and all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic or foreign, necessary to carry on any Borrower’s business or necessary (including to avoid a conflict or breach under any agreement, instrument, other document, license, permit or other authorization) for the execution, delivery or performance of this Agreement, the Other Documents, the Subordinated Obligations Documents or the Acquisition Agreement, including any Consents required under all applicable federal, state or other Applicable Law.",
"“Consolidated Current Assets” shall mean, as at any date of determination, the total assets of Borrowers and their Subsidiaries which may properly be classified as current assets on a consolidated balance sheet of Borrowers and their Subsidiaries in accordance with GAAP, excluding cash and cash equivalents. “Consolidated Current Liabilities” shall mean, as at any date of determination, the total liabilities of Borrowers and their Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Advance) on a consolidated balance sheet of Borrowers and their Subsidiaries in accordance with GAAP. “Contract Rate” shall have the meaning set forth in Section 3.1 hereof.. “Controlled Group” shall mean, at any time, each Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with any Borrower, are treated as a single employer under Section 414 of the Code.",
"“Crowley Real Property” shall mean that certain real property located in Crowley, Louisiana and described in more detail on Schedule 4.19 attached hereto. “Customer” shall mean and include the account debtor with respect to any Receivable and/or the prospective purchaser of goods, services or both with respect to any contract or contract right, and/or any party who enters into or proposes to enter into any contract or other arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property or perform any services. “Customs” shall have the meaning set forth in Section 2.11(b) hereof. “Debt Payments” shall mean and include, for any period and calculated for all Borrowers on a consolidated basis, the sum of (without duplication) (a) all amounts actually incurred and payable during such period for interest on any Advances, Indebtedness, and the interest portion 6 -------------------------------------------------------------------------------- Execution Copy of any amount incurred under any Capitalized Lease Obligation and any “synthetic lease”, plus (b) all amounts incurred and payable for all fees, commissions and charges under this Agreement and with respect to any Advances, Funded Debt or other Indebtedness for borrowed money, plus (c) scheduled principal payments under any Capitalized Lease Obligation and any “synthetic lease”, plus (d) unscheduled principal payments paid during the period under any Capitalized Lease Obligations and any “synthetic lease”, plus (e) scheduled principal payments made with respect to any Funded Debt or other Indebtedness for borrowed money (other than the repayment of Revolving Advances), whether payable to the Agent, any Lender or any other Person, plus (f) unscheduled principal payments with respect to any Funded Debt or other Indebtedness for borrowed money (other than the repayment of Revolving Advances), whether payable to the Agent, any Lender or any other Person.",
"“Default” shall mean an event, circumstance or condition which, with the giving of notice or passage of time or both, would constitute an Event of Default. “Default Rate” shall have the meaning set forth in Section 3.1 hereof. “Defaulting Lender” shall have the meaning set forth in Section 2.23(a) hereof. “Depository Accounts” shall have the meaning set forth in Section 4.15(h) hereof. “Designated Lender” shall have the meaning set forth in Section 16.2(b) hereof. “Documents” shall have the meaning set forth in Section 8.1(h) hereof. “Dollar” and the sign “$” shall mean lawful money of the United States of America. “Domestic Rate Loan” shall mean any Advance that bears interest based upon the Alternate Base Rate. “Drawing Date” shall have the meaning set forth in Section 2.12(b) hereof. “Early Termination Date” shall have the meaning set forth in Section 13.1 hereof.",
"“Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net income (or loss) of Borrowers on a Consolidated Basis for such period (excluding one-time non-cash gains and non-cash losses), plus (ii) all interest expense of Borrowers on a Consolidated Basis for such period, plus (iii) all charges against income of Borrowers on a Consolidated Basis for such period for federal, state and local taxes. “EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and Taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period. “Eligible Receivables” shall mean and include with respect to each Borrower, each Receivable of such Borrower arising in the Ordinary Course of Business and which Agent, in its sole credit judgment, shall deem to be an Eligible Receivable, based on such considerations as Agent may from time to time deem appropriate. A Receivable shall not be deemed eligible 7 -------------------------------------------------------------------------------- Execution Copy unless such Receivable is subject to Agent’s first priority perfected security interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an invoice or other documentary evidence satisfactory to Agent.",
"In addition, no Receivable shall be an Eligible Receivable if: (a) it arises out of a sale made by any Borrower to an Affiliate of any Borrower or to a Person controlled by an Affiliate of any Borrower; (b) it is due or unpaid more than (i) sixty (60) days after the original due date or (ii) ninety (90) days after the original invoice date; (c) fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible Receivables hereunder. Such percentage may, in Agent’s sole discretion, be increased or decreased from time to time; (d) any covenant, representation or warranty contained in this Agreement with respect to such Receivable has been breached; (e) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing; (f) the sale is to a Customer outside (i) the continental United States of America or (ii) Canada (other than the province of Quebec), unless the sale is on letter of credit, guaranty or acceptance terms, in each case acceptable to Agent in its sole discretion; provided, however, that all such Receivables shall be payable in U.S.",
"Dollars; (g) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment or any other repurchase or return basis or is evidenced by chattel paper; (h) Agent believes, in its sole judgment, that collection of such Receivable is insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to pay; (i) the Customer is the United States of America, any state or any department, agency or instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq.",
"and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other applicable statutes or ordinances; (j) the goods giving rise to such Receivable have not been delivered to and accepted by the Customer or the services giving rise to such Receivable have not been performed by the 8 -------------------------------------------------------------------------------- Execution Copy applicable Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale or the Receivable represents a progress or milestone billing or is otherwise contingent upon the applicable Borrower’s completion of any future performance or service; (k) the Receivable of the Customer, together with the other Receivables of the Customer, exceeds 30% of the total Eligible Receivables, or such other credit limit determined by Agent in its sole discretion, to the extent such Receivable exceeds such limit; (l) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim (other than Mud Contras up to $1,500,000 in the aggregate at any time) the Customer is also a creditor or supplier of a Borrower or the Receivable is contingent in any respect or for any reason; provided, however, with respect to any Receivable which is not subject to a Mud Contra, only to the extent of such offset, deduction, dispute, or counterclaim and (ii) with respect to any Receivable which is subject to a Mud Contra, only to the extent of the applicable Mud Contra for all Mud Contras which, in the aggregate, exceed $1,500,000; (m) the applicable Borrower has made any agreement with any Customer for any deduction therefrom, except for discounts or allowances made in the Ordinary Course of Business for prompt payment, all of which discounts or allowances are reflected in the calculation of the face value of each respective invoice related thereto; (n) any return, rejection or repossession of the merchandise (other than the storage of Mud Inventory by the Borrowers for the benefit of a Customer, as agreed to by the Borrowers and such Customer) has occurred or the rendition of services has been disputed; (o) such Receivable is not payable to a Borrower; or (p) such Receivable is not otherwise satisfactory to Agent as determined in good faith by Agent in the exercise of its discretion in a reasonable manner.",
"“Environmental Complaint” shall have the meaning set forth in Section 4.19(d) hereof. “Environmental Laws” shall mean all federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto. “Equipment” shall mean and include as to each Borrower all of such Borrower’s goods (other than Inventory) whether now owned or hereafter acquired and wherever located including all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all replacements and substitutions therefore or accessions thereto. “Equity Documents” shall mean all documents executed in connection with the issuance of Holdings’ Equity Interests to Sponsor and Sponsor’s Equity Interests to Waypoint on or immediately prior to the Closing Date, including membership certificates, if any.",
"9 -------------------------------------------------------------------------------- Execution Copy “Equity Interests” of any Person shall mean any and all shares, rights to purchase, options, warrants, general, limited or limited liability partnership interests, member interests, participation or other equivalents of or interest in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock, convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act). “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time and the rules and regulations promulgated thereunder. “Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current Interest Period relating thereto the interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by Agent by dividing (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternative Source”), at approximately 11:00 a.m., London time two (2) Business Days prior to the first day of such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by Agent at such time (which determination shall be conclusive absent manifest error)) for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Reserve Percentage.",
"The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error. “Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on the Eurodollar Rate. “Event of Default” shall have the meaning set forth in Article X hereof.",
"“Excess Cash Flow” for any fiscal period shall mean EBITDA of Borrowers on a Consolidated Basis for such fiscal period, plus the amount, if any, by which Net Working Capital decreased during such fiscal period, minus the amount, if any, by which Net Working Capital increased during such fiscal period, minus Unfinanced Capital Expenditures made by Borrowers on a Consolidated Basis during such fiscal period minus cash taxes actually paid by Borrowers on a Consolidated Basis during such fiscal period and including any distributions to Waypoint with respect to the Subordinated Obligations Documents payable in accordance with Section 7.7 hereof, minus principal and interest payments on Funded Debt, minus management fees not otherwise deducted in calculating net income during such fiscal period. 10 -------------------------------------------------------------------------------- Execution Copy “Exchange Act” shall have the mean the Securities Exchange Act of 1934, as amended.",
"“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced. “Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.",
"“Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by PNC (an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the PNC at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to Borrowers, effective on the date of any such change.",
"“Fixed Charge Coverage Ratio” shall mean and include, with respect to any period, the ratio of (a) (i) EBITDA minus (ii) Unfinanced Capital Expenditures made during such period, minus (iii) distributions and dividends (other than any Subordinated Obligations Payments included in clause (b) hereof) made during such period, minus (iv) cash taxes paid during such period, minus (v) management fees paid and not otherwise deducted in calculating net income (loss) during such period to (b) (i) all Debt Payments plus (ii) all Subordinated Obligations Payments made during such period. For purposes of determining the Fixed Charge Coverage Ratio, Capital Expenditures that are financed under Revolving Advances made pursuant to this Agreement shall be considered Unfinanced Capital Expenditures.",
"“Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or any State or territory thereof. “Formula Amount” shall have the meaning set forth in Section 2.1(a). 11 -------------------------------------------------------------------------------- Execution Copy “Francis Drilling” shall have the meaning set forth in the introductory paragraph to this Agreement and shall extend to all permitted successors and assigns of such Person. “Francis Oaks” shall have the meaning set forth in the introductory paragraph to this Agreement and shall extend to all permitted successors and assigns of such Person. “Funded Debt” shall mean, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person’s option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capitalized Lease Obligations, current maturities of long-term debt, revolving credit and short term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrower, the Obligations and, without duplication, Indebtedness consisting of guaranties of Funded Debt of other Persons.",
"“GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time. “General Intangibles” shall mean and include as to each Borrower all of such Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment intangibles, all choses in action, causes of action, corporate or other business records, inventions, designs, patents, patent applications, equipment formulations, manufacturing procedures, quality control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill, copyrights, design rights, software, computer information, source codes, codes, records and updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims, computer programs, all claims under guaranties, security interests or other security held by or granted to such Borrower to secure payment of any of the Receivables by a Customer (other than to the extent covered by Receivables) all rights of indemnification and all other intangible property of every kind and nature (other than Receivables). “Governmental Acts” shall have the meaning set forth in Section 2.17.",
"“Governmental Body” shall mean any nation or government, any state or other political subdivision thereof or any entity, authority, agency, division or department exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government. “Guarantor” shall mean any Person who may hereafter guarantee payment or performance of the whole or any part of the Obligations and “Guarantors” means collectively all such Persons. “Guarantor Security Agreement” shall mean any Security Agreement executed by any Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and substance satisfactory to Agent. “Guaranty” shall mean any guaranty of the obligations of Borrowers executed by a Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and substance satisfactory to Agent. 12 -------------------------------------------------------------------------------- Execution Copy “Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof. “Hazardous Substance” shall mean, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C.",
"Sections 1801, et seq. ), RCRA, Articles 15 and 27 of the New York State Environmental Conservation Law or any other applicable Environmental Law and in the regulations adopted pursuant thereto. “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA or applicable state law, and any other applicable federal and state laws now in force or hereafter enacted relating to hazardous waste disposal. “Hedge Liabilities” shall have the meaning provided in the definition of “Lender-Provided Interest Rate Hedge”. “Holdings” shall mean shall have the meaning set forth in the introductory paragraph of this Agreement. “Increased Tax Burden” shall mean the additional federal, state or local taxes assumed to be payable by a member of Holdings and/or Francis Oaks as a result of such Borrower’s status as a limited liability company, in each case, reasonably estimated by Holdings and/or Francis Oaks, as applicable, in respect of the quarterly estimated tax payments payable by such member and subsequently evidenced and substantiated by (and adjusted, if and to the extent required by Section 7.7, based upon) the tax returns filed by Holdings and Francis Oaks, as a limited liability company, with such taxes being calculated for all members at the highest marginal rate applicable to any member. “Indebtedness” of a Person at a particular date shall mean all obligations of such Person which in accordance with GAAP would be classified upon a balance sheet as liabilities (except capital stock and surplus earned or otherwise) and in any event, without limitation by reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations of such Person whether direct or guaranteed, and all premiums, if any, due at the required prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by such Person, whether or not such indebtedness actually shall have been created, assumed or incurred by such Person.",
"Any indebtedness of such Person resulting from the acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually so created, assumed or incurred. “Ineligible Security” shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended. “Intellectual Property” shall mean property constituting under any Applicable Law a patent, patent application, copyright, trademark, service mark, trade name, trade name application, domain name, domain name application, mask work, trade secret or license or other right to use any of the foregoing. 13 -------------------------------------------------------------------------------- Execution Copy “Intellectual Property Security Agreement” shall mean that certain Intellectual Property Security Agreement, dated as of the Closing Date between Borrowers and Agent, the terms and conditions of which shall be satisfactory to Agent. “Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant to Section 2.2(b). “Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor or similar agreements entered into by any Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, such Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of interest applicable to Indebtedness.",
"“Inventory” shall mean and include as to each Borrower all of such Borrower’s now owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be furnished under any consignment arrangement, contract of service or held for sale or lease, all raw materials, work in process, finished goods and materials and supplies of any kind, nature or description which are or might be used or consumed in such Borrower’s business or used in selling or furnishing such goods, merchandise and other personal property, and all documents of title or other documents representing them.",
"“Investment Property” shall mean and include as to each Borrower, all of such Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated), securities entitlements, securities accounts, commodities contracts and commodities accounts. “Issuer” shall mean any Person who issues a Letter of Credit and/or accepts a draft pursuant to the terms hereof. “Leasehold Interests” shall mean all of each Borrower’s right, title and interest in and to the premises identified as leased properties on Schedule 4.19 hereto. “Lender” and “Lenders” shall have the meaning ascribed to such term in the introductory paragraph to this Agreement and shall include each Person which becomes a transferee, successor or assign of any Lender. “Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is provided by any Lender and with respect to which Agent confirms meets the following requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for hedging (rather than speculative) purposes. The liabilities of any Borrower to the provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder, guaranteed obligations under the Guaranty and secured obligations under the Guarantor Security Agreement and otherwise treated as Obligations for purposes of 14 -------------------------------------------------------------------------------- Execution Copy each of the Other Documents. The Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other Obligations under this Agreement and the Other Documents.",
"“Letter of Credit Fees” shall have the meaning set forth in Section 3.2. “Letter of Credit Borrowing” shall have the meaning set forth in Section 2.12(d). “Letter of Credit Sublimit” shall mean $2,000,000. “Letters of Credit” shall have the meaning set forth in Section 2.9. “Licensor” shall mean any Person from whom any Borrower obtains the right to use (whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with such Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in connection with such Borrower’s business operations. “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or preference, priority or other security agreement or preferential arrangement held or asserted in respect of any asset of any kind or nature whatsoever including any conditional sale or other title retention agreement, any lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction.",
"“Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent by a Person who owns or occupies premises at which any Collateral may be located from time to time and by which such Person shall waive any Lien that such Person may ever have with respect to any of the Collateral and shall authorize Agent from time to time to enter upon the premises to inspect or remove the Collateral from such premises or to use such premises to store or dispose of such Inventory. “Loan Party” shall mean, individually or collectively as the context requires, (i) Borrowers, (ii) any Guarantor and (iii) any other Person hereafter joined to this Agreement as a “Borrower”. “Material Adverse Effect” shall mean a material adverse effect on (a) the condition (financial or otherwise), results of operations, assets, business, properties or prospects of any Loan Party, (b) any Loan Party’s ability to duly and punctually pay or perform the Obligations in accordance with the terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the practical realization of the benefits of Agent’s and each Lender’s rights and remedies under this Agreement and the Other Documents.",
"For purposes of this definition, references to “Loan Party” shall refer to any Real Property or business to be acquired by any Loan Party pursuant to the Acquisition Agreement, as the context shall require for periods prior to the Closing Date. “Maximum Face Amount” shall mean, with respect to any outstanding Letter of Credit, the face amount of such Letter of Credit including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective. 15 -------------------------------------------------------------------------------- Execution Copy “Maximum Loan Amount” shall mean $24,000,000 less repayments of the Term Loan. “Maximum Revolving Advance Amount” shall mean $12,000,000.",
"“Maximum Undrawn Amount” shall mean with respect to any outstanding Letter of Credit, the amount of such Letter of Credit that is or may become available to be drawn, including all automatic increases provided for in such Letter of Credit, whether or not any such automatic increase has become effective. “Modified Commitment Transfer Supplement” shall have the meaning set forth in Section 16.3(d). “Mortgage” shall mean, individually or collectively as the context requires, any deed of trust or mortgage on the Real Property securing the Obligations, in each case, together with all extensions, renewals, amendments, supplements, modifications, substitutions and replacements thereto and thereof and in form and substance satisfactory to Agent. “Mud Claim” shall mean any claim (whether or not asserted) by any Customer of Borrowers for any Mud Inventory which is held by Borrowers for the benefit of such Customer.",
"“Mud Contra” shall mean, with respect to any actual or potential assertion of a Mud Claim by a Customer of Borrowers to reduce the payment obligations of such Customers to Borrowers, valued in an amount equal to the lesser of (i) the Mud Liability of Borrowers to such Customer and (ii) the Receivables (on an aggregated basis) owed to Borrowers by such Customer, in each case, as of any date of determination. “Mud Inventory” shall mean Inventory of Borrowers consisting of liquids and muds circulated through the wellbore during rotary drilling and workover operations to bring cuttings to the surface, to cool and lubricate the bit and drill stem, to control subsurface pressure, and to deposit mud cake along the borehole wall. “Mud Liability” shall mean an amount equal to the numbers of barrels of Mud Inventory subject to a Mud Claim of a Customer at any time, multiplied by the average per barrel retail sales price of Borrowers’ Mud Inventory for the thirty period immediately preceding the calculation date. “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA. “Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors (including any Borrower or any member of the Controlled Group) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.",
"“Negative Pledge” shall mean those certain Negative Pledge Agreements, in each case, dated as of the Closing Date, between Borrowers and Agent, in recordable form and otherwise in form and substance satisfactory to Agent. 16 -------------------------------------------------------------------------------- Execution Copy “Net Working Capital” shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time. “NOLV Appraisal” shall have the meaning set forth in Section 9.17 hereof. “Note” shall mean each of the Term Note, the Revolving Credit Note and “Notes” shall mean collectively, the Term Note and the Revolving Credit, each as amended, restated, extended, supplemented or otherwise modified from time to time.",
"“Obligations” shall mean and include any and all loans, advances, debts, liabilities, obligations, covenants and duties owing by any Borrower to Lenders or Agent or to any other direct or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future (including any interest or other amounts accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition interest or other amounts is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument, whether arising under any agreement, instrument or document, (including this Agreement and the Other Documents) whether or not for the payment of money, whether arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, under any interest or currency swap, future, option or other similar agreement, or in any other manner, whether arising out of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated clearing houses or otherwise) or out of Agent’s or any Lenders non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including, but not limited to, any and all of any Borrower’s Indebtedness and/or liabilities under this Agreement, the Other Documents or under any other agreement between Agent or Lenders and any Borrower and any amendments, extensions, renewals or increases and all costs and expenses of Agent and any Lender incurred in the documentation, negotiation, modification, enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable attorneys’ fees and expenses and all obligations of any Borrower to Agent or Lenders to perform acts or refrain from taking any action.",
"“Ordinary Course of Business” shall mean with respect to any Borrower, the ordinary course of such Borrower’s business as conducted on the Closing Date or as contemplated to be performed on Schedule 5.22 hereto. “Other Documents” shall mean each Mortgage, the Notes, the Questionnaire, any Guaranty, any Pledge Agreement, and any Negative Pledge, any Guarantor Security Agreement, the Lender Provided Interest Rate Hedge, the Collateral Assignment of Acquisition Agreement, the Intellectual Property Security Agreement, any Subordination Agreement and any and all other agreements, instruments and documents, including guaranties, pledges, powers of attorney, consents, interest or currency swap agreements or other similar agreements and all other writings 17 -------------------------------------------------------------------------------- Execution Copy heretofore, now or hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or any Lender in respect of the transactions contemplated by this Agreement.",
"“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b). “Parent” of any Person shall mean a corporation or other entity owning, directly or indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting power to elect a majority of the directors of the Person, or other Persons performing similar functions for any such Person. “Participant” shall mean each Person who shall be granted the right by any Lender to participate in any of the Advances and who shall have entered into a participation agreement in form and substance satisfactory to such Lender. “Participation Advance” shall have the meaning set forth in Section 2.12(d). “Participation Commitment” shall mean each Lender’s obligation to buy a participation of the Letters of Credit issued hereunder. “Payee” shall have the meaning set forth in Section 3.10.",
"“Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to Borrowing Agent and to each Lender to be the Payment Office. “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor. “Pension Benefit Plan” shall mean at any time any employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i) is maintained by any member of the Controlled Group for employees of any member of the Controlled Group; or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the Controlled Group for employees of any entity which was at such time a member of the Controlled Group.",
"“Permitted Encumbrances” shall mean: (a) Liens in favor of Agent for the benefit of Agent and Lenders; (b) Liens for taxes, assessments or other governmental charges not delinquent or being Properly Contested; (c) Liens disclosed in the financial statements referred to in Section 5.5, the existence of which Agent has consented to in writing; (d) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemployment insurance; 18 -------------------------------------------------------------------------------- Execution Copy (e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business; (f) Liens arising by virtue of the rendition, entry or issuance against any Borrower or any Subsidiary, or any property of any Borrower or any Subsidiary, of any judgment, writ, order, or decree for so long as each such Lien (x) is in existence for less than 20 consecutive days after it first arises or is being Properly Contested and (y) is at all times junior in priority to any Liens in favor of Agent; (g) mechanics’, workers’, materialmen’s or other like Liens arising in the Ordinary Course of Business with respect to obligations which are not due or which are being Properly Contested; (h) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase price thereof, provided that (x) any such lien shall not encumber any other property of any Borrower and (y) the aggregate amount of Indebtedness secured by such Liens incurred as a result of such purchases during any fiscal year shall not exceed the amount provided for in Section 7.6; and (i) Liens disclosed on Schedule 1.2; provided that such Liens shall secure only those obligations which they secure on the Closing Date (and extensions, renewals and refinancings of such obligations permitted by Section 7.8) and shall not subsequently apply to any other property or assets of any Borrower. “Person” shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization, association, limited liability company, limited liability partnership, institution, public benefit corporation, joint venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise, including any instrumentality, division, agency, body or department thereof).",
"“Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Benefit Plan), maintained for employees of any Borrower or any member of the Controlled Group or any such Plan to which any Borrower or any member of the Controlled Group is required to contribute on behalf of any of its employees. “Pledge Agreement” shall mean, individually or collectively as the context requires (i) the Pledge Agreement, dated as of the Closing Date and executed by Sponsor in favor of Agent, granting Agent a Lien in the Equity Interests of Holdings; (ii) the Pledge Agreement, dated as of the Closing Date and executed by Holdings in favor of Agent, granting Agent a Lien in the Equity Interests of Francis Oaks, (iii) the Pledge Agreement, dated as of the Closing Date and executed by Francis Oaks in favor of Agent, granting Agent a Lien in the Equity Interests of Francis Drilling, and (iv) any other pledge agreement executed in favor of Agent after the Closing Date, in each case, in form and substance satisfactory to Agent and as amended, amended and restated, supplemented and/or otherwise modified from time to time in accordance with this Agreement. 19 -------------------------------------------------------------------------------- Execution Copy “PNC” shall have the meaning set forth in the introductory paragraph of this Agreement and shall extend to all of its successors and assigns.",
"“Prior Indebtedness” means the Indebtedness and obligations specified on Schedule 1.2(d) hereof. “Pro Forma Balance Sheet” shall have the meaning set forth in Section 5.5(a) hereof. “Pro Forma Financial Statements” shall have the meaning set forth in Section 5.5(b) hereof. “Projections” shall have the meaning set forth in Section 5.5(b) hereof. “Properly Contested” shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid as and when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness or Lien, as applicable, is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse Effect and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of Agent (except only with respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the final resolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in connection therewith.",
"“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof. “Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof. “Questionnaire” shall mean the Questionnaire and Perfection Certificate and the responses thereto provided by Borrowers and delivered to Agent, and all amendments, supplements and modifications to the foregoing. For purposes of this definition, “Borrowers” shall refer to any Borrower and/or the Real Property or business to be acquired by any Borrower pursuant to the Acquisition Agreement, as the context shall require for periods prior to the Closing Date. “RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., as same may be amended from time to time. 20 -------------------------------------------------------------------------------- Execution Copy “Real Property” shall mean all of each Borrower’s right, title and interest in and to the owned and leased premises identified on Schedule 4.19 hereto or which is hereafter owned or leased by any Borrower. “Receivables” shall mean and include, as to each Borrower, all of such Borrower’s accounts, contract rights, instruments (including those evidencing indebtedness owed to such Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances, credit card receivables and all other forms of obligations owing to such Borrower arising out of or in connection with the sale or lease of Inventory or the rendition of services, all supporting obligations, guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically sold or assigned to Agent hereunder.",
"“Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i) hereof. “Register” shall have the meaning set forth in Section 16.3(e). “Reimbursement Obligation” shall have the meaning set forth in Section 2.12(b)hereof. “Release” shall have the meaning set forth in Section 5.7(c)(i) hereof. “Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA or the regulations promulgated thereunder. “Required Lenders” shall mean Lenders holding at least fifty-one percent (51%) of the Advances and, if no Advances are outstanding, shall mean Lenders holding greater than fifty-one percent (51%) of the Commitment Percentages; provided, however, if there are fewer than three (3) Lenders, Required Lenders shall mean all Lenders. “Reserve Percentage” shall mean as of any day the maximum percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”.",
"“Revolving Advances” shall mean Advances made other than Letters of Credit and the Term Loan. “Revolving Credit Note” shall mean, collectively, the promissory notes referred to in Section 2.1(a) hereof. “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one and three-quarters percent (1.75%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three-quarters percent (2.75%) with respect to Eurodollar Rate Loans.",
"21 -------------------------------------------------------------------------------- Execution Copy “Rolling Stock” shall mean all trucks, trailers, other motor vehicles or construction equipment (including without limitation all cranes, bulldozers, loaders, tractors, forklifts, lifts and winches) that are used or capable of being used to transport Borrowers’ Inventory or Equipment or otherwise used by Borrowers in the Ordinary Course of Business. “SEC” shall mean the Securities and Exchange Commission or any successor thereto. “Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities. “Securities Act” shall mean the Securities Act of 1933, as amended. “Sellers” shall mean Michael G. Francis, Diana Istre Francis, Bryan Francis, Mackey Francis and Francis Oaks. “Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of each week or more frequently if Agent deems appropriate unless such day is not a Business Day in which case it shall be the next succeeding Business Day.",
"“Sponsor” shall mean NYTEX Energy Holdings, Inc., a Delaware corporation “Subcontractor Accounts Payable Reserve” shall mean a reserve established by Agent in an amount equal to all accounts payable to subcontractors of any Borrower. “Subordinated Obligations” shall mean and include all liabilities, loans, debts and other obligations of any Borrower owed to Waypoint. “Subordinated Obligations Documents” shall mean the Preferred Stock and Warrant Purchase Agreement, dated as of the date hereof, among Sponsor, Holdings and Waypoint, all Equity Interests (whether or not certificated) issued pursuant thereto and any Organizational Document of any Borrower which establish redemption, distribution or payment rights in favor of Waypoint, as amended, amended and restated, extended, supplemented and/or otherwise modified from time to time in accordance with the Subordination Agreement and this Agreement. “Subordinated Obligations Payments” shall mean and include all cash actually expended to make distributions or other payments in respect of the Subordinated Obligations as permitted by any Subordination Agreement and permitted pursuant to Section 7.7.",
"“Subordination Agreement(s)” shall mean (a) any agreement among any Loan Party, a subordinating creditor or Equity Interest holder of such Loan party and Agent, on behalf other Lenders, pursuant to which, among other things, the obligations owing to a subordinated creditor or Equity Interest holder are subordinated to the prior payment and satisfaction of the Obligations, including, without limitation, the Subordination Agreement dated as of the Closing Date, among Agent, Borrowers and Waypoint, and (b) any note, indenture, note purchase agreement or similar instrument or agreement, pursuant to which the indebtedness evidenced thereby or issued thereunder is subordinated to the Obligations by the express terms of such note, 22 -------------------------------------------------------------------------------- Execution Copy indenture, note purchase agreement or similar instrument or agreement, in each case, in form and substance satisfactory to Agent in its sole discretion. “Subsidiary” of any Person shall mean a corporation or other entity of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.",
"“Subsidiary Stock” shall mean all of the issued and outstanding Equity Interests of any Subsidiary owned by any Borrower (not to exceed 65% of the Equity Interests of any Foreign Subsidiary). “Term” shall have the meaning set forth in Section 13.1 hereof. “Term Loan” shall mean the Advances made pursuant to Section 2.4 hereof. “Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus two and one-half percent (2.50%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus three and one-half percent (3.50%) with respect to Eurodollar Rate Loans. “Term Note” shall mean, collectively, the promissory notes described in Section 2.4 hereof. “Termination Event” shall mean (i) a Reportable Event with respect to any Plan or Multiemployer Plan; (ii) the withdrawal of any Borrower or any member of the Controlled Group from a Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any Borrower or any member of the Controlled Group from a Multiemployer Plan.",
"“Texas Finance Code” shall have the meaning set forth in Section 3.6 hereof. “Toxic Substance” shall mean and include any material present on the Real Property or the Leasehold Interests which has been shown to have significant adverse effect on human health or which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state law, or any other applicable federal or state laws now in force or hereafter enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints. 23 -------------------------------------------------------------------------------- Execution Copy “Trading with the Enemy Act” shall mean the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling legislation or executive order relating thereto.",
"“Transactions” shall have the meaning set forth in Section 5.5 hereof. “Transferee” shall have the meaning set forth in Section 16.3(d) hereof. “Undrawn Availability” at a particular date shall mean an amount equal to (a) the lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii), minus (b) the sum of (i) the outstanding amount of Advances (other than the Term Loan) plus (ii) all amounts due and owing to any Borrower’s trade creditors which are outstanding more than sixty (60) days past the original due date plus (iii) fees and expenses for which Borrowers are liable but which have not been paid or charged to Borrowers’ Account plus (iv) all other past due Indebtedness.",
"“Unfinanced Capital Expenditures” shall mean all Capital Expenditures of Borrower other than those made utilizing financing provided by the applicable seller or third party lenders. For the avoidance of doubt, Capital Expenditures made by a Borrower utilizing Revolving Advances shall be deemed Unfinanced Capital Expenditures. “Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof. “USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced. “Waypoint” shall mean Waypoint NYTEX, LLC, a Delaware limited liability company. “Week” shall mean the time period commencing with the opening of business on a Wednesday and ending on the end of business the following Tuesday. 1.3. Uniform Commercial Code Terms. All terms used herein and defined in the Uniform Commercial Code as adopted in the State of Texas from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwise defined herein. Without limiting the foregoing, the terms “accounts”, “chattel paper”, “commercial tort claims”, “instruments”, “general intangibles”, “goods”, “payment intangibles”, “proceeds”, “supporting obligations”, “securities”, “investment property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”, as and when used in the description of Collateral shall have the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code.",
"To the extent the definition of any category or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such expanded definition will apply automatically as of the date of such amendment, modification or revision. 1.4. Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision. All references herein to Articles, Sections, Exhibits and 24 -------------------------------------------------------------------------------- Execution Copy Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be deemed to cover all genders.",
"Wherever appropriate in the context, terms used herein in the singular also include the plural and vice versa. All references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations. Unless otherwise provided, all references to any instruments or agreements to which Agent is a party, including references to any of the Other Documents, shall include any and all modifications or amendments thereto and any and all extensions or renewals thereof. All references herein to the time of day shall mean the time in New York, New York. Unless otherwise provided, all financial calculations shall be performed with Inventory valued on a first-in, first-out basis.",
"Whenever the words “including” or “include” shall be used, such words shall be understood to mean “including, without limitation” or “include, without limitation”. A Default or Event of Default shall be deemed to exist at all times during the period commencing on the date that such Default or Event of Default occurs to the date on which such Default or Event of Default is waived in writing pursuant to this Agreement or, in the case of a Default, is cured within any period of cure expressly provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in this Agreement or any of the Other Documents as having been created in favor of Agent, any agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for the benefit or account of Agent and Lenders.",
"Wherever the phrase “to the best of Borrowers’ knowledge” or words of similar import relating to the knowledge or the awareness of any Borrower or their respective representative officers or representatives are used in this Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a senior officer of any Borrower or (ii) the knowledge that a senior officer would have obtained if he had engaged in good faith and diligent performance of his duties, including the making of such reasonably specific inquiries as may be necessary of the employees or agents of such Borrower or Seller and a good faith attempt to ascertain the existence or accuracy of the matter to which such phrase relates.",
"All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by a covenant, the fact that it would be permitted by an exception to, or otherwise within the limitations of, another covenant shall not avoid the occurrence of a default if such action is taken or condition exists. In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of a breach of a representation or warranty hereunder. II ADVANCES, PAYMENTS. 2.1. Revolving Advances. (a) Amount of Revolving Advances. Subject to the terms and conditions set forth in this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make Revolving Advances to Borrowers in aggregate amounts outstanding at any time equal to such Lender’s Commitment Percentage of the lesser of (x) the Maximum Revolving Advance 25 -------------------------------------------------------------------------------- Execution Copy Amount less the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) less the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit or (y) an amount equal to the sum of: (i) up to 85%, subject to the provisions of Section 2.1(b) hereof (“Receivables Advance Rate”), of Eligible Receivables, minus (ii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus (iii) such reserves (including the Subcontractors Accounts Payable Reserve and any reserve established in respect of Borrowers’ Hedge Liabilities) as Agent may reasonably deem proper and necessary from time to time; The amount derived from the sum of (x) Section 2.1(a)(y)(i) minus (y) Section 2.1(a)(y)(iii) at any time and from time to time shall be referred to as the “Formula Amount”.",
"The Revolving Advances shall be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”) substantially in the form attached hereto as Exhibit 2.1(a). (b) Discretionary Rights. The Receivables Advance Rates may be increased or decreased by Agent at any time and from time to time in the exercise of its reasonable discretion. Each Borrower consents to any such increases or decreases and acknowledges that decreasing the Receivables Advance Rates or increasing or imposing reserves may limit or restrict Advances requested by Borrowing Agent. Agent shall give Borrowing Agent five (5) days prior notice of its intention to decrease the Receivables Advance Rates; provided, however, no Borrower shall have any right of action whatsoever against Agent for, and Agent shall not be liable for any damages resulting from, the failure of Agent to provide the prior notice contemplated in this sentence. The rights of Agent under this subsection are subject to the provisions of Section 16.2(b).",
"2.2. Procedure for Revolving Advances Borrowing. (a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 10:00 a.m. on a Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should any amount required to be paid as interest hereunder, or as fees or other charges under this Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation, become due unless Borrowers have elected a Eurodollar Rate Loan therefore in accordance with subsection (b) below, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate Loan as of the date such payment is due, in the amount required to pay in full such interest, fee, charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such request shall be irrevocable. (b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business Day), (ii) the type of borrowing and the amount on the date of such 26 -------------------------------------------------------------------------------- Execution Copy Advance to be borrowed, which amount shall be in an aggregate principal amount that is not less than $1,000,000 and integral multiples of $100,000 in excess thereof, and (iii) the duration of the first Interest Period therefor.",
"Interest Periods for Eurodollar Rate Loans shall be for one, two or three; provided, if an Interest Period would end on a day that is not a Business Day, it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate Loan shall be made available to any Borrower during the continuance of a Default or an Event of Default. After giving effect to each requested Eurodollar Rate Loan, including those which are converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than three (3) Eurodollar Rate Loans, in the aggregate. (c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in subsection (b)(iii) above provided that the exact length of each Interest Period shall be determined in accordance with the practice of the interbank market for offshore Dollar deposits and no Interest Period shall end after the last day of the Term. Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section 2.2(d), as the case may be.",
"Borrowing Agent shall elect the duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such duration not later than 10:00 a.m. on the day which is three (3) Business Days prior to the last day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow. (d) Provided that no Default or Event of Default shall have occurred and be continuing, Borrowing Agent may, on the last Business Day of the then current Interest Period applicable to any outstanding Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate Loans, convert any such loan into a loan of another type in the same aggregate principal amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent written notice by no later than 10:00 a.m. (i) on the day which is three (3) Business Days’ prior to the date on which such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the conversion is from a Domestic Rate Loan to any other type of loan, the duration of the first Interest Period therefore.",
"(e) At its option and upon written notice given prior to 10:00 a.m. at least three (3) Business Days’ prior to the date of such prepayment, any Borrower may prepay the Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of prepayment of Advances which are Eurodollar Rate Loans and the amount of such 27 -------------------------------------------------------------------------------- Execution Copy prepayment. In the event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than the last Business Day of the then current Interest Period with respect thereto, such Borrower shall indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof. (f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence of any prepayment, conversion of or any default by any Borrower in the payment of the principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder.",
"A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error. (g) Notwithstanding any other provision hereof, if any Applicable Law, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall include any Lender and the office or branch where any Lender or any corporation or bank controlling such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans of another type. If any such payment or conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or conversion, including (but not limited to) any interest or other amounts payable by Lenders to lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan.",
"A certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall be conclusive absent manifest error. 2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed from whichever office or other place Agent may designate from time to time and, together with any and all other Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s books. During the Term, Borrowers may use the Revolving Advances by borrowing, prepaying and reborrowing, all in accordance with the terms and conditions hereof.",
"The proceeds of each Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have been requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving Advances to the extent Lenders make such Revolving Advances, be made available to the applicable Borrower on the day so requested by way of credit to such Borrower’s operating account at PNC, or such other bank as Borrowing Agent may designate following notification to Agent, in immediately available federal funds or other immediately available funds or, with respect to Revolving Advances deemed to have been 28 -------------------------------------------------------------------------------- Execution Copy requested by any Borrower, be disbursed to Agent to be applied to the outstanding Obligations giving rise to such deemed request. 2.4. Term Loan. (a) Term Loan. Subject to the terms and conditions of this Agreement, each Lender, severally and not jointly, will make a Term Loan to Borrowers in the sum equal to such Lender’s Commitment Percentage of $12,000,000.",
"The Term Loan shall be advanced on the Closing Date and shall be, with respect to principal, payable as follows, subject to acceleration upon the occurrence of an Event of Default under this Agreement or termination of this Agreement: (a) commencing on December 1, 2010 and continuing on the first Business Day of each and every calendar month through thereafter, Borrowers shall pay to Agent equal monthly payments of principal in the aggregate amount of $142,857.14 (which amount has been agreed to by Borrowers and Lenders and based upon a seven year principal amortization schedule) and (b) the entire outstanding principal balance of this Term Loan, together with all accrued and unpaid interest, shall be due and payable in full on the last day of the Term, if not sooner paid, by Borrowers.",
"The Term Loan shall be evidenced by one or more secured promissory notes (collectively, the “Term Note”) in substantially the form attached hereto as Exhibit 2.4. The Term Loan may consist of Domestic Rate Loans or Eurodollar Rate Loans, or a combination thereof, as Borrowing Agent may request. In the event that Borrowers desire to obtain or extend a Eurodollar Rate Loan or to convert a Domestic Rate Loan to a Eurodollar Rate Loan, Borrowing Agent shall comply with the notification requirements set forth in Sections 2.2(b) and (d) and the provisions of Sections 2.2(b) through (g) shall apply. Amounts repaid under the Term Loan may not be reborrowed. 2.5. Maximum Advances. The aggregate balance of Revolving Advances outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) or (b) the Formula Amount less, in each case, the aggregate Maximum Undrawn Amount of all issued and outstanding Letters of Credit.",
"2.6. Repayment of Advances. (a) The Revolving Advances shall be due and payable in full on the last day of the Term subject to earlier prepayment as herein provided. The Term Loan shall be due and payable as provided in Section 2.4 hereof and in the Term Note, subject to mandatory prepayments as herein provided. (b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the date received. In consideration of Agent’s agreement to conditionally credit Borrowers’ Account as of the next Business Day following Agent’s receipt of those items of payment, each Borrower agrees that, in computing the charges under this Agreement, all items of payment shall be deemed applied by Agent on account of the Obligations one (1) Business Day after (i) the Business Day following Agent’s receipt of such payments via wire transfer or electronic depository check or (ii) in the case of payments received by Agent in any other form, the Business Day such payments constitute good funds in Agent’s 29 -------------------------------------------------------------------------------- Execution Copy account.",
"Agent is not, however, required to credit Borrowers’ Account for the amount of any item of payment which is unsatisfactory to Agent and Agent may charge Borrowers’ Account for the amount of any item of payment which is returned to Agent unpaid. (c) All payments of principal, interest and other amounts payable hereunder, or under any of the Other Documents shall be made to Agent at the Payment Office not later than 12:00 p.m. on the due date therefor in lawful money of the United States of America in federal funds or other funds immediately available to Agent. Agent shall have the right to effectuate payment on any and all Obligations due and owing hereunder by charging Borrowers’ Account or by making Advances as provided in Section 2.2 hereof. (d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under any related agreement, without any deduction whatsoever, including, but not limited to, any deduction for any setoff or counterclaim.",
"2.7. Repayment of Excess Advances. The aggregate balance of Advances outstanding at any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due and payable without the necessity of any demand, at the Payment Office, whether or not a Default or Event of Default has occurred. 2.8. Statement of Account. Agent shall maintain, in accordance with its customary procedures, a loan account (“Borrowers’ Account”) in the name of Borrowers in which shall be recorded the date and amount of each Advance made by Agent and the date and amount of each payment in respect thereof; provided, however, the failure by Agent to record the date and amount of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to Borrowing Agent a statement showing the accounting for the Advances made, payments made or credited in respect thereof, and other transactions between Agent and Borrowers during such month.",
"The monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest error and shall constitute an account stated between Lenders and Borrowers unless Agent receives a written statement of Borrowers’ specific exceptions thereto within thirty (30) days after such statement is received by Borrowing Agent. The records of Agent with respect to the loan account shall be conclusive evidence absent manifest error of the amounts of Advances and other charges thereto and of payments applicable thereto. 2.9. Letters of Credit. Subject to the terms and conditions hereof, Agent shall issue or cause the issuance of standby and/or trade letters of credit (“Letters of Credit”) for the account of any Borrower; provided, however, that Agent will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance thereof would then cause the sum of (i) the outstanding Revolving Advances plus (ii) the Maximum Undrawn Amount of all outstanding Letters of Credit to exceed the lesser of (x) the Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) or (y) the Formula Amount.",
"The Maximum Undrawn Amount of outstanding Letters of Credit shall not exceed in the aggregate at any time the Letter of Credit Sublimit. All disbursements or payments related to Letters of Credit shall be deemed to be Domestic Rate Loans consisting of Revolving Advances and shall bear interest at the Revolving Interest Rate for Domestic Rate Loans; Letters of Credit that have not been drawn upon shall not bear interest. 30 -------------------------------------------------------------------------------- Execution Copy 2.10. Issuance of Letters of Credit. (a) Borrowing Agent, on behalf of Borrowers, may request Agent to issue or cause the issuance of a Letter of Credit by delivering to Agent at the Payment Office, prior to 10:00 a.m., at least five (5) Business Days’ prior to the proposed date of issuance, Agent’s form of Letter of Credit Application (the “Letter of Credit Application”) completed to the satisfaction of Agent; and, such other certificates, documents and other papers and information as Agent may reasonably request.",
"Borrowing Agent, on behalf of Borrowers, also has the right to give instructions and make agreements with respect to any application, any applicable letter of credit and security agreement, any applicable letter of credit reimbursement agreement and/or any other applicable agreement, any letter of credit and the disposition of documents, disposition of any unutilized funds, and to agree with Agent upon any amendment, extension or renewal of any Letter of Credit. (b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts, other written demands for payment, or acceptances of usance drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twenty-four (24) months after such Letter of Credit’s date of issuance and in no event later than the last day of the Term.",
"Each standby Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits as most recently published by the International Chamber of Commerce at the time a Letter of Credit is issued (the “UCP”) or the International Standby Practices (ISP98 International Chamber of Commerce Publication Number 590) (the “ISP98 Rules”)), and any subsequent revision thereof at the time a standby Letter of Credit is issued, as determined by Agent, and each trade Letter of Credit shall be subject to the UCP. (c) Agent shall use its reasonable efforts to notify Lenders of the request by Borrowing Agent for a Letter of Credit hereunder. 2.11. Requirements For Issuance of Letters of Credit. (a) Borrowing Agent shall authorize and direct any Issuer to name the applicable Borrower as the “Applicant” or “Account Party” of each Letter of Credit.",
"If Agent is not the Issuer of any Letter of Credit, Borrowing Agent shall authorize and direct the Issuer to deliver to Agent all instruments, documents, and other writings and property received by the Issuer pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit, the application therefore or any acceptance therefore. (b) In connection with all Letters of Credit issued or caused to be issued by Agent under this Agreement, each Borrower hereby appoints Agent, or its designee, as its attorney, with full power and authority if a Default or an Event of Default shall have occurred, (i) to sign and/or endorse such Borrower’s name upon any warehouse or other receipts, letter of credit applications and acceptances, (ii) to sign such Borrower’s name on bills of lading; (iii) to 31 -------------------------------------------------------------------------------- Execution Copy clear Inventory through the United States of America Customs Department (“Customs”) in the name of such Borrower or Agent or Agent’s designee, and to sign and deliver to Customs officials powers of attorney in the name of such Borrower for such purpose; and (iv) to complete in such Borrower’s name or Agent’s, or in the name of Agent’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof. Neither Agent nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Agent’s or its attorney’s willful misconduct.",
"This power, being coupled with an interest, is irrevocable as long as any Letters of Credit remain outstanding. 2.12. Disbursements, Reimbursement. (a) Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Commitment Percentage of the Maximum Face Amount of such Letter of Credit and the amount of such drawing, respectively. (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, Agent will promptly notify Borrowing Agent. Provided that Borrowing Agent shall have received such notice, Borrowers shall reimburse (such obligation to reimburse Agent shall sometimes be referred to as a “Reimbursement Obligation”) Agent prior to 12:00 p.m. on each date that an amount is paid by Agent under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by Agent.",
"In the event Borrowers fail to reimburse Agent for the full amount of any drawing under any Letter of Credit by 12:00 p.m. on the Drawing Date, Agent will promptly notify each Lender thereof, and Borrowers shall be deemed to have requested that a Revolving Advance maintained as a Domestic Rate Loan be made by Lenders to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the lesser of (x) Maximum Revolving Advance Amount minus the amount of reserves, if any, established in accordance with Section 2.1(a)(y)(iii) or (y) the Formula Amount, less, in each case, the Maximum Undrawn Amount of all Letters of Credit and subject to Section 8.2 hereof. Any notice given by Agent pursuant to this Section 2.12(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (c) Each Lender shall upon any notice pursuant to Section 2.12(b) make available to Agent an amount in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.12(d)) each be deemed to have made a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in that amount.",
"If any Lender so notified fails to make available to Agent the amount of such Lender’s Commitment Percentage of such amount by no later than 2:00 p.m., on the Drawing Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Revolving Advances maintained as a Domestic Rate Loan on and after the fourth day following the 32 -------------------------------------------------------------------------------- Execution Copy Drawing Date. Agent will promptly give notice of the occurrence of the Drawing Date, but failure of Agent to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.12(c), provided that such Lender shall not be obligated to pay interest as provided in Section 2.12(c) (i) and (ii) until and commencing from the date of receipt of notice from Agent of a drawing. (d) With respect to any unreimbursed drawing that is not converted into a Revolving Advance maintained as a Domestic Rate Loan to Borrowers in whole or in part as contemplated by Section 2.12(b), because of Borrowers’ failure to satisfy the conditions set forth in Section 8.2 (other than any notice requirements) or for any other reason, Borrowers shall be deemed to have incurred from Agent a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing.",
"Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to a Revolving Advance maintained as a Domestic Rate Loan. Each Lender’s payment to Agent pursuant to Section 2.12(c) shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance” from such Lender in satisfaction of its Participation Commitment under this Section 2.12. (e) Each Lender’s Participation Commitment shall continue until the last to occur of any of the following events: (x) Agent ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (y) no Letter of Credit issued or created hereunder remains outstanding and uncancelled and (z) all Persons (other than Borrowers) have been fully reimbursed for all payments made under or relating to Letters of Credit. 2.13. Repayment of Participation Advances. (a) Upon (and only upon) receipt by Agent for its account of immediately available funds from Borrowers (i) in reimbursement of any payment made by Agent under the Letter of Credit with respect to which any Lender has made a Participation Advance to Agent, or (ii) in payment of interest on such a payment made by Agent under such a Letter of Credit, Agent will pay to each Lender, in the same funds as those received by Agent, the amount of such Lender’s Commitment Percentage of such funds, except Agent shall retain the amount of the Commitment Percentage of such funds of any Lender that did not make a Participation Advance in respect of such payment by Agent.",
"(b) If Agent is required at any time to return to any Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by Borrowers to Agent pursuant to Section 2.13(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of Agent, forthwith return to Agent the amount of its Commitment Percentage of any amounts so returned by Agent plus interest at the Federal Funds Effective Rate. 2.14. Documentation. Each Borrower agrees to be bound by the terms of the Letter of Credit Application and by Agent’s interpretations of any Letter of Credit issued on behalf of such Borrower and by Agent’s written regulations and customary practices relating to letters of credit, though Agent’s interpretations may be different from such Borrower’s own.",
"In the event 33 -------------------------------------------------------------------------------- Execution Copy of a conflict between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY ACT OR INACTIVE ARISING FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), in following the Borrowing Agent’s or any Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto. 2.15. Determination to Honor Drawing Request. In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth. 2.16. Nature of Participation and Reimbursement Obligations.",
"Each Lender’s obligation in accordance with this Agreement to make the Revolving Advances or Participation Advances as a result of a drawing under a Letter of Credit, and the obligations of Borrowers to reimburse Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.16 under all circumstances, including the following circumstances: (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Agent, any Borrower or any other Person for any reason whatsoever; (ii) the failure of any Borrower or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in this Agreement for the making of a Revolving Advance, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of Lenders to make Participation Advances under Section 2.12; (iii) any lack of validity or enforceability of any Letter of Credit; (iv) any claim of breach of warranty that might be made by Borrower or any Lender against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, cross-claim, defense or other right which any Borrower or any Lender may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), Agent or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Borrower or any Subsidiaries of such Borrower and the beneficiary for which any Letter of Credit was procured); 34 -------------------------------------------------------------------------------- Execution Copy (v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if Agent or any of Agent’s Affiliates has been notified thereof; (vi) payment by Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit; (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit; (viii) any failure by Agent or any of Agent’s Affiliates to issue any Letter of Credit in the form requested by Borrowing Agent, unless Agent has received written notice from Borrowing Agent of such failure within three (3) Business Days after Agent shall have furnished Borrowing Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice; (ix) any Material Adverse Effect on any Loan Party; (x) any breach of this Agreement or any Other Document by any party thereto; (xi) the occurrence or continuance of an insolvency proceeding with respect to any Loan Party; (xii) the fact that a Default or Event of Default shall have occurred and be continuing; (xiii) the fact that the Term shall have expired or this Agreement or the Obligations hereunder shall have been terminated; and (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.",
"2.17. Indemnity. In addition to amounts payable as provided in Section 16.5, each Borrower hereby agrees to protect, indemnify, pay and save harmless Agent and any of Agent’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which Agent or any of Agent’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED 35 -------------------------------------------------------------------------------- Execution Copy MATTER ARISING FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), other than as a result of (A) the gross negligence or willful misconduct of Agent as determined by a final and non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by Agent or any of Agent’s Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Body (all such acts or omissions herein called “Governmental Acts”).",
"2.18. Liability for Acts and Omissions. As between Borrowers and Agent and Lenders, each Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED MATTER ARISING FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY). In furtherance and not in limitation of the respective foregoing, Agent shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if Agent shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Borrower against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Borrower and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, facsimile, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Agent, including any governmental acts, and none of the above shall affect or impair, or prevent the vesting of, any of Agent’s rights or powers hereunder.",
"Nothing in the preceding sentence shall relieve Agent from liability for Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment) in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall Agent or Agent’s Affiliates be liable to any Borrower for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.",
"Without limiting the generality of the foregoing, Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court 36 -------------------------------------------------------------------------------- Execution Copy order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by Agent or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on Agent or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.",
"In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Agent under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in its good faith and without gross negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment), shall not put Agent under any resulting liability to any Borrower or any Lender. 2.19. Additional Payments. Any sums expended by Agent or any Lender due to any Borrower’s failure to perform or comply with its obligations under this Agreement or any Other Document including any Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrowers’ Account as a Revolving Advance and added to the Obligations. 2.20.",
"Manner of Borrowing and Payment. (a) Each borrowing of Revolving Advances shall be advanced according to the applicable Commitment Percentages of Lenders. The Term Loan shall be advanced according to the Commitment Percentages of Lenders. (b) Each payment (including each prepayment) by any Borrower on account of the principal of and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata according to the applicable Commitment Percentages of Lenders. Each payment (including each prepayment) by any Borrower on account of the principal of and interest on the Term Note, shall be made from or to, or applied to that portion of the Term Loan evidenced by the Term Note pro rata according to the Commitment Percentages of Lenders. Except as expressly provided herein, all payments (including prepayments) to be made by any Borrower on account of principal, interest and fees shall be made without set off or counterclaim and shall be made to Agent on behalf of Lenders to the Payment Office, in each case on or prior to 1:00 p.m., in Dollars and in immediately available funds. (c) (i) Notwithstanding anything to the contrary contained in Sections 2.20(a) and (b) hereof, commencing with the first Business Day following the Closing Date, each 37 -------------------------------------------------------------------------------- Execution Copy borrowing of Revolving Advances shall be advanced by Agent and each payment by any Borrower on account of Revolving Advances shall be applied first to those Revolving Advances advanced by Agent.",
"On or before 1:00 p.m., on each Settlement Date commencing with the first Settlement Date following the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the aggregate amount of repayments applied to outstanding Revolving Advances during such preceding Week, then each Lender shall provide Agent with funds in an amount equal to its applicable Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of the difference between (y) such repayments and (z) such Revolving Advances.",
"(ii) Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate on outstanding Advances which it has funded. (iii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate with respect to payments received and Advances made during the Week immediately preceding such Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error. (d) If any Lender or Participant (a “benefited Lender”) shall at any time receive any payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such payment to and Collateral received by any other Lender, if any, in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from the other Lenders a participation in such portion of each such other Lender’s Advances, or shall provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s Advances may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion.",
"(e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender that such Lender will not make the amount which would constitute its applicable Commitment Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume that such Lender shall make such amount available to Agent on the next Settlement Date and, in reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent on demand an amount equal to the product of (i) the daily average Federal Funds Rate (computed on the basis of a year of 360 days) during such 38 -------------------------------------------------------------------------------- Execution Copy period as quoted by Agent, times (ii) such amount, times (iii) the number of days from and including such Settlement Date to the date on which such amount becomes immediately available to Agent.",
"A certificate of Agent submitted to any Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the absence of manifest error. If such amount is not in fact made available to Agent by such Lender within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances hereunder, on demand from Borrowers; provided, however, that Agent’s right to such recovery shall not prejudice or otherwise adversely affect Borrowers’ rights (if any) against such Lender. 2.21. Mandatory Prepayments. (a) Subject to Section 4.3 hereof, when any Borrower sells or otherwise disposes of any Collateral other than Inventory in the Ordinary Course of Business, Borrowers shall repay the Advances in an amount equal to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or other dispositions), such repayments to be made promptly but in no event more than one (1) Business Day following receipt of such net proceeds, and until the date of payment, such proceeds shall be held in trust for Agent.",
"The foregoing shall not be deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions hereof. Such repayments shall be applied (i) first, to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof and (ii) second, to the remaining Advances in such order as Agent may determine, subject to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms hereof. (b) Borrowers shall prepay the outstanding principal installments of the Term Loan in the inverse order of maturities in an amount equal to twenty-five percent (25%) of Excess Cash Flow for each fiscal year commencing on or after September 1, 2010, payable upon delivery of the financial statements to Agent referred to in and required by Section 9.7 for such fiscal year but in any event not later than one hundred twenty (120) days after the end of each such fiscal year. In the event that the financial statement is not so delivered, then a calculation based upon estimated amounts shall be made by Agent upon which calculation Borrowers shall make the prepayment required by this Section 2.21(c), subject to adjustment when the financial statement is delivered to Agent as required hereby.",
"The calculation made by Agent shall not be deemed a waiver of any rights Agent or Lenders may have as a result of the failure by Borrowers to deliver such financial statement. 2.22. Use of Proceeds. (a) On the Closing Date, Holdings shall apply the proceeds of the Advances made on the Closing Date to finance a portion of the consideration payable under the Acquisition Agreement and to refinance existing Indebtedness of Borrowers (other than Holdings). After the Closing Date, Borrowers (other than Holdings) shall apply the proceeds of Advances to (i) pay fees and expenses relating to the Transaction (including the Transaction Costs), and (ii) provide for their working capital needs and reimburse drawings under Letters of Credit. (b) Without limiting the generality of Section 2.22(a) above, no Loan Party nor any other Person which may in the future become party to this Agreement or the Other 39 -------------------------------------------------------------------------------- Execution Copy Documents as a Loan Party, intends to use nor shall they use any portion of the proceeds of the Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.",
"2.23. Defaulting Lender. (a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement) to make available its portion of any Advance or (y) notifies either Agent or Borrowing Agent that it does not intend to make available its portion of any Advance (if the actual refusal would constitute a breach by such Lender of its obligations under this Agreement) (each, a “Lender Default”), all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which a Lender Default is in effect and of the other parties hereto shall be modified to the extent of the express provisions of this Section 2.23 while such Lender Default remains in effect. (b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”) which are not Defaulting Lenders based on their respective Commitment Percentages, and no Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced by any Lender shall be increased as a result of such Lender Default. Amounts received in respect of principal of any type of Advances shall be applied to reduce the applicable Advances of each Lender (other than any Defaulting Lender) pro rata based on the aggregate of the outstanding Advances of that type of all Lenders at the time of such application; provided, that, Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent.",
"Agent may hold and, in its discretion, re-lend to a Borrower the amount of such payments received or retained by it for the account of such Defaulting Lender. (c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve, disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents. All amendments, waivers and other modifications of this Agreement and the Other Documents may be made without regard to a Defaulting Lender and, for purposes of the definition of “Required Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances outstanding or a Commitment Percentage. (d) Other than as expressly set forth in this Section 2.23, the rights and obligations of a Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in this Section 2.23 shall be deemed to release any Defaulting Lender from its obligations under this Agreement and the Other Documents, shall alter such obligations, shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a result of any default by such Defaulting Lender hereunder.",
"(e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall be treated as a Lender under this Agreement. 40 -------------------------------------------------------------------------------- Execution Copy III INTEREST AND FEES. 3.1. Interest. Interest on Advances shall be payable in arrears on the first day of each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the end of each Interest Period. Interest charges shall be computed on the actual principal amount of Advances outstanding during the month at a rate per annum equal to (i) with respect to Revolving Advances, the applicable Revolving Interest Rate and (ii) with respect to the Term Loan, the applicable Term Loan Rate (as applicable, the “Contract Rate”).",
"Whenever, subsequent to the date of this Agreement, the Alternate Base Rate is increased or decreased, the applicable Contract Rate shall be similarly changed without notice or demand of any kind by an amount equal to the amount of such change in the Alternate Base Rate during the time such change or changes remain in effect. The Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of any change in the Reserve Percentage as of such effective date.",
"Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Obligations shall bear interest at the applicable Contract Rate plus two (2%) percent per annum the “Default Rate”). 3.2. Letter of Credit Fees. (a) Borrowers shall pay (x) to Agent, for the ratable benefit of Lenders, fees for each Letter of Credit for the period from and excluding the date of issuance of same to and including the date of expiration or termination, equal to the average daily face amount of each outstanding Letter of Credit multiplied by two and three-quarters percent (2.75%) per annum, such fees to be calculated on the basis of a 360-day year for the actual number of days elapsed and to be payable quarterly in arrears on the first day of each quarter and on the last day of the Term, and (y) to the Issuer, a fronting fee of one quarter of one percent (0.25%) per annum, together with any and all administrative, issuance, amendment, payment and negotiation charges with respect to Letters of Credit and all fees and expenses as agreed upon by the Issuer and the Borrowing Agent in connection with any Letter of Credit, including in connection with the opening, amendment or renewal of any such Letter of Credit and any acceptances created thereunder and shall reimburse Agent for any and all fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing fees, the “Letter of Credit and Fees”).",
"All such charges shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Any such charge in effect at the time of a particular transaction shall be the charge for that transaction, notwithstanding any subsequent change in the Issuer’s prevailing charges for that type of transaction. All Letter of Credit Fees and Acceptance Fees payable hereunder shall be deemed earned in full on the date when the same are due and payable hereunder and shall not be subject to rebate or pro-ration upon the termination of this Agreement for any reason. Upon and after the occurrence of an Event of Default, and during the continuation thereof, at the option of Agent or at the direction of Required Lenders, the Letter of Credit Fees described in clause (x) of this Section 3.2(a) shall be increased by an additional two percent (2%) per annum. On demand, Borrowers will cause cash to be deposited and maintained in an account with Agent, as cash collateral, in an amount equal to one hundred and five percent (105%) of the Maximum Undrawn Amount of all outstanding Letters of Credit, and each Borrower hereby 41 -------------------------------------------------------------------------------- Execution Copy irrevocably authorizes Agent, in its discretion, on such Borrower’s behalf and in such Borrower’s name, to open such an account and to make and maintain deposits therein, or in an account opened by such Borrower, in the amounts required to be made by such Borrower, out of the proceeds of Receivables or other Collateral or out of any other funds of such Borrower coming into any Lender’s possession at any time.",
"Agent will invest such cash collateral (less applicable reserves) in such short-term money-market items as to which Agent and such Borrower mutually agree and the net return on such investments shall be credited to such account and constitute additional cash collateral. No Borrower may withdraw amounts credited to any such account except upon the occurrence of all of the following: (x) payment and performance in full of all Obligations, (y) expiration of all Letters of Credit and (z) termination of this Agreement.",
"3.3. Closing Fee and Facility Fee. (a) Closing Fee. Upon the execution of this Agreement, Borrowers shall pay to Agent for the ratable benefit of Lenders a closing fee of $180,000, less that portion of the commitment fee of $60,000 and deposit fee of $50,000 heretofore paid by Borrowers to Agent remaining after application of such fee to Agent’s out of pocket costs, fees (including attorneys’ fees) and expenses. (b) Facility Fee. If, for any calendar quarter during the Term, the average daily unpaid balance of the Revolving Advances and undrawn amount of any outstanding Letters of Credit for each day of such calendar quarter does not equal the Maximum Revolving Advance Amount, then Borrowers shall pay to Agent for the ratable benefit of Lenders a fee at a rate equal to one quarter of one percent (0.25%) per annum on the amount by which the Maximum Revolving Advance Amount exceeds such average daily unpaid balance.",
"Such fee shall be payable to Agent in arrears on the first day of each calendar quarter with respect to the previous calendar quarter. 3.4. Collateral Management Fee, Collateral Examination Fee and Fee Letter. (a) Collateral Management Fee. Borrowers shall pay Agent a collateral management fee equal to $2,000 per calendar month commencing on the first day of the calendar month following the Closing Date and on the first day of each calendar month thereafter during the Term. (b) Collateral Examination Fee. Borrowers shall pay to Agent on the first day of each month following any month in which Agent performs any collateral examination, including, without limitation, any field examination, collateral analysis or other business analysis, the need for which is to be determined by Agent and which monitoring is undertaken by Agent or for Agent’s benefit — a collateral examination fee in an amount equal to $850 per day for each person employed to perform such monitoring, plus all costs and disbursements incurred by Agent in the performance of such examination or analysis. The fees set forth in this Section 3.3 and 3.4 shall be in addition to any other fees, costs or expenses payable pursuant to any Other Document and each of the fees described in Sections 3.3 and 3.4 constitute part of the Obligations.",
"Each of the fees described in Sections 3.3 and 3.4 42 -------------------------------------------------------------------------------- Execution Copy shall be deemed earned in full and non-refundable on the date when same is due and payable hereunder and shall not be subject to rebate or proration upon termination of this Agreement for any reason. 3.5. Computation of Interest and Fees. Interest and fees hereunder shall be computed on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be made hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Contract Rate during such extension.",
"3.6. Maximum Charges. It is the intention of the parties to comply strictly with applicable usury laws. Accordingly, no rate change shall be put into effect that would result in a rate greater than the highest rate permitted by law. Notwithstanding anything to the contrary contained in this Agreement or in any Other Document, all agreements which either now are or which shall become agreements among any Borrower, Agent and Lenders are hereby limited so that in no contingency or event whatsoever shall the total liability for payments in the nature of interest, additional interest and other charges exceed the applicable limits imposed by any applicable usury laws. If any payments in the nature of interest, additional interest and other charges made under this Agreement or any Other Document are held to be in excess of the limits imposed by any applicable usury laws, it is agreed that any such amount held to be in excess shall be considered payment of principal hereunder, and the indebtedness evidenced hereby shall be reduced by such amount so that the total liability for payments in the nature of interest, additional interest and other charges shall not exceed the applicable limits imposed by any applicable usury laws, in compliance with the desires of Borrowers and Agent.",
"This provision shall never be superseded or waived and shall control every other provision of this Agreement or any Other Document and all agreements among any Borrower and Agent and Lenders, or their respective successors and assigns. Unless preempted by federal law or as permitted under the sentence immediately following this sentence, the applicable Revolving Interest Rate, or Term Loan Interest Rate, from time to time in effect under this Agreement may not exceed the “weekly ceiling” from time to time in effect under Chapter 303 of the Texas Finance Code, as amended from time to time (the “Texas Finance Code”). If the applicable state or federal law is amended in the future to allow a greater rate of interest to be charged under this Agreement than is presently allowed by applicable state or federal law, then the limitation of interest hereunder shall be increased to the maximum rate of interest allowed by applicable state or federal law as amended, which increase shall be effective hereunder on the effective date of such amendment, and all interest charges owing to Lender by reason thereof shall be payable in accordance with Section 2.6 hereof.",
"If by operation of this provision, Borrowers would be entitled to a refund of interest paid pursuant to this Agreement, each Lender agrees that it shall pay to Borrowers upon Agent’s request such Lender’s Commitment Percentage of such interest to be refunded, as determined by Agent. 3.7. Increased Costs.",
"In the event that any Applicable Law, or any change therein or in the interpretation or application thereof, or compliance by any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having the force of law) from any central bank or other financial, monetary or other authority, shall: 43 -------------------------------------------------------------------------------- Execution Copy (a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender of principal, fees, interest or any other amount payable hereunder or under any Other Documents (except for changes in the rate of tax on the overall net income of Agent or any Lender by the jurisdiction in which it maintains its principal office); (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, advances or loans by, or other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or (c) impose on Agent or any Lender or the London interbank Eurodollar market any other condition with respect to this Agreement or any Other Document; and the result of any of the foregoing is to increase the cost to Agent or any Lender of making, renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be material or to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Advances by an amount that Agent or such Lender deems to be material, then, in any case Borrowers shall promptly pay Agent or such Lender, upon its demand, such additional amount as will compensate Agent or such Lender for such additional cost or such reduction, as the case may be, provided that the foregoing shall not apply to increased costs which are reflected in the Eurodollar Rate, as the case may be.",
"Agent or such Lender shall certify the amount of such additional cost or reduced amount to Borrowing Agent, and such certification shall be conclusive absent manifest error. Notwithstanding the foregoing, for purposes of this Agreement, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives in connection therewith are deemed to have gone into effect and adopted thirty (30) days after the date of this Agreement. 3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the event that Agent or any Lender shall have determined that: (a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to Section 2.2 hereof for any Interest Period; or (b) Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan, then Agent shall give Borrowing Agent prompt written or telephonic of such determination. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 10:00 a.m. two (2) Business Days prior to the date of such proposed borrowing, that its request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an affected type of Eurodollar Rate 44 -------------------------------------------------------------------------------- Execution Copy Loan shall be continued as or converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 10:00 a.m. two (2) Business Days prior to the last Business Day of the then current Interest Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such affected Eurodollar Rate Loans.",
"Until such notice has been withdrawn, Lenders shall have no obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan. 3.9. Capital Adequacy. (a) In the event that Agent or any Lender shall have determined that any Applicable Law or guideline regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Body, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by Agent or any Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or such Lender could have achieved but for such adoption, change or compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time, Borrowers shall pay upon demand to Agent or such Lender such additional amount or amounts as will compensate Agent or such Lender for such reduction.",
"In determining such amount or amounts, Agent or such Lender may use any reasonable averaging or attribution methods. The protection of this Section 3.9 shall be available to Agent and each Lender regardless of any possible contention of invalidity or inapplicability with respect to the Applicable Law or condition. (b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered to Borrowing Agent shall be conclusive absent manifest error. 3.10. Gross Up for Taxes. If any Borrower shall be required by Applicable Law to withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each, individually, a “Payee” and collectively, the “Payees”), (a) the sum payable to such Payee or Payees, as the case may be, shall be increased as may be necessary so that, after making all required withholding or deductions, the applicable Payee or Payees receives an amount equal to the sum it would have received had no such withholding or deductions been made (the “Gross-Up Payment”), (b) such Borrower shall make such withholding or deductions, 45 -------------------------------------------------------------------------------- Execution Copy and (c) such Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with Applicable Law.",
"Notwithstanding the foregoing, no Borrower shall be obligated to make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete exemption with respect thereto pursuant to Section 3.11 hereof. 3.11. Withholding Tax Exemption. (a) Each Payee that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of Agent, each other Payee) agrees that it will deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code. The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.",
"(b) Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as follows: (A) each Payee which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by any Borrower hereunder for the account of such Payee; (B) each Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless Agent in its sole discretion shall permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by Agent). Each Payee which so delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrowing Agent or Agent.",
"(c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any tax it deducts and withholds in accordance with regulations under §1441 of the Code.",
"46 -------------------------------------------------------------------------------- Execution Copy IV COLLATERAL: GENERAL TERMS 4.1. Security Interest in the Collateral. To secure the prompt payment and performance to Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges and grants to Agent for its benefit and for the ratable benefit of each Lender a continuing security interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter acquired or arising and wheresoever located. Each Borrower shall mark its books and records as may be necessary or appropriate to evidence, protect and perfect Agent’s security interest and shall cause its financial statements to reflect such security interest.",
"Each Borrower shall promptly provide Agent with written notice of all commercial tort claims, such notice to contain the case title together with the applicable court and a brief description of the claim(s). Upon delivery of each such notice, such Borrower shall be deemed to hereby grant to Agent a security interest and lien in and to such commercial tort claims and all proceeds thereof. 4.2. Perfection of Security Interest. Each Borrower shall take all action that may be necessary or desirable, or that Agent may request, so as at all times to maintain the validity, perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to, (i) immediately discharging all Liens other than Permitted Encumbrances, (ii) obtaining Lien Waiver Agreements, (iii) delivering to Agent, endorsed or accompanied by such instruments of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify, any and all chattel paper, instruments, letters of credits and advices thereof and documents evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other custodial arrangements satisfactory to Agent, and (v) executing and delivering financing statements, control agreements, instruments of pledge, mortgages, notices and assignments, in each case in form and substance satisfactory to Agent, relating to the creation, validity, perfection, maintenance or continuation of Agent’s security interest and Lien in and to the Collateral under the Uniform Commercial Code or other Applicable Law.",
"By its signature hereto, each Borrower hereby authorizes Agent to file against such Borrower, one or more financing, continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance satisfactory to Agent (which statements may have a description of collateral which is broader than that set forth herein). All charges, expenses and fees Agent may incur in doing any of the foregoing, and any local taxes relating thereto, shall be charged to Borrowers’ Account as a Revolving Advance of a Domestic Rate Loan and added to the Obligations, or, at Agent’s option, shall be paid to Agent for its benefit and for the ratable benefit of Lenders immediately upon demand.",
"4.3. Disposition of Collateral. Each Borrower will safeguard and protect all Collateral for Agent’s general account and make no disposition thereof whether by sale, lease or otherwise except (a) the sale of Inventory in the Ordinary Course of Business and (b) the disposition or transfer of obsolete and worn-out Equipment in the Ordinary Course of Business during any fiscal year having an aggregate fair market value of not more than $750,000 and only to the extent that the net cash proceeds of such disposition are remitted to Agent to, at the election of the Borrowers (evidenced by a certificate setting forth such election delivered to Agent within two (2) Business Days of any such disposition), either (x) be applied by Agent pursuant to Section 2.21 or (y) be applied to the outstanding Revolving Advances provided that Agent simultaneously institutes a reserve pursuant to Section 2.1(a)(y) in an amount equal to such net 47 -------------------------------------------------------------------------------- Execution Copy cash proceeds, which reserve shall be released upon the earlier to occur of (i) Borrowers request a Revolving Advance in amount equal to or less than the amount of such reserve within 90 days following such disposition to acquire replacement Equipment which shall be subject to Agent’s first priority security interest, in which case, Agent shall make, subject to the provisions of Section 8.2 and Article II hereof, a Revolving Advance available to Borrowers for such acquisition or (ii) 90 days following such disposition shall elapse, in which case, Agent shall immediately release such reserve and the proceeds of such disposition shall be applied by Agent pursuant to Section 2.21.",
"4.4. Preservation of Collateral. Following the occurrence of a Default or Event of Default in addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s interest in and to preserve the Collateral, including the hiring of such security guards or the placing of other security protection measures as Agent may deem appropriate; (b) may employ and maintain at any of any Borrower’s premises a custodian who shall have full authority to do all acts necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to which Agent may move all or part of the Collateral; (d) may use Borrowers’ owned or leased lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral; and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the Collateral is located, and may proceed over and through Borrowers’ owned or leased property. Each Borrower shall cooperate fully with all of Agent’s efforts to preserve the Collateral and will take such actions to preserve the Collateral as Agent may direct. All of Agent’s expenses of preserving the Collateral, including any expenses relating to the bonding of a custodian, shall be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations.",
"4.5. Ownership of Collateral. (a) With respect to the Collateral, at the time the Collateral becomes subject to Agent’s security interest: (i) each Borrower shall be the sole owner of and fully authorized and able to sell, transfer, pledge and/or grant a first priority security interest in each and every item of its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed by each Borrower or delivered to Agent or any Lender in connection with this Agreement shall be true and correct in all respects; (iii) all signatures and endorsements of each Borrower that appear on such documents and agreements shall be genuine and each Borrower shall have full capacity to execute same; (iv) each Borrower’s Equipment and Inventory shall be located as set forth on Schedule 4.5 and shall not be removed from such location(s) without the prior written consent of Agent except with respect to (x) the sale of Inventory in the Ordinary Course of Business and (y) Equipment to the extent permitted in Section 4.3 hereof. (b) (i) There is no location at which any Borrower has any Inventory (except for Inventory in transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5 hereto contains a correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which Inventory of any Borrower is stored; none of the receipts received by any Borrower from any warehouse states that the goods covered thereby are to be delivered to 48 -------------------------------------------------------------------------------- Execution Copy bearer or to the order of a named Person or to a named Person and such named Person’s assigns; (iii) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of (A) each place of business of each Borrower and (B) the chief executive office of each Borrower; and (iv) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the location, by state and street address, of all Real Property owned or leased by each Borrower, together with the names and addresses of any landlords.",
"4.6. Defense of Agent’s and Lenders’ Interests. Until (a) payment and performance in full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the Collateral shall continue in full force and effect. During such period no Borrower shall, without Agent’s prior written consent, pledge, sell (except Inventory in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances, any part of the Collateral. Each Borrower shall defend Agent’s interests in the Collateral against any and all Persons whatsoever. At any time following demand by Agent for payment of all Obligations, Agent shall have the right to take possession of the indicia of the Collateral and the Collateral in whatever physical form contained, including: labels, stationery, documents, instruments and advertising materials. If Agent exercises this right to take possession of the Collateral, Borrowers shall, upon demand, assemble it in the best manner possible and make it available to Agent at a place reasonably convenient to Agent. In addition, with respect to all Collateral, Agent and Lenders shall be entitled to all of the rights and remedies set forth herein and further provided by the Uniform Commercial Code or other Applicable Law. Each Borrower shall, and Agent may, at its option, instruct all suppliers, carriers, forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest to deliver same to Agent and/or subject to Agent’s order and if they shall come into any Borrower’s possession, they, and each of them, shall be held by such Borrower in trust as Agent’s trustee, and such Borrower will immediately deliver them to Agent in their original form together with any necessary endorsement.",
"4.7. Books and Records. Each Borrower shall (a) keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to its business and affairs; (b) set up on its books accruals with respect to all taxes, assessments, charges, levies and claims; (c) on a reasonably current basis set up on its books, from its earnings, allowances against doubtful Receivables, advances and investments and all other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on required payments and accruals for depreciation, obsolescence, or amortization of properties), which should be set aside from such earnings in connection with its business and (d) use its best efforts to obtain Lien Waiver Agreements with respect to all premises leased by a Borrower where books and records are stored. All determinations pursuant to this subsection shall be made in accordance with, or as required by, GAAP consistently applied in the opinion of such independent public accountant as shall then be regularly engaged by Borrowers.",
"4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes and directs all accountants and auditors employed by such Borrower at any time during the Term to exhibit and deliver to Agent and each Lender copies of any of such Borrower’s financial statements, trial balances or other accounting records of any sort in the accountant’s or auditor’s possession, 49 -------------------------------------------------------------------------------- Execution Copy and to disclose to Agent and each Lender any information such accountants may have concerning such Borrower’s financial status and business operations. Each Borrower hereby authorizes all Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating to such Borrower, whether made by such Borrower or otherwise; however, Agent and each Lender will attempt to obtain such information or materials directly from such Borrower prior to obtaining such information or materials from such accountants or Governmental Bodies. 4.9. Compliance with Laws. Each Borrower shall comply with all Applicable Laws with respect to the Collateral or any part thereof or to the operation of such Borrower’s business the non-compliance with which could reasonably be expected to have a Material Adverse Effect.",
"Each Borrower may, however, contest or dispute any Applicable Laws in any reasonable manner, provided that any related Lien is inchoate or stayed and sufficient reserves are established to the reasonable satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral. The assets of Borrowers at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets of Borrowers so that such insurance shall remain in full force and effect. 4.10. Inspection of Premises. At all reasonable times upon prior notice to Borrowers, provided no such notice is required in an Event of Default, Agent and each Lender shall have full access to and the right to audit, check, inspect and make abstracts and copies from each Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral and the operation of each Borrower’s business.",
"Agent, any Lender and their agents may enter upon any premises of any Borrower at any time during business hours and at any other reasonable time, and from time to time, upon prior notice to Borrowers, provided no such notice is required in an Event of Default, for the purpose of inspecting the Collateral and any and all records pertaining thereto and the operation of such Borrower’s business. 4.11. Insurance. The assets and properties of each Borrower at all times shall be maintained in accordance with the requirements of all insurance carriers which provide insurance with respect to the assets and properties of such Borrower so that such insurance shall remain in full force and effect. Each Borrower shall bear the full risk of any loss of any nature whatsoever with respect to the Collateral.",
"At each Borrower’s own cost and expense in amounts and with carriers acceptable to Agent, each Borrower shall (a) keep all its insurable properties and properties in which such Borrower has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to such Borrower’s including business interruption insurance; (b) maintain a bond in such amounts as is customary in the case of companies engaged in businesses similar to such Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers and employees who may either singly or jointly with others at any time have access to the assets or funds of such Borrower either directly or through authority to draw upon such funds or to direct generally the disposition of such assets; (c) maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (d) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or jurisdiction in which such Borrower is engaged in business; and (e) furnish Agent with (i) copies of all policies and evidence of the maintenance of such policies 50 -------------------------------------------------------------------------------- Execution Copy by the renewal thereof at least thirty (30) days before any expiration date, and (ii) appropriate loss payable endorsements in form and substance satisfactory to Agent, naming Agent as a co-insured and lender loss payee as its interests may appear with respect to all insurance coverage referred to in clauses (a) and (c) above, and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy, and (C) that such policy and loss payable clauses may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice is given to Agent. In the event of any loss thereunder, the carriers named therein hereby are directed by Agent and the applicable Borrower to make payment for such loss to Agent and not to such Borrower and Agent jointly.",
"If any insurance losses are paid by check, draft or other instrument payable to any Borrower and Agent jointly, Agent may endorse such Borrower’s name thereon and do such other things as Agent may deem advisable to reduce the same to cash. Agent is hereby authorized to adjust and compromise claims under insurance coverage referred to in clauses (a), and (b) above. All loss recoveries received by Agent upon any such insurance may be applied to the Obligations, in such order as Agent in its sole discretion shall determine. Any surplus shall be paid by Agent to Borrowers or applied as may be otherwise required by law. Any deficiency thereon shall be paid by Borrowers to Agent, on demand.",
"4.12. Failure to Pay Insurance. If any Borrower fails to obtain insurance as hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers’ Account therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of the Obligations. 4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes, assessments and other Charges lawfully levied or assessed upon such Borrower or any of the Collateral including real and personal property taxes, assessments and charges and all franchise, income, employment, social security benefits, withholding, and sales taxes, unless the same are being Properly Contested.",
"If any tax by any Governmental Body is or may be imposed on or as a result of any transaction between any Borrower and Agent or any Lender which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other Charges remain unpaid after the date fixed for their payment, or if any claim shall be made which, in Agent’s or any Lender’s opinion, may possibly create a valid Lien on the Collateral, Agent may without notice to Borrowers pay the taxes, assessments or other Charges and each Borrower hereby indemnifies and holds Agent and each Lender harmless in respect thereof. Agent will not pay any taxes, assessments or Charges to the extent that any applicable Borrower has Properly Contested those taxes, assessments or Charges. The amount of any payment by Agent under this Section 4.13 shall be charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations and, until Borrowers shall furnish Agent with an indemnity therefor (or supply Agent with evidence satisfactory to Agent that due provision for the payment thereof has been made), Agent may hold without interest any balance standing to Borrowers’ credit and Agent shall retain its security interest in and Lien on any and all Collateral held by Agent.",
"4.14. Payment of Leasehold Obligations. Each Borrower shall at all times pay, when and as due, its rental obligations under all leases under which it is a tenant, and shall otherwise 51 -------------------------------------------------------------------------------- Execution Copy comply, in all material respects, with all other terms of such leases and keep them in full force and effect and, at Agent’s request will provide evidence of having done so. 4.15. Receivables. (a) Nature of Receivables. Each of the Receivables shall be a bona fide and valid account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice errors shall not be deemed to be a breach hereof) with respect to an absolute sale or lease and delivery of goods upon stated terms of a Borrower, or work, labor or services theretofore rendered by a Borrower as of the date each Receivable is created.",
"Same shall be due and owing in accordance with the applicable Borrower’s standard terms of sale without dispute, setoff or counterclaim except as may be stated on the accounts receivable schedules delivered by Borrowers to Agent. (b) Solvency of Customers. Each Customer, to the best of each Borrower’s knowledge, as of the date each Receivable is created, is and will be solvent and able to pay all Receivables on which the Customer is obligated in full when due or with respect to such Customers of any Borrower who are not solvent such Borrower has set up on its books and in its financial records bad debt reserves adequate to cover such Receivables. (c) Location of Borrowers.",
"Each Borrower’s chief executive office is located at 240 Jasmine Rd., Crowley, Louisiana 70526. Until written notice is given to Agent by Borrowing Agent of any other office at which any Borrower keeps its records pertaining to Receivables, all such records shall be kept at such executive office. (d) Collection of Receivables. Until any Borrower’s authority to do so is terminated by Agent (which notice Agent may give at any time following the occurrence and during the continuance of an Event of Default or a Default), each Borrower will, at such Borrower’s sole cost and expense, but on Agent’s behalf and for Agent’s account, collect as Agent’s property and in trust for Agent all amounts received on Receivables, and shall not commingle such collections with any Borrower’s funds or use the same except to pay Obligations. Each Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver to Agent, in original form and on the date of receipt thereof, all checks, drafts, notes, money orders, acceptances, cash and other evidences of Indebtedness. (e) Notification of Assignment of Receivables. At any time after the occurrence and during the continuance of an Event of Default or Default, Agent shall have the right to send notice of the assignment of, and Agent’s security interest in and Lien on, the Receivables to any and all Customers or any third party holding or otherwise concerned with any of the Collateral.",
"Thereafter, Agent shall have the sole right to collect the Receivables, take possession of the Collateral, or both. Agent’s actual collection expenses, including, but not limited to, stationery and postage, telephone and telegraph, secretarial and clerical expenses and the salaries of any collection personnel used for collection, may be charged to Borrowers’ Account and added to the Obligations. 52 -------------------------------------------------------------------------------- Execution Copy (f) Power of Agent to Act on Borrowers’ Behalf. Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or any Borrower any and all checks, drafts and other instruments for the payment of money relating to the Receivables, and each Borrower hereby waives notice of presentment, protest and non-payment of any instrument so endorsed.",
"Each Borrower hereby constitutes Agent or Agent’s designee as such Borrower’s attorney with power (i) to endorse such Borrower’s name upon any notes, acceptances, checks, drafts, money orders or other evidences of payment or Collateral; (ii) to sign such Borrower’s name on any invoice or bill of lading relating to any of the Receivables, drafts against Customers, assignments and verifications of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to sign such Borrower’s name on all financing statements or any other documents or instruments deemed necessary or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to file same; (v) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to demand payment of the Receivables; (vi) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to enforce payment of the Receivables by legal proceedings or otherwise; (vii) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to exercise all of such Borrower’s rights and remedies with respect to the collection of the Receivables and any other Collateral; (viii) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to settle, adjust, compromise, extend or renew the Receivables; (ix) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to settle, adjust or compromise any legal proceedings brought to collect Receivables; (x) to prepare, file and sign such Borrower’s name on a proof of claim in bankruptcy or similar document against any Customer; (xi) upon the occurrence and during the continuance of a Default or an Event of Default or at such other times as Agent, in its discretion determines is necessary or appropriate, to prepare, file and sign such Borrower’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables; and (xii) to do all other acts and things necessary to carry out this Agreement.",
"All acts of said attorney or designee are hereby ratified and approved, and said attorney or designee shall not be liable for any acts of omission or commission nor for any error of judgment or mistake of fact or of law (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), unless done maliciously or with gross (not mere) negligence (as determined by a court of competent jurisdiction in a final non-appealable judgment); this power being coupled with an interest is irrevocable while any of the Obligations remain unpaid. Agent shall have the right at any time following the occurrence of an Event of Default or Default, to change the address for delivery of mail addressed to any Borrower to such address as Agent may designate and to receive, open and dispose of all mail addressed to any Borrower. (g) No Liability.",
"Neither Agent nor any Lender shall, under any circumstances or in any event whatsoever, have any liability for any error or omission or delay of any kind (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), unless such error or omission is the result of gross negligence or willful 53 -------------------------------------------------------------------------------- Execution Copy misconduct (as determined by a court of competent jurisdiction in a final non-applicable judgment) occurring in the settlement, collection or payment of any of the Receivables or any instrument received in payment thereof, or for any damage resulting therefrom. Following the occurrence of an Event of Default or Default, Agent may, without notice or consent from any Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for cash, credit or upon any terms any of the Receivables or any other securities, instruments or insurance applicable thereto and/or release any obligor thereof. Agent is authorized and empowered to accept following the occurrence of an Event of Default or Default, the return of the goods represented by any of the Receivables, without notice to or consent by any Borrower, all without discharging or in any way affecting any Borrower’s liability hereunder. (h) Establishment of a Lockbox Account, Dominion Account. All proceeds of Collateral shall be deposited by Borrowers into either (i) a lockbox account, dominion account or such other “blocked account” (“Blocked Accounts”) established at a bank or banks (each such bank, a “Blocked Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be selected by Borrowers and be acceptable to Agent in its sole discretion or (ii) depository accounts (“Depository Accounts”) established at Agent for the deposit of such proceeds.",
"Borrowers, Agent and each Blocked Account Bank shall enter into a deposit account control agreement in form and substance satisfactory to Agent directing such Blocked Account Bank to transfer such funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank or by wire transfer to appropriate account(s) of Agent. All funds deposited in such Blocked Accounts shall immediately become the property of Agent and Borrowers shall obtain the agreement by such Blocked Account Bank to waive any offset rights against the funds so deposited. Neither Agent nor any Lender assumes any responsibility for such blocked account arrangement, including any claim of accord and satisfaction or release with respect to deposits accepted by any Blocked Account Bank thereunder.",
"All deposit accounts and investment accounts of Borrowers and their Subsidiaries are set forth on Schedule 4.15(h). Borrowing Agent shall notify each Customer of any Borrower to send all future payments owed to a Borrower by such Customer, including, but not limited to, payments on any Receivable, to a Blocked Account, (i) with respect to any Person that is a Customer of any Borrower on the Closing Date, within thirty (30) days of the Closing Date and (ii) with respect to any Person that is not a Customer on the Closing Date, immediately upon such Person becoming a Customer of a Borrower.",
"If any Borrower shall receive any collections or other proceeds of the Collateral, such Borrower shall hold such collections or proceeds in trust for the benefit of Agent and deposit such collections or proceeds into a Blocked Account within one (1) Business Day following such Borrower’s receipt thereof. (i) Adjustments. No Borrower will, without Agent’s consent, compromise or adjust any Receivables (or extend the time for payment thereof) or accept any returns of merchandise or grant any additional discounts, allowances or credits thereon except for those compromises, adjustments, returns, discounts, credits and allowances as have been heretofore customary in the business of such Borrower.",
"4.16. Inventory. To the extent Inventory held for sale or lease has been produced by any Borrower, it has been and will be produced by such Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder. 54 -------------------------------------------------------------------------------- Execution Copy 4.17. Maintenance of Equipment. The Equipment shall be maintained in good operating condition and repair (reasonable wear and tear excepted) and all necessary replacements of and repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be maintained and preserved. No Borrower shall use or operate the Equipment in violation of any law, statute, ordinance, code, rule or regulation.",
"Each Borrower shall have the right to sell Equipment to the extent set forth in Section 4.3 hereof. 4.18. Exculpation of Liability. Nothing herein contained shall be construed to constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction of any part of the Collateral wherever the same may be located and regardless of the cause thereof. Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume any of any Borrower’s obligations under any contract or agreement assigned to Agent or such Lender, and neither Agent nor any Lender shall be responsible in any way for the performance by any Borrower of any of the terms and conditions thereof. 4.19. Environmental Matters. (a) Borrowers shall ensure that the Real Property and all operations and businesses conducted thereon remains in compliance with all Environmental Laws and they shall not place or permit to be placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or appropriate governmental authorities. (b) Borrowers shall establish and maintain a system to assure and monitor continued compliance with all applicable Environmental Laws which system shall include periodic reviews of such compliance. (c) Borrowers shall (i) employ in connection with the use of the Real Property appropriate technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers that maintain valid permits under RCRA and any other applicable Environmental Laws.",
"Borrowers shall use their best efforts to obtain certificates of disposal, such as hazardous waste manifest receipts, from all treatment, transport, storage or disposal facilities or operators employed by Borrowers in connection with the transport or disposal of any Hazardous Waste generated at the Real Property. (d) In the event any Borrower obtains, gives or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of violation, request for information or notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand letter or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws affecting the Real Property or any Borrower’s interest therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property is located or the United States Environmental Protection Agency (any such person or entity hereinafter the “Authority”), then Borrowing Agent shall, within five (5) 55 -------------------------------------------------------------------------------- Execution Copy Business Days, give written notice of same to Agent detailing facts and circumstances of which any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint.",
"Such information is to be provided to allow Agent to protect its security interest in and Lien on the Real Property and the Collateral and is not intended to create nor shall it create any obligation upon Agent or any Lender with respect thereto. (e) Borrowing Agent shall promptly forward to Agent copies of any request for information, notification of potential liability, demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated or used by any Borrower to dispose of Hazardous Substances and shall continue to forward copies of correspondence between any Borrower and the Authority regarding such claims to Agent until the claim is settled. Borrowing Agent shall promptly forward to Agent copies of all documents and reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file under any Environmental Laws.",
"Such information is to be provided solely to allow Agent to protect Agent’s security interest in and Lien on the Real Property and the Collateral. (f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and take all necessary action in order to safeguard the health of any Person and to avoid subjecting the Collateral or Real Property to any Lien. If any Borrower shall fail to respond promptly to any Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply with any of the requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation to do so, for the sole purpose of protecting Agent’s interest in the Collateral: (A) give such notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real Property) and take such actions as Agent (or such third parties as directed by Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such Hazardous Discharge or Environmental Complaint.",
"All reasonable costs and expenses incurred by Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums paid in connection with any judicial or administrative investigation or proceedings, fines and penalties, together with interest thereon from the date expended at the Default Rate for Domestic Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid shall be added to and become a part of the Obligations secured by the Liens created by the terms of this Agreement or any other agreement between Agent, any Lender and any Borrower. (g) Promptly upon the written request of Agent (which request will not be made more than one time during the Term, provided no such limitation is applicable upon the occurrence of an Event of Default), Borrowers shall provide Agent, at Borrowers’ expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent, to assess with a reasonable degree of certainty the existence of a Hazardous Discharge and the potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found on, under, at or within the Real Property.",
"Any report or investigation of such Hazardous Discharge proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such estimates, individually or in the aggregate, exceed $100,000, Agent shall have the right to require Borrowers to post a bond, letter of credit or other security reasonably satisfactory to Agent to secure payment of these costs and expenses.",
"56 -------------------------------------------------------------------------------- Execution Copy (h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their respective employees, agents, directors and officers harmless from and against all loss, liability (INCLUDING, WITHOUT LIMITATION, ANY STRICT LIABILITY), damage and expense, claims, costs, fines and penalties, including attorney’s fees, suffered or incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous Substances affecting the Real Property, whether or not the same originates or emerges from the Real Property or any contiguous real estate, including any loss of value of the Real Property as a result of the foregoing (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO AN ACT OR INACTION FROM AGENT’S OR LENDERS’ NEGLIGENCE OR STRICT LIABILITY), except to the extent such loss, liability, damage and expense is attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender.",
"Borrowers’ obligations under this Section 4.19 shall arise upon the discovery of the presence of any Hazardous Substances at the Real Property, whether or not any federal, state, or local environmental agency has taken or threatened any action in connection with the presence of any Hazardous Substances. Borrowers’ obligation and the indemnifications hereunder shall survive the termination of this Agreement. (i) For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to include all of each Borrower’s right, title and interest in and to its owned and leased premises. 4.20. Financing Statements. Except as respects the financing statements filed by Agent and the financing statements described on Schedule 1.2, no financing statement covering any of the Collateral or any proceeds thereof is on file in any public office 4.21.",
"Rolling Stock and other Vehicles. With respect to each vehicle or item of Rolling Stock subject to a certificate of title statute acquired after the Closing Date, Borrowers shall deliver to Agent, in form and substance satisfactory to Agent: (i) a fully-executed, notarized power of attorney authorizing CT Corp to perfect liens on behalf of Agent; (ii) new unencumbered titles for each item of Rolling Stock within the earlier of (x) five (5) days of receipt by a Borrower of a new title certificate for Rolling Stock and (y) twenty-five (25) days of purchase; (iii) to the extent applicable, an odometer statement clearly identifying the current mileage for each item of Collateral; and (iv) to the extent applicable, an in-state garaging address for each item of Collateral. V REPRESENTATIONS AND WARRANTIES.",
"References in this Article V to “Borrower(s)” shall refer to Borrowers and/or the business to be acquired by Borrowers pursuant to the transactions contemplated by the Acquisition Agreement, as context shall require for periods prior to the Closing Date. Each Borrower represents and warrants that the following statements are, and after giving effect to the transactions contemplated by the Acquisition Agreement will be, true, correct and complete: 5.1. Authority. Each Borrower has full power, authority and legal right to enter into this Agreement and the Other Documents and to perform all its respective Obligations hereunder and thereunder. This Agreement, the Subordination Agreement and the Other 57 -------------------------------------------------------------------------------- Execution Copy Documents have been duly executed and delivered by each Borrower, and this Agreement, the Subordination Agreement and the Other Documents constitute the legal, valid and binding obligation of such Borrower enforceable in accordance with their terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally.",
"The execution, delivery and performance of this Agreement and of the Other Documents (a) are within such Borrower’s limited company or limited liability company powers, as applicable, have been duly authorized by all necessary company action, are not in contravention of law or the terms of such Borrower’s certificate of formation or other applicable documents relating to such Borrower’s formation or to the conduct of such Borrower’s business or of any material agreement or undertaking to which such Borrower is a party or by which such Borrower is bound, including, without limitation, the Acquisition Agreement, (b) will not conflict with or violate any law or regulation, or any judgment, order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have been duly obtained, made or compiled prior to the Closing Date and which are in full force and effect and (d) will not conflict with, nor result in any breach in any of the provisions of or constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset of such Borrower under the provisions of any agreement, charter document, instrument, or operating agreement or other instrument to which such Borrower is a party or by which it or its property is a party or by which it may be bound, including under the provisions of the Acquisition Agreement. 5.2.",
"Formation and Qualification. (a) Each Borrower is duly formed and in good standing under the laws of the state listed on Schedule 5.2(a) and is qualified to do business and is in good standing in the states listed on Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary for such Borrower to conduct its business and own its property and where the failure to so qualify could reasonably be expected to have a Material Adverse Effect on such Borrower. Each Borrower has delivered to Agent true and complete copies of its certificate of formation and operating agreement and agrees to promptly notify Agent of any amendment or changes thereto. (b) The only Subsidiaries of the Loan Parties are listed on Schedule 5.2(b). The Equity Interests of each Borrower are presently held by the Persons identified on Schedule 5.2(b), in the numbers of shares or interests set forth thereon. 5.3.",
"Survival of Representations and Warranties. All representations and warranties of such Borrower contained in this Agreement and the Other Documents shall be true at the time of such Borrower’s execution of this Agreement and the Other Documents, and shall survive the execution, delivery and acceptance thereof by the parties thereto and the closing of the transactions described therein or related thereto. 5.4. Tax Returns. Each Borrower’s federal tax identification number is set forth on Schedule 5.4. Each Borrower has filed all federal, state and local tax returns and other reports each is required by law to file and has paid all taxes, assessments, fees and other governmental charges that are due and payable. Federal, state and local income tax returns of each Borrower 58 -------------------------------------------------------------------------------- Execution Copy (other than Holdings) have been examined and reported upon by the appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years prior to and including the fiscal year ending August 31, 2006. The provision for taxes on the books of each Borrower is adequate for all years not closed by applicable statutes, and for its current fiscal year, and no Borrower has any knowledge of any deficiency or additional assessment in connection therewith not provided for on its books.",
"5.5. Financial Statements. (a) The pro forma balance sheet of Borrowers on a Consolidated Basis (the “Pro Forma Balance Sheet”) furnished to Agent on the Closing Date reflects the consummation of the transactions contemplated by the Acquisition Agreement and this Agreement (collectively, the “Transactions”) and is accurate, complete and correct and fairly reflects the financial condition of Borrowers on a Consolidated Basis as of the Closing Date after giving effect to the Transactions, and has been prepared in accordance with GAAP, consistently applied.",
"The Pro Forma Balance Sheet has been certified as accurate, complete and correct in all material respects by an Authorized Officer of Borrowing Agent. All financial statements referred to in this subsection 5.5(a), including the related schedules and notes thereto, have been prepared, in accordance with GAAP, except as may be disclosed in such financial statements. (b) The twelve-month cash flow projections of Borrowers on a Consolidated Basis and their projected balance sheets as of the Closing Date, copies of which are annexed hereto as Exhibit 5.5(b) (the “Projections”) were approved by an Authorized Officer of Borrowing Agent, are based on underlying assumptions which provide a reasonable basis for the projections contained therein and reflect Borrowers’ judgment based on present circumstances of the most likely set of conditions and course of action for the projected period. The cash flow Projections together with the Pro Forma Balance Sheet, are referred to as the “Pro Forma Financial Statements”. (c) The consolidated and consolidating balance sheets of Borrowers, their Subsidiaries and such other Persons described therein (including the accounts of all Subsidiaries for the respective periods during which a subsidiary relationship existed) as of August 31, 2009, and the related statements of income, changes in stockholder’s equity, and changes in cash flow for the period ended on such date, all accompanied by reports thereon containing opinions without qualification by independent certified public accountants, copies of which have been delivered to Agent, have been prepared in accordance with GAAP, consistently applied (except for changes in application in which such accountants concur and present fairly the financial position of Borrowers and their Subsidiaries at such date and the results of their operations for such period.",
"Since August 31, 2009 there has been no change in the condition, financial or otherwise, of Borrowers or their Subsidiaries as shown on the consolidated balance sheet as of such date and no change in the aggregate value of machinery, equipment and Real Property owned by Borrowers and their respective Subsidiaries, except changes in the Ordinary Course of Business, none of which individually or in the aggregate has been materially adverse 5.6. Entity Names. No Borrower has been known by any other corporate name in the past five years and does not sell Inventory under any other name except as set forth on Schedule 5.6, nor has any Borrower been the surviving company of a merger or consolidation or acquired 59 -------------------------------------------------------------------------------- Execution Copy all or substantially all of the assets of any Person, with the exception of those assets acquired pursuant to the Acquisition Agreement during the preceding five (5) years. 5.7. O.S.H.A.",
"and Environmental Compliance. (a) Each Borrower has duly complied with, and its facilities, business, assets, property, leaseholds, Real Property and Equipment are in compliance in all material respects with, the provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act, RCRA and all other Environmental Laws; there have been no outstanding citations, notices or orders of non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds or Equipment under any such laws, rules or regulations. (b) Each Borrower has been issued all required federal, state and local licenses, certificates or permits relating to all applicable Environmental Laws.",
"(c) (i) There are no visible signs of releases, spills, discharges, leaks or disposal (collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within any Real Property or any premises leased by any Borrower; (ii) there are no underground storage tanks or polychlorinated biphenyls on the Real Property or any premises leased by any Borrower; (iii) neither the Real Property nor any premises leased by any Borrower has ever been used as a treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are present on the Real Property or any premises leased by any Borrower, excepting such quantities as are handled in accordance with all applicable manufacturer’s instructions and governmental regulations and in proper storage containers and as are necessary for the operation of the commercial business of any Borrower or of its tenants. 5.8.",
"Solvency; No Litigation, Violation, Indebtedness or Default. (a) Each Borrower is, and after giving effect to the Transactions, each Borrower will be solvent, able to pay its debts as they mature, and has, and after giving effect to the Transactions, will have capital sufficient to carry on its business and all businesses in which it is about to engage, and (i) as of the Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going concern basis) will be in excess of the amount of its liabilities.",
"(b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or threatened litigation, arbitration, actions or proceedings which involve the possibility of having a Material Adverse Effect, and (ii) any liabilities or indebtedness for borrowed money other than the Obligations. (c) No Borrower is in violation of any applicable statute, law, rule, regulation or ordinance in any respect which could reasonably be expected to have a Material Adverse Effect, nor is any Borrower in violation of any order of any court, Governmental Body or arbitration board or tribunal. (d) No Borrower nor any member of the Controlled Group maintains or contributes to any Plan other than (i) as of the Closing Date, those listed on Schedule 5.8(d) 60 -------------------------------------------------------------------------------- Execution Copy hereto and (ii) thereafter, as permitted under this Agreement.",
"(i) No Plan has incurred any “accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not waived, and each Borrower and each member of the Controlled Group has met all applicable minimum funding requirements under Section 302 of ERISA in respect of each Plan; (ii) each Plan which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal income tax under Section 501(a) of the Code; (iii) neither any Borrower nor any member of the Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and neither any Borrower nor any member of the Controlled Group knows of any facts or circumstances which would materially change the value of such assets and accrued benefits and other liabilities; (vi) neither any Borrower nor any member of the Controlled Group has breached any of the responsibilities, obligations or duties imposed on it by ERISA with respect to any Plan; (vii) neither any Borrower nor any member of a Controlled Group has incurred any liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists which could give rise to any such liability; (viii) neither any Borrower nor any member of the Controlled Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a “prohibited transaction” described in Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix) each Borrower and each member of the Controlled Group has made all contributions due and payable with respect to each Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which the thirty (30) day notice period has not been waived; (xi) neither any Borrower nor any member of the Controlled Group has any fiduciary responsibility for investments with respect to any plan existing for the benefit of persons other than employees or former employees of any Borrower and any member of the Controlled Group; (xii) neither any Borrower nor any member of the Controlled Group maintains or contributes to any Plan which provides health, accident or life insurance benefits to former employees, their spouses or dependents, other than in accordance with Section 4980B of the Code; (xiii) neither any Borrower nor any member of the Controlled Group has withdrawn, completely or partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result in any such liability; and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary duty or for any failure in connection with the administration or investment of the assets of a Plan.",
"5.9. Patents, Trademarks, Copyrights and Licenses. All patents, patent applications, trademarks, trademark applications, service marks, service mark applications, copyrights, copyright applications, design rights, trade names, trade name applications, assumed names, trade secrets, domain names, domain name applications and licenses owned or utilized by any Borrower are set forth on Schedule 5.9, are valid and have been duly registered or filed with all appropriate Governmental Bodies and constitute all of the intellectual property rights which are necessary for the operation of its business; there is no objection to or pending challenge to the 61 -------------------------------------------------------------------------------- Execution Copy validity of any such patent, trademark, copyright, design rights, trade name, domain name, trade secret or license and no Borrower is aware of any grounds for any challenge, except as set forth in Schedule 5.9 hereto. Each patent, patent application, patent license, trademark, trademark application, trademark license, service mark, service mark application, service mark license, design rights, copyright, copyright application and copyright license owned or held by any Borrower and all trade secrets used by any Borrower consist of original material or property developed by such Borrower or was lawfully acquired by such Borrower from the proper and lawful owner thereof. Each of such items has been maintained so as to preserve the value thereof from the date of creation or acquisition thereof. With respect to all software used by any Borrower, such Borrower is in possession of all source and object codes related to each piece of software or is the beneficiary of a source code escrow agreement, each such source code escrow agreement being listed on Schedule 5.9 hereto.",
"5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower (a) is in compliance with and (b) has procured and is now in possession of, all material licenses or permits required by any applicable federal, state, provincial or local law, rule or regulation for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business and where the failure to procure such licenses or permits could have a Material Adverse Effect.",
"5.11. Default of Indebtedness. No Borrower is in default in the payment of the principal of or interest on any Indebtedness or under any instrument or agreement under or subject to which any Indebtedness has been issued and no event has occurred under the provisions of any such instrument or agreement which with or without the lapse of time or the giving of notice, or both, constitutes or would constitute an event of default thereunder. 5.12. No Default. No Borrower is in default in the payment or performance of any of its contractual obligations and no Default has occurred. 5.13.",
"No Burdensome Restrictions. No Borrower is party to any contract or agreement the performance of which could have a Material Adverse Effect. Each Borrower has heretofore delivered to Agent true and complete copies of all material contracts to which it is a party or to which it or any of its properties is subject. No Borrower has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted Encumbrance. 5.14. No Labor Disputes. No Borrower is involved in any labor dispute; there are no strikes or walkouts or union organization of any Borrower’s employees threatened or in existence and no labor contract is scheduled to expire during the Term other than as set forth on Schedule 5.14 hereto.",
"5.15. Margin Regulations. No Borrower is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors. 62 -------------------------------------------------------------------------------- Execution Copy 5.16. Investment Company Act. No Borrower is an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended, nor is it controlled by such a company.",
"5.17. Disclosure. No representation or warranty made by any Borrower in this Agreement , the Subordinated Obligations Documents or in the Acquisition Agreement, or in any financial statement, report, certificate or any other document furnished in connection herewith or therewith contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to any Borrower or which reasonably should be known to such Borrower which such Borrower has not disclosed to Agent in writing with respect to the transactions contemplated by the Acquisition Agreement or this Agreement which could reasonably be expected to have a Material Adverse Effect.",
"5.18. Delivery of Acquisition Agreement and Subordinated Loan Documentation. Agent has received complete copies of the Acquisition Agreement (including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof. None of such documents and agreements has been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant to a written agreement or instrument which has heretofore been delivered to Agent. Each of the representations and warranties of the Sellers set forth in the Acquisition Agreement are true and correct in all material respects as of the date hereof and are hereby made by Borrowers as if they were set forth herein in their entirety. 5.19. Swaps. No Borrower is a party to, nor will it be a party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates or currencies unless same provides that damages upon termination following an event of default thereunder are payable on an unlimited “two-way basis” without regard to fault on the part of either party. 5.20.",
"Conflicting Agreements. No provision of any mortgage, indenture, contract, agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts with, or requires any Consent which has not already been obtained to, or would in any way prevent the execution, delivery or performance of, the terms of this Agreement or the Other Documents. 5.21. Application of Certain Laws and Regulations. Neither any Borrower nor any Affiliate of any Borrower is subject to any law, statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws, statutes, rules or regulations relative to common or interstate carriers or to the sale of electricity, gas, steam, water, telephone, telegraph or other public utility services. 5.22. Business and Property of Borrowers. Holdings did not engage in any business prior to the Closing Date. Upon and after the Closing Date, Borrowers do not propose to 63 -------------------------------------------------------------------------------- Execution Copy engage in any business other than those conducted on the Closing Date and those set forth on Schedule 5.22 and activities necessary to conduct the foregoing.",
"On the Closing Date, each Borrower will own all the property and possess all of the rights and Consents necessary for the conduct of the business of such Borrower. 5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall not use any portion of the proceeds of the Advances, directly or indirectly, to purchase during the underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary. 5.24. Anti-Terrorism Laws. (a) General. Neither any Borrower nor any Affiliate of any Borrower is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. (b) Executive Order No. 13224. Neither any Borrower nor any Affiliate of any Borrower or their respective agents acting or benefiting in any capacity in connection with the Advances or other transactions hereunder, is any of the following (each a “Blocked Person”): (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No.",
"13224; (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224; (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224; (v) a Person or entity that is named as a “specially designated national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or (vi) a Person or entity who is affiliated or associated with a Person or entity listed above. Neither any Borrower nor to the knowledge of any Borrower, any of its agents acting in any capacity in connection with the Advances or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.",
"64 -------------------------------------------------------------------------------- Execution Copy 5.25. Trading with the Enemy. No Borrower has engaged, nor does it intend to engage, in any business or activity prohibited by the Trading with the Enemy Act. 5.26. Federal Securities Laws. Neither any Borrower nor any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) has any securities registered under the Exchange Act or (iii) has filed a registration statement that has not yet become effective under the Securities Act.",
"VI AFFIRMATIVE COVENANTS. Each Borrower shall, until payment in full of the Obligations and termination of this Agreement: 6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees and expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in Section 4.15(h). Agent may, without making demand, charge Borrowers’ Account for all such fees and expenses. 6.2. Conduct of Business and Maintenance of Existence and Assets. (a) Conduct continuously and operate actively its business according to good business practices and maintain all of its properties useful or necessary in its business in good working order and condition (reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of this Agreement), including all licenses, patents, copyrights, design rights, trade names, trade secrets, domain names and trademarks and take all actions necessary to enforce and protect the validity of any intellectual property right necessary to the operations of the business of each Borrower or other right included in the Collateral; (b) keep in full force and effect its existence and comply in all material respects with the laws and regulations governing the conduct of its business where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports and pay all such franchise and other taxes and license fees and do all such other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under the laws of the United States or any political subdivision thereof where the failure to do so could reasonably be expected to have a Material Adverse Effect.",
"6.3. Violations. Promptly notify Agent in writing of any violation of any law, statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to any Borrower which could reasonably be expected to have a Material Adverse Effect. 6.4. Government Receivables. Take all steps necessary to protect Agent’s interest in the Collateral under the Federal Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper connected with any Receivable arising out of contracts between any Borrower and the United States, any state or any department, agency or instrumentality of any of them. 65 -------------------------------------------------------------------------------- Execution Copy 6.5. Financial Covenants. (a) Fixed Charge Coverage Ratio. Cause to be maintained a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, measured as of (a) November 30, 2010, for the fiscal quarter then most recently ended; (b) February 28, 2011, for the two fiscal quarter period then most recently ended; (c) May 31, 2011, for the three fiscal quarter period then most recently ended; (d) August 31, 2011 and as of the last day of each fiscal quarter thereafter, for the four fiscal quarter period then most recently ended.",
"6.6. Execution of Supplemental Instruments. Execute and deliver to Agent from time to time, within five (5) Business Days after demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as Agent may request, in order that the full intent of this Agreement may be carried into effect. 6.7. Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to specified grace periods and, in the case of the trade payables, to normal payment practices) all its obligations and liabilities of whatever nature, except when the failure to do so could not reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is currently being contested in good faith by appropriate proceedings and each Borrower shall have provided for such reserves as Agent may reasonably deem proper and necessary, subject at all times to any applicable subordination arrangement in favor of Lenders. 6.8. Standards of Financial Statements. Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13 as to which GAAP is applicable to be complete and correct in all material respects (subject, in the case of interim financial statements, to normal year-end audit adjustments and the absence of footnotes) and to be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as concurred in by such reporting accountants or officer, as the case may be, and disclosed therein).",
"6.9. Federal Securities Laws. Promptly notify Agent in writing if any Borrower or any of its Subsidiaries (i) is required to file periodic reports under the Exchange Act, (ii) registers any securities under the Exchange Act or (iii) files a registration statement under the Securities Act. 6.10. Exercise of Rights. Enforce all of its rights under the Acquisition Agreement and the Indemnification Agreement executed in connection therewith including, but not limited to, all indemnification rights and pursue all remedies available to it with diligence and in good faith in connection with the enforcement of any such rights.",
"6.11. Defaults under the Acquisition or Subordinated Obligations Documents. The Borrowing Agent shall provide Agent with prompt written notice upon the occurrence of any default or event of default under any of the Subordinated Obligations Documents, the Acquisition Agreement and/or any document executed in connection therewith. 6.12. Post-Closing Obligations. Borrowers shall cause the conditions set forth on Schedule 6.12 hereto to be satisfied in full, on or before the date specified for each such 66 -------------------------------------------------------------------------------- Execution Copy condition, time being of the essence, and each to be satisfactory, in form and substance as applicable, to Agent in its sole discretion. 6.13. Nature of Business. Carry on its business in substantially the same manner and in substantially the same fields of enterprise as set forth in Section 5.22. VII NEGATIVE COVENANTS.",
"No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement: 7.1. Merger, Consolidation, Acquisition and Sale of Assets. (a) Enter into any merger, consolidation or other reorganization with or into any other Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit any other Person to consolidate with or merge with it. (b) Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (i) dispositions of Inventory and Equipment to the extent expressly permitted by Section 4.3 and (ii) any other sales or dispositions expressly permitted by this Agreement. 7.2. Creation of Liens. Create or suffer to exist any Lien or transfer upon or against any of its property or assets now owned or hereafter acquired, except Permitted Encumbrances.",
"7.3. Guarantees. Become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) as disclosed on Schedule 7.3, (b) the endorsement of checks in the Ordinary Course of Business, and (c) guarantees of Indebtedness of the types permitted in Section 7.8. 7.4. Investments. Purchase or acquire obligations or Equity Interests of, or any other interest in, any Person, except (a) obligations issued or guaranteed by the United States of America or any agency thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least $500,000,000 or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment rating agency, (d) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof and (e) the Acquisition Agreement. 7.5. Loans.",
"Make advances, loans or extensions of credit to any Person, including any Parent, Subsidiary or Affiliate except with respect to the extension of commercial trade credit in connection with the sale of Inventory in the Ordinary Course of Business. 7.6. Capital Expenditures. Contract for, purchase or make any expenditure or commitments for Capital Expenditures for (i) the twelve (12) months immediately following the Closing Date in an aggregate amount for all Borrowers in excess of $4,500,000 and (ii) each 67 -------------------------------------------------------------------------------- Execution Copy twelve (12) month period thereafter in excess of $5,000,000 provided, that no more than $500,000 of the Capital Expenditures permitted pursuant to clauses (i) and (ii) above shall be Unfinanced Capital Expenditures. 7.7. Distributions. Pay or make any distribution on any membership interests of any Borrower to any Person or apply any of its funds, property or assets to the purchase, redemption or other retirement of any membership interests, or of any options to purchase or acquire any such membership interests of any Borrower except that so long as: (a)(i) a notice of termination with regard to this Agreement shall not be outstanding, and (ii) no Event of Default or Default shall have occurred, and (iii) the purpose for such purchase, redemption or distribution shall be as set forth in writing to Agent at least ten (10) days prior to such purchase, redemption or distribution and such purchase, redemption or distribution shall in fact be used for such purpose, any Borrower shall be permitted to make distributions to its members in an aggregate amount equal to the Increased Tax Burden of its members; and (b)(i) a notice of termination with regard to this Agreement shall not be outstanding, and (ii) no Event of Default or Default shall have occurred or result after giving effect to such distribution, and (iii) the purpose for such distribution shall be as set forth in writing to Agent at least ten (10) days prior to such distribution and such distribution shall in fact be used for such purpose, and (iv) after giving effect to such distribution, Borrowers shall have Undrawn Availability of at least $2,000,000, and (v) such distributions are required by the Subordinated Obligations Documents and (vi) the Subordination Agreement among Borrowers, Agent and Waypoint is in full force and effect, Borrowers shall be permitted to make Subordinated Obligations Payments to Waypoint Capital.",
"Subject to this Section 7.7, payments to members shall be made so as to be available when the tax is due, including in respect of estimated tax payments. In the event (x) the actual distribution to members made pursuant to this Section 7.7 exceeds the actual income tax liability of any member due to such Borrower’s status as a limited liability company (calculated based on the applicable IRS Form 1065 or such other applicable form filed by such Borrower), or (y) if such Borrower was a subchapter C corporation, such Borrower would be entitled to a refund of income taxes previously paid as a result of a tax loss during a year in which such Borrower is a limited liability company, then the members shall repay such Borrower the amount of such excess or refund, as the case may be, no later than the date the annual tax return must be filed by such Borrower (without giving effect to any filing extensions). In the event such amounts are not repaid in a timely manner by any member, then such Borrower shall not pay or make any distribution with respect to, or purchase, redeem or retire, any membership interest of such Borrower held or controlled by, directly or indirectly, such member until such payment has been made.",
"7.8. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (i) Indebtedness to Lenders; (ii) Indebtedness incurred for Capital Expenditures permitted under Section 7.6 hereof; (iii) Indebtedness created under the Subordinated Obligations Documents (to the extent that the obligations of Borrower to Waypoint could be characterized as Indebtedness), provided that the Subordination Agreement is in full force and effect and has not been violated or repudiated by Waypoint; (iv) Indebtedness assumed under the Acquisition Agreement and (v) other Indebtedness not to exceed $250,000 in the aggregate at any time outstanding so long as such Indebtedness is subject to a Subordination Agreement in favor of Agent. 68 -------------------------------------------------------------------------------- Execution Copy 7.9. Nature of Business.",
"Substantially change the nature of the business in which it is presently engaged, as set forth in Section 5.22, nor except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets or property other than in the Ordinary Course of Business for assets or property which are useful in, necessary for and are to be used in its business as presently conducted. 7.10. Transactions with Affiliates. Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except transactions disclosed to Agent, which are in the Ordinary Course of Business, on an arm’s-length basis on terms and conditions no less favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate, except Sponsor shall be entitled to an annual management fee of $750,000, payable in equal monthly installments of $62,500, so long as (x) no Default or Event of Default exists at the time of each such payment or after giving effect thereto, (y) Borrowers are in pro forma compliance with the covenants set forth in Section 6.5 both immediately before and after giving effect to each such payment installment and (z) Borrowers shall have Undrawn Availability of at least $2,000,000 both before and after giving effect to each such payment installment.",
"7.11. Leases. Enter as lessee into any lease arrangement for real or personal property (unless capitalized and permitted under Section 7.6 hereof) if after giving effect thereto, aggregate annual rental payments for all leased property would exceed $900,000 in any one fiscal year in the aggregate for all Borrowers. 7.12. Subsidiaries. (a) Form any Subsidiary. (b) Enter into any partnership, joint venture or similar arrangement. 7.13. Fiscal Year and Accounting Changes. Change its fiscal year from August 31 or make any change (i) in accounting treatment and reporting practices except as required by GAAP or (ii) in tax reporting treatment except as required by law. 7.14.",
"Pledge of Credit. Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose whatsoever or use any portion of any Advance in or for any business other than such Borrower’s business as conducted on the date of this Agreement. 7.15. Amendment of Certificate of Formation, Operating Agreement. Amend, modify or waive any term or provision of its certificate of formation, organization or inception or operating agreement or bylaws, or any other constituent document (collectively, the “Organizational Documents”) unless required by law; provided, however, Borrowers shall provide written notice to Agent within five (5) Business Days of being required to make any such modification.",
"7.16. Compliance with ERISA. (i) (x) Maintain, or permit any member of the Controlled Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule 5.8(d) or any other Plan for which Agent has provided its prior written 69 -------------------------------------------------------------------------------- Execution Copy consent, (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt “prohibited transaction”, as that term is defined in Section 406 of ERISA and Section 4975 of the Code, (iii) incur, or permit any member of the Controlled Group to incur, any “accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv) terminate, or permit any member of the Controlled Group to terminate, any Plan where such event could result in any liability of any Borrower or any member of the Controlled Group or the imposition of a lien on the property of any Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on Schedule 5.8(d), (vi) incur, or permit any member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code or postpone or delay or allow any member of the Controlled Group to postpone or delay any funding requirement with respect of any Plan.",
"7.17. Prepayment of Indebtedness. Except as permitted pursuant to Section 7.21 hereof, at any time, directly or indirectly, prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire or otherwise acquire any Indebtedness of any Borrower. 7.18. Anti-Terrorism Laws. No Borrower shall, until satisfaction in full of the Obligations and termination of this Agreement, nor shall it permit any Affiliate or agent to: (a) Conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person. (b) Deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224. (c) Engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No.",
"13224, the USA PATRIOT Act or any other Anti-Terrorism Law. Borrower shall deliver to Lenders any certification or other evidence requested from time to time by any Lender in its sole discretion, confirming Borrower’s compliance with this Section. 7.19. Membership/Partnership Interests. Elect to treat or permit any of its Subsidiaries to (x) treat its limited liability company membership interests or partnership interests, as the case may be, as securities as contemplated by the definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform Commercial Code or (y) certificate its limited liability company membership interests or partnership interests, as the case may be. 7.20. Trading with the Enemy Act. Engage in any business or activity in violation of the Trading with the Enemy Act. 70 -------------------------------------------------------------------------------- Execution Copy 7.21.",
"Reserved. 7.22. Other Agreements. Enter into any material amendment, waiver or modification of the Acquisition Agreement, the Subordinated Obligations Documents or any related agreements. VIII CONDITIONS PRECEDENT. 8.1. Conditions to Initial Advances. The agreement of Lenders to make the initial Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by Agent, immediately prior to or concurrently with the making of such Advances, of the following conditions precedent: (a) This Agreement. Agent shall have received this Agreement, duly executed by each Borrower; (b) Pledge Agreement. Agent shall have received the Pledge Agreements duly executed by the parties named therein; (c) Negative Pledge Agreement. Agent shall have received the Negative Pledge Agreements, in each case, duly executed by the parties named therein (d) Pledge Equity Interests; Stock Certificates and Units Powers; Pledged Notes. Receipt by Agent of (i) any certificates representing the membership interests or Equity Interests or Capital Stock pledged pursuant to the Pledge Agreements, together with an undated stock power or until such power (or analogous power) for each membership interest or the shares, as applicable, executed in blank by an Authorized Officer of the pledgor thereof and (ii) each promissory note (if any) pledged to Agent pursuant to the Pledge Agreements endorsed in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof; (e) Intellectual Property Security Agreement.",
"Agent shall have received the Intellectual Property Security Agreement duly executed by the parties named therein; (f) Notes. Agent shall have received the Notes duly executed and delivered by an authorized officer of each Borrower; (g) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by this Agreement, any related agreement or under law or reasonably requested by Agent to be filed, registered or recorded in order to create, in favor of Agent, a perfected security interest in or lien upon the Collateral shall have been properly filed, registered or recorded in each jurisdiction in which the filing, registration or recordation thereof is so required or requested, and Agent shall have received an acknowledgment copy, or other evidence satisfactory to it, of each such filing, registration or recordation and satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto; (h) Company Proceedings of Borrowers.",
"Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Managing Member or Managers, as applicable, of each Borrower authorizing (i) the execution, delivery and performance of this Agreement, the Notes, the Mortgage, any related agreements including any 71 -------------------------------------------------------------------------------- Execution Copy Other Document and the Acquisition Agreement (collectively the “Documents”) and (ii) the granting by each Borrower of the security interests in and liens upon the Collateral in each case certified by the Secretary or an Assistant Secretary of each Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate; (i) Incumbency Certificates of Borrowers. Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as to the incumbency and signature of the officers of each Borrower executing this Agreement, the Other Documents, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary; (j) Company Proceedings of each Guarantor.",
"Agent shall have received a copy of the resolutions in form and substance reasonably satisfactory to Agent, of the Managing Member of each Guarantor authorizing the execution, delivery and performance of the Guaranty, the Guaranty Security Agreement and each Other Document to which it is a party certified by the Secretary or an Assistant Secretary of each Guarantor as of the Closing Date; and, such certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate; (k) Incumbency Certificates of each Guarantor. Agent shall have received a certificate of the Secretary or an Assistant Secretary of each Guarantor, dated the Closing Date, as to the incumbency and signature of the officers of each Guarantor executing this Agreement, any certificate or other documents to be delivered by it pursuant hereto, together with evidence of the incumbency of such Secretary or Assistant Secretary; (l) Certificates.",
"Agent shall have received a copy of the Articles or Certificate of Formation of each Borrower and each Guarantor, and all amendments thereto, certified by the Secretary of State or other appropriate official of its jurisdiction of formation together with copies of the Operating Agreement of each Borrower and each Guarantor and all agreements of each Borrower’s and each Guarantor’s members certified as accurate and complete by the Secretary of each Borrower and such Guarantor; (m) Good Standing Certificates. Agent shall have received good standing certificates for each Borrower and each Guarantor dated not more than ten (10) days prior to the Closing Date, issued by the Secretary of State or other appropriate official of each Borrower’s and each Guarantor’s jurisdiction of formation and each jurisdiction where the conduct of each Borrower’s and each Guarantor’s business activities or the ownership of its properties necessitates qualification; (n) Legal Opinion. Agent shall have (i) received the executed legal opinion of Strasburger & Price, LLP in form and substance satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Agreement, the Note, the Other Documents, and related agreements as Agent may reasonably require and Borrowers hereby authorize and direct such counsel to deliver such opinions to Agent and Lenders and (ii) been permitted to rely on the legal opinion received by Sponsor and Borrower in connection with the Acquisition in form and substance satisfactory to Agent which shall cover such matters incident 72 -------------------------------------------------------------------------------- Execution Copy to the transactions contemplated by the Acquisition Agreement and related agreements as Agent may reasonably require; (o) Third Party Consents.",
"Receipt by Agent of evidence satisfactory to Agent that the Loan Parties have obtained all material consents and approvals of all Persons, including all requisite Governmental Bodies and counterparties to material contracts to the execution, delivery and performance of this Agreement, the Other Documents and the Acquisition Agreement; (p) No Litigation. (i) No litigation, investigation or proceeding before or by any arbitrator or Governmental Body shall be continuing or threatened against any Loan Party or against the officers or directors of any Loan Party (A) in connection with this Agreement, the Other Documents, the Subordinated Obligations Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature materially adverse to any Loan Party or the conduct of its business or inconsistent with the due consummation of the Transactions shall have been issued by any Governmental Body; (q) Financial Condition Certificates.",
"Agent shall have received an executed Financial Condition Certificate in the form of Exhibit 8.1(k). (r) Collateral Examination. Agent shall have completed Collateral examinations and received appraisals, the results of which shall be satisfactory in form and substance to Lenders, of the Receivables, Inventory, General Intangibles, Real Property, Leasehold Interest and Equipment of each Borrower and all books and records in connection therewith; (s) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior to the Closing Date hereunder, including pursuant to Article III hereof; (t) Pro Forma Financial Statements.",
"Agent shall have received a copy of the Pro Forma Financial Statements which shall be satisfactory in all respects to Lenders; (u) Equity Documents and the Acquisition Agreement. Agent shall have received final executed copies of the Equity Documents and Acquisition Agreement, and all related agreements, documents and instruments as in effect on the Closing Date all of which shall be satisfactory in form and substance to Agent and the transactions contemplated by such documentation shall be consummated prior to or simultaneously with the making of the initial Advance; (v) Subordination Agreement. Agent shall have entered into a Subordination Agreement with Borrowers and Waypoint satisfactory in form and substance to Agent in its sole discretion; (w) Insurance.",
"Agent shall have received in form and substance satisfactory to Agent, certified copies of Borrowers’ casualty insurance policies, together with loss payable endorsements on Agent’s standard form of lender loss payee endorsement naming Agent as 73 -------------------------------------------------------------------------------- Execution Copy lender loss payee, and certified copies of Borrowers’ liability insurance policies, together with endorsements naming Agent as a co-insured; (x) Title Insurance. Agent shall have received fully paid mortgagee title insurance policies (or binding commitments to issue title insurance policies, marked to Agent’s satisfaction to evidence the form of such policies to be delivered with respect to the Mortgage), in standard ALTA form, issued by a title insurance company satisfactory to Agent, each in an amount equal to not less than the fair market value of the Crowley Real Property subject to the Mortgage, insuring the Mortgage to create a valid Lien on the Crowley Real Property with no exceptions which Agent shall not have approved in writing and no survey exceptions; (y) Environmental Reports.",
"Agent shall have received (i) “Environmental Questionnaire” prepared by independent environmental engineering firms for each parcel of Real Property owned or leased by any Borrower except for the Crowley Real Property and (ii) Environmental Reports with respect to the Crowley Real Property, each to be satisfactory to Agent in its sole discretion; (z) Payment Instructions. Agent shall have received written instructions from Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this Agreement; (aa) Blocked Accounts. Agent shall have received duly executed agreements establishing the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the collection or servicing of the Receivables and proceeds of the Collateral; (bb) Consents. Agent shall have received any and all Consents necessary to permit the effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent shall have received such Consents and waivers of such third parties as might assert claims with respect to the Collateral, as Agent and its counsel shall deem necessary; (cc) No Adverse Material Change. (i) since August 31, 2009, there shall not have occurred any event, condition or state of facts which could reasonably be expected to have a Material Adverse Effect and (ii) no representations made or information supplied to Agent or Lenders shall have been proven to be inaccurate or misleading in any material respect; (dd) Lien Waiver Agreements.",
"Agent shall have received Lien Waiver Agreements satisfactory to Agent with respect to all premises leased by Borrowers at which any Collateral is located; (ee) Mortgage. Agent shall have received in form and substance satisfactory to Lenders (i) executed Mortgages in recordable form, (ii) a title policy for the Crowley Real Property and (iii) surveys for the Crowley Real Property; (ff) Guarantees and Other Documents. Agent shall have received (i) the executed Guarantees, (ii) the executed Guarantor Security Agreement, and (iii) the executed Other Documents, all in form and substance satisfactory to Agent; 74 -------------------------------------------------------------------------------- Execution Copy (gg) Prior Indebtedness. A payoff letter from each lender of any Prior Indebtedness, in form and substance satisfactory to Agent, together with such Uniform Commercial Code termination statements, releases of mortgage Liens and other instruments, documents and./or agreements necessary or appropriate to terminate any Liens in favor of any such lenders securing Prior Indebtedness which is to be indefeasibly paid in full on or prior to the Closing Date, as Agent may requested, duly executed and in recordable form, if applicable, and otherwise in form and substance satisfactory to Agent; (hh) Document and Diligence Review.",
"Agent and its counsel shall have (i) reviewed all books and records, organization documents, third party financing agreements, customer agreements, material contracts of Borrowers including leases, union contracts, labor contracts, vendor supply contracts, license agreements and distributorship agreements (ii) reviewed the Loan Parties corporate and legal structure, and such contracts, agreements, references to structure shall be satisfactory to agent and its counsel, including, but not limited to, all terms, conditions and documentation related to the Equity Documents; (ii) Closing Certificate. Agent shall have received a closing certificate signed by the Chief Financial Officer of each Loan Party dated as of the date hereof, stating that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii) the Loan Parties on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred or is continuing; (jj) Borrowing Base. Agent shall have received evidence from Borrowers that the amount of Eligible Receivables is sufficient in value and amount to support Advances in the amount requested by Borrowers on the Closing Date; (kk) Prefund Examination.",
"Agent shall have completed a prefunding examination of the Collateral, which examination shall include the verification and testing of Receivables and payables in respect of Mud Claims, the results of which shall be satisfactory to Agent in its sole discretion; (ll) Undrawn Availability. After giving effect to the initial Advances hereunder, Borrowers shall have Undrawn Availability of at least $2,000,000; and (mm) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower is in compliance with all pertinent federal, state, local or territorial regulations, including those with respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act. (nn) Other. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the Transactions shall be satisfactory in form and substance to Agent and its counsel. 8.2.",
"Conditions to Each Advance. The agreement of Lenders to make any Advance requested to be made on any date (including the initial Advance), is subject to the satisfaction of the following conditions precedent as of the date such Advance is made: 75 -------------------------------------------------------------------------------- Execution Copy (a) Representations and Warranties. Each of the representations and warranties made by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to which it is a party, and each of the representations and warranties contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement, the Other Documents or any related agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date; (b) No Default. No Event of Default or Default shall have occurred and be continuing on such date, or would exist after giving effect to the Advances requested to be made, on such date and, in the case of the initial Advance, after giving effect to the consummation of the transactions contemplated by the Acquisition Agreement; provided, however that Agent, in its sole discretion, may continue to make Advances notwithstanding the existence of an Event of Default or Default and that any Advances so made shall not be deemed a waiver of any such Event of Default or Default; and (c) Maximum Advances. In the case of any type of Advance requested to be made, after giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum amount of such type of Advance permitted under this Agreement.",
"Each request for an Advance by any Borrower hereunder shall constitute a representation and warranty by each Borrower as of the date of such Advance that the conditions contained in this subsection shall have been satisfied. IX INFORMATION AS TO BORROWERS. Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on its behalf to, until satisfaction in full of the Obligations and the termination of this Agreement: 9.1. Disclosure of Material Matters. Immediately upon learning thereof, report to Agent all matters materially affecting the value, enforceability or collectibility of any portion of the Collateral, including any Borrower’s reclamation or repossession of, or the return to any Borrower of, a material amount of goods or claims or disputes asserted by any Customer or other obligor or any Lien, other than any Permitted Encumbrance, placed upon or asserted against any Borrower or any Collateral. 9.2.",
"Schedules. (a) Deliver to Agent on or before the twentieth (20th) day of each month as and for the prior month (i) accounts receivable agings inclusive of reconciliations to the general ledger, (ii) accounts payable agings inclusive of reconciliations to the general ledger, (iii) Inventory reports (including Inventory perpetual reports) in form and substance acceptable to Agent, (iv) a Mud Liability schedule in form and substance satisfactory to Agent including, but not limited to, a listing by Customer showing the number of barrels of Mud Inventory held in storage multiplied by the average retail sale price of Mud Inventory sold during such month compared to the Receivables outstanding for such Customer, (v) a Borrowing Base Certificate in form and substance satisfactory to Agent (which shall be calculated as of the last day of the prior month and which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement) and (vi) an Undrawn Availability calculation; 76 -------------------------------------------------------------------------------- Execution Copy (b) No less than once each week, deliver to Agent on or before each Wednesday of each week as of the last Business Day of the previous week, or such other intervals and for such periods as the Agent may require, a Borrowing Base Certificate in form and substance satisfactory to Agent, that shall be calculated as of the last day of the prior week (which shall not be binding upon Agent or restrictive of Agent’s rights under this Agreement), and shall include in each instance, detailed description of sales, collections, credits, and shall include, if requested by Agent: (i) confirmatory assignment schedules, (ii) copies of Customer’s invoices, (iii) evidence of shipment or delivery, (iv) Inventory reports, (v) a equipment by location report showing the location of the Borrowers’ Rolling Stock and (vi) such further schedules, documents, and/or information regarding the Collateral as Agent may require including, but not limited to, trial balances and test verifications.",
"Agent shall have the right to confirm and verify all Receivables by any manner and through any medium it considers advisable and do whatever it may deem reasonably necessary to protect its interests hereunder. The items to be provided under this Section are to be in form satisfactory to Agent and executed by Borrowers and delivered to Agent from time to time solely for Agent’s convenience in maintaining records of the Collateral, and any Borrower’s failure to deliver any of such items to Agent shall not affect, terminate, modify, or otherwise limit Agent’s Lien with respect to the Collateral. 9.3. Environmental Reports. Furnish Agent, concurrently with the delivery of the financial statements referred to in Sections 9.7 and 9.8, with a Compliance Certificate signed by an Authorized Officer of Borrowing Agent stating, to the best of his knowledge, that each Borrower is in compliance in all material respects with all federal, state and local Environmental Laws. To the extent any Borrower is not in compliance with the foregoing laws, the certificate shall set forth with specificity all areas of non-compliance and the proposed action such Borrower will implement in order to achieve full compliance. 9.4.",
"Litigation. Promptly notify Agent in writing of any claim, litigation, suit or administrative proceeding affecting any Loan Party, whether or not the claim is covered by insurance, and of any litigation, suit or administrative proceeding, which in any such case affects the Collateral or which could reasonably be expected to have a Material Adverse Effect. 9.5. Material Occurrences. Promptly notify Agent in writing upon the occurrence of (a) any Event of Default or Default; (b) any event of default under the Subordinated Obligations Documents; (c) any event which with the giving of notice or lapse of time, or both, would constitute an event of default under the Subordinated Obligations Documents; (d) any event, development or circumstance whereby any financial statements or other reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP consistently applied, the financial condition or operating results of any Borrower as of the date of such statements; (e) any accumulated retirement plan funding deficiency which, if such deficiency continued for two plan years and was not corrected as provided in Section 4971 of the Code, could subject any Borrower to a tax imposed by Section 4971 of the Code; (f) each and every default by any Borrower which might result in the acceleration of the maturity of any Indebtedness, including the names and addresses of the holders of such Indebtedness with respect to which there is a default existing or with respect to which the maturity has been or 77 -------------------------------------------------------------------------------- Execution Copy could be accelerated, and the amount of such Indebtedness; and (g) any other development in the business or affairs of any Loan Party which could reasonably be expected to have a Material Adverse Effect; in each case describing the nature thereof and the action Borrowers propose to take with respect thereto.",
"9.6. Government Receivables. Notify Agent immediately if any of its Receivables arise out of contracts between any Borrower and the United States, any state, or any department, agency or instrumentality of any of them. 9.7. Annual Financial Statements. Furnish Agent within one hundred twenty (120) days after the end of each fiscal year of Borrowers, financial statements of Borrowers on a consolidated and consolidating basis including, but not limited to, statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by an independent certified public accounting firm selected by Borrowers and satisfactory to Agent (the “Accountants”).",
"The report of the Accountants shall be accompanied by all management letters from the Accountants delivered or addressed to Borrowers. In addition, the reports shall be accompanied by a Compliance Certificate. 9.8. Quarterly Financial Statements. Furnish Agent within forty-five (45) days after the end of each fiscal quarter, an unaudited balance sheet of Borrowers on a consolidated and consolidating basis and unaudited statements of income and stockholders’ equity and cash flow of Borrowers on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers’ business. The reports shall be accompanied by a Compliance Certificate. 9.9. Monthly Financial Statements. Furnish Agent within thirty (30) days after the end of each month, an unaudited balance sheet of Borrowers on a consolidated and consolidating basis and unaudited statements of income and stockholders’ equity and cash flow of Borrowers on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscal year to the end of such month and for such month, prepared on a basis consistent with prior practices and complete and correct in all material respects, subject to normal and recurring year end adjustments that individually and in the aggregate are not material to Borrowers’ business.",
"The reports shall be accompanied by a Compliance Certificate. 9.10. Other Reports. Furnish Agent as soon as available, but in any event within ten (10) days after the issuance thereof, (i) with copies of such financial statements, reports and returns as each Borrower shall send to its members and (ii) copies of all notices, reports, financial statements and other materials sent pursuant to the Subordinated Obligations Documents. 78 -------------------------------------------------------------------------------- Execution Copy 9.11. Additional Information. Furnish Agent with such additional information as Agent shall reasonably request in order to enable Agent to determine whether the terms, covenants, provisions and conditions of this Agreement and the Notes have been complied with by Borrowers including, without the necessity of any request by Agent, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of any Borrower’s opening of any new office or place of business or any Borrower’s closing of any existing office or place of business, and (c) promptly upon any Borrower’s learning thereof, notice of any labor dispute to which any Borrower may become a party, any strikes or walkouts relating to any of its plants or other facilities, and the expiration of any labor contract to which any Borrower is a party or by which any Borrower is bound. 9.12. Projected Operating Budget.",
"Furnish Agent, no later than thirty (30) days prior to the beginning of each Borrower’s fiscal years commencing with fiscal year 2011, a month by month projected operating budget and cash flow of Borrowers on a consolidated and consolidating basis for such fiscal year (including an income statement for each month and a balance sheet as at the end of the last month in each fiscal quarter), such projections to be accompanied by a certificate signed by an Authorized Officer of each Borrower to the effect that such projections have been prepared on the basis of sound financial planning practice consistent with past budgets and financial statements and that such officer has no reason to question the reasonableness of any material assumptions on which such projections were prepared. 9.13. Variances From Operating Budget.",
"At Agent’s request, furnish Agent, concurrently with the delivery of the financial statements referred to in Section 9.7 and each monthly report, a written report summarizing all material variances from budgets submitted by Borrowers pursuant to Section 9.12 and a discussion and analysis by management with respect to such variances. 9.14. Notice of Suits, Adverse Events. Furnish Agent with prompt written notice of (i) any lapse or other termination of any Consent issued to any Loan Party by any Governmental Body or any other Person that is material to the operation of any Borrower’s business, (ii) any refusal by any Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any periodic or special reports filed by any Loan Party with any Governmental Body or Person, if such reports indicate any material change in the business, operations, affairs or condition of any Loan party, or if copies thereof are requested by Lender, and (iv) copies of any material notices and other communications from any Governmental Body or Person which specifically relate to any Loan Party.",
"9.15. ERISA Notices and Requests.",
"Furnish Agent with immediate written notice in the event that (i) any Borrower or any member of the Controlled Group knows or has reason to know that a Termination Event has occurred, together with a written statement describing such Termination Event and the action, if any, which such Borrower or any member of the Controlled Group has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) any Borrower or any member of the Controlled Group knows or has reason to know that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written statement describing such transaction 79 -------------------------------------------------------------------------------- Execution Copy and the action which such Borrower or any member of the Controlled Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request has been filed with respect to any Plan together with all communications received by any Borrower or any member of the Controlled Group with respect to such request, (iv) any increase in the benefits of any existing Plan or the establishment of any new Plan or the commencement of contributions to any Plan to which any Borrower or any member of the Controlled Group was not previously contributing shall occur, (v) any Borrower or any member of the Controlled Group shall receive from the PBGC a notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan, together with copies of each such notice, (vi) any Borrower or any member of the Controlled Group shall receive any favorable or unfavorable determination letter from the Internal Revenue Service regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of each such letter; (vii) any Borrower or any member of the Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together with copies of each such notice; (viii) any Borrower or any member of the Controlled Group shall fail to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment; or (ix) any Borrower or any member of the Controlled Group knows that (a) a Multiemployer Plan has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.",
"9.16. Additional Documents. Execute and deliver to Agent, (i) upon request made in Agent’s sole discretion after the occurrence of an Event of Default, mortgages to Agent granting Agent Liens on all such Real Property owned by any Borrower as Agent shall request to secure the Obligations, and (ii) upon request, such documents and agreements as Agent may, from time to time, reasonably request to carry out the purposes, terms or conditions of this Agreement. 9.17. Appraisals and Field Examinations. Permit Agent or Agent’s representatives to (a) perform desktop Collateral appraisals in form and substance satisfactory to Agent at Borrowers’ cost and expense as Agent deems appropriate in Agent’s sole discretion, to determine, among other things, the net orderly liquidation value of the Collateral, (b) perform full Collateral appraisals in form and substance satisfactory to Agent at Borrowers’ cost and expense as Agent deems appropriate in Agent’s sole discretion, and, to determine, among other things, the net orderly liquidation value of the Collateral (each appraisal contemplated in this Section 9.17 or performed by Agent prior to the Closing Date shall each be an “NOLV Appraisal”), and (c) conduct field examinations at Borrowers’ cost and expense as Agent deems appropriate in Agent’s sole discretion. Notwithstanding the foregoing, so long as no Event of Default or Default has occurred and is continuing, Borrower shall not be required to pay for more than one appraisal of the types described in Section 9.17(b) per calendar year. 9.18 Background Check.",
"Agent shall have the right to conduct a background check on any new officer of any Borrower. X EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an “Event of Default”: 80 -------------------------------------------------------------------------------- Execution Copy 10.1. Nonpayment. Failure by any Borrower to pay any principal or interest on the Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any other liabilities or make any other payment, fee or charge provided for herein when due or in any Other Document; 10.2. Breach of Representation.",
"Any representation or warranty made or deemed made by any Loan Party in this Agreement, any Other Document or any related agreement or in any certificate, document or financial or other statement furnished at any time in connection herewith or therewith shall prove to have been misleading in any material respect on the date when made or deemed to have been made; 10.3. Financial Information. Failure by any Borrower to (i)(x) furnish financial information when due, or (y) when requested or (ii) permit the inspection of its books or records in accordance with this Agreement; 10.4. Judicial Actions.",
"Issuance of a notice of Lien, levy, assessment, injunction or attachment against any Borrower’s Collateral or against a material portion of any Borrower’s other property which is not stayed or lifted within thirty (30) days; 10.5. Noncompliance. Except as otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or neglect of any Loan Party to perform, keep or observe any term, provision, condition, covenant herein contained, or contained in any Other Document or any other agreement or arrangement, now or hereafter entered into between Loan Party and Agent or any Lender, or (ii) failure or neglect of any Borrower to perform, keep or observe any term, provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is not cured within ten (10) days from the occurrence of such failure or neglect; 10.6. Judgments. Any judgment or judgments are rendered against any Loan Party for an aggregate amount in excess of $250,000 or again all Loan Parties for an aggregate amount in excess of $250,000 and (i) enforcement proceedings shall have been commenced by a creditor upon such judgment, (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any such judgment results in the creation of a Lien upon any of the Collateral (other than a Permitted Encumbrance); 10.7.",
"Bankruptcy. Any Loan Party shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing; 81 -------------------------------------------------------------------------------- Execution Copy 10.8. Inability to Pay.",
"Any Loan Party shall admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business; 10.9. Affiliate Bankruptcy. Any Affiliate or any Subsidiary of any Loan Party shall (i) apply for, consent to or suffer the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as they become due or cease operations of its present business, (iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the purpose of effecting any of the foregoing; 10.10.",
"Material Adverse Effect. Any change in any Loan Party’s results of operations or condition (financial or otherwise) which in Agent’s opinion has a Material Adverse Effect; 10.11. Lien Priority. Any Lien created hereunder or provided for hereby or under any related agreement for any reason ceases to be or is not a valid and perfected Lien having a first priority interest; 10.12. Subordination Agreement Default. (i) An event of default has occurred under the Subordination Agreement, which default shall not have been cured or waived within any applicable grace period, (ii) termination or breach of the Subordination Agreement by Borrower or Waypoint or (iii) the attempt by any Borrower or Waypoint to terminate or challenge the validity of its respective Obligations under the Subordination Agreement. 10.13.",
"Subordinated Obligations Document Default. (i) The modification, termination or breach of any of the Subordinated Obligations Document Documents of any Borrower or (ii) the attempt by any Borrower or Waypoint to terminate or challenge the validity of the subordination and other provisions benefiting Agent or any Lender contained in any Subordinated Obligations Document. 10.14. Cross Default. A default of the obligations of any Loan Party under any agreement relating to Indebtedness of not less than $500,000 to which it is a party shall occur which adversely affects its condition, affairs or prospects (financial or otherwise) or a failure by an Loan Party to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in respect of Indebtedness, which default or failure to pay is not cured within any applicable grace period; 10.15.",
"Breach of Guaranty. Termination or breach of any Guaranty or Guaranty Security Agreement or similar agreement executed and delivered to Agent in connection with the Obligations of any Borrower, or if any Guarantor attempts to terminate, challenges the validity of, or its liability under, any such Guaranty or Guaranty Security Agreement or similar agreement; 82 -------------------------------------------------------------------------------- Execution Copy 10.16. Change of Ownership. Any Change of Ownership or Change of Control shall occur; 10.17. Invalidity. Any material provision of this Agreement or any Other Document shall, for any reason, cease to be valid and binding on any Loan Party, or any Loan Party shall so claim in writing to Agent or any Lender; 10.18. Licenses. (i) Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify any license, permit, patent, trademark or trade name of any Loan Party or (B) commence proceedings to suspend, revoke, terminate or adversely modify any such license, permit, trademark, trade name or patent and such proceedings shall not be dismissed or discharged within sixty (60) days, or (C) schedule or conduct a hearing on the renewal of any license, permit, trademark, trade name, domain name or patent necessary for the continuation of any Loan Party’s business and the staff of such Governmental Body issues a report recommending the termination, revocation, suspension or material, adverse modification of such license, permit, trademark, trade name, domain name or patent, and such revocation or termination and non-replacement described in (A), (B) and (C) above would reasonably be expected to have a Material Adverse Effect; (ii) any agreement which is necessary or material to the operation of any Loan Party’s business shall be revoked or terminated and not replaced by a substitute acceptable to Agent within thirty (30) days after the date of such revocation or termination, and such revocation or termination and non-replacement would reasonably be expected to have a Material Adverse Effect; 10.19.",
"Seizures. Any portion of the Collateral shall be seized or taken by a Governmental Body, or any Loan Party or the title and rights of any Loan Party or Sponsor which is the owner of any material portion of the Collateral shall have become the subject matter of claim, litigation, suit or other proceeding which might, in the opinion of Agent, upon final determination, result in impairment or loss of the security provided by this Agreement or the Other Documents; 10.20. Operations. The operations of any Loan Party’s manufacturing facility are interrupted at any time for more than forty-eight (48) hours during any period of five (5) consecutive days, unless such Loan Party shall (i) be entitled to receive for such period of interruption, proceeds of business interruption insurance sufficient to assure that its per diem cash needs during such period is at least equal to its average per diem cash needs for the consecutive three month period immediately preceding the initial date of interruption and (ii) receive such proceeds in the amount described in clause (i) preceding not later than thirty (30) days following the initial date of any such interruption; provided, however, that notwithstanding the provisions of clauses (i) and (ii) of this Section, an Event of Default shall be deemed to have occurred if such Loan Party shall be receiving the proceeds of business interruption insurance for a period of thirty (30) consecutive days; or 10.21.",
"Pension Plans. An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with respect to any Plan and, as a result of such event or condition, together with all other such events or conditions, any Borrower or any member of the Controlled Group shall incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect. 83 -------------------------------------------------------------------------------- Execution Copy XI LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT. 11.1. Rights and Remedies. (a) Upon the occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other Events of Default and at any time thereafter (such default not having previously been cured), at the option of Required Lenders all Obligations shall be immediately due and payable and Lenders shall have the right to terminate this Agreement and to terminate the obligation of Lenders to make Advances and (iii) a filing of a petition against any Borrower in any involuntary case under any state or federal bankruptcy laws, all Obligations shall be immediately due and payable and the obligation of Lenders to make Advances hereunder shall be terminated other than as may be required by an appropriate order of the bankruptcy court having jurisdiction over such Borrower. Upon the occurrence of any Event of Default, Agent shall have the right to exercise any and all rights and remedies provided for herein, under the Other Documents, under the Uniform Commercial Code and at law or equity generally, including the right to foreclose the security interests granted herein and to realize upon any Collateral by any available judicial procedure and/or to take possession of and sell any or all of the Collateral with or without judicial process.",
"Agent may enter any of any Borrower’s premises or other premises (including all Real Property identified on Schedule 4.19 hereto) without legal process and without incurring liability to any Borrower therefore, and Agent may thereupon, or at any time thereafter, conduct a public or private sale of the Collateral or in its discretion without notice or demand, take the Collateral and remove the same to such place as Agent may deem advisable and Agent may require Borrowers to make the Collateral available to Agent at a convenient place, including, without limitation requiring a Borrower to disassemble and re-assemble Collateral in order to remove such Collateral to such place as Agent may deem advisable and convenient.",
"With or without having the Collateral at the time or place of sale, Agent may sell the Collateral, or any part thereof, at public or private sale, at any time or place, in one or more sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as Agent may elect. Except as to that part of the Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give Borrowers reasonable notification of such sale or sales, it being agreed that in all events written notice mailed to Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable notification. At any public sale Agent or any Lender may bid for and become the purchaser, and Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold absolutely free from any claim or right of whatsoever kind, including any equity of redemption and all such claims, rights and equities are hereby expressly waived and released by each Borrower.",
"In connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted permission to use all of each Borrower’s (a) trademarks, trade styles, trade names, trade name applications, domain names, domain name applications, patents, patent applications, copyrights, service marks, licenses, franchises and other proprietary rights which are used or useful in connection with Inventory for the purpose of marketing, advertising for sale and selling or otherwise disposing of 84 -------------------------------------------------------------------------------- Execution Copy such Inventory and (b) Equipment for the purpose of completing the manufacture of unfinished goods.",
"The cash proceeds realized from the sale of any Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof. Noncash proceeds will only be applied to the Obligations as they are converted into cash. If any deficiency shall arise, Borrowers shall remain liable to Agent and Lenders therefore.",
"(b) To the extent that Applicable Law imposes duties on Agent to exercise remedies in a commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially unreasonable for Agent (i) to fail to incur expenses reasonably deemed significant by Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as any Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure Agent against risks of loss, collection or disposition of Collateral or to provide to Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral.",
"Each Borrower acknowledges that the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or omissions by Agent would not be commercially unreasonable in Agent’s exercise of remedies against the Collateral and that other actions or omissions by Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 11.1(b). Without limitation upon the foregoing, nothing contained in this Section 11.1(b) shall be construed to grant any rights to any Borrower or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b). 11.2. Agent’s Discretion. Agent shall have the right in its sole discretion to determine which rights, Liens, security interests or remedies Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with respect thereto and such determination will not in any way modify or affect any of Agent’s or Lenders’ rights hereunder. 11.3. Setoff.",
"Subject to Section 14.12, in addition to any other rights which Agent or any Lender may have under Applicable Law, upon the occurrence of an Event of Default 85 -------------------------------------------------------------------------------- Execution Copy hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to apply any Borrower’s property held by Agent and such Lender to reduce the Obligations. 11.4. Rights and Remedies not Exclusive. The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.",
"11.5. Allocation of Payments After Event of Default. Notwithstanding any other provisions of this Agreement to the contrary, after the occurrence and during the continuance of an Event of Default, all amounts collected or received by Agent on account of the Obligations or any other amounts outstanding under any of the Other Documents or in respect of the Collateral may, at Agent’s discretion, be paid over or delivered as follows: FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of Agent in connection with enforcing its rights and the rights of Lenders under this Agreement and the Other Documents and any protective advances made by Agent with respect to the Collateral under or pursuant to the terms of this Agreement; SECOND, to payment of any fees owed to Agent; THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each of Lenders to the extent owing to such Lender pursuant to the terms of this Agreement; FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest; FIFTH, to the payment of the outstanding principal amount of the Obligations (including the payment or cash collateralization of any outstanding Letters of Credit); SIXTH, to all other Obligations and other obligations which shall have become due and payable under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH” above; and SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.",
"In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category; (ii) each of Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata share (based on the proportion that the then outstanding Advances held by such Lender bears to the aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts available for distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by Agent in a cash collateral account and applied (A) first, to reimburse the Issuer from time to time for any drawings under such 86 -------------------------------------------------------------------------------- Execution Copy Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner provided in this Section 11.5.",
"XII WAIVERS AND JUDICIAL PROCEEDINGS. 12.1. Waiver of Notice. Each Borrower hereby waives notice of non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit extended, Collateral received or delivered, or any other action taken in reliance hereon, and all other demands and notices of any description, except such as are expressly provided for herein. 12.2. Delay. No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or option shall operate as a waiver of such or any other right, remedy or option or of any Default or Event of Default.",
"12.3. Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. XIII EFFECTIVE DATE AND TERMINATION. 13.1.",
"Term. This Agreement, which shall inure to the benefit of and shall be binding upon the respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become effective on the date hereof and shall continue in full force and effect until November 23, 2015 (the “Term”) unless sooner terminated as herein provided. Borrowers may terminate this Agreement at any time upon ninety (90) days’ prior written notice upon payment in full of the Obligations. In the event the Obligations are prepaid in full prior to the last day of the Term or Agent terminates this Agreement as a result of an Event of Default hereunder (the date of such occurrence hereinafter referred to as the “Early Termination Date”), Borrowers shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal to (a) three percent (3.0%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the Closing Date to and including the date immediately preceding the first anniversary of the Closing Date, (b) two percent (2.0%) of the Maximum Loan Amount if the Early 87 -------------------------------------------------------------------------------- Execution Copy Termination Date occurs on or after the first anniversary of the Closing Date to and including the date immediately preceding the second anniversary of the Closing Date and (c) one percent (1.0%) of the Maximum Loan Amount if the Early Termination Date occurs on or after the second anniversary of the Closing Date to and including the date immediately preceding the third anniversary of the Closing Date. 13.2.",
"Termination. The termination of the Agreement shall not affect any Borrower’s, Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the effective date of such termination, and the provisions hereof shall continue to be fully operative until all transactions entered into, rights or interests created or Obligations have been fully and indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall continue in full force and effect, notwithstanding the termination of this Agreement or the fact that Borrowers’ Account may from time to time be temporarily in a zero or credit position, until all of the Obligations of each Borrower have been indefeasibly paid and performed in full after the termination of this Agreement or each Borrower has furnished Agent and Lenders with an indemnification satisfactory to Agent and Lenders with respect thereto.",
"Accordingly, each Borrower waives any rights which it may have under the Uniform Commercial Code to demand the filing of termination statements with respect to the Collateral, and Agent shall not be required to send such termination statements to each Borrower, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations have been indefeasibly paid in full in immediately available funds. All representations, warranties, covenants, waivers and agreements contained herein shall survive termination hereof until all Obligations are indefeasibly paid and performed in full. XIV REGARDING AGENT. 14.1.",
"Appointment. Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and the Other Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set forth in Sections 3.3(a) and 3.4), charges and collections (without giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit of Lenders. Agent may perform any of its duties hereunder by or through its agents or employees.",
"As to any matters not expressly provided for by this Agreement (including collection of the Note) Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not be required to take any action which exposes Agent to liability or which is contrary to this Agreement or the Other Documents or Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent with respect thereto. 14.2. Nature of Duties.",
"Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its 88 -------------------------------------------------------------------------------- Execution Copy officers, directors, employees or agents shall be (i) liable for any action taken or omitted by them as such hereunder or in connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by any Borrower or any officer thereof contained in this Agreement, or in any of the Other Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure of any Borrower to perform its obligations hereunder. Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the properties, books or records of any Borrower.",
"The duties of Agent as respects the Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent any obligations in respect of this Agreement except as expressly set forth herein. 14.3. Lack of Reliance on Agent and Resignation. Independently and without reliance upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of Loan Party in connection with the making and the continuance of the Advances hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of Loan Party. Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Advances or at any time or times thereafter except as shall be provided by any Borrower pursuant to the terms hereof.",
"Agent shall not be responsible to any Lender for any recitals, statements, information, representations or warranties herein or in any agreement, document, certificate or a statement delivered in connection with or for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any Other Document, or of the financial condition of any Loan Party, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Note, the Other Documents or the financial condition of any Borrower, or the existence of any Event of Default or any Default. Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent and upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably satisfactory to Borrowers.",
"Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term “Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. 89 -------------------------------------------------------------------------------- Execution Copy 14.4. Certain Rights of Agent.",
"If Agent shall request instructions from Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any Other Document, Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall not have any right of action whatsoever against Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.",
"14.5. Reliance. Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, order or other document or telephone message believed by it to be genuine and correct and to have been signed, sent or made by the proper person or entity, and, with respect to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder, upon advice of counsel selected by it.",
"Agent may employ agents and attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent with reasonable care. 14.6. Notice of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent has received notice from a Lender or Borrowing Agent referring to this Agreement or the Other Documents, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of Lenders.",
"14.7. Indemnification. To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Other Document (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO ANY OTHERWISE INDEMNIFIED MATTER ARISING FROM AGENT’S OR LENDER’S NEGLIGENCE OR STRICT LIABILITY); provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment). 14.8. Agent in its Individual Capacity. With respect to the obligation of Agent to lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder as any other Lender and as if it were not performing the duties as Agent specified herein; and the term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include Agent in its individual capacity as a Lender.",
"Agent may engage in business 90 -------------------------------------------------------------------------------- Execution Copy with any Borrower as if it were not performing the duties specified herein, and may accept fees and other consideration from any Borrower for services in connection with this Agreement or otherwise without having to account for the same to Lenders. 14.9. Delivery of Documents. To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9, 9.12 and 9.13 or Borrowing Base Certificates from any Borrower pursuant to the terms of this Agreement which any Borrower is not obligated to deliver to each Lender, Agent will promptly furnish such documents and information to Lenders. 14.10. Borrowers’ Undertaking to Agent. Without prejudice to their respective obligations to Lenders under the other provisions of this Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time to time on demand all amounts from time to time due and payable by it for the account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already paid.",
"Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or the relevant one or more of them pursuant to this Agreement. 14.11. No Reliance on Agent’s Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws. 14.12. Other Agreements. Each of Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to any Borrower or any deposit accounts of any Borrower now or hereafter maintained with such Lender.",
"Anything in this Agreement to the contrary notwithstanding, each of Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take any action to protect or enforce its rights arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Other Documents shall be taken in concert and at the direction or with the consent of Agent or Required Lenders. XV BORROWING AGENCY. 15.1. Borrowing Agency Provisions. (a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent and in such capacity to borrow, sign and endorse notes, and execute and deliver all instruments, documents, writings and further assurances now or hereafter required 91 -------------------------------------------------------------------------------- Execution Copy hereunder, on behalf of such Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in accordance with the request of Borrowing Agent.",
"(b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies Agent and each Lender and holds Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or instruction from Borrowing Agent or any other action taken by Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or gross (not mere) negligence by the indemnified party (as determined by a court of competent jurisdiction in a final and non-appealable judgment). (c) All Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals and forbearance granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve its rights against any Borrower, the release by Agent or any Lender of any Collateral now or thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof.",
"Each Borrower waives all suretyship defenses. 15.2. Waiver of Subrogation. Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which such Borrower may now or hereafter have against the other Borrowers or other Person directly or contingently liable for the Obligations hereunder, or against or with respect to the other Borrowers’ property (including, without limitation, any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until termination of this Agreement and repayment in full of the Obligations. XVI MISCELLANEOUS 16.1. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas applied to contracts to be performed wholly within the State of Texas. Any judicial proceeding brought by or against any Borrower with respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any court of competent jurisdiction in the State of Texas, United States of America, and, by execution and delivery of this Agreement, each Borrower accepts for itself and in connection with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each Borrower hereby waives personal service of any and all process upon it and consents that all such service of process may be made 92 -------------------------------------------------------------------------------- Execution Copy by registered mail (return receipt requested) directed to Borrowing Agent at its address set forth in Section 16.6 and service so made shall be deemed completed five (5) days after the same shall have been so deposited in the mails of the United States of America, or, at Agent’s option, by service upon Borrowing Agent which each Borrower irrevocably appoints as such Borrower’s Agent for the purpose of accepting service within the State of Texas.",
"Nothing herein shall affect the right to serve process in any manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings against any Borrower in the courts of any other jurisdiction. Each Borrower waives any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. Each Borrower waives the right to remove any judicial proceeding brought against such Borrower in any state court to any federal court. Any judicial proceeding by any Borrower against Agent or any Lender involving, directly or indirectly, any matter or claim in any way arising out of, related to or connected with this Agreement or any related agreement, shall be brought only in a federal or state court located in the County of Dallas, State of Texas.",
"16.2. Entire Understanding. (a) THIS AGREEMENT AND THE DOCUMENTS EXECUTED CONCURRENTLY HEREWITH CONTAIN THE ENTIRE UNDERSTANDING BETWEEN EACH BORROWER, AGENT AND EACH LENDER AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER HEREOF. ANY PROMISES, REPRESENTATIONS, WARRANTIES OR GUARANTEES NOT HEREIN CONTAINED AND HEREINAFTER MADE SHALL HAVE NO FORCE AND EFFECT UNLESS IN WRITING, SIGNED BY EACH BORROWER’S, AGENT’S AND EACH LENDER’S RESPECTIVE OFFICERS. Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing, signed by the party to be charged. Each Borrower acknowledges that it has been advised by counsel in connection with the execution of this Agreement and Other Documents and is not relying upon oral representations or statements inconsistent with the terms and provisions of this Agreement. (b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and Borrowers may, subject to the provisions of this Section 16.2 (b), from time to time enter into written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms thereof or waiving any Event of Default thereunder, but only to the extent specified in such written agreements; provided, however, that no such supplemental agreement shall, without the consent of all Lenders affected thereby: (i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the Maximum Loan Amount.",
"93 -------------------------------------------------------------------------------- Execution Copy (ii) extend the maturity of any Note or the due date for any amount payable hereunder, or decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this Agreement. (iii) alter the definition of the term Required Lenders or alter, amend or modify this Section 16.2(b). (iv) release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement) having an aggregate value in excess of $1,000,000. (v) change the rights and duties of Agent. (vi) permit any Revolving Advance to be made if after giving effect thereto the total of Revolving Advances outstanding hereunder would exceed the Formula Amount for more than sixty (60) consecutive Business Days or exceed one hundred and five percent (105%) of the Formula Amount.",
"(vii) increase the Receivables Advance Rates above the Receivables Advance Rates in effect on the Closing Date. (viii) release all or substantially all Guarantors. Any such supplemental agreement shall apply equally to each Lender and shall be binding upon Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver, Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of Default is the same as the Event of Default which was waived), or impair any right consequent thereon. In the event that Agent requests the consent of a Lender pursuant to this Section 16.2 and such consent is denied, then PNC may, at its option, require such Lender to assign its interest in the Advances to PNC or to another Lender or to any other Person designated by Agent (the “Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus (ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid when collected from Borrowers. In the event PNC elects to require any Lender to assign its interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty five (45) days following such Lender’s denial, and such Lender will assign its interest to PNC or the Designated Lender no later than five (5) days following receipt of such notice pursuant to a Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as appropriate, and Agent.",
"Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or (c) any other provision of this Agreement, Agent may at its discretion and without the consent of the Required Lenders, voluntarily permit the outstanding Revolving Advances at any time to exceed the Formula Amount by up to five percent (5.00%) of the Formula Amount for up to thirty (30) 94 -------------------------------------------------------------------------------- Execution Copy consecutive Business Days (the “Out-of-Formula Loans”); provided, that, such outstanding Advances do not exceed the Maximum Revolving Advance Amount.",
"If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate for Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders do make Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits of Section 2.1(a). For purposes of this paragraph, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Formula Amount was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be “Eligible Receivables” becomes ineligible, collections of Receivables applied to reduce outstanding Revolving Advances are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral. In the event Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more than five percent (5.00%), Agent shall use its efforts to have Borrowers decrease such excess in as expeditious a manner as is practicable under the circumstances and not inconsistent with the reason for such excess.",
"Revolving Advances made after Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary overadvances and shall be decreased in accordance with the preceding sentence. In addition to (and not in substitution of) the discretionary Revolving Advances permitted above in this Section 16.2, Agent is hereby authorized by Borrowers and Lenders, from time to time in Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrowers on behalf of Lenders which Agent, in its reasonable business judgment, deems necessary or desirable (a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any other amount chargeable to Borrowers pursuant to the terms of this Agreement; provided, that at any time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not exceed one hundred and five percent (105%) of the Formula Amount.",
"16.3. Successors and Assigns; Participations; New Lenders. (a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each Lender, all future holders of the Obligations and their respective successors and permitted assigns, except that no Borrower may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Agent and each Lender. (b) Each Borrower acknowledges that in the regular course of commercial banking business one or more Lenders may at any time and from time to time sell participating interests in the Advances to other financial institutions (each such transferee or purchaser of a participating interest, a “Participant”). Each Participant may exercise all rights of payment (including rights of set-off) with respect to the portion of such Advances held by it or other Obligations payable hereunder as fully as if such Participant were the direct holder thereof provided that Borrowers shall not be required to pay to any Participant more than the amount which it would have been required to pay to Lender which granted an interest in its Advances or 95 -------------------------------------------------------------------------------- Execution Copy other Obligations payable hereunder to such Participant had such Lender retained such interest in the Advances hereunder or other Obligations payable hereunder and in no event shall Borrowers be required to pay any such amount arising from the same circumstances and with respect to the same Advances or other Obligations payable hereunder to both such Lender and such Participant. Each Borrower hereby grants to any Participant a continuing security interest in any deposits, moneys or other property actually or constructively held by such Participant as security for the Participant’s interest in the Advances.",
"(c) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may sell, assign or transfer all or any part of its rights and obligations under or relating to Revolving Advances and/or Term Loans under this Agreement and the Other Documents to one or more additional banks or financial institutions and one or more additional banks or financial institutions may commit to make Advances hereunder (each a “Purchasing Lender”), in minimum amounts of not less than $1,000,000, pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for recording. Upon such execution, delivery, acceptance and recording, from and after the transfer effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement, the Commitment Transfer Supplement creating a novation for that purpose. Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents.",
"Each Borrower hereby consents to the addition of such Purchasing Lender and the resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights and obligations of such transferor Lender under this Agreement and the Other Documents. Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing. (d) Any Lender, with the consent of Agent which shall not be unreasonably withheld or delayed, may directly or indirectly sell, assign or transfer all or any portion of its rights and obligations under or relating to Revolving Advances and/or Term Loans under this Agreement and the Other Documents to an entity, whether a corporation, partnership, trust, limited liability company or other entity that (i) is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and (ii) is administered, serviced or managed by the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each Participant and Purchasing Lender, each a “Transferee” and collectively the “Transferees”), pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being assigned (“Modified Commitment Transfer Supplement”), executed by any intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for recording.",
"Upon such execution and delivery, from and after the transfer effective date determined pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a 96 -------------------------------------------------------------------------------- Execution Copy party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to the extent provided in such Modified Commitment Transfer Supplement, be released from its obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation for that purpose. Such Modified Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing CLO. Each Borrower hereby consents to the addition of such Purchasing CLO.",
"Borrowers shall execute and deliver such further documents and do such further acts and things in order to effectuate the foregoing. (e) Agent shall maintain at its address a copy of each Commitment Transfer Supplement and Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the recordation of the names and addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the owner of the Advance recorded therein for the purposes of this Agreement. The Register shall be available for inspection by Borrowing Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the effective date of each transfer or assignment (other than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing CLO.",
"(f) Each Borrower authorizes each Lender to disclose to any Transferee and any prospective Transferee any and all financial information in such Lender’s possession concerning such Borrower which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement or in connection with such Lender’s credit evaluation of such Borrower. 16.4. Application of Payments. Agent shall have the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent that any Borrower makes a payment or Agent or any Lender receives any payment or proceeds of the Collateral for any Borrower’s benefit, which are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had not been received by Agent or such Lender. 16.5. Indemnity. Each Borrower shall indemnify Agent, each Lender and each of their respective officers, directors, Affiliates, attorneys, employees and agents from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or any other Person with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any Lender is a party thereto, except to the extent that any 97 -------------------------------------------------------------------------------- Execution Copy of the foregoing arises out of the willful misconduct of the party being indemnified (as determined by a court of competent jurisdiction in a final and non-appealable judgment).",
"WITHOUT LIMITING THE FOREGOING, (I) IT IS THE INTENTION OF EACH BORROWER, AND EACH BORROWER AGREES, THAT THE INDEMNITY PROVISIONS AND EXCULPATORY PROVISIONS CONTAINED IN THIS AGREEMENT SHALL APPLY WITH RESPECT TO LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SETTLEMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER (INCLUDING, WITHOUT LIMITATION, FEES AND DISBURSEMENTS OF COUNSEL), WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF ANY PARTY TO BE INDEMNIFIED AND, (II) THIS INDEMNITY SHALL EXTEND TO ANY LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING FEES AND DISBURSEMENTS OF COUNSEL) ASSERTED AGAINST OR INCURRED BY ANY OF THE INDEMNITEES DESCRIBED ABOVE IN THIS SECTION 16.5 BY ANY PERSON UNDER ANY ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF ANY BORROWER’S OR ANY OTHER PERSON’S FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS WASTE MATERIALS, INCLUDING HAZARDOUS SUBSTANCES AND HAZARDOUS WASTE, OR OTHER TOXIC SUBSTANCES. Additionally, if any taxes (excluding taxes imposed upon or measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Borrowers on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and penalties thereon, and will indemnify and hold the indemnitees described above in this Section 16.5 harmless from and against all liability in connection therewith.",
"16.6. Notice. Any notice or request hereunder may be given to Borrowing Agent or any Borrower or to Agent or any Lender at their respective addresses set forth below or at such other address as may hereafter be specified in a notice designated as a notice of change of address under this Section. Any notice, request, demand, direction or other communication (for purposes of this Section 16.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Agreement shall be given or made by telephone or in writing (which includes by means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 16.6) in accordance with this Section 16.6.",
"Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Section 16.6 hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 16.6. Any Notice shall be effective: (a) In the case of hand-delivery, when delivered; 98 -------------------------------------------------------------------------------- Execution Copy (b) If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested; (c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a confirmatory Notice (received at or before noon on such next Business Day); (d) In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number, if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine; (e) In the case of electronic transmission, when actually received; (f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such site) by another means set forth in this Section 16.6; and (g) If given by any other means (including by overnight courier), when actually received. Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy thereof to Agent, and Agent shall promptly notify the other Lenders of its receipt of such Notice.",
"(A) If to Agent or PNC at: PNC Bank, National Association 2100 Ross Avenue, Suite 1850 Dallas, Texas 75201 Attention: Relationship Manager (Francis) Telephone: (214) 871-1265 Facsimile: (214) 871-2015 and to: PNC Bank, National Association Two Tower Center Blvd. East Brunswick, New Jersey 08816 Attention: Josephine Griffin Telephone: (732) 220-4388 Facsimile: (732) 220-4394 99 -------------------------------------------------------------------------------- Execution Copy with a copy to: PNC Bank, National Association PNC Agency Services PNC Firstside Center 500 First Avenue, 4th Floor Pittsburgh, Pennsylvania 15219 Attention: Lisa Pierce Telephone: (412) 762-6442 Facsimile: (412) 762-8672 with an additional copy to: Patton Boggs LLP 2000 McKinney Avenue, Suite 1700 Dallas, Texas 75201 Attention: Michelle Suarez Telephone: (214) 758-1500 Facsimile: (214) 758-1550 (B) If to a Lender other than Agent, as specified on the signature pages hereof.",
"(C) If to Borrowing Agent or any Borrower: c/o NYTEX Energy Holdings, Inc. 12222 Merit Drive, Suite 1850 Dallas, Texas 75251 Attention: Mr. Kenneth Conte Telephone: (972) 770-4700 Facsimile: (972) 770-4701 with a copy to: Strasburger & Price, LLP 901 Main Street, Suite 4400 Dallas, Texas 75202 Attention: Mr. Kevin Woltjen Telephone: (214) 651-2344 Facsimile: (214) 659-4025 16.7. Survival. The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the Other Documents and payment in full of the Obligations. 16.8. Severability. If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given effect so far as possible. 16.9.",
"Expenses. All costs and expenses including reasonable attorneys’ fees (including the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on 100 -------------------------------------------------------------------------------- Execution Copy behalf of Lenders (a) in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or (b) in connection with the entering into, modification, amendment, administration and enforcement of this Agreement, the Subordination Agreement or any consents or waivers hereunder or thereunder and all related agreements, documents and instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent’s security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or any Lender’s rights hereunder, under the Subordination Agreement and under all related agreements, documents and instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with any Loan party or Waypoint or (e) in connection with any advice given to Agent or any Lender with respect to its rights and obligations under this Agreement, the Subordination Agreement and all related agreements, documents and instruments, may be charged to Borrowers’ Account and shall be part of the Obligations 16.10.",
"Injunctive Relief. Each Borrower recognizes that, in the event any Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, or threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving that actual damages are not an adequate remedy. 16.11. Consequential Damages. Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to any Loan Party (or any Affiliate of any such Person) for indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration or collection of the Obligations or as a result of any transaction contemplated under this Agreement or any Other Document.",
"16.12. Captions. The captions at various places in this Agreement are intended for convenience only and do not constitute and shall not be interpreted as part of this Agreement. 16.13. Counterparts; Facsimile Signatures. This Agreement may be executed in any number of and by different parties hereto on separate counterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto. 16.14. Construction. The parties acknowledge that each party and its counsel have reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits thereto.",
"16.15. Confidentiality; Sharing Information. Agent, each Lender and each Transferee shall hold all non-public information obtained by Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance with Agent’s, such Lender’s and such Transferee’s customary procedures for handling confidential information of this nature; provided, however, Agent, each Lender and each Transferee may disclose such confidential 101 -------------------------------------------------------------------------------- Execution Copy information (a) to its examiners, Affiliates, outside auditors, counsel and other professional advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as required or requested by any Governmental Body or representative thereof or pursuant to legal process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to notify the applicable Borrower of the applicable request for disclosure of such non-public information (A) by a Governmental Body or representative thereof (other than any such request in connection with an examination of the financial condition of a Lender or a Transferee by such Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or any Transferee be obligated to return any materials furnished by any Borrower other than those documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the Collateral once the Obligations have been paid in full and this Agreement has been terminated.",
"Each Borrower acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to such Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each Borrower hereby authorizes each Lender to share any information delivered to such Lender by such Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the provisions of this Section 16.15 as if it were a Lender hereunder.",
"Such authorization shall survive the repayment of the other Obligations and the termination of this Agreement. 16.16. Publicity. Each Borrower and each Lender hereby authorizes Agent to make appropriate announcements of the financial arrangement entered into among Borrowers, Agent and Lenders, including announcements which are commonly known as tombstones, in such publications and to such selected parties as Agent shall in its sole and absolute discretion deem appropriate. 16.17. Certifications From Banks and Participants; US PATRIOT Act. Each Lender or assignee or participant of a Lender that is not incorporated under the Laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United States or foreign country, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to Agent the certification, or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as are required under the USA PATRIOT Act.",
"16.18. Non-Applicability of Chapter 346. Each Borrower and Agent hereby agree that, except for the opt-out provisions of Section 346.004 thereof, the provisions of Chapter 346 of the Texas Finance Code (regulating certain revolving credit loans and revolving tri-party accounts) shall not apply to this Agreement or any of the Other Documents. 102 -------------------------------------------------------------------------------- Execution Copy 16.19. BORROWERS’ WAIVER OF RIGHTS UNDER TEXAS DECEPTIVE TRADE PRACTICES ACT. EACH BORROWER HEREBY WAIVES ANY RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION § 17.41 ET SEQ. TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF THE BORROWERS OWN SELECTION, EACH BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER.",
"EACH BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT EACH PERSON (A) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO AGENT, AND (B) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. [Remainder of page left blank intentionally; signature pages follow] 103 -------------------------------------------------------------------------------- Execution Copy IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the day and year first above written. BORROWERS: NYTEX FDF ACQUISITION, INC. By: Name: Michael Galvis Title: President & Chief Executive Officer FRANCIS OAKS, L.L.C. By: Name: Michael Galvis Title: President & Chief Executive Officer FRANCIS’ DRILLING FLUIDS, LTD. By: Name: Kenneth K. Conte Title: Executive Vice President, Secretary & Treasurer [Signature Page to Revolving Credit, Term Loan and Security Agreement] -------------------------------------------------------------------------------- Execution Copy IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the day and year first above written. AGENT AND LENDER: PNC BANK, NATIONAL ASSOCIATION By: Name: Robert Reaser Title: Vice President [Signature Page to Revolving Credit, Term Loan and Security Agreement] -------------------------------------------------------------------------------- Execution Copy Schedule 6.12 Post-Closing Obligations Condition Days After Closing to Complete 1.",
"Vehicle Title Lien. With respect to each item of Collateral subject to a certificate of title statute and listed on Schedule 6.12(a) attached hereto, Borrowers shall have delivered to Agent, in form and substance satisfactory to Agent: (i) a fully-executed, notarized power of attorney authorizing CT Corp to perfect liens on behalf of Agent; (ii) an original title properly endorsed to such Borrower for each such item of Collateral; (iii) to the extent applicable, an odometer statement clearly identifying the current mileage for each item of Collateral; (iv) to the extent applicable, an in-state garaging address for each item of Collateral; and (v) evidence that Agent’s Lien has been duly noted thereon. 30 days 2. Perfect Agent’s Lien in Aircraft and Vessel.",
"Perfect Agent’s Lien in all aircraft and marine vessels constituting Collateral. 30 days 3. Lien Waiver Agreements. With respect to each location leased by Borrowers set forth on Schedule 4.19, Borrowers shall have delivered to Agent, in form and substance satisfactory to Agent, a Lien Waiver Agreement pertaining to such location. 120 Business Days; provided, however, in the event that such condition is not satisfied for any location Agent shall either (i) institute a reserve pursuant to Section 2.1(a)(y)(iii) equal to three months rent for such location or (ii) declare a Default under Section 6.12. 4.",
"Mortgage Release. Borrowers shall have delivered to Agent, in form and substance satisfactory to Agent, a Mortgage Release executed by Iberia Savings Bank. 60 days -------------------------------------------------------------------------------- Execution Copy Condition Days After Closing to Complete 5. Insurance Endorsements. Borrowers shall have delivered to Agent insurance endorsements, in form and substance satisfactory to Agent, naming Agent as an additional insured and lender loss payee as its interests may appear with respect to all property and liability insurance policies naming Borrowers as the insured entity. 30 days 6. Landlord Waivers. Borrowers shall have delivered to Agent fully executed landlord waivers, each in form and substance satisfactory to Agent in its sole discretion with respect to the premises located at each of the following: 60 days a.",
"103 N. Aransas St, Alice, TX b. 1149 W. Austin St., Kermit, TX c. Eads Ave, Weatherford, OK d. 3220 Metric Dr, Sulphur, LA e. 100 Asma Blvd., Building 1, Suite 151, Lafayette, LA f. Lot # 9, Marshall Subdivision, Cameron, LA g. Lot # 8, Marshall Subdivision, Cameron, LA h. Lot # 7, Marshall Subdivision, Cameron, LA i. Lot # 6, Marshall Subdivision, Cameron, LA j. 206 and 208 W Main, Alice, TX k. 208 W Main, Alice, TX (railspur) l. 9711 Exxon (Pvt) Rd, Intercoastal City, LA m. 2600 Second Street, Berwick, LA n. 1000 Hwy 1, Coushatta, LA o. 180 17th St, Fourchon East, Golden Meadow, LA p. 300 E Arlington, Ada, OK q.",
"Port of Lake Charles, Lake Charles, LA r. 851 Yellowstone Industrial Park, Rock Springs, WY -------------------------------------------------------------------------------- Execution Copy Condition Days After Closing to Complete s. Airstrip, Crowley, LA 7. Local Counsel Opinion. Borrowers shall have delivered to Agent the executed legal opinion of Louisiana counsel opining on the Crowley Real Property in form and substance satisfactory to Agent. 2 weeks 8. Schedule to UCC Financing Statement.",
"Borrowers shall have delivered to Agent a legible copy of the schedule attached to that certain UCC-1 financing statement filed by Cisco Systems Capital Corporation; file #01-101240 dated 7/26/10 in Acadia, LA. 30 days 9. Business Interruption Insurance. Borrowers shall have delivered to Agent evidence of business interruption insurance in the amount of $2,000,000 maintained by Borrowers. 120 days 10. Mortgagee Title Policy. Borrowers shall have delivered to Agent a mortgagee title policy for the Crowley Real Property. 20 days 11.",
"Dissolution of Subsidiaries. Borrowers shall have delivered to Agent evidence of the dissolution of Francis Chemical Company, Superior Chemical Company and Pyburn Services, Inc. in form and substance satisfactory to Agent. 10 days -------------------------------------------------------------------------------- Execution Copy Schedule 6.12(a) Vehicle Title Liens to be Perfected Post-Closing (see attached)"
]
| https://github.com/TheAtticusProject/cuad | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
b"<html>\n<title> - MULTILATERAL DEVELOPMENT BANKS: PROMOTING EFFECTIVENESS AND FIGHTING CORRUPTION</title>\n<body><pre>[Senate Hearing 109-913]\n[From the U.S. Government Printing Office]\n\n\n S. Hrg. 109-913\n \n MULTILATERAL DEVELOPMENT BANKS:\n PROMOTING EFFECTIVENESS\n AND FIGHTING CORRUPTION\n\n=======================================================================\n\n HEARING\n\n\n\n BEFORE THE\n\n\n\n COMMITTEE ON FOREIGN RELATIONS\n UNITED STATES SENATE\n\n\n\n ONE HUNDRED NINTH CONGRESS\n\n\n\n SECOND SESSION\n\n\n\n __________\n\n MARCH 28, 2006\n\n __________\n\n\n\n Printed for the use of the Committee on Foreign Relations\n\n\n Available via the World Wide Web: http://www.access.gpo.gov/congress/\n senate\n\n U.S. GOVERNMENT PRINTING OFFICE\n33-727 PDF WASHINGTON : 2007\n---------------------------------------------------------------------\nFor sale by the Superintendent of Documents, U.S. Government\nPrinting Office Internet: bookstore.gpo.gov Phone: toll free (866)\n512-1800; DC area (202) 512-1800 Fax: (202)512-2250 Mail: Stop SSOP,\nWashington, DC 20402-0001 \n\n\n\n\n\n\n\n COMMITTEE ON FOREIGN RELATIONS\n\n RICHARD G. LUGAR, Indiana, Chairman\n\nCHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware\nLINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland\nGEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut\nNORM COLEMAN, Minnesota JOHN F. KERRY, Massachusetts\nGEORGE V. VOINOVICH, Ohio RUSSELL D. FEINGOLD, Wisconsin\nLAMAR ALEXANDER, Tennessee BARBARA BOXER, California\nJOHN E. SUNUNU, New Hampshire BILL NELSON, Florida\nLISA MURKOWSKI, Alaska BARACK OBAMA, Illinois\nMEL MARTINEZ, Florida\n Kenneth A. Myers, Jr., Staff Director\n Antony J. Blinken, Democratic Staff Director\n\n\n\n \n\n\n\n\n\n\n\n C O N T E N T S\n\n ---------- \n Page\nLugar, Hon. Richard G., U.S. Senator from Indiana, opening \n statement......................................................\n\n 1\n\n\nEasterly, Dr. William, Professor of Economics, New York \n University..................................................... 26\n\n Prepared statement........................................... 29\n\n\nLerrick, Dr. Adam Director, the Gailliot Center for Public \n Policy, Carnegie Mellon University............................. 39\n\n Prepared statement........................................... 41\n\n\nLevine, Dr. Ruth E., Director of Programs, Center for Global \n Development.................................................... 33\n\n Prepared statement........................................... 35\n\n\nLowery, Hon. Clay, Assistant Secretary For International Affairs, \n Department of the Treasury, Washington, DC..................... 3\n\n Prepared statement........................................... 5\n\n\nPerry, Hon. Cynthia Shepard, U.S. Executive Director, the African \n Development Bank, Washington, DC............................... 10\n\n Prepared statement........................................... 13\n\n\n (iii)\n\n\n MULTILATERAL DEVELOPMENT BANKS:\n PROMOTING EFFECTIVENESS AND\n FIGHTING CORRUPTION\n\n ---------- \n\n\n TUESDAY, MARCH 28, 2006,\n\n U.S. Senate,\n Committee on Foreign Relations,\n Washington, DC.\n The committee met, pursuant to notice, at 9:34 a.m. in room \nSD-419, Dirksen Senate Office Building, Hon. Richard G. Lugar \n[chairman] presiding.\n Present: Senators Lugar and Martinez.\n\n OPENING STATEMENT OF HON. RICHARD G. LUGAR,\n U.S. SENATOR FROM INDIANA\n\n Chairman Lugar. This meeting of the Senate Foreign \nRelations Committee is called to order. The Foreign Relations \nCommittee meets to continue our review of the United States \npolicy toward the multilateral development banks, the MDBs. \nThis is the fifth in a series of hearings on the MDBs that \nbegan in 2004. Those earlier hearings contributed to this \ncommittee's understanding of both the value of the MDBs' work \nand problems with their operations that were in need of \ncorrection.\n In 2005, building on these hearings, I introduced Senate \nBill 1129, the Development Bank Reform and Authorization Act. \nThrough the cooperation of many Members of Congress, most of \nthe provisions of this bill were enacted into law in November \n2005. With passage of this legislation Congress made a strong \nstatement that it recognizes the critical role of the MDBs in \nachieving developmental goals around the world, but also that \nthe operations of these banks must be transparent, efficient, \nand free of corruption.\n The legislation authorizes funds for three of the MDBs and \ncontains provisions designed to ensure greater transparency and \naccountability in the banks' operations. It requires the \nSecretary of the Treasury and the United States Executive \nDirectors to the MDBs to support clear and public anti-\ncorruption procedures that are coordinated all across the MDBs. \nAmong many provisions, it promotes staff financial disclosure \nprocedures, whistle blower protections and the establishment of \nindependent ethics and auditing offices. It also encourages \ntransparent budget processes for countries that receive budget \nsupport from the MDBs, and additional disclosure requirements \nfor natural resource extraction projects.\n The need for oversight did not end with the passage of the \nMDB reform legislation, which is why we're here today. The \nUnited States has strong national security and humanitarian \ninterests in alleviating poverty and promoting progress around \nthe world. The MDBs can help leverage the resources that we \ndevote to advancing international development. Since 1960, the \nUnited States has provided more than $42 billion in direct \ncontributions to the MDBs. In addition, the United States has \nprovided more than $1.7 billion for debt relief.\n The United States Government must work hard to ensure that \nthis money is spent efficiently, both because of our \nresponsibility to American taxpayers and because inefficiency \nand corruption undermine the basic humanitarian and foreign \npolicy objectives of our participation in MDB financing.\n World bank economists Craig Burnside and David Dollar \nasserted in the American Economic Review that, and I quote, \n``in the presence of poor policies . . . aid has no positive \neffect on growth,'' end of quote. Similarly, the World Bank Web \nsite identifies corruption as quote, ``the single greatest \nobstacle to economic and social development.'' Corruption \nassociated with MDB loans not only squanders development funds \nand enriches dishonest officials and contractors, it leaves \nimpoverished nations with the burden of the resulting debts.\n At the World Bank, President Paul Wolfowitz has continued \nand expanded the anti-corruption policies initiated by his \npredecessor, James Wolfensohn. President Wolfowitz has \nreportedly suspended loans in Argentina, Bangladesh, Chad, \nIndia, Kenya, and perhaps others because of corruption \nconcerns. Although some of these actions may stimulate \ncontroversy, nations receiving World Bank loans must do \neverything in their power to provide confidence that loans and \nthe projects that they fund are free of corruption.\n In Chad, for example, the World Bank has set up a model \nrevenue management program to ensure that money generated by \nthe Chad/Cameroon oil pipeline would be spent for the good of \nthe people. But after the oil pipeline had been built, the \ngovernment of Chad unilaterally reneged on its commitment to \nwork under these anti-corruption procedures. The government \nalso withdrew its pledge to direct the bulk of the revenue to \nhealth, education, and rural development. The World Bank had \nlittle choice but to suspend lending to Chad.\n The importance of getting loans right from the start is \ndemonstrated by the case of the Congo. Recently the World Bank \nand the International Monetary Fund agreed to grant debt relief \nto the Republic of Congo, a country that has flouted past anti-\ncorruption conditions. According to Global Witness, there is \nevidence that hundreds of millions of dollars are unaccounted \nfor in Congo's budget. Congo is receiving debt relief despite \nearning billions from oil sales in 2005.\n I'm optimistic about the G-8 agreement for 100 percent debt \nrelief for highly indebted poor countries that implement \npolicies to foster growth and to reduce poverty. The cycle of \nindebtedness of these poor countries must end. But we will not \nfully achieve this important goal unless we establish an anti-\ncorruption culture throughout the international lending \nprocess.\n Everyone involved must understand that the history of the \nMDBs includes well documented and unacceptable cases of waste, \nfraud, and abuse. We know that billions of dollars that could \nhave helped some of the poorest people in the world have been \nsiphoned off or squandered. We all wish this was not so, but \nsuch facts place extra burdens on both the banks and the \nnations receiving the loans. And those of us in Congress who \ncare about international development and like-minded people \naround the world must shine a light on these programs, not to \nundercut their missions, but rather to ensure that these \nmissions succeed.\n We are living in an era when threats posed by terrorism, \nweapons proliferation, international communicable diseases, \nincreasing competition for energy supplies and other factors \nhave enlightened many of the world's people to the need to \nensure that poor nations are not left behind. But these same \nthreats also place competing demands on national budgets. If \ndevelopment projects are transparent, productive, and \nefficiently run, I believe they will enjoy broad support. If \nthey are not, they are likely to fare poorly when placed in \ncompetition with domestic priorities or more tangible security \nrelated expenditures.\n Today we are pleased to be joined by two distinguished \npanels. First we will hear from Mr. Clay Lowery, Assistant \nSecretary of the Treasury for International Affairs, and \nAmbassador Cynthia Perry, U.S. Executive Director to the \nAfrican Development Bank. They will testify regarding U.S. \nefforts to support the anti-corruption strategies of the \ndevelopment banks. On the second panel, we will hear from Dr. \nWilliam Easterly of New York University, Dr. Ruth Levine from \nthe Center for Global Development, and Dr. Adam Lerrick from \nCarnegie Mellon University. We welcome our expert witnesses, \nand we look forward to their insights.\n Let me mention before I ask them to commence their \ntestimony that I want to acknowledge the presence of a large \ngroup of State Department Foreign Service Officers who are here \nin this hearing today. They're in the midst, I'm advised, of a \nyear-long economics training program at the Foreign Service \nInstitute. I understand that they've been studying the works of \nsome of our witnesses today and therefore will be acute \nobservers. We're delighted that they are here because they will \nbe in the field soon making a difference.\n I welcome both of you. You are good friends of the \ncommittee. Let me say that your full statements will be made a \npart of the record, so you need not ask for permission that \nthat occur. I'll ask you to proceed with a summary or the full \ntext as you may wish. And then we will have questions from our \ncommittee members. Secretary Lowery?\n\n STATEMENT OF HON. CLAY LOWERY, ASSISTANT SECRETARY FOR \nINTERNATIONAL AFFAIRS, DEPARTMENT OF THE TREASURY, WASHINGTON, \n DC\n\n Mr. Lowery. Thank you sir. Chairman Lugar and Senator \nMartinez I want to thank you very much for the opportunity to \ntestify today on the critical imperative facing us at the \nmultilateral development banks, and that's the fight against \ncorruption. I'm very pleased to be joined at the table by \nAmbassador Perry, the U.S. Executive Director at the African \nDevelopment Bank, who will address the African Banks' efforts \nto combat this affliction.\n The administration has one fundamental policy goal for the \nmultilateral development banks, and that is to help poor \ncountries reduce poverty by increasing economic growth. The \nworld has made major gains against poverty in recent decades. \nIn the past 40 years, life expectancy in developing countries \nhas increased by over a quarter. In the last 30 years, \nilliteracy has fallen by half, and in the last 20 years over \n400 people have been lifted out of absolute poverty.\n While these statistics are impressive, I posit that many \nmore tens of millions of people would have been lifted out of \npoverty if it wasn't for corruption. In other words, corruption \nstill remains one of the major impediments to meeting the \nchallenge of extreme poverty.\n Corruption nefariously compromises development by \nsquandering resources vital to combating illiteracy, disease, \nhigh infant mortality, and a polluted environment. Corruption, \nin and of itself, is immoral, illegal, and intolerable. In \nshort, stealing from the poorest people is appalling. Fighting \ncorruption and building strong governance and accountability \nstructures in developing countries has been a top priority from \nthe first day of the Bush administration, and we know that has \nbeen a top priority for you, Mr. Chairman, and the whole \ncommittee.\n We see two great challenges. First, we must attack the \ncorruption around the world that keeps nations poor. President \nBush has launched a series of initiatives to tackle this \nproblem head on, from crafting the Monterrey Consensus on \nFinancing for Development, creating the Millennium Challenge \nAccount, working to build a consensus to provide debt relief to \nthe poorest countries, launching anti-corruption initiatives to \nthe G-8, to taking on money laundering, terrorist financing, \nand searching out and returning the stolen assets from \nkleptocrats around the world.\n The second challenge is reforming the MDBs to root out any \ncorruption within the institutions themselves and to make them \neffective instruments for attacking corruption in borrowing \nnations. As we continue to advance our comprehensive reform \nagenda at the MDBs to address these challenges, we have a \nstrong new ally at the World Bank in its new President, Paul \nWolfowitz. He has made fighting corruption in all areas of the \nWorld Bank's engagement one of his primary goals since coming \nto the Bank. His leadership, together with this committee's, \nhas put even more wind in our sails.\n This committee has held a series of hearings over the last \nfew years about progress, or the lack thereof, in fighting \ncorruption in and through the multilateral development banks. \nThe legislation enacted last year reflects our agenda in both \nfighting corruption and enhancing development results. In our \nview, the core of this agenda is to provide the right \nincentives to individuals, countries, and institutions, build \nthe capacity and structures to have strong checks and balances, \nand hold those individuals, countries, and institutions \naccountable for their actions.\n Examples of progress in advancing this agenda include \nsomething that you mentioned in your statement from the \nBurnside and Dollar study, which is rewarding performance. In \nthe mid-1990s, the World Bank provided roughly 40 percent more \nof--on a per capita basis, to the best performers than it did \nto the worst performers. Today that number is approaching 400 \npercent. In terms of establishing controls, in just the past \ncouple of months the Inter-American Development Bank has \nadopted an ethics code requiring senior management to disclose \nfinancial assets and income. This ethics code, I just was \nspeaking with the President of the IDB this morning, has been \njust put on their Web site. While the Asian Development Bank \nhas implemented measures to protect the identity of whistle \nblowers.\n Holding countries accountable, you mentioned President \nWolfowitz's leadership on this front. I'm not going to repeat \nwhat you've already said.\n The job of fighting corruption, however, is far from \nfinished. For example, we must do more to break the incentive \nstructure of rewarding loan volume as opposed to project \nperformance. We must continue to harmonize procurement \nstandards and procedures. The MDBs must release more project \ndocuments earlier and we must establish more robust fiduciary \nstandards at institutions like the Global Environmental \nFacility.\n Mr. Chairman, there is no easy fix or answer to corruption \nand it remains a very serious impediment to growth, poverty \nreduction, and improved living standards in the world's poorest \ncountries. While we have made progress in focusing the MDBs on \nthe fight against corruption, we are still a long way from \nvictory. As I testify before you today I find reason for \noptimism in the recent leadership taken by President Wolfowitz \nand the other multilateral development banks' heads who just \nrecently created a task force across their institutions to \nintensify efforts to tackle the problem of corruption, both \nsystematically and systemically.\n We will continue our intense efforts to push this agenda \nand look forward to our continuing cooperation and dialogue \nwith Congress on the best way to achieve concrete results. I \ncan assure you that we will continue to pursue the cause \ntirelessly. Thank you for your time and I look forward to \nanswering any questions you may have.\n\n [The prepared statement of Mr. Lowery follows:]\n Prepared Statement of Hon. Clay Lowery, Assistant Secretary for \n International Affairs, Department of the Treasury\n Chairman Lugar, Senator Biden, members of the committee, I'm \npleased to testify today on a critical imperative facing us at the \nmultilateral development banks (MDBs). The administration has one \nfundamental policy goal for the MDBs--to use programs, projects, and \nadvice to assist countries in reducing poverty by increasing economic \ngrowth. There is no issue that undermines that goal more than that of \ncorruption. Corruption compromises development like no other \nimpediment, resulting in squandered resources and ineffective efforts \nto combat illiteracy, disease, high infant mortality, and a polluted \nenvironment. This has been a top priority from the first day of the \nBush administration, and we know it has been a top priority for you, \nMr. Chairman, and your whole committee.\n We see two great challenges. First, we must attack the corruption \naround the world that keeps nations poor. President Bush has launched a \nseries of initiatives to tackle this problem--from crafting the \nMonterrey Consensus on Financing for Development, to creating the \nMillennium Challenge Account, to launching anti-corruption initiatives \nthrough the G8, to taking on money laundering, terrorist financing, and \nsearching out and returning the stolen assets from the kleptocrats of \nthe world.\n The second challenge is reforming the MDBs to root out any \ncorruption within the institutions themselves and to make them \neffective instruments for attacking corruption in borrowing nations.\n We are advancing a comprehensive reform agenda at the MDBs to \naddress both of these challenges. And we have a strong new ally at the \nWorld Bank in its new President, Paul Wolfowitz. He has made fighting \ncorruption in all areas of the World Bank's engagement one of his \nprimary goals since coming to the Bank. Examples of this commitment \nthus far include:\n\n\n <bullet> Chad where the Bank has suspended disbursements in response \n to the government's recent unilateral amendments to the \n Petroleum Revenue Management Law, which was negotiated with the \n World Bank to improve transparency and ensure allocation of oil \n revenues to priority sectors such as health and education;\n\n <bullet> India where the Bank has held up consideration of a health \n project due to concerns about procurement irregularities and \n has suspended disbursements of approximately $400 million for \n transportation projects due to safeguard violations;\n\n <bullet> Republic of Congo, where concerns about allegations of \n corruption in the state-owned oil company resulted in President \n Wolfowitz's insisting on the significant strengthening of \n conditions for debt relief under the HIPC initiative;\n\n <bullet> Uzbekistan where consideration of the Country Assistance \n Strategy has been delayed due to good governance concerns;\n\n <bullet> The Bank's Department of Institutional Integrity (INT), \n which President Wolfowitz has reinvigorated and restructured to \n make its authority clear and its operations more effective.\n\n\n The United States supports President Wolfowitz's leadership on \ncorruption and his progress to date. We also sought and continue to \nsupport the recent commitment of all MDB Heads to harmonize their \nstrategies in the fight on corruption. But the job is far from \nfinished, and we will continue to work with all the MDBs to advance the \nanti-corruption agenda as our highest priority.\n progress made and the u.s. plan to further the anti-corruption agenda\n Only 10 years ago did the discussion of corruption begin in earnest \nat the MDBs, thanks in large measure to James Wolfensohn, former \npresident of the World Bank. But U.S. leadership also played an \nimportant role in focusing the discussion and providing support for \nefforts on anti-corruption reform. The result is that each MDB has \nrecognized the importance of fighting corruption and, with varying \ndegrees of success, has taken on reforms at both the country and the \ninstitutional level.\n Fighting corruption is not easy, however, even in the United \nStates, where there are high fiduciary standards, well developed legal \nsystems, and a relatively open and transparent society that demands \naccountability. For countries where institutions and standards are \nweak, where the political system is neither accountable nor \ntransparent, and where individuals may have been beaten down and become \nresigned to corruption as a way of life, fighting this scourge is an \nextremely daunting challenge. Although the MDBs have developed and \nmobilized a variety of tools to focus on the quality of public-sector \ninstitutions, the World Bank's Review of Development Effectiveness for \n2004 indicates that there is ``little evidence that governance is \nimproving and corruption decreasing.'' Because of corruption's \npervasive nature, deep institutional changes are necessary across the \nmultilateral development banks in order to make real progress in the \nfight.\n That is why we appreciate the added attention to these efforts that \nthis committee has provided in recent years. We fully support the \nimplementation of the policy goals laid out in the fiscal year 2006 \nappropriations legislation, and in particular--we endorse the aim of \nthe legislation to improve transparency of operations, link project \nresults to staff performance, strengthen procurement standards, and \nenhance coordination across the MDBs on definitions of fraud and \ncorruption and cross-debarment procedures. These are important, \nnecessary, and logical steps in eliminating corruption. In support of \nthese goals, each U.S. Executive Director has developed an action plan \nfor implementation, including time lines.\n To make inroads on corruption, there must be a system of mutual \naccountability in place. To strengthen the system of accountability, \nthe most critical areas of focus for the anti-corruption campaign \ninvolve four key policy objectives: strengthening institutional \ntransparency and accountability, promoting good governance in recipient \ncountries, improving fiduciary safeguards, and advancing the results \nagenda.\n institutional transparency and accountability\n To protect against internal corruption, it is essential to ensure \nthat each MDB has its own house in order. This committee has held a \nseries of hearings over the last few years about progress--or the lack \nthereof--in fighting corruption in these institutions. Instead of \nrecapping all of that, I thought it would be most valuable to highlight \nwhere, with strong backing from the United States, the MDBs have made \nspecific progress in the areas related to the legislation you passed \nlast year, with particular emphasis on the areas of harmonizing anti-\ncorruption and procurement efforts, strengthening whistleblower \nprotections, increasing transparency, and building internal mechanisms \nto ensure accountability.\n In order to strengthen the operations of the internal investigative \nfunction in each institution, the MDBs must move forward to standardize \ntheir definition of corruption and to ensure that compliance and \nenforcement actions taken by one institution are supported by all \nothers. To this end, we welcome the recent announcement by the Heads of \nMDBs to establish a task force to develop a uniform Framework for \nPreventing and Combating Fraud and Corruption for agreement by the \nSeptember World Bank Annual Meeting. This is the first step in \nharmonizing the MDB response to corruption. A working group will \ncontinue to refine these definitions and work toward harmonizing other \naspects of the sanctioning of fraud and corruption at the MDBs. In \nfact, the Inter-American Development Bank (IDB) has already adopted the \ncurrent definitions agreed to by the working group, including a common \ncross-debarment policy.\n The MDB's whistleblower policies also bear reviewing, as it is \ncritical that employees feel they can report abuse without reprisal. We \nsee the strengthened INT operations at the World Bank as one way of \nsupporting whistleblower protections, but all the MDBs need to \ncontinually update their whistleblower policies to reflect best \npractices in the public and private sectors. The Asian Development \nBank, for example, has recently implemented measures to protect the \nidentity of whistleblowers, including secure phone lines, emails, faxes \nand confidentiality procedures and is planning further enhancements.\n Another way to improve accountability is through increasing \ntransparency of operations at the MDBs. The U.S. insistence on \ninstitutional transparency over the last several years has led to \nrevised disclosure policies at virtually all the development \ninstitutions. Just last month, for example, the Board of Directors at \nthe International Finance Corporation (IFC) approved a new policy that \nincludes the presumption of disclosure of non-proprietary information \nabout IFC activities and the release of Board minutes.\n Internal audit departments can play a key role in strengthening the \naccountability of the institutions themselves. We are encouraged that \nthe World Bank's Internal Audit Department (IAD) is implementing a \nstrong audit work program. IAD, reporting regularly both to President \nWolfowitz and the Board's Audit Committee, is making significant \ncontributions to risk management of the World Bank Group and to \nincreasing the efficiency and effectiveness of the Group's operations. \nIt is important that internal audit function in all the MDBs be given \nappropriate status by management and be provided adequate staff and \nresources to conduct audits and to follow up to ensure the \nimplementation of recommendations. The progress to date at all \ninstitutions is commendable, and it is encouraging that the MDBs are \ntaking action on these issues, thanks in no small part to the advocacy \nof the U.S. Government on these issues.\n good governance in recipient countries\n In order to make inroads on corruption at the country-level, \nhowever, the MDBs need to help countries improve accountability by \nincreasing country capacity and advocating good governance. This is an \narea in which the MDBs have committed significant resources, but \nunfortunately projects focusing on governance have had mixed success. \nTo really be effective in the fight on corruption, the MDBs need to \ncontinue their work on building governance and institutional capacity, \nbut with a better eye to ensuring ownership and results.\n Assistance to help countries build successful and accountable \npublic-sector institutions continues to be substantial, with the World \nBank alone providing over $2.83 billion in fiscal year 2005. When \nadding sectors of law and justice, the assistance to improving \ngovernance and building capacity equates to roughly 25 percent of total \ncommitments of both IBRD and IDA in 2005. Spending on governance \nprojects increased by one-third at the Asian Development Bank (AsDB) to \n14 percent of all lending in 2005 and accounted for 15 percent at the \nIDB. The assistance is directed to a wide range of governance issues, \nsuch as judicial reform to strengthen the rule of law, tax policy and \nrevenue collection measures aimed at ensuring tax compliance and \naccountability, fiscal transparency and accountability, and procurement \nreform to help remove incentives for government corruption.\n Despite the challenges in developing countries, there are projects \nthat are helping countries make important strides to improve \ngovernance. In the Philippines, for example, the Supreme Court adopted \nrecommendations arising from a recently completed AsDB technical \nassistance project on reforms to the judicial system. These \nrecommendations will be implemented under a World Bank loan. In \nBolivia, the IDB has a project to strengthen capacity in the Finance \nMinistry to develop an e-government procurement program. The program \nwill have an additional indirect effect of permitting greater public \naccountability for the Ministry's funds. Recognizing that building \ncapacity can be significantly more challenging sometimes than building \na road or school, we are nevertheless troubled that building governance \nand capacity has produced mixed results.\n Reasons for the mixed results were presented in a recent internal \nAsDB review of the implementation of its anti-corruption and governance \npolicies. The AsDB concluded that the Bank has not yet completed the \nprocess of mainstreaming governance and anti-corruption throughout the \ninstitution. Challenges included inadequate identification of \ngovernance and corruption risks in country strategies, too many small \nprojects covering too many areas, thinly deployed staff resources, and \ninsufficient emphasis on public financial management systems. While the \nreview identified a number of weaknesses, the candidness of the report \nand management's decision to prioritize strengthening its anti-\ncorruption and governance efforts under the next Medium Term Strategy \nillustrate the AsDB's enhanced commitment to fight corruption.\n Despite these challenges, there are promising steps to improve \ngovernance through the MDBs because of the changing incentives. For \nexample, indicators in the World Bank/IFC Doing Business report \nhighlight where countries need to dedicate resources to improve the \nbusiness environment. Increasingly countries are asking how they can \nimprove their rankings, with the recognition that through improved \nefficiency and systems, there is less government waste, fewer \nopportunities for corruption, and more opportunities for investment.\n At the institutional level, the World Bank has embraced good \ngovernance as a key area in the focus of its Country Assistance \nStrategies because of its importance to development sustainability. The \nWorld Bank and IFC, supported by other donors, have developed \nindicators to measure and track country performance in public financial \nmanagement. Finally, the country incentives for good governance are \ndriven by the performance-based allocation (PBA) systems, which \nallocate resources of the concessional windows across the MDBs on the \nbasis of performance. Scarce resources should go where they will be \nused most effectively, and the PBA systems serve as a critical part of \nthis incentive structure. For instance, the AsDF's weighting on \ngovernance factors in terms of measuring country performance has \nincreased from 30 percent to 50 percent in just the last year. And in \nIDA, in the mid 1990s, the best performers received roughly 40 percent \nmore on a per capita basis than the worst performers; today that figure \nis over 350 percent.\n strengthening fiduciary safeguards\n When we think about corruption it is easy to have a picture of \ncases of grand-scale corruption, such as those of former Liberian \nleader Charles Taylor or the late Nigerian dictator Sani Abacha. The \nmost egregious cases are often much easier to identify than the much \nsmaller abuses, but it is the smaller scale mishandlings that can \nreally add up, unless the appropriate fiduciary safeguards are in \nplace. Thus, effective MDB project supervision and rules for \nprocurement, disbursement, and audit are essential for protecting \ndevelopment resources, as well as for achieving and sustaining \ndevelopment results.\n Unfortunately, on one key aspect of international standards the \nU.S. is finding itself increasingly at odds with the donor community. \nThe harmonization agenda of the OECD Development Assistance Committee \n(DAC) is encouraging development assistance providers to use countries' \nown procurement systems rather than internationally agreed standards. \nThe appropriate direction of harmonization should be upward and to a \nwidely accepted international standard.\n We believe countries should use the World Bank's procurement \nstandards--not only because they are the best in the business--but also \nbecause the international business community is familiar with them and \nthis promotes fair competition. At the other MDBs, we are trying to \nhold procurement standards to the highest-common denominator rather \nthan the lowest. We have been urging all the MDBs to harmonize strong \nprocurement standards by adopting the World Bank's procurement \nguidelines. The IDB did so last year. Unfortunately the AsDB failed to \nfollow suit despite recent attempts to work with them on this. Strong \nprocurement and disbursement guidelines create accountability and \ntransparency, without which there is room for corruption.\n results measurement and performance\n A critical win for the U.S. has been the acceptance in the donor \ncommunity of the results agenda--embracing results measurement at the \ncountry and now increasingly at the institutional level. We believe \nthis will improve accountability and effective use of scarce \ndevelopment resources. Results measurement is an integral aspect of the \nanti-corruption discussion because it is a way to ensure that resources \nare allocated on the basis of tangible outcomes. Focus on results \ndemands country and institutional accountability for actions and \nhopefully can improve institutional efficiency as well.\n The measurable results agenda supported by the U.S. has been \nbroadly recognized in the donor community as an essential tool for \nensuring effective aid delivery at the project level. The good news is \nthat now all project documents considered by the Executive Directors of \nthe World Bank, AfDB, AsDB, IDB, and EBRD identify project objectives, \nwhich are subject to subsequent evaluation. The World Bank and AsDB are \nnow incorporating results frameworks in all their new country \nstrategies. For example, the AsDB's recent Bangladesh country strategy, \nwhich was the product of extensive consultations with civil society \ngroups, comprises detailed and time bound development targets, \nincluding those on critical structural reforms related to governance.\n Incorporating a matrix of expected results in project planning is \nthe first step; however, as a next step, the MDBs now need to ensure \nthat effective oversight occurs during project implementation, allowing \nmanagers to recognize early on when a project is off-track and \ncorrective action needs to be taken. The track record on this is \nimproving, and one encouraging example of accountability is in Honduras \nwhere the community monitored all aspects of health and education \nprojects and met regularly with World Bank staff. The community \nvolunteers assessed the projects on an ongoing basis and were in a \nposition to let staff know if things were off-track.\n At the institutional level, the U.S. has pushed for stronger links \nbetween project performance, staff compensation, and budget \nallocations. The AsDB recently implemented a new performance management \nsystem that assesses staff on the basis of performance against \ndevelopment outputs and rewards the top 10 percent of achievers. The \nWorld Bank is currently preparing to implement fully an Operational \nPolicy of Results Measurement, which will effectively codify the \nimportance of results at the center of Bank operations.\n However, despite their commitment to results, significant hurdles \nto the implementation of the results agenda within the institution \nremain. The World Bank needs to link the decisionmaking processes of \nhuman resources, operations, and the budget, allowing the results \nagenda to have an impact in the form of allocation of resources. The \nIBRD and IDA have not yet fully tied program budgets to results, but \nBank management anticipates completion of this project by the beginning \nof its 2008 fiscal year. Meanwhile, at all of the MDBs except the IFC, \nthere is a missing link to the results agenda as there does not appear \nto be any move to directly link staff or management compensation to \nproject performance. Bottom line: while there is progress on the \nresults agenda across the MDBs, more needs to be done in terms of \nimplementation of results measurement at the institutional level.\n Making results measurement and strong fiduciary policies our \npriority in the MDB reform process serves a distinct purpose in the \nfight on corruption because it helps ensure accountability. In turn, \naccountability ensures that donor resources are used effectively and \nserves as an effective method to decrease the opportunities for \ncorruption at the project and institutional level.\n conclusion\n There is no easy fix or answer to corruption, and it remains a very \nserious impediment to growth, poverty reduction and improved living \nstandards in the world's poorest countries. While we have made progress \nin focusing the MDBs on the fight against corruption, we are still a \nlong way from victory. As I testify before you today I find reason for \noptimism in the recent steps taken by President Wolfowitz and other MDB \nHeads to intensify their efforts to tackle the problem both \nsystematically and systemically. We will continue our intense efforts \nto push this agenda and look forward to our continuing cooperation and \ndialogue with Congress on the best ways to achieve concrete results. I \ncan assure you that we will continue to pursue this cause tirelessly. \nThank you for your time, and I look forward to answering any questions \nyou may have.\n\n\n Chairman Lugar. Thank you Secretary Lowery for your \ntestimony. And I'd like to call now upon Ambassador Perry.\n\n STATEMENT OF HON. CYNTHIA SHEPARD PERRY, U.S. EXECUTIVE \n DIRECTOR, THE AFRICAN DEVELOPMENT BANK, WASHINGTON, DC\n\n Ambassador Perry. Thank you Mr. Chairman, Senator Martinez. \nDistinguished members of the Senate Foreign Relations \nCommittee, thank you very much for your invitation to testify \ntoday. This is my fourth time appearing before this committee \nand I want first to thank you for the encouragement you have \ngiven me to do some of the terribly hard jobs I've had to do. \nThis is another one. This an issue of great importance, \nfighting corruption on the multilateral development banks. I \nhave submitted for the record a written statement, but I take \nthis opportunity to highlight a few key areas of importance.\n The African Development Bank Group has made significant \nstrides in the recent past against corruption, although much \nmore remains to be done. We have a new President, Dr. Donald \nKaberuka, who has made fighting corruption one of his top \npriorities. And the U.S. Executive Director's office has been \nworking closely with the Bank to ensure that proper safeguards \nare implemented quickly and that those that already exist are \nstrengthened.\n Of course, the fight against corruption cannot be won if \nthe right tools are not at the Bank's disposal. Within the \nBank, there must exist the right mechanisms to prevent, detect, \nand punish corruption. In member states, the right leadership \nmust exist to foster a culture of zero tolerance when it comes \nto graft, and to strengthen national systems so that they can \nwithstand the scourge of corruption. And, as a donor, we must \ndo our part to sustain pressure and demand results.\n Both management and staff of a financial institution must \nbe able to rely on systems and processes, in addition to \ncorporate ethos, to make the fight against corruption \neffective. With our backing and our constant pushing, the Bank \nestablished the anti-corruption and fraud investigation unit \nand an oversight committee on fraud and corruption last year. \nThe unit will undertake investigations in response to specific \nallegations of corruption and fraud and the oversight committee \nwill ensure that punishment is meeted out appropriately. \nGetting this unit fully functional, however has been delayed \nsomewhat, but we've worked closely with management to ensure \nthis important work proceeds at pace.\n The Bank is also expected to bring to the board a \nwhistleblower protection policy in the coming weeks which will \ninclude the definitions adopted by the MDB taskforce. We need \nto ensure that this policy is both comprehensive and \nsuccessfully implemented.\n To support these efforts, the Treasury Department's Office \nof Technical Assistance agreed earlier this month to provide an \nadvisor to this new anti-fraud unit to help develop capacity to \ncarry out investigations and to detect fraud. I very much hope \nthat this will strengthen African capacity to detect and punish \ncorruption.\n The Bank is also updating its guidelines for financial \ngovernance and financial analysis of projects, which are used \nby all Bank staff as they design and implement projects. The \ncompleted guidelines should substantially improve portfolio \nquality and performance, and further mainstream the importance \nof fighting corruption in all Bank activities by all Bank \nstaff.\n Diagnosis of opportunities for fraud and corruption is \ncritical if the fight is to be won and the Bank uses the latest \ndiagnostic tools. Country Financial Accountability Assessments, \nCountry Procurement Assessment Reviews, and Country Governance \nProfiles, are used to assess operational risks and recommend \nways to help borrowers fight corruption, restore integrity, and \npromote good governance. Nine Country Governance Profiles, and \ntwo CFAA's will be done this year.\n The Bank has joined with the OECD through the Partnership \nAgainst Corruption in Africa, PACA, to help member countries \nstrengthen ongoing anti-corruption efforts and to initiate new \nones. Invitations to join have been extended to 14 countries \nthat received debt relief in 2005 from the Bank. In return for \njoining PACA we'll offer them a menu of reform programs to curb \nthe supply and demand of corruption, a platform for regional \ndialogue and development of joint programs, and opportunities \nfor the exchange of lessons learned.\n The Bank is also an observer of the Financial Action Task \nForce and regularly attends FATF meetings with other \ninstitutions fighting corruption. This Bank is developing a \nstrategy on money laundering and terrorist financing this year.\n In late 2005, the Bank's new COSO internal framework--\ncontrol framework was implemented to help ensure that internal \nbank procedures are being followed and that risks are \nappropriately mitigated. In fact, the Bank now collects \nfinancial disclosure forms for Executive Board members and \ntheir staff, so that wrongdoing will be exposed before damage \nis done to the institution.\n And finally, the Bank's independent evaluation unit, OPEV, \npinpoints weaknesses in governance in its member states through \nits variety of evaluation and reports. For example, the Bank \nrecently found that while it was doing relatively well in \nGhana, more had to be done in Mali and Mauritania.\n I must add one note of concern regarding OPEV, Mr. \nChairman. While we have high regard for the quality and value \nof its work, we have not been able to secure the kind of \nindependence for OPEV from Management, and we would like this \nunit to have a very strong--much stronger position. We have \nasked President Kaberuka to revisit this issue.\n The tools of the Bank, Mr. Chairman, when strengthened, \nwill help the Bank take on and fight corruption internally and, \nalso, in our member states. But the Bank's efforts, in order to \nbe successful, have to rely on the second pillar of \neffectiveness, and that is good country leadership.\n Mr. Chairman, it's easy to dictate the importance of \nfighting corruption from a distance. It is much more difficult \nto put in place systems and attitudes that fight graft on the \nground, on a day-to-day basis. A critical first step is having \nthe right leadership. Leadership that is committed to \neradicating corruption and the decay it causes to institutions. \nLeadership that is devoted to strengthening institutions and \nthe rule of law so that judiciaries cannot be undermined and \ntreasuries cannot be plundered. Leadership, Mr. Chairman, that \ncreates a conducive environment to root out corruption and \npunish the corrupt.\n Through its work with member states, the Bank has helped \nthose African governments with the right leadership to build \nsafeguards and strengthen institutions. In places like Burkina \nFaso, for example, the Bank is helping develop policies and \nstrategies that will fight corruption. The Bank has taken the \nlead in helping Benin and Mauritania build institutions to \ndetect corruption and punish the corrupt.\n In other countries, like Nigeria, the Bank has helped \nstrengthen the leadership's determination to fight corruption. \nIn the--Gambia, the Bank helped get the word out for the \ngovernment's Operation No Compromise, a public awareness \ncampaign against corruption.\n However, more still must be done in a number of countries, \nsuch as you have mentioned, Kenya, Chad, Republic of Congo, and \nUganda. New allegations of corruption have recently surfaced. \nThe Bank is reviewing its engagements with those countries. \nThus far, the Bank has found that none of its projects in Kenya \nwere corrupted. We expect the Bank to design interventions in \nthese and other countries. Thus far, the Bank has found that \nnone of its projects in Kenya were corrupted. We expect the \nBank to design interventions in these and other countries with \na focus on anti-corruption and good governance. The Bank's \ntechnical assistance and capacity building activities can help \nthese countries strengthen their systems to ensure resources \nare not being corrupted.\n More broadly, Mr. Chairman, the Bank is now working to \nbuild awareness in member states, among governments and the \npeople, so that they are aware of the existence and negative \nimpact of corruption.\n At my urging, President Kaberuka is organizing a half-day \nseminar on fighting corruption at the African Bank's upcoming \nannual meetings in Burkina Faso in May. Ministers from the \nBank's 77 member countries will be in attendance, as well as \nother leading personalities from all over the world. I expect \nPresident Kaberuka to emphasize that there is no place for \ncorruption in development, and no place for corruption at the \nAfrican Development Bank itself. In such fora, where \ndevelopment leaders join together to review and assess the \nprogress they have made, it is more important than ever before \nto make sure this message is heard loud and clear. By \norganizing this event, the Bank is showing leadership on a \ncritical issue facing Africa.\n Finally Mr. Chairman, I would like to speak to the recent \nlegislation concerning fighting corruption at the multilateral \ndevelopment banks sponsored by you and approved by Congress, \nand signed into law by the President. Several of the measures \nyou introduced are already being implemented and many more are \nbeing strengthened. For example, financial disclosures for \nboard members are now required, and the Bank's whistleblower \nprotection policy is in its final stages of preparation. The \nBank is also in discussion with other MDBs on implementing \ncross debarment of corrupt firms that are dealing with the \nMDBs.\n On the audit side, I've already mentioned the role we \nplayed in establishing the anti-corruption and fraud \ninvestigation unit and our plans to help develop the unit's \ninvestigative techniques. The new independent review mechanism \nwill also build a more responsive and transparent culture \nwithin the Bank, and in our member states. Given some delays in \nrecruitment, however, we will need to continue to press \nmanagement to be sure that these nascent units become \noperational and effective without further delay.\n One particular area, and I've spoken to this before, I will \nfocus my near term efforts relates to the independence of \nBank's evaluation unit. As I mentioned earlier, we will need to \nredouble our efforts with management and other board members to \nbring the African Bank into alignment with other MDBs on this \nimportant issue.\n As a donor, we will continue to raise anti-corruption to \nthe level of global importance that it deserves. For too long \ndiscussion of corruption has been swept under the carpet by \ndonors or watered down to nonexistence in order to satisfy \nsupposed exigencies. But without openly discussing the problem, \none cannot even hope to tackle the problem. Mr. Chairman, I \nbelieve your leadership on this matter has given voice to \nothers, encouraged them to lead, and given strength to all of \nthose who stand against corruption.\n Mr. Chairman, progress is being made at the African \nDevelopment Bank, but it will require substantial, ongoing \nefforts by all parties concerned. We will work to strengthen \nthe tools we already have, and, as necessary, develop new ones \nto detect and prevent fraud. Working with like-minded leaders \nwill help us deliver real development results to the neediest.\n Mr. Chairman, I hope you will agree that while the road to \nfighting corruption is a long one, we started off in good \nstride. Much more must and will be done in our development \ndollars are to make a dent against poverty. While there is no \nroom for complacency, and we must remain intense and vigilant \nin our efforts, I believe that the African Development Bank is \non the move. I thank you for your strong support.\n\n [The prepared statement of Ambassador Perry follows:]\nPrepared Statement of Ambassador Cynthia Shepard Perry, U.S. Executive \n Director, African Development Bank\n Mr. Chairman, distinguished Members of the Senate Foreign Relations \nCommittee, thank you for your invitation to testify today on an issue \nof great importance, Fighting Corruption at the Multilateral \nDevelopment Banks.\n As former President of the World Bank Jim Wolfensohn noted more \nthan a decade ago, ``corruption is a cancer . . .'' It is a cancer on \nthe hope and dreams of people living in poverty across the globe, in \nevery corner of the world. It is a cancer that eats away at the core of \nwhat is good and selfless: the fight to eradicate poverty. But \ncorruption, as you have rightly pinpointed Mr. Chairman, doesn't start \nor end at the national level. As major international scandals have \nrecently proven, corruption is a transnational problem and, it is clear \nthat corruption and fraud are commonplace in many international \ninstitutions charged with fighting this cancer and making the world a \nbetter place to live.\n The African Development Bank Group has made significant strides in \nthe recent past against corruption, although much more remains to be \ndone. The new President of the Bank Group, Dr. Donald Kaberuka, has \nmade fighting corruption one of his top priorities. Indeed, given his \nexperience as finance minister of Rwanda, dealing with a post-conflict \nand fragile country, the Bank's new president is well-placed to know \njust how important institution-building can be. Upon taking office, \nPresident Kaberuka set the right tone. In his welcome address to Bank \nStaff, he told them that internal controls and the fight against waste \nwere everyone's responsibility--not just Management's. Everyone had a \nstake in ensuring the Bank is clean and effective. The U.S. Executive \nDirector's Office has been working closely with the Bank's senior \nManagement to ensure that proper safeguards are implemented quickly and \nthat those that already exist are strengthened.\n Of course the fight against corruption cannot be won if the right \ntools are not at the Bank's disposal. Within the Bank, there must exist \nthe right mechanisms to prevent, detect, and punish corruption. In \nmember states, the right leadership must exist to foster a culture of \nzero tolerance when it comes to graft and take it upon itself to \nstrengthen national systems so that they can withstand the scourge of \ncorruption. And, as a donor, we must do our part to sustain pressure \nand demand results.\n Mr. Chairman, let me take each of these areas and detail for you \nwhere I believe we are and where I believe we need to go from here.\n strengthening the bank's tools for fighting corruption\n Both Management and Staff of a financial institution must rely on \nsystems and processes, in addition to corporate ethos, to make the \nfight against corruption effective.\n For the last several years, I have pushed the Bank to create a \nstrong fraud and corruption investigation office. With our backing and \nour constant pushing, the African Development Bank established the \nAnti-Corruption and Fraud Investigation Unit in 2005. The Bank's Board \nalso approved establishing an oversight committee on fraud and \ncorruption. Together, these two functions will comprise an entire \ndivision of the Bank Group. Getting this unit fully functional, \nhowever, has been delayed somewhat but we have worked closely with \nmanagement to ensure this important work proceeds apace.\n Once fully functional, this unit will undertake investigations in \nresponse to specific allegations of corruption and fraud against \nindividual staff members or third parties who engage in business with \nthe Bank. The Bank is currently developing a Whistleblower Protection \nPolicy to bring to the Board in the next few weeks. This policy has \ntaken longer than we expected to develop, but we understand that it may \ninclude several other important provisions, such as voluntary \ndisclosure.\n Recently, the Treasury Department's Office of Technical Assistance \nagreed to provide an advisor to the new investigative unit to help the \nBank and its member countries develop its capacity to carry out \ninvestigations and detect fraud. We expect this help to be mainstreamed \nin the Bank's member states and to the Bank's lending activities across \nAfrica. In this way, we hope to strengthen African capacity to detect \nand punish corruption.\n The African Bank is also updating its Guidelines for Financial \nGovernance and Financial Analysis of Projects. These guidelines \ndescribe and explain the Banks' policies, procedures and approaches to \nthe financial governance, management and analysis of projects and \nprograms that the Bank finances, and are used by all Bank staff as they \ndesign and implement projects. Updating the guidelines involves \nnumerous workshops with other MDBs and stakeholders, as well as good \ngovernance experts to exchange state-of-the-art lessons learned and \nbest practices. Once completed, the guidelines should substantially \nimprove portfolio quality and performance and further mainstream the \nimportance of fighting corruption in all Bank activities.\n Diagnosis of opportunities for fraud and corruption is critical if \nthe fight is to be won. The Bank continues to use the latest diagnostic \ntools, such as the Country Financial Accountability Assessments (CFAA), \nCountry Procurement Assessment Reviews (CPAR), and Country Governance \nProfiles (CGPs), to assess operational risks and recommend ways to \nassist borrowers to fight corruption, restore integrity, and promote \ngood governance. CGP diagnostics are now incorporated into all Bank \ngovernance projects, and are used as a tool in Bank policy dialogues \nwith borrowers, particularly in the design of policy-based loans. Last \nyear, five Country Governance Profiles, for Madagascar, Djibouti, \nEthiopia, Namibia and Mozambique, were completed, and an additional \nnine are scheduled for 2006. In addition, the Bank collaborated with \nthe World Bank to carryout two CFAAs, in Togo and Uganda, last year, \nand six more are planned for 2006.\n In response to the accord between African leaders and the G8 at the \nGleneagles Summit in 2005, the AfDB and OECD joined forces through the \nPartnership Against Corruption in Africa (PACA) to support member \ncountries in strengthening ongoing anti-corruption efforts and to \ninitiate new ones. Through the PACA framework, the two institutions \nmerge their experience--both in Africa and internationally--in the \nfight against corruption, money laundering and related activities. \nWorking with the OECD, the Bank plans to engage local and international \npartners, including the private sector, so that it can help African \ncountries design, implement, and monitor the fight against corruption. \nInvitations to join have been extended to fourteen countries that were \nprovided debt relief in 2005. In return for joining the partnership, \nPACA will offer countries a menu of reform programs to curb the supply \nand demand of corruption, a platform for regional dialogue and \ndevelopment of joint programs, and opportunities for the exchange of \nlessons learned. The Partnership could be an important tool for the \nBank as it takes a lead role in raising awareness throughout Africa and \nthe world on the costs of corruption.\n The Bank has also assumed its Observer role with the Financial \nAction Task Force (FATF) and regularly attends FATF meetings for \ninformation gathering and exchange of views with other institutions \nfighting corruption. These include African agencies engaged in the \nfight against money laundering and terrorist financing. In 2005, the \nBank launched a process of preparing a strategy on money laundering and \nterrorist financing, which is expected to be finalized in early 2006. \nThe United States has been pushing for the strategy for several years \nand we hope--once the Board approves the Bank's strategy for the Bank \nto mainstream it into member states' efforts. Working relations have \nalso been established with African FATF-Style Regional Bodies (FSRBs) \nfor the development of a common approach to tackling money laundering \nand terrorist financing.\n In late 2005, the Bank implemented a new COSO (named for the \nCommittee of Sponsoring Organizations of the Treadway Commission) \ninternal control framework. The framework is an important tool to check \nthat internal Bank procedures are being followed and that risks are \nappropriately mitigated. The COSO framework tests Management policies \nand practices that could lead to fraud, waste, and corruption. The \nsystem, currently in use in most of the Fortune 500, should strengthen \nManagement's ability to detect and stop corruption.\n In addition, the Bank recently instituted a means to ensure that \ncorruption and conflicts of interest do not exist among members of the \nBank's Board. Through a series of financial disclosure forms, we hope \nsuch conflicts and wrongdoing will be exposed before damage is done to \nthe institution's integrity.\n Finally, the AfDB's independent evaluation department, the \nOperations Evaluation Unit (OPEV) continues to support the Bank's \ngovernance and anti-corruption work. In 2005, it issued 168 evaluation \nreports of Bank projects and activities covering the entire range of \nsectors and countries in which the Bank Group is active. These \nevaluations have helped to pinpoint weaknesses in governance in member \nstates. OPEV has also completed a thorough review of the Bank's Country \nStrategy Papers (CSPs), which provide a framework for dialogue with \nborrowing countries on governance and corruption issues. The review \nconcluded that the Bank's CSPs have covered governance issues \nadequately for about 84 percent of the cases reviewed.\n Also in 2005, OPEV undertook four Country Assistance Evaluations. \nThe CAEs for Ghana, for example, found that the Bank's institutional \nsupport project, which included a component on governance, had a \nsubstantial positive impact on the country's institutional development. \nThis is particularly helpful in Ghana because it is a HIPC country in \nthe process of strengthening its institutions. In the other three CAEs, \nBank institutional support was rated as modest but with substantial \nroom for improvement. Some of the recommendations from the reviews have \nfocused on paying even greater attention to governance in future CSPs \nfor Mali and Mauritania.\n I should note, Mr. Chairman, one issue of concern regarding OPEV. \nWhile we have high regard for the quality and value of OPEV's work, we \nhave not been able to secure the kind of independence from Management \nwe would like this unit. A recent Board resolution--which we opposed--\ncalls for the head of OPEV to be hired and fired by the Bank's \nPresident, with only consultation of the Board, not its concurrence. We \nhave asked President Kaberuka to revisit this issue.\n Mr. Chairman, the above elements help form a set of tools that, \nwhen fully implemented and strengthened, can help the Bank take on and \nfight corruption. But the effort--in order to be successful--has to \nrely on the second pillar of effectiveness: good country leadership.\n creating a conducive environment\n It is easy to dictate the importance of fighting corruption from a \ndistance, Mr. Chairman. It is much more difficult to put in place \nsystems and attitudes that fight graft on the ground, on a day-to-day \nbasis. A critical first step is having the right leadership. Leadership \nthat is committed to eradicating corruption and the decay it causes to \ninstitutions. Leadership that is devoted to strengthening institutions \nand the rule of law so that judiciaries can not be undermined and \ntreasuries can not be plundered. Leadership, Mr. Chairman, that creates \na conducive environment to root out corruption and punish the corrupt.\n Through its work with member states, the African Development Bank \nhas helped those member states with the right leadership to build \nsafeguards and strengthen institutions. I would like to share a few \nexamples with you of this important work and, most importantly, of the \nresults the Bank has been able to achieve thus far:\n\n\n <bullet> After developing an anti-corruption program with the help of \n the Bank in 2003 and 2004, Benin started implementing anti-\n corruption efforts last year, including acceleration of \n institutional reforms, revamping and strengthening government \n policies, and consolidation of public finances. With the Bank's \n help, Benin also established an office to monitor anti-\n corruption efforts.\n\n <bullet> Nigeria's anti-corruption campaign is also supported by the \n Bank, which provides technical assistance and capacity \n building. Nigeria's National Empowerment and Development \n Strategy (NEEDS), developed with the Bank's help, aims to \n enhance public sector capacity for good governance and \n responsible economic management, including fiscal planning. \n Nigeria has also established the Economic and Financial Crimes \n Commission (EFCC) and the Independent Corrupt Practices \n Commission (ICPC), and the government has acted to remove high \n ranking civil servants from office on grounds of corruption. \n The Anti-Money Laundering Act was also reviewed last year, and \n a revised version is currently with the National Assembly for \n approval.\n\n <bullet> After going off-track from its IMF program in 2003, Gambia \n engaged the Bank and other international donors on a wide-\n reaching anti-corruption campaign. In late 2003, the Gambian \n government passed the Financial Institutions, Insurance and \n Money Laundering Act. The government also launched ``Operation \n No Compromise,'' a campaign aimed at raising public awareness \n of corruption and governance issues.\n\n <bullet> The government of Burkina Faso has adopted the National \n Policy to Combat Corruption, and is in the process of \n establishing a national anti-financial crimes office. In 2005, \n the government passed the National Policy on Good Governance \n and both the Bank's Results-Based Country Strategy Paper and \n two lending programs are designed to better identify and combat \n corruption.\n\n <bullet> In 2005, a new State Inspector General was appointed to help \n investigate corruption charges in the government of Mauritania. \n At the same time, the government has moved forward to improve \n governance and the quality of services it provides to its \n citizens. Over the course of 2005, the amount of time it took \n to process a government complaint form has decreased from 1 day \n to 45 minutes. The government is also working with the AfDB, \n the World Bank and other donors to strengthen the National Good \n Governance Program.\n\n <bullet> The Ghana Anti-Corruption Coalition (GACC), made up of the \n government and its partners (including the AfDB), has organized \n workshops and agreed on an action plan to combat corruption. \n The Serious Fraud Office (SFO) investigates corruption and the \n Police Special Investigation Unit, which acts as a financial \n intelligence unit.\n\n\n Of course much more must be done in the Bank's operations to fight \ncorruption, both in countries and in Bank-funded projects. In a number \nof countries, such as Kenya, Chad, Republic of Congo, and Uganda, new \nallegations of corruption have surfaced recently. The Bank is reviewing \nits engagements with these countries. Thus far, the Bank has found that \nnone of its projects in Kenya were corrupted. We expect the Bank to \ndesign interventions in these and other countries with a focus on anti-\ncorruption and good governance. The Bank's technical assistance and \ncapacity building activities can help these countries strengthen their \nsystems detect and prevent corruption.\n More broadly, Mr. Chairman, the Bank is working to build awareness \nin member states, among governments and the people, so that they are \naware of the existence and negative impact of corruption. In July 2005, \nthe Bank collaborated with other donors to host a regional workshop on \nPro-poor Local Governance, and preparations are underway in the Bank to \ndevelop a strategy paper on rebuilding state capacity for better \ngovernance and development effectiveness. Printed information and \npublic workshops are offered to sensitize local populations to the \nproblem of corruption. Bank representatives form an integral component \nof this dialogue, so that corruption is fought at every step of Bank \nGroup engagement.\n The Bank's role in building conducive and supportive environments \nis potentially very large. And the Bank should use its convening powers \nto raise awareness among member states. At my urging, President \nKaberuka is organizing a half-day seminar on fighting corruption at the \nAfrican Bank's upcoming Annual Meetings in Burkina Faso in May. \nMinisters from the Bank's seventy-seven member countries will be in \nattendance, as well as other leading personalities, from all over the \nworld. I expect President Kaberuka to emphasize that there is no place \nfor corruption in development, and no place for corruption at the \nAfrican Development Bank itself. In such fora, where development \nleaders join together to review and assess the progress they have made, \nit is more important than ever before to make sure this message is \nheard. By organizing this event, the Bank is taking an important \nleadership role on the African continent.\n sustaining pressure\n Finally Mr. Chairman, I would like to speak to the recent \nlegislation concerning fighting corruption at the Multilateral \nDevelopment Banks sponsored by you and approved by Congress, and signed \ninto law by the President.\n Several of the measures you specifically introduced are already \nbeing implemented. And many more are being strengthened. For example, \nthe African Bank is in the process of presenting a Whistleblower \nProtection Policy, which we hope to have up and running very soon. \nFinancial disclosures for Board members are now required. The Bank is \nalso in the process of discussing ways to implement ``cross debarment'' \nacross the MDBs of corrupt firms found to be doing business with other \nMDBs. This was the topic of a high-level discussion between the Heads \nof the MDBs in Washington in February.\n On the audit side of Bank operations, we have successfully pushed \nfor the establishment of an Anti-Corruption and Fraud Investigation \nUnit and I am proud to say that the United States is playing an active \nrole to help the Unit develop investigative techniques and mainstream \nthem to member states. As I noted earlier, getting this unit \noperational is the key next step, and we will continue to press \nManagement on this score.\n The Bank has also established an Independent Review Mechanism which \nconsists of a Compliance Review and Mediation Unit and a Roster of \nExperts to help advise the Board, if necessary, on projects that \nadversely affect people. Like the Anti-Fraud and Corruption Unit, \nhowever, staffing the unit has slowed its full effectiveness. We will \ncontinue to work to ensure that this becomes an effective mechanism \nthat builds a more responsive and transparent culture in the Bank and \nmember states.\n One particular area where I will focus my near term efforts is on \nthe area of the independence of OPEV. As I mentioned earlier, we will \nneed to redouble our efforts with Management and other Board members to \nbring the African Bank into alignment with the other MDBs on this \nimportant issue.\n As a donor, we have to raise anti-corruption to the level of global \nimportance that it deserves. For too long, discussion of corruption has \nbeen swept under the carpet by donors or watered down to nonexistence \nin order to satisfy supposed exigencies. But without openly discussing \nthe problem, one can not even hope to tackle the problem. Mr. Chairman, \nyour leadership on this matter has given voice to others, encourages \nthem to lead, and gives strength to anyone who stands against \ncorruption.\n conclusion\n Mr. Chairman, progress is being made, but it will require \nsubstantial, ongoing efforts by all parties concerned. We must \nstrengthen the tools we already have to prevent and detect corruption, \nand, when necessary, develop new ones. We must work with like-minded \nleaders to raise awareness and strengthen institutions in the African \ncountries. We must demonstrate our strong international leadership that \nhelps keep the spotlight shining on fighting corruption. These efforts \nwill help the Bank deliver real results to the neediest.\n Mr. Chairman, I hope you will agree that while the road to fighting \ncorruption is a long one, we have started off in good stride. While \nthere is no room for complacency and we must remain intense and \nvigilant in our efforts, I believe that the African Development Bank is \non the move. I thank you for your strong support.\n\n\n Chairman Lugar. Thank you for that good news. We appreciate \nyour testimony. Let me raise some questions. We'll have a 10-\nminute question period. I'll ask some questions and then I'll \nyield to my dear colleague, Senator Martinez.\n First of all, Mr. Lowery, there is a U.S. News and World \nReport issue that has just come out focusing on internal \nproblems at the World Bank, including that they are alleged to \nbe ``kickbacks, payoffs, bribery, embezzlement, collusive \nbidding, plague bank funded projects around the world.'' The \narticle states that, ``knowledgeable analysts believe corrupt \npractices may be associated with more than 20 percent of the \nfunds disbursed by the World Bank each year.''\n Does Treasury agree with this figure, and, if not, what is \nyour assessment? That article focuses American attention and \nprobably a wider worldwide audience than our committee has on \nthis particular issue.\n Mr. Lowery. Thank you very much. I also read this article. \nThe estimates on how much money is lost on the MDBs on \ncorruption are, frankly, all over the map. I've actually--I \nwent back and looked through the different testimonies that \nI've seen in this committee for the last couple of years, and I \nsaw that there have been different figures thrown out by \ndifferent experts and some of it has been refuted by other \nexperts.\n We do not have a great figure. Let me just say that my view \nis this--is that, I think Treasury Department's view is not one \ndollar--not 1 dollar should be lost. So how do we do that? We \nneed to set up the right types of transparency mechanisms, the \nright types of internal controls, and the right types of \npunishment regimes in order to basically try to root that out. \nSo while we don't have a figure, I actually want to, instead, \nfocus on how to get rid of any figure.\n Chairman Lugar. Let me just ask about a specific area in \nwhich the Department of the Treasury is involved. You've been \nsupporting the Extractive Industry Transparency Initiative and \npromoting its adoption resource developing countries. What \nsteps has the Department of the Treasury taken to press the \nMDBs to require natural resource revenue and contract \ntransparency for all projects and lending in the extractive \nindustry sector?\n Mr. Lowery. Sir we--obviously--the State Department has the \nlead on the EITI initiative. We work very closely with the \nUnited Kingdom, which has been one of its biggest proponents. \nAt the multilateral development banks, we are--we do a few \nthings. First of all, we try to promote very much the idea of \ntransparency in budgets. It is a crime that the countries of \nthe world that have found oil have not been able to use this \noil to help their--the betterment of their people.\n Let me just take a recent example. You mentioned in your \nstatement earlier the Congo-Brazzaville just received debt \nreduction. The Congo-Brazzaville is a very, very poor country. \nThe average person there lives on basically 2 dollars a day. \nAnd they are quite indebted. So there's an understanding as why \nthey should get some debt relief. But, at the same time, there \nhas been allegations of corruption in the government, some of \nthem are very related to the oil sector and the National Oil \nCompany. And what we supported and actually pushed very hard \non, and President Wolfowitz supported, was basically, we \nprovide the debt relief but we do it under a few different \nthings. First is we would get annual certified audits of the \nNational Oil Company during the time that it was getting debt \nrelief, that's something that has not been happening in the \npast. Second, we basically said that we would put into escrow \nfunds from the interim debt relief that could be monitored and \noverseen by Congolese civil society and by external experts. \nAnd third, we required that government officials disclose their \nassets and divest any financial holdings that they might have \nin the oil company.\n So we are very concerned about this problem. We agree with \nyou and we're trying to push this both at the more systematic \nlevel, which is EITI, but also at the country level.\n Chairman Lugar. All right. I appreciate that emphasis. \nAnecdotally, let me mention that Senator Barack Obama of this \ncommittee and I had the privilege of visiting Azerbaijan in \nearly September of last year. They are not into the banks for \nloans presently, in large part because they have become \nsuddenly wealthy. But the British petroleum platforms out in \nthe Baku Harbor and the Baku-Ceyhan pipeline have brought \nextraordinary revenues. I raised this question with the \nPresident of Azerbaijan and his answer was encouraging, that \nthey're going to adopt what he called the Norway Plan. The \nNorway Plan roughly is to set up these extractive incomes from \noil, or natural gas that will be coming in two years along the \nsame pipeline, into sort of an endowment for the country. They \nplan to extract the income as it proceeds. If that's the case, \nit will be a wonderful course of action. It will be fairly \nunique in the area.\n Perhaps Treasury might have opportunities in its own \ninternational diplomacy, at conferences or what have you. \nWithout calling it the Norway Play or the Azeris plan or what \nhave you, the general idea of this is tremendously important. \nBecause these resources finally run out and if, furthermore, \nthey've been stolen and squandered in the process, they're in \ndouble or triple jeopardy. This is essentially what we're \ntalking about with these loans and these opportunities for \npeople.\n You've touched upon the Congo situation. What is our \ngeneral call on that? I, in my opening statement, brought up \nsome distressing circumstances and you've reiterated that in a \nway, but are we satisfied sufficiently in the Congo that those \nloans should proceed? And, if not, what sort of stipulations do \nwe have for the future?\n Mr. Lowery. Actually, the two points you made are very \nrelated in terms of the Norway Plan and Congo. The--or the \nAzerbaijan Plan. It's basically--that's actually what we've \nbeen trying to do in Congo with this debt relief, is work--our \nExecutive Director at the World Bank, Bob Holland, worked very \ndiligently with the World Bank management who, I think, \nbelieved the exact same thing we did. The debt relief was kind \nof on its way forward and basically the United States raised \nconcerns that we don't know exactly what's happening with the \nmoney. We're worried about some corruption issues in this \ncountry. So they established, basically, some of the things I \njust mentioned, including areas of how to kind of take the \nmoney that's being raised through debt relief, which is \nslightly different than oil revenues, obviously, and put it \ninto accounts to use for people for health care programs, \neducation, that type of thing. So that's what we were trying to \ndo in Congo.\n In Chad, you mentioned this also in your opening statement, \nthe--when the World Bank helped fund the pipeline in Chad they \nbasically tried to establish something like this Norway fund, \nwhich is, let's create a rainy day fund. And, because this will \ngo away at some point. Obviously that's run into a problem over \nthe last few months because the Chadian government passed a--\nthere was a legislation that passed, I don't think it was \nenacted, but it was passed to basically--we need to take this \nmoney down because we need to spend resources right now.\n We were very supportive of President Wolfowitz basically \nsuspending loans to Chad and going back into negotiation with \nthem on this issue because, I mean, quite frankly the World \nBank was being held at gunpoint. And it was--that was \nunacceptable. And so I think the President realized this is not \na way to negotiate, we need to have a--and so I think that \nhopefully we can see a way forward for Chad, but it is \ndefinitely a problem. I mean I think we're pretty supportive of \nthings like the Norway Plan, Azerbaijan Plan, I don't know \nAzerbaijan as well, but the Norway Plan.\n Chairman Lugar. I appreciate that point, as well as the \nwhole issue of transparency that both of you have mentioned, \nthat I mentioned to begin with. I hark back to the Azeris and \nBritish Petroleum. One of the important things about that was \nthe transparency by British Petroleum of how much oil is \nactually going through the pipeline and how much they're \ngetting for it, and who is getting the money. Those facts, \nlikewise, outside the realm of governments, with private \nbusinesses are tremendously important in these issues. And I \nhave commended the cooperation of the oil companies that are \ninvolved, that will play a very large role in transparency and \nresponsibility by that government.\n Finally, is the administration requesting sufficient funds \nto pay our pledges to the MDBs, including arrearages? What is \nyour take on where we stand on that respect? Is the President's \nbudget adequate to bring us up to date?\n Mr. Lowery. The President's budget basically reflects a bit \nof a reality, which is that we go into these negotiations for \nreplenishment agreements and we try to figure out what is--what \nwe want to see in a number in terms of the reforms we want in \nthese institutions and how do we take it forward over the next \nfew years and then we put a pledge down. And the problem we've \nhad is that our pledges, frankly, aren't being met and it's \nlosing--we're losing credibility because of it.\n We have an arrears problem that has been growing over the \nlast 5 years. In the past, in this administration, we've asked \nfor arrears clearances and we haven't gotten them. So I think \nwhat you're seeing a reflection in the President's budget is \nthat we're asking now, let's at least get what we're asking \nfor, what we're pledging, what we're putting the name of the \ncountry on. And then we'll start trying to--if we can get that, \nthen we can start making a dent again in our arrears problem.\n So our request is sufficient and the President's budget is, \nobviously I support, and that's because right now we figure \nwe--we were listening to Congress, we're trying to do the best \nwe can, but frankly at some point we need to actually get what \nwe actually ask for.\n Chairman Lugar. That's a very good point and that's the \nreason I asked the question, to elicit your response. In the \npast the Congress may not have paid that much attention to the \nquestion. So as we begin to have a better dialogue and we make \nprogress together, there probably, I'm hopeful, will be more \nenthusiasm by members of this committee and members of this \nbody in tackling this, in supporting this. But at the same \ntime, we need to have clearer figures from you on what the dues \nare and what the arrearages are so that, at least in the backs \nof our minds if not more forward, we have some idea of where we \nstand.\n If you can furnish, just for the record of this hearing, \nwhere all of that stands, that would be very helpful to us.\n Mr. Lowery. Absolutely. Our arrears are $738 million. But \nwhat we'll do is, we just actually put out our justification \ndocument for the budget over the last week, and we'll make sure \nthat this committee gets a full accounting of it.\n Chairman Lugar. Excellent. Very timely.\n Senator Martinez?\n Senator Martinez. Mr. Chairman thank you very much and \nthank you for calling this important hearing on the issue that \nI think is so important to the developing world. I'm delighted \nto hear from the panel this morning. I'm very encouraged, \nAmbassador Perry, by the information you give us on the \nprogress being made in the African Development Bank. I would \njust comment that over the years, I think corruption has always \nbeen a concern in all relationships of these multinational \nbanks. But just as much that as I have watched over the years, \nthere's also been the misuse or the poor use of funds and the \nlack of measurable results on accountability.\n One of the things that I've also observed is the \nconcentration of very grandiose and large projects sometimes \nwith, frankly, questionable results. And I wonder, is there any \nmove or any direction, Mr. Lowery or Ambassador Perry, as to \nwhether or not we should be looking or moving in a direction of \nmore people lending, bringing it down to a level of assisting \nfamilies, assisting small enterprises, micro-lending, things of \nthis nature that might put money more directly in the hands of \npeople. I'm not sure how you get from A to B and to C, but I \njust wondered if there's anything you can comment to me on \nthat?\n Mr. Lowery. Thank you very much. This is a terrific \nquestion because it plays into exactly, I think, the way we \nlike to think of these institutions.\n One of the--our biggest priority right now probably, at the \nInter-American Development Bank, is to promote small and medium \nenterprise assistance. The reason is that the--Latin American \nis going through a lot of changes but we are listening very \ncarefully, very carefully to what Latin America is saying to \nus. And I think what we are hearing, and hopefully we're \nhearing it correctly, is the poor people of Latin America don't \nhave the opportunities. They don't have the opportunities to \ngrow a business, to make a living, to create jobs. And we think \nthe Inter-American Development Bank can do a much better job on \nthis area. And I was--again, I was just talking to the \nPresident of the IDB this morning about that very subject and \nwe're going to be proposing a resolution, hopefully, at the \nannual meetings next week to basically engage all the Governors \nin a more effective manner on this front.\n In terms of big infrastructure programs, infrastructure is \nimportant for development. We have to--development has got lots \nof factors to it. We have to worry about social sectors like \neducation and health care, and providing clean water. But we \nalso have to worry about infrastructure. We need to basically \nmake sure that--most poor countries are reliant on agriculture \nand so the poor farmers need to be able to get their products \nto markets, which means building small roads, building ports. \nPorts are tough to build, and there's a lot of corruption, \nunfortunately, associated with ports, so you have be very \ncareful about how it's done. The MDBs can play a vital role in \nthat, but it has to be a very careful role.\n Ambassador Perry. I'm going to say, first of all, that that \nis not the same problem we have at the Bank. We're not making \ntoo large loans. We're making too many small loans. And what \nwe're trying now to do is to think of ways to increase the size \nof those loans because it takes a lot of our energy and \nmanagement time to process and to evaluate and to watch over. \nSo we're trying to get into that mode.\n But we do share the same concern you have, is that the \nmoney should be going to families, building families, and so, \ntherefore, we have an emphasis on lending more to women who \nwill take care of that particular interest, and putting more \nmoney into infrastructural development which, in itself, leads \nto more involvement of women and families in the whole aspect \nof development.\n The President has just appointed two women vice presidents \nwho also have that interest of bringing family--the plights of \nfamilies and the whole incidence of illnesses and especially in \nAfrica, you know, the HIV/AIDS, but all the attending diseases \nthat need to be treated. So we are looking at the plight of the \npoor people.\n We now, as you may now, have our first American vice \npresident, who has top executive powers. And we hope that this \nwill also help the Bank to move further into delivering to \nfamilies. But I do thank you for your concern about it.\n Senator Martinez. Thank you. I would just ask one other \nquestion as it relates to the African Bank. I know that, as \nexpressed by the Chairman and the acts of this Congress and--\nthe United States has a strong commitment in this area of \ncorruption and fighting corruption, and I wonder if the other \ninvestors of the Bank, the African Development Bank, share in \nour concern, are equally committed to that effort.\n Ambassador Perry. I would think that the non-African \nmembers are as concerned as we are about corruption. There are \nonly six, let's say EDs who service that area of the non-\nAfrican countries.\n I would say there's less concern about corruption among our \nAfrican EDs and therefore, we're spending a lot of time \neducating them to this question of corruption and how it's \ngoing to hurt their delivery to their constituent countries. So \nthey support our efforts in this view, even though it might \nhurt some of their own countries as it goes through, at first. \nThey are committed to supporting it.\n Senator Martinez. Thank you, Mr. Chairman.\n Chairman Lugar. Thank you very much, Senator Martinez. I \nhave some additional questions for you, Director Perry. I have \nnoted and many have stated that the African Development Bank is \ndifficult to monitor because its project program and policy \ndocuments are not widely available. Should the African \nDevelopment Bank more actively disseminate this information to \ncivil society? And when should we expect the information about \neach African Development Bank project to be made available on \nthe Web site of the Bank?\n Ambassador Perry. Many of the projects are already being \nput on the Web site. And our independent evaluation department, \nthe OPEV, is helping us to do this. Our CSPs, for example, \nespecially the draft CSPs, are being placed so that people can \nread them. All of our efforts toward anti-corruption are also \non. The minutes of our board meetings are not on, but we've \nagreed to highlight--put the highlights of our actions on the \nWeb. There's a lot of information that is on and is being \nprepared to go on. We're not where we'd like to be, but it is \nmoving in that direction.\n Chairman Lugar. President Kaberuka has underscored the \nimportance of measuring the development effectiveness of the \nBank's operation.\n Ambassador Perry. Yes.\n Chairman Lugar. What can be done to promote these \nevaluations of the African Development Bank? Or what kind of \nevaluations has the President promoted at this point?\n Ambassador Perry. He's looking primarily at evaluations of \nour projects in the field, whether or not they are being \ncompleted the way that they say they are, to speed up \ndisbursements, for example, which have traditionally been very \nslow at the Bank. We are concerned about corruption in some of \nthe projects, to try to make sure it does not exist. This new \nsupport that we're getting from the Office of Technical \nAssistance is very important to our ability to do that, and the \nPresident has really pushed very hard for us to get this \nassistance, and we are grateful for that. That goes to our \nauditing efforts, goes to our whistleblowing efforts, to our \nfollow up effectiveness evaluations.\n We really appreciate this kind of support that is coming \nfrom the Treasury Department to us to help Mr. Kaberuka. But \nhe's sort of made a mark in the sand, you know, that corruption \nis the biggest problem we have and that corruption is a bigger \nproblem than disease and wars and all the things that we're \nplagued with, and has given it his full attention. I suppose \nthat would be his mark in history, that he's been able to \nreduce--can anybody say that they will get rid of it? \nEspecially in a tradition where corruption has always existed, \nto remove that from our country-states. It does not have to go \non within the Bank. And that's what he's after, clean up the \nBank first, and then let's use this kind of assistance we're \ngetting from Treasury to advise our member-states in this whole \narea. He's working very hard at it, he has my faith that he's \ngoing to succeed.\n Chairman Lugar. You're modest in underscoring your role. \nIt's important as the American Director of that Bank, in \nsupport of the President, that you have knowledge of his \nactivities. Likewise as you've cited, this direct aid by the \nTreasury specifically to bring about changes in any corruption \nculture that may be there is important.\n I'm just curious, is there any independent audit of what's \nhappening? In other words, when you try to evaluate, either the \nPresident of the Bank or yourself, you call in technical \npersonnel that you have in your employ, but do you bring in \nanybody else to look at this situation?\n Ambassador Perry. Yes, absolutely. We do have independent \nauditors who continually watch over what we're doing and the \nBank and bring to our attention things that need to be worked \non. It is a constant kind of watchfulness I think, that did not \nexist in the last regime that has taken place. Now you \nunderstand that this President has only been there since \nSeptember.\n Chairman Lugar. Yes.\n Ambassador Perry. His first job is to try to get everybody \nto understand where he's going and to get their complicity and \ntheir strength and energies to make it happen, even though it \nmight change some of their lives as well. But we do have the \ninternal and the external auditing function to make sure that \nwe keep it clear. We haven't reached the success we want, but \nwe're working at it. Thank you.\n Chairman Lugar. Let me ask a question which is a \ncorrelation of one I asked Secretary Lowery. Has the United \nStates lost voting shares at the African Development Bank \nbecause of our failure to fully fund our pledges to the Bank?\n Ambassador Perry. I've got to look through my notes on that \nso I don't say the wrong thing.\n Mr. Lowery. I believe the answer is----\n Ambassador Perry. No, can I please answer it, though? Yes, \nI want to answer it myself.\n I want to answer this because it's very important to me. \nIt's of great concern to me. The U.S. has been consistently \nclear to both AFD management and other donors that we fully \nintended to purchase all of our allocated shares, which we lost \nduring the last replenishment.\n In addition to the innumerable hours which my staff and I \nin my office have spent over this issue over the last 12 \nmonths, and senior Treasury officials also engaged and wrote \nseveral letters to convey our interest and concern. And we \nraised it orally with the former and current Presidents, both \nhere in Washington and in Tunis. Nonetheless, the Bank strictly \nfollowed its very tight share transfer reviews and, because we \nwere unable to purchase our allocated shares by the deadline, \nanother donor stepped forward to do so. So we lost \napproximately .2 percent of our voting shares.\n Because of funding shortfalls now on the fiscal year 2006 \nrequest, we will also be short $1.4 million on April 4, when \nour next payment falls due, and our inability to purchase those \nshares will result in a further reduction of voting share by \napproximately .5 percent. We can use our influence to get the \nmanagement and to ring fence our shares and to hold them until \nwe are able to pick them again on subsequent allocations.\n But as it is right now, the rules read that if we forfeit \nit, then another country can move in and pick them up. This \nuncertain situation makes it much more difficult for us to \nsecure the changes that we seek, and that you seek. It's \nimportant to fully fund our fiscal year 2000 request of $5.02 \nmillion. But I must say, I wish it would come before fiscal \nyear 2007 because a loss of these shares minimizes our \ninfluence in changing attitudes not only of our G-7 colleagues, \nbut our African colleagues and making things happen at the \nBank.\n It's more than just really a question of losing voting \npower, but losing influence is most important. And I, you know, \nI hate to see it happen on my watch. So anything that could be \ndone to pick up our arrearages would be great as of the 2006 \ncut. I think we're at $2 million now in arrears. That amounts \nto something like 189 shares. And these--if our shares are put \ninto the general pool, then our G-7 colleagues have already \nsaid they'll pick up quickly unless their ring fenced so that \nthey cannot be touched. So I will be working with our President \non that. I think I have his confidence. It's a matter of \nkeeping up his resolve and making some very difficult \nsituations. This is the way I see my role, Mr. Chairman. Thank \nyou very much for asking the question because it's very dear to \nmy heart.\n Chairman Lugar. It's very important to us, too. As a \ncommittee, we've taken this project seriously. So have you. But \nour ability to work with others in other nations, our \ncredibility for reform, is based upon at least some of the \nthrust of our enthusiasm to pick up the tab for our part of it, \nas we require them to do their share. So we will attempt to \nwork together in this situation.\n I would just say to both of you, I am encouraged by what is \noccurring. I would say modestly that our hearings have not been \nparticularly very well covered in the United States. The people \nsimply lose track of all these banks and what in the world we \nare doing.\n But when we get into specifics of other countries, I can \nassure you that our press secretaries pick up many articles and \neditorials and for many countries it's a revelation of what has \nbeen occurring. The transparency happens really, because of \nyour testimony or our questions or some combination of this. \nAnd that has brought some movement, I believe. It's made for \nmore of a dialogue as our State Department officials or \nTreasury move around the world and visit with people. People \nask what is going on here and why the deep concern, and you \nhave opportunities to witness for this country and our ideals.\n So I appreciate both of you coming this morning and the \nwork that you are doing and your cooperation with us and we \nlook forward to seeing you again, because this will be an \nongoing pursuit.\n Ambassador Perry. Thank you Mr. Chairman.\n Chairman Lugar. Thank you.\n Mr. Lowery. Thank you very much Mr. Chairman.\n Chairman Lugar. Thank you Mr. Lowery. Let me now call upon \nour second panel of witnesses: Dr. William Easterly, professor \nof economics, New York University; Dr. Ruth Levine, acting \nPresident of the Center for Global Development; and Dr. Adam \nLerrick, Director of the Gailliot Center for Public Policy at \nCarnegie Mellon University.\n We welcome this distinguished panel. Perhaps you were here \nat the onset of the hearing at which I had mentioned that a \nnumber of Foreign Service Officers of the United States have \njoined us for this hearing.\n We're very pleased to see the article in the Washington \nPost this morning that indicates that Foreign Service Officers \nin a good number of difficult places around the world will \nreceive additional compensation for those posts. This is \nrelevant to the banks and private firms, that a good number of \nthese take their clue from these raises and these evaluations \nas to their compensation of persons who are abroad.\n This, as the article points out, development today was a \nrather little known and uncommented part of legislation that \nactually passed last year in conference with the Senate and \nwith the House and now is seeing the light of day in the lives \nof about 80,000 persons in our Government, as well as others \nwho are elsewhere.\n I mention this because frequently as we talk about service \nabroad we are talking about multinational firms, multinational \nbanks, in addition to our own diplomatic representation, and \nthe presence of our country in these countries. These willing \npersons who are prepared to do difficult jobs and to do so \nconsistently are tremendously important to recognize and, I \nbelieve, to compensate. So there is a reason for some rejoicing \nthis morning. I take this liberty to simply mention our feeling \nin this committee.\n We look forward to hearing your testimony about the issues \nat hand. And I'm going to ask you to testify in the order that \nI introduced you, which will be, first of all, Dr. Easterly, \nthen Dr. Levine, and then Dr. Lerrick. And all of your \nstatements will be made a part of the record in full and you \nmay proceed as you wish. Dr. Easterly?\n\nSTATEMENT OF DR. WILLIAM EASTERLY, PROFESSOR OF ECONOMICS, NEW \n YORK UNIVERSITY\n\n Dr. Easterly. Thank you Mr. Chairman.\n Mr. Chairman, UK Chancellor of the Exchequer, Gordon Brown \nrecently gave a compassionate speech about the tragedy of \nextreme poverty afflicting billions of people, with millions of \nchildren dying from easily preventable diseases. He called for \na doubling of foreign aid, a Marshall Plan for the world's \npoor. He offered hope by pointing out how easy it is to do \ngood. Medicine that would prevent half of malaria deaths costs \nonly 12 cents a dose. A bed net to prevent a child from getting \nmalaria costs only 4 dollars. Preventing 5 million child deaths \nover the next 10 years would cost just 3 dollars for each new \nmother.\n However, Gordon Brown and many other aid advocates have \nbeen silent about the other tragedy of the world's poor. This \nis the tragedy in which the West already spent $2.3 trillion on \nforeign aid over the last 5 decades and still has not managed \nto get 12-cent medicines to children to prevent half of all \nmalaria deaths. The West spent $2.3 trillion and still had not \nmanaged to get 4-dollar bed nets to poor families. The West \nspent $2.3 trillion and still had not managed to get 3 dollars \nto each new mother to prevent 5 million child deaths. It's a \ntragedy that so much well-meaning compassion did not bring \nthese results for needy people.\n The two key elements that have been missing in foreign aid \nhave been feedback and accountability. And I salute your \nefforts to increase the accountability of the multilateral \ndevelopment banks. The needs of the rich, of course, get met \nthrough feedback and accountability. Consumers tell a firm that \nthis product is worth the price by buying the product, or they \ndecide the product is worthless and return it to the store. \nVoters tell their elected representatives that public services \nare inadequate and the politician, an elected representative, \ntries to fix the problem.\n Profit-seeking firms make a product they find to be in high \ndemand, but they also take responsibility for the product. If \nthe product poisons the customer, they are liable, or at least \nthey go out of business. Elected representatives take \nresponsibility for the quality of public services. If something \ngoes wrong, they pay politically. If it succeeds, they get the \npolitical rewards.\n Aid agencies could be held accountable for specific tasks. \nInstead of what we see are extremely weak or, really, even \nabsent incentives that follow from the collective \nresponsibility of all aid agencies and recipient governments \nfor broad goals that depend on many other things besides aid \nagency effort, such as the current, very fashionable campaign \nto achieve the United Nations' millennium development goals.\n If a bureaucracy shares responsibility with many other \nagencies to achieve vague goals that depend on many other \nthings, then it is not accountable. Without accountability then \nthe incentives for finding out what works is weak. True \naccountability would mean having an aid agency take \nresponsibility for a specific, monitorable task to help the \npoor, whose outcome depends almost entirely on what the agency \ndoes. Then independent evaluation of how well the agency does \nthe task will then create strong incentives for performance.\n Although evaluation has taken place for a long time in \nforeign aid, it is often self-evaluation, using reports from \nthe same people who implemented the project. Mr. Chairman, my \nstudents at NYU would not study very hard if I gave them the \nright to assign themselves their own grades.\n The World Bank makes some attempt to achieve independence \nfor its Operations Evaluation Department, which reports \ndirectly to the Board of the World Bank, not to the President. \nHowever, staff move back and forth between OED, the Operations \nEvaluation Department, and the rest of the rest of the Bank. A \nnegative evaluation could hurt staffs career prospects. I \nactually experienced that personally when I wrote a negative \nevaluation and since moved onto another career. The OED \nevaluation is subjective.\n Unclear methods lead to evaluation disconnects like one \nthat delicately described in Mali. This is a quote: ``It has to \nbe asked how the largely positive findings of the evaluations \ncan be reconciled with the poor development outcomes observed \nover the same period and the unfavorable views of local \npeople.''\n Even when internal evaluation points out failure, do \nagencies hold anyone responsible or change aid agency \npractices? It is hard to find out from a review of the World \nBank's evaluation Web site. The Operations Evaluation \nDepartment indicated how eight, what it called influential \nevaluations, influenced actions, not of the World Bank, but of \nthe borrowing government in 32 different ways, but it mentioned \nonly two instances of its evaluations affecting behavior within \nthe World Bank, and one of them was for the worse.\n The way forward is politically difficult. Truly independent \nevaluation of specific aid efforts. Not overall sweeping \nevaluations of a whole nationwide development program, but \nspecific and continuous evaluation of particular interventions \nfrom which agencies can learn. Only outside political pressure \non aid agencies are likely to create the incentives to do these \nevaluations. A World Bank study of evaluation in 2000 began \nwith the confession, despite the billions of dollars spent on \ndevelopment assistance each year, there is still very little \nknown about the actual impact of projects on the poor. Mr. \nChairman, I suggest that's an astonishing statement after a \nhalf century of the World Bank's existence.\n The World Bank has recently changed the name of its \nOperations Evaluation Department. It is now called the \nIndependent Evaluation Group, although it is unclear whether a \nname change is sufficient to achieve true independence. That \nevaluation unit still remains housed within the World Bank and \nstill uses the same staff, which still obviously compromises \ntheir independence.\n I know personally from my time at the World Bank of several \nexamples, many examples, of pressure being brought to bear from \nthe rest of the Bank on OED, now called the Independent \nEvaluation Group, to alter its evaluation reports. Negative \nreports were censored by the rest of the World Bank until the \nreport was more favorable.\n The solution is as obvious as it is unpopular. Create a \ntruly independent group of evaluators who have no conflict of \ninterest with the World Bank or other multilateral development \nbanks. Require all the multilateral development banks to set \naside some of their budget, such as the part now wasted on \nself-evaluation, for these independent evaluators. Many would \nunderstandably squirm at the thought of a new evaluation \nbureaucracy, but the good news about evaluation is that it can, \nand should, be one of the least bureaucratic activities \nimaginable. It can be completely decentralized, so that a loose \nnetwork of independent evaluators can write their reports on a \nrandom sample of each multilateral development bank's projects \nand programs.\n Of course, there has to be incentives to do something as a \nresult of the evaluations. Allocations of money to multilateral \ndevelopment banks should go up or down depending on their \naverage performance as rated by the independent evaluators. \nAlso multilateral development banks should get credit for \ndiscontinuing failed programs, as reported by the evaluators, \nor fixing them if they are fixable, while inaction should be \ncorrespondingly penalized.\n It is time, after half a century and $2.3 trillion dollars, \nit is time for an end to the second tragedy of the world's \npoor, which will help make progress on the first tragedy, that \nof poverty itself. To gradually figure out how the poor can \ngive more feedback to more accountable agents on what they know \nand what they most want and need. The big utopian dreams about \nending world poverty, such as the U.N. Millennium Development \nGoals embraced by the World Bank, hold nobody accountable for \nanything. Can't we just hold the agents of charity accountable, \nso they do get 12-cent medicines to children to keep them from \ndying from malaria, do get 4-dollar bed nets to the poor to \nprevent malaria, do get 3 dollars to each new mother to prevent \nchild deaths?\n Thank you very much Mr. Chairman.\n\n [The prepared statement of Dr. Easterly follows:]\n Prepared Statement of Dr. William Easterly, Professor of Economics,\n New York University\n\n Accountability for Multilateral Development Banks*\n\n introduction\n---------------------------------------------------------------------------\n *My publisher would like me to announce at this point for copyright \npurposes that this testimony is excerpted from William Easterly, The \nWhite Man's Burden: Why the West's Efforts to Aid the Rest Have Done So \nMuch Ill and So Little Good (The Penguin Press: New York), 2006. This \ndoes not prohibit the posting of this excerpt on the Internet.\n---------------------------------------------------------------------------\n I am driving out of Addis Ababa, Ethiopia to the countryside. An \nendless line of women and girls is marching in the opposite direction \ninto the city. They range in age from 9 to 59. Each one is bent nearly \ndouble under a load of firewood. The heavy load propels them forward \nalmost at a trot. I think of slaves driven along by an invisible slave-\ndriver. They are carrying the firewood from miles outside of Addis \nAbaba, where there are eucalyptus forests, across the denuded lands \ncircling the city. They bring the wood to the main city market, where \nthey will sell the load for a couple of dollars. That will be it for \ntheir day's income, as it takes all day to heft firewood into Addis and \nto walk back.\n I later found that BBC News had posted a story about one of the \nfirewood collectors. Amaretch, age 10, woke up at 3 a.m. to collect \neucalyptus branches and leaves, then began the long and painful march \ninto the city. Amaretch, whose name means ``beautiful one,'' is the \nyoungest of 4 children in her family. She says:\n\n I don't want to have to carry wood all my life. But at the \n moment I have no choice because we are so poor. All of us \n children carry wood to help our mother and father buy food for \n us. I would prefer to be able to just go to school and not have \n to worry about getting money.\\1\\\n\n The World Bank and other aid agencies aim at reducing this tragic \npoverty. Former President James Wolfensohn of the World Bank put on the \nwall of the lobby of World Bank headquarters the words ``our dream is a \nworld free of poverty.'' He wrote about this dream with inspiration and \neloquence:\n\n If we act now with realism and foresight,\n if we show courage,\n if we think globally and\n allocate our resources accordingly,\n we can give our children a\n more peaceful and equitable world.\n One where suffering will be reduced.\n Where children everywhere\n will have a sense of hope.\n This is not just a dream.\n It is our responsibility.\\2\\\nThe Two Tragedies of the World's Poor\n UK Chancellor of the Exchequer Gordon Brown is also eloquent about \nthe tragedy of the world's poor, at least one of their two tragedies. \nIn January 2005, he gave a compassionate speech about the tragedy of \nextreme poverty afflicting billions of people, with millions of \nchildren dying from easily preventable diseases. He called for a \ndoubling of foreign aid, a Marshall Plan for the world's poor, an \nInternational Financing Facility (IFF) to borrow tens of billions more \ndollars against future aid to rescue the poor today. He offered hope by \npointing out how easy it is to do good. Medicine that would prevent \nhalf of malaria deaths costs only 12 cents a dose. A bed net to prevent \na child from getting malaria costs only $4. Preventing 5 million child \ndeaths over the next 10 years would cost just $3 for each new mother. \nAn aid program to give cash to families who put their children in \nschool, getting children like Amaretch into elementary school, would \ncost little.\\3\\\n However, Gordon Brown was silent about the other tragedy of the \nworld's poor. This is the tragedy in which the West already spent $2.3 \ntrillion on foreign aid over the last 5 decades and still had not \nmanaged to get 12-cent medicines to children to prevent half of all \nmalaria deaths. The West spent $2.3 trillion and still had not managed \nto get $4 bed nets to poor families. The West spent $2.3 trillion and \nstill had not managed to get $3 to each new mother to prevent 5 million \nchild deaths. The West spent $2.3 trillion and Amaretch is still \ncarrying firewood and not going to school. It's a tragedy that so much \nwell-meaning compassion did not bring these results for needy people.\nPlanners Versus Searchers\n A big part of the problem in aid is that aid agencies like the \nWorld Bank adopt sweeping goals like ending world poverty, for which it \nis impossible to hold them accountable. They follow an unproductive \nPlanners' approach to foreign aid, where a more humble but much more \nproductive Searchers' approach would work better. In foreign aid, \nPlanners announce good intentions but don't motivate anyone to carry \nthem out; Searchers find things that work and get some reward. Planners \nraise expectations but take no responsibility for meeting them; \nSearchers accept responsibility for their actions. Planners determine \nwhat to supply; Searchers find out what is in demand. Planners apply \nglobal blueprints; Searchers adapt to local conditions. Planners at the \nTop lack knowledge of the Bottom; Searchers find out what the reality \nis at the Bottom. Planners never hear whether the Planned got what they \nneeded; Searchers find out if the customer is satisfied. Will Gordon \nBrown be held accountable if the new wave of aid still does not get 12-\ncent medicines to children with malaria?\n Indeed, the two key elements that make searches work, and the \nabsence of which is fatal to plans, are feedback and accountability. \nSearchers only know if something works if the people at the bottom can \ngive feedback. This is why successful Searchers have to be close to the \ncustomers at the bottom, rather than surveying the world from the top. \nConsumers tell the firm ``this product is worth the price'' by buying \nthe product, or decide the product is worthless and return it to the \nstore. Voters tell their local politician that ``public services \nstink'' and the politician tries to fix the problem.\n Lack of feedback is one of the most critical flaws in existing aid. \nIt comes about because of the near-invisibility of efforts and results \nby aid agencies in distant parts of the world. Many aid critics are \nbeginning to explore how to address this flaw, from employing local \n``watchers'' of aid projects to doing independent evaluation of aid \nprojects.\n Of course, feedback only works if somebody listens. Once a Searcher \nimplements the result of a search, they take responsibility for the \noutcome. Profit-seeking firms make a product they find to be in high \ndemand, but they also take responsibility for the product--if the \nproduct poisons the customer, they are liable, or at least they go out \nof business. A political reformer takes responsibility for the results \nof the reform. If something goes wrong, they pay politically, perhaps \nby losing office. If it succeeds, they get the political rewards.\n Although all governments include bureaucracy, in well-developed \ndemocratic governments the bureaucrats are somewhat more specialized \nand accountable for specific results to the citizens (although God \nknows they try hard not to be). Active civic organizations and \npolitical lobbies operate from the bottom up to hold leaders and \nbureaucrats accountable, correcting mistaken steps and rewarding \npositive ones. Rich voters complain if municipal trash collectors don't \npick up their trash; politicians and bureaucrats have political \nincentives to correct any breakdown in trash collection. Feedback \nguides democratic governments toward supplying services the market \ncannot supply, and toward providing institutions for the markets to \nwork.\n At a higher level, accountability is necessary to motivate a whole \norganization or government to use Searchers. In contrast, Planners \nflourish where there is little accountability. Again, outsiders don't \nhave much accountability and so are Planners; insiders have more \naccountability and are more likely to be Searchers.\n We will see some of the helpful changes that can happen in aid when \nincreasing accountability, shifting power from Planners to Searchers. \nAid agencies can be held accountable for specific tasks, rather than \nthe weak incentives that follow from collective responsibility of all \naid agencies and recipient governments for broad goals that depend on \nmany other things besides aid agency effort. Aid workers now tend to be \nineffective generalists; accountability would make them into more \neffective specialists.\n To oversimplify by a couple gigawatts, the needs of the rich get \nmet because they give feedback to political and economic Searchers, and \nthey can hold the Searchers accountable for following through with \nspecific actions. The needs of the poor don't get met because they have \nlittle money or political power with which to make their needs known \nand to hold somebody accountable to meet those needs--they are stuck \nwith Planners. The second tragedy continues.\n The prevalence of ineffective Plans is because the results of \nWestern assistance happen out of view of the Western public. More \nineffective approaches survive than they would if results were more \nvisible. The Big Plans are attractive to politicians, celebrities, and \nactivists who want to make a big splash, without the Western public \nrealizing that the Big Plans at the top are not connected to reality at \nthe bottom.\nDesperate Needs\n The effort wasted on the Plans is all the more tragic when we \nconsider some of the simple, desperate needs of the poor, which \nSearchers could address piecemeal. The typical country in Africa has a \nthird of the children under 5 with stunted growth due to malnutrition. \nA group of women in Nigeria report that they are too weakened by hunger \nto breast-feed their babies. Throughout Africa, there is a long \n``hungry season'' in between when the stores from the last harvest run \nout and the new crop becomes available. Even in a more prosperous \nregion like Latin America, a fifth of children suffer from \nmalnutrition. Malnutrition lowers the life potential of children, as \nwell as making them more vulnerable to killer diseases. As a woman in \nVoluntad de Dios, Ecuador put it, children get sick ``because of lack \nof food. We are poor. We have no money to buy or to feed ourselves.'' \n\\4\\\n In Kwalala, Malawi, wells break down during the rainy system \nbecause of lack of maintenance. Villagers are forced to take their \ndrinking water from the lake, even though they know it is contaminated \nwith human waste from the highlands, causing diseases like diarrhea and \nschistosomiasis.\\5\\ Schistosomiasis is caused by parasitic worms passed \nalong through contaminated water; it causes damage to the lungs, liver, \nbladder, and intestines.\\6\\\n An old man in Ethiopia says:\n\n Poverty snatched away my wife from me. When she got sick, I \n tried my best to cure her with tebel [holy water] and woukabi \n [spirits], for these were the only things a poor person could \n afford. However, God took her away. My son, too, was killed by \n malaria. Now I am alone.\\7\\\n\n Some success stories show that aid agencies can make progress on \nproblems like these. There have been successful programs feeding the \nhungry, which means children could get food in Voluntad de Dios, \nEcuador. Success on expanding access to clean water could help the \nvillagers of Kwalala, Malawi. In Mbwadzulu, Malawi, in fact, two new \nboreholes have allowed villagers to discontinue using polluted lake \nwater, causing a decline in cholera.\\8\\ The Ethiopian man's tragedy \ncould have been avoided with cheap medicines.\n In Ethiopia, Etenshe Ajele, 36, spent 12 years carrying firewood \ninto Addis Ababa. Now she is trying to help women and girls like \nAmaretch. She runs the Former Women Fuelwood Carriers' Association, \nwhose members teach girls so they can stay out of the firewood brigade. \nEtenshe Ajele and her colleagues also teach women alternative skills, \nlike weaving, and give them small loans for startup capital. ``Most \nwomen know how to weave but do not have enough money to buy \nmaterials,'' says Ajele, ``So we provide that and we also help them \nwith new and different designs so that they can sell the shawls and \ndresses that they make more easily.'' \\9\\ This Association is no \npanacea--it still has not reached Amaretch--but it shows the kind of \nhomegrown effort that foreign donors could support much more.\nAccountability and Evaluation\n If a bureaucracy shares responsibilities with other agencies to \nachieve vague goals that depend on many other things, then it is not \naccountable to its intended beneficiaries--the poor. Without \naccountability, then the incentive for finding out what works is weak. \nTrue accountability would mean having an aid agency take responsibility \nfor a specific, monitorable task to help the poor, whose outcome \ndepends almost entirely on what the agency does. Then independent \nevaluation of how well the agency does the task will then create strong \nincentives for performance.\n Although evaluation has taken place for a long time in foreign aid, \nit is often self-evaluation, using reports from the same people who \nimplemented the project. My students at NYU would not study very hard \nif I gave them the right to assign themselves their own grades.\n The World Bank makes some attempt to achieve independence for its \nOperations Evaluation Department (OED), which reports directly to the \nBoard of the World Bank, not to the President. However, staff move back \nand forth between OED and the rest of the Bank--a negative evaluation \ncould hurt staffs career prospects. The OED evaluation is subjective. \nUnclear methods lead to evaluation disconnects like that delicately \ndescribed in Mali:\\10\\\n\n it has to be asked how the largely positive findings of the \n evaluations can be reconciled with the poor development \n outcomes observed over the same period (1985-1995) and the \n unfavourable views of local people. (p. 26)\n\n Even when internal evaluation points out failure, do agencies hold \nanyone responsible or change aid agency practices? It is hard to find \nout from a review of the World Bank's evaluation web site. The OED in \n2004 indicated how eight ``influential evaluations'' influenced actions \nof the borrower in 32 different ways, but mentioned only two instances \nof affecting behavior within the World Bank itself (one of them for the \nworse).\n The way forward is politically difficult--truly independent \nscientific evaluation of specific aid efforts. Not overall sweeping \nevaluations of a whole nationwide development program, but specific and \ncontinuous evaluation of particular interventions from which agencies \ncan learn. Only outside political pressure on aid agencies are likely \nto create the incentives to do these evaluations. A World Bank study of \nevaluation in 2000 began with the confession ``Despite the billions of \ndollars spent on development assistance each year, there is still very \nlittle known about the actual impact of projects on the poor.'' \\11\\\n After years of pressure, the IMF created an Independent Evaluation \nOffice in 2001. The World Bank in 2004 laudably created a Development \nImpact Evaluation Taskforce. The taskforce will use the randomized \ncontrolled trial methodology followed by most academic researchers to \nassess the impact of selected interventions on the intended \nbeneficiaries. The taskforce has started two dozen new evaluations in \nfour areas (conditional cash transfers in low income countries, school \nbased management, contract teachers, use of information as an \naccountability tool for schools and slum upgrading programs). It \nremains to be seen if the evaluation results change the incentives to \ndo effective programs in the operational side of the World Bank. The \nWorld Bank also changed the name of its Operations Evaluation \nDepartment to Independent Evaluation Group, although it is unclear as \nof this writing to what extent this represents real change.\n Despite the use of the word ``independent'' by both the IMF and the \nWorld Bank, these evaluation units still remain housed within these \norganizations and use the same staff, which obviously compromises their \nindependence. I know personally from my time at the World Bank of \nseveral examples of pressure being brought to bear from the rest of the \nBank on OED (now called IEG) to alter its evaluation.\n The solution is as obvious as it is unpopular--create a truly \nindependent group of evaluators who have no conflict of interest with \nthe World Bank or other multilateral development banks. Require all the \nmultilateral development banks to set aside some of their budget (such \nas the part now wasted on self-evaluation) for these independent \nevaluators. Many would understandably squirm at the thought of a new \nEvaluation Bureaucracy, but the good news about evaluation is that it \ncan--and should--be one of the least bureaucratic activities \nimaginable. It can be completely decentralized, so that a loose network \nof independent evaluators can write their reports on a random sample of \neach multilateral development bank's projects and programs. An \nevaluation unit should be more like The New York Times than like The \nBureaucracy that Ate Foreign Aid. A minimal staff of ``editors'' can \nsimply assign projects to ``reporters'' (evaluators) and publish the \nresults. Of course, there has to be incentives to do something as a \nresult of the evaluations--allocations of money to multilateral \ndevelopment banks should go up or down depending on their average \nperformance as rated by the independent evaluators. Also multilateral \ndevelopment banks should get credit for discontinuing failed programs \nor fixing them if they are fixable, while inaction should be \ncorrespondingly penalized.\nSuccess Through Evaluation\n In 1997, the Mexican Deputy Minister of Finance, a well-known \neconomist named Santiago Levy, came up with an innovative program to \nhelp poor people help themselves. Called PROGRESA (Programa Nacional de \nEducacion, Salud y Alimentacion), the program provides cash grants to \nmothers if they keep their children in school, participate in health \neducation programs, and bring the kids to health clinics for nutrition \nsupplements and regular checkups.\n Since the Mexican federal budget didn't have enough money to reach \neveryone, Levy doled out the scarce funds in a way that the program \ncould be scientifically evaluated. The program randomly selected two \nhundred and fifty-three villages to get the benefits, with another two \nhundred and fifty-three villages (not yet getting benefits) chosen as \ncomparators. Data was collected on all 506 villages before and after \nthe beginning of the program. The Mexican government gave the task of \nevaluating the program to the International Food Policy Research \nInstitute (IFPRI), who commissioned academic studies of the program's \neffects.\n The academic findings confirmed that the program worked. Children \nreceiving PROGRESA benefits had a 23 percent reduction in the incidence \nof illness, a 1-4 percent increase in height, and an 18 percent \nreduction in anemia. Adults had 19 percent fewer days lost to illness. \nThere was a 3.4 percent increase in enrollment for all students in \ngrades 1 through 8; the increase was largest among girls who had \ncompleted grade 6, at 14.8 percent.\\12\\\n More anecdotally, people in a small village called Buenavista have \nnoticed the difference. One mother says that she can feed her children \nmeat twice a week now to supplement the tortillas, thanks to the money \nshe receives from PROGRESA. Schoolteacher Santiago Dias notices that \nattendance is up in Buenavista's two-room schoolhouse. Moreover, Dias \nsays ``because they are better fed, the children can concentrate for \nlonger periods. And knowing that their mothers' benefits depend on \ntheir being at school, the children seem more eager to learn.'' \\13\\\n Because the program was such a clearly documented success, it was \ncontinued despite the voters' rejection of the long-time ruling party \nin Mexico's democratic revolution in 2000. By that time, PROGRESA was \nreaching 10 percent of the families in Mexico and had a budget of $800 \nmillion. The new government expanded it to cover the urban poor. \nSimilar programs began in neighboring countries with support from the \nWorld Bank.\\14\\\n The lesson for aid reformers is: a combination of free choice and \nscientific evaluation can build support for an aid program where things \nthat work can be expanded rapidly. The cash-for-education-and-nutrition \nin itself could be expanded, with suitable local adjustments, to more \ncountries and on a much larger scale than it is now. A program like \nthis in Ethiopia could get the girls around Addis Ababa out of being \nslaves to firewood and get them in school where they can gain the \nskills to escape poverty.\n conclusion\n Only an elite few in the West can be Planners. People everywhere, \nnot just in the West, can all be Searchers. Searchers can all look for \npiecemeal, gradual improvements in the lives of the poor, in the \nworking of foreign aid, in the working of private markets, in the \nactions of Western governments that affect the Rest. Many Searchers can \nwatch foreign aid at work in many locales around the world and let \ntheir voice be heard when it doesn't deliver the goods. It is time for \nan end to the second tragedy of the world's poor, which will help make \nprogress on the first tragedy. To gradually figure out how the poor can \ngive more feedback to more accountable agents on what they know and \nwhat they most want and need. The Big Plans and Utopian Dreams just get \nin the way, wasting scarce energies. Can't we just hold the agents of \ncharity accountable, so they do get 12-cent medicines to children to \nkeep them dying from malaria, do get $4 bed-nets to the poor to prevent \nmalaria, do get $3 to each new mother to prevent child deaths, do get \nAmaretch into school?\n endnotes\n \\1\\ http://news.bbc.co.uk/1/shared/spl/hi/picture_gallery/04/\nafrica_ethiopian_\nwood_collector/html/7.stm\n \\2\\ World Bank, Our Dream: A World Free of Poverty (November 2000).\n \\3\\ Gordon Brown speech at National Gallery of Scotland, January 6, \n2005. International Development in 2005: the Challenge and the \nOpportunity, Gordon Brown Press 2005-03.htm\n \\4\\ WHO and World Bank, Dying for Change, Washington DC, 2003, p. \n10.\n \\5\\ ibid, p. 11.\n \\6\\ http://www.cdc.gov/ncidod/dpd/parasites/schistosomiasis/\nfactsht1_\nschistosomiasis.htm\n \\7\\ WHO and World Bank, Dying for Change, Washington DC, 2003, p. \n21.\n \\8\\ From Many Lands, Voices of the Poor Volume 3, World Bank, 2002, \np. 63.\n \\9\\ http://news.bbc.co.uk/1/shared/spl/hi/picture_gallery/04/\nafrica_ethiopian_\nwood_collector/html/7.stm\n \\10\\ OECD and UNDP 1999.\n \\11\\ Judy L. Baker, Evaluating the Impact of Development Projects \non Poverty: A Handbook for Practitioners; Directions in Development, \nThe World Bank, Washington, D.C.\n \\12\\ I am paraphrasing the summary of Esther Duflo and Michael \nKremer, Use of Randomization in the Evaluation of Development \nEffectiveness, mimeo MIT and Harvard University, 2004.\n \\13\\ http://news.bbc.co.uk/1/hi/programmes/crossing_continents/\n412802.stm\n \\14\\ Duflo and Kremer 2004.\n\n\n Chairman Lugar. Thank you very much Dr. Easterly. Dr. \nLevine?\n\n STATEMENT OF DR. RUTH E. LEVINE, DIRECTOR OF PROGRAMS, CENTER \n FOR GLOBAL DEVELOPMENT\n\n Dr. Levine. Thank you very much Chairman Lugar. I am very \ngrateful for this opportunity to contribute to an essential and \ntimely debate about the effectiveness of multilateral \ndevelopment banks.\n To start with an obvious point: to succeed as institutions, \nMDBs have to succeed in their main business, and that's working \nwith governments to finance programs that improve welfare, \nproductivity, access to credit and other resources, and long \nterm prosperity of those who are sometimes called the ultimate \nbeneficiaries.\n The ideal of the development enterprise reflects the spirit \nof the well-known Chinese proverb, probably heard several times \neach year in this room: ``Give a man a fish and you feed him \nfor a day. Teach a man to fish and you feed him for a \nlifetime.'' So development assistance is not primarily about \nthe transfer of financial resources from wealthy countries to \npoor countries for immediate survival. It's about providing a \nfoundation of knowledge for long-term development. I am sure \nthat you and others who energetically fight corruption do so \nbecause you believe the funds, if used as intended in the \nproject design, will yield those sorts of results. But will \nthey?\n Sadly, as Bill Easterly indicated, we now have very few \nways to answer that question. From my experience at the World \nBank and the Inter-American Development Bank, as well as my \nrecent research, I can tell you that there is much more talk of \nresults than measurement of them. The institutional focus of \nperformance monitoring remains how much money did we move out \nthe door, and what were the outputs? The schools built, the \nteachers trained, the poor women enrolled in microcredit \nprograms and others. That goes some distance, but it's not \nnearly enough.\n We don't ask whether those investments made a real \ndifference relative to what would have happened without the \nprograms. Did more children get to school and stay in school \nand then enter the labor market? Did households raise \nthemselves out of poverty?\n For most types of programs financed by the multilateral \ndevelopment banks, a body of sound evidence about effectiveness \nis lacking.\n For almost all projects currently in the pipeline, \nvirtually no credible information will be generated about \nprogram impact. For lack of feedback through good impact \nevaluation, the banks continue to repeat failed approaches and \nmiss opportunities to expand successful ones. In short, we \ndon't know how to fish, we're not learning how to fish, and we \nhave very little hope of teaching others how to fish.\n At the Center for Global Development, the Evaluation Gap \nWorking Group has spent many months thinking through the \nreasons for the shortcomings in impact evaluation, and \nassessing the demand for knowledge about program performance \nwithin development agencies, among constituencies, and in \ndeveloping countries. In addition to encouraging efforts to \nimproving evaluation and create a culture of learning within \ninstitutions, we believe this may be a moment to call for a \ncollective international initiative to develop an impact \nevaluation agenda, agree to rigorous methodological standards \nand jointly fund design and implementation of a set of \nindependent impact evaluations.\n While the overall agenda of evaluation questions should be \ndeveloped by interested parties, including those in this \nchamber, impact evaluations themselves need to be done \nindependently of the major international agencies and borrowing \ncountry governments. Returning to the example of the fish, I \nthink we'd all agree that it's better to ask an impartial judge \nto measure a fish with a standard ruler than to ask the \nfisherman to guess at the size of his catch.\n Independent evaluations would be more credible in the \npublic eye and less subject to the inappropriate pressures that \nDr. Easterly referred to within institutions to modify results \nor conclusions, or limit dissemination of unfavorable findings.\n This committee, and the U.S. Congress more generally, can \ntake a leadership role in fostering genuine, long-term success \nof the multilateral development banks, as well as other \ndevelopment agencies by sending the right signals with three \nclear statements. First, that Congress values and demands the \ntype of knowledge about program impact that comes from rigorous \nevaluation. Second, that Congress sees development agencies' \nsuccess first and foremost in terms of whether the many, many \nprogram experiences that are being financed are yielding \nlearning. Some work, some don't, we have to learn from both \ntypes of programs. And the relevant new knowledge needs to be \nshared with partner governments, as a key ingredient for long-\nterm, sustained development. And finally, Congress can send a \nsignal that it has an interest in exploring new ways to foster \nindependent, high quality impact evaluation across the banks \nand other agencies.\n I think if we are really serious about getting to the point \nwhere the multilateral development banks are fulfilling their \ntremendous potential, and for the efforts to combat corruption \nthemselves to be meaningful, we have to systematically, \nrigorously, and independently evaluate the impact of the \nprograms that are financed. Thank you.\n\n [The prepared statement of Dr. Levine follows:]\n Prepared Statement of Ruth E. Levine, Director of Programs and Senior \n Fellow, Center for Global Development\n Chairman Lugar, ranking minority member Biden and members of the \ncommittee: I very much appreciate the opportunity afforded by this \ncommittee and its staff to contribute to an essential and timely debate \nabout how to improve the ability of development banks to support \nprogress in low- and middle-income countries. What I will speak about \ntoday is based on work we have done over the past 2 years, under the \nauspices of the Evaluation Gap Working Group at the Center for Global \nDevelopment. I would like my full testimony to be entered as part of \nthe record, and I will summarize my major points.\n To start with an obvious point: To succeed as institutions, \nmultilateral development banks must succeed in their main business. In \nthe near term, their main business is working with low- and middle-\nincome governments to finance projects and programs that lead to better \neconomic and social conditions than would have occurred without those \nprojects or programs. The results from these investments should be \nvaluable not only in absolute terms, but relative to the value of \nalternative uses of the funds. In the long-term, the banks' \ncontributions must be still greater. They must help establish the \nfundamental conditions under which developing country governments can \nfoster the welfare, productivity and prosperity of their people.\n The ideal of the development enterprise, in which multilateral \ndevelopment banks play a special role, reflects the spirit of the well-\nknown Chinese proverb: ``Give a man a fish and you feed him for a day. \nTeach a man to fish and you feed him for a lifetime.'' In other words, \ndevelopment assistance is not solely or even primarily about the \ntransfer of financial resources from wealthy countries to meet \nimmediate survival needs of poorer nations; it is about providing the \nfoundation of knowledge that constitutes the basis for long-term \ndevelopment. This is particularly true for development banks, who \nprincipally offer loan financing. Such resources are, by definition, \nappropriate only for investments oriented toward improved outcomes over \nthe long-term.\n In contrast, the success of development banks cannot be measured on \nthe basis of whether they remain solvent, are on good terms with \nCongress and non-governmental organizations, have contented employees, \nor fight corruption at home and abroad. These probably are all \nnecessary, but they are not sufficient. Success of development banks, \nas of other development agencies, rests on whether they can make the \nlives of those who are sometimes referred to as the ``ultimate \nbeneficiaries'' better off, in a meaningful and sustained way.\n Knowing whether or not the banks are succeeding in financing \nprograms that directly improve people's lives is the core of \naccountability. Assessing this type of performance comes from impact \nevaluations, defined as evaluations that measure the results of an \nintervention in terms of changes in key variables (e.g. mortality, \nhealth status, school achievement, labor force status) that can be \ndirectly credited to the program itself, as distinguished from changes \nthat are due to other factors. That is, they are evaluations that \npermit attribution of program-specific effects.\n At the World Bank and other development banks, as in the field of \ndevelopment more broadly, there has been far more talk of ``results'' \nthan measurement of them. Much emphasis has been placed on measuring \nand tracking inputs (such as commitments and disbursements) and \nassessing at the conclusion of a project whether the activities \nanticipated at the design stage have been completed. For example, were \nthe schools built, teachers trained, blackboards procured? Did the \ngovernment undertake the hoped-for changes in hospital finance or \ncontracting with NGOs for delivery of basic health services? I can tell \nyou from my experience within the World Bank and the InterAmerican \nDevelopment Bank, and my observation from my current vantage point at \nthe Center for Global Development, the institutional focus of \nmonitoring performance remains very much on the ``how much money did we \nmove out the door?'' and ``what was financed?''\n Distressingly, very little investment has been made in conducting \nrigorous impact evaluations that are necessary to tell us which \ninterventions and approaches do and do not work in achieving the real \ngoals of all that spending and program activity. Did those schools, \nteachers and blackboards result in more children attending and \ncompleting school than would have occurred in the absence of the \nproject? Did the innovations in health finance and organization yield \nthe results anticipated: less financial exposure of poor people when \nthey became ill? Better use of essential health services, and \nultimately better health? The failure to answer those basic questions \nin a systematic way leaves the banks, and the professionals and high-\nlevel decisionmakers within them, lacking feedback to foster \nimprovement; it leaves Congressional overseers, taxpayers and others \nwho wish to hold the institutions accountable for results with little \nto go on. I suspect those in this chamber are personally familiar with \nthis deeply frustrating situation. I imagine that when you evaluate the \ndevelopment bank's performance, you would rather hear the results of \nserious impact evaluations of a sample of important programs than a \nrecitation of amounts committed and disbursed, or number of textbooks \nprocured.\n Paradoxically, underinvestment in impact evaluation (and consequent \nundersupply of evidence about the relationship between specific types \nof investments and their effects) means that the banks have few chances \nof succeeding in the even more important goal of ``teaching a man to \nfish'': If we don't learn whether a program works in changing the well-\nbeing of beneficiaries, how can a government know if it is worth \nputting the money and effort into similar programs in the future? If we \ndon't bother to measure the results that are direct consequences of the \nspecific program, how can anyone make a credible case for this, or any \nother type of expenditure of public funds? If we don't learn whether \nand why our investments yield benefits, we have fundamentally failed.\nWhy So Little Impact Evaluation?\n Several factors explain the lack of impact evaluation.\n\n\n <bullet> Good impact evaluations require a degree of technical \n sophistication that has only emerged only recently among those \n who focus on international development, although it has been \n available to US domestic social programs since the 1970s. \n (Think, for example, of the landmark studies of Head Start, the \n tradition of excellent evaluations of within income support and \n job training programs in the US, and the Department of \n Education's laudable program evaluation initiatives today.) \n While many studies compare conditions before and after a \n project, such comparisons can be quite misleading without \n attention to other factors that might have also contributed to \n observed changes. Only by comparing observed changes among \n those who benefited from a project to some other control group \n is it possible to begin to disentangle how much of the effects \n can be attributed to the project or program itself. For \n example, when HIV prevention programs are evaluated, it is \n essential to measure the change in HIV incidence with both \n those participating in the program and a set of similar \n individuals or communities not exposed to program activities. \n Without such a comparison, before-after changes are impossible \n to interpret. A fall in HIV incidence in the population within \n the program--an observation that would likely be called \n ``success'' by the program implementers--might simply reflect \n declines due to non-program factors. A rise in HIV incidence \n among program participants--something that might be seen as \n ``failure''--might actually reveal success if incidence is \n rising more slowly than in the general population. Without \n appropriate comparisons, we will never know. Separating out the \n changes due to projects from changes due to other factors is a \n complicated business that may require random assignment of \n beneficiaries or other methods. Fortunately, advances in \n research methods and increasing capacity around the world to \n conduct such impact evaluations are beginning to surmount these \n technical difficulties. Interestingly, we have seen how \n feasible this is through experiences in Mexico, where excellent \n design of PROGRESA, a conditional cash transfer program, \n illustrated the possibility and the value of introducing \n rigorous evaluation within the design a program as it scales \n up.\n\n <bullet> Demand for the knowledge produced by impact evaluations \n tends to be distributed across many actors and across time. It \n is only at the moment of designing a new program, however, that \n anything can be effectively done to start an impact evaluation. \n At that precise moment, program designers want the benefit of \n prior research, yet have few incentives to invest in starting a \n new study. In contrast, they will get rewarded for quickly \n starting implementation, rather than doing the spadework to \n undertake a baseline study. Paradoxically, if they do not \n invest in a new study, the same program designers will find \n themselves in the exact same position 4 or 5 years later \n because the of the missed opportunity to learn whether or not \n the intervention has an impact.\\1\\ Because information from \n impact evaluations is a public good, other institutions and \n governments that might have obtained valuable knowledge from \n the experience also lose when these investments in learning \n about impact are neglected.\n---------------------------------------------------------------------------\n \\1\\ O'Donoghue, T., Rubin, M., 1999. ``Doing It Now or Later.'' The \nAmerican Economic Review 89, 103-124.\n\n <bullet> Evaluation simply is not seen as the central business of the \n development banks. When material and human resources are \n stretched, short-term operational demands will over-ride the \n longer-term, more strategic imperative of evaluation and \n learning. As one indication, resources spent to design and \n implement impact evaluations were not even recognized as a \n separate item in the World Bank's budgeting system until 2005. \n Most task managers at the development banks can tell very sad \n tales about watching their evaluation budgets disappear during \n---------------------------------------------------------------------------\n negotiations with either management or borrowing governments.\n\n <bullet> Those rare individuals within large bureaucracies who wish \n to undertake impact evaluations typically encounter daunting \n resistance. Program implementers may perceive evaluation as a \n threat, potentially leading to a cut-off of funding if results \n are not uniformly positive. At higher levels in an \n organization, managers who are responsive to demands by \n shareholders for ``results, results, results'' may prefer to \n promulgate anecdotes about success, without regard to the \n strength of evidence, rather than expose the genuine lessons of \n experience--including the occasions when results were poor. \n This behavior continues if it is tolerated by the institutions' \n constituencies and funders, including legislative bodies.\n\n\n All of these reasons contribute to the situation observed today: \nFor most types of programs, a body of scientific evidence about \neffectiveness is lacking. For almost all projects currently in \noperation or in the pipeline, virtually no credible information will be \ngenerated about program impact. The banks don't know whether they are \nsucceeding, and they are not generating knowledge for the future. For \nlack of feedback, the banks continue to repeat failed approaches, and \nmiss opportunities to expand upon successful ones. In short: We do not \nknow how to fish. We are not learning how to fish. We have little hope \nof teaching others how to fish.\nWhat Can Be Done?\n Fortunately, some have recognized this problem, care about solving \nit, and are trying hard to find a way to do so. Within the development \nbanks, the Independent Evaluation Departments make heroic efforts to \nsqueeze knowledge out of the experiences of projects that are conducted \nwithout baseline data, without comparison groups, frequently without \nany impact indicators at all. This is a difficult and often fruitless \ntask, although it does generate the basis for improvements in the \noperational activities, which is very valuable. They deserve additional \nresources so that they can undertake more in-depth studies.\n Separate from the Independent Evaluation Department (previously \ncalled Operations Evaluation Department), in the past couple of years, \nthe World Bank has created a new initiative called the Development \nIMpact Evaluation (DIME) to increase the number of Bank projects with \nimpact evaluation components, particularly in strategic areas and \nthemes; to increase the ability of staff to design and carry out such \nevaluations, and to build a process of systematic learning on effective \ndevelopment interventions based on lessons learned from those \nevaluations. The regional development banks also have undertaken a \nlimited set of impact evaluations, within either research or evaluation \ndepartments. These efforts should be recognized and provided with \nadditional institutional resources so that they contribute to a \ncultural change.\n But much more is required, both within and outside of the \ninstitutions. Indeed, a broader and bolder solution to the problem is \nneeded. Three central elements are required for a lasting and genuine \nsolution to the problem of lack of knowledge about what works.\n First, we need to use good evaluation methods to get answers to \nimportant questions. This means identifying the enduring questions, a \nprocess that would be done best in true partnership between developing \ncountries and the range of institutions that provide development \nfinance. The World Bank has made a start by identifying a handful of \nthematic areas within its impact evaluation initiative. But the \nbenefits of concentrating such studies around enduring questions across \nagencies and countries would be far greater.\n Second, we need to use evaluation methods that yield answers. This \nmeans increasing the number of impact evaluations that use rigorous \nmethods--such as random assignment and regression discontinuity--and \napplying them to a small number of programs from which the most can be \nlearned.\n Third, while the overall agenda should be developed by the \n``interested parties,'' impact evaluations themselves need to be done \nindependently of the major international agencies and borrowing country \ngovernments. Returning to the example of the fish, I think we'd all \nagree that it is better to ask an impartial judge to measure a fish \nwith a standard ruler than to ask a fisherman to guess at the size of \nhis catch! Independent evaluations would be more credible in the public \neye, and less subject to inappropriate pressures within institutions to \nmodify results or conclusions, or limit dissemination of unfavorable \nfindings. We have learned about the value of independence in evaluation \nmany times over in other fields, including medicine and social programs \nin our own country. The existence of an independent source of impact \nevaluation--geared to a longer time frame and toward learning--will \navoid many of the inevitable pressures to focus on implementation \nalone, and restrict the communication of bad news to higher levels of \nmanagement.\n At the Center for Global Development, we have spent many months \nthinking through the reasons for the shortcoming in impact evaluation, \nassessing the demand for knowledge about program performance, learning \nabout the efforts in the development banks, bilateral agencies and \ndeveloping country governments related to evaluation, and developing \noptions and recommendations. In addition to encouraging within-\ninstitution efforts to improve evaluation and create a culture of \nlearning, we believe this may be a moment to call for a collective \ninternational initiative for leading-edge bilateral and multilateral \ndevelopment agencies to develop a shared impact evaluation agenda \n(working with interested developing countries), agree to methodological \nstandards and, potentially, jointly fund both design and independent \nimplementation of impact evaluations on enduring questions in \ninternational development. We have developed ideas about many of the \nspecific functions for such an initiative, and believe that there are \ntechnically, politically, and financially feasible institutional \noptions.\n conclusion\n This committee, and the U.S. Congress more generally, can take a \nleadership role in fostering genuine, long-term success of multilateral \ndevelopment banks, as well as other agencies. This can be done by \nmaking three clear statements: First, that Congress values and demands \nthe type of knowledge about program impact that comes from rigorous \nevaluation. Second, that Congress sees development agencies' success \nfirst and foremost in terms of whether the program experiences are \nyielding true learning, with relevant new knowledge being shared with \npartner governments, as a key ingredient for long-term, sustained \ndevelopment. Third, that Congress has an interest in exploring \nmechanisms to foster independent high quality impact evaluation across \nagencies.\n I firmly believe that the development banks have tremendous \nuntapped potential to contribute to improved outcomes over the long \nterm--the healthier children, more productive adults, cleaner \nenvironment and lasting prosperity that we wish for all nations. From \npersonal experience as well as recent research, I believe that they \nwill not be firmly on the track toward fulfilling that potential until \nthe development banks ask, and publicly answer, serious questions about \nthe impact of their programs.\n\n\n Chairman Lugar. Thank you very much. Dr. Lerrick?\n\nSTATEMENT OF DR. ADAM LERRICK, DIRECTOR OF THE GAILLIOT CENTER \n FOR PUBLIC POLICY, CARNEGIE MELLON UNIVERSITY\n\n Dr. Lerrick. Senator, I think you're going to hear quite a \nfew things over and over again during this hearing--but given \nmy reputation as an outspoken critic, they'll just be louder, \npossibly, from me.\n Chairman Lugar. Very well.\n Dr. Lerrick. I will remark that those who say nice things \nabout the bank are called economists, and people who say \ncritical things are called outspoken critics. However, I \nconsider myself a member of the loyal opposition.\n First of all, it's a privilege to appear before the Senate \nForeign Relations Committee.\n The World Bank has just changed the name of its Operations \nEvaluation Department. This sends a clear signal that the Bank \nhas no intention of changing its ways. The new sign on the door \nreads Independent Evaluation Group. The Bank is digging in to \nfend off an increasingly vocal demand for a truly independent \nreview of its stewardship of aid. I think what this panel has \nsaid confirms that.\n After half a century and more than half a trillion dollars, \nthere is little to show for World Bank efforts. But we have no \nmeasure of the Bank's performance except the one it chooses to \npromulgate and no means to validate the wisdom of the \nindustrialized world's collective investment decision.\n The optimism of weighty reports cannot cover up the \nrealities on the ground. The living standards of the poorest \nnations have stagnated and, in sub-Saharan African, actually \ndeclined 25 percent over the last 10 years. Thirty-eight \ncountries have amassed $71 billion in unpayable multilateral \nloans, encouraged by the Bank's self-serving projections of \ncountry growth, and on these loans it's going to be the rich \ncountry taxpayers who now must now make good. Corruption has \nbeen exposed both within the Bank and in its programs and is \nnow estimated at more than $100 billion. Protest is rising \namong Africa's own who seek to stop all aid because it serves \nonly to entrench and enrich a series of corrupt elites. Massive \nanecdotal evidence of waste, ineptitude and outright theft can \nno longer be ignored.\n The Bank gives itself good marks and boasts that more than \nthree quarters of its projects achieve satisfactory outcomes. \nBut when the auditors are captive, when the timing of judgment \nis premature, when the criteria are faulty and when the numbers \nare selectively manipulated, how credible are the conclusions?\n Should we just take the Bank's word for it when U.S. \ntaxpayers are being asked to commit more than $2.5 billion per \nannum for the next 40 years?\n Independence at the Bank is purely cosmetic, for a \ntemporary change of desk and a new nameplate do not alter the \nsignature on the paycheck nor the rewards of the Bank's \npersonnel system. The Independent Evaluation Group is a \ndepartment of the Bank like any other, save the ceremony of \nreporting to an executive board that is passive at best, and \nfor a titular head, the Director General, who cannot return to \nthe bank. But for all others, a revolving door leads back to \nstandard line jobs and advancement.\n This hardly fosters disinterested and rigorous judgments, \neven though the Bank boasts that staff cannot review projects \nthat they themselves designed. Fact-finding missions are \nsuspect when they do not stand at full arm's length from their \nsubject. The magnitude of the Enron failure spotlighted the \nfolly of placing credence in inside oversight and even in \noutside auditors who can be intimidated by well-paying clients.\n In 2002, scandal arose at the German government employment \noffice when claims of 50 percent placement rates were sliced to \n17 percent by an independent audit. Corporations always seek to \nelevate the price of their stock, public agencies always wish \nto expand their funding. External auditors beyond the subject's \ninfluence are needed to pierce the film of self-congratulation \nand to provide the discipline that protects the public \ninterest.\n What the Bank proclaims as results are really only \nprojections made at a moment when optimism is high. Outcome \nmeans only likelihood rated by the loan officer when the \ndisbursement of funds is complete. That is often years before \nphysical plants are up and running. Seldom does the Bank return \nto inspect the long-term project performance and many onsite \ninvestigations come up empty for lack of monitoring and \nrecords. The focus is on quantity of inputs with little effort \nexpended to measure the effective output of programs.\n Performance measures have been manipulated to bolster \nmanagement claims of success and refute critics. In the late \n1990s, satisfactory ratings jumped when the criteria were \nrevised upon the instruction of Bank management without a \ncorresponding adjustment to previous years to ensure \nconsistency of measurement, again, upon the instruction of Bank \nmanagement. After the Meltzer Commission in 1999 noted that \nsustainability, the sine qua non of development, had languished \nat 50 percent success rates for years, ratings jumped to 72 \npercent in 2000. Were these true improvements or had the bar \nsimply been lowered?\n The Bank is better at managing its numbers than at managing \nits programs. What is needed is a bonafide external audit by \nprivate sector companies onsite to determine the lasting \ncontribution of Bank projects in the poorest countries after a \n3- to 5-year operating history and to provide a continuing \nbenchmark for the efficacy of Bank aid. Auditors would report \ndirectly to the legislative and executive branches of the Group \nof Seven governments. Independent program audits and aggregate \nevaluations of performance would be published and the exercise \nrepeated every 3 years.\n Five to seven million dollars, or less than two-tenths of 1 \npercent of the U.S. commitment to the Bank's IDA funding for \nthe next 3-year cycle, would pay for the cost of an audit of \nthe performance of a one-third of IDA projects.\n As an anecdote, when the Meltzer Commission asked \nindependent auditors what the cost of performance audit would \nbe, the estimates came from three different firms were $4 \nmillion, $6 million, and $1.5 million. I asked the head of the \nfirm submitting the $1.5 million bid why his estimate was so \nlow, and his response was, we know these countries very well, \nwe know the Bank very well, we know the Bank's programs very \nwell. We operate the infrastructure of many of these countries. \nWe fully expect that when we arrive, on one-half of the \nprograms there will be nothing. There will be no evidence of \nanything at all. And those will be very quick audits. There \nwill be no road, there will be no school, and therefore, we're \nactually charging $1.5 million to do half the audits, because \nthe first half will be very quick.\n For 6 years the Bank has resisted an independent evaluation \nof its programs. Its objections to external examination have \ncentered on damage to the institution's morale, on the waste of \nfunds and on the irrelevance of a past record that has been \nallegedly rectified by the latest version of the New Bank. As \nthe Millennium goal of halving extreme poverty has gained \nmomentum, donor nations are poised to fund an exponential \nincrease in development aid, a $50 billion doubling of annual \nflows to the poorest nations by 2010 and another $50 billion \nannual increment previewed for 2015. The Bank will get more \nthan its share. Then there is the windfall of so-called ``debt \nrelief'', where the Bank extorted 100 cents on the dollar from \nthe G-7 for a $46 billion portfolio of worthless developing \ncountry loans on which it had been sitting for more than 20 \nyears. The result is an assured stream on automatic pilot to \nfill deep holes in the Bank's balance sheet and then pour out \nas unauthorized new aid.\n Giving masses of money does not end our responsibility to \nthe developing world. Donors have an inescapable interest in \nthe uses to which aid is put and the results that aid achieves. \nSums this significant must be weighed against alternative uses \nof scarce taxpayer resources.\n This is the moment to insist that the World Bank be under \nserious, continuous external review. The Bank must become the \nexemplar for the transparency and accountability it commends to \nthe developing world. Provision for a tri-annual external \nperformance audit must become a condition of approval of the \nGleneagles accord on debt relief and the funding of future aid. \nThere will be no reform without the recognition of past \nfailure.\n Thank you Mr. Chairman.\n\n [The prepared statement of Dr. Lerrick follows:]\nPrepared Statement of Adam Lerrick, Director of the Gailliot Center for \n Public Policy Friends of Allan H. Meltzer, Professor of Economics, \n Carnegie Mellon University, and Visiting Scholar American Enterprise \n Institute\n\n Is the World Bank's Word Good Enough?\n\n It is a privilege to appear before the Senate Committee on Foreign \nRelations.\n The World Bank has just changed the name of its Operations \nEvaluation Department. This sends a clear signal that the Bank has no \nintention of changing its ways. The new sign on the door reads \nIndependent Evaluation Group. The Bank is digging in to fend off an \nincreasingly vocal demand for a truly independent review of its \nstewardship of aid.\n After half a century and more than US$ 500 billion, there is little \nto show for World Bank efforts. But we have no measure of the Bank's \nperformance except the one it chooses to promulgate and no means to \nvalidate the wisdom of the industrialized world's collective investment \ndecision.\n The optimism of weighty reports cannot cover up the realities on \nthe ground. The living standards of the poorest nations have stagnated \nand even declined as much as 25 percent.\\1\\ Thirty-eight countries have \namassed $71 billion in unpayable multilateral loans, encouraged by the \nBank's self-serving projections of country growth, on which rich \ncountry taxpayers must now make good. Corruption has been exposed both \nwithin the Bank and in its programs and is now estimated at more than \n$100 billion. Protest is rising among Africa's own who seek to stop all \naid because it serves only to entrench and enrich a series of corrupt \nelites. Massive anecdotal evidence of waste, ineptitude and outright \ntheft can no longer be ignored.\n---------------------------------------------------------------------------\n \\1\\ Aid was not the moving force behind the impressive gains in \nChina, India and Indonesia where virtually all progress in developing \ncountry living standards has occurred.\n---------------------------------------------------------------------------\n The Bank gives itself good marks and boasts that more than three \nquarters of projects completed had ``satisfactory outcomes''. But when \nthe auditors are captive, when the timing of judgment is premature, \nwhen the criteria are faulty and when the numbers are selectively \nmanipulated--how credible are the conclusions?\n Should we just take the Bank's word for it when US taxpayers are \nbeing asked to commit more than $2.5 billion per annum for the next 40 \nyears?\n ``Independence'' at the Bank is purely cosmetic, for a temporary \nchange of desk and a new nameplate do not alter the signature on the \npaycheck nor the rewards of the Bank's personnel system. The \nIndependent Evaluation Group is a department of the Bank like any \nother, save the ceremony of reporting to an executive board that is \npassive at best. For everyone save the titular Director General, a \nrevolving door leads back to standard line jobs and advancement at the \nBank. Because results are published, there is strong pressure to \ndisplay success. Outside verification is precluded because there is no \npublic access to the underlying data. This hardly fosters disinterested \nand rigorous judgments, even though the Bank boasts that staff cannot \nreview projects that they themselves designed.\n Fact-finding missions are suspect when they do not stand at full \narm's length from their subject. The magnitude of the Enron failure \nspotlighted the folly of placing credence in inside oversight and even \nin outside auditors who can be intimidated by well-paying clients. In \n2002, scandal arose at the German government employment office when \nclaims of 50 percent placement rates were sliced to 17 percent by an \nindependent audit. Corporations always seek to elevate the price of \ntheir stock; public agencies always wish to expand their funding. \nExternal auditors beyond the subject's influence are needed to pierce \nthe film of self-congratulation and to provide the discipline that \nprotects the public interest.\n The ``independence'' issue aside, the Bank's evaluation methodology \nspews out conclusions without worth.\n What the Bank proclaims as results are really only projections made \nat a moment when optimism is high. ``Outcome'' means only \n``likelihood'' rated by the loan officer when the disbursement of funds \nis complete. This is often years before physical projects are up and \nrunning. Generalized ``adjustment programs'' attract the highest marks. \nYet promised reforms will require years to impact the economy if they \nare indeed ever implemented.\n Seldom does the Bank return to inspect long-term project success \nand many onsite investigations come up empty for lack of monitoring and \nrecords. The focus is on quantity of inputs with little effort expended \nto measure the effective output of programs.\n Performance measures have been manipulated to bolster management \nclaims of success and refute critics. In the late 1990s, satisfactory \nratings jumped when the criteria were revised upon the instruction of \nBank management without a corresponding adjustment to previous years to \nensure consistency of measurement, also upon the instruction of Bank \nmanagement. After the Meltzer Commission in 1999 noted that \n``sustainability'', the sine qua non of development, had languished at \n50 percent success rates for years, ratings jumped to 72 percent in \n2000. Were these true improvements or had the bar simply been lowered?\n The Bank is better at managing its numbers than at managing its \nprograms. What is needed is a bona fide external audit by private \nsector companies onsite to determine the lasting contribution of Bank \nprojects in the poorest countries after a 3-5 year operating history \nand to provide a continuing benchmark for the efficacy of Bank aid. \nAuditors would report directly to the legislative and executive \nbranches of the Group of Seven (G7) governments. Individual program \naudits and aggregate evaluations of performance would be published and \nthe exercise repeated every 3 years.\\2\\\n---------------------------------------------------------------------------\n \\2\\ Senator Crapo of Idaho and Senator Enzi of Wyoming focused on \nthe issue of an external performance audit of World Bank programs in \nthe 106th Congress. See S. Con. Res. 136 in the 2nd session.\n---------------------------------------------------------------------------\n Five to seven million dollars or less than \\2/10\\ths of 1 percent \nof the U.S commitment to the Bank's International Development \nAssociation (IDA) funding for the next 3-year cycle, would pay for the \ncost of an audit of the performance of a \\1/3\\ sample of 3 years of IDA \nprojects.\n Bank objections to external examination have centered on damage to \nthe institution's morale, on the waste of funds and on the irrelevance \nof a past record that has been allegedly rectified by latest version of \nthe ``New Bank''. This last has been the routine response by a series \nof managements over the past three decades.\n The technicalities of client confidentiality and sovereignty rights \nof nations that wish to evade scrutiny have also been advanced as \nimpediments. For those on the receiving end of billions of dollars of \nsubsidies that flow from industrialized nation taxpayers through the \nchannel of World Bank financing, there should be a corresponding \nobligation. Free access to the facts and the ability to publish them \nmust become a condition of all World Bank loans.\n As the Millennium goal of halving extreme poverty has gained \nmomentum, donor nations are poised to fund an exponential increase in \ndevelopment aid--a $50 billion doubling of annual flows to the poorest \nnations by 2010 and another $50 billion increment previewed for 2015. \nThe Bank will get more than its share. Then there is the windfall of \nso-called ``debt relief'' where the Bank extorted 100 cents on the \ndollar from the G7 for a $46 billion portfolio of worthless developing \ncountry loans on which it had been sitting for more than two decades. \nThe result is an assured stream of funds on automatic pilot to fill \ndeep holes in the Bank's balance sheet and then pour out as \nunauthorized new aid.\n Giving masses of money does not end our responsibility to the \ndeveloping world. Donors have an inescapable interest in the uses to \nwhich aid is put and the results that aid achieves. Sums this \nsignificant must be weighed against alternative uses for scarce \ntaxpayer resources.\n This is the moment to insist that the World Bank be under serious \nand continuous external review. The Bank must become the examplar for \nthe transparency and accountability it commends to the developing \nworld. Provision for a tri-annual external performance audit must \nbecome a condition of approval of the Gleneagles accord on debt relief \nand the funding of future aid. There will be no reform without the \nrecognition of past failure.\n\n\n Chairman Lugar. Thank you very much Dr. Lerrick. I \nappreciate this panel. I think you had an extraordinarily \nprofound influence upon our deliberations here.\n Let me just start with basics to add to our own \nedification. First of all, let's say a development bank decides \nthat a road in a particular country is going to be of value, or \na network of roads, several roads. Did the road get built? \nYou've addressed that in a way, Dr. Lerrick. Maybe half of the \nroads don't get built, or some percentage. If a school is the \nobjective, did the school actually get built? Physically, did \nthe money come to fruition with completion of a project?\n Now you're raising questions, obviously, beyond that. But \nthat's sort of fundamental, and one of the audit questions to \nbegin with is did it happen, as opposed to the money being \ndiverted to other purposes by a government or contractors.\n But, second then, you're raising more difficult question, \nshould the road have been built, or, in fact, when the road was \nbuilt, what difference did it make to the country or specific \npersons who might use the road? Did it disrupt the environment \nor completely change commerce in diverse ways? So that this is \na question which then verges, some would say, upon the \nsovereignty of the country. Officials there would say, we're \nthe folks who were elected or appointed, or however they got \nthere, and we are making some judgments about what is important \nfor our country. And we think that school ought to be built and \nthe road ought to be built. Are poor people helped? The \nMillennium idea that somehow we can lift millions of people \nfrom desperate poverty is sort of an outside evaluation on our \npart, humanitarian part. Others in the country would say, we \nknow best how to do this.\n Let's accept the fact that the internal audits that are now \nbeing conducted, however one wants to characterize the renaming \nof them and so forth, are inadequate and maybe worse. But let's \nsay that we had a truly independent audit that was \nincorruptible, not like the companies that were auditing Enron, \nthat supposedly were outside Enron.\n Let's say we find these honest people who are bright, who \nunderstand the world, and they weighed into this. First of all, \ncan you find such persons? And then, second, who does set the \nphilosophy, or the basic parameters of what is helpful to poor \npeople or to development in a way that is internationally \naccepted? We're talking about international banks, different \ncultures, different histories all looking at these things. \nAnyone want to make a comment about that sort of general set of \nquestions? Please, Doctor.\n Dr. Levine. Thanks very much. I'll tackle a couple of the \ndimensions of them.\n The programs that the development banks finance are \nnegotiated, as you know, with the developing country borrowers. \nAnd those borrowers have to repay the loan, albeit on often \nsoft terms. And so it is very much the case that the resources \nare shared resources. The designs are or should be shared \ndesigns and the goals of the programs are, themselves, shared \nbetween the development banks and the national governments.\n Chairman Lugar. Is it taken for granted now that the people \nat the development banks know something about the country? In \nother words, is there engaging in this dialogue with----\n Dr. Levine. Yes.\n Chairman Lugar [continuing]. The leaders? That this is an \nintelligent, up front way of saying how can we help people?\n Dr. Levine. Right. My point is that unlike perhaps granting \nagencies, development banks actually do develop their loans in \ncollaboration with national counterparts. Who among that group \nis informed about local conditions one can argue. But they are \nshared programs. And what those programs can generate if \nthey're evaluated effectively against their ultimate aims--the \nmore kids in school and so the people being moved above the \npoverty line. What that can generate is knowledge that then the \ndeveloping country governments can use to assess whether or not \nthat's the right use of both the development bank financed \nresources and their own.\n I'm thinking of the value that the U.S. Congress has seen \nin things like the evaluation of Head Start, the evaluations of \nthe income support and job training programs. The current, \nreally laudable evaluations that the U.S. Department of \nEducation is undertaking--this is the kind of knowledge that we \ngenerate for our own social programs and public investments, \nand that legislative leaders in this country use to decide, \nwell, what do we do next? How do we safeguard the interests of \nthe taxpayer?\n So I guess I would resist the idea that the independent \nevaluations would be done solely for the benefit of the \nagencies. The long term goal is that they'd be done to inform \npublic spending priorities in the countries themselves. That's \nthe end goal.\n Dr. Lerrick. Senator, first, I frequently say that on my \ntombstone they're going to write ``It's not as simple as he \nthought''. Because that's what usually people say when I talk \nabout these issues. I truly believe these are very simple \nissues. I think, first, one of the lessons we've learned over \nthe last 50 years, why it took 50 years, I can question, is \nthat aid does not succeed, projects do not succeed, unless the \nrecipient wants it to succeed, has an interest in the project. \nThat was viewed as a revolutionary concept as recently as 6 \nyears or 7 years ago when David Dollar wrote it.\n But so first let's assume the host government chooses the \nproject, decides this is a priority of our people. Second, one \nof the issues here is there is a terrible problem in aid that \nevery measurement is done on inputs. At the World Bank now they \nbasically measure inputs of cash. Now they're saying we're \ngoing to measure outputs because we're going to measure the \nnumber of textbooks arriving at the schools, the number of \nteachers trained, the number of miles of roads built. But those \nare still inputs.\n What we should be measuring is number of children who can \nread, the number of roads that are passable and workable after \n5 years, not how many roads were built on the day we started. \nAnd those are very easy to quantify. This is not to go out and \nmeasure the number of roads that still are functioning after 10 \nyears or the number of children that can read or the number of \nbabies that have been vaccinated. It's easily audited, it's \neasily evaluated.\n And, in fact, that's why one of the areas that I've focused \na lot of research on: turning aid from a loan-based mechanism \nto what I call a performance-based grant mechanism. Where you \nliterally only pay money upon audited performance. That will go \na long way to achieving our goal.\n The second question you raised is a much more difficult \nquestion. How do you translate number of passable roads to how \nhas that raised the income level of the people in the country? \nThat's a much more difficult question and I don't think we have \nthe metrics to do that. But I think the first step is just \nmaking sure that the roads are built and they're still \nfunctioning. And we can measure the traffic over the roads.\n Chairman Lugar. Let me just comment anecdotally, that in \nour own country with the No Child Left Behind concept we've \nbeen trying to evaluate how third-graders, eighth-graders and \nwhat have you are doing, maybe all the way through the grades \nas you magnify those tests. Of course you might point out, why \ndo states choose how much evaluation they want? Some states \nhave tougher tests than others and so forth. But let's take for \ngranted that it's a reasonable concept here. We find out that \nmaybe 70 or 75 percent of children are achieving third grade \nresults or something of this sort.\n The idea is that therefore, on a performance basis, people \nought to be rewarded for achieving this. But that is not so \neasy because the rest of the schools there, they would say we \nhave special problems. Without enumerating all of them, from \neducational conferences you have a long list. Do you mean this? \nAre you going to shut down these schools that are \nnonperforming? And we say, well no, we opened those up to other \npeople and we try to shore up things. But the fact is, you \nknow, a great deal of money is going into these programs, \nFederal, state, local. So here we're wrestling with problems \nthat are profound. Ultimately you raised the question, if \nyou're being difficult about it, even if people can read third \ngrade level, how does that affect their performance? Are they \nlikely to have higher incomes, better lives, all the rest of \nit?\n But now you're saying, keep it simple. Don't begin to get \nprofound to the third or fourth order judgments, just see \nwhether, after 5 years, the road still works, or whether in \nfact the school got built and some children entered it and \nlearned something. They may be more modest goals. And that's \nsort of important because as we try to structure this \nindependent audit system, wherever it's going to come from, the \nkinds of questions we asked this group to evaluate will \nprobably determine the public confidence in this. And that kind \nof structure can come from you as experts in your experience, \nprobably better than from us. That's why I'm raising these \nquestions.\n Dr. Lerrick. You have chosen the most controversial issue \namong the areas we're talking about, which is education. \nThere's a huge debate in this country about evaluation.\n I think you're right, it has to be kept simple. It has to \nbe transparent, it has to be simple, everyone has to recognize \nhow it was done and accept that this is a valid metric for \nmeasuring the performance. As I said, one way of doing this, \nwhich makes it simpler, is to say, we're only going to pay, \nwe're only going to deliver cash dollars based on each child \nthat can pass a literacy test, we will pay aid of this amount. \nFor each child vaccinated against measles we will pay $4.50 \nupon independent audit.\n When you think of the World Bank, all its client countries \nare viewed as similar. They're not. There is one group of \ncountries, what we call the middle income countries that have \ntotally different problems from the really poor countries, such \nas Africa. The poorest countries that don't have access to \ncapital, private capital, they are so far away from what we \nwould call the desired goal, that getting them 90 percent of \nthe way there is not--should not be controversial. The last 10 \npercent may be controversial, but we have a long way to go \nbefore that happens.\n Chairman Lugar. Dr. Easterly, do you want to weigh in on \nthis?\n Dr. Easterly. Yes, Mr. Chairman, if you'll permit me to \nreturn to your original question about how to work with \nsovereign governments. I think this is an issue that the aid \ncommunity has been stuck on for 50 years and has not found a \nway out of this conundrum. They're so stuck on it that they--\ndespite, as Dr. Lerrick pointed out, despite the increased \nknowledge that we have, that it is obviously counterproductive \nto give aid to corrupt autocrats, which just props up gangsters \nin power to stay longer in power. Amazingly enough, despite \nthat knowledge, there has been no change in the aid community \nin how selective it is to give money to better governments.\n The World Bank's latest ratings on democracy and corruption \nshowed no--there's no association whatsoever between the amount \nof aid a country receives and how corrupt it is or how \ndemocratic it is. And that I--for example, just to give you a \nparticularly egregious example, Paul--the dictator Paul Biya of \nCameroon, who's been in power for decades, he had something \nlike 80 percent of his government revenues from foreign aid, \ndespite the fact that Cameroon also has oil revenues. Where \ndoes that kind of result come from? It comes from the intense \npressure that there is to try to help Cameroonians, individual \nCameroonians, to help poor people, even if they are so unlucky \nas to be stuck with a bad government.\n And, you know, that conundrum leads to continued engagement \nwith very bad governments, even failed states are now getting \naid under the rubric of reconstruction aid, which is also \nfunneled through the warlords that are now in a temporary \ncoalition government in places like Democratic Republic of the \nCongo.\n What is the way out of this conundrum? First of all, you \nknow, the evaluator should hold the World Bank and other aid \nagencies accountable for how selective they are, for how they \nchoose the governments that receive their money. It's a \ndisgrace that Paul Biya is still getting aid money.\n And second, that the aid agencies like the World Bank \nshould explore ways in which they can try to help individuals \ndirectly, like Dr. Lerrick was talking about, bypassing the \ngovernments. And this--of course they have to be sensitive to \nthe issue of not undermining the sovereignty or the political \ndevelopment of the host country, but they can do so by working \nto try to empower individuals from below to make them better \neducated, to give them better roads. All of these things help \nindividuals and, you know, better individuals can themselves \ncreate the conditions for political reform and form the next \ngeneration of political leadership, which could give us better \ngovernment.\n The attempt to change bad government directly through aid \nconditions has totally failed. It's been tried over and over \nagain. It's been a complete failure. So I think the answer is \nto just be really ruthless about screening out the bad \ngovernments, not giving them money, but if there is still the \nneed to help desperate poor people in those countries, then try \nto help them as individuals, not through the government.\n Chairman Lugar. In the governance of these banks, obviously \nthe United States plays a role, we play a large one. We were \ndiscussing today whether we're paying our fair share and \nwhether we're up to the plate. Still these are multinational \nbanks. There are a lot of people here.\n This may be an extreme case, but in February the United \nStates had the Chairmanship of the Security Council at the \nUnited Nations. I was honored to be invited to give a speech to \nthe Security Council, which I did, and we did not dwell upon \nthese particular issues, but we did in a sense by getting into \nthe Human Rights Commission reform. Just after visiting with \nthe Security Council about this, Senator Voinovich, Senator \nColeman and I visited with a group of 77 leaders. These are \ncountries that clearly have very special problems in terms of \ndevelopment. They have a feeling that by banding together they \ncan be heard with regard to the members of the Security Council \nor the Permanent Five or what have you.\n But here we have an issue about who is going to evaluate \nhuman rights. Who ought to be eligible to be on a human rights \ncommission that is trying to bring about human rights for \npeople? There are profoundly different views on this. I don't \ncast dispersions on any of those with whom we visited, but some \nmight suggest, who is to be the judge of this? Is this a \nunilateral decision of the United States or Great Britain or \nFrance? Furthermore, if it is, that's why we have a group of \n77, to stop that kind of evaluation. We are evolving in our \npolitical procedures, they would say. You really can't get \nthere all at once.\n So if there are some human rights problems, that's been \nmankind's fate and the fate of the poor people who lived under \nthose governments. This is a big question. Who will evaluate \nhuman rights--on the commission, there are 40-some members who \nwould cast just judgment and make criteria.\n My guess is, back at the headquarters of some of the \ndevelopment banks there are similar issues of countries saying \nour place in the sun comes from solidarity with some others who \nhave similar problems. And, as a matter of fact, all together \nwe're a majority, if you vote one by one, but maybe not if you \nvote by the stock in the bank or what the contributions are. \nBut for whoever is trying to govern these situations, this must \nbe very, very difficult. In any event, the United States \nobjects to whatever the compromise is, we vote against it, \nwe're one of four countries in the world. All the rest are \nwilling to accommodate the fact that Rome is not changed in a \nday and you have to sort of understand these conditions.\n I raise this simply because, as reformers or as people \ntrying to generate this, we're dealing with people who have \nreal lives in these banks. You've been there Dr. Easterly, so \nyou understand acutely and you very modestly said in your own \nexperience as a whistleblower, this is not a comfortable \nsituation. In fact, termination likely to come to you. And help \nme a little bit, how do we influence some sort of reform given \nsovereignty, given the feeling that if we are small and we band \ntogether to have a common culture, which may not be quite \nthere, or may, in fact, not be there at all, but nevertheless \nmight be helpful to us in our leadership in those countries \nright now?\n Dr. Easterly. Mr. Chairman, I think the ideal is to get the \nfeedback from the poor intended beneficiaries themselves. And \nthat the evaluators that are truly, truly credible are those \nthat find ways to really represent--give a political voice to \nthose poor people that----\n Chairman Lugar. Let's say they go into a country and they \ninterview the poor people----\n Dr. Easterly. Uh-huh. [Affirmative]\n Chairman Lugar [continuing]. And the government says, well \nyou're interfering. You're like an NGO that's trying to foment \ndemocracy in our country. I'm just curious, how, as we search \nfor these evaluation methods, do we really get to the \ngrassroots without retribution of the people who gave the \ninterviews or who saw these auditors?\n Dr. Easterly. Right. That's a very--these are very subtle \ninsights and you rightly put your finger right on the core of \nthe problem. And I think it has--the independent evaluation \nunit would have to be independent in another sense in that it \nwould have to be independent from rich countries so it's not \nseen as the tool of rich country governments. You're not trying \nto interfere in other countries' internal affairs.\n It has to be just a worldwide network of truly independent \ngrassroots people who--and, you know, academics and researchers \nwho have no political allegiance. And it certainly should \ninclude people from the poor countries themselves in large \nnumbers. So that it would not be a representative of the U.S. \nGovernment trying to meddle in the politics of Cameroon or \nsomething.\n Chairman Lugar. Dr. Lerrick?\n Dr. Lerrick. I disagree with much of what Dr. Easterly \nsaid. Let's be clear, there is a small group of countries in \nthis world that are financing all development aid. And the fact \nof the matter is the donors are the ones who must receive the \naccount as to whether their money is being spent. Former \nSecretary of Treasury Paul O'Neill use to refer to the \ncarpenters and plumbers of the United States, that he was not \ngoing to dump the money of the carpenters and plumbers into \nthis bail out or this aid agency or this failed program.\n I think it cannot be a solely U.S. initiative, that's not \nwhat these institutions are. But I think it has to be a \ncoordinated effort of the donor countries to establish what are \nthe benchmarks for aid and for performance.\n The Bank has often hid behind some of the issues you \nraised, what they call the technicalities of client \nconfidentiality, that they just can't release information about \ntheir projects, or the sovereignty rights of nations. But the \nproblem here is that for those on the receiving end of billions \nof dollars of subsidies that flow from industrialized nation \ntaxpayers through the channel of World Bank financing, there's \na corresponding obligation. They must give free access to the \nfacts and the ability to publish them. And the control \nmechanism is that the report, the audits, the evaluations will \nbe published, at the individual project level, at the country \nlevel, at the combined bank level.\n I think, Senator Lugar, a good idea would be if you were to \ntry to implement this process, to set up a commission of, I \ndon't know whether you would call them leading experts or \nsenior statesmen, who would oversee the establishment of what \nthis audit would look like, how will it be performed, what \nwould be the standards, who would execute the audit? Again, a \npublic process, hearings, input, and there should be on that \ncommission representatives of the major developing countries to \nget their input as well.\n But I think you have a much deeper problem in this whole \nprocess which is the fundamental problem in the aid business: \nThe donors are more desperate to give than the recipients are \nto receive. If that is true, aid will fail. It cannot but fail, \nbecause, I would ask you, what would you do, and when Secretary \nLowery spoke about this, what are you going to do if Chad just \nsays no, or Congo says no? We're just not going to implement \nthe anti-corruption measures. And they dare you to say you're \nnot going to give the money? What are you going to do?\n The President of Chad has already said, if you cut off my \nfunding, it doesn't bother me. It's the poor people of Chad \nthat are going to suffer. And they were poor for centuries \nbefore and they'll just be poor again until you decide to give \nme my money. And that's a very difficult position.\n Chairman Lugar. That is the problem and, you know, let me \njust say that this is, you know, acutely the problem felt by \nthe American people, who are compassionate, who see hundreds of \nmillions of very poor people and feel surely there is some way \nwe can help those people. So then we have the mechanisms of \nbanks, and even our own foreign aid or the Millennium Challenge \nin which we try to do this. But, as you say, it could very well \nbe that our overwhelming sense of conscience that we ought to \ndo something is more overwhelming than the recipient side of \nwhat is to be done with the money.\n Dr. Lerrick. And it's not just in the official sector. The \nGates Foundation has encountered the same problem. They've \ntried to implement what would be a kind of performance-based \naid, where they were actually going to go in and audit the \nperformance. But in the end, when Kenya refused to comply, the \nhead of the Gates Foundation said very simply, the greatest \nfailure of a foundation is not distributing the money. If that \nis a fact, then there can not be a successful outcome.\n Chairman Lugar. Yes. Dr. Levine.\n Dr. Levine. I've been listening carefully to my colleagues \nand I think that in this discussion we are conflating a couple \nof different interpretations of the word evaluation. One being \nmore linked to the accountability mission: Did something pass \nor fail? So getting to your education example, did schools pass \nor fail in terms of how students did on tests.\n The other function of evaluation is to look at the \nrelationship between impact, passing or failing, with what was \ndone in the first place, what approaches were taken. So in the \neducation example, what's the relationship between say, class \nsize and how kids do on tests. That, over the long term, is the \nreal contribution that can be made from evaluation.\n There's obviously a short term need to look at that pass/\nfail question, but then it leaves you with exactly what you \nposed, well, what do we do about the failures? Do we neglect \nthem entirely? Do we close down schools? No, of course not. \nWhat you do is you look for ways to improve. Where do you look? \nThere's the kind of eminence-based approach of asking a bunch \nof very smart people what they think. That's what we often do. \nThen there's a more evidence-based approach, which is that you \nactually look carefully, do in-depth evaluations, and learn \nfrom comparing across different approaches and comparing doing \nsomething with not doing anything.\n I just want to highlight that as we talk about evaluation, \nindependent or otherwise, it's useful to make that distinction.\n Chairman Lugar. I'm trying to gather now, from your \ncollective testimony, just who ought to be appointed, and by \nwhom, and who should pay for it.\n You mentioned the Gates Foundation. One suggestion would be \nthat this is not going to happen, this evaluation, from a \ngovernmental entity or something that the Congress conjures up, \nbut rather there must be some independent people out there who \nhave independent money and so forth. And maybe the Gates \nFoundation or others might provide this sort of thing. But even \nif they do, who selects the persons who go down in the weeds, \nas you suggested, Dr. Levine, as opposed to having high-minded \nthoughts without the evaluation in the field? And what do we do \nin the Congress? Do we try to provide through legislation a \nprovision for these independent audits, or a group that does \nthis kind of work? Do we offer some criteria as to who ought to \nbe involved in it and some idea of who pays for it?\n I'm just grappling with the questions that you've raised, \nwhich I think are very important, and which we wanted you to \nraise, so that we're not left at the end of the hearing with \nthe thought that, sadly enough, back in the banks are still \nthese people who we don't think are as independent as they \nought to be. Even though they're doing better and the whole \nquestion has been elevated by five hearings plus all of what \nthey're doing, we're still not quite there.\n I know you need to leave at some point, Dr. Easterly, so I \nrespect that. Would you have a go at that first, in the event \nthat you need to leave our hearing?\n Dr. Easterly. Mr. Chairman, I think that as far as who pays \nfor it, I think the aid agencies themselves should all be \nasked, and we should try to start this as an international \neffort, but we can start with the multilateral development \nbanks, that they should be required to set aside part of their \nbudget, it doesn't have to be a huge amount because these \nevaluations are not that costly compared to the volume of \nlending.\n Chairman Lugar. Set it aside outside their structure.\n Dr. Easterly. Set it aside outside the structure to fund an \nindependent evaluation group that's truly independent, not like \nthe name change that both Dr. Lerrick and I have made fun of. \nAnd, you know, there are lots of development professionals, \neconomists, academics, social reformers of all kinds that are \nout there that will be judged on the basis of just professional \nstandards, whether they're qualified to do evaluations, and \nthey can be assembled in a very decentralized, loose network. \nIt doesn't have to be a large bureaucracy. But funded by these \nfunds that are set aside from the development agencies.\n I think they can operate in the same sort of independent \nway that we have an auditing industry that provides audits on \ncorporations, you know. It's not part of the U.S. Government, \nit doesn't serve sort of U.S. Government strategic policy. And, \nin the same, I think the--to disagree a little bit with my \nfriend, Dr. Lerrick, I think there needs to be a firewall \nbetween anything that would smack of U.S. Government strategic \ninterest or the strategic interest of any donor country. And \njust the goal of pure altruistic aid to help the poor. And \nthose auditors should be only concerned with the effectiveness \nof altruistic aid to help the poor.\n There is a large group of auditors available out there that \ncould be hired. A lot of them could be from developing \ncountries themselves. There are many highly trained \nprofessionals in developing countries that could be paid to do \nthis.\n Chairman Lugar. Dr. Lerrick?\n Dr. Lerrick. First, Senator Lugar, I'd just like to call \nyour attention to Senators Crapo and Enzi who actually put \nforth a Senate resolution in the 106th Congress calling for an \nindependent audit of IDA programs. The question--I'll divide \nthe question in two parts, who should pay for it? That really \nshould not be a major problem because, as Dr. Easterly said, \nwe're not talking about large amounts of money. It's a \nrelatively small amount of money. I will tell you that I have \nbeen approached by two foundations that are willing to finance \nsuch a performance audit. The main difficulty is cooperation, \nnot participation, but cooperation of the World Bank, which \nmeans, literally, just access to the files, to the documents. \nWhat is the project? What was the project supposed to do? What \ndid it cost? Where did it go?\n And, as Dr. Easterly said, it's not very difficult finding \nauditors to do this. I would propose that a commission could be \nset up of what I would call senior statesmen to supervise the \nstructure of what the audit process would be and how it would \nbe implemented. And then you would actually have private sector \nauditing firms go out and literally compile the reports in \ndifferent countries.\n There are major multinational firms that do this as a \nbusiness. And they could do this as well. If you wanted to go \nto a more grassroots approach and have many little individual \nauditors I think it would be more difficult, but it is \nfeasible.\n The third method would be, basically, to say that we are \ngoing to have a performance audit and have it report to the \nlegislative and executive branches of the leading donor \ncountries, all of them, and I agree with Dr. Easterly, it has \nnothing to do--it should have nothing to do with strategic \ninterests or foreign relations interests. It's purely \neffectiveness of the programs. And each one of those \ngovernments has the counterpart to the GAO. Why can't the GAO \nsupervise on behalf of Congress and say this is how the \nstructures were done, these were the processes that were put in \nplace, we consider them reasonable and pass judgment not on the \nindividual programs, but on the mechanics that were \nimplemented. That would be a third way of going about it.\n Chairman Lugar. We might appropriate money for the GAO to \nbegin with.\n Dr. Lerrick. Again, appropriate the money and have the GAO \nto review how the process was done.\n Chairman Lugar. But then how do they get the records in the \nWorld Bank? The GAO goes over there and----\n Dr. Lerrick. No. The World Bank would have to say we are \ngoing to cooperate. And that will only come if the major \nshareholders agree the World Bank should cooperate with this \nprocess.\n Chairman Lugar. Dr. Levine.\n Dr. Levine. Again, I think we're running into a little \npoint of departure about what the aim of this sort of function \nmight be. I agree with my colleagues that the financing is \nsmall, very small relative to the total funds that are \ndisbursed by the World Bank, the Inter-American Development \nBank, and the grant-making agencies. So a small share of each \ndevoted to a collective enterprise would certainly be adequate.\n But in terms of who and how, I think it depends very much \non what the aims are. There's the auditing idea. I'm fearful \nthat would be quite unsatisfying because, in fact, most World \nBank programs do not even have baseline information. So you \ncould barely even do before and after comparisons, let alone \ncomparing what would have happened with a different approach, \nwhat would have happened in the absence of the program.\n So I think a collective evaluation agenda needs to be set \non enduring questions in development: How to get kids in \nschool, how to prevent HIV/AIDS, and other things for which \nhuge amounts of money are being devoted against very little \nevidence. So set that evaluation agenda, establish \nmethodological standards. As Dr. Easterly said, there is an \nacademic industry devoted to that practice. And then commission \nindependent evaluations through an open and competitive process \nwith the results being disseminated widely, again to stimulate \nthe kind of learning that we've talked about earlier.\n Chairman Lugar. I thank you very much. You've been most \nhelpful, I believe, in giving the parameters of the problem, as \nwell as some specifics toward solutions. As you suggested, Dr. \nLevine, there are probably people out there who are going to be \nable to set some standards. There probably is money to be \nobtained. It's not very much. Hopefully we will obtain access \nto the records, imperfect as they may be, as you say. If they \nare as rudimentary as you have suggested, this is going to be \ntough for the auditors, but there has to be a beginning at some \npoint, at least establishment of the independence of the \nprocess, so that it's not an in-house affair and it's not \nbusiness as usual.\n My guess is that even the discussion of the project and the \nformation of all of this is likely to bring about some salutary \nresults as countries and banks and so forth think through the \nimplications of that. We look forward to staying in touch with \nall three of you. We appreciate your insights and your specific \npublic testimony today. And so saying, the hearing is \nadjourned.\n\n\n [Whereupon at 11:37 a.m., the hearing was adjourned.]\n \n\n <all>\n\x1a\n</pre></body></html>\n" | 2006-03-28 | [
"b\"<html>\\n<title> - MULTILATERAL DEVELOPMENT BANKS: PROMOTING EFFECTIVENESS AND FIGHTING CORRUPTION</title>\\n<body><pre>[Senate Hearing 109-913]\\n[From the U.S. Government Printing Office]\\n\\n\\n S. Hrg. 109-913\\n \\n MULTILATERAL DEVELOPMENT BANKS:\\n PROMOTING EFFECTIVENESS\\n AND FIGHTING CORRUPTION\\n\\n=======================================================================\\n\\n HEARING\\n\\n\\n\\n BEFORE THE\\n\\n\\n\\n COMMITTEE ON FOREIGN RELATIONS\\n UNITED STATES SENATE\\n\\n\\n\\n ONE HUNDRED NINTH CONGRESS\\n\\n\\n\\n SECOND SESSION\\n\\n\\n\\n __________\\n\\n MARCH 28, 2006\\n\\n __________\\n\\n\\n\\n Printed for the use of the Committee on Foreign Relations\\n\\n\\n Available via the World Wide Web: http://www.access.gpo.gov/congress/\\n senate\\n\\n U.S. GOVERNMENT PRINTING OFFICE\\n33-727 PDF WASHINGTON : 2007\\n---------------------------------------------------------------------\\nFor sale by the Superintendent of Documents, U.S. Government\\nPrinting Office Internet: bookstore.gpo.gov Phone: toll free (866)\\n512-1800; DC area (202) 512-1800 Fax: (202)512-2250 Mail: Stop SSOP,\\nWashington, DC 20402-0001 \\n\\n\\n\\n\\n\\n\\n\\n COMMITTEE ON FOREIGN RELATIONS\\n\\n RICHARD G. LUGAR, Indiana, Chairman\\n\\nCHUCK HAGEL, Nebraska JOSEPH R. BIDEN, Jr., Delaware\\nLINCOLN CHAFEE, Rhode Island PAUL S. SARBANES, Maryland\\nGEORGE ALLEN, Virginia CHRISTOPHER J. DODD, Connecticut\\nNORM COLEMAN, Minnesota JOHN F. KERRY, Massachusetts\\nGEORGE V. VOINOVICH, Ohio RUSSELL D. FEINGOLD, Wisconsin\\nLAMAR ALEXANDER, Tennessee BARBARA BOXER, California\\nJOHN E. SUNUNU, New Hampshire BILL NELSON, Florida\\nLISA MURKOWSKI, Alaska BARACK OBAMA, Illinois\\nMEL MARTINEZ, Florida\\n Kenneth A. Myers, Jr., Staff Director\\n Antony J. Blinken, Democratic Staff Director\\n\\n\\n\\n \\n\\n\\n\\n\\n\\n\\n\\n C O N T E N T S\\n\\n ---------- \\n Page\\nLugar, Hon.",
"Richard G., U.S. Senator from Indiana, opening \\n statement......................................................\\n\\n 1\\n\\n\\nEasterly, Dr. William, Professor of Economics, New York \\n University..................................................... 26\\n\\n Prepared statement........................................... 29\\n\\n\\nLerrick, Dr. Adam Director, the Gailliot Center for Public \\n Policy, Carnegie Mellon University............................. 39\\n\\n Prepared statement........................................... 41\\n\\n\\nLevine, Dr. Ruth E., Director of Programs, Center for Global \\n Development.................................................... 33\\n\\n Prepared statement........................................... 35\\n\\n\\nLowery, Hon. Clay, Assistant Secretary For International Affairs, \\n Department of the Treasury, Washington, DC..................... 3\\n\\n Prepared statement........................................... 5\\n\\n\\nPerry, Hon. Cynthia Shepard, U.S. Executive Director, the African \\n Development Bank, Washington, DC............................... 10\\n\\n Prepared statement........................................... 13\\n\\n\\n (iii)\\n\\n\\n MULTILATERAL DEVELOPMENT BANKS:\\n PROMOTING EFFECTIVENESS AND\\n FIGHTING CORRUPTION\\n\\n ---------- \\n\\n\\n TUESDAY, MARCH 28, 2006,\\n\\n U.S. Senate,\\n Committee on Foreign Relations,\\n Washington, DC.\\n The committee met, pursuant to notice, at 9:34 a.m. in room \\nSD-419, Dirksen Senate Office Building, Hon.",
"Richard G. Lugar \\n[chairman] presiding.\\n Present: Senators Lugar and Martinez.\\n\\n OPENING STATEMENT OF HON. RICHARD G. LUGAR,\\n U.S. SENATOR FROM INDIANA\\n\\n Chairman Lugar. This meeting of the Senate Foreign \\nRelations Committee is called to order. The Foreign Relations \\nCommittee meets to continue our review of the United States \\npolicy toward the multilateral development banks, the MDBs. \\nThis is the fifth in a series of hearings on the MDBs that \\nbegan in 2004.",
"Those earlier hearings contributed to this \\ncommittee's understanding of both the value of the MDBs' work \\nand problems with their operations that were in need of \\ncorrection.\\n In 2005, building on these hearings, I introduced Senate \\nBill 1129, the Development Bank Reform and Authorization Act. \\nThrough the cooperation of many Members of Congress, most of \\nthe provisions of this bill were enacted into law in November \\n2005. With passage of this legislation Congress made a strong \\nstatement that it recognizes the critical role of the MDBs in \\nachieving developmental goals around the world, but also that \\nthe operations of these banks must be transparent, efficient, \\nand free of corruption.\\n The legislation authorizes funds for three of the MDBs and \\ncontains provisions designed to ensure greater transparency and \\naccountability in the banks' operations. It requires the \\nSecretary of the Treasury and the United States Executive \\nDirectors to the MDBs to support clear and public anti-\\ncorruption procedures that are coordinated all across the MDBs.",
"\\nAmong many provisions, it promotes staff financial disclosure \\nprocedures, whistle blower protections and the establishment of \\nindependent ethics and auditing offices. It also encourages \\ntransparent budget processes for countries that receive budget \\nsupport from the MDBs, and additional disclosure requirements \\nfor natural resource extraction projects.\\n The need for oversight did not end with the passage of the \\nMDB reform legislation, which is why we're here today. The \\nUnited States has strong national security and humanitarian \\ninterests in alleviating poverty and promoting progress around \\nthe world.",
"The MDBs can help leverage the resources that we \\ndevote to advancing international development. Since 1960, the \\nUnited States has provided more than $42 billion in direct \\ncontributions to the MDBs. In addition, the United States has \\nprovided more than $1.7 billion for debt relief.\\n The United States Government must work hard to ensure that \\nthis money is spent efficiently, both because of our \\nresponsibility to American taxpayers and because inefficiency \\nand corruption undermine the basic humanitarian and foreign \\npolicy objectives of our participation in MDB financing.\\n World bank economists Craig Burnside and David Dollar \\nasserted in the American Economic Review that, and I quote, \\n``in the presence of poor policies . .",
". aid has no positive \\neffect on growth,'' end of quote. Similarly, the World Bank Web \\nsite identifies corruption as quote, ``the single greatest \\nobstacle to economic and social development.'' Corruption \\nassociated with MDB loans not only squanders development funds \\nand enriches dishonest officials and contractors, it leaves \\nimpoverished nations with the burden of the resulting debts.\\n At the World Bank, President Paul Wolfowitz has continued \\nand expanded the anti-corruption policies initiated by his \\npredecessor, James Wolfensohn. President Wolfowitz has \\nreportedly suspended loans in Argentina, Bangladesh, Chad, \\nIndia, Kenya, and perhaps others because of corruption \\nconcerns.",
"Although some of these actions may stimulate \\ncontroversy, nations receiving World Bank loans must do \\neverything in their power to provide confidence that loans and \\nthe projects that they fund are free of corruption.\\n In Chad, for example, the World Bank has set up a model \\nrevenue management program to ensure that money generated by \\nthe Chad/Cameroon oil pipeline would be spent for the good of \\nthe people. But after the oil pipeline had been built, the \\ngovernment of Chad unilaterally reneged on its commitment to \\nwork under these anti-corruption procedures. The government \\nalso withdrew its pledge to direct the bulk of the revenue to \\nhealth, education, and rural development.",
"The World Bank had \\nlittle choice but to suspend lending to Chad.\\n The importance of getting loans right from the start is \\ndemonstrated by the case of the Congo. Recently the World Bank \\nand the International Monetary Fund agreed to grant debt relief \\nto the Republic of Congo, a country that has flouted past anti-\\ncorruption conditions. According to Global Witness, there is \\nevidence that hundreds of millions of dollars are unaccounted \\nfor in Congo's budget. Congo is receiving debt relief despite \\nearning billions from oil sales in 2005.\\n I'm optimistic about the G-8 agreement for 100 percent debt \\nrelief for highly indebted poor countries that implement \\npolicies to foster growth and to reduce poverty. The cycle of \\nindebtedness of these poor countries must end. But we will not \\nfully achieve this important goal unless we establish an anti-\\ncorruption culture throughout the international lending \\nprocess.\\n Everyone involved must understand that the history of the \\nMDBs includes well documented and unacceptable cases of waste, \\nfraud, and abuse.",
"We know that billions of dollars that could \\nhave helped some of the poorest people in the world have been \\nsiphoned off or squandered. We all wish this was not so, but \\nsuch facts place extra burdens on both the banks and the \\nnations receiving the loans. And those of us in Congress who \\ncare about international development and like-minded people \\naround the world must shine a light on these programs, not to \\nundercut their missions, but rather to ensure that these \\nmissions succeed.\\n We are living in an era when threats posed by terrorism, \\nweapons proliferation, international communicable diseases, \\nincreasing competition for energy supplies and other factors \\nhave enlightened many of the world's people to the need to \\nensure that poor nations are not left behind. But these same \\nthreats also place competing demands on national budgets. If \\ndevelopment projects are transparent, productive, and \\nefficiently run, I believe they will enjoy broad support. If \\nthey are not, they are likely to fare poorly when placed in \\ncompetition with domestic priorities or more tangible security \\nrelated expenditures.\\n Today we are pleased to be joined by two distinguished \\npanels.",
"First we will hear from Mr. Clay Lowery, Assistant \\nSecretary of the Treasury for International Affairs, and \\nAmbassador Cynthia Perry, U.S. Executive Director to the \\nAfrican Development Bank. They will testify regarding U.S. \\nefforts to support the anti-corruption strategies of the \\ndevelopment banks. On the second panel, we will hear from Dr. \\nWilliam Easterly of New York University, Dr. Ruth Levine from \\nthe Center for Global Development, and Dr. Adam Lerrick from \\nCarnegie Mellon University. We welcome our expert witnesses, \\nand we look forward to their insights.\\n Let me mention before I ask them to commence their \\ntestimony that I want to acknowledge the presence of a large \\ngroup of State Department Foreign Service Officers who are here \\nin this hearing today. They're in the midst, I'm advised, of a \\nyear-long economics training program at the Foreign Service \\nInstitute.",
"I understand that they've been studying the works of \\nsome of our witnesses today and therefore will be acute \\nobservers. We're delighted that they are here because they will \\nbe in the field soon making a difference.\\n I welcome both of you. You are good friends of the \\ncommittee. Let me say that your full statements will be made a \\npart of the record, so you need not ask for permission that \\nthat occur. I'll ask you to proceed with a summary or the full \\ntext as you may wish. And then we will have questions from our \\ncommittee members. Secretary Lowery?\\n\\n STATEMENT OF HON. CLAY LOWERY, ASSISTANT SECRETARY FOR \\nINTERNATIONAL AFFAIRS, DEPARTMENT OF THE TREASURY, WASHINGTON, \\n DC\\n\\n Mr. Lowery.",
"Thank you sir. Chairman Lugar and Senator \\nMartinez I want to thank you very much for the opportunity to \\ntestify today on the critical imperative facing us at the \\nmultilateral development banks, and that's the fight against \\ncorruption. I'm very pleased to be joined at the table by \\nAmbassador Perry, the U.S. Executive Director at the African \\nDevelopment Bank, who will address the African Banks' efforts \\nto combat this affliction.\\n The administration has one fundamental policy goal for the \\nmultilateral development banks, and that is to help poor \\ncountries reduce poverty by increasing economic growth. The \\nworld has made major gains against poverty in recent decades. \\nIn the past 40 years, life expectancy in developing countries \\nhas increased by over a quarter.",
"In the last 30 years, \\nilliteracy has fallen by half, and in the last 20 years over \\n400 people have been lifted out of absolute poverty.\\n While these statistics are impressive, I posit that many \\nmore tens of millions of people would have been lifted out of \\npoverty if it wasn't for corruption. In other words, corruption \\nstill remains one of the major impediments to meeting the \\nchallenge of extreme poverty.\\n Corruption nefariously compromises development by \\nsquandering resources vital to combating illiteracy, disease, \\nhigh infant mortality, and a polluted environment. Corruption, \\nin and of itself, is immoral, illegal, and intolerable. In \\nshort, stealing from the poorest people is appalling. Fighting \\ncorruption and building strong governance and accountability \\nstructures in developing countries has been a top priority from \\nthe first day of the Bush administration, and we know that has \\nbeen a top priority for you, Mr. Chairman, and the whole \\ncommittee.\\n We see two great challenges. First, we must attack the \\ncorruption around the world that keeps nations poor.",
"President \\nBush has launched a series of initiatives to tackle this \\nproblem head on, from crafting the Monterrey Consensus on \\nFinancing for Development, creating the Millennium Challenge \\nAccount, working to build a consensus to provide debt relief to \\nthe poorest countries, launching anti-corruption initiatives to \\nthe G-8, to taking on money laundering, terrorist financing, \\nand searching out and returning the stolen assets from \\nkleptocrats around the world.\\n The second challenge is reforming the MDBs to root out any \\ncorruption within the institutions themselves and to make them \\neffective instruments for attacking corruption in borrowing \\nnations. As we continue to advance our comprehensive reform \\nagenda at the MDBs to address these challenges, we have a \\nstrong new ally at the World Bank in its new President, Paul \\nWolfowitz. He has made fighting corruption in all areas of the \\nWorld Bank's engagement one of his primary goals since coming \\nto the Bank.",
"His leadership, together with this committee's, \\nhas put even more wind in our sails.\\n This committee has held a series of hearings over the last \\nfew years about progress, or the lack thereof, in fighting \\ncorruption in and through the multilateral development banks. \\nThe legislation enacted last year reflects our agenda in both \\nfighting corruption and enhancing development results. In our \\nview, the core of this agenda is to provide the right \\nincentives to individuals, countries, and institutions, build \\nthe capacity and structures to have strong checks and balances, \\nand hold those individuals, countries, and institutions \\naccountable for their actions.\\n Examples of progress in advancing this agenda include \\nsomething that you mentioned in your statement from the \\nBurnside and Dollar study, which is rewarding performance.",
"In \\nthe mid-1990s, the World Bank provided roughly 40 percent more \\nof--on a per capita basis, to the best performers than it did \\nto the worst performers. Today that number is approaching 400 \\npercent. In terms of establishing controls, in just the past \\ncouple of months the Inter-American Development Bank has \\nadopted an ethics code requiring senior management to disclose \\nfinancial assets and income. This ethics code, I just was \\nspeaking with the President of the IDB this morning, has been \\njust put on their Web site. While the Asian Development Bank \\nhas implemented measures to protect the identity of whistle \\nblowers.\\n Holding countries accountable, you mentioned President \\nWolfowitz's leadership on this front. I'm not going to repeat \\nwhat you've already said.\\n The job of fighting corruption, however, is far from \\nfinished. For example, we must do more to break the incentive \\nstructure of rewarding loan volume as opposed to project \\nperformance. We must continue to harmonize procurement \\nstandards and procedures. The MDBs must release more project \\ndocuments earlier and we must establish more robust fiduciary \\nstandards at institutions like the Global Environmental \\nFacility.\\n Mr. Chairman, there is no easy fix or answer to corruption \\nand it remains a very serious impediment to growth, poverty \\nreduction, and improved living standards in the world's poorest \\ncountries. While we have made progress in focusing the MDBs on \\nthe fight against corruption, we are still a long way from \\nvictory.",
"As I testify before you today I find reason for \\noptimism in the recent leadership taken by President Wolfowitz \\nand the other multilateral development banks' heads who just \\nrecently created a task force across their institutions to \\nintensify efforts to tackle the problem of corruption, both \\nsystematically and systemically.\\n We will continue our intense efforts to push this agenda \\nand look forward to our continuing cooperation and dialogue \\nwith Congress on the best way to achieve concrete results. I \\ncan assure you that we will continue to pursue the cause \\ntirelessly. Thank you for your time and I look forward to \\nanswering any questions you may have.\\n\\n [The prepared statement of Mr. Lowery follows:]\\n Prepared Statement of Hon. Clay Lowery, Assistant Secretary for \\n International Affairs, Department of the Treasury\\n Chairman Lugar, Senator Biden, members of the committee, I'm \\npleased to testify today on a critical imperative facing us at the \\nmultilateral development banks (MDBs). The administration has one \\nfundamental policy goal for the MDBs--to use programs, projects, and \\nadvice to assist countries in reducing poverty by increasing economic \\ngrowth. There is no issue that undermines that goal more than that of \\ncorruption. Corruption compromises development like no other \\nimpediment, resulting in squandered resources and ineffective efforts \\nto combat illiteracy, disease, high infant mortality, and a polluted \\nenvironment. This has been a top priority from the first day of the \\nBush administration, and we know it has been a top priority for you, \\nMr.",
"Chairman, and your whole committee.\\n We see two great challenges. First, we must attack the corruption \\naround the world that keeps nations poor. President Bush has launched a \\nseries of initiatives to tackle this problem--from crafting the \\nMonterrey Consensus on Financing for Development, to creating the \\nMillennium Challenge Account, to launching anti-corruption initiatives \\nthrough the G8, to taking on money laundering, terrorist financing, and \\nsearching out and returning the stolen assets from the kleptocrats of \\nthe world.\\n The second challenge is reforming the MDBs to root out any \\ncorruption within the institutions themselves and to make them \\neffective instruments for attacking corruption in borrowing nations.\\n We are advancing a comprehensive reform agenda at the MDBs to \\naddress both of these challenges. And we have a strong new ally at the \\nWorld Bank in its new President, Paul Wolfowitz. He has made fighting \\ncorruption in all areas of the World Bank's engagement one of his \\nprimary goals since coming to the Bank. Examples of this commitment \\nthus far include:\\n\\n\\n <bullet> Chad where the Bank has suspended disbursements in response \\n to the government's recent unilateral amendments to the \\n Petroleum Revenue Management Law, which was negotiated with the \\n World Bank to improve transparency and ensure allocation of oil \\n revenues to priority sectors such as health and education;\\n\\n <bullet> India where the Bank has held up consideration of a health \\n project due to concerns about procurement irregularities and \\n has suspended disbursements of approximately $400 million for \\n transportation projects due to safeguard violations;\\n\\n <bullet> Republic of Congo, where concerns about allegations of \\n corruption in the state-owned oil company resulted in President \\n Wolfowitz's insisting on the significant strengthening of \\n conditions for debt relief under the HIPC initiative;\\n\\n <bullet> Uzbekistan where consideration of the Country Assistance \\n Strategy has been delayed due to good governance concerns;\\n\\n <bullet> The Bank's Department of Institutional Integrity (INT), \\n which President Wolfowitz has reinvigorated and restructured to \\n make its authority clear and its operations more effective.\\n\\n\\n The United States supports President Wolfowitz's leadership on \\ncorruption and his progress to date.",
"We also sought and continue to \\nsupport the recent commitment of all MDB Heads to harmonize their \\nstrategies in the fight on corruption. But the job is far from \\nfinished, and we will continue to work with all the MDBs to advance the \\nanti-corruption agenda as our highest priority.\\n progress made and the u.s. plan to further the anti-corruption agenda\\n Only 10 years ago did the discussion of corruption begin in earnest \\nat the MDBs, thanks in large measure to James Wolfensohn, former \\npresident of the World Bank. But U.S. leadership also played an \\nimportant role in focusing the discussion and providing support for \\nefforts on anti-corruption reform. The result is that each MDB has \\nrecognized the importance of fighting corruption and, with varying \\ndegrees of success, has taken on reforms at both the country and the \\ninstitutional level.\\n Fighting corruption is not easy, however, even in the United \\nStates, where there are high fiduciary standards, well developed legal \\nsystems, and a relatively open and transparent society that demands \\naccountability.",
"For countries where institutions and standards are \\nweak, where the political system is neither accountable nor \\ntransparent, and where individuals may have been beaten down and become \\nresigned to corruption as a way of life, fighting this scourge is an \\nextremely daunting challenge. Although the MDBs have developed and \\nmobilized a variety of tools to focus on the quality of public-sector \\ninstitutions, the World Bank's Review of Development Effectiveness for \\n2004 indicates that there is ``little evidence that governance is \\nimproving and corruption decreasing.'' Because of corruption's \\npervasive nature, deep institutional changes are necessary across the \\nmultilateral development banks in order to make real progress in the \\nfight.\\n That is why we appreciate the added attention to these efforts that \\nthis committee has provided in recent years. We fully support the \\nimplementation of the policy goals laid out in the fiscal year 2006 \\nappropriations legislation, and in particular--we endorse the aim of \\nthe legislation to improve transparency of operations, link project \\nresults to staff performance, strengthen procurement standards, and \\nenhance coordination across the MDBs on definitions of fraud and \\ncorruption and cross-debarment procedures.",
"These are important, \\nnecessary, and logical steps in eliminating corruption. In support of \\nthese goals, each U.S. Executive Director has developed an action plan \\nfor implementation, including time lines.\\n To make inroads on corruption, there must be a system of mutual \\naccountability in place. To strengthen the system of accountability, \\nthe most critical areas of focus for the anti-corruption campaign \\ninvolve four key policy objectives: strengthening institutional \\ntransparency and accountability, promoting good governance in recipient \\ncountries, improving fiduciary safeguards, and advancing the results \\nagenda.\\n institutional transparency and accountability\\n To protect against internal corruption, it is essential to ensure \\nthat each MDB has its own house in order. This committee has held a \\nseries of hearings over the last few years about progress--or the lack \\nthereof--in fighting corruption in these institutions. Instead of \\nrecapping all of that, I thought it would be most valuable to highlight \\nwhere, with strong backing from the United States, the MDBs have made \\nspecific progress in the areas related to the legislation you passed \\nlast year, with particular emphasis on the areas of harmonizing anti-\\ncorruption and procurement efforts, strengthening whistleblower \\nprotections, increasing transparency, and building internal mechanisms \\nto ensure accountability.\\n In order to strengthen the operations of the internal investigative \\nfunction in each institution, the MDBs must move forward to standardize \\ntheir definition of corruption and to ensure that compliance and \\nenforcement actions taken by one institution are supported by all \\nothers.",
"To this end, we welcome the recent announcement by the Heads of \\nMDBs to establish a task force to develop a uniform Framework for \\nPreventing and Combating Fraud and Corruption for agreement by the \\nSeptember World Bank Annual Meeting. This is the first step in \\nharmonizing the MDB response to corruption. A working group will \\ncontinue to refine these definitions and work toward harmonizing other \\naspects of the sanctioning of fraud and corruption at the MDBs. In \\nfact, the Inter-American Development Bank (IDB) has already adopted the \\ncurrent definitions agreed to by the working group, including a common \\ncross-debarment policy.\\n The MDB's whistleblower policies also bear reviewing, as it is \\ncritical that employees feel they can report abuse without reprisal. We \\nsee the strengthened INT operations at the World Bank as one way of \\nsupporting whistleblower protections, but all the MDBs need to \\ncontinually update their whistleblower policies to reflect best \\npractices in the public and private sectors.",
"The Asian Development \\nBank, for example, has recently implemented measures to protect the \\nidentity of whistleblowers, including secure phone lines, emails, faxes \\nand confidentiality procedures and is planning further enhancements.\\n Another way to improve accountability is through increasing \\ntransparency of operations at the MDBs. The U.S. insistence on \\ninstitutional transparency over the last several years has led to \\nrevised disclosure policies at virtually all the development \\ninstitutions. Just last month, for example, the Board of Directors at \\nthe International Finance Corporation (IFC) approved a new policy that \\nincludes the presumption of disclosure of non-proprietary information \\nabout IFC activities and the release of Board minutes.\\n Internal audit departments can play a key role in strengthening the \\naccountability of the institutions themselves.",
"We are encouraged that \\nthe World Bank's Internal Audit Department (IAD) is implementing a \\nstrong audit work program. IAD, reporting regularly both to President \\nWolfowitz and the Board's Audit Committee, is making significant \\ncontributions to risk management of the World Bank Group and to \\nincreasing the efficiency and effectiveness of the Group's operations. \\nIt is important that internal audit function in all the MDBs be given \\nappropriate status by management and be provided adequate staff and \\nresources to conduct audits and to follow up to ensure the \\nimplementation of recommendations. The progress to date at all \\ninstitutions is commendable, and it is encouraging that the MDBs are \\ntaking action on these issues, thanks in no small part to the advocacy \\nof the U.S. Government on these issues.\\n good governance in recipient countries\\n In order to make inroads on corruption at the country-level, \\nhowever, the MDBs need to help countries improve accountability by \\nincreasing country capacity and advocating good governance.",
"This is an \\narea in which the MDBs have committed significant resources, but \\nunfortunately projects focusing on governance have had mixed success. \\nTo really be effective in the fight on corruption, the MDBs need to \\ncontinue their work on building governance and institutional capacity, \\nbut with a better eye to ensuring ownership and results.\\n Assistance to help countries build successful and accountable \\npublic-sector institutions continues to be substantial, with the World \\nBank alone providing over $2.83 billion in fiscal year 2005.",
"When \\nadding sectors of law and justice, the assistance to improving \\ngovernance and building capacity equates to roughly 25 percent of total \\ncommitments of both IBRD and IDA in 2005. Spending on governance \\nprojects increased by one-third at the Asian Development Bank (AsDB) to \\n14 percent of all lending in 2005 and accounted for 15 percent at the \\nIDB. The assistance is directed to a wide range of governance issues, \\nsuch as judicial reform to strengthen the rule of law, tax policy and \\nrevenue collection measures aimed at ensuring tax compliance and \\naccountability, fiscal transparency and accountability, and procurement \\nreform to help remove incentives for government corruption.\\n Despite the challenges in developing countries, there are projects \\nthat are helping countries make important strides to improve \\ngovernance. In the Philippines, for example, the Supreme Court adopted \\nrecommendations arising from a recently completed AsDB technical \\nassistance project on reforms to the judicial system. These \\nrecommendations will be implemented under a World Bank loan. In \\nBolivia, the IDB has a project to strengthen capacity in the Finance \\nMinistry to develop an e-government procurement program.",
"The program \\nwill have an additional indirect effect of permitting greater public \\naccountability for the Ministry's funds. Recognizing that building \\ncapacity can be significantly more challenging sometimes than building \\na road or school, we are nevertheless troubled that building governance \\nand capacity has produced mixed results.\\n Reasons for the mixed results were presented in a recent internal \\nAsDB review of the implementation of its anti-corruption and governance \\npolicies. The AsDB concluded that the Bank has not yet completed the \\nprocess of mainstreaming governance and anti-corruption throughout the \\ninstitution. Challenges included inadequate identification of \\ngovernance and corruption risks in country strategies, too many small \\nprojects covering too many areas, thinly deployed staff resources, and \\ninsufficient emphasis on public financial management systems.",
"While the \\nreview identified a number of weaknesses, the candidness of the report \\nand management's decision to prioritize strengthening its anti-\\ncorruption and governance efforts under the next Medium Term Strategy \\nillustrate the AsDB's enhanced commitment to fight corruption.\\n Despite these challenges, there are promising steps to improve \\ngovernance through the MDBs because of the changing incentives. For \\nexample, indicators in the World Bank/IFC Doing Business report \\nhighlight where countries need to dedicate resources to improve the \\nbusiness environment. Increasingly countries are asking how they can \\nimprove their rankings, with the recognition that through improved \\nefficiency and systems, there is less government waste, fewer \\nopportunities for corruption, and more opportunities for investment.\\n At the institutional level, the World Bank has embraced good \\ngovernance as a key area in the focus of its Country Assistance \\nStrategies because of its importance to development sustainability. The \\nWorld Bank and IFC, supported by other donors, have developed \\nindicators to measure and track country performance in public financial \\nmanagement. Finally, the country incentives for good governance are \\ndriven by the performance-based allocation (PBA) systems, which \\nallocate resources of the concessional windows across the MDBs on the \\nbasis of performance.",
"Scarce resources should go where they will be \\nused most effectively, and the PBA systems serve as a critical part of \\nthis incentive structure. For instance, the AsDF's weighting on \\ngovernance factors in terms of measuring country performance has \\nincreased from 30 percent to 50 percent in just the last year. And in \\nIDA, in the mid 1990s, the best performers received roughly 40 percent \\nmore on a per capita basis than the worst performers; today that figure \\nis over 350 percent.\\n strengthening fiduciary safeguards\\n When we think about corruption it is easy to have a picture of \\ncases of grand-scale corruption, such as those of former Liberian \\nleader Charles Taylor or the late Nigerian dictator Sani Abacha. The \\nmost egregious cases are often much easier to identify than the much \\nsmaller abuses, but it is the smaller scale mishandlings that can \\nreally add up, unless the appropriate fiduciary safeguards are in \\nplace.",
"Thus, effective MDB project supervision and rules for \\nprocurement, disbursement, and audit are essential for protecting \\ndevelopment resources, as well as for achieving and sustaining \\ndevelopment results.\\n Unfortunately, on one key aspect of international standards the \\nU.S. is finding itself increasingly at odds with the donor community. \\nThe harmonization agenda of the OECD Development Assistance Committee \\n(DAC) is encouraging development assistance providers to use countries' \\nown procurement systems rather than internationally agreed standards. \\nThe appropriate direction of harmonization should be upward and to a \\nwidely accepted international standard.\\n We believe countries should use the World Bank's procurement \\nstandards--not only because they are the best in the business--but also \\nbecause the international business community is familiar with them and \\nthis promotes fair competition. At the other MDBs, we are trying to \\nhold procurement standards to the highest-common denominator rather \\nthan the lowest. We have been urging all the MDBs to harmonize strong \\nprocurement standards by adopting the World Bank's procurement \\nguidelines.",
"The IDB did so last year. Unfortunately the AsDB failed to \\nfollow suit despite recent attempts to work with them on this. Strong \\nprocurement and disbursement guidelines create accountability and \\ntransparency, without which there is room for corruption.\\n results measurement and performance\\n A critical win for the U.S. has been the acceptance in the donor \\ncommunity of the results agenda--embracing results measurement at the \\ncountry and now increasingly at the institutional level. We believe \\nthis will improve accountability and effective use of scarce \\ndevelopment resources. Results measurement is an integral aspect of the \\nanti-corruption discussion because it is a way to ensure that resources \\nare allocated on the basis of tangible outcomes. Focus on results \\ndemands country and institutional accountability for actions and \\nhopefully can improve institutional efficiency as well.\\n The measurable results agenda supported by the U.S. has been \\nbroadly recognized in the donor community as an essential tool for \\nensuring effective aid delivery at the project level.",
"The good news is \\nthat now all project documents considered by the Executive Directors of \\nthe World Bank, AfDB, AsDB, IDB, and EBRD identify project objectives, \\nwhich are subject to subsequent evaluation. The World Bank and AsDB are \\nnow incorporating results frameworks in all their new country \\nstrategies. For example, the AsDB's recent Bangladesh country strategy, \\nwhich was the product of extensive consultations with civil society \\ngroups, comprises detailed and time bound development targets, \\nincluding those on critical structural reforms related to governance.\\n Incorporating a matrix of expected results in project planning is \\nthe first step; however, as a next step, the MDBs now need to ensure \\nthat effective oversight occurs during project implementation, allowing \\nmanagers to recognize early on when a project is off-track and \\ncorrective action needs to be taken.",
"The track record on this is \\nimproving, and one encouraging example of accountability is in Honduras \\nwhere the community monitored all aspects of health and education \\nprojects and met regularly with World Bank staff. The community \\nvolunteers assessed the projects on an ongoing basis and were in a \\nposition to let staff know if things were off-track.\\n At the institutional level, the U.S. has pushed for stronger links \\nbetween project performance, staff compensation, and budget \\nallocations. The AsDB recently implemented a new performance management \\nsystem that assesses staff on the basis of performance against \\ndevelopment outputs and rewards the top 10 percent of achievers. The \\nWorld Bank is currently preparing to implement fully an Operational \\nPolicy of Results Measurement, which will effectively codify the \\nimportance of results at the center of Bank operations.\\n However, despite their commitment to results, significant hurdles \\nto the implementation of the results agenda within the institution \\nremain. The World Bank needs to link the decisionmaking processes of \\nhuman resources, operations, and the budget, allowing the results \\nagenda to have an impact in the form of allocation of resources.",
"The \\nIBRD and IDA have not yet fully tied program budgets to results, but \\nBank management anticipates completion of this project by the beginning \\nof its 2008 fiscal year. Meanwhile, at all of the MDBs except the IFC, \\nthere is a missing link to the results agenda as there does not appear \\nto be any move to directly link staff or management compensation to \\nproject performance. Bottom line: while there is progress on the \\nresults agenda across the MDBs, more needs to be done in terms of \\nimplementation of results measurement at the institutional level.\\n Making results measurement and strong fiduciary policies our \\npriority in the MDB reform process serves a distinct purpose in the \\nfight on corruption because it helps ensure accountability.",
"In turn, \\naccountability ensures that donor resources are used effectively and \\nserves as an effective method to decrease the opportunities for \\ncorruption at the project and institutional level.\\n conclusion\\n There is no easy fix or answer to corruption, and it remains a very \\nserious impediment to growth, poverty reduction and improved living \\nstandards in the world's poorest countries. While we have made progress \\nin focusing the MDBs on the fight against corruption, we are still a \\nlong way from victory. As I testify before you today I find reason for \\noptimism in the recent steps taken by President Wolfowitz and other MDB \\nHeads to intensify their efforts to tackle the problem both \\nsystematically and systemically. We will continue our intense efforts \\nto push this agenda and look forward to our continuing cooperation and \\ndialogue with Congress on the best ways to achieve concrete results. I \\ncan assure you that we will continue to pursue this cause tirelessly. \\nThank you for your time, and I look forward to answering any questions \\nyou may have.\\n\\n\\n Chairman Lugar.",
"Thank you Secretary Lowery for your \\ntestimony. And I'd like to call now upon Ambassador Perry.\\n\\n STATEMENT OF HON. CYNTHIA SHEPARD PERRY, U.S. EXECUTIVE \\n DIRECTOR, THE AFRICAN DEVELOPMENT BANK, WASHINGTON, DC\\n\\n Ambassador Perry. Thank you Mr. Chairman, Senator Martinez. \\nDistinguished members of the Senate Foreign Relations \\nCommittee, thank you very much for your invitation to testify \\ntoday. This is my fourth time appearing before this committee \\nand I want first to thank you for the encouragement you have \\ngiven me to do some of the terribly hard jobs I've had to do. \\nThis is another one. This an issue of great importance, \\nfighting corruption on the multilateral development banks.",
"I \\nhave submitted for the record a written statement, but I take \\nthis opportunity to highlight a few key areas of importance.\\n The African Development Bank Group has made significant \\nstrides in the recent past against corruption, although much \\nmore remains to be done. We have a new President, Dr. Donald \\nKaberuka, who has made fighting corruption one of his top \\npriorities. And the U.S. Executive Director's office has been \\nworking closely with the Bank to ensure that proper safeguards \\nare implemented quickly and that those that already exist are \\nstrengthened.\\n Of course, the fight against corruption cannot be won if \\nthe right tools are not at the Bank's disposal. Within the \\nBank, there must exist the right mechanisms to prevent, detect, \\nand punish corruption.",
"In member states, the right leadership \\nmust exist to foster a culture of zero tolerance when it comes \\nto graft, and to strengthen national systems so that they can \\nwithstand the scourge of corruption. And, as a donor, we must \\ndo our part to sustain pressure and demand results.\\n Both management and staff of a financial institution must \\nbe able to rely on systems and processes, in addition to \\ncorporate ethos, to make the fight against corruption \\neffective. With our backing and our constant pushing, the Bank \\nestablished the anti-corruption and fraud investigation unit \\nand an oversight committee on fraud and corruption last year. \\nThe unit will undertake investigations in response to specific \\nallegations of corruption and fraud and the oversight committee \\nwill ensure that punishment is meeted out appropriately.",
"\\nGetting this unit fully functional, however has been delayed \\nsomewhat, but we've worked closely with management to ensure \\nthis important work proceeds at pace.\\n The Bank is also expected to bring to the board a \\nwhistleblower protection policy in the coming weeks which will \\ninclude the definitions adopted by the MDB taskforce. We need \\nto ensure that this policy is both comprehensive and \\nsuccessfully implemented.\\n To support these efforts, the Treasury Department's Office \\nof Technical Assistance agreed earlier this month to provide an \\nadvisor to this new anti-fraud unit to help develop capacity to \\ncarry out investigations and to detect fraud. I very much hope \\nthat this will strengthen African capacity to detect and punish \\ncorruption.\\n The Bank is also updating its guidelines for financial \\ngovernance and financial analysis of projects, which are used \\nby all Bank staff as they design and implement projects.",
"The \\ncompleted guidelines should substantially improve portfolio \\nquality and performance, and further mainstream the importance \\nof fighting corruption in all Bank activities by all Bank \\nstaff.\\n Diagnosis of opportunities for fraud and corruption is \\ncritical if the fight is to be won and the Bank uses the latest \\ndiagnostic tools. Country Financial Accountability Assessments, \\nCountry Procurement Assessment Reviews, and Country Governance \\nProfiles, are used to assess operational risks and recommend \\nways to help borrowers fight corruption, restore integrity, and \\npromote good governance. Nine Country Governance Profiles, and \\ntwo CFAA's will be done this year.\\n The Bank has joined with the OECD through the Partnership \\nAgainst Corruption in Africa, PACA, to help member countries \\nstrengthen ongoing anti-corruption efforts and to initiate new \\nones. Invitations to join have been extended to 14 countries \\nthat received debt relief in 2005 from the Bank.",
"In return for \\njoining PACA we'll offer them a menu of reform programs to curb \\nthe supply and demand of corruption, a platform for regional \\ndialogue and development of joint programs, and opportunities \\nfor the exchange of lessons learned.\\n The Bank is also an observer of the Financial Action Task \\nForce and regularly attends FATF meetings with other \\ninstitutions fighting corruption. This Bank is developing a \\nstrategy on money laundering and terrorist financing this year.\\n In late 2005, the Bank's new COSO internal framework--\\ncontrol framework was implemented to help ensure that internal \\nbank procedures are being followed and that risks are \\nappropriately mitigated.",
"In fact, the Bank now collects \\nfinancial disclosure forms for Executive Board members and \\ntheir staff, so that wrongdoing will be exposed before damage \\nis done to the institution.\\n And finally, the Bank's independent evaluation unit, OPEV, \\npinpoints weaknesses in governance in its member states through \\nits variety of evaluation and reports. For example, the Bank \\nrecently found that while it was doing relatively well in \\nGhana, more had to be done in Mali and Mauritania.\\n I must add one note of concern regarding OPEV, Mr. \\nChairman. While we have high regard for the quality and value \\nof its work, we have not been able to secure the kind of \\nindependence for OPEV from Management, and we would like this \\nunit to have a very strong--much stronger position. We have \\nasked President Kaberuka to revisit this issue.\\n The tools of the Bank, Mr. Chairman, when strengthened, \\nwill help the Bank take on and fight corruption internally and, \\nalso, in our member states. But the Bank's efforts, in order to \\nbe successful, have to rely on the second pillar of \\neffectiveness, and that is good country leadership.\\n Mr. Chairman, it's easy to dictate the importance of \\nfighting corruption from a distance. It is much more difficult \\nto put in place systems and attitudes that fight graft on the \\nground, on a day-to-day basis. A critical first step is having \\nthe right leadership.",
"Leadership that is committed to \\neradicating corruption and the decay it causes to institutions. \\nLeadership that is devoted to strengthening institutions and \\nthe rule of law so that judiciaries cannot be undermined and \\ntreasuries cannot be plundered. Leadership, Mr. Chairman, that \\ncreates a conducive environment to root out corruption and \\npunish the corrupt.\\n Through its work with member states, the Bank has helped \\nthose African governments with the right leadership to build \\nsafeguards and strengthen institutions. In places like Burkina \\nFaso, for example, the Bank is helping develop policies and \\nstrategies that will fight corruption. The Bank has taken the \\nlead in helping Benin and Mauritania build institutions to \\ndetect corruption and punish the corrupt.\\n In other countries, like Nigeria, the Bank has helped \\nstrengthen the leadership's determination to fight corruption. \\nIn the--Gambia, the Bank helped get the word out for the \\ngovernment's Operation No Compromise, a public awareness \\ncampaign against corruption.\\n However, more still must be done in a number of countries, \\nsuch as you have mentioned, Kenya, Chad, Republic of Congo, and \\nUganda. New allegations of corruption have recently surfaced.",
"\\nThe Bank is reviewing its engagements with those countries. \\nThus far, the Bank has found that none of its projects in Kenya \\nwere corrupted. We expect the Bank to design interventions in \\nthese and other countries. Thus far, the Bank has found that \\nnone of its projects in Kenya were corrupted. We expect the \\nBank to design interventions in these and other countries with \\na focus on anti-corruption and good governance. The Bank's \\ntechnical assistance and capacity building activities can help \\nthese countries strengthen their systems to ensure resources \\nare not being corrupted.\\n More broadly, Mr. Chairman, the Bank is now working to \\nbuild awareness in member states, among governments and the \\npeople, so that they are aware of the existence and negative \\nimpact of corruption.\\n At my urging, President Kaberuka is organizing a half-day \\nseminar on fighting corruption at the African Bank's upcoming \\nannual meetings in Burkina Faso in May. Ministers from the \\nBank's 77 member countries will be in attendance, as well as \\nother leading personalities from all over the world. I expect \\nPresident Kaberuka to emphasize that there is no place for \\ncorruption in development, and no place for corruption at the \\nAfrican Development Bank itself.",
"In such fora, where \\ndevelopment leaders join together to review and assess the \\nprogress they have made, it is more important than ever before \\nto make sure this message is heard loud and clear. By \\norganizing this event, the Bank is showing leadership on a \\ncritical issue facing Africa.\\n Finally Mr. Chairman, I would like to speak to the recent \\nlegislation concerning fighting corruption at the multilateral \\ndevelopment banks sponsored by you and approved by Congress, \\nand signed into law by the President. Several of the measures \\nyou introduced are already being implemented and many more are \\nbeing strengthened. For example, financial disclosures for \\nboard members are now required, and the Bank's whistleblower \\nprotection policy is in its final stages of preparation.",
"The \\nBank is also in discussion with other MDBs on implementing \\ncross debarment of corrupt firms that are dealing with the \\nMDBs.\\n On the audit side, I've already mentioned the role we \\nplayed in establishing the anti-corruption and fraud \\ninvestigation unit and our plans to help develop the unit's \\ninvestigative techniques. The new independent review mechanism \\nwill also build a more responsive and transparent culture \\nwithin the Bank, and in our member states. Given some delays in \\nrecruitment, however, we will need to continue to press \\nmanagement to be sure that these nascent units become \\noperational and effective without further delay.\\n One particular area, and I've spoken to this before, I will \\nfocus my near term efforts relates to the independence of \\nBank's evaluation unit.",
"As I mentioned earlier, we will need to \\nredouble our efforts with management and other board members to \\nbring the African Bank into alignment with other MDBs on this \\nimportant issue.\\n As a donor, we will continue to raise anti-corruption to \\nthe level of global importance that it deserves. For too long \\ndiscussion of corruption has been swept under the carpet by \\ndonors or watered down to nonexistence in order to satisfy \\nsupposed exigencies. But without openly discussing the problem, \\none cannot even hope to tackle the problem. Mr. Chairman, I \\nbelieve your leadership on this matter has given voice to \\nothers, encouraged them to lead, and given strength to all of \\nthose who stand against corruption.\\n Mr. Chairman, progress is being made at the African \\nDevelopment Bank, but it will require substantial, ongoing \\nefforts by all parties concerned.",
"We will work to strengthen \\nthe tools we already have, and, as necessary, develop new ones \\nto detect and prevent fraud. Working with like-minded leaders \\nwill help us deliver real development results to the neediest.\\n Mr. Chairman, I hope you will agree that while the road to \\nfighting corruption is a long one, we started off in good \\nstride. Much more must and will be done in our development \\ndollars are to make a dent against poverty. While there is no \\nroom for complacency, and we must remain intense and vigilant \\nin our efforts, I believe that the African Development Bank is \\non the move.",
"I thank you for your strong support.\\n\\n [The prepared statement of Ambassador Perry follows:]\\nPrepared Statement of Ambassador Cynthia Shepard Perry, U.S. Executive \\n Director, African Development Bank\\n Mr. Chairman, distinguished Members of the Senate Foreign Relations \\nCommittee, thank you for your invitation to testify today on an issue \\nof great importance, Fighting Corruption at the Multilateral \\nDevelopment Banks.\\n As former President of the World Bank Jim Wolfensohn noted more \\nthan a decade ago, ``corruption is a cancer . . .'' It is a cancer on \\nthe hope and dreams of people living in poverty across the globe, in \\nevery corner of the world. It is a cancer that eats away at the core of \\nwhat is good and selfless: the fight to eradicate poverty.",
"But \\ncorruption, as you have rightly pinpointed Mr. Chairman, doesn't start \\nor end at the national level. As major international scandals have \\nrecently proven, corruption is a transnational problem and, it is clear \\nthat corruption and fraud are commonplace in many international \\ninstitutions charged with fighting this cancer and making the world a \\nbetter place to live.\\n The African Development Bank Group has made significant strides in \\nthe recent past against corruption, although much more remains to be \\ndone. The new President of the Bank Group, Dr. Donald Kaberuka, has \\nmade fighting corruption one of his top priorities. Indeed, given his \\nexperience as finance minister of Rwanda, dealing with a post-conflict \\nand fragile country, the Bank's new president is well-placed to know \\njust how important institution-building can be. Upon taking office, \\nPresident Kaberuka set the right tone. In his welcome address to Bank \\nStaff, he told them that internal controls and the fight against waste \\nwere everyone's responsibility--not just Management's.",
"Everyone had a \\nstake in ensuring the Bank is clean and effective. The U.S. Executive \\nDirector's Office has been working closely with the Bank's senior \\nManagement to ensure that proper safeguards are implemented quickly and \\nthat those that already exist are strengthened.\\n Of course the fight against corruption cannot be won if the right \\ntools are not at the Bank's disposal. Within the Bank, there must exist \\nthe right mechanisms to prevent, detect, and punish corruption. In \\nmember states, the right leadership must exist to foster a culture of \\nzero tolerance when it comes to graft and take it upon itself to \\nstrengthen national systems so that they can withstand the scourge of \\ncorruption. And, as a donor, we must do our part to sustain pressure \\nand demand results.\\n Mr. Chairman, let me take each of these areas and detail for you \\nwhere I believe we are and where I believe we need to go from here.\\n strengthening the bank's tools for fighting corruption\\n Both Management and Staff of a financial institution must rely on \\nsystems and processes, in addition to corporate ethos, to make the \\nfight against corruption effective.\\n For the last several years, I have pushed the Bank to create a \\nstrong fraud and corruption investigation office. With our backing and \\nour constant pushing, the African Development Bank established the \\nAnti-Corruption and Fraud Investigation Unit in 2005.",
"The Bank's Board \\nalso approved establishing an oversight committee on fraud and \\ncorruption. Together, these two functions will comprise an entire \\ndivision of the Bank Group. Getting this unit fully functional, \\nhowever, has been delayed somewhat but we have worked closely with \\nmanagement to ensure this important work proceeds apace.\\n Once fully functional, this unit will undertake investigations in \\nresponse to specific allegations of corruption and fraud against \\nindividual staff members or third parties who engage in business with \\nthe Bank.",
"The Bank is currently developing a Whistleblower Protection \\nPolicy to bring to the Board in the next few weeks. This policy has \\ntaken longer than we expected to develop, but we understand that it may \\ninclude several other important provisions, such as voluntary \\ndisclosure.\\n Recently, the Treasury Department's Office of Technical Assistance \\nagreed to provide an advisor to the new investigative unit to help the \\nBank and its member countries develop its capacity to carry out \\ninvestigations and detect fraud. We expect this help to be mainstreamed \\nin the Bank's member states and to the Bank's lending activities across \\nAfrica. In this way, we hope to strengthen African capacity to detect \\nand punish corruption.\\n The African Bank is also updating its Guidelines for Financial \\nGovernance and Financial Analysis of Projects. These guidelines \\ndescribe and explain the Banks' policies, procedures and approaches to \\nthe financial governance, management and analysis of projects and \\nprograms that the Bank finances, and are used by all Bank staff as they \\ndesign and implement projects. Updating the guidelines involves \\nnumerous workshops with other MDBs and stakeholders, as well as good \\ngovernance experts to exchange state-of-the-art lessons learned and \\nbest practices.",
"Once completed, the guidelines should substantially \\nimprove portfolio quality and performance and further mainstream the \\nimportance of fighting corruption in all Bank activities.\\n Diagnosis of opportunities for fraud and corruption is critical if \\nthe fight is to be won. The Bank continues to use the latest diagnostic \\ntools, such as the Country Financial Accountability Assessments (CFAA), \\nCountry Procurement Assessment Reviews (CPAR), and Country Governance \\nProfiles (CGPs), to assess operational risks and recommend ways to \\nassist borrowers to fight corruption, restore integrity, and promote \\ngood governance. CGP diagnostics are now incorporated into all Bank \\ngovernance projects, and are used as a tool in Bank policy dialogues \\nwith borrowers, particularly in the design of policy-based loans. Last \\nyear, five Country Governance Profiles, for Madagascar, Djibouti, \\nEthiopia, Namibia and Mozambique, were completed, and an additional \\nnine are scheduled for 2006. In addition, the Bank collaborated with \\nthe World Bank to carryout two CFAAs, in Togo and Uganda, last year, \\nand six more are planned for 2006.\\n In response to the accord between African leaders and the G8 at the \\nGleneagles Summit in 2005, the AfDB and OECD joined forces through the \\nPartnership Against Corruption in Africa (PACA) to support member \\ncountries in strengthening ongoing anti-corruption efforts and to \\ninitiate new ones. Through the PACA framework, the two institutions \\nmerge their experience--both in Africa and internationally--in the \\nfight against corruption, money laundering and related activities. \\nWorking with the OECD, the Bank plans to engage local and international \\npartners, including the private sector, so that it can help African \\ncountries design, implement, and monitor the fight against corruption.",
"\\nInvitations to join have been extended to fourteen countries that were \\nprovided debt relief in 2005. In return for joining the partnership, \\nPACA will offer countries a menu of reform programs to curb the supply \\nand demand of corruption, a platform for regional dialogue and \\ndevelopment of joint programs, and opportunities for the exchange of \\nlessons learned. The Partnership could be an important tool for the \\nBank as it takes a lead role in raising awareness throughout Africa and \\nthe world on the costs of corruption.\\n The Bank has also assumed its Observer role with the Financial \\nAction Task Force (FATF) and regularly attends FATF meetings for \\ninformation gathering and exchange of views with other institutions \\nfighting corruption. These include African agencies engaged in the \\nfight against money laundering and terrorist financing. In 2005, the \\nBank launched a process of preparing a strategy on money laundering and \\nterrorist financing, which is expected to be finalized in early 2006.",
"\\nThe United States has been pushing for the strategy for several years \\nand we hope--once the Board approves the Bank's strategy for the Bank \\nto mainstream it into member states' efforts. Working relations have \\nalso been established with African FATF-Style Regional Bodies (FSRBs) \\nfor the development of a common approach to tackling money laundering \\nand terrorist financing.\\n In late 2005, the Bank implemented a new COSO (named for the \\nCommittee of Sponsoring Organizations of the Treadway Commission) \\ninternal control framework. The framework is an important tool to check \\nthat internal Bank procedures are being followed and that risks are \\nappropriately mitigated. The COSO framework tests Management policies \\nand practices that could lead to fraud, waste, and corruption.",
"The \\nsystem, currently in use in most of the Fortune 500, should strengthen \\nManagement's ability to detect and stop corruption.\\n In addition, the Bank recently instituted a means to ensure that \\ncorruption and conflicts of interest do not exist among members of the \\nBank's Board. Through a series of financial disclosure forms, we hope \\nsuch conflicts and wrongdoing will be exposed before damage is done to \\nthe institution's integrity.\\n Finally, the AfDB's independent evaluation department, the \\nOperations Evaluation Unit (OPEV) continues to support the Bank's \\ngovernance and anti-corruption work. In 2005, it issued 168 evaluation \\nreports of Bank projects and activities covering the entire range of \\nsectors and countries in which the Bank Group is active. These \\nevaluations have helped to pinpoint weaknesses in governance in member \\nstates. OPEV has also completed a thorough review of the Bank's Country \\nStrategy Papers (CSPs), which provide a framework for dialogue with \\nborrowing countries on governance and corruption issues.",
"The review \\nconcluded that the Bank's CSPs have covered governance issues \\nadequately for about 84 percent of the cases reviewed.\\n Also in 2005, OPEV undertook four Country Assistance Evaluations. \\nThe CAEs for Ghana, for example, found that the Bank's institutional \\nsupport project, which included a component on governance, had a \\nsubstantial positive impact on the country's institutional development. \\nThis is particularly helpful in Ghana because it is a HIPC country in \\nthe process of strengthening its institutions.",
"In the other three CAEs, \\nBank institutional support was rated as modest but with substantial \\nroom for improvement. Some of the recommendations from the reviews have \\nfocused on paying even greater attention to governance in future CSPs \\nfor Mali and Mauritania.\\n I should note, Mr. Chairman, one issue of concern regarding OPEV. \\nWhile we have high regard for the quality and value of OPEV's work, we \\nhave not been able to secure the kind of independence from Management \\nwe would like this unit. A recent Board resolution--which we opposed--\\ncalls for the head of OPEV to be hired and fired by the Bank's \\nPresident, with only consultation of the Board, not its concurrence. We \\nhave asked President Kaberuka to revisit this issue.\\n Mr. Chairman, the above elements help form a set of tools that, \\nwhen fully implemented and strengthened, can help the Bank take on and \\nfight corruption.",
"But the effort--in order to be successful--has to \\nrely on the second pillar of effectiveness: good country leadership.\\n creating a conducive environment\\n It is easy to dictate the importance of fighting corruption from a \\ndistance, Mr. Chairman. It is much more difficult to put in place \\nsystems and attitudes that fight graft on the ground, on a day-to-day \\nbasis. A critical first step is having the right leadership. Leadership \\nthat is committed to eradicating corruption and the decay it causes to \\ninstitutions. Leadership that is devoted to strengthening institutions \\nand the rule of law so that judiciaries can not be undermined and \\ntreasuries can not be plundered. Leadership, Mr. Chairman, that creates \\na conducive environment to root out corruption and punish the corrupt.\\n Through its work with member states, the African Development Bank \\nhas helped those member states with the right leadership to build \\nsafeguards and strengthen institutions. I would like to share a few \\nexamples with you of this important work and, most importantly, of the \\nresults the Bank has been able to achieve thus far:\\n\\n\\n <bullet> After developing an anti-corruption program with the help of \\n the Bank in 2003 and 2004, Benin started implementing anti-\\n corruption efforts last year, including acceleration of \\n institutional reforms, revamping and strengthening government \\n policies, and consolidation of public finances. With the Bank's \\n help, Benin also established an office to monitor anti-\\n corruption efforts.\\n\\n <bullet> Nigeria's anti-corruption campaign is also supported by the \\n Bank, which provides technical assistance and capacity \\n building.",
"Nigeria's National Empowerment and Development \\n Strategy (NEEDS), developed with the Bank's help, aims to \\n enhance public sector capacity for good governance and \\n responsible economic management, including fiscal planning. \\n Nigeria has also established the Economic and Financial Crimes \\n Commission (EFCC) and the Independent Corrupt Practices \\n Commission (ICPC), and the government has acted to remove high \\n ranking civil servants from office on grounds of corruption. \\n The Anti-Money Laundering Act was also reviewed last year, and \\n a revised version is currently with the National Assembly for \\n approval.\\n\\n <bullet> After going off-track from its IMF program in 2003, Gambia \\n engaged the Bank and other international donors on a wide-\\n reaching anti-corruption campaign. In late 2003, the Gambian \\n government passed the Financial Institutions, Insurance and \\n Money Laundering Act. The government also launched ``Operation \\n No Compromise,'' a campaign aimed at raising public awareness \\n of corruption and governance issues.\\n\\n <bullet> The government of Burkina Faso has adopted the National \\n Policy to Combat Corruption, and is in the process of \\n establishing a national anti-financial crimes office.",
"In 2005, \\n the government passed the National Policy on Good Governance \\n and both the Bank's Results-Based Country Strategy Paper and \\n two lending programs are designed to better identify and combat \\n corruption.\\n\\n <bullet> In 2005, a new State Inspector General was appointed to help \\n investigate corruption charges in the government of Mauritania. \\n At the same time, the government has moved forward to improve \\n governance and the quality of services it provides to its \\n citizens. Over the course of 2005, the amount of time it took \\n to process a government complaint form has decreased from 1 day \\n to 45 minutes. The government is also working with the AfDB, \\n the World Bank and other donors to strengthen the National Good \\n Governance Program.\\n\\n <bullet> The Ghana Anti-Corruption Coalition (GACC), made up of the \\n government and its partners (including the AfDB), has organized \\n workshops and agreed on an action plan to combat corruption. \\n The Serious Fraud Office (SFO) investigates corruption and the \\n Police Special Investigation Unit, which acts as a financial \\n intelligence unit.\\n\\n\\n Of course much more must be done in the Bank's operations to fight \\ncorruption, both in countries and in Bank-funded projects. In a number \\nof countries, such as Kenya, Chad, Republic of Congo, and Uganda, new \\nallegations of corruption have surfaced recently.",
"The Bank is reviewing \\nits engagements with these countries. Thus far, the Bank has found that \\nnone of its projects in Kenya were corrupted. We expect the Bank to \\ndesign interventions in these and other countries with a focus on anti-\\ncorruption and good governance. The Bank's technical assistance and \\ncapacity building activities can help these countries strengthen their \\nsystems detect and prevent corruption.\\n More broadly, Mr. Chairman, the Bank is working to build awareness \\nin member states, among governments and the people, so that they are \\naware of the existence and negative impact of corruption. In July 2005, \\nthe Bank collaborated with other donors to host a regional workshop on \\nPro-poor Local Governance, and preparations are underway in the Bank to \\ndevelop a strategy paper on rebuilding state capacity for better \\ngovernance and development effectiveness.",
"Printed information and \\npublic workshops are offered to sensitize local populations to the \\nproblem of corruption. Bank representatives form an integral component \\nof this dialogue, so that corruption is fought at every step of Bank \\nGroup engagement.\\n The Bank's role in building conducive and supportive environments \\nis potentially very large. And the Bank should use its convening powers \\nto raise awareness among member states. At my urging, President \\nKaberuka is organizing a half-day seminar on fighting corruption at the \\nAfrican Bank's upcoming Annual Meetings in Burkina Faso in May. \\nMinisters from the Bank's seventy-seven member countries will be in \\nattendance, as well as other leading personalities, from all over the \\nworld.",
"I expect President Kaberuka to emphasize that there is no place \\nfor corruption in development, and no place for corruption at the \\nAfrican Development Bank itself. In such fora, where development \\nleaders join together to review and assess the progress they have made, \\nit is more important than ever before to make sure this message is \\nheard. By organizing this event, the Bank is taking an important \\nleadership role on the African continent.\\n sustaining pressure\\n Finally Mr. Chairman, I would like to speak to the recent \\nlegislation concerning fighting corruption at the Multilateral \\nDevelopment Banks sponsored by you and approved by Congress, and signed \\ninto law by the President.\\n Several of the measures you specifically introduced are already \\nbeing implemented.",
"And many more are being strengthened. For example, \\nthe African Bank is in the process of presenting a Whistleblower \\nProtection Policy, which we hope to have up and running very soon. \\nFinancial disclosures for Board members are now required. The Bank is \\nalso in the process of discussing ways to implement ``cross debarment'' \\nacross the MDBs of corrupt firms found to be doing business with other \\nMDBs. This was the topic of a high-level discussion between the Heads \\nof the MDBs in Washington in February.\\n On the audit side of Bank operations, we have successfully pushed \\nfor the establishment of an Anti-Corruption and Fraud Investigation \\nUnit and I am proud to say that the United States is playing an active \\nrole to help the Unit develop investigative techniques and mainstream \\nthem to member states. As I noted earlier, getting this unit \\noperational is the key next step, and we will continue to press \\nManagement on this score.\\n The Bank has also established an Independent Review Mechanism which \\nconsists of a Compliance Review and Mediation Unit and a Roster of \\nExperts to help advise the Board, if necessary, on projects that \\nadversely affect people. Like the Anti-Fraud and Corruption Unit, \\nhowever, staffing the unit has slowed its full effectiveness. We will \\ncontinue to work to ensure that this becomes an effective mechanism \\nthat builds a more responsive and transparent culture in the Bank and \\nmember states.\\n One particular area where I will focus my near term efforts is on \\nthe area of the independence of OPEV.",
"As I mentioned earlier, we will \\nneed to redouble our efforts with Management and other Board members to \\nbring the African Bank into alignment with the other MDBs on this \\nimportant issue.\\n As a donor, we have to raise anti-corruption to the level of global \\nimportance that it deserves. For too long, discussion of corruption has \\nbeen swept under the carpet by donors or watered down to nonexistence \\nin order to satisfy supposed exigencies. But without openly discussing \\nthe problem, one can not even hope to tackle the problem. Mr. Chairman, \\nyour leadership on this matter has given voice to others, encourages \\nthem to lead, and gives strength to anyone who stands against \\ncorruption.\\n conclusion\\n Mr. Chairman, progress is being made, but it will require \\nsubstantial, ongoing efforts by all parties concerned. We must \\nstrengthen the tools we already have to prevent and detect corruption, \\nand, when necessary, develop new ones.",
"We must work with like-minded \\nleaders to raise awareness and strengthen institutions in the African \\ncountries. We must demonstrate our strong international leadership that \\nhelps keep the spotlight shining on fighting corruption. These efforts \\nwill help the Bank deliver real results to the neediest.\\n Mr. Chairman, I hope you will agree that while the road to fighting \\ncorruption is a long one, we have started off in good stride. While \\nthere is no room for complacency and we must remain intense and \\nvigilant in our efforts, I believe that the African Development Bank is \\non the move.",
"I thank you for your strong support.\\n\\n\\n Chairman Lugar. Thank you for that good news. We appreciate \\nyour testimony. Let me raise some questions. We'll have a 10-\\nminute question period. I'll ask some questions and then I'll \\nyield to my dear colleague, Senator Martinez.\\n First of all, Mr. Lowery, there is a U.S. News and World \\nReport issue that has just come out focusing on internal \\nproblems at the World Bank, including that they are alleged to \\nbe ``kickbacks, payoffs, bribery, embezzlement, collusive \\nbidding, plague bank funded projects around the world.'' The \\narticle states that, ``knowledgeable analysts believe corrupt \\npractices may be associated with more than 20 percent of the \\nfunds disbursed by the World Bank each year. ''\\n Does Treasury agree with this figure, and, if not, what is \\nyour assessment?",
"That article focuses American attention and \\nprobably a wider worldwide audience than our committee has on \\nthis particular issue.\\n Mr. Lowery. Thank you very much. I also read this article. \\nThe estimates on how much money is lost on the MDBs on \\ncorruption are, frankly, all over the map. I've actually--I \\nwent back and looked through the different testimonies that \\nI've seen in this committee for the last couple of years, and I \\nsaw that there have been different figures thrown out by \\ndifferent experts and some of it has been refuted by other \\nexperts.\\n We do not have a great figure. Let me just say that my view \\nis this--is that, I think Treasury Department's view is not one \\ndollar--not 1 dollar should be lost. So how do we do that? We \\nneed to set up the right types of transparency mechanisms, the \\nright types of internal controls, and the right types of \\npunishment regimes in order to basically try to root that out.",
"\\nSo while we don't have a figure, I actually want to, instead, \\nfocus on how to get rid of any figure.\\n Chairman Lugar. Let me just ask about a specific area in \\nwhich the Department of the Treasury is involved. You've been \\nsupporting the Extractive Industry Transparency Initiative and \\npromoting its adoption resource developing countries. What \\nsteps has the Department of the Treasury taken to press the \\nMDBs to require natural resource revenue and contract \\ntransparency for all projects and lending in the extractive \\nindustry sector?\\n Mr. Lowery. Sir we--obviously--the State Department has the \\nlead on the EITI initiative. We work very closely with the \\nUnited Kingdom, which has been one of its biggest proponents. \\nAt the multilateral development banks, we are--we do a few \\nthings. First of all, we try to promote very much the idea of \\ntransparency in budgets. It is a crime that the countries of \\nthe world that have found oil have not been able to use this \\noil to help their--the betterment of their people.\\n Let me just take a recent example. You mentioned in your \\nstatement earlier the Congo-Brazzaville just received debt \\nreduction.",
"The Congo-Brazzaville is a very, very poor country. \\nThe average person there lives on basically 2 dollars a day. \\nAnd they are quite indebted. So there's an understanding as why \\nthey should get some debt relief. But, at the same time, there \\nhas been allegations of corruption in the government, some of \\nthem are very related to the oil sector and the National Oil \\nCompany. And what we supported and actually pushed very hard \\non, and President Wolfowitz supported, was basically, we \\nprovide the debt relief but we do it under a few different \\nthings. First is we would get annual certified audits of the \\nNational Oil Company during the time that it was getting debt \\nrelief, that's something that has not been happening in the \\npast.",
"Second, we basically said that we would put into escrow \\nfunds from the interim debt relief that could be monitored and \\noverseen by Congolese civil society and by external experts. \\nAnd third, we required that government officials disclose their \\nassets and divest any financial holdings that they might have \\nin the oil company.\\n So we are very concerned about this problem. We agree with \\nyou and we're trying to push this both at the more systematic \\nlevel, which is EITI, but also at the country level.\\n Chairman Lugar. All right. I appreciate that emphasis. \\nAnecdotally, let me mention that Senator Barack Obama of this \\ncommittee and I had the privilege of visiting Azerbaijan in \\nearly September of last year. They are not into the banks for \\nloans presently, in large part because they have become \\nsuddenly wealthy.",
"But the British petroleum platforms out in \\nthe Baku Harbor and the Baku-Ceyhan pipeline have brought \\nextraordinary revenues. I raised this question with the \\nPresident of Azerbaijan and his answer was encouraging, that \\nthey're going to adopt what he called the Norway Plan. The \\nNorway Plan roughly is to set up these extractive incomes from \\noil, or natural gas that will be coming in two years along the \\nsame pipeline, into sort of an endowment for the country. They \\nplan to extract the income as it proceeds. If that's the case, \\nit will be a wonderful course of action. It will be fairly \\nunique in the area.\\n Perhaps Treasury might have opportunities in its own \\ninternational diplomacy, at conferences or what have you.",
"\\nWithout calling it the Norway Play or the Azeris plan or what \\nhave you, the general idea of this is tremendously important. \\nBecause these resources finally run out and if, furthermore, \\nthey've been stolen and squandered in the process, they're in \\ndouble or triple jeopardy. This is essentially what we're \\ntalking about with these loans and these opportunities for \\npeople.\\n You've touched upon the Congo situation. What is our \\ngeneral call on that? I, in my opening statement, brought up \\nsome distressing circumstances and you've reiterated that in a \\nway, but are we satisfied sufficiently in the Congo that those \\nloans should proceed? And, if not, what sort of stipulations do \\nwe have for the future?\\n Mr. Lowery. Actually, the two points you made are very \\nrelated in terms of the Norway Plan and Congo. The--or the \\nAzerbaijan Plan.",
"It's basically--that's actually what we've \\nbeen trying to do in Congo with this debt relief, is work--our \\nExecutive Director at the World Bank, Bob Holland, worked very \\ndiligently with the World Bank management who, I think, \\nbelieved the exact same thing we did. The debt relief was kind \\nof on its way forward and basically the United States raised \\nconcerns that we don't know exactly what's happening with the \\nmoney. We're worried about some corruption issues in this \\ncountry. So they established, basically, some of the things I \\njust mentioned, including areas of how to kind of take the \\nmoney that's being raised through debt relief, which is \\nslightly different than oil revenues, obviously, and put it \\ninto accounts to use for people for health care programs, \\neducation, that type of thing. So that's what we were trying to \\ndo in Congo.\\n In Chad, you mentioned this also in your opening statement, \\nthe--when the World Bank helped fund the pipeline in Chad they \\nbasically tried to establish something like this Norway fund, \\nwhich is, let's create a rainy day fund.",
"And, because this will \\ngo away at some point. Obviously that's run into a problem over \\nthe last few months because the Chadian government passed a--\\nthere was a legislation that passed, I don't think it was \\nenacted, but it was passed to basically--we need to take this \\nmoney down because we need to spend resources right now.\\n We were very supportive of President Wolfowitz basically \\nsuspending loans to Chad and going back into negotiation with \\nthem on this issue because, I mean, quite frankly the World \\nBank was being held at gunpoint. And it was--that was \\nunacceptable. And so I think the President realized this is not \\na way to negotiate, we need to have a--and so I think that \\nhopefully we can see a way forward for Chad, but it is \\ndefinitely a problem. I mean I think we're pretty supportive of \\nthings like the Norway Plan, Azerbaijan Plan, I don't know \\nAzerbaijan as well, but the Norway Plan.\\n Chairman Lugar. I appreciate that point, as well as the \\nwhole issue of transparency that both of you have mentioned, \\nthat I mentioned to begin with. I hark back to the Azeris and \\nBritish Petroleum.",
"One of the important things about that was \\nthe transparency by British Petroleum of how much oil is \\nactually going through the pipeline and how much they're \\ngetting for it, and who is getting the money. Those facts, \\nlikewise, outside the realm of governments, with private \\nbusinesses are tremendously important in these issues. And I \\nhave commended the cooperation of the oil companies that are \\ninvolved, that will play a very large role in transparency and \\nresponsibility by that government.\\n Finally, is the administration requesting sufficient funds \\nto pay our pledges to the MDBs, including arrearages? What is \\nyour take on where we stand on that respect? Is the President's \\nbudget adequate to bring us up to date?\\n Mr. Lowery.",
"The President's budget basically reflects a bit \\nof a reality, which is that we go into these negotiations for \\nreplenishment agreements and we try to figure out what is--what \\nwe want to see in a number in terms of the reforms we want in \\nthese institutions and how do we take it forward over the next \\nfew years and then we put a pledge down. And the problem we've \\nhad is that our pledges, frankly, aren't being met and it's \\nlosing--we're losing credibility because of it.\\n We have an arrears problem that has been growing over the \\nlast 5 years. In the past, in this administration, we've asked \\nfor arrears clearances and we haven't gotten them. So I think \\nwhat you're seeing a reflection in the President's budget is \\nthat we're asking now, let's at least get what we're asking \\nfor, what we're pledging, what we're putting the name of the \\ncountry on. And then we'll start trying to--if we can get that, \\nthen we can start making a dent again in our arrears problem.\\n So our request is sufficient and the President's budget is, \\nobviously I support, and that's because right now we figure \\nwe--we were listening to Congress, we're trying to do the best \\nwe can, but frankly at some point we need to actually get what \\nwe actually ask for.\\n Chairman Lugar.",
"That's a very good point and that's the \\nreason I asked the question, to elicit your response. In the \\npast the Congress may not have paid that much attention to the \\nquestion. So as we begin to have a better dialogue and we make \\nprogress together, there probably, I'm hopeful, will be more \\nenthusiasm by members of this committee and members of this \\nbody in tackling this, in supporting this. But at the same \\ntime, we need to have clearer figures from you on what the dues \\nare and what the arrearages are so that, at least in the backs \\nof our minds if not more forward, we have some idea of where we \\nstand.\\n If you can furnish, just for the record of this hearing, \\nwhere all of that stands, that would be very helpful to us.\\n Mr. Lowery. Absolutely. Our arrears are $738 million.",
"But \\nwhat we'll do is, we just actually put out our justification \\ndocument for the budget over the last week, and we'll make sure \\nthat this committee gets a full accounting of it.\\n Chairman Lugar. Excellent. Very timely.\\n Senator Martinez?\\n Senator Martinez. Mr. Chairman thank you very much and \\nthank you for calling this important hearing on the issue that \\nI think is so important to the developing world. I'm delighted \\nto hear from the panel this morning. I'm very encouraged, \\nAmbassador Perry, by the information you give us on the \\nprogress being made in the African Development Bank. I would \\njust comment that over the years, I think corruption has always \\nbeen a concern in all relationships of these multinational \\nbanks. But just as much that as I have watched over the years, \\nthere's also been the misuse or the poor use of funds and the \\nlack of measurable results on accountability.\\n One of the things that I've also observed is the \\nconcentration of very grandiose and large projects sometimes \\nwith, frankly, questionable results. And I wonder, is there any \\nmove or any direction, Mr. Lowery or Ambassador Perry, as to \\nwhether or not we should be looking or moving in a direction of \\nmore people lending, bringing it down to a level of assisting \\nfamilies, assisting small enterprises, micro-lending, things of \\nthis nature that might put money more directly in the hands of \\npeople.",
"I'm not sure how you get from A to B and to C, but I \\njust wondered if there's anything you can comment to me on \\nthat?\\n Mr. Lowery. Thank you very much. This is a terrific \\nquestion because it plays into exactly, I think, the way we \\nlike to think of these institutions.\\n One of the--our biggest priority right now probably, at the \\nInter-American Development Bank, is to promote small and medium \\nenterprise assistance. The reason is that the--Latin American \\nis going through a lot of changes but we are listening very \\ncarefully, very carefully to what Latin America is saying to \\nus. And I think what we are hearing, and hopefully we're \\nhearing it correctly, is the poor people of Latin America don't \\nhave the opportunities. They don't have the opportunities to \\ngrow a business, to make a living, to create jobs. And we think \\nthe Inter-American Development Bank can do a much better job on \\nthis area. And I was--again, I was just talking to the \\nPresident of the IDB this morning about that very subject and \\nwe're going to be proposing a resolution, hopefully, at the \\nannual meetings next week to basically engage all the Governors \\nin a more effective manner on this front.\\n In terms of big infrastructure programs, infrastructure is \\nimportant for development.",
"We have to--development has got lots \\nof factors to it. We have to worry about social sectors like \\neducation and health care, and providing clean water. But we \\nalso have to worry about infrastructure. We need to basically \\nmake sure that--most poor countries are reliant on agriculture \\nand so the poor farmers need to be able to get their products \\nto markets, which means building small roads, building ports. \\nPorts are tough to build, and there's a lot of corruption, \\nunfortunately, associated with ports, so you have be very \\ncareful about how it's done. The MDBs can play a vital role in \\nthat, but it has to be a very careful role.\\n Ambassador Perry. I'm going to say, first of all, that that \\nis not the same problem we have at the Bank.",
"We're not making \\ntoo large loans. We're making too many small loans. And what \\nwe're trying now to do is to think of ways to increase the size \\nof those loans because it takes a lot of our energy and \\nmanagement time to process and to evaluate and to watch over. \\nSo we're trying to get into that mode.\\n But we do share the same concern you have, is that the \\nmoney should be going to families, building families, and so, \\ntherefore, we have an emphasis on lending more to women who \\nwill take care of that particular interest, and putting more \\nmoney into infrastructural development which, in itself, leads \\nto more involvement of women and families in the whole aspect \\nof development.\\n The President has just appointed two women vice presidents \\nwho also have that interest of bringing family--the plights of \\nfamilies and the whole incidence of illnesses and especially in \\nAfrica, you know, the HIV/AIDS, but all the attending diseases \\nthat need to be treated.",
"So we are looking at the plight of the \\npoor people.\\n We now, as you may now, have our first American vice \\npresident, who has top executive powers. And we hope that this \\nwill also help the Bank to move further into delivering to \\nfamilies. But I do thank you for your concern about it.\\n Senator Martinez. Thank you. I would just ask one other \\nquestion as it relates to the African Bank. I know that, as \\nexpressed by the Chairman and the acts of this Congress and--\\nthe United States has a strong commitment in this area of \\ncorruption and fighting corruption, and I wonder if the other \\ninvestors of the Bank, the African Development Bank, share in \\nour concern, are equally committed to that effort.\\n Ambassador Perry. I would think that the non-African \\nmembers are as concerned as we are about corruption. There are \\nonly six, let's say EDs who service that area of the non-\\nAfrican countries.\\n I would say there's less concern about corruption among our \\nAfrican EDs and therefore, we're spending a lot of time \\neducating them to this question of corruption and how it's \\ngoing to hurt their delivery to their constituent countries.",
"So \\nthey support our efforts in this view, even though it might \\nhurt some of their own countries as it goes through, at first. \\nThey are committed to supporting it.\\n Senator Martinez. Thank you, Mr. Chairman.\\n Chairman Lugar. Thank you very much, Senator Martinez. I \\nhave some additional questions for you, Director Perry. I have \\nnoted and many have stated that the African Development Bank is \\ndifficult to monitor because its project program and policy \\ndocuments are not widely available.",
"Should the African \\nDevelopment Bank more actively disseminate this information to \\ncivil society? And when should we expect the information about \\neach African Development Bank project to be made available on \\nthe Web site of the Bank?\\n Ambassador Perry. Many of the projects are already being \\nput on the Web site. And our independent evaluation department, \\nthe OPEV, is helping us to do this. Our CSPs, for example, \\nespecially the draft CSPs, are being placed so that people can \\nread them. All of our efforts toward anti-corruption are also \\non.",
"The minutes of our board meetings are not on, but we've \\nagreed to highlight--put the highlights of our actions on the \\nWeb. There's a lot of information that is on and is being \\nprepared to go on. We're not where we'd like to be, but it is \\nmoving in that direction.\\n Chairman Lugar. President Kaberuka has underscored the \\nimportance of measuring the development effectiveness of the \\nBank's operation.\\n Ambassador Perry. Yes.\\n Chairman Lugar. What can be done to promote these \\nevaluations of the African Development Bank? Or what kind of \\nevaluations has the President promoted at this point?\\n Ambassador Perry. He's looking primarily at evaluations of \\nour projects in the field, whether or not they are being \\ncompleted the way that they say they are, to speed up \\ndisbursements, for example, which have traditionally been very \\nslow at the Bank. We are concerned about corruption in some of \\nthe projects, to try to make sure it does not exist. This new \\nsupport that we're getting from the Office of Technical \\nAssistance is very important to our ability to do that, and the \\nPresident has really pushed very hard for us to get this \\nassistance, and we are grateful for that. That goes to our \\nauditing efforts, goes to our whistleblowing efforts, to our \\nfollow up effectiveness evaluations.\\n We really appreciate this kind of support that is coming \\nfrom the Treasury Department to us to help Mr. Kaberuka.",
"But \\nhe's sort of made a mark in the sand, you know, that corruption \\nis the biggest problem we have and that corruption is a bigger \\nproblem than disease and wars and all the things that we're \\nplagued with, and has given it his full attention. I suppose \\nthat would be his mark in history, that he's been able to \\nreduce--can anybody say that they will get rid of it? \\nEspecially in a tradition where corruption has always existed, \\nto remove that from our country-states. It does not have to go \\non within the Bank.",
"And that's what he's after, clean up the \\nBank first, and then let's use this kind of assistance we're \\ngetting from Treasury to advise our member-states in this whole \\narea. He's working very hard at it, he has my faith that he's \\ngoing to succeed.\\n Chairman Lugar. You're modest in underscoring your role. \\nIt's important as the American Director of that Bank, in \\nsupport of the President, that you have knowledge of his \\nactivities. Likewise as you've cited, this direct aid by the \\nTreasury specifically to bring about changes in any corruption \\nculture that may be there is important.\\n I'm just curious, is there any independent audit of what's \\nhappening? In other words, when you try to evaluate, either the \\nPresident of the Bank or yourself, you call in technical \\npersonnel that you have in your employ, but do you bring in \\nanybody else to look at this situation?\\n Ambassador Perry. Yes, absolutely. We do have independent \\nauditors who continually watch over what we're doing and the \\nBank and bring to our attention things that need to be worked \\non. It is a constant kind of watchfulness I think, that did not \\nexist in the last regime that has taken place.",
"Now you \\nunderstand that this President has only been there since \\nSeptember.\\n Chairman Lugar. Yes.\\n Ambassador Perry. His first job is to try to get everybody \\nto understand where he's going and to get their complicity and \\ntheir strength and energies to make it happen, even though it \\nmight change some of their lives as well. But we do have the \\ninternal and the external auditing function to make sure that \\nwe keep it clear. We haven't reached the success we want, but \\nwe're working at it. Thank you.\\n Chairman Lugar. Let me ask a question which is a \\ncorrelation of one I asked Secretary Lowery. Has the United \\nStates lost voting shares at the African Development Bank \\nbecause of our failure to fully fund our pledges to the Bank?\\n Ambassador Perry.",
"I've got to look through my notes on that \\nso I don't say the wrong thing.\\n Mr. Lowery. I believe the answer is----\\n Ambassador Perry. No, can I please answer it, though? Yes, \\nI want to answer it myself.\\n I want to answer this because it's very important to me. \\nIt's of great concern to me. The U.S. has been consistently \\nclear to both AFD management and other donors that we fully \\nintended to purchase all of our allocated shares, which we lost \\nduring the last replenishment.\\n In addition to the innumerable hours which my staff and I \\nin my office have spent over this issue over the last 12 \\nmonths, and senior Treasury officials also engaged and wrote \\nseveral letters to convey our interest and concern. And we \\nraised it orally with the former and current Presidents, both \\nhere in Washington and in Tunis. Nonetheless, the Bank strictly \\nfollowed its very tight share transfer reviews and, because we \\nwere unable to purchase our allocated shares by the deadline, \\nanother donor stepped forward to do so.",
"So we lost \\napproximately .2 percent of our voting shares.\\n Because of funding shortfalls now on the fiscal year 2006 \\nrequest, we will also be short $1.4 million on April 4, when \\nour next payment falls due, and our inability to purchase those \\nshares will result in a further reduction of voting share by \\napproximately .5 percent. We can use our influence to get the \\nmanagement and to ring fence our shares and to hold them until \\nwe are able to pick them again on subsequent allocations.\\n But as it is right now, the rules read that if we forfeit \\nit, then another country can move in and pick them up. This \\nuncertain situation makes it much more difficult for us to \\nsecure the changes that we seek, and that you seek. It's \\nimportant to fully fund our fiscal year 2000 request of $5.02 \\nmillion.",
"But I must say, I wish it would come before fiscal \\nyear 2007 because a loss of these shares minimizes our \\ninfluence in changing attitudes not only of our G-7 colleagues, \\nbut our African colleagues and making things happen at the \\nBank.\\n It's more than just really a question of losing voting \\npower, but losing influence is most important. And I, you know, \\nI hate to see it happen on my watch. So anything that could be \\ndone to pick up our arrearages would be great as of the 2006 \\ncut. I think we're at $2 million now in arrears. That amounts \\nto something like 189 shares. And these--if our shares are put \\ninto the general pool, then our G-7 colleagues have already \\nsaid they'll pick up quickly unless their ring fenced so that \\nthey cannot be touched. So I will be working with our President \\non that. I think I have his confidence.",
"It's a matter of \\nkeeping up his resolve and making some very difficult \\nsituations. This is the way I see my role, Mr. Chairman. Thank \\nyou very much for asking the question because it's very dear to \\nmy heart.\\n Chairman Lugar. It's very important to us, too. As a \\ncommittee, we've taken this project seriously. So have you. But \\nour ability to work with others in other nations, our \\ncredibility for reform, is based upon at least some of the \\nthrust of our enthusiasm to pick up the tab for our part of it, \\nas we require them to do their share.",
"So we will attempt to \\nwork together in this situation.\\n I would just say to both of you, I am encouraged by what is \\noccurring. I would say modestly that our hearings have not been \\nparticularly very well covered in the United States. The people \\nsimply lose track of all these banks and what in the world we \\nare doing.\\n But when we get into specifics of other countries, I can \\nassure you that our press secretaries pick up many articles and \\neditorials and for many countries it's a revelation of what has \\nbeen occurring. The transparency happens really, because of \\nyour testimony or our questions or some combination of this.",
"\\nAnd that has brought some movement, I believe. It's made for \\nmore of a dialogue as our State Department officials or \\nTreasury move around the world and visit with people. People \\nask what is going on here and why the deep concern, and you \\nhave opportunities to witness for this country and our ideals.\\n So I appreciate both of you coming this morning and the \\nwork that you are doing and your cooperation with us and we \\nlook forward to seeing you again, because this will be an \\nongoing pursuit.\\n Ambassador Perry. Thank you Mr. Chairman.\\n Chairman Lugar. Thank you.\\n Mr. Lowery. Thank you very much Mr. Chairman.\\n Chairman Lugar. Thank you Mr. Lowery. Let me now call upon \\nour second panel of witnesses: Dr. William Easterly, professor \\nof economics, New York University; Dr. Ruth Levine, acting \\nPresident of the Center for Global Development; and Dr. Adam \\nLerrick, Director of the Gailliot Center for Public Policy at \\nCarnegie Mellon University.\\n We welcome this distinguished panel. Perhaps you were here \\nat the onset of the hearing at which I had mentioned that a \\nnumber of Foreign Service Officers of the United States have \\njoined us for this hearing.\\n We're very pleased to see the article in the Washington \\nPost this morning that indicates that Foreign Service Officers \\nin a good number of difficult places around the world will \\nreceive additional compensation for those posts.",
"This is \\nrelevant to the banks and private firms, that a good number of \\nthese take their clue from these raises and these evaluations \\nas to their compensation of persons who are abroad.\\n This, as the article points out, development today was a \\nrather little known and uncommented part of legislation that \\nactually passed last year in conference with the Senate and \\nwith the House and now is seeing the light of day in the lives \\nof about 80,000 persons in our Government, as well as others \\nwho are elsewhere.\\n I mention this because frequently as we talk about service \\nabroad we are talking about multinational firms, multinational \\nbanks, in addition to our own diplomatic representation, and \\nthe presence of our country in these countries. These willing \\npersons who are prepared to do difficult jobs and to do so \\nconsistently are tremendously important to recognize and, I \\nbelieve, to compensate.",
"So there is a reason for some rejoicing \\nthis morning. I take this liberty to simply mention our feeling \\nin this committee.\\n We look forward to hearing your testimony about the issues \\nat hand. And I'm going to ask you to testify in the order that \\nI introduced you, which will be, first of all, Dr. Easterly, \\nthen Dr. Levine, and then Dr. Lerrick. And all of your \\nstatements will be made a part of the record in full and you \\nmay proceed as you wish. Dr. Easterly?\\n\\nSTATEMENT OF DR. WILLIAM EASTERLY, PROFESSOR OF ECONOMICS, NEW \\n YORK UNIVERSITY\\n\\n Dr. Easterly.",
"Thank you Mr. Chairman.\\n Mr. Chairman, UK Chancellor of the Exchequer, Gordon Brown \\nrecently gave a compassionate speech about the tragedy of \\nextreme poverty afflicting billions of people, with millions of \\nchildren dying from easily preventable diseases. He called for \\na doubling of foreign aid, a Marshall Plan for the world's \\npoor. He offered hope by pointing out how easy it is to do \\ngood. Medicine that would prevent half of malaria deaths costs \\nonly 12 cents a dose.",
"A bed net to prevent a child from getting \\nmalaria costs only 4 dollars. Preventing 5 million child deaths \\nover the next 10 years would cost just 3 dollars for each new \\nmother.\\n However, Gordon Brown and many other aid advocates have \\nbeen silent about the other tragedy of the world's poor. This \\nis the tragedy in which the West already spent $2.3 trillion on \\nforeign aid over the last 5 decades and still has not managed \\nto get 12-cent medicines to children to prevent half of all \\nmalaria deaths. The West spent $2.3 trillion and still had not \\nmanaged to get 4-dollar bed nets to poor families. The West \\nspent $2.3 trillion and still had not managed to get 3 dollars \\nto each new mother to prevent 5 million child deaths.",
"It's a \\ntragedy that so much well-meaning compassion did not bring \\nthese results for needy people.\\n The two key elements that have been missing in foreign aid \\nhave been feedback and accountability. And I salute your \\nefforts to increase the accountability of the multilateral \\ndevelopment banks. The needs of the rich, of course, get met \\nthrough feedback and accountability. Consumers tell a firm that \\nthis product is worth the price by buying the product, or they \\ndecide the product is worthless and return it to the store. \\nVoters tell their elected representatives that public services \\nare inadequate and the politician, an elected representative, \\ntries to fix the problem.\\n Profit-seeking firms make a product they find to be in high \\ndemand, but they also take responsibility for the product. If \\nthe product poisons the customer, they are liable, or at least \\nthey go out of business.",
"Elected representatives take \\nresponsibility for the quality of public services. If something \\ngoes wrong, they pay politically. If it succeeds, they get the \\npolitical rewards.\\n Aid agencies could be held accountable for specific tasks. \\nInstead of what we see are extremely weak or, really, even \\nabsent incentives that follow from the collective \\nresponsibility of all aid agencies and recipient governments \\nfor broad goals that depend on many other things besides aid \\nagency effort, such as the current, very fashionable campaign \\nto achieve the United Nations' millennium development goals.\\n If a bureaucracy shares responsibility with many other \\nagencies to achieve vague goals that depend on many other \\nthings, then it is not accountable. Without accountability then \\nthe incentives for finding out what works is weak. True \\naccountability would mean having an aid agency take \\nresponsibility for a specific, monitorable task to help the \\npoor, whose outcome depends almost entirely on what the agency \\ndoes.",
"Then independent evaluation of how well the agency does \\nthe task will then create strong incentives for performance.\\n Although evaluation has taken place for a long time in \\nforeign aid, it is often self-evaluation, using reports from \\nthe same people who implemented the project. Mr. Chairman, my \\nstudents at NYU would not study very hard if I gave them the \\nright to assign themselves their own grades.\\n The World Bank makes some attempt to achieve independence \\nfor its Operations Evaluation Department, which reports \\ndirectly to the Board of the World Bank, not to the President. \\nHowever, staff move back and forth between OED, the Operations \\nEvaluation Department, and the rest of the rest of the Bank.",
"A \\nnegative evaluation could hurt staffs career prospects. I \\nactually experienced that personally when I wrote a negative \\nevaluation and since moved onto another career. The OED \\nevaluation is subjective.\\n Unclear methods lead to evaluation disconnects like one \\nthat delicately described in Mali. This is a quote: ``It has to \\nbe asked how the largely positive findings of the evaluations \\ncan be reconciled with the poor development outcomes observed \\nover the same period and the unfavorable views of local \\npeople. ''\\n Even when internal evaluation points out failure, do \\nagencies hold anyone responsible or change aid agency \\npractices? It is hard to find out from a review of the World \\nBank's evaluation Web site. The Operations Evaluation \\nDepartment indicated how eight, what it called influential \\nevaluations, influenced actions, not of the World Bank, but of \\nthe borrowing government in 32 different ways, but it mentioned \\nonly two instances of its evaluations affecting behavior within \\nthe World Bank, and one of them was for the worse.\\n The way forward is politically difficult. Truly independent \\nevaluation of specific aid efforts. Not overall sweeping \\nevaluations of a whole nationwide development program, but \\nspecific and continuous evaluation of particular interventions \\nfrom which agencies can learn. Only outside political pressure \\non aid agencies are likely to create the incentives to do these \\nevaluations. A World Bank study of evaluation in 2000 began \\nwith the confession, despite the billions of dollars spent on \\ndevelopment assistance each year, there is still very little \\nknown about the actual impact of projects on the poor.",
"Mr. \\nChairman, I suggest that's an astonishing statement after a \\nhalf century of the World Bank's existence.\\n The World Bank has recently changed the name of its \\nOperations Evaluation Department. It is now called the \\nIndependent Evaluation Group, although it is unclear whether a \\nname change is sufficient to achieve true independence. That \\nevaluation unit still remains housed within the World Bank and \\nstill uses the same staff, which still obviously compromises \\ntheir independence.\\n I know personally from my time at the World Bank of several \\nexamples, many examples, of pressure being brought to bear from \\nthe rest of the Bank on OED, now called the Independent \\nEvaluation Group, to alter its evaluation reports. Negative \\nreports were censored by the rest of the World Bank until the \\nreport was more favorable.\\n The solution is as obvious as it is unpopular. Create a \\ntruly independent group of evaluators who have no conflict of \\ninterest with the World Bank or other multilateral development \\nbanks. Require all the multilateral development banks to set \\naside some of their budget, such as the part now wasted on \\nself-evaluation, for these independent evaluators.",
"Many would \\nunderstandably squirm at the thought of a new evaluation \\nbureaucracy, but the good news about evaluation is that it can, \\nand should, be one of the least bureaucratic activities \\nimaginable. It can be completely decentralized, so that a loose \\nnetwork of independent evaluators can write their reports on a \\nrandom sample of each multilateral development bank's projects \\nand programs.\\n Of course, there has to be incentives to do something as a \\nresult of the evaluations. Allocations of money to multilateral \\ndevelopment banks should go up or down depending on their \\naverage performance as rated by the independent evaluators. \\nAlso multilateral development banks should get credit for \\ndiscontinuing failed programs, as reported by the evaluators, \\nor fixing them if they are fixable, while inaction should be \\ncorrespondingly penalized.\\n It is time, after half a century and $2.3 trillion dollars, \\nit is time for an end to the second tragedy of the world's \\npoor, which will help make progress on the first tragedy, that \\nof poverty itself.",
"To gradually figure out how the poor can \\ngive more feedback to more accountable agents on what they know \\nand what they most want and need. The big utopian dreams about \\nending world poverty, such as the U.N. Millennium Development \\nGoals embraced by the World Bank, hold nobody accountable for \\nanything. Can't we just hold the agents of charity accountable, \\nso they do get 12-cent medicines to children to keep them from \\ndying from malaria, do get 4-dollar bed nets to the poor to \\nprevent malaria, do get 3 dollars to each new mother to prevent \\nchild deaths?\\n Thank you very much Mr. Chairman.\\n\\n [The prepared statement of Dr. Easterly follows:]\\n Prepared Statement of Dr. William Easterly, Professor of Economics,\\n New York University\\n\\n Accountability for Multilateral Development Banks*\\n\\n introduction\\n---------------------------------------------------------------------------\\n *My publisher would like me to announce at this point for copyright \\npurposes that this testimony is excerpted from William Easterly, The \\nWhite Man's Burden: Why the West's Efforts to Aid the Rest Have Done So \\nMuch Ill and So Little Good (The Penguin Press: New York), 2006.",
"This \\ndoes not prohibit the posting of this excerpt on the Internet.\\n---------------------------------------------------------------------------\\n I am driving out of Addis Ababa, Ethiopia to the countryside. An \\nendless line of women and girls is marching in the opposite direction \\ninto the city. They range in age from 9 to 59. Each one is bent nearly \\ndouble under a load of firewood. The heavy load propels them forward \\nalmost at a trot. I think of slaves driven along by an invisible slave-\\ndriver. They are carrying the firewood from miles outside of Addis \\nAbaba, where there are eucalyptus forests, across the denuded lands \\ncircling the city. They bring the wood to the main city market, where \\nthey will sell the load for a couple of dollars. That will be it for \\ntheir day's income, as it takes all day to heft firewood into Addis and \\nto walk back.\\n I later found that BBC News had posted a story about one of the \\nfirewood collectors. Amaretch, age 10, woke up at 3 a.m. to collect \\neucalyptus branches and leaves, then began the long and painful march \\ninto the city.",
"Amaretch, whose name means ``beautiful one,'' is the \\nyoungest of 4 children in her family. She says:\\n\\n I don't want to have to carry wood all my life. But at the \\n moment I have no choice because we are so poor. All of us \\n children carry wood to help our mother and father buy food for \\n us. I would prefer to be able to just go to school and not have \\n to worry about getting money.\\\\1\\\\\\n\\n The World Bank and other aid agencies aim at reducing this tragic \\npoverty. Former President James Wolfensohn of the World Bank put on the \\nwall of the lobby of World Bank headquarters the words ``our dream is a \\nworld free of poverty.''",
"He wrote about this dream with inspiration and \\neloquence:\\n\\n If we act now with realism and foresight,\\n if we show courage,\\n if we think globally and\\n allocate our resources accordingly,\\n we can give our children a\\n more peaceful and equitable world.\\n One where suffering will be reduced.\\n Where children everywhere\\n will have a sense of hope.\\n This is not just a dream.\\n It is our responsibility.\\\\2\\\\\\nThe Two Tragedies of the World's Poor\\n UK Chancellor of the Exchequer Gordon Brown is also eloquent about \\nthe tragedy of the world's poor, at least one of their two tragedies.",
"\\nIn January 2005, he gave a compassionate speech about the tragedy of \\nextreme poverty afflicting billions of people, with millions of \\nchildren dying from easily preventable diseases. He called for a \\ndoubling of foreign aid, a Marshall Plan for the world's poor, an \\nInternational Financing Facility (IFF) to borrow tens of billions more \\ndollars against future aid to rescue the poor today. He offered hope by \\npointing out how easy it is to do good. Medicine that would prevent \\nhalf of malaria deaths costs only 12 cents a dose. A bed net to prevent \\na child from getting malaria costs only $4. Preventing 5 million child \\ndeaths over the next 10 years would cost just $3 for each new mother. \\nAn aid program to give cash to families who put their children in \\nschool, getting children like Amaretch into elementary school, would \\ncost little.\\\\3\\\\\\n However, Gordon Brown was silent about the other tragedy of the \\nworld's poor.",
"This is the tragedy in which the West already spent $2.3 \\ntrillion on foreign aid over the last 5 decades and still had not \\nmanaged to get 12-cent medicines to children to prevent half of all \\nmalaria deaths. The West spent $2.3 trillion and still had not managed \\nto get $4 bed nets to poor families. The West spent $2.3 trillion and \\nstill had not managed to get $3 to each new mother to prevent 5 million \\nchild deaths. The West spent $2.3 trillion and Amaretch is still \\ncarrying firewood and not going to school. It's a tragedy that so much \\nwell-meaning compassion did not bring these results for needy people.\\nPlanners Versus Searchers\\n A big part of the problem in aid is that aid agencies like the \\nWorld Bank adopt sweeping goals like ending world poverty, for which it \\nis impossible to hold them accountable. They follow an unproductive \\nPlanners' approach to foreign aid, where a more humble but much more \\nproductive Searchers' approach would work better.",
"In foreign aid, \\nPlanners announce good intentions but don't motivate anyone to carry \\nthem out; Searchers find things that work and get some reward. Planners \\nraise expectations but take no responsibility for meeting them; \\nSearchers accept responsibility for their actions. Planners determine \\nwhat to supply; Searchers find out what is in demand. Planners apply \\nglobal blueprints; Searchers adapt to local conditions. Planners at the \\nTop lack knowledge of the Bottom; Searchers find out what the reality \\nis at the Bottom.",
"Planners never hear whether the Planned got what they \\nneeded; Searchers find out if the customer is satisfied. Will Gordon \\nBrown be held accountable if the new wave of aid still does not get 12-\\ncent medicines to children with malaria?\\n Indeed, the two key elements that make searches work, and the \\nabsence of which is fatal to plans, are feedback and accountability. \\nSearchers only know if something works if the people at the bottom can \\ngive feedback. This is why successful Searchers have to be close to the \\ncustomers at the bottom, rather than surveying the world from the top.",
"\\nConsumers tell the firm ``this product is worth the price'' by buying \\nthe product, or decide the product is worthless and return it to the \\nstore. Voters tell their local politician that ``public services \\nstink'' and the politician tries to fix the problem.\\n Lack of feedback is one of the most critical flaws in existing aid. \\nIt comes about because of the near-invisibility of efforts and results \\nby aid agencies in distant parts of the world.",
"Many aid critics are \\nbeginning to explore how to address this flaw, from employing local \\n``watchers'' of aid projects to doing independent evaluation of aid \\nprojects.\\n Of course, feedback only works if somebody listens. Once a Searcher \\nimplements the result of a search, they take responsibility for the \\noutcome. Profit-seeking firms make a product they find to be in high \\ndemand, but they also take responsibility for the product--if the \\nproduct poisons the customer, they are liable, or at least they go out \\nof business. A political reformer takes responsibility for the results \\nof the reform. If something goes wrong, they pay politically, perhaps \\nby losing office. If it succeeds, they get the political rewards.\\n Although all governments include bureaucracy, in well-developed \\ndemocratic governments the bureaucrats are somewhat more specialized \\nand accountable for specific results to the citizens (although God \\nknows they try hard not to be). Active civic organizations and \\npolitical lobbies operate from the bottom up to hold leaders and \\nbureaucrats accountable, correcting mistaken steps and rewarding \\npositive ones. Rich voters complain if municipal trash collectors don't \\npick up their trash; politicians and bureaucrats have political \\nincentives to correct any breakdown in trash collection.",
"Feedback \\nguides democratic governments toward supplying services the market \\ncannot supply, and toward providing institutions for the markets to \\nwork.\\n At a higher level, accountability is necessary to motivate a whole \\norganization or government to use Searchers. In contrast, Planners \\nflourish where there is little accountability. Again, outsiders don't \\nhave much accountability and so are Planners; insiders have more \\naccountability and are more likely to be Searchers.\\n We will see some of the helpful changes that can happen in aid when \\nincreasing accountability, shifting power from Planners to Searchers. \\nAid agencies can be held accountable for specific tasks, rather than \\nthe weak incentives that follow from collective responsibility of all \\naid agencies and recipient governments for broad goals that depend on \\nmany other things besides aid agency effort. Aid workers now tend to be \\nineffective generalists; accountability would make them into more \\neffective specialists.\\n To oversimplify by a couple gigawatts, the needs of the rich get \\nmet because they give feedback to political and economic Searchers, and \\nthey can hold the Searchers accountable for following through with \\nspecific actions. The needs of the poor don't get met because they have \\nlittle money or political power with which to make their needs known \\nand to hold somebody accountable to meet those needs--they are stuck \\nwith Planners.",
"The second tragedy continues.\\n The prevalence of ineffective Plans is because the results of \\nWestern assistance happen out of view of the Western public. More \\nineffective approaches survive than they would if results were more \\nvisible. The Big Plans are attractive to politicians, celebrities, and \\nactivists who want to make a big splash, without the Western public \\nrealizing that the Big Plans at the top are not connected to reality at \\nthe bottom.\\nDesperate Needs\\n The effort wasted on the Plans is all the more tragic when we \\nconsider some of the simple, desperate needs of the poor, which \\nSearchers could address piecemeal. The typical country in Africa has a \\nthird of the children under 5 with stunted growth due to malnutrition.",
"\\nA group of women in Nigeria report that they are too weakened by hunger \\nto breast-feed their babies. Throughout Africa, there is a long \\n``hungry season'' in between when the stores from the last harvest run \\nout and the new crop becomes available. Even in a more prosperous \\nregion like Latin America, a fifth of children suffer from \\nmalnutrition. Malnutrition lowers the life potential of children, as \\nwell as making them more vulnerable to killer diseases. As a woman in \\nVoluntad de Dios, Ecuador put it, children get sick ``because of lack \\nof food. We are poor.",
"We have no money to buy or to feed ourselves.'' \\n\\\\4\\\\\\n In Kwalala, Malawi, wells break down during the rainy system \\nbecause of lack of maintenance. Villagers are forced to take their \\ndrinking water from the lake, even though they know it is contaminated \\nwith human waste from the highlands, causing diseases like diarrhea and \\nschistosomiasis.\\\\5\\\\ Schistosomiasis is caused by parasitic worms passed \\nalong through contaminated water; it causes damage to the lungs, liver, \\nbladder, and intestines.\\\\6\\\\\\n An old man in Ethiopia says:\\n\\n Poverty snatched away my wife from me. When she got sick, I \\n tried my best to cure her with tebel [holy water] and woukabi \\n [spirits], for these were the only things a poor person could \\n afford.",
"However, God took her away. My son, too, was killed by \\n malaria. Now I am alone.\\\\7\\\\\\n\\n Some success stories show that aid agencies can make progress on \\nproblems like these. There have been successful programs feeding the \\nhungry, which means children could get food in Voluntad de Dios, \\nEcuador. Success on expanding access to clean water could help the \\nvillagers of Kwalala, Malawi. In Mbwadzulu, Malawi, in fact, two new \\nboreholes have allowed villagers to discontinue using polluted lake \\nwater, causing a decline in cholera.\\\\8\\\\ The Ethiopian man's tragedy \\ncould have been avoided with cheap medicines.\\n In Ethiopia, Etenshe Ajele, 36, spent 12 years carrying firewood \\ninto Addis Ababa.",
"Now she is trying to help women and girls like \\nAmaretch. She runs the Former Women Fuelwood Carriers' Association, \\nwhose members teach girls so they can stay out of the firewood brigade. \\nEtenshe Ajele and her colleagues also teach women alternative skills, \\nlike weaving, and give them small loans for startup capital. ``Most \\nwomen know how to weave but do not have enough money to buy \\nmaterials,'' says Ajele, ``So we provide that and we also help them \\nwith new and different designs so that they can sell the shawls and \\ndresses that they make more easily.'' \\\\9\\\\ This Association is no \\npanacea--it still has not reached Amaretch--but it shows the kind of \\nhomegrown effort that foreign donors could support much more.\\nAccountability and Evaluation\\n If a bureaucracy shares responsibilities with other agencies to \\nachieve vague goals that depend on many other things, then it is not \\naccountable to its intended beneficiaries--the poor. Without \\naccountability, then the incentive for finding out what works is weak.",
"\\nTrue accountability would mean having an aid agency take responsibility \\nfor a specific, monitorable task to help the poor, whose outcome \\ndepends almost entirely on what the agency does. Then independent \\nevaluation of how well the agency does the task will then create strong \\nincentives for performance.\\n Although evaluation has taken place for a long time in foreign aid, \\nit is often self-evaluation, using reports from the same people who \\nimplemented the project.",
"My students at NYU would not study very hard \\nif I gave them the right to assign themselves their own grades.\\n The World Bank makes some attempt to achieve independence for its \\nOperations Evaluation Department (OED), which reports directly to the \\nBoard of the World Bank, not to the President. However, staff move back \\nand forth between OED and the rest of the Bank--a negative evaluation \\ncould hurt staffs career prospects.",
"The OED evaluation is subjective. \\nUnclear methods lead to evaluation disconnects like that delicately \\ndescribed in Mali:\\\\10\\\\\\n\\n it has to be asked how the largely positive findings of the \\n evaluations can be reconciled with the poor development \\n outcomes observed over the same period (1985-1995) and the \\n unfavourable views of local people. (p. 26)\\n\\n Even when internal evaluation points out failure, do agencies hold \\nanyone responsible or change aid agency practices? It is hard to find \\nout from a review of the World Bank's evaluation web site. The OED in \\n2004 indicated how eight ``influential evaluations'' influenced actions \\nof the borrower in 32 different ways, but mentioned only two instances \\nof affecting behavior within the World Bank itself (one of them for the \\nworse).\\n The way forward is politically difficult--truly independent \\nscientific evaluation of specific aid efforts. Not overall sweeping \\nevaluations of a whole nationwide development program, but specific and \\ncontinuous evaluation of particular interventions from which agencies \\ncan learn.",
"Only outside political pressure on aid agencies are likely \\nto create the incentives to do these evaluations. A World Bank study of \\nevaluation in 2000 began with the confession ``Despite the billions of \\ndollars spent on development assistance each year, there is still very \\nlittle known about the actual impact of projects on the poor.'' \\\\11\\\\\\n After years of pressure, the IMF created an Independent Evaluation \\nOffice in 2001. The World Bank in 2004 laudably created a Development \\nImpact Evaluation Taskforce. The taskforce will use the randomized \\ncontrolled trial methodology followed by most academic researchers to \\nassess the impact of selected interventions on the intended \\nbeneficiaries. The taskforce has started two dozen new evaluations in \\nfour areas (conditional cash transfers in low income countries, school \\nbased management, contract teachers, use of information as an \\naccountability tool for schools and slum upgrading programs). It \\nremains to be seen if the evaluation results change the incentives to \\ndo effective programs in the operational side of the World Bank. The \\nWorld Bank also changed the name of its Operations Evaluation \\nDepartment to Independent Evaluation Group, although it is unclear as \\nof this writing to what extent this represents real change.\\n Despite the use of the word ``independent'' by both the IMF and the \\nWorld Bank, these evaluation units still remain housed within these \\norganizations and use the same staff, which obviously compromises their \\nindependence.",
"I know personally from my time at the World Bank of \\nseveral examples of pressure being brought to bear from the rest of the \\nBank on OED (now called IEG) to alter its evaluation.\\n The solution is as obvious as it is unpopular--create a truly \\nindependent group of evaluators who have no conflict of interest with \\nthe World Bank or other multilateral development banks. Require all the \\nmultilateral development banks to set aside some of their budget (such \\nas the part now wasted on self-evaluation) for these independent \\nevaluators. Many would understandably squirm at the thought of a new \\nEvaluation Bureaucracy, but the good news about evaluation is that it \\ncan--and should--be one of the least bureaucratic activities \\nimaginable. It can be completely decentralized, so that a loose network \\nof independent evaluators can write their reports on a random sample of \\neach multilateral development bank's projects and programs. An \\nevaluation unit should be more like The New York Times than like The \\nBureaucracy that Ate Foreign Aid. A minimal staff of ``editors'' can \\nsimply assign projects to ``reporters'' (evaluators) and publish the \\nresults.",
"Of course, there has to be incentives to do something as a \\nresult of the evaluations--allocations of money to multilateral \\ndevelopment banks should go up or down depending on their average \\nperformance as rated by the independent evaluators. Also multilateral \\ndevelopment banks should get credit for discontinuing failed programs \\nor fixing them if they are fixable, while inaction should be \\ncorrespondingly penalized.\\nSuccess Through Evaluation\\n In 1997, the Mexican Deputy Minister of Finance, a well-known \\neconomist named Santiago Levy, came up with an innovative program to \\nhelp poor people help themselves. Called PROGRESA (Programa Nacional de \\nEducacion, Salud y Alimentacion), the program provides cash grants to \\nmothers if they keep their children in school, participate in health \\neducation programs, and bring the kids to health clinics for nutrition \\nsupplements and regular checkups.\\n Since the Mexican federal budget didn't have enough money to reach \\neveryone, Levy doled out the scarce funds in a way that the program \\ncould be scientifically evaluated. The program randomly selected two \\nhundred and fifty-three villages to get the benefits, with another two \\nhundred and fifty-three villages (not yet getting benefits) chosen as \\ncomparators. Data was collected on all 506 villages before and after \\nthe beginning of the program. The Mexican government gave the task of \\nevaluating the program to the International Food Policy Research \\nInstitute (IFPRI), who commissioned academic studies of the program's \\neffects.\\n The academic findings confirmed that the program worked.",
"Children \\nreceiving PROGRESA benefits had a 23 percent reduction in the incidence \\nof illness, a 1-4 percent increase in height, and an 18 percent \\nreduction in anemia. Adults had 19 percent fewer days lost to illness. \\nThere was a 3.4 percent increase in enrollment for all students in \\ngrades 1 through 8; the increase was largest among girls who had \\ncompleted grade 6, at 14.8 percent.\\\\12\\\\\\n More anecdotally, people in a small village called Buenavista have \\nnoticed the difference.",
"One mother says that she can feed her children \\nmeat twice a week now to supplement the tortillas, thanks to the money \\nshe receives from PROGRESA. Schoolteacher Santiago Dias notices that \\nattendance is up in Buenavista's two-room schoolhouse. Moreover, Dias \\nsays ``because they are better fed, the children can concentrate for \\nlonger periods. And knowing that their mothers' benefits depend on \\ntheir being at school, the children seem more eager to learn.'' \\\\13\\\\\\n Because the program was such a clearly documented success, it was \\ncontinued despite the voters' rejection of the long-time ruling party \\nin Mexico's democratic revolution in 2000. By that time, PROGRESA was \\nreaching 10 percent of the families in Mexico and had a budget of $800 \\nmillion. The new government expanded it to cover the urban poor. \\nSimilar programs began in neighboring countries with support from the \\nWorld Bank.\\\\14\\\\\\n The lesson for aid reformers is: a combination of free choice and \\nscientific evaluation can build support for an aid program where things \\nthat work can be expanded rapidly. The cash-for-education-and-nutrition \\nin itself could be expanded, with suitable local adjustments, to more \\ncountries and on a much larger scale than it is now.",
"A program like \\nthis in Ethiopia could get the girls around Addis Ababa out of being \\nslaves to firewood and get them in school where they can gain the \\nskills to escape poverty.\\n conclusion\\n Only an elite few in the West can be Planners. People everywhere, \\nnot just in the West, can all be Searchers. Searchers can all look for \\npiecemeal, gradual improvements in the lives of the poor, in the \\nworking of foreign aid, in the working of private markets, in the \\nactions of Western governments that affect the Rest. Many Searchers can \\nwatch foreign aid at work in many locales around the world and let \\ntheir voice be heard when it doesn't deliver the goods. It is time for \\nan end to the second tragedy of the world's poor, which will help make \\nprogress on the first tragedy. To gradually figure out how the poor can \\ngive more feedback to more accountable agents on what they know and \\nwhat they most want and need. The Big Plans and Utopian Dreams just get \\nin the way, wasting scarce energies. Can't we just hold the agents of \\ncharity accountable, so they do get 12-cent medicines to children to \\nkeep them dying from malaria, do get $4 bed-nets to the poor to prevent \\nmalaria, do get $3 to each new mother to prevent child deaths, do get \\nAmaretch into school?\\n endnotes\\n \\\\1\\\\ http://news.bbc.co.uk/1/shared/spl/hi/picture_gallery/04/\\nafrica_ethiopian_\\nwood_collector/html/7.stm\\n \\\\2\\\\ World Bank, Our Dream: A World Free of Poverty (November 2000).\\n \\\\3\\\\ Gordon Brown speech at National Gallery of Scotland, January 6, \\n2005.",
"International Development in 2005: the Challenge and the \\nOpportunity, Gordon Brown Press 2005-03.htm\\n \\\\4\\\\ WHO and World Bank, Dying for Change, Washington DC, 2003, p. \\n10.\\n \\\\5\\\\ ibid, p. 11.\\n \\\\6\\\\ http://www.cdc.gov/ncidod/dpd/parasites/schistosomiasis/\\nfactsht1_\\nschistosomiasis.htm\\n \\\\7\\\\ WHO and World Bank, Dying for Change, Washington DC, 2003, p. \\n21.\\n \\\\8\\\\ From Many Lands, Voices of the Poor Volume 3, World Bank, 2002, \\np. 63.\\n \\\\9\\\\ http://news.bbc.co.uk/1/shared/spl/hi/picture_gallery/04/\\nafrica_ethiopian_\\nwood_collector/html/7.stm\\n \\\\10\\\\ OECD and UNDP 1999.\\n \\\\11\\\\ Judy L. Baker, Evaluating the Impact of Development Projects \\non Poverty: A Handbook for Practitioners; Directions in Development, \\nThe World Bank, Washington, D.C.\\n \\\\12\\\\ I am paraphrasing the summary of Esther Duflo and Michael \\nKremer, Use of Randomization in the Evaluation of Development \\nEffectiveness, mimeo MIT and Harvard University, 2004.\\n \\\\13\\\\ http://news.bbc.co.uk/1/hi/programmes/crossing_continents/\\n412802.stm\\n \\\\14\\\\ Duflo and Kremer 2004.\\n\\n\\n Chairman Lugar.",
"Thank you very much Dr. Easterly. Dr. \\nLevine?\\n\\n STATEMENT OF DR. RUTH E. LEVINE, DIRECTOR OF PROGRAMS, CENTER \\n FOR GLOBAL DEVELOPMENT\\n\\n Dr. Levine. Thank you very much Chairman Lugar. I am very \\ngrateful for this opportunity to contribute to an essential and \\ntimely debate about the effectiveness of multilateral \\ndevelopment banks.\\n To start with an obvious point: to succeed as institutions, \\nMDBs have to succeed in their main business, and that's working \\nwith governments to finance programs that improve welfare, \\nproductivity, access to credit and other resources, and long \\nterm prosperity of those who are sometimes called the ultimate \\nbeneficiaries.\\n The ideal of the development enterprise reflects the spirit \\nof the well-known Chinese proverb, probably heard several times \\neach year in this room: ``Give a man a fish and you feed him \\nfor a day. Teach a man to fish and you feed him for a \\nlifetime.'' So development assistance is not primarily about \\nthe transfer of financial resources from wealthy countries to \\npoor countries for immediate survival.",
"It's about providing a \\nfoundation of knowledge for long-term development. I am sure \\nthat you and others who energetically fight corruption do so \\nbecause you believe the funds, if used as intended in the \\nproject design, will yield those sorts of results. But will \\nthey?\\n Sadly, as Bill Easterly indicated, we now have very few \\nways to answer that question. From my experience at the World \\nBank and the Inter-American Development Bank, as well as my \\nrecent research, I can tell you that there is much more talk of \\nresults than measurement of them. The institutional focus of \\nperformance monitoring remains how much money did we move out \\nthe door, and what were the outputs?",
"The schools built, the \\nteachers trained, the poor women enrolled in microcredit \\nprograms and others. That goes some distance, but it's not \\nnearly enough.\\n We don't ask whether those investments made a real \\ndifference relative to what would have happened without the \\nprograms. Did more children get to school and stay in school \\nand then enter the labor market? Did households raise \\nthemselves out of poverty?\\n For most types of programs financed by the multilateral \\ndevelopment banks, a body of sound evidence about effectiveness \\nis lacking.\\n For almost all projects currently in the pipeline, \\nvirtually no credible information will be generated about \\nprogram impact. For lack of feedback through good impact \\nevaluation, the banks continue to repeat failed approaches and \\nmiss opportunities to expand successful ones. In short, we \\ndon't know how to fish, we're not learning how to fish, and we \\nhave very little hope of teaching others how to fish.\\n At the Center for Global Development, the Evaluation Gap \\nWorking Group has spent many months thinking through the \\nreasons for the shortcomings in impact evaluation, and \\nassessing the demand for knowledge about program performance \\nwithin development agencies, among constituencies, and in \\ndeveloping countries. In addition to encouraging efforts to \\nimproving evaluation and create a culture of learning within \\ninstitutions, we believe this may be a moment to call for a \\ncollective international initiative to develop an impact \\nevaluation agenda, agree to rigorous methodological standards \\nand jointly fund design and implementation of a set of \\nindependent impact evaluations.\\n While the overall agenda of evaluation questions should be \\ndeveloped by interested parties, including those in this \\nchamber, impact evaluations themselves need to be done \\nindependently of the major international agencies and borrowing \\ncountry governments.",
"Returning to the example of the fish, I \\nthink we'd all agree that it's better to ask an impartial judge \\nto measure a fish with a standard ruler than to ask the \\nfisherman to guess at the size of his catch.\\n Independent evaluations would be more credible in the \\npublic eye and less subject to the inappropriate pressures that \\nDr. Easterly referred to within institutions to modify results \\nor conclusions, or limit dissemination of unfavorable findings.\\n This committee, and the U.S. Congress more generally, can \\ntake a leadership role in fostering genuine, long-term success \\nof the multilateral development banks, as well as other \\ndevelopment agencies by sending the right signals with three \\nclear statements. First, that Congress values and demands the \\ntype of knowledge about program impact that comes from rigorous \\nevaluation. Second, that Congress sees development agencies' \\nsuccess first and foremost in terms of whether the many, many \\nprogram experiences that are being financed are yielding \\nlearning. Some work, some don't, we have to learn from both \\ntypes of programs.",
"And the relevant new knowledge needs to be \\nshared with partner governments, as a key ingredient for long-\\nterm, sustained development. And finally, Congress can send a \\nsignal that it has an interest in exploring new ways to foster \\nindependent, high quality impact evaluation across the banks \\nand other agencies.\\n I think if we are really serious about getting to the point \\nwhere the multilateral development banks are fulfilling their \\ntremendous potential, and for the efforts to combat corruption \\nthemselves to be meaningful, we have to systematically, \\nrigorously, and independently evaluate the impact of the \\nprograms that are financed. Thank you.\\n\\n [The prepared statement of Dr. Levine follows:]\\n Prepared Statement of Ruth E. Levine, Director of Programs and Senior \\n Fellow, Center for Global Development\\n Chairman Lugar, ranking minority member Biden and members of the \\ncommittee: I very much appreciate the opportunity afforded by this \\ncommittee and its staff to contribute to an essential and timely debate \\nabout how to improve the ability of development banks to support \\nprogress in low- and middle-income countries. What I will speak about \\ntoday is based on work we have done over the past 2 years, under the \\nauspices of the Evaluation Gap Working Group at the Center for Global \\nDevelopment. I would like my full testimony to be entered as part of \\nthe record, and I will summarize my major points.\\n To start with an obvious point: To succeed as institutions, \\nmultilateral development banks must succeed in their main business.",
"In \\nthe near term, their main business is working with low- and middle-\\nincome governments to finance projects and programs that lead to better \\neconomic and social conditions than would have occurred without those \\nprojects or programs. The results from these investments should be \\nvaluable not only in absolute terms, but relative to the value of \\nalternative uses of the funds. In the long-term, the banks' \\ncontributions must be still greater. They must help establish the \\nfundamental conditions under which developing country governments can \\nfoster the welfare, productivity and prosperity of their people.\\n The ideal of the development enterprise, in which multilateral \\ndevelopment banks play a special role, reflects the spirit of the well-\\nknown Chinese proverb: ``Give a man a fish and you feed him for a day. \\nTeach a man to fish and you feed him for a lifetime.'' In other words, \\ndevelopment assistance is not solely or even primarily about the \\ntransfer of financial resources from wealthy countries to meet \\nimmediate survival needs of poorer nations; it is about providing the \\nfoundation of knowledge that constitutes the basis for long-term \\ndevelopment. This is particularly true for development banks, who \\nprincipally offer loan financing. Such resources are, by definition, \\nappropriate only for investments oriented toward improved outcomes over \\nthe long-term.\\n In contrast, the success of development banks cannot be measured on \\nthe basis of whether they remain solvent, are on good terms with \\nCongress and non-governmental organizations, have contented employees, \\nor fight corruption at home and abroad.",
"These probably are all \\nnecessary, but they are not sufficient. Success of development banks, \\nas of other development agencies, rests on whether they can make the \\nlives of those who are sometimes referred to as the ``ultimate \\nbeneficiaries'' better off, in a meaningful and sustained way.\\n Knowing whether or not the banks are succeeding in financing \\nprograms that directly improve people's lives is the core of \\naccountability. Assessing this type of performance comes from impact \\nevaluations, defined as evaluations that measure the results of an \\nintervention in terms of changes in key variables (e.g. mortality, \\nhealth status, school achievement, labor force status) that can be \\ndirectly credited to the program itself, as distinguished from changes \\nthat are due to other factors.",
"That is, they are evaluations that \\npermit attribution of program-specific effects.\\n At the World Bank and other development banks, as in the field of \\ndevelopment more broadly, there has been far more talk of ``results'' \\nthan measurement of them. Much emphasis has been placed on measuring \\nand tracking inputs (such as commitments and disbursements) and \\nassessing at the conclusion of a project whether the activities \\nanticipated at the design stage have been completed. For example, were \\nthe schools built, teachers trained, blackboards procured?",
"Did the \\ngovernment undertake the hoped-for changes in hospital finance or \\ncontracting with NGOs for delivery of basic health services? I can tell \\nyou from my experience within the World Bank and the InterAmerican \\nDevelopment Bank, and my observation from my current vantage point at \\nthe Center for Global Development, the institutional focus of \\nmonitoring performance remains very much on the ``how much money did we \\nmove out the door?'' and ``what was financed? ''\\n Distressingly, very little investment has been made in conducting \\nrigorous impact evaluations that are necessary to tell us which \\ninterventions and approaches do and do not work in achieving the real \\ngoals of all that spending and program activity.",
"Did those schools, \\nteachers and blackboards result in more children attending and \\ncompleting school than would have occurred in the absence of the \\nproject? Did the innovations in health finance and organization yield \\nthe results anticipated: less financial exposure of poor people when \\nthey became ill? Better use of essential health services, and \\nultimately better health? The failure to answer those basic questions \\nin a systematic way leaves the banks, and the professionals and high-\\nlevel decisionmakers within them, lacking feedback to foster \\nimprovement; it leaves Congressional overseers, taxpayers and others \\nwho wish to hold the institutions accountable for results with little \\nto go on.",
"I suspect those in this chamber are personally familiar with \\nthis deeply frustrating situation. I imagine that when you evaluate the \\ndevelopment bank's performance, you would rather hear the results of \\nserious impact evaluations of a sample of important programs than a \\nrecitation of amounts committed and disbursed, or number of textbooks \\nprocured.\\n Paradoxically, underinvestment in impact evaluation (and consequent \\nundersupply of evidence about the relationship between specific types \\nof investments and their effects) means that the banks have few chances \\nof succeeding in the even more important goal of ``teaching a man to \\nfish'': If we don't learn whether a program works in changing the well-\\nbeing of beneficiaries, how can a government know if it is worth \\nputting the money and effort into similar programs in the future? If we \\ndon't bother to measure the results that are direct consequences of the \\nspecific program, how can anyone make a credible case for this, or any \\nother type of expenditure of public funds? If we don't learn whether \\nand why our investments yield benefits, we have fundamentally failed.\\nWhy So Little Impact Evaluation?\\n Several factors explain the lack of impact evaluation.\\n\\n\\n <bullet> Good impact evaluations require a degree of technical \\n sophistication that has only emerged only recently among those \\n who focus on international development, although it has been \\n available to US domestic social programs since the 1970s. \\n (Think, for example, of the landmark studies of Head Start, the \\n tradition of excellent evaluations of within income support and \\n job training programs in the US, and the Department of \\n Education's laudable program evaluation initiatives today.)",
"\\n While many studies compare conditions before and after a \\n project, such comparisons can be quite misleading without \\n attention to other factors that might have also contributed to \\n observed changes. Only by comparing observed changes among \\n those who benefited from a project to some other control group \\n is it possible to begin to disentangle how much of the effects \\n can be attributed to the project or program itself. For \\n example, when HIV prevention programs are evaluated, it is \\n essential to measure the change in HIV incidence with both \\n those participating in the program and a set of similar \\n individuals or communities not exposed to program activities. \\n Without such a comparison, before-after changes are impossible \\n to interpret. A fall in HIV incidence in the population within \\n the program--an observation that would likely be called \\n ``success'' by the program implementers--might simply reflect \\n declines due to non-program factors.",
"A rise in HIV incidence \\n among program participants--something that might be seen as \\n ``failure''--might actually reveal success if incidence is \\n rising more slowly than in the general population. Without \\n appropriate comparisons, we will never know. Separating out the \\n changes due to projects from changes due to other factors is a \\n complicated business that may require random assignment of \\n beneficiaries or other methods. Fortunately, advances in \\n research methods and increasing capacity around the world to \\n conduct such impact evaluations are beginning to surmount these \\n technical difficulties.",
"Interestingly, we have seen how \\n feasible this is through experiences in Mexico, where excellent \\n design of PROGRESA, a conditional cash transfer program, \\n illustrated the possibility and the value of introducing \\n rigorous evaluation within the design a program as it scales \\n up.\\n\\n <bullet> Demand for the knowledge produced by impact evaluations \\n tends to be distributed across many actors and across time. It \\n is only at the moment of designing a new program, however, that \\n anything can be effectively done to start an impact evaluation. \\n At that precise moment, program designers want the benefit of \\n prior research, yet have few incentives to invest in starting a \\n new study. In contrast, they will get rewarded for quickly \\n starting implementation, rather than doing the spadework to \\n undertake a baseline study. Paradoxically, if they do not \\n invest in a new study, the same program designers will find \\n themselves in the exact same position 4 or 5 years later \\n because the of the missed opportunity to learn whether or not \\n the intervention has an impact.\\\\1\\\\ Because information from \\n impact evaluations is a public good, other institutions and \\n governments that might have obtained valuable knowledge from \\n the experience also lose when these investments in learning \\n about impact are neglected.\\n---------------------------------------------------------------------------\\n \\\\1\\\\ O'Donoghue, T., Rubin, M., 1999. ``Doing It Now or Later.''",
"The \\nAmerican Economic Review 89, 103-124.\\n\\n <bullet> Evaluation simply is not seen as the central business of the \\n development banks. When material and human resources are \\n stretched, short-term operational demands will over-ride the \\n longer-term, more strategic imperative of evaluation and \\n learning. As one indication, resources spent to design and \\n implement impact evaluations were not even recognized as a \\n separate item in the World Bank's budgeting system until 2005. \\n Most task managers at the development banks can tell very sad \\n tales about watching their evaluation budgets disappear during \\n---------------------------------------------------------------------------\\n negotiations with either management or borrowing governments.\\n\\n <bullet> Those rare individuals within large bureaucracies who wish \\n to undertake impact evaluations typically encounter daunting \\n resistance. Program implementers may perceive evaluation as a \\n threat, potentially leading to a cut-off of funding if results \\n are not uniformly positive.",
"At higher levels in an \\n organization, managers who are responsive to demands by \\n shareholders for ``results, results, results'' may prefer to \\n promulgate anecdotes about success, without regard to the \\n strength of evidence, rather than expose the genuine lessons of \\n experience--including the occasions when results were poor. \\n This behavior continues if it is tolerated by the institutions' \\n constituencies and funders, including legislative bodies.\\n\\n\\n All of these reasons contribute to the situation observed today: \\nFor most types of programs, a body of scientific evidence about \\neffectiveness is lacking.",
"For almost all projects currently in \\noperation or in the pipeline, virtually no credible information will be \\ngenerated about program impact. The banks don't know whether they are \\nsucceeding, and they are not generating knowledge for the future. For \\nlack of feedback, the banks continue to repeat failed approaches, and \\nmiss opportunities to expand upon successful ones. In short: We do not \\nknow how to fish. We are not learning how to fish. We have little hope \\nof teaching others how to fish.\\nWhat Can Be Done?\\n Fortunately, some have recognized this problem, care about solving \\nit, and are trying hard to find a way to do so.",
"Within the development \\nbanks, the Independent Evaluation Departments make heroic efforts to \\nsqueeze knowledge out of the experiences of projects that are conducted \\nwithout baseline data, without comparison groups, frequently without \\nany impact indicators at all. This is a difficult and often fruitless \\ntask, although it does generate the basis for improvements in the \\noperational activities, which is very valuable. They deserve additional \\nresources so that they can undertake more in-depth studies.\\n Separate from the Independent Evaluation Department (previously \\ncalled Operations Evaluation Department), in the past couple of years, \\nthe World Bank has created a new initiative called the Development \\nIMpact Evaluation (DIME) to increase the number of Bank projects with \\nimpact evaluation components, particularly in strategic areas and \\nthemes; to increase the ability of staff to design and carry out such \\nevaluations, and to build a process of systematic learning on effective \\ndevelopment interventions based on lessons learned from those \\nevaluations.",
"The regional development banks also have undertaken a \\nlimited set of impact evaluations, within either research or evaluation \\ndepartments. These efforts should be recognized and provided with \\nadditional institutional resources so that they contribute to a \\ncultural change.\\n But much more is required, both within and outside of the \\ninstitutions. Indeed, a broader and bolder solution to the problem is \\nneeded. Three central elements are required for a lasting and genuine \\nsolution to the problem of lack of knowledge about what works.\\n First, we need to use good evaluation methods to get answers to \\nimportant questions. This means identifying the enduring questions, a \\nprocess that would be done best in true partnership between developing \\ncountries and the range of institutions that provide development \\nfinance. The World Bank has made a start by identifying a handful of \\nthematic areas within its impact evaluation initiative.",
"But the \\nbenefits of concentrating such studies around enduring questions across \\nagencies and countries would be far greater.\\n Second, we need to use evaluation methods that yield answers. This \\nmeans increasing the number of impact evaluations that use rigorous \\nmethods--such as random assignment and regression discontinuity--and \\napplying them to a small number of programs from which the most can be \\nlearned.\\n Third, while the overall agenda should be developed by the \\n``interested parties,'' impact evaluations themselves need to be done \\nindependently of the major international agencies and borrowing country \\ngovernments. Returning to the example of the fish, I think we'd all \\nagree that it is better to ask an impartial judge to measure a fish \\nwith a standard ruler than to ask a fisherman to guess at the size of \\nhis catch! Independent evaluations would be more credible in the public \\neye, and less subject to inappropriate pressures within institutions to \\nmodify results or conclusions, or limit dissemination of unfavorable \\nfindings.",
"We have learned about the value of independence in evaluation \\nmany times over in other fields, including medicine and social programs \\nin our own country. The existence of an independent source of impact \\nevaluation--geared to a longer time frame and toward learning--will \\navoid many of the inevitable pressures to focus on implementation \\nalone, and restrict the communication of bad news to higher levels of \\nmanagement.\\n At the Center for Global Development, we have spent many months \\nthinking through the reasons for the shortcoming in impact evaluation, \\nassessing the demand for knowledge about program performance, learning \\nabout the efforts in the development banks, bilateral agencies and \\ndeveloping country governments related to evaluation, and developing \\noptions and recommendations. In addition to encouraging within-\\ninstitution efforts to improve evaluation and create a culture of \\nlearning, we believe this may be a moment to call for a collective \\ninternational initiative for leading-edge bilateral and multilateral \\ndevelopment agencies to develop a shared impact evaluation agenda \\n(working with interested developing countries), agree to methodological \\nstandards and, potentially, jointly fund both design and independent \\nimplementation of impact evaluations on enduring questions in \\ninternational development.",
"We have developed ideas about many of the \\nspecific functions for such an initiative, and believe that there are \\ntechnically, politically, and financially feasible institutional \\noptions.\\n conclusion\\n This committee, and the U.S. Congress more generally, can take a \\nleadership role in fostering genuine, long-term success of multilateral \\ndevelopment banks, as well as other agencies. This can be done by \\nmaking three clear statements: First, that Congress values and demands \\nthe type of knowledge about program impact that comes from rigorous \\nevaluation. Second, that Congress sees development agencies' success \\nfirst and foremost in terms of whether the program experiences are \\nyielding true learning, with relevant new knowledge being shared with \\npartner governments, as a key ingredient for long-term, sustained \\ndevelopment. Third, that Congress has an interest in exploring \\nmechanisms to foster independent high quality impact evaluation across \\nagencies.\\n I firmly believe that the development banks have tremendous \\nuntapped potential to contribute to improved outcomes over the long \\nterm--the healthier children, more productive adults, cleaner \\nenvironment and lasting prosperity that we wish for all nations. From \\npersonal experience as well as recent research, I believe that they \\nwill not be firmly on the track toward fulfilling that potential until \\nthe development banks ask, and publicly answer, serious questions about \\nthe impact of their programs.\\n\\n\\n Chairman Lugar.",
"Thank you very much. Dr. Lerrick?\\n\\nSTATEMENT OF DR. ADAM LERRICK, DIRECTOR OF THE GAILLIOT CENTER \\n FOR PUBLIC POLICY, CARNEGIE MELLON UNIVERSITY\\n\\n Dr. Lerrick. Senator, I think you're going to hear quite a \\nfew things over and over again during this hearing--but given \\nmy reputation as an outspoken critic, they'll just be louder, \\npossibly, from me.\\n Chairman Lugar. Very well.\\n Dr. Lerrick. I will remark that those who say nice things \\nabout the bank are called economists, and people who say \\ncritical things are called outspoken critics. However, I \\nconsider myself a member of the loyal opposition.\\n First of all, it's a privilege to appear before the Senate \\nForeign Relations Committee.\\n The World Bank has just changed the name of its Operations \\nEvaluation Department.",
"This sends a clear signal that the Bank \\nhas no intention of changing its ways. The new sign on the door \\nreads Independent Evaluation Group. The Bank is digging in to \\nfend off an increasingly vocal demand for a truly independent \\nreview of its stewardship of aid. I think what this panel has \\nsaid confirms that.\\n After half a century and more than half a trillion dollars, \\nthere is little to show for World Bank efforts. But we have no \\nmeasure of the Bank's performance except the one it chooses to \\npromulgate and no means to validate the wisdom of the \\nindustrialized world's collective investment decision.\\n The optimism of weighty reports cannot cover up the \\nrealities on the ground. The living standards of the poorest \\nnations have stagnated and, in sub-Saharan African, actually \\ndeclined 25 percent over the last 10 years.",
"Thirty-eight \\ncountries have amassed $71 billion in unpayable multilateral \\nloans, encouraged by the Bank's self-serving projections of \\ncountry growth, and on these loans it's going to be the rich \\ncountry taxpayers who now must now make good. Corruption has \\nbeen exposed both within the Bank and in its programs and is \\nnow estimated at more than $100 billion. Protest is rising \\namong Africa's own who seek to stop all aid because it serves \\nonly to entrench and enrich a series of corrupt elites. Massive \\nanecdotal evidence of waste, ineptitude and outright theft can \\nno longer be ignored.\\n The Bank gives itself good marks and boasts that more than \\nthree quarters of its projects achieve satisfactory outcomes.",
"\\nBut when the auditors are captive, when the timing of judgment \\nis premature, when the criteria are faulty and when the numbers \\nare selectively manipulated, how credible are the conclusions?\\n Should we just take the Bank's word for it when U.S. \\ntaxpayers are being asked to commit more than $2.5 billion per \\nannum for the next 40 years?\\n Independence at the Bank is purely cosmetic, for a \\ntemporary change of desk and a new nameplate do not alter the \\nsignature on the paycheck nor the rewards of the Bank's \\npersonnel system. The Independent Evaluation Group is a \\ndepartment of the Bank like any other, save the ceremony of \\nreporting to an executive board that is passive at best, and \\nfor a titular head, the Director General, who cannot return to \\nthe bank. But for all others, a revolving door leads back to \\nstandard line jobs and advancement.\\n This hardly fosters disinterested and rigorous judgments, \\neven though the Bank boasts that staff cannot review projects \\nthat they themselves designed.",
"Fact-finding missions are \\nsuspect when they do not stand at full arm's length from their \\nsubject. The magnitude of the Enron failure spotlighted the \\nfolly of placing credence in inside oversight and even in \\noutside auditors who can be intimidated by well-paying clients.\\n In 2002, scandal arose at the German government employment \\noffice when claims of 50 percent placement rates were sliced to \\n17 percent by an independent audit. Corporations always seek to \\nelevate the price of their stock, public agencies always wish \\nto expand their funding. External auditors beyond the subject's \\ninfluence are needed to pierce the film of self-congratulation \\nand to provide the discipline that protects the public \\ninterest.\\n What the Bank proclaims as results are really only \\nprojections made at a moment when optimism is high.",
"Outcome \\nmeans only likelihood rated by the loan officer when the \\ndisbursement of funds is complete. That is often years before \\nphysical plants are up and running. Seldom does the Bank return \\nto inspect the long-term project performance and many onsite \\ninvestigations come up empty for lack of monitoring and \\nrecords. The focus is on quantity of inputs with little effort \\nexpended to measure the effective output of programs.\\n Performance measures have been manipulated to bolster \\nmanagement claims of success and refute critics. In the late \\n1990s, satisfactory ratings jumped when the criteria were \\nrevised upon the instruction of Bank management without a \\ncorresponding adjustment to previous years to ensure \\nconsistency of measurement, again, upon the instruction of Bank \\nmanagement.",
"After the Meltzer Commission in 1999 noted that \\nsustainability, the sine qua non of development, had languished \\nat 50 percent success rates for years, ratings jumped to 72 \\npercent in 2000. Were these true improvements or had the bar \\nsimply been lowered?\\n The Bank is better at managing its numbers than at managing \\nits programs. What is needed is a bonafide external audit by \\nprivate sector companies onsite to determine the lasting \\ncontribution of Bank projects in the poorest countries after a \\n3- to 5-year operating history and to provide a continuing \\nbenchmark for the efficacy of Bank aid.",
"Auditors would report \\ndirectly to the legislative and executive branches of the Group \\nof Seven governments. Independent program audits and aggregate \\nevaluations of performance would be published and the exercise \\nrepeated every 3 years.\\n Five to seven million dollars, or less than two-tenths of 1 \\npercent of the U.S. commitment to the Bank's IDA funding for \\nthe next 3-year cycle, would pay for the cost of an audit of \\nthe performance of a one-third of IDA projects.\\n As an anecdote, when the Meltzer Commission asked \\nindependent auditors what the cost of performance audit would \\nbe, the estimates came from three different firms were $4 \\nmillion, $6 million, and $1.5 million.",
"I asked the head of the \\nfirm submitting the $1.5 million bid why his estimate was so \\nlow, and his response was, we know these countries very well, \\nwe know the Bank very well, we know the Bank's programs very \\nwell. We operate the infrastructure of many of these countries. \\nWe fully expect that when we arrive, on one-half of the \\nprograms there will be nothing. There will be no evidence of \\nanything at all. And those will be very quick audits. There \\nwill be no road, there will be no school, and therefore, we're \\nactually charging $1.5 million to do half the audits, because \\nthe first half will be very quick.\\n For 6 years the Bank has resisted an independent evaluation \\nof its programs. Its objections to external examination have \\ncentered on damage to the institution's morale, on the waste of \\nfunds and on the irrelevance of a past record that has been \\nallegedly rectified by the latest version of the New Bank. As \\nthe Millennium goal of halving extreme poverty has gained \\nmomentum, donor nations are poised to fund an exponential \\nincrease in development aid, a $50 billion doubling of annual \\nflows to the poorest nations by 2010 and another $50 billion \\nannual increment previewed for 2015.",
"The Bank will get more \\nthan its share. Then there is the windfall of so-called ``debt \\nrelief'', where the Bank extorted 100 cents on the dollar from \\nthe G-7 for a $46 billion portfolio of worthless developing \\ncountry loans on which it had been sitting for more than 20 \\nyears. The result is an assured stream on automatic pilot to \\nfill deep holes in the Bank's balance sheet and then pour out \\nas unauthorized new aid.\\n Giving masses of money does not end our responsibility to \\nthe developing world.",
"Donors have an inescapable interest in \\nthe uses to which aid is put and the results that aid achieves. \\nSums this significant must be weighed against alternative uses \\nof scarce taxpayer resources.\\n This is the moment to insist that the World Bank be under \\nserious, continuous external review. The Bank must become the \\nexemplar for the transparency and accountability it commends to \\nthe developing world. Provision for a tri-annual external \\nperformance audit must become a condition of approval of the \\nGleneagles accord on debt relief and the funding of future aid. \\nThere will be no reform without the recognition of past \\nfailure.\\n Thank you Mr. Chairman.\\n\\n [The prepared statement of Dr. Lerrick follows:]\\nPrepared Statement of Adam Lerrick, Director of the Gailliot Center for \\n Public Policy Friends of Allan H. Meltzer, Professor of Economics, \\n Carnegie Mellon University, and Visiting Scholar American Enterprise \\n Institute\\n\\n Is the World Bank's Word Good Enough?\\n\\n It is a privilege to appear before the Senate Committee on Foreign \\nRelations.\\n The World Bank has just changed the name of its Operations \\nEvaluation Department.",
"This sends a clear signal that the Bank has no \\nintention of changing its ways. The new sign on the door reads \\nIndependent Evaluation Group. The Bank is digging in to fend off an \\nincreasingly vocal demand for a truly independent review of its \\nstewardship of aid.\\n After half a century and more than US$ 500 billion, there is little \\nto show for World Bank efforts. But we have no measure of the Bank's \\nperformance except the one it chooses to promulgate and no means to \\nvalidate the wisdom of the industrialized world's collective investment \\ndecision.\\n The optimism of weighty reports cannot cover up the realities on \\nthe ground. The living standards of the poorest nations have stagnated \\nand even declined as much as 25 percent.\\\\1\\\\ Thirty-eight countries have \\namassed $71 billion in unpayable multilateral loans, encouraged by the \\nBank's self-serving projections of country growth, on which rich \\ncountry taxpayers must now make good. Corruption has been exposed both \\nwithin the Bank and in its programs and is now estimated at more than \\n$100 billion.",
"Protest is rising among Africa's own who seek to stop all \\naid because it serves only to entrench and enrich a series of corrupt \\nelites. Massive anecdotal evidence of waste, ineptitude and outright \\ntheft can no longer be ignored.\\n---------------------------------------------------------------------------\\n \\\\1\\\\ Aid was not the moving force behind the impressive gains in \\nChina, India and Indonesia where virtually all progress in developing \\ncountry living standards has occurred.\\n---------------------------------------------------------------------------\\n The Bank gives itself good marks and boasts that more than three \\nquarters of projects completed had ``satisfactory outcomes''.",
"But when \\nthe auditors are captive, when the timing of judgment is premature, \\nwhen the criteria are faulty and when the numbers are selectively \\nmanipulated--how credible are the conclusions?\\n Should we just take the Bank's word for it when US taxpayers are \\nbeing asked to commit more than $2.5 billion per annum for the next 40 \\nyears?\\n ``Independence'' at the Bank is purely cosmetic, for a temporary \\nchange of desk and a new nameplate do not alter the signature on the \\npaycheck nor the rewards of the Bank's personnel system. The \\nIndependent Evaluation Group is a department of the Bank like any \\nother, save the ceremony of reporting to an executive board that is \\npassive at best. For everyone save the titular Director General, a \\nrevolving door leads back to standard line jobs and advancement at the \\nBank.",
"Because results are published, there is strong pressure to \\ndisplay success. Outside verification is precluded because there is no \\npublic access to the underlying data. This hardly fosters disinterested \\nand rigorous judgments, even though the Bank boasts that staff cannot \\nreview projects that they themselves designed.\\n Fact-finding missions are suspect when they do not stand at full \\narm's length from their subject. The magnitude of the Enron failure \\nspotlighted the folly of placing credence in inside oversight and even \\nin outside auditors who can be intimidated by well-paying clients. In \\n2002, scandal arose at the German government employment office when \\nclaims of 50 percent placement rates were sliced to 17 percent by an \\nindependent audit. Corporations always seek to elevate the price of \\ntheir stock; public agencies always wish to expand their funding. \\nExternal auditors beyond the subject's influence are needed to pierce \\nthe film of self-congratulation and to provide the discipline that \\nprotects the public interest.\\n The ``independence'' issue aside, the Bank's evaluation methodology \\nspews out conclusions without worth.\\n What the Bank proclaims as results are really only projections made \\nat a moment when optimism is high. ``Outcome'' means only \\n``likelihood'' rated by the loan officer when the disbursement of funds \\nis complete.",
"This is often years before physical projects are up and \\nrunning. Generalized ``adjustment programs'' attract the highest marks. \\nYet promised reforms will require years to impact the economy if they \\nare indeed ever implemented.\\n Seldom does the Bank return to inspect long-term project success \\nand many onsite investigations come up empty for lack of monitoring and \\nrecords. The focus is on quantity of inputs with little effort expended \\nto measure the effective output of programs.\\n Performance measures have been manipulated to bolster management \\nclaims of success and refute critics. In the late 1990s, satisfactory \\nratings jumped when the criteria were revised upon the instruction of \\nBank management without a corresponding adjustment to previous years to \\nensure consistency of measurement, also upon the instruction of Bank \\nmanagement. After the Meltzer Commission in 1999 noted that \\n``sustainability'', the sine qua non of development, had languished at \\n50 percent success rates for years, ratings jumped to 72 percent in \\n2000.",
"Were these true improvements or had the bar simply been lowered?\\n The Bank is better at managing its numbers than at managing its \\nprograms. What is needed is a bona fide external audit by private \\nsector companies onsite to determine the lasting contribution of Bank \\nprojects in the poorest countries after a 3-5 year operating history \\nand to provide a continuing benchmark for the efficacy of Bank aid. \\nAuditors would report directly to the legislative and executive \\nbranches of the Group of Seven (G7) governments. Individual program \\naudits and aggregate evaluations of performance would be published and \\nthe exercise repeated every 3 years.\\\\2\\\\\\n---------------------------------------------------------------------------\\n \\\\2\\\\ Senator Crapo of Idaho and Senator Enzi of Wyoming focused on \\nthe issue of an external performance audit of World Bank programs in \\nthe 106th Congress. See S. Con.",
"Res. 136 in the 2nd session.\\n---------------------------------------------------------------------------\\n Five to seven million dollars or less than \\\\2/10\\\\ths of 1 percent \\nof the U.S commitment to the Bank's International Development \\nAssociation (IDA) funding for the next 3-year cycle, would pay for the \\ncost of an audit of the performance of a \\\\1/3\\\\ sample of 3 years of IDA \\nprojects.\\n Bank objections to external examination have centered on damage to \\nthe institution's morale, on the waste of funds and on the irrelevance \\nof a past record that has been allegedly rectified by latest version of \\nthe ``New Bank''.",
"This last has been the routine response by a series \\nof managements over the past three decades.\\n The technicalities of client confidentiality and sovereignty rights \\nof nations that wish to evade scrutiny have also been advanced as \\nimpediments. For those on the receiving end of billions of dollars of \\nsubsidies that flow from industrialized nation taxpayers through the \\nchannel of World Bank financing, there should be a corresponding \\nobligation. Free access to the facts and the ability to publish them \\nmust become a condition of all World Bank loans.\\n As the Millennium goal of halving extreme poverty has gained \\nmomentum, donor nations are poised to fund an exponential increase in \\ndevelopment aid--a $50 billion doubling of annual flows to the poorest \\nnations by 2010 and another $50 billion increment previewed for 2015. \\nThe Bank will get more than its share. Then there is the windfall of \\nso-called ``debt relief'' where the Bank extorted 100 cents on the \\ndollar from the G7 for a $46 billion portfolio of worthless developing \\ncountry loans on which it had been sitting for more than two decades.",
"\\nThe result is an assured stream of funds on automatic pilot to fill \\ndeep holes in the Bank's balance sheet and then pour out as \\nunauthorized new aid.\\n Giving masses of money does not end our responsibility to the \\ndeveloping world. Donors have an inescapable interest in the uses to \\nwhich aid is put and the results that aid achieves. Sums this \\nsignificant must be weighed against alternative uses for scarce \\ntaxpayer resources.\\n This is the moment to insist that the World Bank be under serious \\nand continuous external review. The Bank must become the examplar for \\nthe transparency and accountability it commends to the developing \\nworld.",
"Provision for a tri-annual external performance audit must \\nbecome a condition of approval of the Gleneagles accord on debt relief \\nand the funding of future aid. There will be no reform without the \\nrecognition of past failure.\\n\\n\\n Chairman Lugar. Thank you very much Dr. Lerrick. I \\nappreciate this panel. I think you had an extraordinarily \\nprofound influence upon our deliberations here.\\n Let me just start with basics to add to our own \\nedification. First of all, let's say a development bank decides \\nthat a road in a particular country is going to be of value, or \\na network of roads, several roads. Did the road get built? \\nYou've addressed that in a way, Dr. Lerrick. Maybe half of the \\nroads don't get built, or some percentage. If a school is the \\nobjective, did the school actually get built? Physically, did \\nthe money come to fruition with completion of a project?\\n Now you're raising questions, obviously, beyond that.",
"But \\nthat's sort of fundamental, and one of the audit questions to \\nbegin with is did it happen, as opposed to the money being \\ndiverted to other purposes by a government or contractors.\\n But, second then, you're raising more difficult question, \\nshould the road have been built, or, in fact, when the road was \\nbuilt, what difference did it make to the country or specific \\npersons who might use the road? Did it disrupt the environment \\nor completely change commerce in diverse ways? So that this is \\na question which then verges, some would say, upon the \\nsovereignty of the country. Officials there would say, we're \\nthe folks who were elected or appointed, or however they got \\nthere, and we are making some judgments about what is important \\nfor our country. And we think that school ought to be built and \\nthe road ought to be built.",
"Are poor people helped? The \\nMillennium idea that somehow we can lift millions of people \\nfrom desperate poverty is sort of an outside evaluation on our \\npart, humanitarian part. Others in the country would say, we \\nknow best how to do this.\\n Let's accept the fact that the internal audits that are now \\nbeing conducted, however one wants to characterize the renaming \\nof them and so forth, are inadequate and maybe worse. But let's \\nsay that we had a truly independent audit that was \\nincorruptible, not like the companies that were auditing Enron, \\nthat supposedly were outside Enron.\\n Let's say we find these honest people who are bright, who \\nunderstand the world, and they weighed into this.",
"First of all, \\ncan you find such persons? And then, second, who does set the \\nphilosophy, or the basic parameters of what is helpful to poor \\npeople or to development in a way that is internationally \\naccepted? We're talking about international banks, different \\ncultures, different histories all looking at these things. \\nAnyone want to make a comment about that sort of general set of \\nquestions? Please, Doctor.\\n Dr. Levine. Thanks very much. I'll tackle a couple of the \\ndimensions of them.\\n The programs that the development banks finance are \\nnegotiated, as you know, with the developing country borrowers. \\nAnd those borrowers have to repay the loan, albeit on often \\nsoft terms. And so it is very much the case that the resources \\nare shared resources.",
"The designs are or should be shared \\ndesigns and the goals of the programs are, themselves, shared \\nbetween the development banks and the national governments.\\n Chairman Lugar. Is it taken for granted now that the people \\nat the development banks know something about the country? In \\nother words, is there engaging in this dialogue with----\\n Dr. Levine. Yes.\\n Chairman Lugar [continuing]. The leaders? That this is an \\nintelligent, up front way of saying how can we help people?\\n Dr. Levine. Right. My point is that unlike perhaps granting \\nagencies, development banks actually do develop their loans in \\ncollaboration with national counterparts.",
"Who among that group \\nis informed about local conditions one can argue. But they are \\nshared programs. And what those programs can generate if \\nthey're evaluated effectively against their ultimate aims--the \\nmore kids in school and so the people being moved above the \\npoverty line. What that can generate is knowledge that then the \\ndeveloping country governments can use to assess whether or not \\nthat's the right use of both the development bank financed \\nresources and their own.\\n I'm thinking of the value that the U.S. Congress has seen \\nin things like the evaluation of Head Start, the evaluations of \\nthe income support and job training programs. The current, \\nreally laudable evaluations that the U.S. Department of \\nEducation is undertaking--this is the kind of knowledge that we \\ngenerate for our own social programs and public investments, \\nand that legislative leaders in this country use to decide, \\nwell, what do we do next? How do we safeguard the interests of \\nthe taxpayer?\\n So I guess I would resist the idea that the independent \\nevaluations would be done solely for the benefit of the \\nagencies.",
"The long term goal is that they'd be done to inform \\npublic spending priorities in the countries themselves. That's \\nthe end goal.\\n Dr. Lerrick. Senator, first, I frequently say that on my \\ntombstone they're going to write ``It's not as simple as he \\nthought''. Because that's what usually people say when I talk \\nabout these issues. I truly believe these are very simple \\nissues. I think, first, one of the lessons we've learned over \\nthe last 50 years, why it took 50 years, I can question, is \\nthat aid does not succeed, projects do not succeed, unless the \\nrecipient wants it to succeed, has an interest in the project. \\nThat was viewed as a revolutionary concept as recently as 6 \\nyears or 7 years ago when David Dollar wrote it.\\n But so first let's assume the host government chooses the \\nproject, decides this is a priority of our people. Second, one \\nof the issues here is there is a terrible problem in aid that \\nevery measurement is done on inputs. At the World Bank now they \\nbasically measure inputs of cash.",
"Now they're saying we're \\ngoing to measure outputs because we're going to measure the \\nnumber of textbooks arriving at the schools, the number of \\nteachers trained, the number of miles of roads built. But those \\nare still inputs.\\n What we should be measuring is number of children who can \\nread, the number of roads that are passable and workable after \\n5 years, not how many roads were built on the day we started. \\nAnd those are very easy to quantify. This is not to go out and \\nmeasure the number of roads that still are functioning after 10 \\nyears or the number of children that can read or the number of \\nbabies that have been vaccinated. It's easily audited, it's \\neasily evaluated.\\n And, in fact, that's why one of the areas that I've focused \\na lot of research on: turning aid from a loan-based mechanism \\nto what I call a performance-based grant mechanism.",
"Where you \\nliterally only pay money upon audited performance. That will go \\na long way to achieving our goal.\\n The second question you raised is a much more difficult \\nquestion. How do you translate number of passable roads to how \\nhas that raised the income level of the people in the country? \\nThat's a much more difficult question and I don't think we have \\nthe metrics to do that. But I think the first step is just \\nmaking sure that the roads are built and they're still \\nfunctioning.",
"And we can measure the traffic over the roads.\\n Chairman Lugar. Let me just comment anecdotally, that in \\nour own country with the No Child Left Behind concept we've \\nbeen trying to evaluate how third-graders, eighth-graders and \\nwhat have you are doing, maybe all the way through the grades \\nas you magnify those tests. Of course you might point out, why \\ndo states choose how much evaluation they want? Some states \\nhave tougher tests than others and so forth. But let's take for \\ngranted that it's a reasonable concept here. We find out that \\nmaybe 70 or 75 percent of children are achieving third grade \\nresults or something of this sort.\\n The idea is that therefore, on a performance basis, people \\nought to be rewarded for achieving this. But that is not so \\neasy because the rest of the schools there, they would say we \\nhave special problems.",
"Without enumerating all of them, from \\neducational conferences you have a long list. Do you mean this? \\nAre you going to shut down these schools that are \\nnonperforming? And we say, well no, we opened those up to other \\npeople and we try to shore up things. But the fact is, you \\nknow, a great deal of money is going into these programs, \\nFederal, state, local. So here we're wrestling with problems \\nthat are profound. Ultimately you raised the question, if \\nyou're being difficult about it, even if people can read third \\ngrade level, how does that affect their performance? Are they \\nlikely to have higher incomes, better lives, all the rest of \\nit?\\n But now you're saying, keep it simple. Don't begin to get \\nprofound to the third or fourth order judgments, just see \\nwhether, after 5 years, the road still works, or whether in \\nfact the school got built and some children entered it and \\nlearned something. They may be more modest goals. And that's \\nsort of important because as we try to structure this \\nindependent audit system, wherever it's going to come from, the \\nkinds of questions we asked this group to evaluate will \\nprobably determine the public confidence in this.",
"And that kind \\nof structure can come from you as experts in your experience, \\nprobably better than from us. That's why I'm raising these \\nquestions.\\n Dr. Lerrick. You have chosen the most controversial issue \\namong the areas we're talking about, which is education. \\nThere's a huge debate in this country about evaluation.\\n I think you're right, it has to be kept simple. It has to \\nbe transparent, it has to be simple, everyone has to recognize \\nhow it was done and accept that this is a valid metric for \\nmeasuring the performance. As I said, one way of doing this, \\nwhich makes it simpler, is to say, we're only going to pay, \\nwe're only going to deliver cash dollars based on each child \\nthat can pass a literacy test, we will pay aid of this amount.",
"\\nFor each child vaccinated against measles we will pay $4.50 \\nupon independent audit.\\n When you think of the World Bank, all its client countries \\nare viewed as similar. They're not. There is one group of \\ncountries, what we call the middle income countries that have \\ntotally different problems from the really poor countries, such \\nas Africa. The poorest countries that don't have access to \\ncapital, private capital, they are so far away from what we \\nwould call the desired goal, that getting them 90 percent of \\nthe way there is not--should not be controversial. The last 10 \\npercent may be controversial, but we have a long way to go \\nbefore that happens.\\n Chairman Lugar.",
"Dr. Easterly, do you want to weigh in on \\nthis?\\n Dr. Easterly. Yes, Mr. Chairman, if you'll permit me to \\nreturn to your original question about how to work with \\nsovereign governments. I think this is an issue that the aid \\ncommunity has been stuck on for 50 years and has not found a \\nway out of this conundrum. They're so stuck on it that they--\\ndespite, as Dr. Lerrick pointed out, despite the increased \\nknowledge that we have, that it is obviously counterproductive \\nto give aid to corrupt autocrats, which just props up gangsters \\nin power to stay longer in power.",
"Amazingly enough, despite \\nthat knowledge, there has been no change in the aid community \\nin how selective it is to give money to better governments.\\n The World Bank's latest ratings on democracy and corruption \\nshowed no--there's no association whatsoever between the amount \\nof aid a country receives and how corrupt it is or how \\ndemocratic it is. And that I--for example, just to give you a \\nparticularly egregious example, Paul--the dictator Paul Biya of \\nCameroon, who's been in power for decades, he had something \\nlike 80 percent of his government revenues from foreign aid, \\ndespite the fact that Cameroon also has oil revenues.",
"Where \\ndoes that kind of result come from? It comes from the intense \\npressure that there is to try to help Cameroonians, individual \\nCameroonians, to help poor people, even if they are so unlucky \\nas to be stuck with a bad government.\\n And, you know, that conundrum leads to continued engagement \\nwith very bad governments, even failed states are now getting \\naid under the rubric of reconstruction aid, which is also \\nfunneled through the warlords that are now in a temporary \\ncoalition government in places like Democratic Republic of the \\nCongo.\\n What is the way out of this conundrum? First of all, you \\nknow, the evaluator should hold the World Bank and other aid \\nagencies accountable for how selective they are, for how they \\nchoose the governments that receive their money.",
"It's a \\ndisgrace that Paul Biya is still getting aid money.\\n And second, that the aid agencies like the World Bank \\nshould explore ways in which they can try to help individuals \\ndirectly, like Dr. Lerrick was talking about, bypassing the \\ngovernments. And this--of course they have to be sensitive to \\nthe issue of not undermining the sovereignty or the political \\ndevelopment of the host country, but they can do so by working \\nto try to empower individuals from below to make them better \\neducated, to give them better roads. All of these things help \\nindividuals and, you know, better individuals can themselves \\ncreate the conditions for political reform and form the next \\ngeneration of political leadership, which could give us better \\ngovernment.\\n The attempt to change bad government directly through aid \\nconditions has totally failed. It's been tried over and over \\nagain. It's been a complete failure. So I think the answer is \\nto just be really ruthless about screening out the bad \\ngovernments, not giving them money, but if there is still the \\nneed to help desperate poor people in those countries, then try \\nto help them as individuals, not through the government.\\n Chairman Lugar.",
"In the governance of these banks, obviously \\nthe United States plays a role, we play a large one. We were \\ndiscussing today whether we're paying our fair share and \\nwhether we're up to the plate. Still these are multinational \\nbanks. There are a lot of people here.\\n This may be an extreme case, but in February the United \\nStates had the Chairmanship of the Security Council at the \\nUnited Nations. I was honored to be invited to give a speech to \\nthe Security Council, which I did, and we did not dwell upon \\nthese particular issues, but we did in a sense by getting into \\nthe Human Rights Commission reform.",
"Just after visiting with \\nthe Security Council about this, Senator Voinovich, Senator \\nColeman and I visited with a group of 77 leaders. These are \\ncountries that clearly have very special problems in terms of \\ndevelopment. They have a feeling that by banding together they \\ncan be heard with regard to the members of the Security Council \\nor the Permanent Five or what have you.\\n But here we have an issue about who is going to evaluate \\nhuman rights. Who ought to be eligible to be on a human rights \\ncommission that is trying to bring about human rights for \\npeople? There are profoundly different views on this. I don't \\ncast dispersions on any of those with whom we visited, but some \\nmight suggest, who is to be the judge of this? Is this a \\nunilateral decision of the United States or Great Britain or \\nFrance? Furthermore, if it is, that's why we have a group of \\n77, to stop that kind of evaluation. We are evolving in our \\npolitical procedures, they would say.",
"You really can't get \\nthere all at once.\\n So if there are some human rights problems, that's been \\nmankind's fate and the fate of the poor people who lived under \\nthose governments. This is a big question. Who will evaluate \\nhuman rights--on the commission, there are 40-some members who \\nwould cast just judgment and make criteria.\\n My guess is, back at the headquarters of some of the \\ndevelopment banks there are similar issues of countries saying \\nour place in the sun comes from solidarity with some others who \\nhave similar problems. And, as a matter of fact, all together \\nwe're a majority, if you vote one by one, but maybe not if you \\nvote by the stock in the bank or what the contributions are.",
"\\nBut for whoever is trying to govern these situations, this must \\nbe very, very difficult. In any event, the United States \\nobjects to whatever the compromise is, we vote against it, \\nwe're one of four countries in the world. All the rest are \\nwilling to accommodate the fact that Rome is not changed in a \\nday and you have to sort of understand these conditions.\\n I raise this simply because, as reformers or as people \\ntrying to generate this, we're dealing with people who have \\nreal lives in these banks.",
"You've been there Dr. Easterly, so \\nyou understand acutely and you very modestly said in your own \\nexperience as a whistleblower, this is not a comfortable \\nsituation. In fact, termination likely to come to you. And help \\nme a little bit, how do we influence some sort of reform given \\nsovereignty, given the feeling that if we are small and we band \\ntogether to have a common culture, which may not be quite \\nthere, or may, in fact, not be there at all, but nevertheless \\nmight be helpful to us in our leadership in those countries \\nright now?\\n Dr. Easterly. Mr. Chairman, I think the ideal is to get the \\nfeedback from the poor intended beneficiaries themselves. And \\nthat the evaluators that are truly, truly credible are those \\nthat find ways to really represent--give a political voice to \\nthose poor people that----\\n Chairman Lugar. Let's say they go into a country and they \\ninterview the poor people----\\n Dr. Easterly.",
"Uh-huh. [Affirmative]\\n Chairman Lugar [continuing]. And the government says, well \\nyou're interfering. You're like an NGO that's trying to foment \\ndemocracy in our country. I'm just curious, how, as we search \\nfor these evaluation methods, do we really get to the \\ngrassroots without retribution of the people who gave the \\ninterviews or who saw these auditors?\\n Dr. Easterly. Right. That's a very--these are very subtle \\ninsights and you rightly put your finger right on the core of \\nthe problem. And I think it has--the independent evaluation \\nunit would have to be independent in another sense in that it \\nwould have to be independent from rich countries so it's not \\nseen as the tool of rich country governments.",
"You're not trying \\nto interfere in other countries' internal affairs.\\n It has to be just a worldwide network of truly independent \\ngrassroots people who--and, you know, academics and researchers \\nwho have no political allegiance. And it certainly should \\ninclude people from the poor countries themselves in large \\nnumbers. So that it would not be a representative of the U.S. \\nGovernment trying to meddle in the politics of Cameroon or \\nsomething.\\n Chairman Lugar. Dr. Lerrick?\\n Dr. Lerrick. I disagree with much of what Dr. Easterly \\nsaid. Let's be clear, there is a small group of countries in \\nthis world that are financing all development aid. And the fact \\nof the matter is the donors are the ones who must receive the \\naccount as to whether their money is being spent. Former \\nSecretary of Treasury Paul O'Neill use to refer to the \\ncarpenters and plumbers of the United States, that he was not \\ngoing to dump the money of the carpenters and plumbers into \\nthis bail out or this aid agency or this failed program.\\n I think it cannot be a solely U.S. initiative, that's not \\nwhat these institutions are.",
"But I think it has to be a \\ncoordinated effort of the donor countries to establish what are \\nthe benchmarks for aid and for performance.\\n The Bank has often hid behind some of the issues you \\nraised, what they call the technicalities of client \\nconfidentiality, that they just can't release information about \\ntheir projects, or the sovereignty rights of nations. But the \\nproblem here is that for those on the receiving end of billions \\nof dollars of subsidies that flow from industrialized nation \\ntaxpayers through the channel of World Bank financing, there's \\na corresponding obligation. They must give free access to the \\nfacts and the ability to publish them. And the control \\nmechanism is that the report, the audits, the evaluations will \\nbe published, at the individual project level, at the country \\nlevel, at the combined bank level.\\n I think, Senator Lugar, a good idea would be if you were to \\ntry to implement this process, to set up a commission of, I \\ndon't know whether you would call them leading experts or \\nsenior statesmen, who would oversee the establishment of what \\nthis audit would look like, how will it be performed, what \\nwould be the standards, who would execute the audit?",
"Again, a \\npublic process, hearings, input, and there should be on that \\ncommission representatives of the major developing countries to \\nget their input as well.\\n But I think you have a much deeper problem in this whole \\nprocess which is the fundamental problem in the aid business: \\nThe donors are more desperate to give than the recipients are \\nto receive. If that is true, aid will fail. It cannot but fail, \\nbecause, I would ask you, what would you do, and when Secretary \\nLowery spoke about this, what are you going to do if Chad just \\nsays no, or Congo says no? We're just not going to implement \\nthe anti-corruption measures. And they dare you to say you're \\nnot going to give the money? What are you going to do?\\n The President of Chad has already said, if you cut off my \\nfunding, it doesn't bother me. It's the poor people of Chad \\nthat are going to suffer.",
"And they were poor for centuries \\nbefore and they'll just be poor again until you decide to give \\nme my money. And that's a very difficult position.\\n Chairman Lugar. That is the problem and, you know, let me \\njust say that this is, you know, acutely the problem felt by \\nthe American people, who are compassionate, who see hundreds of \\nmillions of very poor people and feel surely there is some way \\nwe can help those people. So then we have the mechanisms of \\nbanks, and even our own foreign aid or the Millennium Challenge \\nin which we try to do this. But, as you say, it could very well \\nbe that our overwhelming sense of conscience that we ought to \\ndo something is more overwhelming than the recipient side of \\nwhat is to be done with the money.\\n Dr. Lerrick.",
"And it's not just in the official sector. The \\nGates Foundation has encountered the same problem. They've \\ntried to implement what would be a kind of performance-based \\naid, where they were actually going to go in and audit the \\nperformance. But in the end, when Kenya refused to comply, the \\nhead of the Gates Foundation said very simply, the greatest \\nfailure of a foundation is not distributing the money. If that \\nis a fact, then there can not be a successful outcome.\\n Chairman Lugar. Yes. Dr. Levine.\\n Dr. Levine. I've been listening carefully to my colleagues \\nand I think that in this discussion we are conflating a couple \\nof different interpretations of the word evaluation.",
"One being \\nmore linked to the accountability mission: Did something pass \\nor fail? So getting to your education example, did schools pass \\nor fail in terms of how students did on tests.\\n The other function of evaluation is to look at the \\nrelationship between impact, passing or failing, with what was \\ndone in the first place, what approaches were taken. So in the \\neducation example, what's the relationship between say, class \\nsize and how kids do on tests. That, over the long term, is the \\nreal contribution that can be made from evaluation.\\n There's obviously a short term need to look at that pass/\\nfail question, but then it leaves you with exactly what you \\nposed, well, what do we do about the failures? Do we neglect \\nthem entirely? Do we close down schools? No, of course not. \\nWhat you do is you look for ways to improve. Where do you look? \\nThere's the kind of eminence-based approach of asking a bunch \\nof very smart people what they think. That's what we often do. \\nThen there's a more evidence-based approach, which is that you \\nactually look carefully, do in-depth evaluations, and learn \\nfrom comparing across different approaches and comparing doing \\nsomething with not doing anything.\\n I just want to highlight that as we talk about evaluation, \\nindependent or otherwise, it's useful to make that distinction.\\n Chairman Lugar.",
"I'm trying to gather now, from your \\ncollective testimony, just who ought to be appointed, and by \\nwhom, and who should pay for it.\\n You mentioned the Gates Foundation. One suggestion would be \\nthat this is not going to happen, this evaluation, from a \\ngovernmental entity or something that the Congress conjures up, \\nbut rather there must be some independent people out there who \\nhave independent money and so forth. And maybe the Gates \\nFoundation or others might provide this sort of thing. But even \\nif they do, who selects the persons who go down in the weeds, \\nas you suggested, Dr. Levine, as opposed to having high-minded \\nthoughts without the evaluation in the field? And what do we do \\nin the Congress? Do we try to provide through legislation a \\nprovision for these independent audits, or a group that does \\nthis kind of work? Do we offer some criteria as to who ought to \\nbe involved in it and some idea of who pays for it?\\n I'm just grappling with the questions that you've raised, \\nwhich I think are very important, and which we wanted you to \\nraise, so that we're not left at the end of the hearing with \\nthe thought that, sadly enough, back in the banks are still \\nthese people who we don't think are as independent as they \\nought to be. Even though they're doing better and the whole \\nquestion has been elevated by five hearings plus all of what \\nthey're doing, we're still not quite there.\\n I know you need to leave at some point, Dr. Easterly, so I \\nrespect that.",
"Would you have a go at that first, in the event \\nthat you need to leave our hearing?\\n Dr. Easterly. Mr. Chairman, I think that as far as who pays \\nfor it, I think the aid agencies themselves should all be \\nasked, and we should try to start this as an international \\neffort, but we can start with the multilateral development \\nbanks, that they should be required to set aside part of their \\nbudget, it doesn't have to be a huge amount because these \\nevaluations are not that costly compared to the volume of \\nlending.\\n Chairman Lugar. Set it aside outside their structure.\\n Dr. Easterly. Set it aside outside the structure to fund an \\nindependent evaluation group that's truly independent, not like \\nthe name change that both Dr. Lerrick and I have made fun of.",
"\\nAnd, you know, there are lots of development professionals, \\neconomists, academics, social reformers of all kinds that are \\nout there that will be judged on the basis of just professional \\nstandards, whether they're qualified to do evaluations, and \\nthey can be assembled in a very decentralized, loose network. \\nIt doesn't have to be a large bureaucracy. But funded by these \\nfunds that are set aside from the development agencies.\\n I think they can operate in the same sort of independent \\nway that we have an auditing industry that provides audits on \\ncorporations, you know. It's not part of the U.S. Government, \\nit doesn't serve sort of U.S. Government strategic policy.",
"And, \\nin the same, I think the--to disagree a little bit with my \\nfriend, Dr. Lerrick, I think there needs to be a firewall \\nbetween anything that would smack of U.S. Government strategic \\ninterest or the strategic interest of any donor country. And \\njust the goal of pure altruistic aid to help the poor. And \\nthose auditors should be only concerned with the effectiveness \\nof altruistic aid to help the poor.\\n There is a large group of auditors available out there that \\ncould be hired. A lot of them could be from developing \\ncountries themselves. There are many highly trained \\nprofessionals in developing countries that could be paid to do \\nthis.\\n Chairman Lugar. Dr. Lerrick?\\n Dr. Lerrick. First, Senator Lugar, I'd just like to call \\nyour attention to Senators Crapo and Enzi who actually put \\nforth a Senate resolution in the 106th Congress calling for an \\nindependent audit of IDA programs. The question--I'll divide \\nthe question in two parts, who should pay for it? That really \\nshould not be a major problem because, as Dr. Easterly said, \\nwe're not talking about large amounts of money. It's a \\nrelatively small amount of money.",
"I will tell you that I have \\nbeen approached by two foundations that are willing to finance \\nsuch a performance audit. The main difficulty is cooperation, \\nnot participation, but cooperation of the World Bank, which \\nmeans, literally, just access to the files, to the documents. \\nWhat is the project? What was the project supposed to do? What \\ndid it cost? Where did it go?\\n And, as Dr. Easterly said, it's not very difficult finding \\nauditors to do this. I would propose that a commission could be \\nset up of what I would call senior statesmen to supervise the \\nstructure of what the audit process would be and how it would \\nbe implemented. And then you would actually have private sector \\nauditing firms go out and literally compile the reports in \\ndifferent countries.\\n There are major multinational firms that do this as a \\nbusiness.",
"And they could do this as well. If you wanted to go \\nto a more grassroots approach and have many little individual \\nauditors I think it would be more difficult, but it is \\nfeasible.\\n The third method would be, basically, to say that we are \\ngoing to have a performance audit and have it report to the \\nlegislative and executive branches of the leading donor \\ncountries, all of them, and I agree with Dr. Easterly, it has \\nnothing to do--it should have nothing to do with strategic \\ninterests or foreign relations interests. It's purely \\neffectiveness of the programs.",
"And each one of those \\ngovernments has the counterpart to the GAO. Why can't the GAO \\nsupervise on behalf of Congress and say this is how the \\nstructures were done, these were the processes that were put in \\nplace, we consider them reasonable and pass judgment not on the \\nindividual programs, but on the mechanics that were \\nimplemented. That would be a third way of going about it.\\n Chairman Lugar. We might appropriate money for the GAO to \\nbegin with.\\n Dr. Lerrick. Again, appropriate the money and have the GAO \\nto review how the process was done.\\n Chairman Lugar. But then how do they get the records in the \\nWorld Bank? The GAO goes over there and----\\n Dr. Lerrick. No. The World Bank would have to say we are \\ngoing to cooperate.",
"And that will only come if the major \\nshareholders agree the World Bank should cooperate with this \\nprocess.\\n Chairman Lugar. Dr. Levine.\\n Dr. Levine. Again, I think we're running into a little \\npoint of departure about what the aim of this sort of function \\nmight be. I agree with my colleagues that the financing is \\nsmall, very small relative to the total funds that are \\ndisbursed by the World Bank, the Inter-American Development \\nBank, and the grant-making agencies. So a small share of each \\ndevoted to a collective enterprise would certainly be adequate.\\n But in terms of who and how, I think it depends very much \\non what the aims are.",
"There's the auditing idea. I'm fearful \\nthat would be quite unsatisfying because, in fact, most World \\nBank programs do not even have baseline information. So you \\ncould barely even do before and after comparisons, let alone \\ncomparing what would have happened with a different approach, \\nwhat would have happened in the absence of the program.\\n So I think a collective evaluation agenda needs to be set \\non enduring questions in development: How to get kids in \\nschool, how to prevent HIV/AIDS, and other things for which \\nhuge amounts of money are being devoted against very little \\nevidence. So set that evaluation agenda, establish \\nmethodological standards. As Dr. Easterly said, there is an \\nacademic industry devoted to that practice. And then commission \\nindependent evaluations through an open and competitive process \\nwith the results being disseminated widely, again to stimulate \\nthe kind of learning that we've talked about earlier.\\n Chairman Lugar. I thank you very much. You've been most \\nhelpful, I believe, in giving the parameters of the problem, as \\nwell as some specifics toward solutions. As you suggested, Dr. \\nLevine, there are probably people out there who are going to be \\nable to set some standards. There probably is money to be \\nobtained.",
"It's not very much. Hopefully we will obtain access \\nto the records, imperfect as they may be, as you say. If they \\nare as rudimentary as you have suggested, this is going to be \\ntough for the auditors, but there has to be a beginning at some \\npoint, at least establishment of the independence of the \\nprocess, so that it's not an in-house affair and it's not \\nbusiness as usual.\\n My guess is that even the discussion of the project and the \\nformation of all of this is likely to bring about some salutary \\nresults as countries and banks and so forth think through the \\nimplications of that. We look forward to staying in touch with \\nall three of you. We appreciate your insights and your specific \\npublic testimony today. And so saying, the hearing is \\nadjourned.\\n\\n\\n [Whereupon at 11:37 a.m., the hearing was adjourned. ]\\n \\n\\n <all>\\n\\x1a\\n</pre></body></html>\\n\""
]
| https://www.govinfo.gov/content/pkg/CHRG-109shrg33727/html/CHRG-109shrg33727.htm | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
23 B.R. 499 (1982) In the Matter of PENN CENTRAL TRANSPORTATION COMPANY, Debtor. In re APPLICATIONS FOR ALLOWANCE UNDER § 77(c)(12). Bankruptcy No. 70-347. United States District Court, E.D. Pennsylvania. July 23, 1982.
OPINION AND ORDERS NOS. 4152 THRU 4156 FULLAM, District Judge. Section 77(c)(12) of the Bankruptcy Act provides: "[T]he judge may make an allowance, to be paid out of the debtor's estate, for the actual and reasonable expenses (including reasonable attorneys fees) incurred in connection with the proceedings and the plan by parties in interest. . . . " This Opinion deals with the applications of five of the more active participants in the Penn Central reorganization for such allowances. The applications now before the Court are made by or on behalf of the following: Penn Central Company, which was the owner of all of the Debtor's common stock; the Institutional Investors, a group of insurance companies; Citibank, as agent for a group of 53 lending institutions; the Robinson petitioners, a small group of shareholders of Penn Central Company; and the Trustee of the New York, New Haven & Hartford Railroad ("New Haven Trustee"). The amounts requested by these five applicants aggregate more than $26 million. The Trustees of the Debtor ("the Trustees") expressed their views concerning the subject matter of these applications before the consummation of the Plan; and, at the invitation of the Court, the Securities & *500 Exchange Commission and the Interstate Commerce Commission have commented on the legal and factual issues presented by the applications. While some of these comments can be regarded as questioning certain items and certain legal theories advanced in support of the applications, no actual formal objection to any of the applications has been filed. The absence of significant contest does not, however, relieve this Court of the responsibility of carefully examining the applications to ensure that only permissible allowances are approved. In order to be eligible for reimbursement pursuant to § 77(c)(12), the expenses (including counsel fees) incurred by creditors and other parties in interest must be shown to have been of benefit to the estate. Woods v. City Nat'l Bank & Trust Co., 312 U.S. 262, 61 S. Ct. 493, 85 L. Ed. 820 (1941). In addition, of course, the amounts of such allowances must be reasonable. In determining whether particular activities for which reimbursement is sought can properly be characterized as having benefitted the estate, the Court is faced, not with applying a litmus-like test, but with exercising a prudent and realistic judgment. Each reorganization must be viewed in its totality, and each applicant's efforts must be assessed in the context of the entire reorganization process. As stated by the SEC in its comments (Doc. No. 16669, at p. 5): "[A]ctivities or services which are found to be solely, or primarily, in the interests of certain creditors or stockholders and in no way beneficial to the administration of the estate or to a fair and equitable and feasible plan were not intended to be compensated or reimbursed from the debtor's estate." To put the matter succinctly, costs associated with activities helpful to the reorganization process are reimbursable but costs associated with advancing a party's own interests are not. This distinction is easily stated, but not always easily applied, as the discussion of individual applications later in this Opinion demonstrates. Of course, achieving a reorganization is in the interests of all creditors, and every party to the proceeding was undoubtedly motivated by self-interest in pursuing that goal. The distinction to be made is between activities undertaken solely for the private interest of the creditor, and activities which, while beneficial to the private interests of the creditor, also benefitted the reorganization process. Once the threshold requirement of benefit-to-the-estate-and-its-reorganization has been met, there arises the question whether, in fixing the amount of the allowance, the degree of benefit to the estate is a factor to be considered and, if so, how it enters into the calculus. In approving compensation of counsel to the Trustees, pursuant to § (c)(2) of the Act, the Court was called upon to determine the level of counsel's compensation. In theory, and in most cases in actuality, the present inquiry is subtly different: the level of compensation of counsel has already been determined, and paid, by the petitioning creditor; the Court is required merely to determine that the amount paid did not exceed the limits of reasonableness, and is thus properly reimbursable. Thus, in the usual situation under (c)(12), while counsel's standing, the quality of the work performed, degree of difficulty, etc., would presumably have been taken into account by the attorney and his client in their own arrangements, it is unlikely that the extent of benefit to the Debtor's estate or the reorganization process would have much to do with the matter. Moreover, since (c)(12) contemplates reimbursement only for counsel fees actually incurred, the statute provides no basis for implementing a decision by the Court that, because counsel's efforts greatly benefitted the reorganization, the fee should have been higher. Unfortunately, this theoretical distinction between (c)(2) and (c)(12) applications does not, as practical matter, permit the Court to avoid the question whether benefit to the estate should be quantified and taken into account in approving allowances under (c)(12), for at least two reasons: (1) in some *501 instances, the fees previously paid to their counsel by the claimants, for which reimbursement is now sought, were fixed at relatively high levels, and can be approved for reimbursement only if particular benefit to the reorganization process can be taken into account; and (2) in other instances, counsel have not yet been paid, and the attorney-client arrangements contemplate payment in whatever amount this Court approves for reimbursement under (c)(12). Thus, in the final analysis, the Court is required to consider all of the factors which properly bear upon the reasonableness of counsel fees. The starting point is the amount of time expended by counsel, multiplied by the appropriate hourly rates. This is the basis on which special counsel to the Trustees have been compensated, see In re Penn Central Trans. Co., 440 F. Supp. 569 (E.D.Pa.1977), and has been generally adhered to (with slight modification in certain instances, as for example where a law firm was engaged to conduct specific litigation warranting some increase). The specific fee structure governing compensation of special counsel is as follows: For the period through September 1976, $90 per hour for partners, $60 for associates, and $15 for others (clerks and paralegals); for the period from October 1976 through December 1977, $100, $60 and $20, respectively; and for later periods, $110, $70 and $25, respectively. (This hourly fee structure will be referred to herein as the "special counsel rates"). To the extent that the present applications seek an award or reimbursement of counsel fees, the special counsel rates will be used as a sort of benchmark, but all of the traditionally accepted norms for awarding attorneys fees will be taken into account. See, particularly Disciplinary Rule 2-106(B) of the American Bar Association Code of Professional Responsibility, and Judge Anderson's opinion in In re N.Y., N.H. & H.R.R. Co., 421 F. Supp. 249 (D.Conn.1976), aff'd, 567 F.2d 166 (2d Cir.), cert. denied, 434 U.S. 833, 98 S. Ct. 120, 54 L. Ed. 2d 94 (1977). In evaluating these applications, I have concluded that the extent to which the efforts of counsel were of benefit to the Debtor's estate and its reorganization should be taken into account, but I flatly reject the measurements of these benefits suggested by some of the pending applications. The fact that counsel played a part, along with many others, in preserving or enhancing asset values, and preventing their dissipation, does not mean that counsel created these asset values. Moreover, the actions for which reimbursement is sought were undertaken in the first instance for the benefit of the applicants; and the applicants have recovered these benefits through the distributions provided in the Plan. Reimbursement of expenses incurred by participants in reorganizations serves a valid public policy of fostering participation in reorganization proceedings. Participation by interested parties increases the likelihood that the proceedings will not be dominated by a select few, as was the case in many of the equity receiverships which preceded § 77. Reliance by these applicants on cases awarding attorneys fees in antitrust and securities class actions is misplaced. In those cases, there is the much broader public policy of providing an incentive for the private enforcement of Congressional mandates; and the fee awards in such cases also take into account the equitable concept that counsel should share in the fruits of their labors. Bankruptcy reorganization proceedings are primarily for the benefit of the claimants. The common-fund concept and other class-action doctrines have no place in § 77(c)(12) analysis. The Court's task now is to apply these principles to the pending applications. It is helpful first to review the activities for which reimbursement is sought, and their relationship to the reorganization process; and then to address separately each of the five applications. I. REVIEW OF REORGANIZATION ACTIVITIES The activities in question may, for convenience, be roughly divided into five categories. *502 The first four relate to specific stages of the reorganization proceeding, and the fifth to the Pennco litigation. 1. June 1970 to December 1973; pursuit of a traditional income-based reorganization of the railroad Throughout the entire period from the filing of the bankruptcy petition until the conveyance of the railroad to ConRail on April 1, 1976, the Trustees were faced with the overriding task of continuing to provide rail service, and of making the decisions and solving the problems associated with the day-to-day operation of one of the nation's largest rail carriers. But from the standpoint of reorganization planning, their task during the initial period of reorganization was first to determine what needed to be done in order to make the railroad sufficiently profitable to support a reorganization plan, and then to try to achieve the necessary changes. It was almost immediately apparent that many of the obstacles to profitability were beyond the control of the Trustees. Nevertheless, it was encumbent upon the Trustees to effect the improvements which were within their control, and they did this to a remarkable degree. It was also necessary for them to identify the changes which would have to be made by others if the reorganization were to succeed, and to do what they could to urge that corrective measures be taken by others. Support from the public sector for the required changes (involving such matters as regulatory constraints, labor arrangements, elimination of unprofitable freight service, and elimination or subsidization of passenger and commuter services) was, unfortunately, slow in developing. By March of 1973, this Court was compelled to conclude that Penn Central could probably not continue its rail operations after October of that year. In July of 1973, the Trustees proposed a Plan of Reorganization which would have involved the sale of Penn Central's rail operations to other carriers. The New Haven trustee and the Penn Central Company also proposed plans of reorganization. The ICC held accelerated hearings on these plans, but rejected all of them in September of 1973 because they did not guarantee the continuation of rail service. By this time, Congress was considering various legislative solutions to the problems of Penn Central and the other northeastern railroads in reorganization. On January 2, 1974, the Regional Railroad Reorganization Act of 1973 (RRRA) became law. During this initial period, the New Haven trustee and the institutional investors and, to a lesser extent, the Penn Central Company, actively participated before the Court. They were, of course, not alone. The indenture trustees were also active, to the extent they regarded as consistent with the fiduciary obligations imposed by their respective indentures. More important adversary roles were played by the Institutional Investors, as holders of a large portion of Penn Central's debt securities, by the New Haven trustee, as holder of a large secured claim and a large potentially secured claim, and by the Penn Central Company as the single shareholder. The efforts of these parties were generally directed to the preservation of the Debtor's assets. Although their efforts did not always meet with success, their views were very important to the integrity of the decision-making process. I will not burden this Opinion with a lengthy catalog of the important issues decided during this period. It suffices to state that major issues concerning the sale of assets, financing of equipment and other capital acquisitions, and reorganization planning, arose on a daily basis during this initial stage of the reorganization. 2. Implementation of the RRRA Enactment of the RRRA in January 1974 triggered two related lines of litigation, the hearings and preliminary determinations mandated by the RRRA itself, and challenges to the validity of the statute. Ultimately, the Special Court held that the RRRA provided a "fair and equitable process" for the reorganization of the Penn Central and the other northeast rail carriers in reorganization, and the Supreme Court held (in December 1974) that the RRRA, as *503 supplemented by the Tucker Act, was constitutional. Once these hurdles were surmounted, there was another round of activity centered on the production by U.S. Railway Association of the Preliminary and Final System Plans, legislative amendment to the RRRA, and the maintenance and financing of rail service pending the conveyance to ConRail on April 1, 1976. Throughout this period, the New Haven trustee, the Institutional Investors, and Citibank were among the most active participants. Needless to say, important constitutional principles, and very large amounts of money, were at stake. In the end, the rail assets were conveyed to ConRail, and Penn Central and the other northeastern carriers were relegated to the Valuation Case litigation before the Special Court to obtain compensation for the conveyed rail assets. 3. Formulation and Approval of the Plan With the advent of the RRRA and the decision of the Supreme Court upholding its constitutionality, it became apparent that the increasing erosion of the Debtor's estate from its rail operations would come to an end on April 1, 1976. The next task was to devise a plan of reorganization which, while adequately taking into account the uncertainties associated with the RRRA's approach, could be implemented without awaiting the final outcome of the Valuation Case litigation, and without the delays which would be involved in litigating to conclusion all of the myriad other legal issues at hand. With the approval and encouragement of this Court, the Trustees instituted a series of meetings with a large group of interested parties, beginning in late 1975, to explore the possibilities of achieving a consensual plan. Although no firm conclusions were then reached, a smaller group of interested parties, consisting of the New Haven trustee, Citibank, and the Institutional Investors (known as the "Friday Group" because most of its early meetings occurred on that day) emerged as the successor to the original larger group, and continued its exploratory discussions. Throughout 1976, the Friday Group worked diligently and productively toward the formulation of an acceptable Plan of Reorganization. While it would be an overstatement to suggest that the Plan which was ultimately adopted was the work of the Friday Group, there can be no doubt that the Friday Group played an important and essential role in the planning process. It was necessary to assemble and analyze the vast amount of information available from the Trustees and other sources, having to do with cataloguing the assets which would remain after conveyance and determining their value, and identifying and estimating the amounts of potential claims against the estate; tasks which, with their own staff reduced in the wake of the conveyance to ConRail and occupied with the details of the conveyance and organizing the post-conveyance operation of the estate, the Trustees gladly permitted Citibank to undertake. At the same time, the Friday Group sought to relate the information available to a possible legal framework for a reorganization plan. In July of 1976, the Friday Group published a document entitled "Principles of Reorganization", and shortly thereafter Citibank made available its comprehensive studies of Penn Central's retained assets and claims, its potential cash flows, and its leased lines. The Trustees evaluated these work-products in the light of their own reorganization planning, and concluded that the stated principles might well provide a basis for a consensual plan of reorganization. While the Trustees proceeded to develop and draft a plan of reorganization, the Friday Group actively sought to "sell" the program to other parties in interest, and worked closely with the Trustees in their efforts. This period of interaction between the Trustees and the Friday Group was marked with some acrimony, but a large measure of cooperation. Eventually, the Trustees filed their proposed Plan of Reorganization on December 17, 1976, and the Friday Group supported it. A key element in the Trustees' Plan was the proposed compromise by the Government *504 of almost all of its claims against the estate, including, most importantly, its mammoth "super-priority" claims under § 211(h) of the RRRA. Members of the Friday Group participated in the discussions between the Trustees and government representatives which led to acceptance of the compromise. Amendments to the Plan were filed in May of 1976, and evidentiary hearings were held in June. Thereafter, further amendments dealing with the treatment of tax claims were filed in November, and were also supported by the Friday Group. This Court ultimately approved the Amended Plan in March 1978. This brief sketch of the planning process does not convey the full flavor of the tremendous contribution made by the Friday Group. Several of the fundamental premises of the Plan originated in the work of the Friday Group. Its out-of-court efforts in explaining the Plan to other interested parties undoubtedly contributed to its widespread acceptance. The briefs filed by Friday Group members were very helpful to a proper understanding of the legal and factual premises of the Plan. The Friday Group's attention to the details of reorganization documents, its evaluation of the possible impact of appeals, and its analysis of the tax implications of the Plan also provided a valuable contribution to the reorganization process. As the Plan proceedings moved forward, the Special Court proceedings also accelerated. Members of the Friday Group, as well as the Penn Central Company, actively participated in the Valuation Case litigation before the Special Court. 4. Implementation of the Plan After the Plan was approved, there was a great deal of work having to do with the voting process, the confirmation of the Plan, appeals, the details of the reorganization documents and the Consummation Order, and the negotiation of certain settlements. 5. The Pennco Litigation Through its wholly owned subsidiary, the Pennsylvania Company ("Pennco"), the Debtor owned or controlled a vast assemblage of business entities, for the most part not related to railroading. About a year before bankruptcy, in order to pay off a large amount of short-term debt and to obtain additional financing, the Debtor had pledged all of its Pennco stock, generally regarded as its "crown jewel", to a group of 53 banks, for which Citibank served as agent, as security for a $300 million loan. Promptly after the bankruptcy petition was filed, Citibank accelerated the loan, which was then in default, and sought to acquire ownership of the Pennco stock. In what was conceived as an interim measure, but actually remained in effect throughout the reorganization, I directed, in Order No. 10, that until further order of this Court, no dividends on the Pennco stock could be declared or paid, and no other fund transfers made to the Debtor by Pennco, except by leave of this Court, after notice to Citibank and an opportunity for hearing. At that juncture, the situation was as follows: Pennco and most of its constituent enterprises were profitable. However, there were some weak spots, and some management problems; and there was widespread concern that Penn Central's bankruptcy would have an adverse impact upon employee morale and upon future availability of necessary credit. It was essential that the values represented by Pennco not be jeopardized. The Trustees had obtained emergency funding in the amount of $100 million from government-guaranteed trustees certificates, the lien of which took precedence over pre-bankruptcy secured debt. It was clear that large additional amounts of capital would be needed. Availability of additional financing without Government guarantees seemed unlikely, and there could be no assurance that further Government guarantees would be forthcoming. There was room for the argument that the Debtor had no "equity" in the Pennco stock, and that the banks right to foreclose might be established. Finally, there was also room for argument concerning the extent to which it was permissible *505 to dispose of assets of the Debtor otherwise than pursuant to a plan of reorganization. Grappling with these problems, the Trustees and Citibank, on behalf of the 53-bank group, commenced negotiations which, in 1972, resulted in a formal settlement proposal. The settlement contemplated that the banks would receive all of the Pennco stock in discharge of the $300 million loan obligation. If Pennco's value increased, the Debtor's estate would share in that increase over a 10-year period, and would receive certain of Pennco's rail assets at no cost. In addition, the banks agreed to provide $150 million in additional equipment financing. The settlement proposal triggered two related lines of litigation, one concerning the merits of the settlement proposal itself, and the other concerning a challenge to the validity of the initial pledge of the Pennco stock. The principal opponents of the settlement agreement were the Institutional Investors, the New Haven trustee, a group of Penn Central shareholders ("the Robinson petitioners") and, ultimately, the United States Government. The challenge to the pledge itself was led by the Robinson petitioners and by special representatives appointed by this Court to represent the interests of bondholders whose indenture trustees were members of the 53-bank group. After extensive litigation, this Court rejected the settlement proposal, not because it was legally impermissible or disadvantageous to the Debtor's estate, but on the ground that its advantages were not so pronounced as to justify authorizing its implementation despite the objections of so many interested parties, particularly the United States Government. Rejection of the settlement proposal removed the immediate necessity of adjudicating the validity of the pledge itself, and the parties tacitly agreed that those issues should remain unresolved. These remaining disputes were eventually compromised and resolved in the Plan of Reorganization. In making the determination as to whether any or all of these litigation activities benefitted the Debtor's estate and its reorganization, it is of crucial importance to bear in mind the chronological context. When the settlement was negotiated and put forward, the RRRA (or, indeed, any other possible Congressional solution to the rail crisis) was far in the future. The Trustees and other interested parties were struggling with the task of reorganizing a railroad, and with carrying out their responsibilities to the public. With the benefit of hindsight, it is easy to conclude that the parties who opposed the settlement, and sought to retain Pennco as part of the Debtor's estate, were engaged in activities beneficial to the estate, since Pennco formed the nucleus around which the reorganization has been successfully accomplished. Perhaps not so readily discernible, but equally true, is the fact that, in the light of what was then knowable, the proposed settlement would also have been beneficial to the estate. The parties supporting the proposed settlement were also performing services beneficial to the estate and the reorganization process. It is true, of course, that one of the events which triggered the negotiations leading to the proposed settlement was the effort by the banks to foreclose the pledge, and to advance their own interests at the expense of the Debtor's estate. The costs of such efforts are not reimbursable under § (c)(12). But this does not substantially undermine the conclusion that the efforts of Citibank and others in negotiating, proposing, and supporting the proposed settlement were of benefit to the estate, and are reimbursable. A somewhat similar analysis is appropriate with respect to the litigation challenging the validity of the pledge itself. Citibank is not entitled to be reimbursed for its expenditures in defending its status as a secured creditor, but is entitled to recognition to the extent its efforts contributed to the formulation and approval of a consensual Plan of Reorganization. These distinctions are difficult to quantify with precision but can, I believe, be adequately covered by adjustments to the awards in particular cases. *506 II. REVIEW OF INDIVIDUAL APPLICATIONS 1. Institutional Investors Early in the reorganization proceeding, some 13 insurance companies holding more than $400 million of pre-petition debt obligations of Penn Central banded together in an informal organization known as "Institutional Investors, Penn Central Group". By 1976, the membership had declined to five insurance companies, but these five permanent members of the group owned in excess of $300 million of Penn Central's debt. The Institutional Investors played an active role throughout the entire proceeding, and were key litigants in many significant matters in this and other courts. Of particular note in the early phases of the reorganization were the Institutional Investors' activities concerning sales of major assets, the Trustees' reports on reorganization planning, the use of escrowed funds, and the Plan proceedings before the ICC. Later, the group was particularly active throughout the RRRA litigation and its aftermath. The Institutional Investors were a member of the Friday Group, and played an active and productive role in the approval and consummation of the Plan. Wilkie, Farr & Gallagher of New York City (and particularly Walter Brown, Esq., of that firm), served as lead counsel for the Institutional Investors, which paid it a total of $2,522,100 for its legal services. Ballard, Spahr, Andrews & Ingersoll, of Philadelphia, served as local counsel for the Institutional Investors, and received $120,987.49 for its services. The hourly rates used in calculating these fees are reasonable, and the full fees will be allowed to the Group. Expenses of counsel for the period totaled $354,399.80. These expenses will also be allowed. In addition, the Group paid $565,799.31 to its transportation consultant, Wyer, Dick & Company. These services were plainly necessary. Throughout the pre-conveyance period, the configuration of the Debtor's rail system was a matter of frequent discussion. The Trustees' reports on reorganization planning, and the various abandonment proposals, created significant analytical tasks for the transportation consultant, as did the Preliminary and Final System Plans of USRA. And it was also necessary and appropriate for the Institutional Investors to utilize Wyer, Dick's services in connection with preparing its Valuation Case analyses. These expenses, together with certain additional expenses including the Group's share of the cost of printing the "Principles of Reorganization," will be allowed. Thus, the award to the Institutional Investors, Penn Central Group, includes counsel fees of $2,643,087.49, expenses of counsel, $354,399.80, and other expenses of $684,533.05, for a total award of $3,682,020.34 (base award, exclusive of delay increment). 2. Citibank As noted above, Citibank participated actively in these proceedings, principally as agent and spokesman for the group of 53 banks which were owed $300 million plus interest, secured by the pledge of the Pennco stock. Citibank seeks an allowance totaling $5,598,490.77, calculated as follows: counsel fees, $3,340,429; expenses of counsel, $213,012.09; personnel expenses, $1,198,341; and other expenses, $846,708.68. There can be no doubt that most of the activities which generated these expenses were beneficial to the estate. In addition to its general activities in the hearings which addressed various important reorganization issues, Citibank was particularly active and helpful in analyzing the Debtor's overall financial and operating positions, and in developing significant studies concerning future prospects and financial requirements. Following enactment of the RRRA, these activities intensified. Citibank's work with the Friday Group in producing the "Principles of Reorganization," and its debt and claims analysis, its analysis of the leased line problems, and its three-volume cash-flow forecast made especially valuable contributions to the achievement of the consensual plan. *507 It remains necessary, however, to review the reasonableness of the costs incurred, and also to consider whether certain adjustments should be made to reflect disallowance of reimbursement for expenses incurred solely in pursuit of Citibank's own interests.
A. Counsel Fees and Expenses of Counsel.
The Philadelphia firm of Fox, Rothschild, O'Brien & Frankel served as local counsel for Citibank, insofar as efficiency and economy could be served by the arrangement. The firm was paid fees aggregating $118,315. This reflects hourly rates slightly in excess of the special counsel rate, but in view of the limited and special nature of the undertaking and the general economies achieved, the entire fee appears reasonable, and will be allowed. Citibank also paid the New York law firm of Zalkin & Cohn $36,000 for legal services rendered early in the proceeding. This payment, also, will be allowed, as will the expenses of both firms. The New York firm of Sherman & Sterling served as Citibank's counsel throughout the proceedings. Their fees totaled $3,186,114 ($1,234,250 through March of 1976, and $1,951,864 for the remaining period of the application). The record reflects the total hours billed for partners, associates, and summer associates and paralegals during each of these two periods, but does not reflect the hourly rates. The affidavit of the partner in charge takes the position that the firm's fees are calculated on the basis of complex formulae and cost measurement indices which would not be "understandable" to outsiders. There is, of course, no doubt that the quality of the firm's work was of the very highest; and much of its work was performed under difficult time-constraints. And it is appropriate to permit some further upward adjustment to reflect higher overhead costs in New York than elsewhere. For the initial period, from 1970 through March 1976, it appears that the firm's billing rates were only moderately in excess of the special counsel rates (approximately 18.7% higher). In the circumstances, this differential is not unreasonable. For the later period, however, the differential is much greater, amounting to about 69%. During this period, the firm billed for a total of 17,771.9 hours (partners, 5,446.8 hours; associates, 8,903.9 hours; and summer associates and paralegals, 3,392.2 hours). This works out to an overall average hourly rate of $109 per hour. The same total amount would be achieved, for example, by a schedule of $200 per hour for partners, $85 for associates, and $30 for summer clerks and paralegals; or $175 per hour for partners, $100 for associates, and $30 for summer clerks and paralegals. Under any view of the matter, it seems clear that the hourly rates charged substantially exceed those allowed to any other applicants for compensation in this case (including all of the firms which served as counsel to indenture trustees). Giving full weight to the exemplary quality of the services performed, the difficulty of the issues, the magnitude of the responsibility, and all other pertinent factors, I find myself unable to justify disparities of this magnitude. I have concluded that, for purposes of calculating the ultimate reasonable allowance to Citibank, the maximum which can be attributed to Sherman & Sterling's counsel fees for the entire period is $2,884,250 plus expenses. It should be noted that even this figure represents an upward adjustment of about 31% above the special counsel rates. Because Sherman & Sterling's billings covered the firm's services attributable solely to defense of Citibank's secured position and attempts to recover its collateral, the entire amount is not allowable. The application is not sufficiently detailed to permit calculation of the adjustment with mathematical accuracy. All of the non-reimbursable services occurred in the 1970-1976 period, for which $1,234,250 is viewed as appropriate compensation. It appears probable that approximately 50% of the firm's work during this period related to *508 Pennco matters; and I believe it appropriate to assume that approximately 25% of the firm's Pennco efforts should be disallowed, because unrelated to the interests of the Debtor's estate. Thus, I have concluded that 12½% of the total claimed for the initial period should be disallowed.
B. Personnel Expenses
Citibank seeks reimbursement in the total sum of $1,198,341 for the services of Citibank officers and employees. Of that amount, $272,162 was billed by Citibank's corporate finance department for time charges for the July 1976 cash-flow forecast. As noted above, this was a cooperative effort endorsed by the Trustees. The full amount of that expense will be reimbursed. Citibank also expended $182,000 for consulting services for three studies of ConRail, $48,743 for computer services, and $11,421 for a consulting economist. These items, aggregating $242,165 will also be allowed. The balance of the personnel expenses, $683,514, cover the salaries of bank personnel for time devoted exclusively to Penn Central matters. I am not persuaded that the full amount of this expense is properly reimbursable under § (c)(12). In the first place, a substantial portion of this expense surely represents the ordinary cost of running a bank, rather than additional expense incurred by reason of the reorganization proceeding. Ordinarily, the overhead expenses of a lending institution are subsumed in the interest charged. In the second place, some portion of these services undoubtedly related to the defense of the Pennco pledge and the attempts to seize the collateral, and are thus not allowable. Finally, it is reasonable to suppose that much of this activity related to internal communications among the 53-bank group, a process which benefitted the Debtor's estate only marginally, if at all. Taking all of these factors into consideration, I have concluded that only 50% of this $683,514 item should be allowed. Thus, the base amount of the allowance for Citibank's internal expenses is fixed at $856,084.
C. Miscellaneous Expenses
Citibank also seeks reimbursement of approximately $846,700 for miscellaneous expenses. Of this amount, roughly $266,000 represents travel, telephone, reproduction costs, subscription services and the like; and approximately $580,200 represents amounts billed by outside firms and paid by Citibank for printing expenses and transcript fees. Some portion of these expenses should be allocated to ordinary overhead, interbank communications, and non-reimbursable aspects of the Pennco litigation. In addition, there is reason to doubt that all of the printing expenses are properly chargeable to the Debtor's estate under § (c)(12) (for example, the $277,099.84 for printing what appear to have been an unnecessarily large number of copies of Citibank's June 10, 1974 brief and the financial analyses of USRA's Preliminary and Final System Plans). Given these problems I have concluded that an allowance of 50% of these miscellaneous expenses, or $423,350, is appropriate. 3. The New Haven Trustee The New York, New Haven & Hartford Railroad Company had been in bankruptcy reorganization since July 1961. Its fortunes continued to decline, and it became apparent that the New Haven could no longer survive as an independent railroad. When the Pennsylvania Railroad and the New York Central sought the approval of the ICC for a merger of those two railroads, the New Haven sought and obtained an ICC order making acquisition of the New Haven a condition of its approval of the Pennsylvania-New York Central merger. The merged company, Penn Central Transportation Company, was required to assume ownership and operation of the New Haven properties in 1968; the price to be paid for the properties remained to be determined. An agreement was reached, under which the New Haven would be paid principally in the form of Penn Central common stock, but there was an underwriting provision pursuant to which Penn Central guaranteed the value of the stock at $87.50 per share. *509 The decision of the United States Supreme Court finally approving this arrangement was rendered shortly after Penn Central filed its § 77 petition. Because of that development, the Supreme Court remanded the case for reconsideration of "the form that Penn Central's consideration to New Haven should properly take, and the status of the New Haven estate as a shareholder or creditor of Penn Central". New Haven Inclusion Cases, 399 U.S. 392, 489, 90 S. Ct. 2054, 2108, 26 L. Ed. 2d 691 (1970). There was further litigation before the New Haven reorganization court and in this Court. The upshot was a decision by this Court that the New Haven estate should be tentatively treated as holding a lien to secure the purchase price of its property, and that final determination of its status should await the development and approval of a plan of reorganization of the Penn Central. In addition to this potentially secured claim arising under the guarantee agreement, the New Haven trustee also held some $34 million in Penn Central bonds, secured by property previously owned by the New Haven. Thus, the New Haven trustee, on behalf of the parties in interest in the New Haven reorganization proceeding, had a very substantial stake in the outcome of the Penn Central reorganization. Moreover, the New Haven bondholders and other creditors had already been awaiting payment of their claims for more than 10 years. It is therefore quite understandable that the prospect of patiently awaiting the outcome of still another railroad reorganization proceeding was not an attractive one. As might be expected, therefore, up until the time that the RRRA-solution became inevitable, the position of the New Haven trustee was adverse to that of the Penn Central Trustees on a wide range of issues. The New Haven trustee opposed the issuance of trustees certificates, opposed most of the sales of assets, and opposed rail-related capital expenditures. This was not mere obstructionism, however, but a valid campaign for the preservation of the Debtor's estate from the ravages of rail-related erosion, so that an acceptable reorganization could be achieved. Given the actual outcome a consensual plan under which all creditors received adequate satisfaction of their claims I have no hesitation in concluding that the New Haven Trustee has met the initial burden of showing that his efforts were of benefit to the estate. Indeed, after the RRRA was in place, the efforts of New Haven's counsel, in the Friday Group activities, the development and formulation of the Reorganization Plan, and in the Valuation Case litigation, were of inestimable benefit to the estate and the reorganization process. Moreover, even in the earlier, more adversarial stage, the New Haven interests occupied a position akin to that of a "loyal opposition", and proved helpful to the Trustees and to this Court in many ways too numerous to mention. Counsel for the New Haven trustee brought a high level of factual and legal analysis to the litigated issues; this high quality of advocacy was of very great benefit to the Court in analyzing and deciding the complicated and difficult issues presented throughout the reorganization proceeding. I fully endorse the comments of the Securities & Exchange Commission, singling out the New Haven trustee and his counsel for their positive contributions throughout the case. Thus, it is clear that the costs and expenses, including counsel fees, incurred by the New Haven trustee, are reimbursable; and it is also clear that, in determining the appropriate level of compensation of counsel, a substantial increment because of the extent of the benefit conferred is appropriate. Unfortunately, however, I find myself unable to justify increments of the same order of magnitude as contemplated by the present application. In addition to certain out-of-pocket expenses which are unexceptionable and will be allowed, the New Haven trustee seeks an allowance of $10 million to cover counsel fees of the law firm of Sullivan & Worcester, of Boston, Massachusetts. Of that amount, the trustee has already paid $1,750,711.50 to the firm, as authorized by the New Haven reorganization court, for *510 services related to the Penn Central reorganization. The trustee seeks reimbursement of that sum, and a direction that the balance of the $10 million applied for be paid directly to the Sullivan & Worcester firm. The record establishes that Sullivan & Worcester devoted some 27,314 hours to Penn Central reorganization matters (partners, 17,329 hours, associates 9,109 hours, clerks and paralegals, 876 hours). At the firm's normal guideline rates in effect in July 1978, the total fee, purely on a time basis, would be $2,247,395. Application of the special counsel rates would yield a substantially similar fee. In support of the $10 million request, it is asserted that the efforts of the firm produced benefits for the estate in the range of $875 million to $1,050,000,000. Hence, the fee sought is only about 1% of the benefit, and therefore relatively modest. There are several reasons for rejecting this approach. Counsel for the New Haven trustee played a very significant part in the cooperative effort which may have produced benefits of the level suggested, but cannot properly claim exclusive credit. Moreover, and more importantly, the suggested standard is not, and never has been, an acceptable basis for determining reasonableness for purposes of § (c)(12) allowances. The unique contributions of the Sullivan & Worcester firm, and particularly of Joseph Auerbach, Esq., of that firm, merit compensation at levels reflecting a significant increment above normal hourly rates. I am satisfied that an allowance at the upper end of the range of reasonableness is appropriate in this instance. Considering all of the relevant factors, I have concluded that the proper allowance to the New Haven trustee for counsel fees of the Sullivan & Worcester firm is $3,750,000 (base award, exclusive of delay factor). 4. Penn Central Company David Berger, P.A. represented the Penn Central Company, which owned all of the Debtor's common stock, throughout these proceedings. Penn Central Company had few assets other than its stock interest in the Debtor, but had significant debt obligations it was unable to meet. Contemporaneously with the Debtor's reorganization proceeding, Penn Central Company went through a Chapter XI arrangement proceeding, presided over by Bankruptcy Judge Goldhaber. The company has paid the Berger firm $270,000 on account of its bill for legal services, with the understanding that the law firm would seek an allowance covering its full claim in this proceeding. An order of bankruptcy Judge Goldhaber provides that whatever allowance is approved by this Court will be divided between the Berger firm and the company 50-50, until the company has recovered the $270,000 previously paid. On behalf of the company, the Berger firm participated in many of the important proceedings in this and other courts, including the Pennco settlement litigation, the ICC Plan hearings, the constitutional attacks on and the statutory proceedings under the RRRA, Penn Central Company's severance petition, and disputes related to the sale of the Barclay Hotel, the Debtor's Madison Square Garden stock, and the Westside Yards in New York. The firm was also active in the pre-conveyance discussions concerning reorganization planning, but was not actively involved in the formulation of the Plan of Reorganization. For the most part, these activities, and many others which have not been mentioned here, were of benefit to the Debtor's estate, and there is no reason for imposing any discount because of duplication of effort. Penn Central Company was granted limited intervention in the Valuation Case before the Special Court, and submitted briefs on the issues it was permitted to address. These actions, too, may be regarded as beneficial to the estate. Somewhat surprisingly, the Berger firm also accepted an appointment to the Liaison Committee appointed by the Special Court, notwithstanding the limited nature of its intervention in that proceeding. The record does not permit a precise determination as to the time *511 spent on Liaison Committee work, although it seems clear that many hundreds of hours were devoted to this effort. It must be stated that the benefit to the Debtor's estate from the Berger firm's participation in the Liaison Committee would seem to have been marginal at best. From the beginning of the reorganization until April 1, 1976, the Berger firm devoted some 5,329.5 hours on Penn Central reorganization matters and an additional 2,266 hours from March 1976 through May 1978, making a total of 7,595.5 hours. The standard billing rates of the firm as of December 1976 and July 1978 have been provided, but these rates clearly do not necessarily correspond to all of the periods in which the work was performed. Application of the special counsel rates would produce an aggregate fee of $505,123. On the other hand, applying the Berger firm's December 1976 rates to the entire period would suggest a fee totaling $788,843.75. The difference is due largely to the $200 per-hour rate claimed for the senior partner, David Berger, Esq., who recorded approximately 27% of all of the hours recorded for the firm. There are valid reasons for approving an award in excess of the special counsel rate. Penn Central Company participated in only a limited number of matters, all of which were important. The firm represented its client's interest well, and made a significant contribution to these proceedings. Quite properly, counsel have focused in particular on the West Side Rail Yard transactions and the Barclay Hotel as examples of their success. On occasion, the firm stumbled slightly, as when it persuaded this Court that the price initially offered for the Madison Square Garden stock was inadequate (it continued to decline, and was later disposed of at a lower price); but the efforts were undoubtedly intended to benefit the Debtor's estate, and the positions asserted were valid in light of the available information. A further factor worthy of consideration is the contingent nature of the firm's compensation. Because of the straitened circumstances of Penn Central Company, the Berger firm carried the torch for the stockholders with no assurance that the firm would ever be paid. Finally, and most importantly, the quality of the firm's legal work was exceptionally high, and much of the work was done under serious time-constraints. Recognizing that the amount requested represents a very substantial multiple over the reasonable hourly rate, the applicant asserts that the firm's efforts produced benefits for the estate in excess of $30 million. Although this claim has somewhat more plausibility than similar claims made on behalf of the Robinson petitioners, as will be discussed below, I again must reject the contention. Asset values were not created by the law firms involved, and their preservation and enhancement was the product of many factors. Moreover, I remain persuaded that allowances under § (c)(12) cannot be directly related to asset values. On the other hand, I am satisfied that the benefits to the estate to which the Berger firm contributed should be taken into account to some extent, and that this factor justifies an increase above the special counsel rate. All in all, I believe the appropriate allowance is $700,000, together with the firm's expenses of $49,430.23, plus reimbursement to the Penn Central Company for the $26,307 in expenses previously paid (base award, exclusive of delay increment). The distribution is to be allocated in accordance with the order previously entered by Bankruptcy Judge Goldhaber. 5. The Robinson Petitioners Four law firms and a single practitioner combined to represent the petitioning shareholders of Penn Central Company in the "Robinson Petition" litigation. Lead counsel was the firm of David Berger, P.A. The present petition for an allowance under § (c)(12) is submitted by the attorneys themselves, rather than their clients. It seems to have been understood that counsel's compensation would be limited entirely to such award as this Court might approve pursuant to § (c)(12). Since the object of the Robinson Petition litigation was to invalidate the Pennco pledge and to block the proposed Pennco settlement, there was never *512 any prospect of a direct monetary recovery by the clients themselves, hence this fee arrangement is understandable. The principal activities related to the investigation and litigation of the Robinson Petition took place between March 1972 and December 1972, although some additional time was spent in 1973 and 1974. The record reflects a total of 5,006 hours devoted to this effort (3,727 by partners, 1236.5 by associates, and 342.75 by law clerks and paralegals). When the Trustees filed their proposed Reorganization Plan in December 1976, counsel embarked upon a second round of activity, and interposed objections to the proposed treatment of the claims of the bank group in the Plan. After actively participating in the Plan hearings, counsel withdrew the objections. The present application reflects an additional, 2,066.75 hours in connection with the Plan proceedings (1336.25 hours for partners, 637 hours for associates, and 93.5 hours for law clerks and paralegals). For all of these efforts, the applicants seek an award of $6 million. This would represent an average hourly rate of $813.81. By contrast, if the 1978-level special counsel rates were applied to the hours recorded, the total fee would be $588,403. Even applying the Berger firm's 1976 rates to the Robinson Petition litigation, and its 1978 rates to the Plan proceedings, the total fee would be approximately $967,765. Thus, the claim seeks an award 6.2 times the firm's (somewhat later) hourly rates, and more than 10 times the special counsel rates. Allowances based on multiples of this magnitude are simply unheard of, and totally unwarranted, in reorganization proceedings. In justification of the fee requested, the applicants assert that their efforts preserved for the estate the entire value of Pennco, which they fix at between $500 and $600 million, together with all of Pennco's earnings from 1972 to 1977, and the alleged value of all of the concessions made by the banks as part of the consensual Plan of Reorganization. It is asserted that the total of these benefits is approximately $980 million, to which should be added the benefit of preserving the utility of the Debtor's tax loss carryforwards, as well as other benefits. Since the grand total of all of these benefits is in excess of $1 billion, the claimed fee of $6 million is only 6/10 of 1% of the benefits conferred, and is therefore reasonable. In making these arguments, counsel exhibit the tenacity, aggressiveness, courage and imagination which characterized their efforts throughout the reorganization proceeding. While these attributes of advocacy, in the performance of services for which allowance will be made, justify a substantial increase over the normal special counsel rate, in the present context they are no substitute for rational argument. The original proposal to settle the Pennco matter with the bank group was, as mentioned above, a mixture of plusses and minuses. Given the actual course of the reorganization, after enactment of the RRRA, there can be no doubt that the estate benefitted from disapproval of the proposed settlement. But rejection of the settlement did not determine the course of the reorganization, and it is not difficult to envision other scenarios in which rejection of the settlement would, with the benefit of hindsight, be viewed less favorably. More importantly, it is obvious that the principal factor in rejection of the settlement was the Government's objection to it, a circumstance for which the Robinson petitioners and their counsel can scarcely claim credit. The applicants deserve substantial credit for their imaginative and thorough challenge to the validity of the pledge. Although this does not, as the applicants apparently believe, readily translate into a totally successful assertion of their position (the issue was never finally decided by the Court; but as stated in this Court's Opinion approving the Plan, "The most likely outcome of the litigation would have been some form of modified treatment in the Plan of Reorganization"), the applicants did make a valuable contribution to the compromise of these issues in the Plan of Reorganization. *513 After the Pennco settlement proposal was rejected by the Court, the banks did file a petition to foreclose the pledge. The Robinson petitioners opposed this application, but so did the United States Government and the Penn Central Trustees. The foreclosure application was not made until October 1973, when enactment of the RRRA was imminent (the RRRA became law in January 1974). No one can seriously suggest that "but for" the opposition filed by the Robinson petitioners, the banks would have been permitted to foreclose. A considerable measure of posturing and saberrattling was being indulged in; it is fair to state that, in view of the RRRA, no one took the foreclosure petition very seriously. It was obvious to all concerned that Pennco would be retained as the nucleus of the reorganized company. The fact that I regard the amount requested by these applicants to be grossly excessive, and am not persuaded to the contrary by the justifications asserted, should not be permitted to detract from the genuine merit of the application. Counsel for the Robinson petitioners, and particularly the Berger firm, provided very high-quality legal service, and their activities were of decided benefit to the Debtor's estate. A substantial increment above normal hourly rates is appropriate. In my judgment, a fair and reasonable allowance for all of the services of counsel for the Robinson petitioners is $1,150,000, together with the $34,698.89 in expenses claimed (base award, exclusive of delay increment). 6. The Delay Factor The Orders granting the various allowances will include an increment designated as "delay factor". This addition to the allowances is comparable to that awarded previously to the Indenture Trustees. Funds to satisfy § 77(c)(12) applications were set aside pursuant to the Consummation Order. The delay factor is an equitable allocation of the earnings on the funds to the persons for whose benefit the funds were set aside. III. SUMMARY The following chart summarizes the Court's decisions on the pending applications:
DELAY TOTAL APPLICANT CLAIMED ALLOWED FACTOR AWARD Institutional Investors $ 3,682,020 $ 3,682,020 $ 1,288,707 $ 4,970,723 Citibank 5,598,490 4,376,730 1,531,855 5,908,585 New Haven Trustee 10,399,295 4,149,245 1,452,235 5,601,480 Penn Central Company 1,248,328 775,737 271,508 1,047,245 Robinson Petitioners 6,034,698 1,184,698 414,644 1,599,342 ___________ ___________ __________ ___________ $26,962,831 $14,168,430 $4,859,949 $19,127,375
IV. POSTSCRIPT The fees and allowances now being approved for these five applicants aggregate nearly $20 million. Substantial additional amounts have previously been approved for others involved in the litigation. While these amounts, in the abstract, may seem very large, the allowances cover many years of intensive activity. I am satisfied that the amounts authorized are entirely reasonable. Perhaps more importantly, I am absolutely convinced that, but for the dedication, skill, legal ability, and remarkable cooperation of the counsel involved, litigation expenses would have been multiplied many times over. Whatever the historical assessment *514 of the Penn Central reorganization may prove to be, there can be no doubt that the performance of the lawyers involved will never be excelled. | 10-30-2013 | [
"23 B.R. 499 (1982) In the Matter of PENN CENTRAL TRANSPORTATION COMPANY, Debtor. In re APPLICATIONS FOR ALLOWANCE UNDER § 77(c)(12). Bankruptcy No. 70-347. United States District Court, E.D. Pennsylvania. July 23, 1982. OPINION AND ORDERS NOS. 4152 THRU 4156 FULLAM, District Judge. Section 77(c)(12) of the Bankruptcy Act provides: \"[T]he judge may make an allowance, to be paid out of the debtor's estate, for the actual and reasonable expenses (including reasonable attorneys fees) incurred in connection with the proceedings and the plan by parties in interest. . . . \" This Opinion deals with the applications of five of the more active participants in the Penn Central reorganization for such allowances.",
"The applications now before the Court are made by or on behalf of the following: Penn Central Company, which was the owner of all of the Debtor's common stock; the Institutional Investors, a group of insurance companies; Citibank, as agent for a group of 53 lending institutions; the Robinson petitioners, a small group of shareholders of Penn Central Company; and the Trustee of the New York, New Haven & Hartford Railroad (\"New Haven Trustee\"). The amounts requested by these five applicants aggregate more than $26 million.",
"The Trustees of the Debtor (\"the Trustees\") expressed their views concerning the subject matter of these applications before the consummation of the Plan; and, at the invitation of the Court, the Securities & *500 Exchange Commission and the Interstate Commerce Commission have commented on the legal and factual issues presented by the applications. While some of these comments can be regarded as questioning certain items and certain legal theories advanced in support of the applications, no actual formal objection to any of the applications has been filed. The absence of significant contest does not, however, relieve this Court of the responsibility of carefully examining the applications to ensure that only permissible allowances are approved.",
"In order to be eligible for reimbursement pursuant to § 77(c)(12), the expenses (including counsel fees) incurred by creditors and other parties in interest must be shown to have been of benefit to the estate. Woods v. City Nat'l Bank & Trust Co., 312 U.S. 262, 61 S. Ct. 493, 85 L. Ed. 820 (1941). In addition, of course, the amounts of such allowances must be reasonable. In determining whether particular activities for which reimbursement is sought can properly be characterized as having benefitted the estate, the Court is faced, not with applying a litmus-like test, but with exercising a prudent and realistic judgment. Each reorganization must be viewed in its totality, and each applicant's efforts must be assessed in the context of the entire reorganization process. As stated by the SEC in its comments (Doc. No.",
"16669, at p. 5): \"[A]ctivities or services which are found to be solely, or primarily, in the interests of certain creditors or stockholders and in no way beneficial to the administration of the estate or to a fair and equitable and feasible plan were not intended to be compensated or reimbursed from the debtor's estate.\" To put the matter succinctly, costs associated with activities helpful to the reorganization process are reimbursable but costs associated with advancing a party's own interests are not. This distinction is easily stated, but not always easily applied, as the discussion of individual applications later in this Opinion demonstrates. Of course, achieving a reorganization is in the interests of all creditors, and every party to the proceeding was undoubtedly motivated by self-interest in pursuing that goal.",
"The distinction to be made is between activities undertaken solely for the private interest of the creditor, and activities which, while beneficial to the private interests of the creditor, also benefitted the reorganization process. Once the threshold requirement of benefit-to-the-estate-and-its-reorganization has been met, there arises the question whether, in fixing the amount of the allowance, the degree of benefit to the estate is a factor to be considered and, if so, how it enters into the calculus. In approving compensation of counsel to the Trustees, pursuant to § (c)(2) of the Act, the Court was called upon to determine the level of counsel's compensation. In theory, and in most cases in actuality, the present inquiry is subtly different: the level of compensation of counsel has already been determined, and paid, by the petitioning creditor; the Court is required merely to determine that the amount paid did not exceed the limits of reasonableness, and is thus properly reimbursable.",
"Thus, in the usual situation under (c)(12), while counsel's standing, the quality of the work performed, degree of difficulty, etc., would presumably have been taken into account by the attorney and his client in their own arrangements, it is unlikely that the extent of benefit to the Debtor's estate or the reorganization process would have much to do with the matter. Moreover, since (c)(12) contemplates reimbursement only for counsel fees actually incurred, the statute provides no basis for implementing a decision by the Court that, because counsel's efforts greatly benefitted the reorganization, the fee should have been higher. Unfortunately, this theoretical distinction between (c)(2) and (c)(12) applications does not, as practical matter, permit the Court to avoid the question whether benefit to the estate should be quantified and taken into account in approving allowances under (c)(12), for at least two reasons: (1) in some *501 instances, the fees previously paid to their counsel by the claimants, for which reimbursement is now sought, were fixed at relatively high levels, and can be approved for reimbursement only if particular benefit to the reorganization process can be taken into account; and (2) in other instances, counsel have not yet been paid, and the attorney-client arrangements contemplate payment in whatever amount this Court approves for reimbursement under (c)(12).",
"Thus, in the final analysis, the Court is required to consider all of the factors which properly bear upon the reasonableness of counsel fees. The starting point is the amount of time expended by counsel, multiplied by the appropriate hourly rates. This is the basis on which special counsel to the Trustees have been compensated, see In re Penn Central Trans. Co., 440 F. Supp. 569 (E.D.Pa.1977), and has been generally adhered to (with slight modification in certain instances, as for example where a law firm was engaged to conduct specific litigation warranting some increase). The specific fee structure governing compensation of special counsel is as follows: For the period through September 1976, $90 per hour for partners, $60 for associates, and $15 for others (clerks and paralegals); for the period from October 1976 through December 1977, $100, $60 and $20, respectively; and for later periods, $110, $70 and $25, respectively. (This hourly fee structure will be referred to herein as the \"special counsel rates\"). To the extent that the present applications seek an award or reimbursement of counsel fees, the special counsel rates will be used as a sort of benchmark, but all of the traditionally accepted norms for awarding attorneys fees will be taken into account. See, particularly Disciplinary Rule 2-106(B) of the American Bar Association Code of Professional Responsibility, and Judge Anderson's opinion in In re N.Y., N.H. & H.R.R.",
"Co., 421 F. Supp. 249 (D.Conn.1976), aff'd, 567 F.2d 166 (2d Cir. ), cert. denied, 434 U.S. 833, 98 S. Ct. 120, 54 L. Ed. 2d 94 (1977). In evaluating these applications, I have concluded that the extent to which the efforts of counsel were of benefit to the Debtor's estate and its reorganization should be taken into account, but I flatly reject the measurements of these benefits suggested by some of the pending applications. The fact that counsel played a part, along with many others, in preserving or enhancing asset values, and preventing their dissipation, does not mean that counsel created these asset values. Moreover, the actions for which reimbursement is sought were undertaken in the first instance for the benefit of the applicants; and the applicants have recovered these benefits through the distributions provided in the Plan.",
"Reimbursement of expenses incurred by participants in reorganizations serves a valid public policy of fostering participation in reorganization proceedings. Participation by interested parties increases the likelihood that the proceedings will not be dominated by a select few, as was the case in many of the equity receiverships which preceded § 77. Reliance by these applicants on cases awarding attorneys fees in antitrust and securities class actions is misplaced. In those cases, there is the much broader public policy of providing an incentive for the private enforcement of Congressional mandates; and the fee awards in such cases also take into account the equitable concept that counsel should share in the fruits of their labors.",
"Bankruptcy reorganization proceedings are primarily for the benefit of the claimants. The common-fund concept and other class-action doctrines have no place in § 77(c)(12) analysis. The Court's task now is to apply these principles to the pending applications. It is helpful first to review the activities for which reimbursement is sought, and their relationship to the reorganization process; and then to address separately each of the five applications. I. REVIEW OF REORGANIZATION ACTIVITIES The activities in question may, for convenience, be roughly divided into five categories. *502 The first four relate to specific stages of the reorganization proceeding, and the fifth to the Pennco litigation. 1.",
"June 1970 to December 1973; pursuit of a traditional income-based reorganization of the railroad Throughout the entire period from the filing of the bankruptcy petition until the conveyance of the railroad to ConRail on April 1, 1976, the Trustees were faced with the overriding task of continuing to provide rail service, and of making the decisions and solving the problems associated with the day-to-day operation of one of the nation's largest rail carriers. But from the standpoint of reorganization planning, their task during the initial period of reorganization was first to determine what needed to be done in order to make the railroad sufficiently profitable to support a reorganization plan, and then to try to achieve the necessary changes. It was almost immediately apparent that many of the obstacles to profitability were beyond the control of the Trustees. Nevertheless, it was encumbent upon the Trustees to effect the improvements which were within their control, and they did this to a remarkable degree. It was also necessary for them to identify the changes which would have to be made by others if the reorganization were to succeed, and to do what they could to urge that corrective measures be taken by others.",
"Support from the public sector for the required changes (involving such matters as regulatory constraints, labor arrangements, elimination of unprofitable freight service, and elimination or subsidization of passenger and commuter services) was, unfortunately, slow in developing. By March of 1973, this Court was compelled to conclude that Penn Central could probably not continue its rail operations after October of that year. In July of 1973, the Trustees proposed a Plan of Reorganization which would have involved the sale of Penn Central's rail operations to other carriers. The New Haven trustee and the Penn Central Company also proposed plans of reorganization. The ICC held accelerated hearings on these plans, but rejected all of them in September of 1973 because they did not guarantee the continuation of rail service. By this time, Congress was considering various legislative solutions to the problems of Penn Central and the other northeastern railroads in reorganization. On January 2, 1974, the Regional Railroad Reorganization Act of 1973 (RRRA) became law. During this initial period, the New Haven trustee and the institutional investors and, to a lesser extent, the Penn Central Company, actively participated before the Court. They were, of course, not alone.",
"The indenture trustees were also active, to the extent they regarded as consistent with the fiduciary obligations imposed by their respective indentures. More important adversary roles were played by the Institutional Investors, as holders of a large portion of Penn Central's debt securities, by the New Haven trustee, as holder of a large secured claim and a large potentially secured claim, and by the Penn Central Company as the single shareholder.",
"The efforts of these parties were generally directed to the preservation of the Debtor's assets. Although their efforts did not always meet with success, their views were very important to the integrity of the decision-making process. I will not burden this Opinion with a lengthy catalog of the important issues decided during this period. It suffices to state that major issues concerning the sale of assets, financing of equipment and other capital acquisitions, and reorganization planning, arose on a daily basis during this initial stage of the reorganization. 2. Implementation of the RRRA Enactment of the RRRA in January 1974 triggered two related lines of litigation, the hearings and preliminary determinations mandated by the RRRA itself, and challenges to the validity of the statute. Ultimately, the Special Court held that the RRRA provided a \"fair and equitable process\" for the reorganization of the Penn Central and the other northeast rail carriers in reorganization, and the Supreme Court held (in December 1974) that the RRRA, as *503 supplemented by the Tucker Act, was constitutional.",
"Once these hurdles were surmounted, there was another round of activity centered on the production by U.S. Railway Association of the Preliminary and Final System Plans, legislative amendment to the RRRA, and the maintenance and financing of rail service pending the conveyance to ConRail on April 1, 1976. Throughout this period, the New Haven trustee, the Institutional Investors, and Citibank were among the most active participants. Needless to say, important constitutional principles, and very large amounts of money, were at stake. In the end, the rail assets were conveyed to ConRail, and Penn Central and the other northeastern carriers were relegated to the Valuation Case litigation before the Special Court to obtain compensation for the conveyed rail assets. 3.",
"Formulation and Approval of the Plan With the advent of the RRRA and the decision of the Supreme Court upholding its constitutionality, it became apparent that the increasing erosion of the Debtor's estate from its rail operations would come to an end on April 1, 1976. The next task was to devise a plan of reorganization which, while adequately taking into account the uncertainties associated with the RRRA's approach, could be implemented without awaiting the final outcome of the Valuation Case litigation, and without the delays which would be involved in litigating to conclusion all of the myriad other legal issues at hand. With the approval and encouragement of this Court, the Trustees instituted a series of meetings with a large group of interested parties, beginning in late 1975, to explore the possibilities of achieving a consensual plan. Although no firm conclusions were then reached, a smaller group of interested parties, consisting of the New Haven trustee, Citibank, and the Institutional Investors (known as the \"Friday Group\" because most of its early meetings occurred on that day) emerged as the successor to the original larger group, and continued its exploratory discussions. Throughout 1976, the Friday Group worked diligently and productively toward the formulation of an acceptable Plan of Reorganization. While it would be an overstatement to suggest that the Plan which was ultimately adopted was the work of the Friday Group, there can be no doubt that the Friday Group played an important and essential role in the planning process.",
"It was necessary to assemble and analyze the vast amount of information available from the Trustees and other sources, having to do with cataloguing the assets which would remain after conveyance and determining their value, and identifying and estimating the amounts of potential claims against the estate; tasks which, with their own staff reduced in the wake of the conveyance to ConRail and occupied with the details of the conveyance and organizing the post-conveyance operation of the estate, the Trustees gladly permitted Citibank to undertake. At the same time, the Friday Group sought to relate the information available to a possible legal framework for a reorganization plan. In July of 1976, the Friday Group published a document entitled \"Principles of Reorganization\", and shortly thereafter Citibank made available its comprehensive studies of Penn Central's retained assets and claims, its potential cash flows, and its leased lines. The Trustees evaluated these work-products in the light of their own reorganization planning, and concluded that the stated principles might well provide a basis for a consensual plan of reorganization. While the Trustees proceeded to develop and draft a plan of reorganization, the Friday Group actively sought to \"sell\" the program to other parties in interest, and worked closely with the Trustees in their efforts.",
"This period of interaction between the Trustees and the Friday Group was marked with some acrimony, but a large measure of cooperation. Eventually, the Trustees filed their proposed Plan of Reorganization on December 17, 1976, and the Friday Group supported it. A key element in the Trustees' Plan was the proposed compromise by the Government *504 of almost all of its claims against the estate, including, most importantly, its mammoth \"super-priority\" claims under § 211(h) of the RRRA. Members of the Friday Group participated in the discussions between the Trustees and government representatives which led to acceptance of the compromise. Amendments to the Plan were filed in May of 1976, and evidentiary hearings were held in June. Thereafter, further amendments dealing with the treatment of tax claims were filed in November, and were also supported by the Friday Group. This Court ultimately approved the Amended Plan in March 1978. This brief sketch of the planning process does not convey the full flavor of the tremendous contribution made by the Friday Group. Several of the fundamental premises of the Plan originated in the work of the Friday Group. Its out-of-court efforts in explaining the Plan to other interested parties undoubtedly contributed to its widespread acceptance.",
"The briefs filed by Friday Group members were very helpful to a proper understanding of the legal and factual premises of the Plan. The Friday Group's attention to the details of reorganization documents, its evaluation of the possible impact of appeals, and its analysis of the tax implications of the Plan also provided a valuable contribution to the reorganization process. As the Plan proceedings moved forward, the Special Court proceedings also accelerated. Members of the Friday Group, as well as the Penn Central Company, actively participated in the Valuation Case litigation before the Special Court. 4. Implementation of the Plan After the Plan was approved, there was a great deal of work having to do with the voting process, the confirmation of the Plan, appeals, the details of the reorganization documents and the Consummation Order, and the negotiation of certain settlements. 5.",
"The Pennco Litigation Through its wholly owned subsidiary, the Pennsylvania Company (\"Pennco\"), the Debtor owned or controlled a vast assemblage of business entities, for the most part not related to railroading. About a year before bankruptcy, in order to pay off a large amount of short-term debt and to obtain additional financing, the Debtor had pledged all of its Pennco stock, generally regarded as its \"crown jewel\", to a group of 53 banks, for which Citibank served as agent, as security for a $300 million loan. Promptly after the bankruptcy petition was filed, Citibank accelerated the loan, which was then in default, and sought to acquire ownership of the Pennco stock. In what was conceived as an interim measure, but actually remained in effect throughout the reorganization, I directed, in Order No. 10, that until further order of this Court, no dividends on the Pennco stock could be declared or paid, and no other fund transfers made to the Debtor by Pennco, except by leave of this Court, after notice to Citibank and an opportunity for hearing. At that juncture, the situation was as follows: Pennco and most of its constituent enterprises were profitable. However, there were some weak spots, and some management problems; and there was widespread concern that Penn Central's bankruptcy would have an adverse impact upon employee morale and upon future availability of necessary credit.",
"It was essential that the values represented by Pennco not be jeopardized. The Trustees had obtained emergency funding in the amount of $100 million from government-guaranteed trustees certificates, the lien of which took precedence over pre-bankruptcy secured debt. It was clear that large additional amounts of capital would be needed. Availability of additional financing without Government guarantees seemed unlikely, and there could be no assurance that further Government guarantees would be forthcoming. There was room for the argument that the Debtor had no \"equity\" in the Pennco stock, and that the banks right to foreclose might be established. Finally, there was also room for argument concerning the extent to which it was permissible *505 to dispose of assets of the Debtor otherwise than pursuant to a plan of reorganization. Grappling with these problems, the Trustees and Citibank, on behalf of the 53-bank group, commenced negotiations which, in 1972, resulted in a formal settlement proposal. The settlement contemplated that the banks would receive all of the Pennco stock in discharge of the $300 million loan obligation. If Pennco's value increased, the Debtor's estate would share in that increase over a 10-year period, and would receive certain of Pennco's rail assets at no cost.",
"In addition, the banks agreed to provide $150 million in additional equipment financing. The settlement proposal triggered two related lines of litigation, one concerning the merits of the settlement proposal itself, and the other concerning a challenge to the validity of the initial pledge of the Pennco stock. The principal opponents of the settlement agreement were the Institutional Investors, the New Haven trustee, a group of Penn Central shareholders (\"the Robinson petitioners\") and, ultimately, the United States Government. The challenge to the pledge itself was led by the Robinson petitioners and by special representatives appointed by this Court to represent the interests of bondholders whose indenture trustees were members of the 53-bank group. After extensive litigation, this Court rejected the settlement proposal, not because it was legally impermissible or disadvantageous to the Debtor's estate, but on the ground that its advantages were not so pronounced as to justify authorizing its implementation despite the objections of so many interested parties, particularly the United States Government. Rejection of the settlement proposal removed the immediate necessity of adjudicating the validity of the pledge itself, and the parties tacitly agreed that those issues should remain unresolved.",
"These remaining disputes were eventually compromised and resolved in the Plan of Reorganization. In making the determination as to whether any or all of these litigation activities benefitted the Debtor's estate and its reorganization, it is of crucial importance to bear in mind the chronological context. When the settlement was negotiated and put forward, the RRRA (or, indeed, any other possible Congressional solution to the rail crisis) was far in the future. The Trustees and other interested parties were struggling with the task of reorganizing a railroad, and with carrying out their responsibilities to the public.",
"With the benefit of hindsight, it is easy to conclude that the parties who opposed the settlement, and sought to retain Pennco as part of the Debtor's estate, were engaged in activities beneficial to the estate, since Pennco formed the nucleus around which the reorganization has been successfully accomplished. Perhaps not so readily discernible, but equally true, is the fact that, in the light of what was then knowable, the proposed settlement would also have been beneficial to the estate. The parties supporting the proposed settlement were also performing services beneficial to the estate and the reorganization process.",
"It is true, of course, that one of the events which triggered the negotiations leading to the proposed settlement was the effort by the banks to foreclose the pledge, and to advance their own interests at the expense of the Debtor's estate. The costs of such efforts are not reimbursable under § (c)(12). But this does not substantially undermine the conclusion that the efforts of Citibank and others in negotiating, proposing, and supporting the proposed settlement were of benefit to the estate, and are reimbursable. A somewhat similar analysis is appropriate with respect to the litigation challenging the validity of the pledge itself. Citibank is not entitled to be reimbursed for its expenditures in defending its status as a secured creditor, but is entitled to recognition to the extent its efforts contributed to the formulation and approval of a consensual Plan of Reorganization.",
"These distinctions are difficult to quantify with precision but can, I believe, be adequately covered by adjustments to the awards in particular cases. *506 II. REVIEW OF INDIVIDUAL APPLICATIONS 1. Institutional Investors Early in the reorganization proceeding, some 13 insurance companies holding more than $400 million of pre-petition debt obligations of Penn Central banded together in an informal organization known as \"Institutional Investors, Penn Central Group\". By 1976, the membership had declined to five insurance companies, but these five permanent members of the group owned in excess of $300 million of Penn Central's debt. The Institutional Investors played an active role throughout the entire proceeding, and were key litigants in many significant matters in this and other courts.",
"Of particular note in the early phases of the reorganization were the Institutional Investors' activities concerning sales of major assets, the Trustees' reports on reorganization planning, the use of escrowed funds, and the Plan proceedings before the ICC. Later, the group was particularly active throughout the RRRA litigation and its aftermath. The Institutional Investors were a member of the Friday Group, and played an active and productive role in the approval and consummation of the Plan. Wilkie, Farr & Gallagher of New York City (and particularly Walter Brown, Esq., of that firm), served as lead counsel for the Institutional Investors, which paid it a total of $2,522,100 for its legal services. Ballard, Spahr, Andrews & Ingersoll, of Philadelphia, served as local counsel for the Institutional Investors, and received $120,987.49 for its services.",
"The hourly rates used in calculating these fees are reasonable, and the full fees will be allowed to the Group. Expenses of counsel for the period totaled $354,399.80. These expenses will also be allowed. In addition, the Group paid $565,799.31 to its transportation consultant, Wyer, Dick & Company. These services were plainly necessary. Throughout the pre-conveyance period, the configuration of the Debtor's rail system was a matter of frequent discussion. The Trustees' reports on reorganization planning, and the various abandonment proposals, created significant analytical tasks for the transportation consultant, as did the Preliminary and Final System Plans of USRA. And it was also necessary and appropriate for the Institutional Investors to utilize Wyer, Dick's services in connection with preparing its Valuation Case analyses. These expenses, together with certain additional expenses including the Group's share of the cost of printing the \"Principles of Reorganization,\" will be allowed. Thus, the award to the Institutional Investors, Penn Central Group, includes counsel fees of $2,643,087.49, expenses of counsel, $354,399.80, and other expenses of $684,533.05, for a total award of $3,682,020.34 (base award, exclusive of delay increment). 2.",
"Citibank As noted above, Citibank participated actively in these proceedings, principally as agent and spokesman for the group of 53 banks which were owed $300 million plus interest, secured by the pledge of the Pennco stock. Citibank seeks an allowance totaling $5,598,490.77, calculated as follows: counsel fees, $3,340,429; expenses of counsel, $213,012.09; personnel expenses, $1,198,341; and other expenses, $846,708.68. There can be no doubt that most of the activities which generated these expenses were beneficial to the estate. In addition to its general activities in the hearings which addressed various important reorganization issues, Citibank was particularly active and helpful in analyzing the Debtor's overall financial and operating positions, and in developing significant studies concerning future prospects and financial requirements. Following enactment of the RRRA, these activities intensified. Citibank's work with the Friday Group in producing the \"Principles of Reorganization,\" and its debt and claims analysis, its analysis of the leased line problems, and its three-volume cash-flow forecast made especially valuable contributions to the achievement of the consensual plan. *507 It remains necessary, however, to review the reasonableness of the costs incurred, and also to consider whether certain adjustments should be made to reflect disallowance of reimbursement for expenses incurred solely in pursuit of Citibank's own interests.",
"A. Counsel Fees and Expenses of Counsel. The Philadelphia firm of Fox, Rothschild, O'Brien & Frankel served as local counsel for Citibank, insofar as efficiency and economy could be served by the arrangement. The firm was paid fees aggregating $118,315. This reflects hourly rates slightly in excess of the special counsel rate, but in view of the limited and special nature of the undertaking and the general economies achieved, the entire fee appears reasonable, and will be allowed. Citibank also paid the New York law firm of Zalkin & Cohn $36,000 for legal services rendered early in the proceeding. This payment, also, will be allowed, as will the expenses of both firms. The New York firm of Sherman & Sterling served as Citibank's counsel throughout the proceedings. Their fees totaled $3,186,114 ($1,234,250 through March of 1976, and $1,951,864 for the remaining period of the application). The record reflects the total hours billed for partners, associates, and summer associates and paralegals during each of these two periods, but does not reflect the hourly rates.",
"The affidavit of the partner in charge takes the position that the firm's fees are calculated on the basis of complex formulae and cost measurement indices which would not be \"understandable\" to outsiders. There is, of course, no doubt that the quality of the firm's work was of the very highest; and much of its work was performed under difficult time-constraints. And it is appropriate to permit some further upward adjustment to reflect higher overhead costs in New York than elsewhere. For the initial period, from 1970 through March 1976, it appears that the firm's billing rates were only moderately in excess of the special counsel rates (approximately 18.7% higher).",
"In the circumstances, this differential is not unreasonable. For the later period, however, the differential is much greater, amounting to about 69%. During this period, the firm billed for a total of 17,771.9 hours (partners, 5,446.8 hours; associates, 8,903.9 hours; and summer associates and paralegals, 3,392.2 hours). This works out to an overall average hourly rate of $109 per hour. The same total amount would be achieved, for example, by a schedule of $200 per hour for partners, $85 for associates, and $30 for summer clerks and paralegals; or $175 per hour for partners, $100 for associates, and $30 for summer clerks and paralegals. Under any view of the matter, it seems clear that the hourly rates charged substantially exceed those allowed to any other applicants for compensation in this case (including all of the firms which served as counsel to indenture trustees).",
"Giving full weight to the exemplary quality of the services performed, the difficulty of the issues, the magnitude of the responsibility, and all other pertinent factors, I find myself unable to justify disparities of this magnitude. I have concluded that, for purposes of calculating the ultimate reasonable allowance to Citibank, the maximum which can be attributed to Sherman & Sterling's counsel fees for the entire period is $2,884,250 plus expenses. It should be noted that even this figure represents an upward adjustment of about 31% above the special counsel rates. Because Sherman & Sterling's billings covered the firm's services attributable solely to defense of Citibank's secured position and attempts to recover its collateral, the entire amount is not allowable. The application is not sufficiently detailed to permit calculation of the adjustment with mathematical accuracy. All of the non-reimbursable services occurred in the 1970-1976 period, for which $1,234,250 is viewed as appropriate compensation.",
"It appears probable that approximately 50% of the firm's work during this period related to *508 Pennco matters; and I believe it appropriate to assume that approximately 25% of the firm's Pennco efforts should be disallowed, because unrelated to the interests of the Debtor's estate. Thus, I have concluded that 12½% of the total claimed for the initial period should be disallowed. B. Personnel Expenses Citibank seeks reimbursement in the total sum of $1,198,341 for the services of Citibank officers and employees. Of that amount, $272,162 was billed by Citibank's corporate finance department for time charges for the July 1976 cash-flow forecast.",
"As noted above, this was a cooperative effort endorsed by the Trustees. The full amount of that expense will be reimbursed. Citibank also expended $182,000 for consulting services for three studies of ConRail, $48,743 for computer services, and $11,421 for a consulting economist. These items, aggregating $242,165 will also be allowed. The balance of the personnel expenses, $683,514, cover the salaries of bank personnel for time devoted exclusively to Penn Central matters. I am not persuaded that the full amount of this expense is properly reimbursable under § (c)(12). In the first place, a substantial portion of this expense surely represents the ordinary cost of running a bank, rather than additional expense incurred by reason of the reorganization proceeding. Ordinarily, the overhead expenses of a lending institution are subsumed in the interest charged. In the second place, some portion of these services undoubtedly related to the defense of the Pennco pledge and the attempts to seize the collateral, and are thus not allowable.",
"Finally, it is reasonable to suppose that much of this activity related to internal communications among the 53-bank group, a process which benefitted the Debtor's estate only marginally, if at all. Taking all of these factors into consideration, I have concluded that only 50% of this $683,514 item should be allowed. Thus, the base amount of the allowance for Citibank's internal expenses is fixed at $856,084. C. Miscellaneous Expenses Citibank also seeks reimbursement of approximately $846,700 for miscellaneous expenses.",
"Of this amount, roughly $266,000 represents travel, telephone, reproduction costs, subscription services and the like; and approximately $580,200 represents amounts billed by outside firms and paid by Citibank for printing expenses and transcript fees. Some portion of these expenses should be allocated to ordinary overhead, interbank communications, and non-reimbursable aspects of the Pennco litigation. In addition, there is reason to doubt that all of the printing expenses are properly chargeable to the Debtor's estate under § (c)(12) (for example, the $277,099.84 for printing what appear to have been an unnecessarily large number of copies of Citibank's June 10, 1974 brief and the financial analyses of USRA's Preliminary and Final System Plans).",
"Given these problems I have concluded that an allowance of 50% of these miscellaneous expenses, or $423,350, is appropriate. 3. The New Haven Trustee The New York, New Haven & Hartford Railroad Company had been in bankruptcy reorganization since July 1961. Its fortunes continued to decline, and it became apparent that the New Haven could no longer survive as an independent railroad. When the Pennsylvania Railroad and the New York Central sought the approval of the ICC for a merger of those two railroads, the New Haven sought and obtained an ICC order making acquisition of the New Haven a condition of its approval of the Pennsylvania-New York Central merger. The merged company, Penn Central Transportation Company, was required to assume ownership and operation of the New Haven properties in 1968; the price to be paid for the properties remained to be determined.",
"An agreement was reached, under which the New Haven would be paid principally in the form of Penn Central common stock, but there was an underwriting provision pursuant to which Penn Central guaranteed the value of the stock at $87.50 per share. *509 The decision of the United States Supreme Court finally approving this arrangement was rendered shortly after Penn Central filed its § 77 petition. Because of that development, the Supreme Court remanded the case for reconsideration of \"the form that Penn Central's consideration to New Haven should properly take, and the status of the New Haven estate as a shareholder or creditor of Penn Central\". New Haven Inclusion Cases, 399 U.S. 392, 489, 90 S. Ct. 2054, 2108, 26 L. Ed. 2d 691 (1970).",
"There was further litigation before the New Haven reorganization court and in this Court. The upshot was a decision by this Court that the New Haven estate should be tentatively treated as holding a lien to secure the purchase price of its property, and that final determination of its status should await the development and approval of a plan of reorganization of the Penn Central. In addition to this potentially secured claim arising under the guarantee agreement, the New Haven trustee also held some $34 million in Penn Central bonds, secured by property previously owned by the New Haven. Thus, the New Haven trustee, on behalf of the parties in interest in the New Haven reorganization proceeding, had a very substantial stake in the outcome of the Penn Central reorganization.",
"Moreover, the New Haven bondholders and other creditors had already been awaiting payment of their claims for more than 10 years. It is therefore quite understandable that the prospect of patiently awaiting the outcome of still another railroad reorganization proceeding was not an attractive one. As might be expected, therefore, up until the time that the RRRA-solution became inevitable, the position of the New Haven trustee was adverse to that of the Penn Central Trustees on a wide range of issues. The New Haven trustee opposed the issuance of trustees certificates, opposed most of the sales of assets, and opposed rail-related capital expenditures.",
"This was not mere obstructionism, however, but a valid campaign for the preservation of the Debtor's estate from the ravages of rail-related erosion, so that an acceptable reorganization could be achieved. Given the actual outcome a consensual plan under which all creditors received adequate satisfaction of their claims I have no hesitation in concluding that the New Haven Trustee has met the initial burden of showing that his efforts were of benefit to the estate. Indeed, after the RRRA was in place, the efforts of New Haven's counsel, in the Friday Group activities, the development and formulation of the Reorganization Plan, and in the Valuation Case litigation, were of inestimable benefit to the estate and the reorganization process. Moreover, even in the earlier, more adversarial stage, the New Haven interests occupied a position akin to that of a \"loyal opposition\", and proved helpful to the Trustees and to this Court in many ways too numerous to mention. Counsel for the New Haven trustee brought a high level of factual and legal analysis to the litigated issues; this high quality of advocacy was of very great benefit to the Court in analyzing and deciding the complicated and difficult issues presented throughout the reorganization proceeding.",
"I fully endorse the comments of the Securities & Exchange Commission, singling out the New Haven trustee and his counsel for their positive contributions throughout the case. Thus, it is clear that the costs and expenses, including counsel fees, incurred by the New Haven trustee, are reimbursable; and it is also clear that, in determining the appropriate level of compensation of counsel, a substantial increment because of the extent of the benefit conferred is appropriate. Unfortunately, however, I find myself unable to justify increments of the same order of magnitude as contemplated by the present application. In addition to certain out-of-pocket expenses which are unexceptionable and will be allowed, the New Haven trustee seeks an allowance of $10 million to cover counsel fees of the law firm of Sullivan & Worcester, of Boston, Massachusetts. Of that amount, the trustee has already paid $1,750,711.50 to the firm, as authorized by the New Haven reorganization court, for *510 services related to the Penn Central reorganization. The trustee seeks reimbursement of that sum, and a direction that the balance of the $10 million applied for be paid directly to the Sullivan & Worcester firm.",
"The record establishes that Sullivan & Worcester devoted some 27,314 hours to Penn Central reorganization matters (partners, 17,329 hours, associates 9,109 hours, clerks and paralegals, 876 hours). At the firm's normal guideline rates in effect in July 1978, the total fee, purely on a time basis, would be $2,247,395. Application of the special counsel rates would yield a substantially similar fee. In support of the $10 million request, it is asserted that the efforts of the firm produced benefits for the estate in the range of $875 million to $1,050,000,000. Hence, the fee sought is only about 1% of the benefit, and therefore relatively modest. There are several reasons for rejecting this approach. Counsel for the New Haven trustee played a very significant part in the cooperative effort which may have produced benefits of the level suggested, but cannot properly claim exclusive credit.",
"Moreover, and more importantly, the suggested standard is not, and never has been, an acceptable basis for determining reasonableness for purposes of § (c)(12) allowances. The unique contributions of the Sullivan & Worcester firm, and particularly of Joseph Auerbach, Esq., of that firm, merit compensation at levels reflecting a significant increment above normal hourly rates. I am satisfied that an allowance at the upper end of the range of reasonableness is appropriate in this instance. Considering all of the relevant factors, I have concluded that the proper allowance to the New Haven trustee for counsel fees of the Sullivan & Worcester firm is $3,750,000 (base award, exclusive of delay factor). 4. Penn Central Company David Berger, P.A. represented the Penn Central Company, which owned all of the Debtor's common stock, throughout these proceedings.",
"Penn Central Company had few assets other than its stock interest in the Debtor, but had significant debt obligations it was unable to meet. Contemporaneously with the Debtor's reorganization proceeding, Penn Central Company went through a Chapter XI arrangement proceeding, presided over by Bankruptcy Judge Goldhaber. The company has paid the Berger firm $270,000 on account of its bill for legal services, with the understanding that the law firm would seek an allowance covering its full claim in this proceeding. An order of bankruptcy Judge Goldhaber provides that whatever allowance is approved by this Court will be divided between the Berger firm and the company 50-50, until the company has recovered the $270,000 previously paid.",
"On behalf of the company, the Berger firm participated in many of the important proceedings in this and other courts, including the Pennco settlement litigation, the ICC Plan hearings, the constitutional attacks on and the statutory proceedings under the RRRA, Penn Central Company's severance petition, and disputes related to the sale of the Barclay Hotel, the Debtor's Madison Square Garden stock, and the Westside Yards in New York. The firm was also active in the pre-conveyance discussions concerning reorganization planning, but was not actively involved in the formulation of the Plan of Reorganization. For the most part, these activities, and many others which have not been mentioned here, were of benefit to the Debtor's estate, and there is no reason for imposing any discount because of duplication of effort. Penn Central Company was granted limited intervention in the Valuation Case before the Special Court, and submitted briefs on the issues it was permitted to address. These actions, too, may be regarded as beneficial to the estate.",
"Somewhat surprisingly, the Berger firm also accepted an appointment to the Liaison Committee appointed by the Special Court, notwithstanding the limited nature of its intervention in that proceeding. The record does not permit a precise determination as to the time *511 spent on Liaison Committee work, although it seems clear that many hundreds of hours were devoted to this effort. It must be stated that the benefit to the Debtor's estate from the Berger firm's participation in the Liaison Committee would seem to have been marginal at best. From the beginning of the reorganization until April 1, 1976, the Berger firm devoted some 5,329.5 hours on Penn Central reorganization matters and an additional 2,266 hours from March 1976 through May 1978, making a total of 7,595.5 hours. The standard billing rates of the firm as of December 1976 and July 1978 have been provided, but these rates clearly do not necessarily correspond to all of the periods in which the work was performed. Application of the special counsel rates would produce an aggregate fee of $505,123.",
"On the other hand, applying the Berger firm's December 1976 rates to the entire period would suggest a fee totaling $788,843.75. The difference is due largely to the $200 per-hour rate claimed for the senior partner, David Berger, Esq., who recorded approximately 27% of all of the hours recorded for the firm. There are valid reasons for approving an award in excess of the special counsel rate. Penn Central Company participated in only a limited number of matters, all of which were important. The firm represented its client's interest well, and made a significant contribution to these proceedings. Quite properly, counsel have focused in particular on the West Side Rail Yard transactions and the Barclay Hotel as examples of their success. On occasion, the firm stumbled slightly, as when it persuaded this Court that the price initially offered for the Madison Square Garden stock was inadequate (it continued to decline, and was later disposed of at a lower price); but the efforts were undoubtedly intended to benefit the Debtor's estate, and the positions asserted were valid in light of the available information.",
"A further factor worthy of consideration is the contingent nature of the firm's compensation. Because of the straitened circumstances of Penn Central Company, the Berger firm carried the torch for the stockholders with no assurance that the firm would ever be paid. Finally, and most importantly, the quality of the firm's legal work was exceptionally high, and much of the work was done under serious time-constraints. Recognizing that the amount requested represents a very substantial multiple over the reasonable hourly rate, the applicant asserts that the firm's efforts produced benefits for the estate in excess of $30 million. Although this claim has somewhat more plausibility than similar claims made on behalf of the Robinson petitioners, as will be discussed below, I again must reject the contention. Asset values were not created by the law firms involved, and their preservation and enhancement was the product of many factors. Moreover, I remain persuaded that allowances under § (c)(12) cannot be directly related to asset values.",
"On the other hand, I am satisfied that the benefits to the estate to which the Berger firm contributed should be taken into account to some extent, and that this factor justifies an increase above the special counsel rate. All in all, I believe the appropriate allowance is $700,000, together with the firm's expenses of $49,430.23, plus reimbursement to the Penn Central Company for the $26,307 in expenses previously paid (base award, exclusive of delay increment). The distribution is to be allocated in accordance with the order previously entered by Bankruptcy Judge Goldhaber. 5. The Robinson Petitioners Four law firms and a single practitioner combined to represent the petitioning shareholders of Penn Central Company in the \"Robinson Petition\" litigation. Lead counsel was the firm of David Berger, P.A.",
"The present petition for an allowance under § (c)(12) is submitted by the attorneys themselves, rather than their clients. It seems to have been understood that counsel's compensation would be limited entirely to such award as this Court might approve pursuant to § (c)(12). Since the object of the Robinson Petition litigation was to invalidate the Pennco pledge and to block the proposed Pennco settlement, there was never *512 any prospect of a direct monetary recovery by the clients themselves, hence this fee arrangement is understandable. The principal activities related to the investigation and litigation of the Robinson Petition took place between March 1972 and December 1972, although some additional time was spent in 1973 and 1974.",
"The record reflects a total of 5,006 hours devoted to this effort (3,727 by partners, 1236.5 by associates, and 342.75 by law clerks and paralegals). When the Trustees filed their proposed Reorganization Plan in December 1976, counsel embarked upon a second round of activity, and interposed objections to the proposed treatment of the claims of the bank group in the Plan. After actively participating in the Plan hearings, counsel withdrew the objections. The present application reflects an additional, 2,066.75 hours in connection with the Plan proceedings (1336.25 hours for partners, 637 hours for associates, and 93.5 hours for law clerks and paralegals). For all of these efforts, the applicants seek an award of $6 million.",
"This would represent an average hourly rate of $813.81. By contrast, if the 1978-level special counsel rates were applied to the hours recorded, the total fee would be $588,403. Even applying the Berger firm's 1976 rates to the Robinson Petition litigation, and its 1978 rates to the Plan proceedings, the total fee would be approximately $967,765. Thus, the claim seeks an award 6.2 times the firm's (somewhat later) hourly rates, and more than 10 times the special counsel rates. Allowances based on multiples of this magnitude are simply unheard of, and totally unwarranted, in reorganization proceedings. In justification of the fee requested, the applicants assert that their efforts preserved for the estate the entire value of Pennco, which they fix at between $500 and $600 million, together with all of Pennco's earnings from 1972 to 1977, and the alleged value of all of the concessions made by the banks as part of the consensual Plan of Reorganization. It is asserted that the total of these benefits is approximately $980 million, to which should be added the benefit of preserving the utility of the Debtor's tax loss carryforwards, as well as other benefits. Since the grand total of all of these benefits is in excess of $1 billion, the claimed fee of $6 million is only 6/10 of 1% of the benefits conferred, and is therefore reasonable.",
"In making these arguments, counsel exhibit the tenacity, aggressiveness, courage and imagination which characterized their efforts throughout the reorganization proceeding. While these attributes of advocacy, in the performance of services for which allowance will be made, justify a substantial increase over the normal special counsel rate, in the present context they are no substitute for rational argument. The original proposal to settle the Pennco matter with the bank group was, as mentioned above, a mixture of plusses and minuses. Given the actual course of the reorganization, after enactment of the RRRA, there can be no doubt that the estate benefitted from disapproval of the proposed settlement. But rejection of the settlement did not determine the course of the reorganization, and it is not difficult to envision other scenarios in which rejection of the settlement would, with the benefit of hindsight, be viewed less favorably. More importantly, it is obvious that the principal factor in rejection of the settlement was the Government's objection to it, a circumstance for which the Robinson petitioners and their counsel can scarcely claim credit. The applicants deserve substantial credit for their imaginative and thorough challenge to the validity of the pledge. Although this does not, as the applicants apparently believe, readily translate into a totally successful assertion of their position (the issue was never finally decided by the Court; but as stated in this Court's Opinion approving the Plan, \"The most likely outcome of the litigation would have been some form of modified treatment in the Plan of Reorganization\"), the applicants did make a valuable contribution to the compromise of these issues in the Plan of Reorganization.",
"*513 After the Pennco settlement proposal was rejected by the Court, the banks did file a petition to foreclose the pledge. The Robinson petitioners opposed this application, but so did the United States Government and the Penn Central Trustees. The foreclosure application was not made until October 1973, when enactment of the RRRA was imminent (the RRRA became law in January 1974). No one can seriously suggest that \"but for\" the opposition filed by the Robinson petitioners, the banks would have been permitted to foreclose. A considerable measure of posturing and saberrattling was being indulged in; it is fair to state that, in view of the RRRA, no one took the foreclosure petition very seriously. It was obvious to all concerned that Pennco would be retained as the nucleus of the reorganized company.",
"The fact that I regard the amount requested by these applicants to be grossly excessive, and am not persuaded to the contrary by the justifications asserted, should not be permitted to detract from the genuine merit of the application. Counsel for the Robinson petitioners, and particularly the Berger firm, provided very high-quality legal service, and their activities were of decided benefit to the Debtor's estate. A substantial increment above normal hourly rates is appropriate. In my judgment, a fair and reasonable allowance for all of the services of counsel for the Robinson petitioners is $1,150,000, together with the $34,698.89 in expenses claimed (base award, exclusive of delay increment). 6. The Delay Factor The Orders granting the various allowances will include an increment designated as \"delay factor\". This addition to the allowances is comparable to that awarded previously to the Indenture Trustees.",
"Funds to satisfy § 77(c)(12) applications were set aside pursuant to the Consummation Order. The delay factor is an equitable allocation of the earnings on the funds to the persons for whose benefit the funds were set aside. III. SUMMARY The following chart summarizes the Court's decisions on the pending applications: DELAY TOTAL APPLICANT CLAIMED ALLOWED FACTOR AWARD Institutional Investors $ 3,682,020 $ 3,682,020 $ 1,288,707 $ 4,970,723 Citibank 5,598,490 4,376,730 1,531,855 5,908,585 New Haven Trustee 10,399,295 4,149,245 1,452,235 5,601,480 Penn Central Company 1,248,328 775,737 271,508 1,047,245 Robinson Petitioners 6,034,698 1,184,698 414,644 1,599,342 ___________ ___________ __________ ___________ $26,962,831 $14,168,430 $4,859,949 $19,127,375 IV. POSTSCRIPT The fees and allowances now being approved for these five applicants aggregate nearly $20 million. Substantial additional amounts have previously been approved for others involved in the litigation. While these amounts, in the abstract, may seem very large, the allowances cover many years of intensive activity. I am satisfied that the amounts authorized are entirely reasonable. Perhaps more importantly, I am absolutely convinced that, but for the dedication, skill, legal ability, and remarkable cooperation of the counsel involved, litigation expenses would have been multiplied many times over. Whatever the historical assessment *514 of the Penn Central reorganization may prove to be, there can be no doubt that the performance of the lawyers involved will never be excelled."
]
| https://www.courtlistener.com/api/rest/v3/opinions/2015571/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
EXAMINER’S AMENDMENT An examiner’s amendment to the record appears below. Should the changes and/or additions be unacceptable to applicant, an amendment may be filed as provided by 37 CFR 1.312. To ensure consideration of such an amendment, it MUST be submitted no later than the payment of the issue fee. Authorization for this examiner’s amendment was given in an interview with Lauren Schneider on April 25, 2022. The application has been amended as follows: Replace claim 1 as follows: Claim 1. A guiding sheath, comprising: an elongated shaft having an inner liner defining a lumen, a braided member surrounding the inner liner, and an outer layer surrounding the braided member; a ring electrode mounted on the elongated shaft; a lead wire having a distal end connected to the ring electrode; a lumened lead wire tubing extending longitudinally along the elongated shaft, the lumened lead wire tubing having a proximal portion, a transition portion, and a distal portion, the proximal portion extending below the braided member, the distal portion extending above the braided member, and the transition portion passing through a gap in the braided member, the lead wire extending longitudinally through the lumened lead wire tubing; a puller wire; a lumened puller wire tubing in contact with and extending longitudinally along the elongated shaft, the lumened puller wire tubing extending below the braided member along its entire length, and the puller wire extending longitudinally through the the lumened puller wire tubing; a control handle at a proximal end of the elongated shaft; and a hemostatic valve proximal of the control handle, the hemostatic valve comprising: a hub housing comprising proximal and distal ends and a central passage, an end cap mounted on the proximal end of the hub housing and comprising a central opening defining an entry into the central passage of the hub housing, a seal valve member positioned within the central passage of the hub housing and comprising a deformable central opening, the deformable central opening being configured to remain closed in a neutral configuration but to deform upon exertion of axial pressure on the deformable central opening by a device to allow passage of the device when the device is extended through the central passage, and a friction ring positioned within the central passage of the hub housing distal of the seal valve member and comprising a central aperture that remains open and is axially aligned with the deformable opening of the seal valve member, the central aperture of the friction ring configured for frictional contact with the device when the device is extended through the central passage, and configured to minimize passage of air distally from the central opening of the seal valve member as the device is extended through the central passage. Claims 16-20: Canceled.
REASONS FOR ALLOWANCE The following is an examiner’s statement of reasons for allowance: Leeflang (U.S. PGPub. No. 2016/0058971), Fuentes (U.S. PGPub. No. 2012/0277671) and Bonnette (U.S. PGPub. No. 2006/0129091) were found to be the closest prior arts to the claimed invention. Leeflang discloses a catheter comprising majority of structures as claimed in claim 1. However, Leeflang fails to disclose a lumened puller wire tubing in contact with and extending longitudinally along the elongated shaft as required in independent claim 1. Instead, Leeflang discloses a lumened puller wire tubing (auxiliary lumen 18b in Fig. 1B) that changes its position relative to a braided member and a lumen of an elongated shaft to prevent separation of a pull wire from layers of the catheter or tear at least partially through the wall of the catheter ([0005]-[0007]). Therefore, it would be hindsight reasoning to modify Leeflang’s lumened puller wire tubing so that it is in contact with and extending longitudinally along the elongated shaft and extending below the braided member along its entire length as required in independent claim 1. Fuentes teaches an arrangement in which the lumened puller wire tubing and its puller wire are between inner and outer braided members so that the puller wire tubing and its puller wire are encapsulated in a sidewall of a catheter shaft to prevent separation of the puller wire tubing and its puller wire from separating from the catheter shaft ([0013]). However, Fuentes fails to teach the lumened puller wire tubing that is in contact with and extending longitudinally along the elongated shaft and below the braided member along its entire length as required in independent claim 1. There would be no motivation from Fuentes to position the lumened puller wire tubing so that it is directly in contact with the elongated shaft and extends below the braided member as doing so would teach away from the intended design of Fuentes. Accordingly, independent claim 1 and its dependent claims 2-4, 6-15 and 21 are allowed. Any comments considered necessary by applicant must be submitted no later than the payment of the issue fee and, to avoid processing delays, should preferably accompany the issue fee. Such submissions should be clearly labeled “Comments on Statement of Reasons for Allowance.” Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to EUNHWA KIM whose telephone number is (571)270-1265. The examiner can normally be reached 9AM-5:30PM. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, JOSEPH STOKLOSA can be reached on (571) 272-1213. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center. Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
/EUN HWA KIM/Primary Examiner, Art Unit 3794 4/25/2022 | 2022-05-05T16:57:18 | [
"EXAMINER’S AMENDMENT An examiner’s amendment to the record appears below. Should the changes and/or additions be unacceptable to applicant, an amendment may be filed as provided by 37 CFR 1.312. To ensure consideration of such an amendment, it MUST be submitted no later than the payment of the issue fee. Authorization for this examiner’s amendment was given in an interview with Lauren Schneider on April 25, 2022. The application has been amended as follows: Replace claim 1 as follows: Claim 1.",
"A guiding sheath, comprising: an elongated shaft having an inner liner defining a lumen, a braided member surrounding the inner liner, and an outer layer surrounding the braided member; a ring electrode mounted on the elongated shaft; a lead wire having a distal end connected to the ring electrode; a lumened lead wire tubing extending longitudinally along the elongated shaft, the lumened lead wire tubing having a proximal portion, a transition portion, and a distal portion, the proximal portion extending below the braided member, the distal portion extending above the braided member, and the transition portion passing through a gap in the braided member, the lead wire extending longitudinally through the lumened lead wire tubing; a puller wire; a lumened puller wire tubing in contact with and extending longitudinally along the elongated shaft, the lumened puller wire tubing extending below the braided member along its entire length, and the puller wire extending longitudinally through the the lumened puller wire tubing; a control handle at a proximal end of the elongated shaft; and a hemostatic valve proximal of the control handle, the hemostatic valve comprising: a hub housing comprising proximal and distal ends and a central passage, an end cap mounted on the proximal end of the hub housing and comprising a central opening defining an entry into the central passage of the hub housing, a seal valve member positioned within the central passage of the hub housing and comprising a deformable central opening, the deformable central opening being configured to remain closed in a neutral configuration but to deform upon exertion of axial pressure on the deformable central opening by a device to allow passage of the device when the device is extended through the central passage, and a friction ring positioned within the central passage of the hub housing distal of the seal valve member and comprising a central aperture that remains open and is axially aligned with the deformable opening of the seal valve member, the central aperture of the friction ring configured for frictional contact with the device when the device is extended through the central passage, and configured to minimize passage of air distally from the central opening of the seal valve member as the device is extended through the central passage. Claims 16-20: Canceled.",
"REASONS FOR ALLOWANCE The following is an examiner’s statement of reasons for allowance: Leeflang (U.S. PGPub. No. 2016/0058971), Fuentes (U.S. PGPub. No. 2012/0277671) and Bonnette (U.S. PGPub. No. 2006/0129091) were found to be the closest prior arts to the claimed invention. Leeflang discloses a catheter comprising majority of structures as claimed in claim 1. However, Leeflang fails to disclose a lumened puller wire tubing in contact with and extending longitudinally along the elongated shaft as required in independent claim 1. Instead, Leeflang discloses a lumened puller wire tubing (auxiliary lumen 18b in Fig. 1B) that changes its position relative to a braided member and a lumen of an elongated shaft to prevent separation of a pull wire from layers of the catheter or tear at least partially through the wall of the catheter ([0005]-[0007]). Therefore, it would be hindsight reasoning to modify Leeflang’s lumened puller wire tubing so that it is in contact with and extending longitudinally along the elongated shaft and extending below the braided member along its entire length as required in independent claim 1.",
"Fuentes teaches an arrangement in which the lumened puller wire tubing and its puller wire are between inner and outer braided members so that the puller wire tubing and its puller wire are encapsulated in a sidewall of a catheter shaft to prevent separation of the puller wire tubing and its puller wire from separating from the catheter shaft ([0013]). However, Fuentes fails to teach the lumened puller wire tubing that is in contact with and extending longitudinally along the elongated shaft and below the braided member along its entire length as required in independent claim 1. There would be no motivation from Fuentes to position the lumened puller wire tubing so that it is directly in contact with the elongated shaft and extends below the braided member as doing so would teach away from the intended design of Fuentes. Accordingly, independent claim 1 and its dependent claims 2-4, 6-15 and 21 are allowed.",
"Any comments considered necessary by applicant must be submitted no later than the payment of the issue fee and, to avoid processing delays, should preferably accompany the issue fee. Such submissions should be clearly labeled “Comments on Statement of Reasons for Allowance.” Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to EUNHWA KIM whose telephone number is (571)270-1265. The examiner can normally be reached 9AM-5:30PM. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, JOSEPH STOKLOSA can be reached on (571) 272-1213. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center.",
"Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. /EUN HWA KIM/Primary Examiner, Art Unit 3794 4/25/2022"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2022-05-08.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Citation Nr: 1136995
Decision Date: 09/30/11 Archive Date: 10/11/11
DOCKET NO. 09-48 336 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Portland, Oregon
THE ISSUES
1. Whether new and material evidence has been received to reopen service connection for chronic renal failure, status post kidney transplant.
2. Whether new and material evidence has been received to reopen service connection for duodenal ulcer disease.
3. Whether new and material evidence has been received to reopen service connection for a left knee disorder
4. Whether new and material evidence has been received to reopen service connection for bilateral carpal tunnel syndrome.
5. Whether new and material evidence has been received to reopen service connection for a ganglion of the right wrist.
6. Whether new and material evidence has been received to reopen service connection for hypertension.
7. Whether new and material evidence has been received to reopen service connection for a dysthymic disorder.
8. Entitlement to service connection for a bilateral shoulder disorder.
9. Entitlement to service connection for a right ankle disorder.
REPRESENTATION
Appellant represented by: Oregon Department of Veterans' Affairs
WITNESS AT HEARING ON APPEAL
Appellant (the Veteran)
ATTORNEY FOR THE BOARD
Joseph P. Gervasio, Counsel
INTRODUCTION
The Veteran, who is the Appellant, served on active duty from October 1973 to February 1974 and had verified active duty for training (ACDUTRA) from February 1978 to July 1978. He had additional periods of inactive duty training (INACDUTRA).
This case comes to the Board of Veterans' Appeals (Board) on appeal of a May 2008 rating decision of the Portland, Oregon, Regional Office (RO) of the Department of Veterans Affairs (VA).
Although the RO may have reopened the Veteran's claims of service connection, the question of whether new and material evidence has been received to reopen such claim must be addressed in the first instance by the Board because the issue goes to the Board's jurisdiction to reach the underlying claim and adjudicate it on a de novo basis. See Barnett v. Brown, 83 F.3d 1380, 1383 (Fed. Cir. 1996), aff'd 8 Vet. App. 1 (1995). If the Board finds that no such evidence has been offered, that is where the analysis must end; hence, what the RO may have determined in this regard is irrelevant. Barnett, 83 F.3d at 1383. The Board has characterized the Veteran's claims accordingly.
The issue of service connection for a bilateral shoulder disorder is addressed in the REMAND portion of the decision below and is REMANDED to the RO via the Appeals Management Center (AMC).
FINDINGS OF FACT
1. In a June 2004 decision, the Board denied service connection for chronic renal disease on the basis that the Veteran did not have chronic renal disease that had been linked to active service.
2. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for chronic renal disease.
3. In a June 2004 decision, the Board denied service connection for duodenal ulcer disease on the basis that evidence received subsequent to a January 1976 rating decision that denied service connection for peptic ulcer disease had not raised a reasonable possibility of substantiating the claim.
4. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for peptic ulcer disease.
5. In a June 2004 decision, the Board denied service connection for a left knee disability on the basis that the Veteran did not have a left knee disability that had been linked to active service.
6. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for a left knee disability.
7. In a June 2004 decision, the Board denied service connection for a bilateral carpel tunnel syndrome on the basis that the Veteran did not have bilateral carpal tunnel syndrome that had been linked to active service.
8. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for bilateral carpel tunnel syndrome.
9. In a June 2004 decision, the Board denied service connection for a ganglion of the right wrist on the basis that the Veteran did not have a ganglion of the right wrist that had been linked to active service.
10. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for a ganglion of the right wrist.
11. In a June 2004 decision, the Board denied service connection for hypertension on the basis that the Veteran did not have hypertension that had been linked to active service.
12. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for hypertension.
13. In a June 2005 decision, the Board denied service connection for a psychiatric disorder on the basis that the Veteran's psychiatric disability preexisted his entry into active duty service and had not increased in severity during service.
14. Evidence received subsequent to the June 2005 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for a psychiatric disorder that includes dysthymic disorder.
15. The Veteran did not sustain a right ankle injury or disease in service, and symptoms of right ankle disorder were not chronic in service.
16. Symptoms of a right ankle disability have not been continuous since discharge from service.
17. A right ankle disability, diagnosed as right ankle tendonitis, is not related to service.
CONCLUSIONS OF LAW
1. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a chronic renal disease is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).
2. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a duodenal ulcer disease is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).
3. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a left knee disability is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).
4. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for bilateral carpel tunnel syndrome is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).
5. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a ganglion of the right wrist is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).
6. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for hypertension is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).
7. The additional evidence received subsequent to the June 2005 decision of the Board that denied service connection for a psychiatric disorder, including dysthymic disorder, is not new and material; thus, service connection for this disability is not reopened, and the June 2005 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).
8. A chronic right ankle disability was neither incurred in nor aggravated by service. 38 U.S.C.A. §§101(21), (24) (West 2002); 1110, 1131 (West 2002); 38 C.F.R. § 3.303 (2010).
REASONS AND BASES FOR FINDINGS AND CONCLUSIONS
Duties to Notify and Assist
The Veterans Claims Assistance Act of 2000 (VCAA), in part, describes VA's duties to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2010).
Upon receipt of a complete or substantially complete application for benefits, VA is required to notify the claimant and his or her representative of any information, and any medical or lay evidence, not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; and (3) that the claimant is expected to provide. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b). VCAA notice requirements apply to all five elements of a service connection claim: 1) veteran status; 2) existence of a disability; 3) a connection between the veteran's service and the disability; 4) degree of disability; and 5) effective date of the disability. Dingess/Hartman v. Nicholson, 19 Vet. App. 473, 484-86 (2006), aff'd, 483 F.3d 1311 (Fed. Cir. 2007). VCAA notice should be provided to a claimant before the initial unfavorable agency of original jurisdiction decision on a claim. Mayfield v. Nicholson, 444 F.3d 1328 (Fed. Cir. 2006).
In Kent v. Nicholson, 20 Vet. App. 1 (2006), the United States Court of Appeals for Veterans Claims (Court) held that in a claim to reopen a previously finally denied claim, VCAA notice must notify the claimant of the meaning of new and material evidence and of what evidence and information (1) is necessary to reopen the claim; (2) is necessary to substantiate each element of the underlying service connection claim; and (3) is specifically required to substantiate the element or elements needed for service connection that were found insufficient in the prior final denial on the merits.
The Veteran was advised of VA's duties to notify and assist in the development of the claim[s] prior to the initial adjudication of the claims. A March 2008 letter provided notice in accordance with Kent, and also explained the evidence VA was responsible for providing and the evidence the Veteran was responsible for providing. This letter also informed the Veteran of disability rating and effective date criteria. The Veteran has had ample opportunity to respond and supplement the record.
With regard to the duty to assist, the Veteran's service treatment records (STRs) and pertinent post-service treatment records, including treatment records utilized by the Social Security Administration (SSA) for a benefits claim, have been secured. The Veteran has not been afforded a VA examination regarding the issues that must be reopened by new and material evidence. The duty to assist by arranging for a VA examination or obtaining a medical opinion does not attach until a previously denied claim is reopened. 38 C.F.R. § 3.159 (c)(4)(iii). The RO arranged for a VA examination of the Veteran's right ankle in September 2009. This examination is found to be adequate for rating purposes for this issue. In this regard, it is noted that the examiner reviewed the Veteran's medical history and complaints, made clinical observations, and rendered an opinion regarding whether the currently diagnosed right ankle disability is related to the Veteran's service. The Veteran has not identified any evidence that remains outstanding. VA's duty to assist is met. Accordingly, the Board will address the claims.
Service Connection Laws and Regulations
Service connection may be granted for a disability resulting from disease or injury incurred in or aggravated by active military, naval, or air service. 38 U.S.C.A. §§ 1110, 1131; 38 C.F.R. § 3.303(a). For the showing of chronic disease in service, there is required a combination of manifestations sufficient to identify the disease entity, and sufficient observation to establish chronicity at the time. With chronic disease as such in service, subsequent manifestations of the same chronic disease at any later date, however remote, are service connected, unless clearly attributable to intercurrent causes. If a condition noted during service is not shown to be chronic, then generally, a showing of continuity of symptoms after service is required for service connection. 38 C.F.R. § 3.303(b). Service connection may also be granted for any disease diagnosed after discharge, when all the evidence, including that pertinent to service, establishes that the disease was incurred in service. 38 C.F.R. § 3.303(d).
Where a veteran who served for ninety days or more during a period of war (or during peacetime service after December 31, 1946) develops certain chronic diseases, such as duodenal ulcer disease, arthritis, or hypertension, to a degree of 10 percent or more within one year from separation from service, such diseases may be presumed to have been incurred in service even though there is no evidence of such disease during the period of service. This presumption is rebuttable by affirmative evidence to the contrary. See 38 U.S.C.A. §§ 1101, 1112, 1113, 1137 (West 2002); 38 C.F.R. §§ 3.307, 3.309 (2010).
Active military, naval, or air service includes any period of active duty for training (ACDUTRA) during which the individual concerned was disabled or died from a disease or injury incurred in or aggravated in line of duty, or any period of inactive duty training (INACDUTRA) during which the individual concerned was disabled or died from injury incurred in or aggravated in line of duty. 38 U.S.C.A.
§ 101(21), (24) (West 2002); 38 C.F.R. § 3.6(a), (d) (2010); Biggins v. Derwinski,
1 Vet. App. 474, 477-78 (1991). Presumptive periods do not apply to ACDUTRA or INACDUTRA. Id. Therefore, consideration of 38 C.F.R. §§ 3.307 and 3.309 (presumptive service connection for certain chronic diseases) for the periods of ACDUTRA or INACDUTRA is not appropriate. ACDUTRA is, generally, full-time duty in the Armed Forces performed by reserves for training purposes. 38 C.F.R. § 3.6(c)(1) (2010).
New and Material Evidence to Reopen Claims
Service connection for chronic renal disease, duodenal ulcer disease, a left knee disability, bilateral carpal tunnel syndrome, the residuals of a ganglion of the right wrist, and essential hypertension was previously denied by the Board in a June 2004 decision. Service connection for a psychiatric disorder was previously denied by the Board in a June 2005 decision. Under such circumstances, the decision of the Board is final, with the exception that a veteran may later reopen his claims if new and material evidence is submitted. 38 U.S.C.A. §§ 5108, 7104. Therefore, it must first be determined whether or not new and material evidence has been submitted such that the claims may now be reopened. Manio v. Derwinski, 1 Vet. App. 140 (1991).
A claimant may reopen a finally adjudicated claim by submitting new and material evidence. New evidence means existing evidence not previously submitted to agency decisionmakers. Material evidence means existing evidence that, by itself or when considered with previous evidence of record, relates to an unestablished fact necessary to substantiate the claim. New and material evidence can be neither cumulative nor redundant of the evidence of record at the time of the last prior final denial of the claim sought to be reopened, and must raise a reasonable possibility of substantiating the claim. 38 C.F.R. § 3.156(a).
The threshold for determining whether new and material evidence raises a reasonable possibility of substantiating a claim is "low." See Shade v. Shinseki,
24 Vet. App. 110, 117 (2010). Furthermore, in determining whether this low threshold is met, VA should not limit its consideration to whether the newly submitted evidence relates specifically to the reason why the claim was last denied, but instead should ask whether the evidence could reasonably substantiate the claim were the claim to be reopened, either by triggering the VA Secretary's duty to assist or through consideration of an alternative theory of entitlement. Id. at 118. The evidence submitted to reopen a claim is presumed to be true for the purpose of determining whether new and material evidence has been received. Duran v. Brown, 7 Vet. App. 216, 220 (1994); Justus v. Principi, 3 Vet. App. 510, 513 (1992).
Evidence of record at the time of the June 2004 Board decision that denied service connection for chronic renal disease, duodenal ulcer disease, a left knee disability, bilateral carpal tunnel syndrome, a ganglion of the right wrist, and hypertension included the Veteran's STRs, which showed no complaint or manifestation of any of the disabilities at issue; records and examinations performed in connection with the Veteran's ACDUTRA and INACDUTRA; the results of VA compensation examinations in December 1975 and July 2003; and records of private treatment that the Veteran received from 1999 and 2003 for renal disease and hypertension. The December 1975 VA examination showed a normal blood pressure reading and there was no demonstration of peptic ulcer disease, renal disease, a left knee disability, carpal tunnel syndrome or a ganglion cyst of the right wrist. A physical examination performed in connection with the Veteran's INACDUTRA showed the presence of a right wrist ganglion, without evidence of injury while on INACDUTRA, as well as a history of hypertension. A December 1992 examination performed in connection with INACDUTRA continues to show an elevated blood pressure reading and reports that the Veteran had a history of left knee surgery, bilateral carpal tunnel syndrome and right wrist ganglion cyst surgery. Chronic renal disease was first demonstrated in private treatment records dated in 1999.
Specifically, the June 2004 Board decision found that an unappealed January 1976 rating decision had denied service connection for duodenal ulcer disease as not shown during active duty or demonstrated in the post-service medical evidence, and that evidence submitted subsequent to that decision was cumulative and redundant and did not raise a reasonable possibility of substantiating the claim. At that time, the Board also found that the competent and probative medical evidence did not show that the Veteran had essential hypertension, chronic renal disease, a left knee disability, bilateral carpal tunnel syndrome, or residuals of a right wrist ganglion cyst that had been linked to active service, ACDUTRA, or INACDUTRA on any basis.
Evidence received subsequent to the Board's June 2004 decision includes additional medical records from the Veteran's periods of INACDUTRA and copies of records of treatment for the Veteran's hypertension and renal disease and testimony given at a personal hearing at the RO in May 2009. The Veteran's testimony essentially duplicates contentions of the Veteran made in connection with his prior appeal to the Board. Such testimony is not sufficient to reopen a previously denied claim for service connection. Moray v. Brown, 5 Vet. App. 211 (1993). The medical records from the Veteran's period of INACDUTRA do not show that any of the claimed disabilities are the result of injury sustained while the Veteran was performing INACDUTRA. The post-service medical evidence consists primarily of records of treatment many years after service that does not indicate in any way that the conditions are related to service.
Such evidence is not new and material evidence upon which the claim may be reopened. Cox v. Brown, 5 Vet. App. 95 (1993). As new and material evidence submitted in support of the Veteran's claims has not been received, the applications to reopen service connection for chronic renal disease, duodenal ulcer disease, a left knee disability, bilateral carpal tunnel syndrome, a ganglion of the right wrist, or hypertension are denied.
Regarding the Veteran's psychiatric disorder, evidence of record at the time of the Board's June 2005 denial of service connection included the Veteran's STRs, records from his periods of INACDUTRA, private treatment records, and the results of a July 2004 VA examination. At that time, the Board found that the Veteran's psychiatric disorder had preexisted his entry into active duty and that there was no increase in the underlying severity of the psychiatric disorder during service. Based upon these findings, the Veteran's claim for service connection was denied.
Evidence received subsequent to the June 2005 Board decision included additional records of private treatment, including treatment of psychiatric disability. These records do not show that the Veteran's preexisting psychiatric disability either did not preexist service or permanently increased in severity during service, and do not relate these disabilities to service in any way. As with the other disabilities discussed above, this evidence is not new and material evidence upon which the claim may be reopened. Id. As such, the appeal to reopen service connection for a psychiatric disability must be denied.
Service Connection for a Right Ankle Disability
The Veteran contends that service connection is warranted for a right ankle disability. He asserts that he sustained an injury of the right ankle in the same motor vehicle accident (MVA) during service in which he sustained an injury of his left ankle (for which service connection has been established).
After review of the record, the Board finds that the weight of the evidence demonstrates that the Veteran did not sustain a right ankle injury or disease in service, and symptoms of right ankle disorder were not chronic in service. While review of the STRs discloses complaints of a left ankle disability, there is no demonstration of a right ankle disorder, including no complaints or findings of right ankle disorder following the in-service MVA.
The Board also finds that symptoms of a right ankle disability have not been continuous since discharge from service. Review of the Veteran's post-service treatment records, including those utilized by the SSA in a disability determination, are similarly negative for complaints or manifestations of a right ankle disorder. The Veteran was afforded a VA examination in September 2009. At that time, examination of the ankles showed no swelling, deformity, or discoloration. Both ankles were tender to the Achilles tendon. While there was increased laxity on the left, the right ankle had no increase in laxity. The assessment was of bilateral ankle degenerative arthritis, with bilateral Achilles tendinitis.
The Board further finds that the weight of the evidence demonstrates that a right ankle disability, diagnosed as right ankle tendonitis, is not related to service. Regarding the right ankle, the VA examiner in September 2009 rendered a competent medical opinion that right ankle degenerative arthritis with Achilles tendinitis was less likely to have been related to service because there was no laxity in the ankle joint and the only real disability was Achilles tendinitis, which was less likely related to service. The VA examiner further opined that any ankle swelling noted was the result of prednisone therapy that was associated with treatment of the Veteran's non-service-connected kidney failure and kidney transplant. The only medical opinion of record is to the effect that it is less likely than not that the currently diagnosed right ankle disability is related to service.
For these reasons, the Board finds that a preponderance of the evidence is against the Veteran's claim for service connection for a right ankle disorder, and the claim must be denied. Because the preponderance of the evidence is against the claim, the benefit of the doubt doctrine is not for application. See 38 U.S.C.A. § 5107; 38 C.F.R. § 3.102.
ORDER
New and material evidence has not been received, the appeal to reopen service connection for chronic renal failure is denied.
New and material evidence has not been received, the appeal to reopen service connection for duodenal ulcer disease is denied.
New and material evidence has not been received, the appeal to reopen service connection for a left knee disorder is denied.
New and material evidence has not been received, the appeal to reopen service connection for bilateral carpal tunnel syndrome is denied.
New and material evidence has not been received, the appeal to reopen service connection for ganglion of the right wrist is denied.
New and material evidence has not been received, the appeal to reopen service connection for hypertension is denied.
New and material evidence has not been received, the appeal to reopen service connection for dysthymic disorder is denied.
Service connection for a right ankle disorder is denied.
REMAND
The Veteran is also claiming service connection for bilateral shoulder disabilities, which were found on September 2009 VA examination. At that time, the examiner rendered an opinion that the shoulder disabilities were less likely than not to be related to service; however, the examiner assumed that the Veteran had not been treated for shoulder disability while on active duty. Review of the STRs shows that the Veteran was treated for a muscle injury of the right arm from lifting weights in November 1973 and also complained of bilateral shoulder pain that same month. Thus, the VA examiner's opinion was not based upon an accurate understanding of the evidence of record. As such, an additional opinion regarding whether the Veteran's shoulder disorder is related to service, that is based on the full and accurate facts, is necessary.
Accordingly, the issue of service connection for a bilateral shoulder disorder is REMANDED for the following action:
1. The RO/AMC should forward the Veteran's claims file to the September 2009 VA examiner/opinion provider for review and an addendum opinion regarding the Veteran's shoulder disabilities. After review of the relevant documents in the claims folder, the VA examiner should be requested to render an opinion regarding whether it is at least as likely as not (probability 50 percent of more) that the Veteran's right shoulder disabilities are related to service, including the complaints of shoulder pain noted in November 1973. If the VA provider is unavailable to offer the opinion sought, the Veteran's claims file should be forwarded to another appropriate VA examiner for the opinion sought. The opinion-provider should answer the question posed and explain the rationale for the opinion given.
2. Thereafter, the RO/AMC should readjudicate the issue of service connection for a bilateral shoulder disorder. If the determination remains unfavorable to the Veteran, he and his representative should be provided with a supplemental statement of the case that addresses all relevant actions taken on the claim for benefits. The Veteran should be given an opportunity to respond to the supplemental statement of the case prior to returning the case to the Board for further review.
The Veteran has the right to submit additional evidence and argument on the matter the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). The Veteran is advised to appear and participate in any scheduled VA examination, as failure to do so may result in denial of the claim. See 38 C.F.R. § 3.655 (2010).
This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2010).
______________________________________________
J. Parker
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs | 09-30-2011 | [
"Citation Nr: 1136995 Decision Date: 09/30/11 Archive Date: 10/11/11 DOCKET NO. 09-48 336 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Portland, Oregon THE ISSUES 1. Whether new and material evidence has been received to reopen service connection for chronic renal failure, status post kidney transplant. 2. Whether new and material evidence has been received to reopen service connection for duodenal ulcer disease. 3. Whether new and material evidence has been received to reopen service connection for a left knee disorder 4. Whether new and material evidence has been received to reopen service connection for bilateral carpal tunnel syndrome. 5. Whether new and material evidence has been received to reopen service connection for a ganglion of the right wrist.",
"6. Whether new and material evidence has been received to reopen service connection for hypertension. 7. Whether new and material evidence has been received to reopen service connection for a dysthymic disorder. 8. Entitlement to service connection for a bilateral shoulder disorder. 9. Entitlement to service connection for a right ankle disorder. REPRESENTATION Appellant represented by: Oregon Department of Veterans' Affairs WITNESS AT HEARING ON APPEAL Appellant (the Veteran) ATTORNEY FOR THE BOARD Joseph P. Gervasio, Counsel INTRODUCTION The Veteran, who is the Appellant, served on active duty from October 1973 to February 1974 and had verified active duty for training (ACDUTRA) from February 1978 to July 1978.",
"He had additional periods of inactive duty training (INACDUTRA). This case comes to the Board of Veterans' Appeals (Board) on appeal of a May 2008 rating decision of the Portland, Oregon, Regional Office (RO) of the Department of Veterans Affairs (VA). Although the RO may have reopened the Veteran's claims of service connection, the question of whether new and material evidence has been received to reopen such claim must be addressed in the first instance by the Board because the issue goes to the Board's jurisdiction to reach the underlying claim and adjudicate it on a de novo basis.",
"See Barnett v. Brown, 83 F.3d 1380, 1383 (Fed. Cir. 1996), aff'd 8 Vet. App. 1 (1995). If the Board finds that no such evidence has been offered, that is where the analysis must end; hence, what the RO may have determined in this regard is irrelevant. Barnett, 83 F.3d at 1383. The Board has characterized the Veteran's claims accordingly. The issue of service connection for a bilateral shoulder disorder is addressed in the REMAND portion of the decision below and is REMANDED to the RO via the Appeals Management Center (AMC). FINDINGS OF FACT 1. In a June 2004 decision, the Board denied service connection for chronic renal disease on the basis that the Veteran did not have chronic renal disease that had been linked to active service. 2. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for chronic renal disease.",
"3. In a June 2004 decision, the Board denied service connection for duodenal ulcer disease on the basis that evidence received subsequent to a January 1976 rating decision that denied service connection for peptic ulcer disease had not raised a reasonable possibility of substantiating the claim. 4. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for peptic ulcer disease. 5. In a June 2004 decision, the Board denied service connection for a left knee disability on the basis that the Veteran did not have a left knee disability that had been linked to active service.",
"6. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for a left knee disability. 7. In a June 2004 decision, the Board denied service connection for a bilateral carpel tunnel syndrome on the basis that the Veteran did not have bilateral carpal tunnel syndrome that had been linked to active service. 8.",
"Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for bilateral carpel tunnel syndrome. 9. In a June 2004 decision, the Board denied service connection for a ganglion of the right wrist on the basis that the Veteran did not have a ganglion of the right wrist that had been linked to active service. 10. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for a ganglion of the right wrist. 11.",
"In a June 2004 decision, the Board denied service connection for hypertension on the basis that the Veteran did not have hypertension that had been linked to active service. 12. Evidence received subsequent to the June 2004 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for hypertension. 13. In a June 2005 decision, the Board denied service connection for a psychiatric disorder on the basis that the Veteran's psychiatric disability preexisted his entry into active duty service and had not increased in severity during service. 14. Evidence received subsequent to the June 2005 decision of the Board is cumulative and, when considered with evidence earlier of record, does not relate to an unestablished fact necessary to substantiate the claim or raise a reasonable possibility of substantiating the claim for service connection for a psychiatric disorder that includes dysthymic disorder.",
"15. The Veteran did not sustain a right ankle injury or disease in service, and symptoms of right ankle disorder were not chronic in service. 16. Symptoms of a right ankle disability have not been continuous since discharge from service. 17. A right ankle disability, diagnosed as right ankle tendonitis, is not related to service. CONCLUSIONS OF LAW 1. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a chronic renal disease is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010).",
"2. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a duodenal ulcer disease is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010). 3. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a left knee disability is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final.",
"38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010). 4. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for bilateral carpel tunnel syndrome is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010). 5. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for a ganglion of the right wrist is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final.",
"38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010). 6. The additional evidence received subsequent to the June 2004 decision of the Board that denied service connection for hypertension is not new and material; thus, service connection for this disability is not reopened, and the June 2004 Board decision remains final. 38 U.S.C.A. §§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010). 7. The additional evidence received subsequent to the June 2005 decision of the Board that denied service connection for a psychiatric disorder, including dysthymic disorder, is not new and material; thus, service connection for this disability is not reopened, and the June 2005 Board decision remains final. 38 U.S.C.A.",
"§§ 5108, 7104 (West 2002); 38 C.F.R. § 3.156 (2010). 8. A chronic right ankle disability was neither incurred in nor aggravated by service. 38 U.S.C.A. §§101(21), (24) (West 2002); 1110, 1131 (West 2002); 38 C.F.R. § 3.303 (2010). REASONS AND BASES FOR FINDINGS AND CONCLUSIONS Duties to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA), in part, describes VA's duties to notify and assist claimants in substantiating a claim for VA benefits. 38 U.S.C.A.",
"§§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2010). Upon receipt of a complete or substantially complete application for benefits, VA is required to notify the claimant and his or her representative of any information, and any medical or lay evidence, not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; and (3) that the claimant is expected to provide.",
"38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b). VCAA notice requirements apply to all five elements of a service connection claim: 1) veteran status; 2) existence of a disability; 3) a connection between the veteran's service and the disability; 4) degree of disability; and 5) effective date of the disability. Dingess/Hartman v. Nicholson, 19 Vet. App. 473, 484-86 (2006), aff'd, 483 F.3d 1311 (Fed. Cir. 2007). VCAA notice should be provided to a claimant before the initial unfavorable agency of original jurisdiction decision on a claim. Mayfield v. Nicholson, 444 F.3d 1328 (Fed.",
"Cir. 2006). In Kent v. Nicholson, 20 Vet. App. 1 (2006), the United States Court of Appeals for Veterans Claims (Court) held that in a claim to reopen a previously finally denied claim, VCAA notice must notify the claimant of the meaning of new and material evidence and of what evidence and information (1) is necessary to reopen the claim; (2) is necessary to substantiate each element of the underlying service connection claim; and (3) is specifically required to substantiate the element or elements needed for service connection that were found insufficient in the prior final denial on the merits. The Veteran was advised of VA's duties to notify and assist in the development of the claim[s] prior to the initial adjudication of the claims. A March 2008 letter provided notice in accordance with Kent, and also explained the evidence VA was responsible for providing and the evidence the Veteran was responsible for providing.",
"This letter also informed the Veteran of disability rating and effective date criteria. The Veteran has had ample opportunity to respond and supplement the record. With regard to the duty to assist, the Veteran's service treatment records (STRs) and pertinent post-service treatment records, including treatment records utilized by the Social Security Administration (SSA) for a benefits claim, have been secured. The Veteran has not been afforded a VA examination regarding the issues that must be reopened by new and material evidence. The duty to assist by arranging for a VA examination or obtaining a medical opinion does not attach until a previously denied claim is reopened. 38 C.F.R. § 3.159 (c)(4)(iii). The RO arranged for a VA examination of the Veteran's right ankle in September 2009. This examination is found to be adequate for rating purposes for this issue. In this regard, it is noted that the examiner reviewed the Veteran's medical history and complaints, made clinical observations, and rendered an opinion regarding whether the currently diagnosed right ankle disability is related to the Veteran's service.",
"The Veteran has not identified any evidence that remains outstanding. VA's duty to assist is met. Accordingly, the Board will address the claims. Service Connection Laws and Regulations Service connection may be granted for a disability resulting from disease or injury incurred in or aggravated by active military, naval, or air service. 38 U.S.C.A. §§ 1110, 1131; 38 C.F.R. § 3.303(a). For the showing of chronic disease in service, there is required a combination of manifestations sufficient to identify the disease entity, and sufficient observation to establish chronicity at the time. With chronic disease as such in service, subsequent manifestations of the same chronic disease at any later date, however remote, are service connected, unless clearly attributable to intercurrent causes. If a condition noted during service is not shown to be chronic, then generally, a showing of continuity of symptoms after service is required for service connection.",
"38 C.F.R. § 3.303(b). Service connection may also be granted for any disease diagnosed after discharge, when all the evidence, including that pertinent to service, establishes that the disease was incurred in service. 38 C.F.R. § 3.303(d). Where a veteran who served for ninety days or more during a period of war (or during peacetime service after December 31, 1946) develops certain chronic diseases, such as duodenal ulcer disease, arthritis, or hypertension, to a degree of 10 percent or more within one year from separation from service, such diseases may be presumed to have been incurred in service even though there is no evidence of such disease during the period of service. This presumption is rebuttable by affirmative evidence to the contrary. See 38 U.S.C.A. §§ 1101, 1112, 1113, 1137 (West 2002); 38 C.F.R. §§ 3.307, 3.309 (2010).",
"Active military, naval, or air service includes any period of active duty for training (ACDUTRA) during which the individual concerned was disabled or died from a disease or injury incurred in or aggravated in line of duty, or any period of inactive duty training (INACDUTRA) during which the individual concerned was disabled or died from injury incurred in or aggravated in line of duty. 38 U.S.C.A. § 101(21), (24) (West 2002); 38 C.F.R. § 3.6(a), (d) (2010); Biggins v. Derwinski, 1 Vet. App. 474, 477-78 (1991). Presumptive periods do not apply to ACDUTRA or INACDUTRA. Id. Therefore, consideration of 38 C.F.R.",
"§§ 3.307 and 3.309 (presumptive service connection for certain chronic diseases) for the periods of ACDUTRA or INACDUTRA is not appropriate. ACDUTRA is, generally, full-time duty in the Armed Forces performed by reserves for training purposes. 38 C.F.R. § 3.6(c)(1) (2010). New and Material Evidence to Reopen Claims Service connection for chronic renal disease, duodenal ulcer disease, a left knee disability, bilateral carpal tunnel syndrome, the residuals of a ganglion of the right wrist, and essential hypertension was previously denied by the Board in a June 2004 decision. Service connection for a psychiatric disorder was previously denied by the Board in a June 2005 decision.",
"Under such circumstances, the decision of the Board is final, with the exception that a veteran may later reopen his claims if new and material evidence is submitted. 38 U.S.C.A. §§ 5108, 7104. Therefore, it must first be determined whether or not new and material evidence has been submitted such that the claims may now be reopened. Manio v. Derwinski, 1 Vet. App. 140 (1991). A claimant may reopen a finally adjudicated claim by submitting new and material evidence. New evidence means existing evidence not previously submitted to agency decisionmakers. Material evidence means existing evidence that, by itself or when considered with previous evidence of record, relates to an unestablished fact necessary to substantiate the claim. New and material evidence can be neither cumulative nor redundant of the evidence of record at the time of the last prior final denial of the claim sought to be reopened, and must raise a reasonable possibility of substantiating the claim.",
"38 C.F.R. § 3.156(a). The threshold for determining whether new and material evidence raises a reasonable possibility of substantiating a claim is \"low.\" See Shade v. Shinseki, 24 Vet. App. 110, 117 (2010). Furthermore, in determining whether this low threshold is met, VA should not limit its consideration to whether the newly submitted evidence relates specifically to the reason why the claim was last denied, but instead should ask whether the evidence could reasonably substantiate the claim were the claim to be reopened, either by triggering the VA Secretary's duty to assist or through consideration of an alternative theory of entitlement. Id. at 118. The evidence submitted to reopen a claim is presumed to be true for the purpose of determining whether new and material evidence has been received. Duran v. Brown, 7 Vet. App.",
"216, 220 (1994); Justus v. Principi, 3 Vet. App. 510, 513 (1992). Evidence of record at the time of the June 2004 Board decision that denied service connection for chronic renal disease, duodenal ulcer disease, a left knee disability, bilateral carpal tunnel syndrome, a ganglion of the right wrist, and hypertension included the Veteran's STRs, which showed no complaint or manifestation of any of the disabilities at issue; records and examinations performed in connection with the Veteran's ACDUTRA and INACDUTRA; the results of VA compensation examinations in December 1975 and July 2003; and records of private treatment that the Veteran received from 1999 and 2003 for renal disease and hypertension. The December 1975 VA examination showed a normal blood pressure reading and there was no demonstration of peptic ulcer disease, renal disease, a left knee disability, carpal tunnel syndrome or a ganglion cyst of the right wrist. A physical examination performed in connection with the Veteran's INACDUTRA showed the presence of a right wrist ganglion, without evidence of injury while on INACDUTRA, as well as a history of hypertension.",
"A December 1992 examination performed in connection with INACDUTRA continues to show an elevated blood pressure reading and reports that the Veteran had a history of left knee surgery, bilateral carpal tunnel syndrome and right wrist ganglion cyst surgery. Chronic renal disease was first demonstrated in private treatment records dated in 1999. Specifically, the June 2004 Board decision found that an unappealed January 1976 rating decision had denied service connection for duodenal ulcer disease as not shown during active duty or demonstrated in the post-service medical evidence, and that evidence submitted subsequent to that decision was cumulative and redundant and did not raise a reasonable possibility of substantiating the claim. At that time, the Board also found that the competent and probative medical evidence did not show that the Veteran had essential hypertension, chronic renal disease, a left knee disability, bilateral carpal tunnel syndrome, or residuals of a right wrist ganglion cyst that had been linked to active service, ACDUTRA, or INACDUTRA on any basis. Evidence received subsequent to the Board's June 2004 decision includes additional medical records from the Veteran's periods of INACDUTRA and copies of records of treatment for the Veteran's hypertension and renal disease and testimony given at a personal hearing at the RO in May 2009. The Veteran's testimony essentially duplicates contentions of the Veteran made in connection with his prior appeal to the Board.",
"Such testimony is not sufficient to reopen a previously denied claim for service connection. Moray v. Brown, 5 Vet. App. 211 (1993). The medical records from the Veteran's period of INACDUTRA do not show that any of the claimed disabilities are the result of injury sustained while the Veteran was performing INACDUTRA. The post-service medical evidence consists primarily of records of treatment many years after service that does not indicate in any way that the conditions are related to service. Such evidence is not new and material evidence upon which the claim may be reopened. Cox v. Brown, 5 Vet. App. 95 (1993).",
"As new and material evidence submitted in support of the Veteran's claims has not been received, the applications to reopen service connection for chronic renal disease, duodenal ulcer disease, a left knee disability, bilateral carpal tunnel syndrome, a ganglion of the right wrist, or hypertension are denied. Regarding the Veteran's psychiatric disorder, evidence of record at the time of the Board's June 2005 denial of service connection included the Veteran's STRs, records from his periods of INACDUTRA, private treatment records, and the results of a July 2004 VA examination. At that time, the Board found that the Veteran's psychiatric disorder had preexisted his entry into active duty and that there was no increase in the underlying severity of the psychiatric disorder during service. Based upon these findings, the Veteran's claim for service connection was denied. Evidence received subsequent to the June 2005 Board decision included additional records of private treatment, including treatment of psychiatric disability. These records do not show that the Veteran's preexisting psychiatric disability either did not preexist service or permanently increased in severity during service, and do not relate these disabilities to service in any way.",
"As with the other disabilities discussed above, this evidence is not new and material evidence upon which the claim may be reopened. Id. As such, the appeal to reopen service connection for a psychiatric disability must be denied. Service Connection for a Right Ankle Disability The Veteran contends that service connection is warranted for a right ankle disability. He asserts that he sustained an injury of the right ankle in the same motor vehicle accident (MVA) during service in which he sustained an injury of his left ankle (for which service connection has been established). After review of the record, the Board finds that the weight of the evidence demonstrates that the Veteran did not sustain a right ankle injury or disease in service, and symptoms of right ankle disorder were not chronic in service. While review of the STRs discloses complaints of a left ankle disability, there is no demonstration of a right ankle disorder, including no complaints or findings of right ankle disorder following the in-service MVA.",
"The Board also finds that symptoms of a right ankle disability have not been continuous since discharge from service. Review of the Veteran's post-service treatment records, including those utilized by the SSA in a disability determination, are similarly negative for complaints or manifestations of a right ankle disorder. The Veteran was afforded a VA examination in September 2009. At that time, examination of the ankles showed no swelling, deformity, or discoloration. Both ankles were tender to the Achilles tendon. While there was increased laxity on the left, the right ankle had no increase in laxity. The assessment was of bilateral ankle degenerative arthritis, with bilateral Achilles tendinitis.",
"The Board further finds that the weight of the evidence demonstrates that a right ankle disability, diagnosed as right ankle tendonitis, is not related to service. Regarding the right ankle, the VA examiner in September 2009 rendered a competent medical opinion that right ankle degenerative arthritis with Achilles tendinitis was less likely to have been related to service because there was no laxity in the ankle joint and the only real disability was Achilles tendinitis, which was less likely related to service. The VA examiner further opined that any ankle swelling noted was the result of prednisone therapy that was associated with treatment of the Veteran's non-service-connected kidney failure and kidney transplant. The only medical opinion of record is to the effect that it is less likely than not that the currently diagnosed right ankle disability is related to service. For these reasons, the Board finds that a preponderance of the evidence is against the Veteran's claim for service connection for a right ankle disorder, and the claim must be denied.",
"Because the preponderance of the evidence is against the claim, the benefit of the doubt doctrine is not for application. See 38 U.S.C.A. § 5107; 38 C.F.R. § 3.102. ORDER New and material evidence has not been received, the appeal to reopen service connection for chronic renal failure is denied. New and material evidence has not been received, the appeal to reopen service connection for duodenal ulcer disease is denied. New and material evidence has not been received, the appeal to reopen service connection for a left knee disorder is denied. New and material evidence has not been received, the appeal to reopen service connection for bilateral carpal tunnel syndrome is denied.",
"New and material evidence has not been received, the appeal to reopen service connection for ganglion of the right wrist is denied. New and material evidence has not been received, the appeal to reopen service connection for hypertension is denied. New and material evidence has not been received, the appeal to reopen service connection for dysthymic disorder is denied. Service connection for a right ankle disorder is denied. REMAND The Veteran is also claiming service connection for bilateral shoulder disabilities, which were found on September 2009 VA examination.",
"At that time, the examiner rendered an opinion that the shoulder disabilities were less likely than not to be related to service; however, the examiner assumed that the Veteran had not been treated for shoulder disability while on active duty. Review of the STRs shows that the Veteran was treated for a muscle injury of the right arm from lifting weights in November 1973 and also complained of bilateral shoulder pain that same month. Thus, the VA examiner's opinion was not based upon an accurate understanding of the evidence of record.",
"As such, an additional opinion regarding whether the Veteran's shoulder disorder is related to service, that is based on the full and accurate facts, is necessary. Accordingly, the issue of service connection for a bilateral shoulder disorder is REMANDED for the following action: 1. The RO/AMC should forward the Veteran's claims file to the September 2009 VA examiner/opinion provider for review and an addendum opinion regarding the Veteran's shoulder disabilities.",
"After review of the relevant documents in the claims folder, the VA examiner should be requested to render an opinion regarding whether it is at least as likely as not (probability 50 percent of more) that the Veteran's right shoulder disabilities are related to service, including the complaints of shoulder pain noted in November 1973. If the VA provider is unavailable to offer the opinion sought, the Veteran's claims file should be forwarded to another appropriate VA examiner for the opinion sought. The opinion-provider should answer the question posed and explain the rationale for the opinion given.",
"2. Thereafter, the RO/AMC should readjudicate the issue of service connection for a bilateral shoulder disorder. If the determination remains unfavorable to the Veteran, he and his representative should be provided with a supplemental statement of the case that addresses all relevant actions taken on the claim for benefits. The Veteran should be given an opportunity to respond to the supplemental statement of the case prior to returning the case to the Board for further review. The Veteran has the right to submit additional evidence and argument on the matter the Board has remanded. Kutscherousky v. West, 12 Vet. App. 369 (1999). The Veteran is advised to appear and participate in any scheduled VA examination, as failure to do so may result in denial of the claim. See 38 C.F.R. § 3.655 (2010). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner.",
"See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2010). ______________________________________________ J. Parker Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs"
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Mr. Justice Hebel delivered the opinion of the court. The claim of the plaintiff is for 5385% hours overtime services rendered as a laborer for the defendant, the City of Chicago, from the first day of August, 1923, to the first day of September, 1927, when the plaintiff was discharged, which overtime is over and above the eight hours constituting a day’s work, and the total of said escess time is to be paid for at 1% times the daily wage earned; that during the time he was employed there was in full force apd effect an ordinance of the City of Chicago, sections 3276 and 3277, entitled, “Hours of Labor,” which provides that eight hours of labor between eight o’clock a. m. and five o’clock p. m. shall be and constitute a day’s work for all employees performing manual labor for the City. The ordinance in part is as follows: “Provided, however, that in all cases of necessity or emergency, superintendents, foremen or others in authority are hereby authorized to work their employees such number of hours as such necessity or emergency may require; but for all labor performed in excess of eight-hours in any one day, such laborer or employee shall be entitled to and shall receive pay at the rate of time and one-half for all such labor performed, except in those employments where there is an established scale of wages and hours which is usually and customarily paid for such excess time by employers generally within the city for like services, in which event such labor in excess of eight hours in one day shall be paid for according to the wage scale, hours and conditions so established.” This case was tried in the municipal court, and from the evidence heard in support of plaintiff’s amended statement of claim and defendant’s affidavit of merits, the trial court found the issues for the plaintiff and entered judgment for the sum of $8,475.39 and costs, from which judgment the defendant appealed to this court. The plaintiff was employed by the defendant as a laborer and assigned to act as watchman for the defendant at the 45th Ward City Yard; his hours of service were from 4 o’clock in the afternoon to 6 o’clock in the morning, when the relief man came and he was relieved from further duty. He continued to work seven days each week from the time he entered the service on August 1, 1923, until September 1, 1927, excepting the time he was allowed for a vacation in each year. There is some conflict as to the kind of service rendered by the plaintiff in addition to his work as watchman, but the facts are not controverted that he received his pay for the services rendered and accepted the amount allowed and finally when he retired from the City service he received and accepted the final payment from the Ci-ty. It does not appear from the record that he objected at any time that the amount allowed and paid to him by the City was not correct. It appears from the evidence that the plaintiff talked with a Mr. Stanton, who was in charge of the Yard in 1925; that Stanton told the plaintiff that the union was going to try to get the eight-hour system. The only other evidence on that point is the eight-hour ordinance. It further appears from the evidence in this case that the plaintiff was satisfied to do the work from 4 o’clock in the afternoon until 6 o’clock the next morning. The fact that the plaintiff worked more than eight hours a day would not entitle him to recover extra compensation under said ordinance, in the absence of an agreement. The facts in this case clearly indicate that it was not contemplated by the parties that the plaintiff was to be paid for time in excess of eight hours of work. The plaintiff voluntarily worked more than eight hours a day, accepted the pay, and at no time during the four years or more of service, claimed pay, or made demand for pay, for extra time. If he did not want to work more than eight hours he should have refused, or, as a condition, should have insisted that if he did so he should be paid for the extra time. It also appears from the evidence that the plaintiff was satisfied'with the work he was doing, and, so far as the record discloses, never objected to, nor claimed pay for overtime services, until he started a suit against the City of Chicago almost a year after he was discharged. In the case of Sanitary District of Chicago v. Burke, 88 Ill. App. 196, in passing upon the appellant’s claim for extra compensation for services in excess of eight hours, which constitute a day’s work, and the application of the eight hours a day statute to the facts, the court said: “But aside from the section referred to, the mere fact that appellee worked more than eight hours a day would not entitle him to recover extra compensation under said act, in the absence of an agreement therefor. A laborer whose employment comes within the terms of the statute may refuse to work more than eight hours a day at his option, or insist as a condition precedent, if he does so work, that he shall be paid for the extra time. But the mere fact that he has voluntarily worked more than eight hours a day does not of itself authorize a demand for extra compensation under the act in question, unless it should, also appear that extra compensation was agreed upon, or was reasonably within the contemplation of the parties at the time. Brooks v. Cotton, 48 N. H. 50; Luske v. Hotchkiss, 37 Conn. 219. In this case it is clear that extra compensation was not contemplated by either party.” In the case of County of Christian v. Merrigan, 191 Ill. 484, the court says: “Moreover, if the eight-hour statute applied, appellee performed the services required of him each day without any agreement (even if there could be such agreement in such a case) that he should be paid for extra time. In the absence of such an agreement or contract no recovery could be had for extra time employed over eight hours during the same day. (10 Am. & Eng. Ency. of Law, — 2d ed. — 463; Luske v. Hotchkiss, 37 Conn. 219.) We are of the opinion that the per diem required by the statute to be paid for the time actually employed was only for one day in each twenty-four hours.” It is indeed strange that the plaintiff remained silent during the years of service and then only after he wa's discharged did he assert a claim for extra compensation. That fact creates a doubt as to the reasonableness of his claim. He should have asserted his claim for compensation at the first opportunity and not have waited, as he did in this case. There was no need of secrecy in postponing his claim for the compensation. For the reasons expressed in this opinion, it was error for the trial court to enter judgment for the sum of $8,475.39 in favor of the plaintiff and against the defendant. The judgment of the municipal court is reversed, with a finding* of fact. Judgment reversed with a finding of fact. Wilson, P. J., and Friend, J., concur. Finding of fact: We find that there was no agreement, express or implied, between the parties for the extra compensation sued for. The clerk will enter the finding.as a part of the judgment. | 11-29-2022 | [
"Mr. Justice Hebel delivered the opinion of the court. The claim of the plaintiff is for 5385% hours overtime services rendered as a laborer for the defendant, the City of Chicago, from the first day of August, 1923, to the first day of September, 1927, when the plaintiff was discharged, which overtime is over and above the eight hours constituting a day’s work, and the total of said escess time is to be paid for at 1% times the daily wage earned; that during the time he was employed there was in full force apd effect an ordinance of the City of Chicago, sections 3276 and 3277, entitled, “Hours of Labor,” which provides that eight hours of labor between eight o’clock a. m. and five o’clock p. m. shall be and constitute a day’s work for all employees performing manual labor for the City. The ordinance in part is as follows: “Provided, however, that in all cases of necessity or emergency, superintendents, foremen or others in authority are hereby authorized to work their employees such number of hours as such necessity or emergency may require; but for all labor performed in excess of eight-hours in any one day, such laborer or employee shall be entitled to and shall receive pay at the rate of time and one-half for all such labor performed, except in those employments where there is an established scale of wages and hours which is usually and customarily paid for such excess time by employers generally within the city for like services, in which event such labor in excess of eight hours in one day shall be paid for according to the wage scale, hours and conditions so established.” This case was tried in the municipal court, and from the evidence heard in support of plaintiff’s amended statement of claim and defendant’s affidavit of merits, the trial court found the issues for the plaintiff and entered judgment for the sum of $8,475.39 and costs, from which judgment the defendant appealed to this court.",
"The plaintiff was employed by the defendant as a laborer and assigned to act as watchman for the defendant at the 45th Ward City Yard; his hours of service were from 4 o’clock in the afternoon to 6 o’clock in the morning, when the relief man came and he was relieved from further duty. He continued to work seven days each week from the time he entered the service on August 1, 1923, until September 1, 1927, excepting the time he was allowed for a vacation in each year. There is some conflict as to the kind of service rendered by the plaintiff in addition to his work as watchman, but the facts are not controverted that he received his pay for the services rendered and accepted the amount allowed and finally when he retired from the City service he received and accepted the final payment from the Ci-ty. It does not appear from the record that he objected at any time that the amount allowed and paid to him by the City was not correct. It appears from the evidence that the plaintiff talked with a Mr. Stanton, who was in charge of the Yard in 1925; that Stanton told the plaintiff that the union was going to try to get the eight-hour system.",
"The only other evidence on that point is the eight-hour ordinance. It further appears from the evidence in this case that the plaintiff was satisfied to do the work from 4 o’clock in the afternoon until 6 o’clock the next morning. The fact that the plaintiff worked more than eight hours a day would not entitle him to recover extra compensation under said ordinance, in the absence of an agreement. The facts in this case clearly indicate that it was not contemplated by the parties that the plaintiff was to be paid for time in excess of eight hours of work. The plaintiff voluntarily worked more than eight hours a day, accepted the pay, and at no time during the four years or more of service, claimed pay, or made demand for pay, for extra time. If he did not want to work more than eight hours he should have refused, or, as a condition, should have insisted that if he did so he should be paid for the extra time.",
"It also appears from the evidence that the plaintiff was satisfied'with the work he was doing, and, so far as the record discloses, never objected to, nor claimed pay for overtime services, until he started a suit against the City of Chicago almost a year after he was discharged. In the case of Sanitary District of Chicago v. Burke, 88 Ill. App. 196, in passing upon the appellant’s claim for extra compensation for services in excess of eight hours, which constitute a day’s work, and the application of the eight hours a day statute to the facts, the court said: “But aside from the section referred to, the mere fact that appellee worked more than eight hours a day would not entitle him to recover extra compensation under said act, in the absence of an agreement therefor. A laborer whose employment comes within the terms of the statute may refuse to work more than eight hours a day at his option, or insist as a condition precedent, if he does so work, that he shall be paid for the extra time. But the mere fact that he has voluntarily worked more than eight hours a day does not of itself authorize a demand for extra compensation under the act in question, unless it should, also appear that extra compensation was agreed upon, or was reasonably within the contemplation of the parties at the time.",
"Brooks v. Cotton, 48 N. H. 50; Luske v. Hotchkiss, 37 Conn. 219. In this case it is clear that extra compensation was not contemplated by either party.” In the case of County of Christian v. Merrigan, 191 Ill. 484, the court says: “Moreover, if the eight-hour statute applied, appellee performed the services required of him each day without any agreement (even if there could be such agreement in such a case) that he should be paid for extra time. In the absence of such an agreement or contract no recovery could be had for extra time employed over eight hours during the same day. (10 Am. & Eng. Ency. of Law, — 2d ed.",
"— 463; Luske v. Hotchkiss, 37 Conn. 219.) We are of the opinion that the per diem required by the statute to be paid for the time actually employed was only for one day in each twenty-four hours.” It is indeed strange that the plaintiff remained silent during the years of service and then only after he wa's discharged did he assert a claim for extra compensation. That fact creates a doubt as to the reasonableness of his claim. He should have asserted his claim for compensation at the first opportunity and not have waited, as he did in this case. There was no need of secrecy in postponing his claim for the compensation.",
"For the reasons expressed in this opinion, it was error for the trial court to enter judgment for the sum of $8,475.39 in favor of the plaintiff and against the defendant. The judgment of the municipal court is reversed, with a finding* of fact. Judgment reversed with a finding of fact. Wilson, P. J., and Friend, J., concur. Finding of fact: We find that there was no agreement, express or implied, between the parties for the extra compensation sued for. The clerk will enter the finding.as a part of the judgment."
]
| https://www.courtlistener.com/api/rest/v3/opinions/9284731/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
DETAILED ACTION Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Election/Restrictions The restriction requirement between , as set forth in the Office action mailed on 6/15/22 , has been reconsidered in view of the allowability of claims to the elected invention pursuant to MPEP § 821.04(a). The restriction requirement is hereby withdrawn as to any claim that requires all the limitations of an allowable claim. Specifically, the restriction requirement of 6/15/22 is withdrawn. Claims 9-20 are no longer withdrawn from consideration because the claim(s) requires all the limitations of an allowable claim. In view of the above noted withdrawal of the restriction requirement, applicant is advised that if any claim presented in a continuation or divisional application is anticipated by, or includes all the limitations of, a claim that is allowable in the present application, such claim may be subject to provisional statutory and/or nonstatutory double patenting rejections over the claims of the instant application. Once a restriction requirement is withdrawn, the provisions of 35 U.S.C. 121 are no longer applicable. See In re Ziegler, 443 F.2d 1211, 1215, 170 USPQ 129, 131-32 (CCPA 1971). See also MPEP § 804.01. Claim Rejections - 35 USC § 112 Claims 1-20 are rejected under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), second paragraph, as being indefinite for failing to particularly point out and distinctly claim the subject matter which the inventor or a joint inventor (or for applications subject to pre-AIA 35 U.S.C. 112, the applicant), regards as the invention. In claims 1-20, each instance of “CDC” should be clarified as to what is being claimed. On line 14, “the foam element” and “the analytes” lack clear antecedent basis of claim 1. On lines 3-4 of claim 4, “the chemical analytes” lack clear antecedent basis. In claim 8, on lines 1-2, “the element cartridge” and on lines 3-4, “the foam element” and “the CDC foam element” lack clear antecedent basis. In claim 9, on line 15, “the analyte sample” lack clear antecedent basis. In claim 11, on lines 1-2, “a linear actuator” and In claim 13, “fans/blowers” appear to be doubly claimed. In claim 12, on line 4, “the chemical analytes” lack clear antecedent basis. In claim 14, on line 3, “the concentrator” lack antecedent basis. In claim 15, on line 15, “the foam element” lack clear antecedent basis. On lines 18-20, “the chemical analyzer inlet” , “the foam element” and “the sample delivery line” lack clear antecedent basis. In claim 16, “a high temperature insulator” appears repetitive of claim 15. Also, on lines 3-4, “the CDC foam element” and “the CDC” lack clear antecedent basis. In claim 17, “the CDC foam” lack clear antecedent basis. In claim 18, “the element cartridge” on line 2, “the foam element” on line 4 and “the CDC foam element” on line 5 lack clear antecedent basis. Further, are the insulators of line 4 in addition to those of claim 15? Allowable Subject Matter Claims 1-20 would be allowable if rewritten or amended to overcome the rejection(s) under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), 2nd paragraph, set forth in this Office action. The following is a statement of reasons for the indication of allowable subject matter: the primary reason for the indicated allowability of the claims is that the prior art fails to teach or suggest a chemical pre-concentrator comprising a housing to hold an array of chemical pre-concentrator element cartridges… a top cover and a bottom of the housing being configured to move using a sliding caliper mechanism, by way of linear actuator along with each cartridge comprising a CDC foam element, dielectric/thermal insulators, electrodes and an elastomer seal wherein the top and the bottom covers slide to open the chemical concentrator… . Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to NASHMIYA FAYYAZ whose telephone number is (571)272-2192. The examiner can normally be reached Monday-Thursday. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Nimesh Patel can be reached on 571-272-2457. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center. Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
Nashmiya Fayyaz Examiner Art Unit 2861
/N.S.F/Examiner, Art Unit 2861
/NIMESHKUMAR D PATEL/Supervisory Patent Examiner, Art Unit 2861 | 2022-07-24T22:06:07 | [
"DETAILED ACTION Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Election/Restrictions The restriction requirement between , as set forth in the Office action mailed on 6/15/22 , has been reconsidered in view of the allowability of claims to the elected invention pursuant to MPEP § 821.04(a). The restriction requirement is hereby withdrawn as to any claim that requires all the limitations of an allowable claim. Specifically, the restriction requirement of 6/15/22 is withdrawn. Claims 9-20 are no longer withdrawn from consideration because the claim(s) requires all the limitations of an allowable claim. In view of the above noted withdrawal of the restriction requirement, applicant is advised that if any claim presented in a continuation or divisional application is anticipated by, or includes all the limitations of, a claim that is allowable in the present application, such claim may be subject to provisional statutory and/or nonstatutory double patenting rejections over the claims of the instant application.",
"Once a restriction requirement is withdrawn, the provisions of 35 U.S.C. 121 are no longer applicable. See In re Ziegler, 443 F.2d 1211, 1215, 170 USPQ 129, 131-32 (CCPA 1971). See also MPEP § 804.01. Claim Rejections - 35 USC § 112 Claims 1-20 are rejected under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), second paragraph, as being indefinite for failing to particularly point out and distinctly claim the subject matter which the inventor or a joint inventor (or for applications subject to pre-AIA 35 U.S.C. 112, the applicant), regards as the invention. In claims 1-20, each instance of “CDC” should be clarified as to what is being claimed.",
"On line 14, “the foam element” and “the analytes” lack clear antecedent basis of claim 1. On lines 3-4 of claim 4, “the chemical analytes” lack clear antecedent basis. In claim 8, on lines 1-2, “the element cartridge” and on lines 3-4, “the foam element” and “the CDC foam element” lack clear antecedent basis. In claim 9, on line 15, “the analyte sample” lack clear antecedent basis. In claim 11, on lines 1-2, “a linear actuator” and In claim 13, “fans/blowers” appear to be doubly claimed. In claim 12, on line 4, “the chemical analytes” lack clear antecedent basis. In claim 14, on line 3, “the concentrator” lack antecedent basis.",
"In claim 15, on line 15, “the foam element” lack clear antecedent basis. On lines 18-20, “the chemical analyzer inlet” , “the foam element” and “the sample delivery line” lack clear antecedent basis. In claim 16, “a high temperature insulator” appears repetitive of claim 15. Also, on lines 3-4, “the CDC foam element” and “the CDC” lack clear antecedent basis. In claim 17, “the CDC foam” lack clear antecedent basis. In claim 18, “the element cartridge” on line 2, “the foam element” on line 4 and “the CDC foam element” on line 5 lack clear antecedent basis. Further, are the insulators of line 4 in addition to those of claim 15?",
"Allowable Subject Matter Claims 1-20 would be allowable if rewritten or amended to overcome the rejection(s) under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), 2nd paragraph, set forth in this Office action. The following is a statement of reasons for the indication of allowable subject matter: the primary reason for the indicated allowability of the claims is that the prior art fails to teach or suggest a chemical pre-concentrator comprising a housing to hold an array of chemical pre-concentrator element cartridges… a top cover and a bottom of the housing being configured to move using a sliding caliper mechanism, by way of linear actuator along with each cartridge comprising a CDC foam element, dielectric/thermal insulators, electrodes and an elastomer seal wherein the top and the bottom covers slide to open the chemical concentrator… .",
"Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to NASHMIYA FAYYAZ whose telephone number is (571)272-2192. The examiner can normally be reached Monday-Thursday. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Nimesh Patel can be reached on 571-272-2457. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center.",
"Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. Nashmiya Fayyaz Examiner Art Unit 2861 /N.S.F/Examiner, Art Unit 2861 /NIMESHKUMAR D PATEL/Supervisory Patent Examiner, Art Unit 2861"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2022-07-24.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 1 of 16
EXHIBITOO Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 2 of 16
1380 Main Street, Suite 202 Springfield, Massachusetts O 1103 Tel.: 413-735-1775 Fax: 413-735-1772 www .brodeurmcgan.com
Daniel X. Montagna dmontagna@brodeurmcgan.com File No.: 30516 * Admitted in MA and CT October 13, 2017
HAND DELIVERY
Lisa C. deSousa, Esq. Kathleen E. Sheehan, Esq. City of Springfield Law Department 36 Court Street, Room 210 Springfield, MA 01103
RE: Jean Williams v. City of Springfield Department of Public Works USDC, Dist. of Mass, C.A. No. 16-CV-30179
Dear Attorneys deSousa and Sheehan:
I submit this correspondence in a good faith effort to resolve the apparent discovery dispute that has arisen in regard to my client's discovery requests. As you are aware from our previous conversation during the deposition with Vincent Desantis as himself and as 30(b)(6) designee, I believe the following interrogatories and requests for production to be inadequately answered.
Interrogatories
15) Identify all complaints, whether actually filed in the Massachusetts Commission Against Discrimination or other state or federal tribunal, made against the City in the last five (5) years regarding gender discrimination, including in your answers who made each complaint and the resolution of each complaint.
At Mr. Desantis' deposition, it became clear that contrary to your answer, multiple claims have been filed against the City. Please provide all information regarding those claims, including the Massachusetts Commission Against Discrimination pleadings filed in all such actions.
Requests for production
Please supplement your response to Request 2. An investigation was identified as being done by Mr. Hill. Please produce any and all of his notes, emails, statements, reports or summaries for this investigation.
As to Request 5, in light of Mr. Desantis' testimony, please clarify if there were any documents the City considered when hiring primary and secondary snow route inspectors for the
Ex1erience, Ethics, and Excellence In Action SJ Ex OO -- 01 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 3 of 16
October 13, 2017 Page2
past five years. For instance, all applications submitted since 2012 for the job which he referenced that were not produced.
Please supplement your responses to Requests 6 and 8. Mr. DeSantis testified in his deposition to a Munis system report, whereby the Munis system can run reports for all persons paid to do the snow inspector job either under code 4616 or other relevant code. Please provide a report from this system as to who performed the functions of the snow inspector from 2012 to present, and include all persons who trained to the do same as identified by this system.
As to Request 9, please produce the DPW foreman job description that Mr. DeSantis stated he created after 2013, which requires all foreman to perform the function of a snow inspector. Also, please produce any documents, including emails, contracts, and job postings, that discuss the job description for a snow route inspector from 2013 to present.
Request 10 needs to be supplemented, as no applications after October 2012 were produced in discovery.
Regarding Request 14, please provide the complaints and your answer/position statements relevant thereto.
Finally, for Request 17, please ensure that this question is read as keeping in mind any documents that any "experts" did regarding job descriptions and job and linkage studies as it relates to the DPW jobs from 1999 to present. In many instances an industrial organizational expert drafted documents for municipalities. If they did so in this case, please disclose their identity and work product.
30(b)(6) deposition
In response to questions about the job description for Snow Route Inspector and the essential functions of that job, DeSantis, the 30(b)(6) deponent, was unable to answer, claiming to be without knowledge of same. However, Defendant had a duty to provide the individual who did have that knowledge, else educate Mr. DeSantis on the topic. Please provide the name of the individual who created the job description and the list of essential functions for the snow route inspector position.
Please supplement these responses timely. I look forward to your response so that we may avoid filing a motion to compel this information.
Very truly yours,
f�� Daniel X. Montagna DXM:sl
SJ Ex OO -- 02 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 4 of 16
Lisa Brodeur-McGan
From: Lisa Brodeur-McGan <lbm@brodeurmcgan.com> Sent: Tuesday, February 06, 2018 3:12 PM To: 'Sheehan, Kathleen' Subject: RE: remark the deposition of VD and finish 30 b 6
I am free today and all day tomorrow.
From: Sheehan, Kathleen [mailto:ksheehan@springfieldcityhall.com] Sent: Tuesday, February 06, 2018 2:36 PM To: 'Lisa Brodeur-McGan'; Desousa, Lisa Cc: slefeave@brodeurmcgan.com; 'Dan Montagna' Subject: RE: remark the deposition of VD and finish 30 b 6
Lisa, When are you available to speak to me? I will be handling this matter not Lisa.
From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Monday, February 05, 2018 6:12 PM To: Sheehan, Kathleen; Desousa, Lisa Cc: 'Lisa Brodeur-McGan'; slefeave@brodeurmcqan.com; 'Dan Montagna' Subject: remark the deposition of VD and finish 30 b 6 -.,, I, I wish t6 obtain some new dates to finish the depositions we started. Also to confirm that you are bringing John Rooney to answer the questions from the 2012 era re snow inspector hiring and usage. I will send you a notice for John - Rooneys deposition if you do not intend to bring him I will mark him up individually. I understand he has retired so please advise if I may contact him myself or if you will handle notice.
I have the dates of Feb 9, 12, 13, 23 26 28th available. Also I have the dates of March 2,5-7 and the 9th. I have just reviewed your supplemental discovery responses that you provided in November and finally have had the time to compare to all the other discovery produced and the discovery dispute letter sent in October. I still need the following information. (CAN WE PLEASE DISCUSS THIS ASAP. WE HAVE A SCHEDULE CONFERENCE SCHEDULED AND I WISH TO KNOW IF WE CAl'irRESOLVE THESE DISPUTES OR IF I SHOULD FILE A MOTION TO COMPEL.)
1. A list of rsons who worked as snow inspectors from 2010 to present. This was requested several different times and in different manners. ome s dfic requests incluae interrogatoriesrequests and the second set of production of documents numbers �nd�- See_also the [!laintiffs second set C?f L�!�!!C?Zl_tori�, Que��on 1 ".!'.11��we once again ask for the City to list who worked during each snow season from 2012 to present, where they were assigned, when they worked and what they were paid. The City's answer does not comply with the rules as the attachments do not answer the question as presented. ( I WISH TO DISCUSS THIS WITH YOU AND SHARE MY.CONCERN ABOUT THIS ANSWER.) Further the attachments are not consistent with several other versions of documents that have been produced in the underiyingmca�ase-ancfin cfis��ery�·�·srmpfy"p'ut,"fa'm' ,�-�king for 'to the City to-a�-SIJ\l�r-thTs question in writing �y�g.11,sitig.!!,.9f Viti.nY...P�e.��� and the completion 91.1�..2.?... b 6. Such is the most economical way for me to obtain this information and it is not unduly burdensome to request this answer.
2. I need information concerning who created the job description attached to Vinny D's deposition. ( SEE Exhibit 1 bate · stamp number 139.) I asked for this in the second request for production of documents. You objected to the term " suggests" and did n_ot answer this request. Essentially I am looking for information and documentation as to who drafted the j(5ftdescription-l\�-t�� in BS 139. This is a gender discrimination case and job descriptions themselves can be evidence ofa1"S"crimtmrl'.iorr-- - 1
SJ Ex OO -- 03 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 5 of 16
3. Regarding the documents that show pay records for snow inspectors. in the second set of production of documents we request in request number 4 for persons who worked as snow route inspectors from 2010 to present and the documents attached to the pod's do not have information for years 2010, 11 or 2012. This is critical information for plaintiff; who worked historically in this role and how it has changed. While you produced some additional pay information attached to your second set of interrogatories, these years were missing.
4. In the second set of pods I asked in request number 12 and 13 or information relevant to your defense that you argued to the MCAD specifically, information that the snow removal personnel dwindled and for this reason the City needed to advertise for more inspectors. I inquired about this to date with the 30 b 6 deponent Vinny D who was not able to answer my questions. The need to hire additional people in 2012 and 2013 is relevant to my case. I am not looking to burden you with a pro'auction that involves irre'ievantdocumerifsori1y'Tocfetemimewha'tinfurmation you were relying on when the mead position statement was drafted and given to the MCAD and what conditions changed thereafter that permitted the program to be disbanded. '1 } 5. Regarding the snow maps requested in 2nd set of pod request number 14, maps for 2012, 13, 14 and 15 are N� missing. While additional maps were also produced and attached to the second set of interrogatories, they were no labeled as to be representative of any particular year. ( For relevance, the maps list numbers which arguable can be cross referenced with routes and without the maps, a key to interpretation of records is missing.
( 6. Thank you for the additional applications for snow insp.ec.to.r:s_y_q_� forwarded to me after my discovery letter of �\ October 13, 2017. Specifically you added applications E,�_e_ 201�a which supplements the ones from 20 2 � N� originally produced. However there were no applications from after 2013 produced. Are there none? ..------_
7. Regarding other disc · 1ination complaints. Based on Vinny d's testimony I know there are other claims. Therefore please answer Number 1 in the original interrogatory and original pod request number 14. This was raised in my October 2017 discovery e er. c. � �.....;.. 8. Investigatory notes documents or records from Mr. Hills discrim,ination investigation as also raised in my October N� 2017 letter.
Thank you for your time and attention to these matters. ( ps please let me know if Lisa is point person for this email or Kathy.)
2
SJ Ex OO -- 04 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 6 of 16
Lisa Brodeur-McGan
From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Wednesday, February 28, 2018 5:42 PM To: 'Lisa Brodeur-McGan' Subject: RE: Williams I potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED
Lisa, I have provided you the information that you requested in the second supplemental answers to ints that was for 2012-2017. As for 2010-2012, the job of snow route inspector was included in the foreman's duties. I will check with payroll to see how they paid the foremen at that time for the snow inspecting.
From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Wednesday, February 28, 2018 4:16 PM To: Sheehan, Kathleen Subject: RE: Williams/ potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED
I need this information before the deposition starts. I have been asking for it consistently. I will be there at 9 and expect to have this information in either a signed interrogatory or a stipulation. I will call the steno and advise her of the same. The entire deposition is centered on this information and I don't need to waste my time or my clients money. Please note that the 30 b notice calls for this information from 2010 to 2017. Further if you are proffering this witness to cover the time frame in question he needs to be prepared to testify to it.
---· -----·------ From: Sheehan, Kathleen [mailto:ksheehan@springfieldcityhall.com] Sent: Wednesday, February 28, 2018 4:05 PM To: 'Lisa Brodeur-McGan' Subject: RE: Williams / potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED
Lisa, I will look at thias but I will not agree to take off tomorrow. Mr. Rooney is retired and this will be the third time his depo would be scheduled and taken off. I can't keep expecting him to set the time aside and have him prepare and then not go forward. I will look at what you have prepared and will see if I can agree to it.
From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Wednesday, February 28, 2018 3:41 PM To: Sheehan, Kathleen Subject: FW: Williams/ potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED Importance: High
Kathy, I am still drafting this so there is no way I can get this to you before 4 and the steno needs to know if we are moving forward tomorrow. I need something under oath that I can mark for both Rooney and Desantis so let's take tomorrow off. PLEASE LOOK AT THIS AND LET ME KNOW IF I AM ON THE RIGHT TRACK WITH CREATING SOMETHING YOU CAN HAVE SIGNED .....
stipulation of defendant city of Springfield department of public works. I signed by a party not the lawyer!
Under pain and penalties of perjury the Defendant represents the following.
1
SJ Ex OO -- 05 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 7 of 16 1. The document BS City Stip 2-11 is a complete list of every person on the DPW payroll that works in the DPW department for the years 2012 to December 2017 that performed the function of snow plow inspector. This documents lists the pay received by each person, the dates worked, the section plowed by zone number. 2. Def Stip BS 12 and 13 are zone descriptions that cross reference BS 1-11. 3. bs City Stip 15 and 16 is a complete list of every person who performed snow plow inspector functions that were employed outside of the Defendant DPW department for the dates of ??? /2013 to December 2017. This document was created by in the department and the defendant represents that this is a complete list of any and all persons who performed the function of snow plow inspector and its functions. This list was created by a review of the payroll system entitled and reflects work performed and paid for per workweek and is not divided by individual days. 4. BS City Stip 17 is a list of persons for the year of 2012 who did not work for the DPW but worked instead for another City department who performed work as a snow plow inspector or who trained as a snow plow inspector. This page list all non DPW employees and is complete. This list was created by who examined the ________ records to determine any person outside DPW who was paid for snow ploy inspection functions for the year 2012. 5. Each person on BS City Stip 17 was paid __ per hour and this was created by who reviewed the _____ payroll system. This list represents all persons who were non-dpw employees who were paid for performing work as a snow plow inspector or for training for such job for the time period of--------to _ 6. Each person on BS City Stip 17 would have worked the week of December 29, 2012 ??? or would have worked the winter of 2012? 7. BS City Stip 18 is ... a list that was created by using the system and is a list of all persons who performed work or training as a snow plow inspector from the dates of---------to -------. This lists the pay they received and no persons are missing from this list for the years indiciated by this paragraph. 8. in order to determine every person who performed the function of snow plow inspector or trained for snow plow inspector for the years of 2012 to December 2017, one must combine all the names listed on BS 2-11, 15-18. This is a complete list of all persons who performed such work and was paid by the Defendant.
9. BS City Stip 19 is a list of all snow plow inspectors and back up inspectors for the year of This list was effective for the years of __, _ 10. BS is a complete set of all applications received by the City of Springfield DPW department from 2010 to december 2017 for the job of snow plow inspector. 11. There are no other applications in our possession after diligent search therefor. 12.
2
SJ Ex OO -- 06 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 8 of 16
Sharon LeFeave
From: Liebl, Stephanie <sliebl@springfieldcityhall.com> Sent: Wednesday, February 28, 2018 4:32 PM To: lbm@brodeurmcgan.com; slefeave@brodeurmcgan.com Cc: Sheehan, Kathleen; Liebl, Stephanie Subject: Williams Case - Revisions to Stipulation Attachments: 201802281628.pdf
Attorney Brodeur McGan and Ms. Lafeave:
Attorney Sheehan asked that I email you her revisions to your proposed stipulation.
Sincerely, Stephanie Liebl Paralegal City of Springfield Law Department 413-787-6149
1
SJ Ex OO -- 07 ._.:.�;;] ':;.:;��:-�·�:'::·.:: :_-: · · .-:·:·; ·.:::·:-';"::-:r.:�1�� �-:.·i Case 3:16-cv-30179-KAR ."-:')':� .t·t·:t.���'.i: · ;·_.�··;·::r.,· Document ·_. :·:. .r;:., · L ,:: · -::...·--.- ·. -�-3.·:-·' -�- • - ·,··.·. · .. · ··:.·..41-33 . ·. ·· L -� .. ,�_. .. --�--Filed · ·---:::-::.: - :�.- �·01/09/19 Page .�:" ·...·.·. ,,.:-·-·-:1 :;�-;:.: -.:"�'· �-:_: :- :- · -, ... :9 �:::.;:.,:::.� .:..:;-:_of 16:-.l :· ·..�:,-::'::i·i·�{;�;.:;·; ·:,:_·'.f�:k,. -.· :-�-�:.:.:-· ',
Sheehan, Kathleen
From: Lisa Brodeur-McGan <lbm@brodeurmcgan.com> Sent: Wednesday, February 28, 2018 3:41 PM To: Sheehan, Kathleen Subject: FW: Williams I potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED
Importance: High
Kathy, I am still drafting this so there is no way I can get this to you before 4 and the steno needs to know if we are moving forward tomorrow. I need something under oath that I can mark for both Rooney and Desantis so let's take tomorrow off. PLEASE LOOK AT THIS AND LET ME KNOW IF I AM ON THE RIGHT TRACK WITH CREATING SOMETHING YOU CAN HAVE SIGNED .....
. stipulation of defendant city of Springfield department of public works./ signed by a party not the lawyer!
Under pain and penalties of perjury the Defendant represents the following. _,j::ID St\D�-r ·· fU"' documen�� 1. The Stip 2-11 is a complete Ii?' of every person on the DPW payroll ,./,works in the DPW snow�,inspector. department for s 2012 to DGtefl'lber 201jf)i:hat performed the function of · This documents lists the pay received by each person, the dates worked, the section plowed by zone number. 2. Def Stip BS 12 and 13 are zone descriptions that cross reference BS���· �-f\Dw��6\� -·� \ � 3.�y Stip 15 and 16 is a complete list of every person who perfor�,·��inspector functions that were employed outside of the Defendant DPW department for the dates of, ?77/20'.i:3 to Dece111ber 2017. This document was created b'y1'loroJ"4wt. in thePo...,..,lr:P:'Jt: departmen�he defendant represents that this is a complete list of any and all persons who performed the function of snow plew inspector and its functions. This list was C:'°cated by� review o_Hhe_payroll system entitled and reflects wor-rmed and paid for per worif,ee�o{- days��h-Lcl�h�cL ---e Is Rot el1�1ee<l by indlvldual �o · · i��9/t� 4. BS City Stip 17 is a list of persons for tl:!e-1;ear �!'who did not wor�or the DPW bu.l�ked instead for another City department who performed work as a snow (3'lfflN inspector or who �r��d as a snow �spector. This page list all non DPW employees and is complete. This list was created byfiliC\l\-\'.rl.il!;ho examined t� ________ records to determine any person outside DPW who was paid for snow �inspection functions forthe year 2012. P°1 � do:.'t\.., \� /,;9..-9 /I�. ---::, . . 5. Each person on BS City Stip 17 was paid __ per hour and this was cre�e.!l �y \ �-Q A�ho reviewed the , _____ payroll system. This list represents all persons who were non...flii6W employees whowefe paid for JJ:ci� I performing work as a snow �Spector or for training for such job for the t+me peried ef -to 1J-/�9hJ · �p� 6. Each person on BS City Stip 17 would have worked th_� week of Dece1rrber 2�, lo;Q. ??? m would lrave Worked the • WiAter--etz� -W1'f1'-L�q"{f1,��uJ}\tC.J\. ld/r;;>..9/t<Jt,...Xix!�payjckk, 7. BS City Stip 18 is ... a list that was c�!r.d bv?n.iiutl�g the system and is a list of all persons who V • performed work or training as a snow·��ctor fr:J�ates of---------to This lists th� pay they received -----t, and no persons are missing from this list for t��M'1na1crated by this paragraph., p�dcdL,oL/ I� //J ¥ 8. in order to determine every person who performed the function of snow �spector or trained for snow pJe.w. � inspector for the years of 2012 to December 2017, one must combine all the names listed on BS 2-11, 15-18. This is a complete list of all persons who performed such work and was paid by the Defendant.
9. BS City Stip 19 is a list of all snow plow inspectors and back up inspectors for the year of This list was � effective for the years of_, _
No � 0-tcL d-t> �u � �A�_ri- SJ Ex OO -- 08 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 10 of 16 3 -S��o� -.�0/f' 10. BS is a complete set 0�9�1ications received by the City of Springfield DPW department from 2.Q� d�� for the job of snow �lnspector. 11. There are no other applications in our possession after diligent search therefor. 12.
--------·------------------
i I
I I ': . '':
. I 'I
2
SJ Ex OO -- 09 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 11 of 16
Sharon LeFeave
From: Lisa Brodeur-McGan <lbm@brodeurmcgan.com> Sent: Friday, May 11, 2018 12:10 PM To: 'Sheehan, Kathleen' Subject: confirming call on Williams
Thank you for calling on Williams. I understand from this conversation today that the payroll documents that were attached to the interrogatories are not to be relied on to determine who did the work for the periods of time in question. I also understand that you cannot advise me at this time who was performing this work. I also understand and appreciate that you need time to figure this out. For this reason I cannot complete my depositions or really my discovery on this critical issue. I have reiterated my request to settle as the time we have all spent on this is substantially greater than the demand I made. I will await your response to resolution before we decide the next step. Can we speak no later than Friday next week on this topic please?
1
SJ Ex OO -- 10 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 12 of 16
Sharon LeFeave
From: Sheehan, Kathleen <ksheehan@springfieldcityhall.com> Sent: Friday, June 29, 2018 4:24 PM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com); Landry, Megan Subject: Williams
Hi Lisa, Over the past weeks, I have been again working with the DPW and payroll to try and obtain the information that you have requ��l�d..r�E,fl[.gJog,Jbe names of the snow inspectors, dates worked and wages paid from 2009-2017. � '.tU,tfftii'ff@%i:f lftfi'1it1ifff61'ffi'ii"f1lfrflii:;;h�tiav:�'.fl�ble. I would like to meet with you to discuss why it is unable to be provided and to discuss what information I can provide to you relative to those issues. I will out of the office next week but if you or Sharon contact Megan Landry at my office, you can make an appointment for us to meet. I can go to your office but I think it would be best if you came here since the documents are all in this office. Thanks
1
SJ Ex OO -- 11 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 13 of 16
Lisa Brodeur-McGan
From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Monday, July 09, 2018 11:27 AM To: 'Lisa Brodeur-McGan' Subject: RE: Williams
Lisa, Sorry to hear about your back issues. Hope they are better now. I am available to meet Thurs or Friday of this week. What would work for you?
From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Monday, July 02, 2018 11:37 AM To: Sheehan, Kathleen Subject: RE: Williams
kathy I have been out of the office for more than a weke with a serious back issue. I am working only a few hours today and not going to make it through the day. what do you have for the end of the week
From: Sheehan, Kathleen [mailto:ksheehan@springfieldcityhall.com] Sent: Friday, June 29, 2018 4:24 PM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com); Landry, Megan Subject: Williams
Hi Lisa, Over the past weeks, I have been again working with the DPW and payroll to try and obtain the information that you have requested regarding the names of the snow inspectors, dates worked and wages paid from 2009-2017. Unfortunately that information is not available. I would like to meet with you to discuss why it is unable to be provided and to discuss what information I can provide to you relative to those issues. I will out of the office next week but if you or Sharon contact Megan Landry at my office, you can make an appointment for us to meet. I can go to your office but I think it would be best if you came here since the documents are all in this office. Thanks
1
SJ Ex OO -- 12 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 14 of 16
Sharon LeFeave
From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Thursday, July 12, 2018 12:20 PM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com) Subject: Williams
Hi Lisa, Just following up on the email that I sent to you on Monday the 9th of July offering to meet with you to discuss your request for the names, dates worked of the snow inspectors from 2009 - 20117. I am available on Friday the is" and much of next week. Just contact me at your convenience to work out a date/time. Thanks
1
SJ Ex OO -- 13 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 15 of 16
Sharon Lefeave
From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Monday, July 23, 2018 10:27 AM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: Landry, Megan; 'Sharon LeFeave' (slefeave@brodeurmcgan.com) Subject: Williams v City of Springfield
Lisa, Please be advised that in accordance with the local rules, I am contacting you to inform you that I will be filing a motion for summary judgement on behalf of the defendant in the above captioned matter and I am available to consult with you at your convenience to see if we can limit the areas of disagreement.
1
SJ Ex OO -- 14 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 16 of 16
Sharon Lef eave
From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com > Sent: Monday, July 30, 2018 11:38 AM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com); Landry, Megan Subject: Williams v. City
Hi Lisa, Hope you had a good vacation. I am available this week to discuss the discovery disputes that have arisen as well as the MSJ that the City expects to file so that we may limit any potential areas of dispute. Could you give me a couple to days/times that you are available to discuss? thanks
1
SJ Ex OO -- 15 | 2019-01-09 | [
"Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 1 of 16 EXHIBITOO Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 2 of 16 1380 Main Street, Suite 202 Springfield, Massachusetts O 1103 Tel. : 413-735-1775 Fax: 413-735-1772 www .brodeurmcgan.com Daniel X. Montagna dmontagna@brodeurmcgan.com File No. : 30516 * Admitted in MA and CT October 13, 2017 HAND DELIVERY Lisa C. deSousa, Esq. Kathleen E. Sheehan, Esq. City of Springfield Law Department 36 Court Street, Room 210 Springfield, MA 01103 RE: Jean Williams v. City of Springfield Department of Public Works USDC, Dist. of Mass, C.A. No.",
"16-CV-30179 Dear Attorneys deSousa and Sheehan: I submit this correspondence in a good faith effort to resolve the apparent discovery dispute that has arisen in regard to my client's discovery requests. As you are aware from our previous conversation during the deposition with Vincent Desantis as himself and as 30(b)(6) designee, I believe the following interrogatories and requests for production to be inadequately answered. Interrogatories 15) Identify all complaints, whether actually filed in the Massachusetts Commission Against Discrimination or other state or federal tribunal, made against the City in the last five (5) years regarding gender discrimination, including in your answers who made each complaint and the resolution of each complaint. At Mr. Desantis' deposition, it became clear that contrary to your answer, multiple claims have been filed against the City. Please provide all information regarding those claims, including the Massachusetts Commission Against Discrimination pleadings filed in all such actions.",
"Requests for production Please supplement your response to Request 2. An investigation was identified as being done by Mr. Hill. Please produce any and all of his notes, emails, statements, reports or summaries for this investigation. As to Request 5, in light of Mr. Desantis' testimony, please clarify if there were any documents the City considered when hiring primary and secondary snow route inspectors for the Ex1erience, Ethics, and Excellence In Action SJ Ex OO -- 01 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 3 of 16 October 13, 2017 Page2 past five years. For instance, all applications submitted since 2012 for the job which he referenced that were not produced. Please supplement your responses to Requests 6 and 8. Mr. DeSantis testified in his deposition to a Munis system report, whereby the Munis system can run reports for all persons paid to do the snow inspector job either under code 4616 or other relevant code.",
"Please provide a report from this system as to who performed the functions of the snow inspector from 2012 to present, and include all persons who trained to the do same as identified by this system. As to Request 9, please produce the DPW foreman job description that Mr. DeSantis stated he created after 2013, which requires all foreman to perform the function of a snow inspector. Also, please produce any documents, including emails, contracts, and job postings, that discuss the job description for a snow route inspector from 2013 to present. Request 10 needs to be supplemented, as no applications after October 2012 were produced in discovery. Regarding Request 14, please provide the complaints and your answer/position statements relevant thereto. Finally, for Request 17, please ensure that this question is read as keeping in mind any documents that any \"experts\" did regarding job descriptions and job and linkage studies as it relates to the DPW jobs from 1999 to present. In many instances an industrial organizational expert drafted documents for municipalities. If they did so in this case, please disclose their identity and work product. 30(b)(6) deposition In response to questions about the job description for Snow Route Inspector and the essential functions of that job, DeSantis, the 30(b)(6) deponent, was unable to answer, claiming to be without knowledge of same. However, Defendant had a duty to provide the individual who did have that knowledge, else educate Mr. DeSantis on the topic. Please provide the name of the individual who created the job description and the list of essential functions for the snow route inspector position.",
"Please supplement these responses timely. I look forward to your response so that we may avoid filing a motion to compel this information. Very truly yours, f�� Daniel X. Montagna DXM:sl SJ Ex OO -- 02 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 4 of 16 Lisa Brodeur-McGan From: Lisa Brodeur-McGan <lbm@brodeurmcgan.com> Sent: Tuesday, February 06, 2018 3:12 PM To: 'Sheehan, Kathleen' Subject: RE: remark the deposition of VD and finish 30 b 6 I am free today and all day tomorrow. From: Sheehan, Kathleen [mailto:ksheehan@springfieldcityhall.com] Sent: Tuesday, February 06, 2018 2:36 PM To: 'Lisa Brodeur-McGan'; Desousa, Lisa Cc: slefeave@brodeurmcgan.com; 'Dan Montagna' Subject: RE: remark the deposition of VD and finish 30 b 6 Lisa, When are you available to speak to me? I will be handling this matter not Lisa. From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Monday, February 05, 2018 6:12 PM To: Sheehan, Kathleen; Desousa, Lisa Cc: 'Lisa Brodeur-McGan'; slefeave@brodeurmcqan.com; 'Dan Montagna' Subject: remark the deposition of VD and finish 30 b 6 -.,, I, I wish t6 obtain some new dates to finish the depositions we started. Also to confirm that you are bringing John Rooney to answer the questions from the 2012 era re snow inspector hiring and usage. I will send you a notice for John - Rooneys deposition if you do not intend to bring him I will mark him up individually.",
"I understand he has retired so please advise if I may contact him myself or if you will handle notice. I have the dates of Feb 9, 12, 13, 23 26 28th available. Also I have the dates of March 2,5-7 and the 9th. I have just reviewed your supplemental discovery responses that you provided in November and finally have had the time to compare to all the other discovery produced and the discovery dispute letter sent in October. I still need the following information. (CAN WE PLEASE DISCUSS THIS ASAP. WE HAVE A SCHEDULE CONFERENCE SCHEDULED AND I WISH TO KNOW IF WE CAl'irRESOLVE THESE DISPUTES OR IF I SHOULD FILE A MOTION TO COMPEL.) 1. A list of rsons who worked as snow inspectors from 2010 to present. This was requested several different times and in different manners. ome s dfic requests incluae interrogatoriesrequests and the second set of production of documents numbers �nd�- See_also the [!laintiffs second set C?f L�!�! !C?Zl_tori�, Que��on 1 \".!",
"'.11��we once again ask for the City to list who worked during each snow season from 2012 to present, where they were assigned, when they worked and what they were paid. The City's answer does not comply with the rules as the attachments do not answer the question as presented. ( I WISH TO DISCUSS THIS WITH YOU AND SHARE MY.CONCERN ABOUT THIS ANSWER.) Further the attachments are not consistent with several other versions of documents that have been produced in the underiyingmca�ase-ancfin cfis��ery�·�·srmpfy\"p'ut,\"fa'm' ,�-�king for 'to the City to-a�-SIJ\\l�r-thTs question in writing �y�g.11,sitig.! !,.9f Viti.nY...P�e.��� and the completion 91.1�..2.?... b 6.",
"Such is the most economical way for me to obtain this information and it is not unduly burdensome to request this answer. 2. I need information concerning who created the job description attached to Vinny D's deposition. ( SEE Exhibit 1 bate · stamp number 139.) I asked for this in the second request for production of documents. You objected to the term \" suggests\" and did n_ot answer this request. Essentially I am looking for information and documentation as to who drafted the j(5ftdescription-l\\�-t�� in BS 139. This is a gender discrimination case and job descriptions themselves can be evidence ofa1\"S\"crimtmrl'.iorr-- - 1 SJ Ex OO -- 03 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 5 of 16 3. Regarding the documents that show pay records for snow inspectors. in the second set of production of documents we request in request number 4 for persons who worked as snow route inspectors from 2010 to present and the documents attached to the pod's do not have information for years 2010, 11 or 2012. This is critical information for plaintiff; who worked historically in this role and how it has changed.",
"While you produced some additional pay information attached to your second set of interrogatories, these years were missing. 4. In the second set of pods I asked in request number 12 and 13 or information relevant to your defense that you argued to the MCAD specifically, information that the snow removal personnel dwindled and for this reason the City needed to advertise for more inspectors. I inquired about this to date with the 30 b 6 deponent Vinny D who was not able to answer my questions. The need to hire additional people in 2012 and 2013 is relevant to my case. I am not looking to burden you with a pro'auction that involves irre'ievantdocumerifsori1y'Tocfetemimewha'tinfurmation you were relying on when the mead position statement was drafted and given to the MCAD and what conditions changed thereafter that permitted the program to be disbanded. '1 } 5. Regarding the snow maps requested in 2nd set of pod request number 14, maps for 2012, 13, 14 and 15 are N� missing.",
"While additional maps were also produced and attached to the second set of interrogatories, they were no labeled as to be representative of any particular year. ( For relevance, the maps list numbers which arguable can be cross referenced with routes and without the maps, a key to interpretation of records is missing. ( 6. Thank you for the additional applications for snow insp.ec.to.r:s_y_q_� forwarded to me after my discovery letter of �\\ October 13, 2017. Specifically you added applications E,�_e_ 201�a which supplements the ones from 20 2 � N� originally produced. However there were no applications from after 2013 produced. Are there none?",
"..------_ 7. Regarding other disc · 1ination complaints. Based on Vinny d's testimony I know there are other claims. Therefore please answer Number 1 in the original interrogatory and original pod request number 14. This was raised in my October 2017 discovery e er. c. � �.....;.. 8. Investigatory notes documents or records from Mr. Hills discrim,ination investigation as also raised in my October N� 2017 letter. Thank you for your time and attention to these matters.",
"( ps please let me know if Lisa is point person for this email or Kathy.) 2 SJ Ex OO -- 04 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 6 of 16 Lisa Brodeur-McGan From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Wednesday, February 28, 2018 5:42 PM To: 'Lisa Brodeur-McGan' Subject: RE: Williams I potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED Lisa, I have provided you the information that you requested in the second supplemental answers to ints that was for 2012-2017. As for 2010-2012, the job of snow route inspector was included in the foreman's duties. I will check with payroll to see how they paid the foremen at that time for the snow inspecting. From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Wednesday, February 28, 2018 4:16 PM To: Sheehan, Kathleen Subject: RE: Williams/ potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED I need this information before the deposition starts. I have been asking for it consistently. I will be there at 9 and expect to have this information in either a signed interrogatory or a stipulation. I will call the steno and advise her of the same.",
"The entire deposition is centered on this information and I don't need to waste my time or my clients money. Please note that the 30 b notice calls for this information from 2010 to 2017. Further if you are proffering this witness to cover the time frame in question he needs to be prepared to testify to it. ---· -----·------ From: Sheehan, Kathleen [mailto:ksheehan@springfieldcityhall.com] Sent: Wednesday, February 28, 2018 4:05 PM To: 'Lisa Brodeur-McGan' Subject: RE: Williams / potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED Lisa, I will look at thias but I will not agree to take off tomorrow. Mr. Rooney is retired and this will be the third time his depo would be scheduled and taken off. I can't keep expecting him to set the time aside and have him prepare and then not go forward.",
"I will look at what you have prepared and will see if I can agree to it. From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Wednesday, February 28, 2018 3:41 PM To: Sheehan, Kathleen Subject: FW: Williams/ potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED Importance: High Kathy, I am still drafting this so there is no way I can get this to you before 4 and the steno needs to know if we are moving forward tomorrow.",
"I need something under oath that I can mark for both Rooney and Desantis so let's take tomorrow off. PLEASE LOOK AT THIS AND LET ME KNOW IF I AM ON THE RIGHT TRACK WITH CREATING SOMETHING YOU CAN HAVE SIGNED ..... stipulation of defendant city of Springfield department of public works. I signed by a party not the lawyer! Under pain and penalties of perjury the Defendant represents the following. 1 SJ Ex OO -- 05 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 7 of 16 1. The document BS City Stip 2-11 is a complete list of every person on the DPW payroll that works in the DPW department for the years 2012 to December 2017 that performed the function of snow plow inspector.",
"This documents lists the pay received by each person, the dates worked, the section plowed by zone number. 2. Def Stip BS 12 and 13 are zone descriptions that cross reference BS 1-11. 3. bs City Stip 15 and 16 is a complete list of every person who performed snow plow inspector functions that were employed outside of the Defendant DPW department for the dates of ? ?? /2013 to December 2017. This document was created by in the department and the defendant represents that this is a complete list of any and all persons who performed the function of snow plow inspector and its functions. This list was created by a review of the payroll system entitled and reflects work performed and paid for per workweek and is not divided by individual days. 4. BS City Stip 17 is a list of persons for the year of 2012 who did not work for the DPW but worked instead for another City department who performed work as a snow plow inspector or who trained as a snow plow inspector. This page list all non DPW employees and is complete. This list was created by who examined the ________ records to determine any person outside DPW who was paid for snow ploy inspection functions for the year 2012.",
"5. Each person on BS City Stip 17 was paid __ per hour and this was created by who reviewed the _____ payroll system. This list represents all persons who were non-dpw employees who were paid for performing work as a snow plow inspector or for training for such job for the time period of--------to _ 6. Each person on BS City Stip 17 would have worked the week of December 29, 2012 ? ??",
"or would have worked the winter of 2012? 7. BS City Stip 18 is ... a list that was created by using the system and is a list of all persons who performed work or training as a snow plow inspector from the dates of---------to -------. This lists the pay they received and no persons are missing from this list for the years indiciated by this paragraph. 8. in order to determine every person who performed the function of snow plow inspector or trained for snow plow inspector for the years of 2012 to December 2017, one must combine all the names listed on BS 2-11, 15-18. This is a complete list of all persons who performed such work and was paid by the Defendant. 9. BS City Stip 19 is a list of all snow plow inspectors and back up inspectors for the year of This list was effective for the years of __, _ 10.",
"BS is a complete set of all applications received by the City of Springfield DPW department from 2010 to december 2017 for the job of snow plow inspector. 11. There are no other applications in our possession after diligent search therefor. 12. 2 SJ Ex OO -- 06 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 8 of 16 Sharon LeFeave From: Liebl, Stephanie <sliebl@springfieldcityhall.com> Sent: Wednesday, February 28, 2018 4:32 PM To: lbm@brodeurmcgan.com; slefeave@brodeurmcgan.com Cc: Sheehan, Kathleen; Liebl, Stephanie Subject: Williams Case - Revisions to Stipulation Attachments: 201802281628.pdf Attorney Brodeur McGan and Ms. Lafeave: Attorney Sheehan asked that I email you her revisions to your proposed stipulation. Sincerely, Stephanie Liebl Paralegal City of Springfield Law Department 413-787-6149 1 SJ Ex OO -- 07 ._. :.�;;] ':;.:;��:-�·�:'::·.",
":: :_-: · · .-:·:·; ·.:::·:-';\"::-:r. :�1�� �-:.·i Case 3:16-cv-30179-KAR . \"-:')':� .t·t·:t.���'.i: · ;·_.�··;·::r.,· Document ·_. :·:. .r;:., · L ,:: · -::...·--.- ·. -�-3.·:-·' -�- • - ·,··.·. · .. · ··:.·..41-33 . ·. ·· L -� .. ,�_. .. --�--Filed · ·---:::-::. : - :�.- �·01/09/19 Page .�:\" ·...·.·. ,,. :-·-·-:1 :;�-;:. : -. :\"�'· �-:_: :- :- · -, ... :9 �:::. ;:.,:::.� . :.. :;-:_of 16:-.l :· ·..�:,-::'::i·i·�{;�;. :;·; ·:,:_·'.f�:k,. -.· :-�-�:.:. :-· ', Sheehan, Kathleen From: Lisa Brodeur-McGan <lbm@brodeurmcgan.com> Sent: Wednesday, February 28, 2018 3:41 PM To: Sheehan, Kathleen Subject: FW: Williams I potential stipulation by party or interrog answer DRAFT ... NOT COMPLETED Importance: High Kathy, I am still drafting this so there is no way I can get this to you before 4 and the steno needs to know if we are moving forward tomorrow. I need something under oath that I can mark for both Rooney and Desantis so let's take tomorrow off. PLEASE LOOK AT THIS AND LET ME KNOW IF I AM ON THE RIGHT TRACK WITH CREATING SOMETHING YOU CAN HAVE SIGNED ..... . stipulation of defendant city of Springfield department of public works./ signed by a party not the lawyer!",
"Under pain and penalties of perjury the Defendant represents the following. _,j::ID St\\D�-r ·· fU\"' documen�� 1. The Stip 2-11 is a complete Ii?' of every person on the DPW payroll ,./,works in the DPW snow�,inspector. department for s 2012 to DGtefl'lber 201jf)i:hat performed the function of · This documents lists the pay received by each person, the dates worked, the section plowed by zone number. 2. Def Stip BS 12 and 13 are zone descriptions that cross reference BS���· �-f\\Dw��6\\� -·� \\ � 3.�y Stip 15 and 16 is a complete list of every person who perfor�,·��inspector functions that were employed outside of the Defendant DPW department for the dates of, ?77/20'.i:3 to Dece111ber 2017. This document was created b'y1'loroJ\"4wt. in thePo...,..,lr:P:'Jt: departmen�he defendant represents that this is a complete list of any and all persons who performed the function of snow plew inspector and its functions.",
"This list was C:'°cated by� review o_Hhe_payroll system entitled and reflects wor-rmed and paid for per worif,ee�o{- days��h-Lcl�h�cL ---e Is Rot el1�1ee<l by indlvldual �o · · i��9/t� 4. BS City Stip 17 is a list of persons for tl:!e-1;ear �! 'who did not wor�or the DPW bu.l�ked instead for another City department who performed work as a snow (3'lfflN inspector or who �r��d as a snow �spector. This page list all non DPW employees and is complete. This list was created byfiliC\\l\\-\\'.rl.il! ;ho examined t� ________ records to determine any person outside DPW who was paid for snow �inspection functions forthe year 2012. P°1 � do:.",
"'t\\.., \\� /,;9..-9 /I�. ---::, . . 5. Each person on BS City Stip 17 was paid __ per hour and this was cre�e. !l �y \\ �-Q A�ho reviewed the , _____ payroll system. This list represents all persons who were non...flii6W employees whowefe paid for JJ:ci� I performing work as a snow �Spector or for training for such job for the t+me peried ef -to 1J-/�9hJ · �p� 6. Each person on BS City Stip 17 would have worked th_� week of Dece1rrber 2�, lo;Q. ? ?? m would lrave Worked the • WiAter--etz� -W1'f1'-L�q\"{f1,��uJ}\\tC.J\\. ld/r;;>..9/t<Jt,...Xix!�payjckk, 7.",
"BS City Stip 18 is ... a list that was c�!r.d bv?n.iiutl�g the system and is a list of all persons who V • performed work or training as a snow·��ctor fr:J�ates of---------to This lists th� pay they received -----t, and no persons are missing from this list for t��M'1na1crated by this paragraph., p�dcdL,oL/ I� //J ¥ 8. in order to determine every person who performed the function of snow �spector or trained for snow pJe.w. � inspector for the years of 2012 to December 2017, one must combine all the names listed on BS 2-11, 15-18. This is a complete list of all persons who performed such work and was paid by the Defendant. 9. BS City Stip 19 is a list of all snow plow inspectors and back up inspectors for the year of This list was � effective for the years of_, _ No � 0-tcL d-t> �u � �A�_ri- SJ Ex OO -- 08 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 10 of 16 3 -S��o� -.�0/f' 10. BS is a complete set 0�9�1ications received by the City of Springfield DPW department from 2.Q� d�� for the job of snow �lnspector. 11.",
"There are no other applications in our possession after diligent search therefor. 12. --------·------------------ i I I I ': . '': . I 'I 2 SJ Ex OO -- 09 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 11 of 16 Sharon LeFeave From: Lisa Brodeur-McGan <lbm@brodeurmcgan.com> Sent: Friday, May 11, 2018 12:10 PM To: 'Sheehan, Kathleen' Subject: confirming call on Williams Thank you for calling on Williams. I understand from this conversation today that the payroll documents that were attached to the interrogatories are not to be relied on to determine who did the work for the periods of time in question. I also understand that you cannot advise me at this time who was performing this work. I also understand and appreciate that you need time to figure this out. For this reason I cannot complete my depositions or really my discovery on this critical issue.",
"I have reiterated my request to settle as the time we have all spent on this is substantially greater than the demand I made. I will await your response to resolution before we decide the next step. Can we speak no later than Friday next week on this topic please? 1 SJ Ex OO -- 10 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 12 of 16 Sharon LeFeave From: Sheehan, Kathleen <ksheehan@springfieldcityhall.com> Sent: Friday, June 29, 2018 4:24 PM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com); Landry, Megan Subject: Williams Hi Lisa, Over the past weeks, I have been again working with the DPW and payroll to try and obtain the information that you have requ��l�d..r�E,fl[.gJog,Jbe names of the snow inspectors, dates worked and wages paid from 2009-2017. � '.tU,tfftii'ff@%i:f lftfi'1it1ifff61'ffi'ii\"f1lfrflii:;;h�tiav:�'.fl�ble.",
"I would like to meet with you to discuss why it is unable to be provided and to discuss what information I can provide to you relative to those issues. I will out of the office next week but if you or Sharon contact Megan Landry at my office, you can make an appointment for us to meet. I can go to your office but I think it would be best if you came here since the documents are all in this office. Thanks 1 SJ Ex OO -- 11 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 13 of 16 Lisa Brodeur-McGan From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Monday, July 09, 2018 11:27 AM To: 'Lisa Brodeur-McGan' Subject: RE: Williams Lisa, Sorry to hear about your back issues. Hope they are better now. I am available to meet Thurs or Friday of this week. What would work for you?",
"From: Lisa Brodeur-McGan [mailto:lbm@brodeurmcgan.com] Sent: Monday, July 02, 2018 11:37 AM To: Sheehan, Kathleen Subject: RE: Williams kathy I have been out of the office for more than a weke with a serious back issue. I am working only a few hours today and not going to make it through the day. what do you have for the end of the week From: Sheehan, Kathleen [mailto:ksheehan@springfieldcityhall.com] Sent: Friday, June 29, 2018 4:24 PM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com); Landry, Megan Subject: Williams Hi Lisa, Over the past weeks, I have been again working with the DPW and payroll to try and obtain the information that you have requested regarding the names of the snow inspectors, dates worked and wages paid from 2009-2017. Unfortunately that information is not available. I would like to meet with you to discuss why it is unable to be provided and to discuss what information I can provide to you relative to those issues. I will out of the office next week but if you or Sharon contact Megan Landry at my office, you can make an appointment for us to meet. I can go to your office but I think it would be best if you came here since the documents are all in this office. Thanks 1 SJ Ex OO -- 12 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 14 of 16 Sharon LeFeave From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Thursday, July 12, 2018 12:20 PM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com) Subject: Williams Hi Lisa, Just following up on the email that I sent to you on Monday the 9th of July offering to meet with you to discuss your request for the names, dates worked of the snow inspectors from 2009 - 20117.",
"I am available on Friday the is\" and much of next week. Just contact me at your convenience to work out a date/time. Thanks 1 SJ Ex OO -- 13 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 15 of 16 Sharon Lefeave From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com> Sent: Monday, July 23, 2018 10:27 AM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: Landry, Megan; 'Sharon LeFeave' (slefeave@brodeurmcgan.com) Subject: Williams v City of Springfield Lisa, Please be advised that in accordance with the local rules, I am contacting you to inform you that I will be filing a motion for summary judgement on behalf of the defendant in the above captioned matter and I am available to consult with you at your convenience to see if we can limit the areas of disagreement. 1 SJ Ex OO -- 14 Case 3:16-cv-30179-KAR Document 41-33 Filed 01/09/19 Page 16 of 16 Sharon Lef eave From: Sheehan, Kathleen < ksheehan@springfieldcityhall.com > Sent: Monday, July 30, 2018 11:38 AM To: Lisa Brodeur-McGan (lbm@brodeurmcgan.com) Cc: 'Sharon LeFeave' (slefeave@brodeurmcgan.com); Landry, Megan Subject: Williams v. City Hi Lisa, Hope you had a good vacation.",
"I am available this week to discuss the discovery disputes that have arisen as well as the MSJ that the City expects to file so that we may limit any potential areas of dispute. Could you give me a couple to days/times that you are available to discuss? thanks 1 SJ Ex OO -- 15"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/116110738/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Opinion by Sullivan, J. It was stipulated that the merchandise consists of hair pencils similar to those passed upon in Solo Horton Brush Co. v. United States (T. D. 46123). The claim at 40 percent under paragraph 1506 was therefore sustained. | 07-20-2022 | [
"Opinion by Sullivan, J. It was stipulated that the merchandise consists of hair pencils similar to those passed upon in Solo Horton Brush Co. v. United States (T. D. 46123). The claim at 40 percent under paragraph 1506 was therefore sustained."
]
| https://www.courtlistener.com/api/rest/v3/opinions/6629003/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTEREDMANAGEMENT INVESTMENT COMPANY Investment Company Act file number: (811-07626) Exact name of registrant as specified in charter: Putnam Municipal Opportunities Trust Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109 Name and address of agent for service: Robert T. Burns, Vice PresidentOne Post Office SquareBoston, Massachusetts 02109 Copy to: John W. Gerstmayr, Esq.Ropes & Gray LLP800 Boylston StreetBoston, Massachusetts 02199-3600 Registrant’s telephone number, including area code: (617) 292-1000 Date of fiscal year end: April 30, 2013 Date of reporting period: July 31, 2012 Item 1. Schedule of Investments: Putnam Municipal Opportunities Trust The fund's portfolio 7/31/12 (Unaudited) Key to holding's abbreviations AGM — Assured Guaranty Municipal Corporation AGO — Assured Guaranty, Ltd. AMBAC — AMBAC Indemnity Corporation COP — Certificates of Participation FGIC — Financial Guaranty Insurance Company FNMA Coll. — Federal National Mortgage Association Collateralized FRB — Floating Rate Bonds: the rate shown is the current interest rate at the close of the reporting period G.O. Bonds — General Obligation Bonds NATL — National Public Finance Guarantee Corp. SGI — Syncora Guarantee, Inc. U.S. Govt. Coll. — U.S. Government Collateralized VRDN — Variable Rate Demand Notes, which are floating-rate securities with long-term maturities, that carry coupons that reset every one or seven days. The rate shown is the current interest rate at the close of the reporting period. MUNICIPAL BONDS AND NOTES (138.1%) (a) Rating (RAT) Principal amount Value Alabama (0.1%) Selma, Indl. Dev. Board Rev. Bonds (Gulf Opportunity Zone Intl. Paper Co.), Ser. A, 5.8s, 5/1/34 BBB $750,000 $838,568 Arizona (3.4%) Casa Grande, Indl. Dev. Auth. Rev. Bonds (Casa Grande Regl. Med. Ctr.), Ser. A, 7 5/8s, 12/1/29 BB-/P 3,025,000 3,141,613 Cochise Cnty., Indl. Dev. Auth. Rev. Bonds (Sierra Vista Cmnty. Hosp.), Ser. A, 6 3/4s, 12/1/26 BBB+/P 395,000 395,698 Coconino Cnty., Poll. Control Rev. Bonds (Tucson Elec. Pwr. Co. - Navajo), Ser. A, 5 1/8s, 10/1/32 Baa3 1,500,000 1,584,015 Glendale, Indl. Dev. Auth. Rev. Bonds (Midwestern U.), 5 1/8s, 5/15/40 A- 2,125,000 2,273,134 Maricopa Cnty., Poll. Control Rev. Bonds (El Paso Elec. Co.), Ser. A, 7 1/4s, 2/1/40 Baa2 2,400,000 2,869,511 Phoenix, Civic Impt. Corp. Arpt. Rev. Bonds, Ser. A, 5s, 7/1/40 A1 1,000,000 1,097,770 Pima Cnty., Indl. Dev. Auth. Rev. Bonds (Tucson Elec. Pwr. Co.), 5 3/4s, 9/1/29 Baa3 800,000 850,824 (Horizon Cmnty. Learning Ctr.), 5.05s, 6/1/25 BBB 1,550,000 1,494,571 Pinal Cnty., Elec. Rev. Bonds (Dist. No. 3), 5 1/4s, 7/1/36 A 500,000 548,410 Salt River Agricultural Impt. & Pwr. Dist. Rev. Bonds, Ser. A, 5s, 12/1/31 Aa1 3,000,000 3,615,000 Tempe, Indl. Dev. Auth. Lease Rev. Bonds (ASU Foundation), AMBAC, 5s, 7/1/28 AA/P 500,000 504,770 U. Med. Ctr. Corp. AZ Hosp. Rev. Bonds, 6 1/2s, 7/1/39 Baa1 1,000,000 1,165,360 California (24.2%) ABC Unified School Dist. G.O. Bonds, Ser. B, FGIC, zero %, 8/1/20 Aa3 1,500,000 1,151,940 Bay Area Toll Auth. of CA Rev. Bonds (San Francisco Bay Area), Ser. F-1, 5s, 4/1/39 AA 2,500,000 2,755,700 Burbank, Unified School Dist. G.O. Bonds (Election of 1997), Ser. C, NATL, FGIC, zero %, 8/1/23 AA- 1,000,000 659,660 CA Edl. Fac. Auth. Rev. Bonds (Claremont Graduate U.), Ser. A, 5s, 3/1/42 A3 2,000,000 2,076,060 (U. of the Pacific), 5s, 11/1/21 A2 1,500,000 1,639,650 (Loyola-Marymount U.), NATL, zero %, 10/1/21 A2 1,300,000 948,571 CA Hsg. Fin. Agcy. Rev. Bonds (Home Mtge.) Ser. E, 4.8s, 8/1/37 Baa2 5,000,000 4,688,750 Ser. K, 4 5/8s, 8/1/26 Baa2 2,500,000 2,426,025 CA Muni. Fin. Auth. COP (Cmnty. Hosp. Central CA), 5 1/4s, 2/1/37 Baa2 1,800,000 1,859,544 CA Poll. Control Fin. Auth. Rev. Bonds (San Jose Wtr. Co.), 5.1s, 6/1/40 A 3,500,000 3,793,090 (Pacific Gas & Electric Corp.), Class D, FGIC, 4 3/4s, 12/1/23 A3 2,500,000 2,703,350 CA Poll. Control Fin. Auth. Solid Waste Disp. FRB (Waste Management, Inc.), Ser. C, 5 1/8s, 11/1/23 BBB 850,000 924,146 CA Poll. Control Fin. Auth. Wtr. Fac. Rev. Bonds (American Wtr. Cap. Corp.), 5 1/4s, 8/1/40 BBB+ 1,000,000 1,035,420 CA State G.O. Bonds 6 1/2s, 4/1/33 A1 12,000,000 15,087,360 5 1/2s, 3/1/40 A1 7,450,000 8,578,526 5s, 4/1/42 A1 4,000,000 4,381,520 5s, 10/1/29 A1 4,000,000 4,446,560 CA State Pub. Wks. Board Rev. Bonds Ser. I-1, 6 1/8s, 11/1/29 A2 1,000,000 1,215,870 Ser. A-1, 6s, 3/1/35 A2 1,600,000 1,891,040 (Dept. of Forestry & Fire), Ser. E, 5s, 11/1/32 A2 1,575,000 1,673,248 (Capital Projects), Ser. A, 5s, 4/1/29 A2 2,000,000 2,216,340 CA Statewide Cmnty. Dev. Auth. COP (The Internext Group), 5 3/8s, 4/1/30 BBB 5,250,000 5,253,727 CA Statewide Cmnty. Dev. Auth. Rev. Bonds (Irvine, LLC-UCI East Campus), 6s, 5/15/40 Baa2 2,000,000 2,175,500 (Sutter Hlth.), Ser. A, 5s, 11/15/43 Aa3 2,485,000 2,597,966 Cathedral City, Impt. Board Act of 1915 Special Assmt. Bonds (Cove Impt. Dist.), Ser. 04-02, 5.05s, 9/2/35 BB+/P 775,000 768,707 Chula Vista COP, NATL, 5s, 8/1/32 A1 4,000,000 4,045,240 Chula Vista, Indl. Dev. Rev. Bonds (San Diego Gas), Ser. B, 5s, 12/1/27 Aa3 1,915,000 2,121,705 Foothill-De Anza, Cmnty. College Dist. G.O. Bonds, Ser. C, 5s, 8/1/40 Aaa 2,250,000 2,604,352 Foothill/Eastern Corridor Agcy. Rev. Bonds, Ser. A, zero %, 1/1/28 (Escrowed to maturity) Aaa 13,000,000 8,770,580 Golden State Tobacco Securitization Corp. Rev. Bonds Ser. 03 A-1, 6 1/4s, 6/1/33 (Prerefunded 6/1/13) Aaa 555,000 582,423 Ser. A-1, 5s, 6/1/33 B3 1,050,000 843,980 Ser. S-B, zero %, 6/1/47 CCC+ 6,000,000 358,020 Los Angeles, Dept. Arpt. Rev. Bonds (Los Angeles Intl. Arpt.), Ser. D, 5s, 5/15/40 AA 3,500,000 3,912,965 M-S-R Energy Auth. Rev. Bonds, Ser. B, 6 1/2s, 11/1/39 A- 3,000,000 3,791,940 Metro. Wtr. Dist. Rev. Bonds (Southern CA Wtr. Wks.), 5 3/4s, 8/10/18 AAA 6,000,000 7,189,680 Orange Cnty., Cmnty. Fac. Dist. Special Tax Rev. Bonds (Ladera Ranch No. 02-1), Ser. A, 5.55s, 8/15/33 BBB-/P 900,000 904,860 Redwood City, Elementary School Dist. G.O. Bonds, FGIC, NATL, zero %, 8/1/21 A+ 1,990,000 1,391,169 Rocklin, Unified School Dist. G.O. Bonds, FGIC, NATL, zero %, 8/1/27 Aa2 2,000,000 1,093,080 Sacramento Cnty., Arpt. Syst. Rev. Bonds, 5s, 7/1/40 A2 1,350,000 1,496,718 Sacramento, Special Tax Rev. Bonds (North Natomas Cmnty. Fac.), Ser. 97-01 5s, 9/1/20 BB+/P 1,195,000 1,214,740 5s, 9/1/29 BB+/P 1,180,000 1,183,185 5s, 9/1/18 BB+/P 1,030,000 1,051,135 San Bernardino Cnty., COP (Med. Ctr. Fin.), Ser. A, NATL, 6 1/2s, 8/1/17 Baa2 3,795,000 4,127,632 San Diego Cnty., Regl. Arpt. Auth. Rev. Bonds, Ser. A, 5s, 7/1/40 A2 3,750,000 4,095,037 San Diego, Unified School Dist. G.O. Bonds (Election of 2008), Ser. C zero %, 7/1/40 Aa2 5,000,000 1,219,400 zero %, 7/1/38 Aa2 5,000,000 1,373,250 San Francisco City & Cnty. Arpt. Comm. Intl. Arpt. Rev. Bonds, 5s, 5/1/28 A1 575,000 679,512 San Juan, Unified School Dist. G.O. Bonds, AGM, zero %, 8/1/19 Aa2 1,000,000 836,430 Sunnyvale, Cmnty. Fac. Dist. Special Tax Rev. Bonds, 7.65s, 8/1/21 B+/P 540,000 540,832 Tuolumne Wind Project Auth. Rev. Bonds (Tuolumne Co.), Ser. A, 5 7/8s, 1/1/29 A+ 1,585,000 1,895,881 Turlock, Irrigation Dist. Rev. Bonds, Ser. A, 5s, 1/1/40 A+ 4,000,000 4,372,200 Colorado (2.1%) CO Hlth. Fac. Auth. Rev. Bonds (Christian Living Cmntys.), Ser. A, 5 3/4s, 1/1/26 BB-/P 325,000 340,678 (Evangelical Lutheran Good Samaritan Society), 5s, 12/1/33 A3 1,650,000 1,787,099 (Evangelical Lutheran), 5s, 6/1/29 A3 850,000 897,762 CO Hsg. & Fin. Auth. Rev. Bonds (Single Family Mtge.), Ser. A-3, Class III, 5 1/4s, 5/1/33 A2 1,490,000 1,542,448 CO Springs, Hosp. Rev. Bonds, 6 3/8s, 12/15/30 A3 3,280,000 3,286,985 E-ub. Hwy. Auth. Rev. Bonds, Ser. C1, NATL, 5 1/2s, 9/1/24 Baa2 1,250,000 1,361,950 Lower CO River Auth. Rev. Bonds 5 3/4s, 5/15/37 A 2,350,000 2,582,768 U.S. Govt. Coll., 5 3/4s, 5/15/37 (Prerefunded 5/15/15) A1 50,000 57,396 Delaware (0.5%) DE St. Econ. Dev. Auth. Rev. Bonds (Delmarva Pwr.), 5.4s, 2/1/31 BBB+ 1,100,000 1,222,760 DE State Hsg. Auth. Rev. Bonds (Single Family Mtge.), Ser. B, zero %, 1/1/40 A3 8,725,000 1,627,561 District of Columbia (1.9%) DC Rev. Bonds (Howard U.), Ser. A, 6 1/2s, 10/1/41 A3 3,000,000 3,556,320 DC U. Rev. Bonds (Gallaudet U.), 5 1/2s, 4/1/34 A+ 1,000,000 1,148,270 DC Wtr. & Swr. Auth. Pub. Util. Rev. Bonds, FGIC, NATL, 5s, 10/1/28 (Prerefunded 10/1/13) AA 3,000,000 3,165,480 Metro. Washington, Arpt. Auth. Dulles Toll Rd. Rev. Bonds (First Sr. Lien), Ser. A, 5s, 10/1/39 A2 2,000,000 2,197,780 (Metrorail), Ser. A, zero %, 10/1/37 Baa1 3,700,000 919,635 Florida (4.9%) Brevard Cnty., Hlth. Care Fac. Auth. Rev. Bonds (Health First, Inc.), 7s, 4/1/39 A3 3,000,000 3,711,330 Escambia Cnty., Env. Impt. Rev. Bonds (Intl. Paper Co.), Ser. A, 5s, 8/1/26 BBB 2,500,000 2,501,475 FL State Board of Ed. G.O. Bonds (Capital Outlay 2011), Ser. F, 5s, 6/1/30 AAA 1,000,000 1,188,190 FL State Muni. Pwr. Agcy. Rev. Bonds, Ser. A, 5s, 10/1/31 A2 1,700,000 1,881,832 Halifax, Hosp. Med. Ctr. Rev. Bonds, Ser. A, 5 3/8s, 6/1/46 A- 4,200,000 4,416,552 Lakeland, Retirement Cmnty. 144A Rev. Bonds (1st Mtge. - Carpenters), 6 3/8s, 1/1/43 BBB-/F 340,000 353,083 Lee Cnty., Rev. Bonds, SGI, 5s, 10/1/25 Aa2 2,500,000 2,808,600 Marco Island, Util. Sys. Rev. Bonds, Ser. A, 5s, 10/1/40 Aa3 1,500,000 1,649,520 Miami Beach, Hlth. Fac. Auth. Hosp. Rev. Bonds (Mount Sinai Med. Ctr.) Ser. A, 6.8s, 11/15/31 Baa2 550,000 555,440 5 3/8s, 11/15/28 BBB-/F 990,000 991,723 Miami-Dade Cnty., Aviation Rev. Bonds (Miami Intl. Arpt.), Ser. A-1, 5 3/8s, 10/1/41 A2 3,000,000 3,391,620 Miami-Dade Cnty., Expressway Auth. Toll Syst. Rev. Bonds, Ser. A, 5s, 7/1/40 A 1,000,000 1,092,010 Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds (Acts Retirement-Life Cmnty.), 5 1/2s, 11/15/33 BBB+ 1,000,000 1,094,480 South Bay, Cmnty. Dev. Dist. Special Assmt. Bonds, Ser. B-1, 5 1/8s, 11/1/12 (In default) (NON) D/P 2,025,000 668,250 South Broward, Hosp. Dist. Rev. Bonds, NATL, 4 3/4s, 5/1/28 Aa3 1,500,000 1,592,700 Tolomato, Cmnty. Dev. Dist. Special Assmt. Bonds, 5.4s, 5/1/37 CCC/P 445,000 396,099 Georgia (3.3%) Atlanta, Arpt. Rev. Bonds Ser. C, 5 7/8s, 1/1/24 A1 500,000 638,620 (Hartsfield-Jackson Intl. Arpt.), Ser. A, 5s, 1/1/35 A1 1,250,000 1,393,875 Atlanta, Wtr. & Waste Wtr. Rev. Bonds, Ser. A, 6 1/4s, 11/1/39 A1 4,500,000 5,488,245 Fulton Cnty., Dev. Auth. Rev. Bonds (GA Tech Athletic Assn.), Ser. A, 5s, 10/1/42 A2 1,350,000 1,509,584 Gainesville & Hall Cnty., Hosp. Auth. Rev. Bonds (Northeast GA Hlth. Care), Ser. B, 5 1/4s, 2/15/45 A+ 7,500,000 8,201,400 Marietta, Dev. Auth. Rev. Bonds (U. Fac. - Life U., Inc.), 7s, 6/15/39 Ba3 1,400,000 1,484,546 Hawaii (—%) HI State Hsg. Fin. & Dev. Corp. Rev. Bonds, Ser. A, FNMA Coll., 5 3/4s, 7/1/30 Aaa 15,000 15,005 Illinois (7.2%) Chicago, O'Hare Intl. Arpt. Rev. Bonds, Ser. A 5 3/4s, 1/1/39 A2 4,000,000 4,711,320 5 5/8s, 1/1/35 A2 1,000,000 1,177,560 Chicago, Waste Wtr. Transmission Rev. Bonds, Ser. A, NATL, zero %, 1/1/24 Aa2 1,600,000 1,042,448 IL Fin. Auth. Rev. Bonds (Silver Cross Hosp. & Med. Ctr.), 7s, 8/15/44 BBB- 2,500,000 3,005,025 (IL Rush U. Med. Ctr.), Ser. D, 6 5/8s, 11/1/39 A2 1,490,000 1,806,342 (IL Rush U. Med Ctr.), Ser. C, 6 5/8s, 11/1/39 A2 1,425,000 1,727,542 (Elmhurst Memorial), Ser. A, 5 5/8s, 1/1/37 Baa2 3,000,000 3,203,400 (Alexian), Ser. A, AGM, 5 1/4s, 1/1/22 Aa3 3,775,000 4,260,880 IL State G.O. Bonds 5s, 3/1/34 A+ 750,000 821,670 5s, 8/1/21 A+ 750,000 861,743 Kendall & Kane Cntys., Cmnty. United School Dist. G.O. Bonds (No. 115 Yorkville), NATL, FGIC, zero %, 1/1/21 Aa3 1,075,000 799,596 Lake Cnty., Cmnty. Construction School Dist. G.O. Bonds (No. 073 Hawthorn), NATL, FGIC zero %, 12/1/21 AA+ 1,805,000 1,298,770 zero %, 12/1/21 (Escrowed to maturity) AA+ 145,000 121,104 zero %, 12/1/20 AA+ 1,495,000 1,129,951 zero %, 12/1/20 (Escrowed to maturity) AA+ 155,000 134,064 Metro. Pier & Exposition Auth. Dedicated State Tax Rev. Bonds (McCormick), Ser. A, NATL, zero %, 12/15/30 AAA 18,500,000 8,184,400 Railsplitter, Tobacco Settlement Auth. Rev. Bonds, 6s, 6/1/28 A- 4,150,000 4,859,609 Southern IL U. Rev. Bonds (Hsg. & Auxiliary), Ser. A, NATL zero %, 4/1/25 A2 1,870,000 1,039,757 zero %, 4/1/21 A2 1,880,000 1,308,292 Indiana (2.8%) IN Bk. Special Program Gas Rev. Bonds, Ser. A, 5 1/4s, 10/15/21 A2 180,000 207,031 IN State Fin. Auth. Rev. Bonds (U.S. Steel Corp.), 6s, 12/1/26 BB 500,000 522,470 (BHI Sr. Living), 5 3/4s, 11/15/41 A-/F 1,000,000 1,106,720 (Duke Energy Ind.), Ser. C, 4.95s, 10/1/40 A2 4,000,000 4,319,680 IN State Fin. Auth. VRDN, Ser. A-2, 0.17s, 2/1/37 VMIG1 5,250,000 5,250,000 Jasper Cnty., Indl. Poll. Control Rev. Bonds AMBAC, 5.7s, 7/1/17 Baa2 1,375,000 1,573,028 NATL, 5.6s, 11/1/16 Baa2 1,550,000 1,758,351 U. Southern IN Rev. Bonds (Student Fee), Ser. J, AGO, 5 3/4s, 10/1/28 Aa3 1,000,000 1,181,640 Kentucky (0.1%) Louisville & Jefferson Cnty., Metro. Govt. College Rev. Bonds (Bellarmine U., Inc.), Ser. A, 6s, 5/1/38 Baa3 290,000 315,297 Maine (0.3%) Rumford, Solid Waste Disp. Rev. Bonds (Boise Cascade Corp.), 6 7/8s, 10/1/26 B2 1,950,000 1,919,483 Maryland (0.2%) MD Econ. Dev. Corp. Poll. Control Rev. Bonds (Potomac Electric Power Co.), 6.2s, 9/1/22 A 650,000 801,678 MD State Indl. Dev. Fin. Auth. Rev. Bonds (Synagro-Baltimore), Ser. A, 5 1/2s, 12/1/15 BBB+/F 500,000 535,515 Massachusetts (6.4%) MA State Dept. Trans. Rev. Bonds (Metro Hwy. Syst.), Ser. B, 5s, 1/1/37 A 2,500,000 2,756,575 MA State Dev. Fin. Agcy. Rev. Bonds (Sabis Intl.), Ser. A, 8s, 4/15/39 BBB 575,000 707,089 (Linden Ponds, Inc. Fac.), Ser. A-1, 6 1/4s, 11/15/26 B-/P 960,369 863,074 (Carleton-Willard Village), 5 5/8s, 12/1/30 A- 750,000 817,755 (Linden Ponds, Inc. Fac.), Ser. A-2, 5 1/2s, 11/15/46 B-/P 51,190 35,571 (Berklee College of Music), 5 1/4s, 10/1/41 A2 2,000,000 2,225,760 (Emerson College), Ser. A, 5s, 1/1/40 Baa1 4,000,000 4,259,520 (Linden Ponds, Inc. Fac.), Ser. B, zero %, 11/15/56 B-/P 254,614 3,399 MA State Dev. Fin. Agcy. Solid Waste Disp. FRB (Dominion Energy Brayton Point), 5s, 2/1/36 A- 1,000,000 1,029,140 MA State Dev. Fin. Agcy. Solid Waste Disp. Mandatory Put Bonds (5/1/19) (Dominion Energy Brayton 1), Ser. 1, 5 3/4s, 12/1/42 A- 1,500,000 1,813,200 MA State Hlth. & Edl. Fac. Auth. Rev. Bonds (Civic Investments, Inc.), Ser. A, U.S. Govt. Coll., 9s, 12/15/15 (Prerefunded 12/15/12) AAA/P 1,485,000 1,555,226 (Jordan Hosp.), Ser. E, 6 3/4s, 10/1/33 BB- 1,500,000 1,533,210 (Quincy Med. Ctr.), Ser. A, 6 1/4s, 1/15/28 (In default) (NON) D/P 465,692 466 (Suffolk U.), Ser. A, 5 3/4s, 7/1/39 Baa2 1,175,000 1,319,149 (Baystate Med. Ctr.), Ser. I, 5 3/4s, 7/1/36 A+ 1,500,000 1,671,450 (Springfield College), 5 5/8s, 10/15/40 Baa1 550,000 595,738 (Care Group), Ser. B-2, NATL, 5 3/8s, 2/1/26 A3 700,000 791,000 (Northeastern U.), Ser. A, 5s, 10/1/35 A2 3,250,000 3,634,930 MA State Hsg. Fin. Agcy. Rev. Bonds, Ser. C, 5.35s, 12/1/42 Aa3 1,500,000 1,603,650 MA State Port Auth. Rev. Bonds, U.S. Govt. Coll., 13s, 7/1/13 (Prerefunded 9/4/12) Aaa 600,000 669,336 MA State Port Auth. Special Fac. Rev. Bonds (Conrac), Ser. A, 5 1/8s, 7/1/41 A 2,855,000 3,138,587 Metro. Boston Trans. Pkg. Corp. Rev. Bonds 5s, 7/1/41 A1 2,600,000 2,854,514 (Systemwide Pkg.), 5 1/4s, 7/1/33 A1 2,500,000 2,848,800 Michigan (6.8%) Detroit, G.O. Bonds Ser. A-1, AMBAC, 5 1/4s, 4/1/24 B 1,435,000 1,305,104 (Cap. Impt.), Ser. A-1, 5s, 4/1/15 B 1,300,000 1,241,968 Detroit, Rev. Bonds, Ser. A, NATL, FGIC, 5s, 7/1/30 A+ 4,505,000 4,508,424 Detroit, City School Dist. G.O. Bonds, Ser. A, AGM, 6s, 5/1/29 Aa2 1,000,000 1,240,390 Detroit, Wtr. & Swr. Dept. Rev. Bonds, Ser. A, 5s, 7/1/32 A+ 1,200,000 1,259,256 Detroit, Wtr. Supply Syst. Rev. Bonds, Ser. B, AGM, 6 1/4s, 7/1/36 AA- 1,425,000 1,663,659 Flint, Hosp. Bldg. Auth. Rev. Bonds (Hurley Med. Ctr.), 7 1/2s, 7/1/39 Ba1 500,000 582,950 King Cnty., Wtr & Swr. Rev. Bonds, 5s, 1/1/45 AA+ 4,000,000 4,484,760 MI Fin. Auth. Rev. Bonds (Revolving Fund-Clean Water), 5s, 10/1/31 AAA 1,500,000 1,806,225 (Unemployment Oblig.), Ser. B, 5s, 7/1/22 Aaa 1,000,000 1,151,380 MI Higher Ed. Fac. Auth. Rev. Bonds (Kalamazoo College), 5 1/2s, 12/1/18 (Prerefunded 12/1/12) A1 500,000 508,730 MI Pub. Pwr. Agcy. Rev. Bonds, Ser. A, 5s, 1/1/27 A2 1,900,000 2,118,728 MI State Hosp. Fin. Auth. Rev. Bonds Ser. A, 6 1/8s, 6/1/39 A1 2,500,000 2,898,650 (Henry Ford Hlth.), 5 3/4s, 11/15/39 A1 2,000,000 2,247,320 (Henry Ford Hlth. Syst.), Ser. A, 5 1/4s, 11/15/46 A1 4,500,000 4,759,065 (Sparrow Hosp.), 5s, 11/15/31 A1 1,350,000 1,435,442 MI State Strategic Fund Ltd. Mandatory Put Bonds (6/2/14) (Dow Chemical), Ser. A-1, 6 3/4s,12/1/28 BBB 100,000 109,614 MI State Strategic Fund, Ltd. Rev. Bonds (Worthington Armstrong Venture), U.S. Govt. Coll., 5 3/4s, 10/1/22 (Escrowed to maturity) AAA/P 1,650,000 2,102,975 MI Tobacco Settlement Fin. Auth. Rev. Bonds, Ser. A, 6s, 6/1/34 B- 575,000 482,442 Monroe Cnty., Hosp. Fin. Auth. Rev. Bonds (Mercy Memorial Hosp. Corp.), 5 3/8s, 6/1/26 BBB 750,000 793,868 Wayne Cnty., Arpt. Auth. Rev. Bonds, Ser. A, 5s, 12/1/21 A2 2,000,000 2,272,700 Minnesota (1.0%) North Oaks, Sr. Hsg. Rev. Bonds (Presbyterian Homes North Oaks), 6 1/8s, 10/1/39 BB/P 995,000 1,059,237 St. Paul, Hsg. & Redev. Auth. Hlth. Care Fac. Rev. Bonds (HealthPartners Oblig. Group), 5 1/4s, 5/15/36 A3 3,500,000 3,677,485 St. Paul, Hsg. & Redev. Auth. Hosp. Rev. Bonds (Healtheast), 6s, 11/15/35 Ba1 1,150,000 1,200,232 Mississippi (2.0%) Jackson Cnty., VRDN (Chevron USA, Inc.), 0.16s, 6/1/23 P-1 1,500,000 1,500,000 MS Bus. Fin. Corp. Rev. Bonds (Syst. Energy Resources, Inc.) 5.9s, 5/1/22 BBB 3,000,000 3,004,710 5 7/8s, 4/1/22 BBB 2,330,000 2,335,312 MS Bus. Fin. Corp. Gulf Opportunity Zone Rev. Bonds, Ser. A, 5s, 5/1/37 A3 2,250,000 2,441,228 Warren Cnty., Gulf Opportunity Zone Rev. Bonds (Intl. Paper Co.), Ser. A, 6 1/2s, 9/1/32 BBB 2,000,000 2,278,900 Missouri (0.1%) MO State Hlth. & Edl. Fac. Auth. VRDN (Washington U. (The)), Ser. B, 0.17s, 9/1/30 VMIG1 850,000 850,000 Montana (0.3%) MT Fac. Fin. Auth. VRDN (Sisters of Charity of Leavenworth), Ser. A, 0.17s, 12/1/25 VMIG1 1,750,000 1,750,000 Nebraska (0.8%) Central Plains, Energy Rev. Bonds (NE Gas No. 1), Ser. A, 5 1/4s, 12/1/18 B2 3,000,000 3,315,240 Lancaster Cnty., Hosp. Auth. Rev. Bonds (Immanuel Oblig. Group), 5 5/8s, 1/1/40 A-/F 925,000 1,030,589 Nevada (8.2%) Clark Cnty., Ltd. Tax Bond, 5s, 6/1/33 (T) AA+ 32,290,000 35,315,702 Clark Cnty., Arpt. Rev. Bonds, Ser. A-2, NATL, FGIC, 5 1/8s, 7/1/26 A1 5,105,000 5,453,263 Clark Cnty., Impt. Dist. Special Assmt. Bonds (Summerlin No. 151), 5s, 8/1/25 BB-/P 2,060,000 1,628,389 Clark Cnty., Indl. Dev. Rev. Bonds (Southwest Gas Corp.), Ser. A, AMBAC, 5 1/4s, 7/1/34 Baa1 3,000,000 3,075,450 Henderson G.O. Bonds (Ltd. Tax -Swr.), NATL, FGIC, 5s, 6/1/29 Aa2 1,000,000 1,065,990 Henderson, Local Impt. Dist. Special Assmt. Bonds (No. T-17), 5s, 9/1/25 BB+/P 600,000 595,998 New Hampshire (1.4%) NH Hlth. & Ed. Fac. Auth. VRDN (U. Syst. of NH), Ser. B, 0.17s, 7/1/33 VMIG1 8,190,000 8,190,000 New Jersey (7.0%) NJ Econ. Dev. Auth. Rev. Bonds (First Mtge. Presbyterian Home), Ser. A, 6 3/8s, 11/1/31 BB/P 1,000,000 999,880 (Cigarette Tax), 5 3/4s, 6/15/29 (Prerefunded 6/15/14) Aaa 5,000,000 5,507,850 5s, 6/15/26 Baa1 500,000 557,240 NJ Econ. Dev. Auth. Wtr. Fac. Rev. Bonds (NJ American Wtr. Co.) Ser. A, 5.7s, 10/1/39 A2 3,900,000 4,298,853 Ser. B, 5.6s, 11/1/34 A2 500,000 552,795 NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds (St. Joseph Hlth. Care Syst.), 6 5/8s, 7/1/38 BBB- 2,750,000 3,226,025 (St. Peter's U. Hosp.), 5 3/4s, 7/1/37 Baa3 2,500,000 2,688,700 (Holy Name Hosp.), 5s, 7/1/36 Baa2 5,000,000 5,097,500 NJ State Edl. Fac. Auth. Rev. Bonds (Fairleigh Dickinson), Ser. C, 6s, 7/1/20 BBB/F 1,500,000 1,606,065 (Georgian Court U.), Ser. D, 5 1/4s, 7/1/37 Baa1 1,000,000 1,061,610 (Georgian Court U.), Ser. D, 5 1/4s, 7/1/27 Baa1 500,000 539,855 NJ State Higher Ed. Assistance Auth. Rev. Bonds (Student Loan), Ser. 1A, 5s, 12/1/22 Aa2 2,500,000 2,788,100 NJ State Trans. Trust Fund Auth. Rev. Bonds (Trans. Syst.), Ser. A, zero %, 12/15/30 A1 13,000,000 5,972,460 Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. 1A, 4 3/4s, 6/1/34 B2 3,000,000 2,418,840 Union Cnty., Util. Auth. Resource Recvy. Fac. Lease Rev. Bonds (Covanta Union), Ser. A, 5 1/4s, 12/1/31 AA+ 2,300,000 2,569,330 New York (10.1%) Broome Cnty., Indl. Dev. Agcy. Continuing Care Retirement Rev. Bonds (Good Shepard Village), Ser. A, 6 7/8s, 7/1/40 B/P 320,000 339,584 Metro. Trans. Auth. Rev. Bonds, Ser. D 5s, 11/15/36 A2 2,000,000 2,242,680 5s, 11/15/29 (FWC) A2 3,000,000 3,504,240 NY City, G.O. Bonds, Ser. F, 5s, 8/1/30 Aa2 3,320,000 3,925,269 NY City, Indl. Dev. Agcy. Special Arpt. Fac. Rev. Bonds (Airis JFK I, LLC), Ser. A, 5 1/2s, 7/1/28 BBB- 2,100,000 2,099,937 NY City, Indl. Dev. Agcy. Special Fac. FRB (American Airlines - JFK Intl. Arpt.), 7 5/8s, 8/1/25 (In default) (NON) D/P 2,000,000 2,133,520 NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds (British Airways PLC), 5 1/4s, 12/1/32 BB 700,000 691,334 NY City, Muni. Wtr. & Swr. Fin. Auth. Rev. bonds 5s, 6/15/31 (T) AA+ 10,000,000 11,800,174 Ser. GG, 5s, 6/15/43 AA+ 2,000,000 2,269,320 NY City, Transitional Fin. Auth. Rev. Bonds (Future Tax), Ser. D-1, 5s, 11/1/32 AAA 3,000,000 3,550,260 NY Cntys., Tobacco Trust III Rev. Bonds (Tobacco Settlement), 6s, 6/1/43 A3 1,500,000 1,506,090 NY State Dorm. Auth. Lease Rev. Bonds (State U. Dorm Fac.), Ser. A, 5s, 7/1/35 Aa2 1,000,000 1,146,090 NY State Dorm. Auth. Non-State Supported Debt Rev. Bonds (Orange Regl. Med. Ctr.), 6 1/4s, 12/1/37 Ba1 2,300,000 2,512,727 NY State Dorm. Auth.Ser. C Rev bonds 5s, 3/15/31 (T) AAA 5,000,000 5,874,570 NY State Energy Research & Dev. Auth. Gas Fac. Rev. Bonds (Brooklyn Union Gas), 6.952s, 7/1/26 A3 6,000,000 6,015,060 Port Auth. NY & NJ Special Oblig. Rev. Bonds (JFK Intl. Air Term. - 6), NATL, 5.9s, 12/1/17 BBB 6,000,000 6,012,600 Seneca Cnty., Indl. Dev. Agcy. Solid Waste Disp. Mandatory Put Bonds (10/1/13) (Seneca Meadows, Inc.), 6 5/8s, 10/1/35 BB- 670,000 677,819 Troy, Cap. Res. Corp. Rev. Bonds (Rensselaer Polytechnic), Ser. A, 5 1/8s, 9/1/40 A3 1,385,000 1,534,940 North Carolina (1.3%) NC Eastern Muni. Pwr. Agcy. Syst. Rev. Bonds, Ser. C, 6 3/4s, 1/1/24 A- 1,000,000 1,246,930 NC Med. Care Cmnty. Hlth. Care Fac. Rev. Bonds (Deerfield), Ser. A, 6s, 11/1/33 BBB+/F 805,000 871,855 (First Mtge. - Presbyterian Homes), 5 3/8s, 10/1/22 BB/P 1,000,000 1,052,950 NC State Muni. Pwr. Agcy. Rev. Bonds (No. 1, Catawba Elec.), Ser. A, 5s, 1/1/30 A2 800,000 889,704 U. of NC Syst. Pool Rev. Bonds, Ser. C, 5 1/2s, 10/1/34 A3 3,000,000 3,368,910 North Dakota (0.5%) ND State Hsg. Fin. Agcy. Rev. Bonds (Hsg. Fin.), Ser. B, 4.8s, 7/1/37 Aa1 2,580,000 2,617,978 Ohio (7.1%) American Muni. Pwr. - Ohio, Inc. Rev. Bonds (Prairie State Energy Campus), Ser. A, 5 1/4s, 2/15/43 A1 1,000,000 1,098,940 (Prairie Street Energy Campus), Ser. A, 5 1/4s, 2/15/33 Aa3 5,000,000 5,615,650 Buckeye, Tobacco Settlement Fin. Auth. Rev. Bonds, Ser. A-2 5 3/4s, 6/1/34 B3 9,000,000 7,319,880 5 1/8s, 6/1/24 B3 2,050,000 1,719,233 Cleveland, Arpt. Syst. Rev. Bonds, Ser. A, 5s, 1/1/29 A- 500,000 558,830 Erie Cnty., OH Hosp. Fac. Rev. Bonds (Firelands Regl. Med. Ctr.), Ser. A, 5 1/4s, 8/15/46 A- 2,500,000 2,567,475 Hickory Chase, Cmnty. Auth. Infrastructure Impt. Rev. Bonds (Hickory Chase), 7s, 12/1/38 (In default) (NON) D/P 644,000 377,957 Lake Cnty., Hosp. Fac. Rev. Bonds (Lake Hosp. Syst.), Ser. C, 6s, 8/15/43 Baa1 3,100,000 3,367,096 OH State Air Quality Dev. Auth. FRB (Columbus Southern Pwr. Co.), Ser. B, 5.8s, 12/1/38 Baa1 2,000,000 2,290,780 OH State Higher Edl. Fac. Comnty. Rev. Bonds (Kenyon College), 5s, 7/1/44 A1 5,000,000 5,381,700 (U. Hosp. Hlth. Syst.), Ser. 09-A, 6 3/4s, 1/15/39 (Prerefunded 1/15/15) A2 3,000,000 3,464,760 OH State Higher Edl. Fac. Comnty. VRDN (Cleveland Clinic Foundation), Ser. B-4, 0.16s, 1/1/43 VMIG1 1,300,000 1,300,000 Scioto Cnty., Hosp. Rev. Bonds (Southern Med. Ctr.), 5 1/2s, 2/15/28 A2 4,660,000 5,134,947 Southeastern OH Port Auth. Hosp. Fac. Rev. Bonds, 5 3/4s, 12/1/32 BB/P 625,000 651,644 Oregon (0.9%) Keizer, Special Assmt. Bonds (Keizer Station), Ser. A, 5.2s, 6/1/31 A1 2,200,000 2,406,426 Multnomah Cnty., Hosp. Fac. Auth. Rev. Bonds (Terwilliger Plaza), Ser. A, 5 1/4s, 12/1/26 BB/P 1,040,000 1,093,238 OR Hlth. Sciences U. Rev. Bonds, Ser. A, 5 3/4s, 7/1/39 A1 1,250,000 1,464,788 Pennsylvania (4.6%) Allegheny Cnty., Hosp. Dev. Auth. Rev. Bonds (Hlth. Syst.-West PA), Ser. A, 5 3/8s, 11/15/40 B- 1,500,000 1,224,915 Bucks Cnty., Indl. Dev. Auth. Rev. Bonds (US Steel Corp.), 6 3/4s, 6/1/26 BB 1,000,000 1,113,320 Bucks Cnty., Indl. Dev. Auth. Retirement Cmnty. Rev. Bonds (Ann's Choice, Inc.), Ser. A 5.4s, 1/1/15 BB/P 1,060,000 1,076,038 5.3s, 1/1/14 BB/P 710,000 720,899 Cumberland Cnty., Muni. Auth. Rev. Bonds (Presbyterian Homes), Ser. A, 5s, 1/1/17 BBB+ 1,320,000 1,399,332 Delaware River Port Auth. PA & NJ Rev. Bonds, Ser. D, 5s, 1/1/40 A3 1,200,000 1,308,396 Erie, Higher Ed. Bldg. Auth. Rev. Bonds (Mercyhurst College), 5 1/2s, 3/15/38 BBB 725,000 781,014 Franklin Cnty., Indl. Dev. Auth. Rev. Bonds (Chambersburg Hosp.), 5 3/8s, 7/1/42 A2 1,000,000 1,079,750 Lancaster, Higher Ed. Auth. College Rev. Bonds (Franklin & Marshall College), 5s, 4/15/29 AA- 1,000,000 1,109,560 Northampton Cnty., Hosp. Auth. Rev. Bonds (St. Luke's Hosp. - Bethlehem), Ser. A, 5 1/2s, 8/15/40 A3 1,250,000 1,331,688 PA Econ. Dev. Fin. Auth. Exempt Fac. Rev. Bonds (Amtrak), Ser. A, 5s, 11/1/32 A1 1,000,000 1,104,560 PA State Higher Edl. Fac. Auth. Rev. Bonds (Gwynedd Mercy College), Ser. KK1, 5 3/8s, 5/1/42 BBB- 500,000 525,305 (Widener U.), 5 3/8s, 7/15/29 BBB+ 750,000 777,525 (St. Joseph's U.), Ser. A, 5s, 11/1/40 A- 3,000,000 3,297,150 (Philadelphia U.), 5s, 6/1/30 Baa2 2,250,000 2,341,755 (Philadelphia U.), 5s, 6/1/22 Baa2 860,000 921,542 PA State Tpk. Comm. Oil Franchise Tax Rev. Bonds, Ser. C, zero %, 12/1/39 AA 5,000,000 1,477,950 Philadelphia, Arpt. Rev. Bonds, Ser. D, 5 1/4s, 6/15/25 A+ 2,750,000 3,118,775 Philadelphia, Hosp. & Higher Ed. Fac. Auth. Rev. Bonds (Hosp.-Graduate Hlth. Sys.), Ser. A, 6 1/4s, 7/1/13 (In default) (NON) D/P 1,462,206 146 Pittsburgh & Allegheny Cnty., Sports & Exhib. Auth. Hotel Rev. Bonds, AGM, 5s, 2/1/35 Aa3 1,225,000 1,331,685 Susquehanna, Area Regl. Arpt. Syst. Auth. Rev. Bonds, Ser. A, 6 1/2s, 1/1/38 Baa3 550,000 583,314 Puerto Rico (5.6%) Cmnwlth. of PR, G.O. Bonds Ser. C, 6 1/2s, 7/1/40 Baa1 5,000,000 5,839,200 Ser. B, 6s, 7/1/39 Baa1 5,000,000 5,484,550 Ser. C, 6s, 7/1/39 Baa1 2,500,000 2,742,275 Cmnwlth. of PR, Aqueduct & Swr. Auth. Rev. Bonds, Ser. A, 6s, 7/1/38 Baa2 1,125,000 1,202,659 Cmnwlth. of PR, Elec. Pwr. Auth. Rev. Bonds, Ser. XX, 5 1/4s, 7/1/40 Baa1 3,000,000 3,123,930 Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds, Ser. AA-2, 5.3s, 7/1/35 A3 875,000 921,121 Cmnwlth. of PR, Pub. Bldg. Auth. Mandatory Put Bonds (7/1/17) (Govt. Fac.), Ser. M-2, 5 3/4s, 7/1/34 Baa1 1,750,000 1,947,050 Cmnwlth. of PR, Sales Tax Fin. Corp. Rev. Bonds, Ser. A, zero %, 8/1/30 A+ 27,000,000 10,890,180 Rhode Island (—%) Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. A, 6 1/4s, 6/1/42 Ba1 200,000 204,912 South Carolina (0.9%) SC Hosp. Auth. Rev. Bonds (Med. U.), Ser. A, 6 1/2s, 8/15/32 (Prerefunded 8/15/12) AA+ 2,000,000 2,004,220 SC Jobs Econ. Dev. Auth. Hosp. Fac. Rev. Bonds (Palmetto Hlth.), Ser. C 6s, 8/1/20 (Prerefunded 8/1/13) Baa1 2,445,000 2,581,015 U.S. Govt. Coll., 6s, 8/1/20 (Prerefunded 8/1/13) Baa1 305,000 321,967 South Dakota (0.4%) SD Edl. Enhancement Funding Corp. SD Tobacco Rev. Bonds, Ser. B, 6 1/2s, 6/1/32 A3 2,450,000 2,542,733 Tennessee (0.7%) Johnson City, Hlth. & Edl. Fac. Board Hosp. Rev. Bonds (Mountain States Hlth. Alliance), 6s, 7/1/38 Baa1 3,450,000 3,992,340 Texas (15.1%) Abilene, Hlth. Fac. Dev. Corp. Retirement Fac. Rev. Bonds (Sears Methodist Retirement), 6s, 11/15/29 B+/P 814,000 614,212 Alliance, Arpt. Auth. Rev. Bonds (Federal Express Corp.), 4.85s, 4/1/21 Baa1 3,250,000 3,504,865 Brazos River Harbor Naval Dist. Env. FRB (Dow Chemical Co.), Ser. A-4, 5.95s, 5/15/33 BBB 400,000 443,620 Brazos River, Auth. Poll. Control Rev. Bonds (TXU Energy Co., LLC), 5s, 3/1/41 Ca 500,000 46,545 Brazos, Harbor Indl. Dev. Corp. Env. Fac. Mandatory Put Bonds (5/1/18) (Dow Chemical), 5.9s, 5/1/38 BBB 2,850,000 3,160,736 Dallas Cnty., Util. & Reclamation Dist. G.O. Bonds, Ser. B, AMBAC, 5 3/8s, 2/15/29 A3 4,000,000 4,301,400 Dallas, Area Rapid Transit Rev. Bonds Sr. Lien, 5s, 12/1/33 (T) AA+ 30,000,000 33,767,586 Harris Cnty., Cultural Ed. Fac. Fin. Corp. VRDN (Texas Med. Ctr.), Ser. B-1, 0.17s, 9/1/31 VMIG1 8,370,000 8,370,000 Houston, Util. Syst. Rev. Bonds, Ser. A, 5s, 11/15/33 AA 1,500,000 1,736,385 Love Field, Arpt. Modernization Corp. Special Fac. Rev. Bonds (Southwest Airlines Co.), 5 1/4s, 11/1/40 Baa3 1,750,000 1,886,937 Matagorda Cnty., Poll. Control Rev. Bonds (Dist. No. 1), Ser. A, AMBAC, 4.4s, 5/1/30 Baa2 1,500,000 1,573,680 North TX Thruway Auth. Rev. Bonds Ser. D, AGO, zero %, 1/1/28 Aa3 7,800,000 4,166,760 Rev. Bonds, Ser. B, zero %, 9/1/43 AA 2,000,000 318,500 North TX, Tollway Auth. Rev. Bonds Ser. A, 6s, 1/1/25 A2 1,300,000 1,534,675 (Toll 2nd Tier), Ser. F, 5 3/4s, 1/1/38 A3 2,000,000 2,192,140 North TX, Tollway Auth. stepped-coupon Rev. Bonds, zero %, (6.5s, 1/1/15) 2043 (STP) A2 4,000,000 4,245,840 Sam Rayburn, Muni. Pwr. Agcy. Rev. Bonds, 6s, 10/1/21 Baa2 2,350,000 2,361,468 Tarrant Cnty., Cultural Ed. Fac. Fin. Corp. Retirement Fac. Rev. Bonds (Buckner Retirement Svcs., Inc.), 5 1/4s, 11/15/37 A- 1,100,000 1,147,795 TX Muni. Gas Acquisition & Supply Corp. I Rev. Bonds, Ser. A, 5s, 12/15/15 A- 3,000,000 3,215,550 TX State Tpk. Auth. Rev. Bonds (Central Texas Tpk. Syst.), Ser. A, AMBAC, 5 1/2s, 8/15/39 Baa1 8,000,000 8,007,680 Utah (0.3%) Salt Lake City, Hosp. Rev. Bonds, AMBAC, 6 3/4s, 5/15/20 (Escrowed to maturity) AAA/P 1,700,000 1,705,219 Virginia (0.6%) Henrico Cnty., Econ. Dev. Auth. Res. Care Fac. Rev. Bonds (United Methodist), Ser. A, 6.7s, 6/1/27 BB+/P 735,000 734,890 Washington Cnty., Indl. Dev. Auth. Hosp. Fac. Rev. Bonds (Mountain States Hlth. Alliance), Ser. C, 7 3/4s, 7/1/38 Baa1 2,100,000 2,611,202 Washington (2.4%) WA State G.O. Bonds (Sr. 520 Corridor-Motor Vehicle Tax), Ser. C, 5s, 6/1/28 (T) AA+ 5,000,000 6,014,379 Tobacco Settlement Auth. of WA Rev. Bonds 6 5/8s, 6/1/32 Baa1 900,000 936,252 6 1/2s, 6/1/26 A3 4,695,000 4,895,664 WA State Hlth. Care Fac. Auth. Rev. Bonds (Kadlec Med. Ctr.), 5 1/2s, 12/1/39 Baa2 2,000,000 2,147,560 West Virginia (0.8%) Harrison Cnty., Cmnty. Solid Waste Disp. Rev. Bonds (Allegheny Energy), Ser. D, 5 1/2s, 10/15/37 BBB 3,450,000 3,634,265 WV State Hosp. Fin. Auth. Rev. Bonds (Thomas Hlth. Syst.), 6 3/4s, 10/1/43 B/P 935,000 976,486 Wisconsin (0.9%) WI State Rev. Bonds, Ser. A, 6s, 5/1/27 Aa3 2,500,000 3,176,725 WI State Hlth. & Edl. Fac. Auth. Rev. Bonds (Prohealth Care, Inc.), 6 5/8s, 2/15/39 A1 1,500,000 1,787,055 Wyoming (0.8%) Campbell Cnty., Solid Waste Fac. Rev. Bonds (Basin Elec. Pwr. Co-op), Ser. A, 5 3/4s, 7/15/39 A1 2,000,000 2,280,740 WY Muni. Pwr. Agcy. Pwr. Supply Rev. Bonds Ser. A, 5 1/2s, 1/1/33 A2 950,000 1,054,757 (Pwr. Supply), Ser. A, 5 1/2s, 1/1/28 A2 1,000,000 1,128,780 TOTAL INVESTMENTS Total investments (cost $717,838,727) (b) Notes to the fund's portfolio Unless noted otherwise, the notes to the fund's portfolio are for the close of the fund's reporting period, which ran from May 1, 2012 through July 31, 2012 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures and references to “Putnam Management” represent Putnam Investment Management, LLC, the fund's manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC. (a) Percentages indicated are based on net assets of $573,398,777. (RAT) The Moody's, Standard & Poor's or Fitch ratings indicated are believed to be the most recent ratings available at the close of the reporting period for the securities listed. Ratings are generally ascribed to securities at the time of issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to do so, and the ratings do not necessarily represent what the agencies would ascribe to these securities at the close of the reporting period. Securities rated by Putnam are indicated by “/P.” Securities rated by Fitch are indicated by “/F.” The rating of an insured security represents what is believed to be the most recent rating of the insurer's claims-paying ability available at the close of the reporting period, if higher than the rating of the direct issuer of the bond, and does not reflect any subsequent changes. Security ratings are defined in the Statement of Additional Information. (b) The aggregate identified cost on a tax basis is $717,897,884, resulting in gross unrealized appreciation and depreciation of $80,941,246 and $6,957,612, respectively, or net unrealized appreciation of $73,983,634. (NON) Non-income-producing security. (STP) The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the fund will begin accruing interest at this rate. (FWC) Forward commitment, in part or in entirety. (T) Underlying security in a tender option bond transaction. The security has been segregated as collateral for financing transactions. At the close of the reporting period, the fund maintained liquid assets totaling $51,429,948 to cover certain derivatives contracts. 144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The rates shown on Mandatory Put Bonds are the current interest rates at the close of the reporting period. The dates shown parenthetically on Mandatory Put Bonds represent the next mandatory put dates. The dates shown parenthetically on prerefunded bonds represent the next prerefunding dates. The dates shown on debt obligations are the original maturity dates. The fund had the following sector concentrations greater than 10% at the close of the reporting period (as a percentage of net assets): Health care 25.4% Utilities Transportation State Government Local Government Education Security valuation: Tax-exempt bonds and notes are generally valued on the basis of valuations provided by an independent pricing service approved by the Trustees. Such services use information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value. These securities will generally be categorized as Level 2. Certain investments, including certain restricted and illiquid securities and derivatives are also valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount. Tender option bond transactions: The fund may participate in transactions whereby a fixed-rate bond is transferred to a tender option bond trust (TOB trust) sponsored by a broker. The TOB trust funds the purchase of the fixed rate bonds by issuing floating-rate bonds issued to third parties and allowing the fund to retain the residual interest in the TOB trust’s assets and cash flows, which are in the form of inverse floating rate bonds. The inverse floating rate bonds held by the fund give the fund the right to (1) cause the holders of the floating rate bonds to tender their notes at par, and (2) to have the fixed-rate bond held by the TOB trust transferred to the fund, causing the TOB trust to collapse. The fund accounts for the transfer of the fixed-rate bond to the TOB trust as a secured borrowing by including the fixed-rate bond in The fund’s portfolio and including the floating rate bond as a liability in the Statement of assets and liabilities. At the close of the reporting period, the fund’s investments with a value of $92,772,411 were held by the TOB trust and served as collateral for $41,342,462 in floating-rate bonds outstanding. During the reporting period, the fund incurred interest expense of $19,266 for these investments based on an average interest rate of 0.18%. ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows: Level 1: Valuations based on quoted prices for identical securities in active markets. Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement. The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period: Valuation inputs Investments in securities: Level 1 Level 2 Level 3 Municipal bonds and notes $— $791,881,518 $— Totals by level $— $— For additional information regarding the fund please see the fund's most recent annual or semiannual shareholder report filed on the Securities and Exchange Commission's Web site, www.sec.gov, or visit Putnam's Individual Investor Web site at www.putnaminvestments.com Item 2. Controls and Procedures: (a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. (b) Changes in internal control over financial reporting: Not applicable Item 3. Exhibits: Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Putnam Municipal Opportunities Trust By (Signature and Title): /s/ Janet C. SmithJanet C. SmithPrincipal Accounting OfficerDate: September 28, 2012 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title): /s/ Jonathan S. HorwitzJonathan S. HorwitzPrincipal Executive OfficerDate: September 28, 2012 By (Signature and Title): /s/ Steven D. KrichmarSteven D. KrichmarPrincipal Financial OfficerDate: September 28, 2012 | [
"UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTEREDMANAGEMENT INVESTMENT COMPANY Investment Company Act file number: (811-07626) Exact name of registrant as specified in charter: Putnam Municipal Opportunities Trust Address of principal executive offices: One Post Office Square, Boston, Massachusetts 02109 Name and address of agent for service: Robert T. Burns, Vice PresidentOne Post Office SquareBoston, Massachusetts 02109 Copy to: John W. Gerstmayr, Esq.Ropes & Gray LLP800 Boylston StreetBoston, Massachusetts 02199-3600 Registrant’s telephone number, including area code: (617) 292-1000 Date of fiscal year end: April 30, 2013 Date of reporting period: July 31, 2012 Item 1.",
"Schedule of Investments: Putnam Municipal Opportunities Trust The fund's portfolio 7/31/12 (Unaudited) Key to holding's abbreviations AGM — Assured Guaranty Municipal Corporation AGO — Assured Guaranty, Ltd. AMBAC — AMBAC Indemnity Corporation COP — Certificates of Participation FGIC — Financial Guaranty Insurance Company FNMA Coll. — Federal National Mortgage Association Collateralized FRB — Floating Rate Bonds: the rate shown is the current interest rate at the close of the reporting period G.O. Bonds — General Obligation Bonds NATL — National Public Finance Guarantee Corp. SGI — Syncora Guarantee, Inc. U.S. Govt.",
"Coll. — U.S. Government Collateralized VRDN — Variable Rate Demand Notes, which are floating-rate securities with long-term maturities, that carry coupons that reset every one or seven days. The rate shown is the current interest rate at the close of the reporting period. MUNICIPAL BONDS AND NOTES (138.1%) (a) Rating (RAT) Principal amount Value Alabama (0.1%) Selma, Indl. Dev. Board Rev. Bonds (Gulf Opportunity Zone Intl. Paper Co.), Ser. A, 5.8s, 5/1/34 BBB $750,000 $838,568 Arizona (3.4%) Casa Grande, Indl. Dev. Auth. Rev. Bonds (Casa Grande Regl. Med. Ctr. ), Ser. A, 7 5/8s, 12/1/29 BB-/P 3,025,000 3,141,613 Cochise Cnty., Indl. Dev. Auth.",
"Rev. Bonds (Sierra Vista Cmnty. Hosp. ), Ser. A, 6 3/4s, 12/1/26 BBB+/P 395,000 395,698 Coconino Cnty., Poll. Control Rev. Bonds (Tucson Elec. Pwr. Co. - Navajo), Ser. A, 5 1/8s, 10/1/32 Baa3 1,500,000 1,584,015 Glendale, Indl. Dev. Auth. Rev. Bonds (Midwestern U. ), 5 1/8s, 5/15/40 A- 2,125,000 2,273,134 Maricopa Cnty., Poll. Control Rev. Bonds (El Paso Elec. Co.), Ser. A, 7 1/4s, 2/1/40 Baa2 2,400,000 2,869,511 Phoenix, Civic Impt. Corp. Arpt. Rev. Bonds, Ser. A, 5s, 7/1/40 A1 1,000,000 1,097,770 Pima Cnty., Indl. Dev. Auth. Rev. Bonds (Tucson Elec. Pwr. Co.), 5 3/4s, 9/1/29 Baa3 800,000 850,824 (Horizon Cmnty. Learning Ctr. ), 5.05s, 6/1/25 BBB 1,550,000 1,494,571 Pinal Cnty., Elec. Rev. Bonds (Dist.",
"No. 3), 5 1/4s, 7/1/36 A 500,000 548,410 Salt River Agricultural Impt. & Pwr. Dist. Rev. Bonds, Ser. A, 5s, 12/1/31 Aa1 3,000,000 3,615,000 Tempe, Indl. Dev. Auth. Lease Rev. Bonds (ASU Foundation), AMBAC, 5s, 7/1/28 AA/P 500,000 504,770 U. Med. Ctr. Corp. AZ Hosp. Rev. Bonds, 6 1/2s, 7/1/39 Baa1 1,000,000 1,165,360 California (24.2%) ABC Unified School Dist. G.O. Bonds, Ser. B, FGIC, zero %, 8/1/20 Aa3 1,500,000 1,151,940 Bay Area Toll Auth. of CA Rev. Bonds (San Francisco Bay Area), Ser. F-1, 5s, 4/1/39 AA 2,500,000 2,755,700 Burbank, Unified School Dist. G.O.",
"Bonds (Election of 1997), Ser. C, NATL, FGIC, zero %, 8/1/23 AA- 1,000,000 659,660 CA Edl. Fac. Auth. Rev. Bonds (Claremont Graduate U. ), Ser. A, 5s, 3/1/42 A3 2,000,000 2,076,060 (U. of the Pacific), 5s, 11/1/21 A2 1,500,000 1,639,650 (Loyola-Marymount U. ), NATL, zero %, 10/1/21 A2 1,300,000 948,571 CA Hsg. Fin. Agcy. Rev. Bonds (Home Mtge.) Ser. E, 4.8s, 8/1/37 Baa2 5,000,000 4,688,750 Ser. K, 4 5/8s, 8/1/26 Baa2 2,500,000 2,426,025 CA Muni. Fin. Auth. COP (Cmnty. Hosp.",
"Central CA), 5 1/4s, 2/1/37 Baa2 1,800,000 1,859,544 CA Poll. Control Fin. Auth. Rev. Bonds (San Jose Wtr. Co.), 5.1s, 6/1/40 A 3,500,000 3,793,090 (Pacific Gas & Electric Corp.), Class D, FGIC, 4 3/4s, 12/1/23 A3 2,500,000 2,703,350 CA Poll. Control Fin. Auth. Solid Waste Disp. FRB (Waste Management, Inc.), Ser. C, 5 1/8s, 11/1/23 BBB 850,000 924,146 CA Poll. Control Fin. Auth. Wtr. Fac. Rev. Bonds (American Wtr. Cap. Corp.), 5 1/4s, 8/1/40 BBB+ 1,000,000 1,035,420 CA State G.O. Bonds 6 1/2s, 4/1/33 A1 12,000,000 15,087,360 5 1/2s, 3/1/40 A1 7,450,000 8,578,526 5s, 4/1/42 A1 4,000,000 4,381,520 5s, 10/1/29 A1 4,000,000 4,446,560 CA State Pub. Wks. Board Rev. Bonds Ser. I-1, 6 1/8s, 11/1/29 A2 1,000,000 1,215,870 Ser.",
"A-1, 6s, 3/1/35 A2 1,600,000 1,891,040 (Dept. of Forestry & Fire), Ser. E, 5s, 11/1/32 A2 1,575,000 1,673,248 (Capital Projects), Ser. A, 5s, 4/1/29 A2 2,000,000 2,216,340 CA Statewide Cmnty. Dev. Auth. COP (The Internext Group), 5 3/8s, 4/1/30 BBB 5,250,000 5,253,727 CA Statewide Cmnty. Dev. Auth. Rev. Bonds (Irvine, LLC-UCI East Campus), 6s, 5/15/40 Baa2 2,000,000 2,175,500 (Sutter Hlth. ), Ser. A, 5s, 11/15/43 Aa3 2,485,000 2,597,966 Cathedral City, Impt.",
"Board Act of 1915 Special Assmt. Bonds (Cove Impt. Dist. ), Ser. 04-02, 5.05s, 9/2/35 BB+/P 775,000 768,707 Chula Vista COP, NATL, 5s, 8/1/32 A1 4,000,000 4,045,240 Chula Vista, Indl. Dev. Rev. Bonds (San Diego Gas), Ser. B, 5s, 12/1/27 Aa3 1,915,000 2,121,705 Foothill-De Anza, Cmnty. College Dist. G.O. Bonds, Ser. C, 5s, 8/1/40 Aaa 2,250,000 2,604,352 Foothill/Eastern Corridor Agcy. Rev. Bonds, Ser.",
"A, zero %, 1/1/28 (Escrowed to maturity) Aaa 13,000,000 8,770,580 Golden State Tobacco Securitization Corp. Rev. Bonds Ser. 03 A-1, 6 1/4s, 6/1/33 (Prerefunded 6/1/13) Aaa 555,000 582,423 Ser. A-1, 5s, 6/1/33 B3 1,050,000 843,980 Ser. S-B, zero %, 6/1/47 CCC+ 6,000,000 358,020 Los Angeles, Dept. Arpt. Rev. Bonds (Los Angeles Intl. Arpt. ), Ser. D, 5s, 5/15/40 AA 3,500,000 3,912,965 M-S-R Energy Auth. Rev.",
"Bonds, Ser. B, 6 1/2s, 11/1/39 A- 3,000,000 3,791,940 Metro. Wtr. Dist. Rev. Bonds (Southern CA Wtr. Wks. ), 5 3/4s, 8/10/18 AAA 6,000,000 7,189,680 Orange Cnty., Cmnty. Fac. Dist. Special Tax Rev. Bonds (Ladera Ranch No. 02-1), Ser. A, 5.55s, 8/15/33 BBB-/P 900,000 904,860 Redwood City, Elementary School Dist. G.O. Bonds, FGIC, NATL, zero %, 8/1/21 A+ 1,990,000 1,391,169 Rocklin, Unified School Dist. G.O. Bonds, FGIC, NATL, zero %, 8/1/27 Aa2 2,000,000 1,093,080 Sacramento Cnty., Arpt. Syst. Rev. Bonds, 5s, 7/1/40 A2 1,350,000 1,496,718 Sacramento, Special Tax Rev. Bonds (North Natomas Cmnty. Fac. ), Ser. 97-01 5s, 9/1/20 BB+/P 1,195,000 1,214,740 5s, 9/1/29 BB+/P 1,180,000 1,183,185 5s, 9/1/18 BB+/P 1,030,000 1,051,135 San Bernardino Cnty., COP (Med. Ctr. Fin. ), Ser. A, NATL, 6 1/2s, 8/1/17 Baa2 3,795,000 4,127,632 San Diego Cnty., Regl. Arpt. Auth. Rev. Bonds, Ser. A, 5s, 7/1/40 A2 3,750,000 4,095,037 San Diego, Unified School Dist. G.O.",
"Bonds (Election of 2008), Ser. C zero %, 7/1/40 Aa2 5,000,000 1,219,400 zero %, 7/1/38 Aa2 5,000,000 1,373,250 San Francisco City & Cnty. Arpt. Comm. Intl. Arpt. Rev. Bonds, 5s, 5/1/28 A1 575,000 679,512 San Juan, Unified School Dist. G.O. Bonds, AGM, zero %, 8/1/19 Aa2 1,000,000 836,430 Sunnyvale, Cmnty. Fac. Dist. Special Tax Rev. Bonds, 7.65s, 8/1/21 B+/P 540,000 540,832 Tuolumne Wind Project Auth. Rev.",
"Bonds (Tuolumne Co.), Ser. A, 5 7/8s, 1/1/29 A+ 1,585,000 1,895,881 Turlock, Irrigation Dist. Rev. Bonds, Ser. A, 5s, 1/1/40 A+ 4,000,000 4,372,200 Colorado (2.1%) CO Hlth. Fac. Auth. Rev. Bonds (Christian Living Cmntys. ), Ser. A, 5 3/4s, 1/1/26 BB-/P 325,000 340,678 (Evangelical Lutheran Good Samaritan Society), 5s, 12/1/33 A3 1,650,000 1,787,099 (Evangelical Lutheran), 5s, 6/1/29 A3 850,000 897,762 CO Hsg. & Fin. Auth. Rev. Bonds (Single Family Mtge. ), Ser. A-3, Class III, 5 1/4s, 5/1/33 A2 1,490,000 1,542,448 CO Springs, Hosp. Rev. Bonds, 6 3/8s, 12/15/30 A3 3,280,000 3,286,985 E-ub.",
"Hwy. Auth. Rev. Bonds, Ser. C1, NATL, 5 1/2s, 9/1/24 Baa2 1,250,000 1,361,950 Lower CO River Auth. Rev. Bonds 5 3/4s, 5/15/37 A 2,350,000 2,582,768 U.S. Govt. Coll., 5 3/4s, 5/15/37 (Prerefunded 5/15/15) A1 50,000 57,396 Delaware (0.5%) DE St. Econ. Dev. Auth. Rev. Bonds (Delmarva Pwr. ), 5.4s, 2/1/31 BBB+ 1,100,000 1,222,760 DE State Hsg. Auth. Rev. Bonds (Single Family Mtge. ), Ser. B, zero %, 1/1/40 A3 8,725,000 1,627,561 District of Columbia (1.9%) DC Rev. Bonds (Howard U. ), Ser. A, 6 1/2s, 10/1/41 A3 3,000,000 3,556,320 DC U. Rev. Bonds (Gallaudet U.",
"), 5 1/2s, 4/1/34 A+ 1,000,000 1,148,270 DC Wtr. & Swr. Auth. Pub. Util. Rev. Bonds, FGIC, NATL, 5s, 10/1/28 (Prerefunded 10/1/13) AA 3,000,000 3,165,480 Metro. Washington, Arpt. Auth. Dulles Toll Rd. Rev. Bonds (First Sr. Lien), Ser. A, 5s, 10/1/39 A2 2,000,000 2,197,780 (Metrorail), Ser. A, zero %, 10/1/37 Baa1 3,700,000 919,635 Florida (4.9%) Brevard Cnty., Hlth. Care Fac. Auth. Rev. Bonds (Health First, Inc.), 7s, 4/1/39 A3 3,000,000 3,711,330 Escambia Cnty., Env. Impt. Rev. Bonds (Intl. Paper Co.), Ser. A, 5s, 8/1/26 BBB 2,500,000 2,501,475 FL State Board of Ed. G.O. Bonds (Capital Outlay 2011), Ser. F, 5s, 6/1/30 AAA 1,000,000 1,188,190 FL State Muni. Pwr. Agcy. Rev. Bonds, Ser.",
"A, 5s, 10/1/31 A2 1,700,000 1,881,832 Halifax, Hosp. Med. Ctr. Rev. Bonds, Ser. A, 5 3/8s, 6/1/46 A- 4,200,000 4,416,552 Lakeland, Retirement Cmnty. 144A Rev. Bonds (1st Mtge. - Carpenters), 6 3/8s, 1/1/43 BBB-/F 340,000 353,083 Lee Cnty., Rev. Bonds, SGI, 5s, 10/1/25 Aa2 2,500,000 2,808,600 Marco Island, Util. Sys. Rev. Bonds, Ser. A, 5s, 10/1/40 Aa3 1,500,000 1,649,520 Miami Beach, Hlth. Fac. Auth. Hosp. Rev. Bonds (Mount Sinai Med. Ctr.) Ser. A, 6.8s, 11/15/31 Baa2 550,000 555,440 5 3/8s, 11/15/28 BBB-/F 990,000 991,723 Miami-Dade Cnty., Aviation Rev. Bonds (Miami Intl. Arpt. ), Ser. A-1, 5 3/8s, 10/1/41 A2 3,000,000 3,391,620 Miami-Dade Cnty., Expressway Auth.",
"Toll Syst. Rev. Bonds, Ser. A, 5s, 7/1/40 A 1,000,000 1,092,010 Palm Beach Cnty., Hlth. Fac. Auth. Rev. Bonds (Acts Retirement-Life Cmnty. ), 5 1/2s, 11/15/33 BBB+ 1,000,000 1,094,480 South Bay, Cmnty. Dev. Dist. Special Assmt. Bonds, Ser. B-1, 5 1/8s, 11/1/12 (In default) (NON) D/P 2,025,000 668,250 South Broward, Hosp. Dist. Rev. Bonds, NATL, 4 3/4s, 5/1/28 Aa3 1,500,000 1,592,700 Tolomato, Cmnty. Dev. Dist. Special Assmt. Bonds, 5.4s, 5/1/37 CCC/P 445,000 396,099 Georgia (3.3%) Atlanta, Arpt. Rev.",
"Bonds Ser. C, 5 7/8s, 1/1/24 A1 500,000 638,620 (Hartsfield-Jackson Intl. Arpt. ), Ser. A, 5s, 1/1/35 A1 1,250,000 1,393,875 Atlanta, Wtr. & Waste Wtr. Rev. Bonds, Ser. A, 6 1/4s, 11/1/39 A1 4,500,000 5,488,245 Fulton Cnty., Dev. Auth. Rev. Bonds (GA Tech Athletic Assn. ), Ser. A, 5s, 10/1/42 A2 1,350,000 1,509,584 Gainesville & Hall Cnty., Hosp. Auth. Rev. Bonds (Northeast GA Hlth. Care), Ser. B, 5 1/4s, 2/15/45 A+ 7,500,000 8,201,400 Marietta, Dev. Auth.",
"Rev. Bonds (U. Fac. - Life U., Inc.), 7s, 6/15/39 Ba3 1,400,000 1,484,546 Hawaii (—%) HI State Hsg. Fin. & Dev. Corp. Rev. Bonds, Ser. A, FNMA Coll., 5 3/4s, 7/1/30 Aaa 15,000 15,005 Illinois (7.2%) Chicago, O'Hare Intl. Arpt. Rev. Bonds, Ser. A 5 3/4s, 1/1/39 A2 4,000,000 4,711,320 5 5/8s, 1/1/35 A2 1,000,000 1,177,560 Chicago, Waste Wtr. Transmission Rev. Bonds, Ser. A, NATL, zero %, 1/1/24 Aa2 1,600,000 1,042,448 IL Fin. Auth.",
"Rev. Bonds (Silver Cross Hosp. & Med. Ctr. ), 7s, 8/15/44 BBB- 2,500,000 3,005,025 (IL Rush U. Med. Ctr. ), Ser. D, 6 5/8s, 11/1/39 A2 1,490,000 1,806,342 (IL Rush U. Med Ctr. ), Ser. C, 6 5/8s, 11/1/39 A2 1,425,000 1,727,542 (Elmhurst Memorial), Ser. A, 5 5/8s, 1/1/37 Baa2 3,000,000 3,203,400 (Alexian), Ser. A, AGM, 5 1/4s, 1/1/22 Aa3 3,775,000 4,260,880 IL State G.O. Bonds 5s, 3/1/34 A+ 750,000 821,670 5s, 8/1/21 A+ 750,000 861,743 Kendall & Kane Cntys., Cmnty. United School Dist. G.O. Bonds (No. 115 Yorkville), NATL, FGIC, zero %, 1/1/21 Aa3 1,075,000 799,596 Lake Cnty., Cmnty. Construction School Dist. G.O. Bonds (No. 073 Hawthorn), NATL, FGIC zero %, 12/1/21 AA+ 1,805,000 1,298,770 zero %, 12/1/21 (Escrowed to maturity) AA+ 145,000 121,104 zero %, 12/1/20 AA+ 1,495,000 1,129,951 zero %, 12/1/20 (Escrowed to maturity) AA+ 155,000 134,064 Metro. Pier & Exposition Auth. Dedicated State Tax Rev. Bonds (McCormick), Ser. A, NATL, zero %, 12/15/30 AAA 18,500,000 8,184,400 Railsplitter, Tobacco Settlement Auth.",
"Rev. Bonds, 6s, 6/1/28 A- 4,150,000 4,859,609 Southern IL U. Rev. Bonds (Hsg. & Auxiliary), Ser. A, NATL zero %, 4/1/25 A2 1,870,000 1,039,757 zero %, 4/1/21 A2 1,880,000 1,308,292 Indiana (2.8%) IN Bk. Special Program Gas Rev. Bonds, Ser. A, 5 1/4s, 10/15/21 A2 180,000 207,031 IN State Fin. Auth. Rev. Bonds (U.S. Steel Corp.), 6s, 12/1/26 BB 500,000 522,470 (BHI Sr. Living), 5 3/4s, 11/15/41 A-/F 1,000,000 1,106,720 (Duke Energy Ind. ), Ser. C, 4.95s, 10/1/40 A2 4,000,000 4,319,680 IN State Fin. Auth. VRDN, Ser. A-2, 0.17s, 2/1/37 VMIG1 5,250,000 5,250,000 Jasper Cnty., Indl. Poll. Control Rev.",
"Bonds AMBAC, 5.7s, 7/1/17 Baa2 1,375,000 1,573,028 NATL, 5.6s, 11/1/16 Baa2 1,550,000 1,758,351 U. Southern IN Rev. Bonds (Student Fee), Ser. J, AGO, 5 3/4s, 10/1/28 Aa3 1,000,000 1,181,640 Kentucky (0.1%) Louisville & Jefferson Cnty., Metro. Govt. College Rev. Bonds (Bellarmine U., Inc.), Ser. A, 6s, 5/1/38 Baa3 290,000 315,297 Maine (0.3%) Rumford, Solid Waste Disp. Rev. Bonds (Boise Cascade Corp.), 6 7/8s, 10/1/26 B2 1,950,000 1,919,483 Maryland (0.2%) MD Econ. Dev. Corp. Poll. Control Rev. Bonds (Potomac Electric Power Co.), 6.2s, 9/1/22 A 650,000 801,678 MD State Indl. Dev. Fin. Auth. Rev. Bonds (Synagro-Baltimore), Ser. A, 5 1/2s, 12/1/15 BBB+/F 500,000 535,515 Massachusetts (6.4%) MA State Dept. Trans. Rev. Bonds (Metro Hwy. Syst. ), Ser. B, 5s, 1/1/37 A 2,500,000 2,756,575 MA State Dev.",
"Fin. Agcy. Rev. Bonds (Sabis Intl. ), Ser. A, 8s, 4/15/39 BBB 575,000 707,089 (Linden Ponds, Inc. Fac. ), Ser. A-1, 6 1/4s, 11/15/26 B-/P 960,369 863,074 (Carleton-Willard Village), 5 5/8s, 12/1/30 A- 750,000 817,755 (Linden Ponds, Inc. Fac. ), Ser. A-2, 5 1/2s, 11/15/46 B-/P 51,190 35,571 (Berklee College of Music), 5 1/4s, 10/1/41 A2 2,000,000 2,225,760 (Emerson College), Ser. A, 5s, 1/1/40 Baa1 4,000,000 4,259,520 (Linden Ponds, Inc. Fac. ), Ser. B, zero %, 11/15/56 B-/P 254,614 3,399 MA State Dev. Fin. Agcy. Solid Waste Disp. FRB (Dominion Energy Brayton Point), 5s, 2/1/36 A- 1,000,000 1,029,140 MA State Dev. Fin. Agcy.",
"Solid Waste Disp. Mandatory Put Bonds (5/1/19) (Dominion Energy Brayton 1), Ser. 1, 5 3/4s, 12/1/42 A- 1,500,000 1,813,200 MA State Hlth. & Edl. Fac. Auth. Rev. Bonds (Civic Investments, Inc.), Ser. A, U.S. Govt. Coll., 9s, 12/15/15 (Prerefunded 12/15/12) AAA/P 1,485,000 1,555,226 (Jordan Hosp. ), Ser. E, 6 3/4s, 10/1/33 BB- 1,500,000 1,533,210 (Quincy Med. Ctr. ), Ser. A, 6 1/4s, 1/15/28 (In default) (NON) D/P 465,692 466 (Suffolk U. ), Ser. A, 5 3/4s, 7/1/39 Baa2 1,175,000 1,319,149 (Baystate Med. Ctr. ), Ser. I, 5 3/4s, 7/1/36 A+ 1,500,000 1,671,450 (Springfield College), 5 5/8s, 10/15/40 Baa1 550,000 595,738 (Care Group), Ser. B-2, NATL, 5 3/8s, 2/1/26 A3 700,000 791,000 (Northeastern U. ), Ser. A, 5s, 10/1/35 A2 3,250,000 3,634,930 MA State Hsg. Fin.",
"Agcy. Rev. Bonds, Ser. C, 5.35s, 12/1/42 Aa3 1,500,000 1,603,650 MA State Port Auth. Rev. Bonds, U.S. Govt. Coll., 13s, 7/1/13 (Prerefunded 9/4/12) Aaa 600,000 669,336 MA State Port Auth. Special Fac. Rev. Bonds (Conrac), Ser. A, 5 1/8s, 7/1/41 A 2,855,000 3,138,587 Metro. Boston Trans. Pkg. Corp. Rev. Bonds 5s, 7/1/41 A1 2,600,000 2,854,514 (Systemwide Pkg. ), 5 1/4s, 7/1/33 A1 2,500,000 2,848,800 Michigan (6.8%) Detroit, G.O. Bonds Ser. A-1, AMBAC, 5 1/4s, 4/1/24 B 1,435,000 1,305,104 (Cap. Impt. ), Ser. A-1, 5s, 4/1/15 B 1,300,000 1,241,968 Detroit, Rev. Bonds, Ser. A, NATL, FGIC, 5s, 7/1/30 A+ 4,505,000 4,508,424 Detroit, City School Dist. G.O. Bonds, Ser. A, AGM, 6s, 5/1/29 Aa2 1,000,000 1,240,390 Detroit, Wtr. & Swr. Dept.",
"Rev. Bonds, Ser. A, 5s, 7/1/32 A+ 1,200,000 1,259,256 Detroit, Wtr. Supply Syst. Rev. Bonds, Ser. B, AGM, 6 1/4s, 7/1/36 AA- 1,425,000 1,663,659 Flint, Hosp. Bldg. Auth. Rev. Bonds (Hurley Med. Ctr. ), 7 1/2s, 7/1/39 Ba1 500,000 582,950 King Cnty., Wtr & Swr. Rev. Bonds, 5s, 1/1/45 AA+ 4,000,000 4,484,760 MI Fin. Auth. Rev. Bonds (Revolving Fund-Clean Water), 5s, 10/1/31 AAA 1,500,000 1,806,225 (Unemployment Oblig. ), Ser. B, 5s, 7/1/22 Aaa 1,000,000 1,151,380 MI Higher Ed.",
"Fac. Auth. Rev. Bonds (Kalamazoo College), 5 1/2s, 12/1/18 (Prerefunded 12/1/12) A1 500,000 508,730 MI Pub. Pwr. Agcy. Rev. Bonds, Ser. A, 5s, 1/1/27 A2 1,900,000 2,118,728 MI State Hosp. Fin. Auth. Rev. Bonds Ser. A, 6 1/8s, 6/1/39 A1 2,500,000 2,898,650 (Henry Ford Hlth. ), 5 3/4s, 11/15/39 A1 2,000,000 2,247,320 (Henry Ford Hlth. Syst. ), Ser. A, 5 1/4s, 11/15/46 A1 4,500,000 4,759,065 (Sparrow Hosp. ), 5s, 11/15/31 A1 1,350,000 1,435,442 MI State Strategic Fund Ltd. Mandatory Put Bonds (6/2/14) (Dow Chemical), Ser. A-1, 6 3/4s,12/1/28 BBB 100,000 109,614 MI State Strategic Fund, Ltd. Rev.",
"Bonds (Worthington Armstrong Venture), U.S. Govt. Coll., 5 3/4s, 10/1/22 (Escrowed to maturity) AAA/P 1,650,000 2,102,975 MI Tobacco Settlement Fin. Auth. Rev. Bonds, Ser. A, 6s, 6/1/34 B- 575,000 482,442 Monroe Cnty., Hosp. Fin. Auth. Rev. Bonds (Mercy Memorial Hosp. Corp.), 5 3/8s, 6/1/26 BBB 750,000 793,868 Wayne Cnty., Arpt. Auth. Rev. Bonds, Ser. A, 5s, 12/1/21 A2 2,000,000 2,272,700 Minnesota (1.0%) North Oaks, Sr. Hsg. Rev. Bonds (Presbyterian Homes North Oaks), 6 1/8s, 10/1/39 BB/P 995,000 1,059,237 St. Paul, Hsg. & Redev. Auth. Hlth. Care Fac. Rev. Bonds (HealthPartners Oblig. Group), 5 1/4s, 5/15/36 A3 3,500,000 3,677,485 St. Paul, Hsg. & Redev. Auth.",
"Hosp. Rev. Bonds (Healtheast), 6s, 11/15/35 Ba1 1,150,000 1,200,232 Mississippi (2.0%) Jackson Cnty., VRDN (Chevron USA, Inc.), 0.16s, 6/1/23 P-1 1,500,000 1,500,000 MS Bus. Fin. Corp. Rev. Bonds (Syst. Energy Resources, Inc.) 5.9s, 5/1/22 BBB 3,000,000 3,004,710 5 7/8s, 4/1/22 BBB 2,330,000 2,335,312 MS Bus. Fin. Corp. Gulf Opportunity Zone Rev. Bonds, Ser. A, 5s, 5/1/37 A3 2,250,000 2,441,228 Warren Cnty., Gulf Opportunity Zone Rev. Bonds (Intl. Paper Co.), Ser. A, 6 1/2s, 9/1/32 BBB 2,000,000 2,278,900 Missouri (0.1%) MO State Hlth. & Edl. Fac. Auth. VRDN (Washington U. (The)), Ser. B, 0.17s, 9/1/30 VMIG1 850,000 850,000 Montana (0.3%) MT Fac. Fin. Auth. VRDN (Sisters of Charity of Leavenworth), Ser. A, 0.17s, 12/1/25 VMIG1 1,750,000 1,750,000 Nebraska (0.8%) Central Plains, Energy Rev. Bonds (NE Gas No. 1), Ser. A, 5 1/4s, 12/1/18 B2 3,000,000 3,315,240 Lancaster Cnty., Hosp. Auth. Rev. Bonds (Immanuel Oblig. Group), 5 5/8s, 1/1/40 A-/F 925,000 1,030,589 Nevada (8.2%) Clark Cnty., Ltd. Tax Bond, 5s, 6/1/33 (T) AA+ 32,290,000 35,315,702 Clark Cnty., Arpt. Rev.",
"Bonds, Ser. A-2, NATL, FGIC, 5 1/8s, 7/1/26 A1 5,105,000 5,453,263 Clark Cnty., Impt. Dist. Special Assmt. Bonds (Summerlin No. 151), 5s, 8/1/25 BB-/P 2,060,000 1,628,389 Clark Cnty., Indl. Dev. Rev. Bonds (Southwest Gas Corp.), Ser. A, AMBAC, 5 1/4s, 7/1/34 Baa1 3,000,000 3,075,450 Henderson G.O. Bonds (Ltd. Tax -Swr. ), NATL, FGIC, 5s, 6/1/29 Aa2 1,000,000 1,065,990 Henderson, Local Impt. Dist. Special Assmt. Bonds (No. T-17), 5s, 9/1/25 BB+/P 600,000 595,998 New Hampshire (1.4%) NH Hlth. & Ed. Fac. Auth. VRDN (U. Syst. of NH), Ser. B, 0.17s, 7/1/33 VMIG1 8,190,000 8,190,000 New Jersey (7.0%) NJ Econ. Dev. Auth. Rev. Bonds (First Mtge. Presbyterian Home), Ser. A, 6 3/8s, 11/1/31 BB/P 1,000,000 999,880 (Cigarette Tax), 5 3/4s, 6/15/29 (Prerefunded 6/15/14) Aaa 5,000,000 5,507,850 5s, 6/15/26 Baa1 500,000 557,240 NJ Econ. Dev. Auth. Wtr. Fac. Rev. Bonds (NJ American Wtr. Co.) Ser.",
"A, 5.7s, 10/1/39 A2 3,900,000 4,298,853 Ser. B, 5.6s, 11/1/34 A2 500,000 552,795 NJ Hlth. Care Fac. Fin. Auth. Rev. Bonds (St. Joseph Hlth. Care Syst. ), 6 5/8s, 7/1/38 BBB- 2,750,000 3,226,025 (St. Peter's U. Hosp. ), 5 3/4s, 7/1/37 Baa3 2,500,000 2,688,700 (Holy Name Hosp. ), 5s, 7/1/36 Baa2 5,000,000 5,097,500 NJ State Edl. Fac. Auth. Rev. Bonds (Fairleigh Dickinson), Ser. C, 6s, 7/1/20 BBB/F 1,500,000 1,606,065 (Georgian Court U. ), Ser. D, 5 1/4s, 7/1/37 Baa1 1,000,000 1,061,610 (Georgian Court U. ), Ser. D, 5 1/4s, 7/1/27 Baa1 500,000 539,855 NJ State Higher Ed. Assistance Auth. Rev. Bonds (Student Loan), Ser. 1A, 5s, 12/1/22 Aa2 2,500,000 2,788,100 NJ State Trans. Trust Fund Auth.",
"Rev. Bonds (Trans. Syst. ), Ser. A, zero %, 12/15/30 A1 13,000,000 5,972,460 Tobacco Settlement Fin. Corp. Rev. Bonds, Ser. 1A, 4 3/4s, 6/1/34 B2 3,000,000 2,418,840 Union Cnty., Util. Auth. Resource Recvy. Fac. Lease Rev. Bonds (Covanta Union), Ser. A, 5 1/4s, 12/1/31 AA+ 2,300,000 2,569,330 New York (10.1%) Broome Cnty., Indl. Dev. Agcy. Continuing Care Retirement Rev. Bonds (Good Shepard Village), Ser. A, 6 7/8s, 7/1/40 B/P 320,000 339,584 Metro. Trans. Auth. Rev. Bonds, Ser. D 5s, 11/15/36 A2 2,000,000 2,242,680 5s, 11/15/29 (FWC) A2 3,000,000 3,504,240 NY City, G.O. Bonds, Ser. F, 5s, 8/1/30 Aa2 3,320,000 3,925,269 NY City, Indl. Dev. Agcy. Special Arpt. Fac.",
"Rev. Bonds (Airis JFK I, LLC), Ser. A, 5 1/2s, 7/1/28 BBB- 2,100,000 2,099,937 NY City, Indl. Dev. Agcy. Special Fac. FRB (American Airlines - JFK Intl. Arpt. ), 7 5/8s, 8/1/25 (In default) (NON) D/P 2,000,000 2,133,520 NY City, Indl. Dev. Agcy. Special Fac. Rev. Bonds (British Airways PLC), 5 1/4s, 12/1/32 BB 700,000 691,334 NY City, Muni. Wtr. & Swr. Fin. Auth. Rev. bonds 5s, 6/15/31 (T) AA+ 10,000,000 11,800,174 Ser. GG, 5s, 6/15/43 AA+ 2,000,000 2,269,320 NY City, Transitional Fin. Auth. Rev. Bonds (Future Tax), Ser. D-1, 5s, 11/1/32 AAA 3,000,000 3,550,260 NY Cntys., Tobacco Trust III Rev. Bonds (Tobacco Settlement), 6s, 6/1/43 A3 1,500,000 1,506,090 NY State Dorm. Auth.",
"Lease Rev. Bonds (State U. Dorm Fac. ), Ser. A, 5s, 7/1/35 Aa2 1,000,000 1,146,090 NY State Dorm. Auth. Non-State Supported Debt Rev. Bonds (Orange Regl. Med. Ctr. ), 6 1/4s, 12/1/37 Ba1 2,300,000 2,512,727 NY State Dorm. Auth.Ser. C Rev bonds 5s, 3/15/31 (T) AAA 5,000,000 5,874,570 NY State Energy Research & Dev. Auth. Gas Fac. Rev. Bonds (Brooklyn Union Gas), 6.952s, 7/1/26 A3 6,000,000 6,015,060 Port Auth. NY & NJ Special Oblig. Rev. Bonds (JFK Intl. Air Term. - 6), NATL, 5.9s, 12/1/17 BBB 6,000,000 6,012,600 Seneca Cnty., Indl. Dev. Agcy.",
"Solid Waste Disp. Mandatory Put Bonds (10/1/13) (Seneca Meadows, Inc.), 6 5/8s, 10/1/35 BB- 670,000 677,819 Troy, Cap. Res. Corp. Rev. Bonds (Rensselaer Polytechnic), Ser. A, 5 1/8s, 9/1/40 A3 1,385,000 1,534,940 North Carolina (1.3%) NC Eastern Muni. Pwr. Agcy. Syst. Rev. Bonds, Ser. C, 6 3/4s, 1/1/24 A- 1,000,000 1,246,930 NC Med. Care Cmnty. Hlth. Care Fac. Rev. Bonds (Deerfield), Ser. A, 6s, 11/1/33 BBB+/F 805,000 871,855 (First Mtge. - Presbyterian Homes), 5 3/8s, 10/1/22 BB/P 1,000,000 1,052,950 NC State Muni. Pwr. Agcy. Rev. Bonds (No. 1, Catawba Elec. ), Ser. A, 5s, 1/1/30 A2 800,000 889,704 U. of NC Syst. Pool Rev. Bonds, Ser.",
"C, 5 1/2s, 10/1/34 A3 3,000,000 3,368,910 North Dakota (0.5%) ND State Hsg. Fin. Agcy. Rev. Bonds (Hsg. Fin. ), Ser. B, 4.8s, 7/1/37 Aa1 2,580,000 2,617,978 Ohio (7.1%) American Muni. Pwr. - Ohio, Inc. Rev. Bonds (Prairie State Energy Campus), Ser. A, 5 1/4s, 2/15/43 A1 1,000,000 1,098,940 (Prairie Street Energy Campus), Ser. A, 5 1/4s, 2/15/33 Aa3 5,000,000 5,615,650 Buckeye, Tobacco Settlement Fin. Auth. Rev. Bonds, Ser. A-2 5 3/4s, 6/1/34 B3 9,000,000 7,319,880 5 1/8s, 6/1/24 B3 2,050,000 1,719,233 Cleveland, Arpt.",
"Syst. Rev. Bonds, Ser. A, 5s, 1/1/29 A- 500,000 558,830 Erie Cnty., OH Hosp. Fac. Rev. Bonds (Firelands Regl. Med. Ctr. ), Ser. A, 5 1/4s, 8/15/46 A- 2,500,000 2,567,475 Hickory Chase, Cmnty. Auth. Infrastructure Impt. Rev. Bonds (Hickory Chase), 7s, 12/1/38 (In default) (NON) D/P 644,000 377,957 Lake Cnty., Hosp. Fac. Rev. Bonds (Lake Hosp. Syst. ), Ser. C, 6s, 8/15/43 Baa1 3,100,000 3,367,096 OH State Air Quality Dev. Auth. FRB (Columbus Southern Pwr. Co.), Ser. B, 5.8s, 12/1/38 Baa1 2,000,000 2,290,780 OH State Higher Edl. Fac. Comnty. Rev. Bonds (Kenyon College), 5s, 7/1/44 A1 5,000,000 5,381,700 (U. Hosp. Hlth. Syst. ), Ser. 09-A, 6 3/4s, 1/15/39 (Prerefunded 1/15/15) A2 3,000,000 3,464,760 OH State Higher Edl. Fac. Comnty. VRDN (Cleveland Clinic Foundation), Ser. B-4, 0.16s, 1/1/43 VMIG1 1,300,000 1,300,000 Scioto Cnty., Hosp. Rev. Bonds (Southern Med. Ctr.",
"), 5 1/2s, 2/15/28 A2 4,660,000 5,134,947 Southeastern OH Port Auth. Hosp. Fac. Rev. Bonds, 5 3/4s, 12/1/32 BB/P 625,000 651,644 Oregon (0.9%) Keizer, Special Assmt. Bonds (Keizer Station), Ser. A, 5.2s, 6/1/31 A1 2,200,000 2,406,426 Multnomah Cnty., Hosp. Fac. Auth. Rev. Bonds (Terwilliger Plaza), Ser. A, 5 1/4s, 12/1/26 BB/P 1,040,000 1,093,238 OR Hlth. Sciences U. Rev. Bonds, Ser. A, 5 3/4s, 7/1/39 A1 1,250,000 1,464,788 Pennsylvania (4.6%) Allegheny Cnty., Hosp. Dev. Auth. Rev.",
"Bonds (Hlth. Syst.-West PA), Ser. A, 5 3/8s, 11/15/40 B- 1,500,000 1,224,915 Bucks Cnty., Indl. Dev. Auth. Rev. Bonds (US Steel Corp.), 6 3/4s, 6/1/26 BB 1,000,000 1,113,320 Bucks Cnty., Indl. Dev. Auth. Retirement Cmnty. Rev. Bonds (Ann's Choice, Inc.), Ser. A 5.4s, 1/1/15 BB/P 1,060,000 1,076,038 5.3s, 1/1/14 BB/P 710,000 720,899 Cumberland Cnty., Muni. Auth. Rev. Bonds (Presbyterian Homes), Ser. A, 5s, 1/1/17 BBB+ 1,320,000 1,399,332 Delaware River Port Auth. PA & NJ Rev. Bonds, Ser. D, 5s, 1/1/40 A3 1,200,000 1,308,396 Erie, Higher Ed. Bldg. Auth. Rev. Bonds (Mercyhurst College), 5 1/2s, 3/15/38 BBB 725,000 781,014 Franklin Cnty., Indl. Dev. Auth. Rev.",
"Bonds (Chambersburg Hosp. ), 5 3/8s, 7/1/42 A2 1,000,000 1,079,750 Lancaster, Higher Ed. Auth. College Rev. Bonds (Franklin & Marshall College), 5s, 4/15/29 AA- 1,000,000 1,109,560 Northampton Cnty., Hosp. Auth. Rev. Bonds (St. Luke's Hosp. - Bethlehem), Ser. A, 5 1/2s, 8/15/40 A3 1,250,000 1,331,688 PA Econ. Dev. Fin. Auth. Exempt Fac. Rev. Bonds (Amtrak), Ser. A, 5s, 11/1/32 A1 1,000,000 1,104,560 PA State Higher Edl. Fac. Auth. Rev. Bonds (Gwynedd Mercy College), Ser. KK1, 5 3/8s, 5/1/42 BBB- 500,000 525,305 (Widener U. ), 5 3/8s, 7/15/29 BBB+ 750,000 777,525 (St. Joseph's U. ), Ser. A, 5s, 11/1/40 A- 3,000,000 3,297,150 (Philadelphia U. ), 5s, 6/1/30 Baa2 2,250,000 2,341,755 (Philadelphia U. ), 5s, 6/1/22 Baa2 860,000 921,542 PA State Tpk. Comm. Oil Franchise Tax Rev. Bonds, Ser. C, zero %, 12/1/39 AA 5,000,000 1,477,950 Philadelphia, Arpt. Rev. Bonds, Ser. D, 5 1/4s, 6/15/25 A+ 2,750,000 3,118,775 Philadelphia, Hosp. & Higher Ed.",
"Fac. Auth. Rev. Bonds (Hosp.-Graduate Hlth. Sys. ), Ser. A, 6 1/4s, 7/1/13 (In default) (NON) D/P 1,462,206 146 Pittsburgh & Allegheny Cnty., Sports & Exhib. Auth. Hotel Rev. Bonds, AGM, 5s, 2/1/35 Aa3 1,225,000 1,331,685 Susquehanna, Area Regl. Arpt. Syst. Auth. Rev. Bonds, Ser. A, 6 1/2s, 1/1/38 Baa3 550,000 583,314 Puerto Rico (5.6%) Cmnwlth. of PR, G.O. Bonds Ser. C, 6 1/2s, 7/1/40 Baa1 5,000,000 5,839,200 Ser. B, 6s, 7/1/39 Baa1 5,000,000 5,484,550 Ser. C, 6s, 7/1/39 Baa1 2,500,000 2,742,275 Cmnwlth. of PR, Aqueduct & Swr. Auth. Rev.",
"Bonds, Ser. A, 6s, 7/1/38 Baa2 1,125,000 1,202,659 Cmnwlth. of PR, Elec. Pwr. Auth. Rev. Bonds, Ser. XX, 5 1/4s, 7/1/40 Baa1 3,000,000 3,123,930 Cmnwlth. of PR, Hwy. & Trans. Auth. Rev. Bonds, Ser. AA-2, 5.3s, 7/1/35 A3 875,000 921,121 Cmnwlth. of PR, Pub. Bldg. Auth. Mandatory Put Bonds (7/1/17) (Govt. Fac. ), Ser. M-2, 5 3/4s, 7/1/34 Baa1 1,750,000 1,947,050 Cmnwlth. of PR, Sales Tax Fin. Corp. Rev. Bonds, Ser. A, zero %, 8/1/30 A+ 27,000,000 10,890,180 Rhode Island (—%) Tobacco Settlement Fin. Corp. Rev. Bonds, Ser.",
"A, 6 1/4s, 6/1/42 Ba1 200,000 204,912 South Carolina (0.9%) SC Hosp. Auth. Rev. Bonds (Med. U. ), Ser. A, 6 1/2s, 8/15/32 (Prerefunded 8/15/12) AA+ 2,000,000 2,004,220 SC Jobs Econ. Dev. Auth. Hosp. Fac. Rev. Bonds (Palmetto Hlth. ), Ser. C 6s, 8/1/20 (Prerefunded 8/1/13) Baa1 2,445,000 2,581,015 U.S. Govt. Coll., 6s, 8/1/20 (Prerefunded 8/1/13) Baa1 305,000 321,967 South Dakota (0.4%) SD Edl. Enhancement Funding Corp. SD Tobacco Rev. Bonds, Ser. B, 6 1/2s, 6/1/32 A3 2,450,000 2,542,733 Tennessee (0.7%) Johnson City, Hlth. & Edl. Fac. Board Hosp. Rev. Bonds (Mountain States Hlth.",
"Alliance), 6s, 7/1/38 Baa1 3,450,000 3,992,340 Texas (15.1%) Abilene, Hlth. Fac. Dev. Corp. Retirement Fac. Rev. Bonds (Sears Methodist Retirement), 6s, 11/15/29 B+/P 814,000 614,212 Alliance, Arpt. Auth. Rev. Bonds (Federal Express Corp.), 4.85s, 4/1/21 Baa1 3,250,000 3,504,865 Brazos River Harbor Naval Dist. Env. FRB (Dow Chemical Co.), Ser. A-4, 5.95s, 5/15/33 BBB 400,000 443,620 Brazos River, Auth. Poll. Control Rev. Bonds (TXU Energy Co., LLC), 5s, 3/1/41 Ca 500,000 46,545 Brazos, Harbor Indl. Dev. Corp. Env. Fac. Mandatory Put Bonds (5/1/18) (Dow Chemical), 5.9s, 5/1/38 BBB 2,850,000 3,160,736 Dallas Cnty., Util. & Reclamation Dist. G.O. Bonds, Ser. B, AMBAC, 5 3/8s, 2/15/29 A3 4,000,000 4,301,400 Dallas, Area Rapid Transit Rev. Bonds Sr. Lien, 5s, 12/1/33 (T) AA+ 30,000,000 33,767,586 Harris Cnty., Cultural Ed.",
"Fac. Fin. Corp. VRDN (Texas Med. Ctr. ), Ser. B-1, 0.17s, 9/1/31 VMIG1 8,370,000 8,370,000 Houston, Util. Syst. Rev. Bonds, Ser. A, 5s, 11/15/33 AA 1,500,000 1,736,385 Love Field, Arpt. Modernization Corp. Special Fac. Rev. Bonds (Southwest Airlines Co.), 5 1/4s, 11/1/40 Baa3 1,750,000 1,886,937 Matagorda Cnty., Poll. Control Rev. Bonds (Dist. No. 1), Ser. A, AMBAC, 4.4s, 5/1/30 Baa2 1,500,000 1,573,680 North TX Thruway Auth. Rev. Bonds Ser.",
"D, AGO, zero %, 1/1/28 Aa3 7,800,000 4,166,760 Rev. Bonds, Ser. B, zero %, 9/1/43 AA 2,000,000 318,500 North TX, Tollway Auth. Rev. Bonds Ser. A, 6s, 1/1/25 A2 1,300,000 1,534,675 (Toll 2nd Tier), Ser. F, 5 3/4s, 1/1/38 A3 2,000,000 2,192,140 North TX, Tollway Auth. stepped-coupon Rev. Bonds, zero %, (6.5s, 1/1/15) 2043 (STP) A2 4,000,000 4,245,840 Sam Rayburn, Muni. Pwr. Agcy. Rev. Bonds, 6s, 10/1/21 Baa2 2,350,000 2,361,468 Tarrant Cnty., Cultural Ed.",
"Fac. Fin. Corp. Retirement Fac. Rev. Bonds (Buckner Retirement Svcs., Inc.), 5 1/4s, 11/15/37 A- 1,100,000 1,147,795 TX Muni. Gas Acquisition & Supply Corp. I Rev. Bonds, Ser. A, 5s, 12/15/15 A- 3,000,000 3,215,550 TX State Tpk. Auth. Rev. Bonds (Central Texas Tpk. Syst. ), Ser. A, AMBAC, 5 1/2s, 8/15/39 Baa1 8,000,000 8,007,680 Utah (0.3%) Salt Lake City, Hosp. Rev. Bonds, AMBAC, 6 3/4s, 5/15/20 (Escrowed to maturity) AAA/P 1,700,000 1,705,219 Virginia (0.6%) Henrico Cnty., Econ. Dev. Auth. Res.",
"Care Fac. Rev. Bonds (United Methodist), Ser. A, 6.7s, 6/1/27 BB+/P 735,000 734,890 Washington Cnty., Indl. Dev. Auth. Hosp. Fac. Rev. Bonds (Mountain States Hlth. Alliance), Ser. C, 7 3/4s, 7/1/38 Baa1 2,100,000 2,611,202 Washington (2.4%) WA State G.O. Bonds (Sr. 520 Corridor-Motor Vehicle Tax), Ser. C, 5s, 6/1/28 (T) AA+ 5,000,000 6,014,379 Tobacco Settlement Auth. of WA Rev. Bonds 6 5/8s, 6/1/32 Baa1 900,000 936,252 6 1/2s, 6/1/26 A3 4,695,000 4,895,664 WA State Hlth. Care Fac. Auth. Rev. Bonds (Kadlec Med. Ctr.",
"), 5 1/2s, 12/1/39 Baa2 2,000,000 2,147,560 West Virginia (0.8%) Harrison Cnty., Cmnty. Solid Waste Disp. Rev. Bonds (Allegheny Energy), Ser. D, 5 1/2s, 10/15/37 BBB 3,450,000 3,634,265 WV State Hosp. Fin. Auth. Rev. Bonds (Thomas Hlth. Syst. ), 6 3/4s, 10/1/43 B/P 935,000 976,486 Wisconsin (0.9%) WI State Rev. Bonds, Ser. A, 6s, 5/1/27 Aa3 2,500,000 3,176,725 WI State Hlth. & Edl. Fac. Auth. Rev. Bonds (Prohealth Care, Inc.), 6 5/8s, 2/15/39 A1 1,500,000 1,787,055 Wyoming (0.8%) Campbell Cnty., Solid Waste Fac. Rev. Bonds (Basin Elec. Pwr. Co-op), Ser. A, 5 3/4s, 7/15/39 A1 2,000,000 2,280,740 WY Muni. Pwr.",
"Agcy. Pwr. Supply Rev. Bonds Ser. A, 5 1/2s, 1/1/33 A2 950,000 1,054,757 (Pwr. Supply), Ser. A, 5 1/2s, 1/1/28 A2 1,000,000 1,128,780 TOTAL INVESTMENTS Total investments (cost $717,838,727) (b) Notes to the fund's portfolio Unless noted otherwise, the notes to the fund's portfolio are for the close of the fund's reporting period, which ran from May 1, 2012 through July 31, 2012 (the reporting period). Within the following notes to the portfolio, references to “ASC 820” represent Accounting Standards Codification ASC 820 Fair Value Measurements and Disclosures and references to “Putnam Management” represent Putnam Investment Management, LLC, the fund's manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC. (a) Percentages indicated are based on net assets of $573,398,777. (RAT) The Moody's, Standard & Poor's or Fitch ratings indicated are believed to be the most recent ratings available at the close of the reporting period for the securities listed. Ratings are generally ascribed to securities at the time of issuance. While the agencies may from time to time revise such ratings, they undertake no obligation to do so, and the ratings do not necessarily represent what the agencies would ascribe to these securities at the close of the reporting period.",
"Securities rated by Putnam are indicated by “/P.” Securities rated by Fitch are indicated by “/F.” The rating of an insured security represents what is believed to be the most recent rating of the insurer's claims-paying ability available at the close of the reporting period, if higher than the rating of the direct issuer of the bond, and does not reflect any subsequent changes. Security ratings are defined in the Statement of Additional Information. (b) The aggregate identified cost on a tax basis is $717,897,884, resulting in gross unrealized appreciation and depreciation of $80,941,246 and $6,957,612, respectively, or net unrealized appreciation of $73,983,634. (NON) Non-income-producing security. (STP) The interest rate and date shown parenthetically represent the new interest rate to be paid and the date the fund will begin accruing interest at this rate.",
"(FWC) Forward commitment, in part or in entirety. (T) Underlying security in a tender option bond transaction. The security has been segregated as collateral for financing transactions. At the close of the reporting period, the fund maintained liquid assets totaling $51,429,948 to cover certain derivatives contracts. 144A after the name of an issuer represents securities exempt from registration under Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. The rates shown on Mandatory Put Bonds are the current interest rates at the close of the reporting period. The dates shown parenthetically on Mandatory Put Bonds represent the next mandatory put dates. The dates shown parenthetically on prerefunded bonds represent the next prerefunding dates. The dates shown on debt obligations are the original maturity dates. The fund had the following sector concentrations greater than 10% at the close of the reporting period (as a percentage of net assets): Health care 25.4% Utilities Transportation State Government Local Government Education Security valuation: Tax-exempt bonds and notes are generally valued on the basis of valuations provided by an independent pricing service approved by the Trustees. Such services use information with respect to transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities in determining value.",
"These securities will generally be categorized as Level 2. Certain investments, including certain restricted and illiquid securities and derivatives are also valued at fair value following procedures approved by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures and recovery rates. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount. Tender option bond transactions: The fund may participate in transactions whereby a fixed-rate bond is transferred to a tender option bond trust (TOB trust) sponsored by a broker.",
"The TOB trust funds the purchase of the fixed rate bonds by issuing floating-rate bonds issued to third parties and allowing the fund to retain the residual interest in the TOB trust’s assets and cash flows, which are in the form of inverse floating rate bonds. The inverse floating rate bonds held by the fund give the fund the right to (1) cause the holders of the floating rate bonds to tender their notes at par, and (2) to have the fixed-rate bond held by the TOB trust transferred to the fund, causing the TOB trust to collapse. The fund accounts for the transfer of the fixed-rate bond to the TOB trust as a secured borrowing by including the fixed-rate bond in The fund’s portfolio and including the floating rate bond as a liability in the Statement of assets and liabilities.",
"At the close of the reporting period, the fund’s investments with a value of $92,772,411 were held by the TOB trust and served as collateral for $41,342,462 in floating-rate bonds outstanding. During the reporting period, the fund incurred interest expense of $19,266 for these investments based on an average interest rate of 0.18%. ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows: Level 1: Valuations based on quoted prices for identical securities in active markets. Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement. The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period: Valuation inputs Investments in securities: Level 1 Level 2 Level 3 Municipal bonds and notes $— $791,881,518 $— Totals by level $— $— For additional information regarding the fund please see the fund's most recent annual or semiannual shareholder report filed on the Securities and Exchange Commission's Web site, www.sec.gov, or visit Putnam's Individual Investor Web site at www.putnaminvestments.com Item 2.",
"Controls and Procedures: (a) The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. (b) Changes in internal control over financial reporting: Not applicable Item 3. Exhibits: Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.",
"SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Putnam Municipal Opportunities Trust By (Signature and Title): /s/ Janet C. SmithJanet C. SmithPrincipal Accounting OfficerDate: September 28, 2012 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title): /s/ Jonathan S. HorwitzJonathan S. HorwitzPrincipal Executive OfficerDate: September 28, 2012 By (Signature and Title): /s/ Steven D. KrichmarSteven D. KrichmarPrincipal Financial OfficerDate: September 28, 2012"
]
| https://applica-public.s3-eu-west-1.amazonaws.com/contract-discovery/edgar.txt.xz | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
AT THE COMPANY:Terry Nicklin+44 (0)1:John McNamara+1 212 827-3771FOR IMMEDIATE RELEASECAMBRIDGE DISPLAY TECHNOLOGY ANNOUNCES DATE FOR2ambridge, UK 27 October 2005 Cambridge Display Technology [Nasdaq: OLED], a global pioneer in the research, development and commercialisation of light emitting polymers (P-OLEDs), has announced that it will release its second quarter 2005 results after the close of market on Wednesday, November 9th, 2005.Management will hold a conference call on Thursday, November 10th, 2005 at 12:00 pm ET. The call will be webcast and can be accessed via the internet live or as a replay at www.earnings.com.The conference call will be archived for replay on the above website for approximately 14 days following the call.# # #About CDTCambridge Display Technology is a global leader in the research, development and commercialisation of light emitting polymers (P-OLEDs), which are targeted for use in a wide range of electronic display products used for information management, communications and entertainment. Features include reduced power consumption, size, thickness and weight, very wide viewing angle, superior video imaging performance and the potential for use on flexible display substrates. Current CDT licensees are actively developing their manufacturing strategies. Founded in 1992, the company is headquartered in Cambridge, UK.http://www.cdtltd.co.uk | [
"AT THE COMPANY:Terry Nicklin+44 (0)1:John McNamara+1 212 827-3771FOR IMMEDIATE RELEASECAMBRIDGE DISPLAY TECHNOLOGY ANNOUNCES DATE FOR2ambridge, UK 27 October 2005 Cambridge Display Technology [Nasdaq: OLED], a global pioneer in the research, development and commercialisation of light emitting polymers (P-OLEDs), has announced that it will release its second quarter 2005 results after the close of market on Wednesday, November 9th, 2005.Management will hold a conference call on Thursday, November 10th, 2005 at 12:00 pm ET. The call will be webcast and can be accessed via the internet live or as a replay at www.earnings.com.The conference call will be archived for replay on the above website for approximately 14 days following the call.# # #About CDTCambridge Display Technology is a global leader in the research, development and commercialisation of light emitting polymers (P-OLEDs), which are targeted for use in a wide range of electronic display products used for information management, communications and entertainment. Features include reduced power consumption, size, thickness and weight, very wide viewing angle, superior video imaging performance and the potential for use on flexible display substrates.",
"Current CDT licensees are actively developing their manufacturing strategies. Founded in 1992, the company is headquartered in Cambridge, UK.http://www.cdtltd.co.uk"
]
| https://applica-public.s3-eu-west-1.amazonaws.com/contract-discovery/edgar.txt.xz | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 1 of 5
EXHIBIT 15 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 2 of 5 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 3 of 5 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 4 of 5 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 5 of 5 | 2021-03-04 | [
"Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 1 of 5 EXHIBIT 15 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 2 of 5 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 3 of 5 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 4 of 5 Case 2:19-cv-01130-RSL Document 93-15 Filed 03/04/21 Page 5 of 5"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/167308251/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Motion for reargument granted and, upon reargument, the decision herein is recalled and, upon such recall, the decision is modified to the extent of striking from the judgment the decretal paragraph directing the distribution ey pres of all funds remaining in the receiver’s hands after payment of all indebtedness and expenses of administration. This direction, aside from its vagueness, was made prematurely. An application for specific cy pres distribution in accordance with the applicable provisions of subdivisions 2 and "4 of section 12 of the Personal Property Law, may be made at the appropriate time. In all other respects, including its branch seeking leave to appeal to the Court of Appeals, motion is denied. Settle order. Present — Cohn, J. P., Breitel, Bastow and Botein, JJ. [See 284 App. Div. 935.] | 01-08-2022 | [
"Motion for reargument granted and, upon reargument, the decision herein is recalled and, upon such recall, the decision is modified to the extent of striking from the judgment the decretal paragraph directing the distribution ey pres of all funds remaining in the receiver’s hands after payment of all indebtedness and expenses of administration. This direction, aside from its vagueness, was made prematurely. An application for specific cy pres distribution in accordance with the applicable provisions of subdivisions 2 and \"4 of section 12 of the Personal Property Law, may be made at the appropriate time. In all other respects, including its branch seeking leave to appeal to the Court of Appeals, motion is denied. Settle order. Present — Cohn, J. P., Breitel, Bastow and Botein, JJ.",
"[See 284 App. Div. 935.]"
]
| https://www.courtlistener.com/api/rest/v3/opinions/5400235/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
199 F.2d 665 W. R. STEPHENS CO.v.COMMISSIONER OF INTERNAL REVENUE. No. 14499. United States Court of Appeals Eighth Circuit. November 13, 1952. Rehearing Denied December 15, 1952.
R. H. Fryberger, Minneapolis, Minn., for petitioner. Melva M. Graney, Sp. Asst. to Atty. Gen. (Ellis N. Slack, Acting Asst. Atty. Gen., and A. F. Prescott and Carolyn R. Just, Sp. Assts. to Atty. Gen., on the brief), for respondent. Before SANBORN, JOHNSEN and COLLET, Circuit Judges. SANBORN, Circuit Judge.
1 This is a petition to review a decision of the Tax Court of the United States redetermining deficiencies in the petitioner's excess profits taxes for the years 1944 and 1945 and income tax for the year 1945.
2 The petitioner is a dealer in new and used automobiles. It has a franchise from the General Motors Corporation for the sale of Buick automobiles. The principal place of petitioner's business is in Minneapolis, Minnesota. It also has a place of business in St. Paul. Under or by virtue of its franchise, the petitioner in 1941 and 1942 acquired from the Buick factory or from other Buick dealers more than three hundred new Buick cars of the 1942 model. During the war years 1942 to 1945, new automobiles were not being produced, and sales of new cars of the 1942 model were closely restricted by the Government. During that period the petitioner was engaged in dealing in used cars and gas and electrical household appliances. It was also a subcontractor under war contracts. The petitioner received no new Buick cars from the Buick factory until May 1946.
3 During the taxable years in suit twenty-eight 1942 Buick automobiles were being used, or were assigned for use, by the petitioner in the conduct of its business. Twenty-six of these cars had been acquired in 1941 and two in 1942. In 1944 the petitioner sold four of the twenty-eight cars. In 1945 it sold sixteen of the cars. The cars were sold at prices equal to those obtainable for new cars of the same model.
4 The petitioner claimed that the twenty-eight cars were property which was subject to allowance for depreciation in 1944 and 1945, under § 23(l) of the Internal Revenue Code, 26 U.S.C.A. § 23(l), which provides for "A reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence) — (1) of property used in the trade or business, or (2) of property held for the production of income."
5 The petitioner also claimed that the profits resulting from the sales of such of the cars in suit as were sold in 1944 and 1945 were long-term capital gains, and not ordinary income. This because of § 117 (j) of the Internal Revenue Code, 26 U.S. C.A. § 117(j), which, in effect, provides that gains from sales of property used in a trade or business and held for more than six months shall be considered as long-term capital gains from sales of capital assets if the property is not held primarily for sale to customers in the ordinary course of the taxpayer's trade or business.1
6 The respondent contends, and the Tax Court found, that the cars in suit were "property held by the taxpayer primarily for sale to customers in the ordinary course of his [its] trade or business" within the meaning of § 117(j) (1), and were not subject to allowance for depreciation, and that the gains from the sales of the cars were ordinary income.
7 The petitioner asserts that its evidence conclusively showed that the cars in suit were not primarily held for sale to customers in the ordinary course of its business, and that the finding of the Tax Court that they were so held is clearly erroneous.
8 The question which concerns us is whether there is adequate evidentiary support for the finding of the Tax Court. If there is, the decision under review must be affirmed. If there is not, the case must be remanded to that Court for a redetermination of the tax liability of the petitioner for the years in question.
9 In its 1944 tax return the petitioner deducted $2,457.58 as claimed depreciation on fourteen of the Buick cars in suit. This deduction was disallowed by the respondent upon the ground that the cars were held primarily for sale to customers in the ordinary course of petitioner's business. In its 1945 tax return the petitioner deducted $2,259.15 as depreciation on nineteen of the cars in suit. The respondent disallowed the deduction for the same reason it had disallowed the similar deduction claimed in the petitioner's 1944 return.
10 In its 1945 return the petitioner reported a long-term capital gain of $14,151.92 on the sale of sixteen of the cars in suit. The respondent ruled that gains from the sales of these cars were ordinary income, since the cars were held primarily for sale to customers.
11 The petitioner took no deduction for claimed depreciation on nineteen of the cars in suit in its 1941, 1942 and 1943 income tax returns. With respect to the additional nine cars asserted to be in company use on December 31, 1943, no depreciation was claimed in petitioner's returns or on its books between the dates of acquisition, 1941, (except for one car acquired March 10, 1942) and December 31, 1945. Six of these nine cars were sold between December 31, 1943, and December 31, 1945. The income from the sale of these six cars was reported by the petitioner as ordinary income, and not as capital gain. The petitioner now asserts that it was in error in so reporting the income from the sale of these cars, and that its tax liability should be adjusted accordingly.
12 The petitioner's system of bookkeeping was that prescribed by the General Motors Corporation for its dealers. The cars in suit were initially carried in what was known as Account No. 231, "New cars held in inventory available for sale." The cars were then transferred from that account to Account No. 230, "Company cars." As of May, 1944, fourteen of the cars were transferred to Account No. 285, a fixed asset account. The Treasurer of the petitioner testified that this last transfer was made on the recommendation of petitioner's Auditor, J. W. Stokes Company of New York. He testified: "They said that we [petitioner] should set up depreciation on them [the cars], and to depreciate them they decided to put them in service cars. * * * Their auditors came out to St. Paul from New York, and it was during one of these audits that someone from the auditors told our Treasurer [then Mr. Grover] to transfer them [the cars], and that is the way it happened."
13 New cars held for sale by petitioner were financed under the "floor plan" of the General Motors Acceptance Corporation. Under this plan petitioner signed a trust receipt in which it agreed to keep the cars new and unused, and only to move them from one warehouse to another. The cars could be used for display purposes, but were not to be used on the street for demonstration purposes. They were covered only by fire insurance.
14 Under another plan called a "Demonstration Agreement," petitioner financed 75 per cent of the cost of a new Buick car and was then permitted to use it for any purpose. A car so financed was covered by fire, comprehensive, and collision insurance. All of the twenty-eight cars in suit were financed under "Demonstration Agreement" during 1941, except the two cars received in 1942, which were financed on the same plan.
15 With reference to the practice of petitioner in transferring new cars from one account to another, its Treasurer testified as follows:
16 "The processes by which these new cars go into the account and are transferred to another account are these. As the cars are purchased from the factory they come in on factory invoices and we automatically put them into the new car inventory. That is in account 231, and when the car is — sometimes the cars are definitely set aside for company use before they are received. We order them for specific purposes. But through our procedure of bookkeeping they would go through the 231 account and then be transferred out to company car inventory. That would be account 230. No car under the floor plan would be in account 230. They would all be on the demonstration plan."
17 The petitioner's Treasurer also testified: "Cars used as demonstrator or company cars, courtesy cars, or cars for salesmen were classified with the company cars in the dealers' standard accounting system. They were not classified as dealer-owned demonstrators. They were called company cars which would include demonstrator; any car that is used for company purposes."
18 There were printed instructions on the back of each form of "Demonstration Agreement," reading as follows:
19 "Period of accommodation is not to exceed the number of months between date car is placed on demonstration and the next new model announcement.
20 "Dealer Release Order should be used to remit monthly payments or to pay full amount when motor vehicle is released from Demonstration Agreement."
21 The period between the date the car was placed on demonstration and the next new model announcement would not exceed one year under normal circumstances. Under the abnormal war conditions, the period was, of course, greatly extended, apparently until 1946.
22 It had always been the petitioner's practice, in connection with selling new Buick cars, to assign a number of such cars to certain of its officers and employees, mainly for use as demonstrators and courtesy cars. Courtesy cars were used for the accommodation of customers whose cars were laid up for repairs. During the years in suit, the petitioner also used some of the twenty-eight cars in suit in procuring used cars over a wide territory, the sale and servicing of household appliances, the procurement of automobile parts, and the carrying out of the defense work which had been contracted for by petitioner.
23 A list showing the serial numbers of the cars in suit and the persons to whom they were assigned, appears in the record. It is difficult to analyze the list, due to the uncertainty as to the significance of what appear to be pencil notations before the serial numbers of the cars. Apparently in 1945 only twelve of the cars were assigned to individual officers or employees of the petitioner, and the remainder were assigned generally as courtesy cars or for general use and replacement. The list does not designate the use to which the cars assigned to individuals were to be put. The pencil notations seem to indicate that eight of the cars were not used in 1944 and that none of the cars were assigned in that year to individual officers or employees. In any event, the list indicates that less than one-half of the cars in suit were assigned in either year to petitioner's officers and employees.
24 In Minnesota, if a car is to be used, the annual State license tax must be paid. If the car is not used, it is exempt from that tax. To gain the exemption, the car owner must file an affidavit of nonuse during the calendar year. In applying for a license for one of the cars in suit in January 1946, the petitioner stated: "This car has been in dead storage since March 10, 1942. Previous to that it was used on our dealer plates and for demonstration only." Eight of the cars were not licensed in 1944, and four of the eight were apparently not licensed in 1945.
25 The petitioner's explanation of the evidence showing that some of the cars were licensed in one year and not in another was that they were being held in reserve. "They were subject to call to be put back into service. It was the same as a plant having surplus equipment that sets it aside until needed."
26 There was no evidence from which it could be determined definitely to what extent any one of the twenty-eight cars had actually been used, or the specific use which had been made of it, and apparently no record of the mileage of any of the cars had been kept. While the twenty-eight cars were segregated on the petitioner's books from the other new cars acquired in 1941 and 1942, and were carried on the books as company cars or in the fixed asset account, and were, to some extent not definitely ascertainable, used in petitioner's business, they were, so far as price was concerned, eventually treated as new cars for the purpose of sale. They were not service cars in any ordinary sense. During the time they were held by petitioner they were appreciating, and not depreciating, in price. It is obvious that they would, in the ordinary course of petitioner's business, be sold before later model Buick cars became available.
The Tax Court said in its opinion:
27 "It was not within the normal operation of petitioner's business that the automobiles in issue were retained as company cars or demonstrators beyond the year in which they were current models. Their retention for a longer period by petitioner was brought about by the restriction on the production of automobiles and also by the Regulations of the Office of Production Management and the Office of Price Administration. Use of the automobiles for purposes beyond which they were permitted by the demonstration agreement, such as service cars used by maintenance men in making service calls for repairing household equipment and using the automobiles in seeking out and purchasing parts and used cars, were not ordinary and were not sufficient to change their normal character nor to establish that they were a depreciable asset rather than stock in trade.
28 "Petitioner has not clearly shown wherein these automobiles were used in a manner which within the normal operation of its business shows an intent to hold the cars primarily for a purpose other than sale. In our view it is for this purpose that the automobiles were originally acquired. No feature surrounds the original purchase of these automobiles by petitioner which would distinguish them from other new automobiles purchased and held for sales. Cf. United States v. Bennett, 5 Cir., 1951, 186 F.2d 407."
29 We think the question whether the cars in suit were or were not held primarily for sale in the ordinary course of petitioner's trade or business was, under the evidence, a question of fact for the Tax Court, and not a question of law for this Court. See and compare, Helvering v. Johnson, 8 Cir., 104 F.2d 140; Tyson v. Commissioner of Internal Revenue, 8 Cir., 146 F.2d 50.
30 The petitioner is of the opinion that this case is ruled by Albright v. United States, 8 Cir., 173 F.2d 339, and United States v. Bennett, 5 Cir., 186 F.2d 407. In those cases it was held, in substance, that livestock acquired by a stock breeder and held for breeding purposes, and not sold until its usefulness for such purposes had passed, was not held "primarily for sale to customers in the ordinary course of his trade or business." In those cases, while it appeared that the taxpayer would eventually sell his breeding stock when it ceased to be such, it was shown that his main objective in acquiring and holding the stock was for breeding purposes and not for the purpose of sale.
31 In the instant case, the evidence shows that the petitioner held the cars in suit for two purposes: one, for use pending sale; and, the other, for the purpose of sale. The respondent ruled that the primary purpose of the petitioner in holding the cars was for sale. His ruling in that regard was presumptively correct. The burden was upon the petitioner to show that the ruling was wrong. Welch v. Helvering, 290 U.S. 111, 115, 54 S.Ct. 8, 78 L.Ed. 212; Commissioner v. Heininger, 320 U.S. 467, 475, 64 S.Ct. 249, 88 L.Ed. 171; Commissioner v. Tower, 327 U.S. 280, 286, 66 S.Ct. 532, 90 L.Ed. 670.
32 We need go no further than to say that, in our opinion, the Tax Court was not compelled to find that the cars in suit were not held primarily for the purpose of sale in the ordinary course of petitioner's business.
33 The decision of the Tax Court is affirmed.
Notes:
1 "§ 117Capital gains and losses "(a) Definitions. As used in this chapter — "(1) Capital assets. The term `capital assets' means property held by the taxpayer (whether or not connected with his trade or business), but does not include stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or property, used in the trade or business, of a character which is subject to the allowance for depreciation provided in section 23(l), * * *. * * * * * "(j) Gains and losses from involuntary conversion and from the sale or exchange of certain property used in the trade or business "(1) Definition of property used in the trade or business. For the purposes of this subsection, the term `property used in the trade or business' means property used in the trade or business, of a character which is subject to the allowance for depreciation provided in section 23(l), held for more than 6 months, and real property used in the trade or business, held for more than 6 months, which is not (A) property of a kind which would properly be includible in the inventory of the taxpayer if on hand at the close of the taxable year, or (B) property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. * * * * * * * * "(2) General rule. If, during the taxable year, the recognized gains upon sales or exchanges of property used in the trade or business, plus the recognized gains from the compulsory or involuntary conversion * * * of property used in the trade or business and capital assets held for more than 6 months into other property or money, exceed the recognized losses from such sales, exchanges, and conversions, such gains and losses shall be considered as gains and losses from sales or exchanges of capital assets held for more than 6 months. * * *"
34 COLLET, Circuit Judge (dissenting).
35 There seems to me to be no material dispute concerning the facts. Petitioner received in the usual course of its business approximately 327 new 1942 model Buick automobiles. Of that number it assigned 28 to uses which were essential to the conduct of its business and which were used in the business or held available for such use. It is not suggested or contended that 28 was an unreasonable number of cars to be assigned, in view of the magnitude and character of its business. All of the 28 cars were, in the usual practice of the business, to be ultimately sold. Petitioner claimed they were primarily held for use in the business. The Commissioner contended that since they were to be ultimately sold, they were held primarily for sale and ipso facto could not have been primarily held for use in the business. The Tax Court agreed with the Commissioner but based its acquiescence in the Commissioner's position on the ground that as a matter of fact the evidence warranted the inference that the cars were held primarily for sale. I find no basis in the evidence for that inference. Hence, in my judgment the conclusion reached by the Tax Court can be sustained only on the theory that the Commissioner urged, i. e., that since the cars were acquired for the ultimate purpose of sale they must be said to have been acquired primarily for that purpose. If that be true, then no new car may be acquired, used by a dealer in its business and later sold, without being held to have been primarily acquired for sale. But this construction of the applicable sections of the Revenue Act quoted in the majority opinion was rejected in Albright v. United States, 8 Cir., 173 F.2d 339 and United States v. Bennett, 5 Cir., 186 F.2d 407, and I think rightly so.
36 I reach the conclusion that this case should be governed by the principles announced in the Albright and Bennett cases. | 08-23-2011 | [
"199 F.2d 665 W. R. STEPHENS CO.v.COMMISSIONER OF INTERNAL REVENUE. No. 14499. United States Court of Appeals Eighth Circuit. November 13, 1952. Rehearing Denied December 15, 1952. R. H. Fryberger, Minneapolis, Minn., for petitioner. Melva M. Graney, Sp. Asst. to Atty. Gen. (Ellis N. Slack, Acting Asst. Atty. Gen., and A. F. Prescott and Carolyn R. Just, Sp. Assts. to Atty. Gen., on the brief), for respondent. Before SANBORN, JOHNSEN and COLLET, Circuit Judges. SANBORN, Circuit Judge. 1 This is a petition to review a decision of the Tax Court of the United States redetermining deficiencies in the petitioner's excess profits taxes for the years 1944 and 1945 and income tax for the year 1945. 2 The petitioner is a dealer in new and used automobiles. It has a franchise from the General Motors Corporation for the sale of Buick automobiles. The principal place of petitioner's business is in Minneapolis, Minnesota. It also has a place of business in St. Paul. Under or by virtue of its franchise, the petitioner in 1941 and 1942 acquired from the Buick factory or from other Buick dealers more than three hundred new Buick cars of the 1942 model. During the war years 1942 to 1945, new automobiles were not being produced, and sales of new cars of the 1942 model were closely restricted by the Government.",
"During that period the petitioner was engaged in dealing in used cars and gas and electrical household appliances. It was also a subcontractor under war contracts. The petitioner received no new Buick cars from the Buick factory until May 1946. 3 During the taxable years in suit twenty-eight 1942 Buick automobiles were being used, or were assigned for use, by the petitioner in the conduct of its business. Twenty-six of these cars had been acquired in 1941 and two in 1942. In 1944 the petitioner sold four of the twenty-eight cars. In 1945 it sold sixteen of the cars. The cars were sold at prices equal to those obtainable for new cars of the same model. 4 The petitioner claimed that the twenty-eight cars were property which was subject to allowance for depreciation in 1944 and 1945, under § 23(l) of the Internal Revenue Code, 26 U.S.C.A. § 23(l), which provides for \"A reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence) — (1) of property used in the trade or business, or (2) of property held for the production of income.\" 5 The petitioner also claimed that the profits resulting from the sales of such of the cars in suit as were sold in 1944 and 1945 were long-term capital gains, and not ordinary income. This because of § 117 (j) of the Internal Revenue Code, 26 U.S. C.A. § 117(j), which, in effect, provides that gains from sales of property used in a trade or business and held for more than six months shall be considered as long-term capital gains from sales of capital assets if the property is not held primarily for sale to customers in the ordinary course of the taxpayer's trade or business.1 6 The respondent contends, and the Tax Court found, that the cars in suit were \"property held by the taxpayer primarily for sale to customers in the ordinary course of his [its] trade or business\" within the meaning of § 117(j) (1), and were not subject to allowance for depreciation, and that the gains from the sales of the cars were ordinary income.",
"7 The petitioner asserts that its evidence conclusively showed that the cars in suit were not primarily held for sale to customers in the ordinary course of its business, and that the finding of the Tax Court that they were so held is clearly erroneous. 8 The question which concerns us is whether there is adequate evidentiary support for the finding of the Tax Court. If there is, the decision under review must be affirmed. If there is not, the case must be remanded to that Court for a redetermination of the tax liability of the petitioner for the years in question. 9 In its 1944 tax return the petitioner deducted $2,457.58 as claimed depreciation on fourteen of the Buick cars in suit. This deduction was disallowed by the respondent upon the ground that the cars were held primarily for sale to customers in the ordinary course of petitioner's business. In its 1945 tax return the petitioner deducted $2,259.15 as depreciation on nineteen of the cars in suit. The respondent disallowed the deduction for the same reason it had disallowed the similar deduction claimed in the petitioner's 1944 return.",
"10 In its 1945 return the petitioner reported a long-term capital gain of $14,151.92 on the sale of sixteen of the cars in suit. The respondent ruled that gains from the sales of these cars were ordinary income, since the cars were held primarily for sale to customers. 11 The petitioner took no deduction for claimed depreciation on nineteen of the cars in suit in its 1941, 1942 and 1943 income tax returns. With respect to the additional nine cars asserted to be in company use on December 31, 1943, no depreciation was claimed in petitioner's returns or on its books between the dates of acquisition, 1941, (except for one car acquired March 10, 1942) and December 31, 1945. Six of these nine cars were sold between December 31, 1943, and December 31, 1945.",
"The income from the sale of these six cars was reported by the petitioner as ordinary income, and not as capital gain. The petitioner now asserts that it was in error in so reporting the income from the sale of these cars, and that its tax liability should be adjusted accordingly. 12 The petitioner's system of bookkeeping was that prescribed by the General Motors Corporation for its dealers. The cars in suit were initially carried in what was known as Account No. 231, \"New cars held in inventory available for sale.\" The cars were then transferred from that account to Account No. 230, \"Company cars.\" As of May, 1944, fourteen of the cars were transferred to Account No. 285, a fixed asset account. The Treasurer of the petitioner testified that this last transfer was made on the recommendation of petitioner's Auditor, J. W. Stokes Company of New York. He testified: \"They said that we [petitioner] should set up depreciation on them [the cars], and to depreciate them they decided to put them in service cars.",
"* * * Their auditors came out to St. Paul from New York, and it was during one of these audits that someone from the auditors told our Treasurer [then Mr. Grover] to transfer them [the cars], and that is the way it happened.\" 13 New cars held for sale by petitioner were financed under the \"floor plan\" of the General Motors Acceptance Corporation. Under this plan petitioner signed a trust receipt in which it agreed to keep the cars new and unused, and only to move them from one warehouse to another. The cars could be used for display purposes, but were not to be used on the street for demonstration purposes. They were covered only by fire insurance. 14 Under another plan called a \"Demonstration Agreement,\" petitioner financed 75 per cent of the cost of a new Buick car and was then permitted to use it for any purpose. A car so financed was covered by fire, comprehensive, and collision insurance. All of the twenty-eight cars in suit were financed under \"Demonstration Agreement\" during 1941, except the two cars received in 1942, which were financed on the same plan.",
"15 With reference to the practice of petitioner in transferring new cars from one account to another, its Treasurer testified as follows: 16 \"The processes by which these new cars go into the account and are transferred to another account are these. As the cars are purchased from the factory they come in on factory invoices and we automatically put them into the new car inventory. That is in account 231, and when the car is — sometimes the cars are definitely set aside for company use before they are received. We order them for specific purposes. But through our procedure of bookkeeping they would go through the 231 account and then be transferred out to company car inventory.",
"That would be account 230. No car under the floor plan would be in account 230. They would all be on the demonstration plan.\" 17 The petitioner's Treasurer also testified: \"Cars used as demonstrator or company cars, courtesy cars, or cars for salesmen were classified with the company cars in the dealers' standard accounting system. They were not classified as dealer-owned demonstrators. They were called company cars which would include demonstrator; any car that is used for company purposes.\"",
"18 There were printed instructions on the back of each form of \"Demonstration Agreement,\" reading as follows: 19 \"Period of accommodation is not to exceed the number of months between date car is placed on demonstration and the next new model announcement. 20 \"Dealer Release Order should be used to remit monthly payments or to pay full amount when motor vehicle is released from Demonstration Agreement.\" 21 The period between the date the car was placed on demonstration and the next new model announcement would not exceed one year under normal circumstances. Under the abnormal war conditions, the period was, of course, greatly extended, apparently until 1946. 22 It had always been the petitioner's practice, in connection with selling new Buick cars, to assign a number of such cars to certain of its officers and employees, mainly for use as demonstrators and courtesy cars.",
"Courtesy cars were used for the accommodation of customers whose cars were laid up for repairs. During the years in suit, the petitioner also used some of the twenty-eight cars in suit in procuring used cars over a wide territory, the sale and servicing of household appliances, the procurement of automobile parts, and the carrying out of the defense work which had been contracted for by petitioner. 23 A list showing the serial numbers of the cars in suit and the persons to whom they were assigned, appears in the record. It is difficult to analyze the list, due to the uncertainty as to the significance of what appear to be pencil notations before the serial numbers of the cars. Apparently in 1945 only twelve of the cars were assigned to individual officers or employees of the petitioner, and the remainder were assigned generally as courtesy cars or for general use and replacement. The list does not designate the use to which the cars assigned to individuals were to be put. The pencil notations seem to indicate that eight of the cars were not used in 1944 and that none of the cars were assigned in that year to individual officers or employees.",
"In any event, the list indicates that less than one-half of the cars in suit were assigned in either year to petitioner's officers and employees. 24 In Minnesota, if a car is to be used, the annual State license tax must be paid. If the car is not used, it is exempt from that tax. To gain the exemption, the car owner must file an affidavit of nonuse during the calendar year. In applying for a license for one of the cars in suit in January 1946, the petitioner stated: \"This car has been in dead storage since March 10, 1942. Previous to that it was used on our dealer plates and for demonstration only.\" Eight of the cars were not licensed in 1944, and four of the eight were apparently not licensed in 1945. 25 The petitioner's explanation of the evidence showing that some of the cars were licensed in one year and not in another was that they were being held in reserve.",
"\"They were subject to call to be put back into service. It was the same as a plant having surplus equipment that sets it aside until needed.\" 26 There was no evidence from which it could be determined definitely to what extent any one of the twenty-eight cars had actually been used, or the specific use which had been made of it, and apparently no record of the mileage of any of the cars had been kept. While the twenty-eight cars were segregated on the petitioner's books from the other new cars acquired in 1941 and 1942, and were carried on the books as company cars or in the fixed asset account, and were, to some extent not definitely ascertainable, used in petitioner's business, they were, so far as price was concerned, eventually treated as new cars for the purpose of sale.",
"They were not service cars in any ordinary sense. During the time they were held by petitioner they were appreciating, and not depreciating, in price. It is obvious that they would, in the ordinary course of petitioner's business, be sold before later model Buick cars became available. The Tax Court said in its opinion: 27 \"It was not within the normal operation of petitioner's business that the automobiles in issue were retained as company cars or demonstrators beyond the year in which they were current models. Their retention for a longer period by petitioner was brought about by the restriction on the production of automobiles and also by the Regulations of the Office of Production Management and the Office of Price Administration. Use of the automobiles for purposes beyond which they were permitted by the demonstration agreement, such as service cars used by maintenance men in making service calls for repairing household equipment and using the automobiles in seeking out and purchasing parts and used cars, were not ordinary and were not sufficient to change their normal character nor to establish that they were a depreciable asset rather than stock in trade.",
"28 \"Petitioner has not clearly shown wherein these automobiles were used in a manner which within the normal operation of its business shows an intent to hold the cars primarily for a purpose other than sale. In our view it is for this purpose that the automobiles were originally acquired. No feature surrounds the original purchase of these automobiles by petitioner which would distinguish them from other new automobiles purchased and held for sales. Cf. United States v. Bennett, 5 Cir., 1951, 186 F.2d 407.\" 29 We think the question whether the cars in suit were or were not held primarily for sale in the ordinary course of petitioner's trade or business was, under the evidence, a question of fact for the Tax Court, and not a question of law for this Court. See and compare, Helvering v. Johnson, 8 Cir., 104 F.2d 140; Tyson v. Commissioner of Internal Revenue, 8 Cir., 146 F.2d 50.",
"30 The petitioner is of the opinion that this case is ruled by Albright v. United States, 8 Cir., 173 F.2d 339, and United States v. Bennett, 5 Cir., 186 F.2d 407. In those cases it was held, in substance, that livestock acquired by a stock breeder and held for breeding purposes, and not sold until its usefulness for such purposes had passed, was not held \"primarily for sale to customers in the ordinary course of his trade or business.\"",
"In those cases, while it appeared that the taxpayer would eventually sell his breeding stock when it ceased to be such, it was shown that his main objective in acquiring and holding the stock was for breeding purposes and not for the purpose of sale. 31 In the instant case, the evidence shows that the petitioner held the cars in suit for two purposes: one, for use pending sale; and, the other, for the purpose of sale. The respondent ruled that the primary purpose of the petitioner in holding the cars was for sale. His ruling in that regard was presumptively correct.",
"The burden was upon the petitioner to show that the ruling was wrong. Welch v. Helvering, 290 U.S. 111, 115, 54 S.Ct. 8, 78 L.Ed. 212; Commissioner v. Heininger, 320 U.S. 467, 475, 64 S.Ct. 249, 88 L.Ed. 171; Commissioner v. Tower, 327 U.S. 280, 286, 66 S.Ct. 532, 90 L.Ed. 670. 32 We need go no further than to say that, in our opinion, the Tax Court was not compelled to find that the cars in suit were not held primarily for the purpose of sale in the ordinary course of petitioner's business. 33 The decision of the Tax Court is affirmed. Notes: 1 \"§ 117Capital gains and losses \"(a) Definitions. As used in this chapter — \"(1) Capital assets.",
"The term `capital assets' means property held by the taxpayer (whether or not connected with his trade or business), but does not include stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business, or property, used in the trade or business, of a character which is subject to the allowance for depreciation provided in section 23(l), * * *.",
"* * * * * \"(j) Gains and losses from involuntary conversion and from the sale or exchange of certain property used in the trade or business \"(1) Definition of property used in the trade or business. For the purposes of this subsection, the term `property used in the trade or business' means property used in the trade or business, of a character which is subject to the allowance for depreciation provided in section 23(l), held for more than 6 months, and real property used in the trade or business, held for more than 6 months, which is not (A) property of a kind which would properly be includible in the inventory of the taxpayer if on hand at the close of the taxable year, or (B) property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. * * * * * * * * \"(2) General rule.",
"If, during the taxable year, the recognized gains upon sales or exchanges of property used in the trade or business, plus the recognized gains from the compulsory or involuntary conversion * * * of property used in the trade or business and capital assets held for more than 6 months into other property or money, exceed the recognized losses from such sales, exchanges, and conversions, such gains and losses shall be considered as gains and losses from sales or exchanges of capital assets held for more than 6 months. * * *\" 34 COLLET, Circuit Judge (dissenting). 35 There seems to me to be no material dispute concerning the facts.",
"Petitioner received in the usual course of its business approximately 327 new 1942 model Buick automobiles. Of that number it assigned 28 to uses which were essential to the conduct of its business and which were used in the business or held available for such use. It is not suggested or contended that 28 was an unreasonable number of cars to be assigned, in view of the magnitude and character of its business. All of the 28 cars were, in the usual practice of the business, to be ultimately sold. Petitioner claimed they were primarily held for use in the business. The Commissioner contended that since they were to be ultimately sold, they were held primarily for sale and ipso facto could not have been primarily held for use in the business.",
"The Tax Court agreed with the Commissioner but based its acquiescence in the Commissioner's position on the ground that as a matter of fact the evidence warranted the inference that the cars were held primarily for sale. I find no basis in the evidence for that inference. Hence, in my judgment the conclusion reached by the Tax Court can be sustained only on the theory that the Commissioner urged, i. e., that since the cars were acquired for the ultimate purpose of sale they must be said to have been acquired primarily for that purpose. If that be true, then no new car may be acquired, used by a dealer in its business and later sold, without being held to have been primarily acquired for sale.",
"But this construction of the applicable sections of the Revenue Act quoted in the majority opinion was rejected in Albright v. United States, 8 Cir., 173 F.2d 339 and United States v. Bennett, 5 Cir., 186 F.2d 407, and I think rightly so. 36 I reach the conclusion that this case should be governed by the principles announced in the Albright and Bennett cases."
]
| https://www.courtlistener.com/api/rest/v3/opinions/230360/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Citation Nr: 0821966
Decision Date: 07/03/08 Archive Date: 07/14/08
DOCKET NO. 05-41 119 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Lincoln,
Nebraska
THE ISSUES
1. Entitlement to an increased rating for degenerative joint
disease of the left knee, currently assigned a 10 percent
evaluation.
2. Entitlement to an increased rating for degenerative joint
disease of the right knee, currently assigned a 10 percent
evaluation.
3. Entitlement to an increased rating for tendinitis of the
left shoulder, currently assigned a 20 percent evaluation.
4. Entitlement to an increased rating for tendinitis of the
right shoulder, currently assigned a 20 percent evaluation.
REPRESENTATION
Appellant represented by: Nebraska Department of
Veterans' Affairs
WITNESS AT HEARING ON APPEAL
Appellant
ATTORNEY FOR THE BOARD
K. Hudson, Counsel
INTRODUCTION
The veteran had active service from February 1969 to November
1972, and from May 1980 to August 1996.
This matter comes before the Board of Veterans' Appeals
(Board) on appeal from a regional office (RO) rating decision
of April 2005, which denied a rating in excess of 10 percent
for each of the disabilities currently on appeal; an
additional issue involving entitlement to a compensable
rating for a right foot condition was withdrawn at an RO
hearing in February 2006. In a June 2006 rating decision,
the rating for each of the veteran's shoulder conditions was
increased to 20 percent, effective the date of claim in
January 2005. However, a grant of less than the maximum
available rating does not terminate the appeal, unless the
veteran expressly states he is satisfied with the assigned
rating, and the issues remain on appeal. See AB v. Brown, 6
Vet.App. 35, 38 (1993).
The appeal is REMANDED to the RO via the Appeals Management
Center (AMC), in Washington, DC. VA will notify the
appellant if further action is required.
REMAND
The veteran requested a Travel Board hearing in his December
2005 substantive appeal, then selected the option of an RO
hearing in response to a December 2005 letter asking him to
specify the type of hearing he wanted. That hearing was held
in March 2006. However, in August 2006, his representative
wrote that the veteran had submitted written testimony and
that he would submit oral testimony at a "Hearing to be
scheduled with the VARO in Lincoln with the Board." In May
2008, the Board requested clarification from the veteran as
to whether he wanted a Board hearing, and if so, what type.
The veteran responded, in May 2008, that he wanted to appear
at a hearing before a Veterans Law Judge of the Board at his
local RO.
Accordingly, the case is REMANDED for the following action:
Schedule the veteran for a hearing to be
held at the RO before a Veterans Law Judge
(i.e., Travel Board hearing).
The appellant has the right to submit additional evidence and
argument on the matter or matters the Board has remanded.
Kutscherousky v. West, 12 Vet. App. 369 (1999). This claim
must be afforded expeditious treatment. The law requires
that all claims that are remanded by the Board of Veterans'
Appeals or by the United States Court of Appeals for Veterans
Claims for additional development or other appropriate action
must be handled in an expeditious manner. See 38 U.S.C.A. §§
5109B, 7112 (West Supp. 2008).
_________________________________________________
K. PARAKKAL
Veterans Law Judge, Board of Veterans' Appeals
Under 38 U.S.C.A. § 7252 (West 2002), only a decision of the
Board of Veterans' Appeals is appealable to the United States
Court of Appeals for Veterans Claims. This remand is in the
nature of a preliminary order and does not constitute a
decision of the Board on the merits of your appeal.
38 C.F.R. § 20.1100(b) (2007). | 07-03-2008 | [
"Citation Nr: 0821966 Decision Date: 07/03/08 Archive Date: 07/14/08 DOCKET NO. 05-41 119 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Lincoln, Nebraska THE ISSUES 1. Entitlement to an increased rating for degenerative joint disease of the left knee, currently assigned a 10 percent evaluation. 2. Entitlement to an increased rating for degenerative joint disease of the right knee, currently assigned a 10 percent evaluation. 3. Entitlement to an increased rating for tendinitis of the left shoulder, currently assigned a 20 percent evaluation. 4. Entitlement to an increased rating for tendinitis of the right shoulder, currently assigned a 20 percent evaluation.",
"REPRESENTATION Appellant represented by: Nebraska Department of Veterans' Affairs WITNESS AT HEARING ON APPEAL Appellant ATTORNEY FOR THE BOARD K. Hudson, Counsel INTRODUCTION The veteran had active service from February 1969 to November 1972, and from May 1980 to August 1996. This matter comes before the Board of Veterans' Appeals (Board) on appeal from a regional office (RO) rating decision of April 2005, which denied a rating in excess of 10 percent for each of the disabilities currently on appeal; an additional issue involving entitlement to a compensable rating for a right foot condition was withdrawn at an RO hearing in February 2006.",
"In a June 2006 rating decision, the rating for each of the veteran's shoulder conditions was increased to 20 percent, effective the date of claim in January 2005. However, a grant of less than the maximum available rating does not terminate the appeal, unless the veteran expressly states he is satisfied with the assigned rating, and the issues remain on appeal. See AB v. Brown, 6 Vet.App. 35, 38 (1993). The appeal is REMANDED to the RO via the Appeals Management Center (AMC), in Washington, DC. VA will notify the appellant if further action is required.",
"REMAND The veteran requested a Travel Board hearing in his December 2005 substantive appeal, then selected the option of an RO hearing in response to a December 2005 letter asking him to specify the type of hearing he wanted. That hearing was held in March 2006. However, in August 2006, his representative wrote that the veteran had submitted written testimony and that he would submit oral testimony at a \"Hearing to be scheduled with the VARO in Lincoln with the Board.\" In May 2008, the Board requested clarification from the veteran as to whether he wanted a Board hearing, and if so, what type. The veteran responded, in May 2008, that he wanted to appear at a hearing before a Veterans Law Judge of the Board at his local RO. Accordingly, the case is REMANDED for the following action: Schedule the veteran for a hearing to be held at the RO before a Veterans Law Judge (i.e., Travel Board hearing). The appellant has the right to submit additional evidence and argument on the matter or matters the Board has remanded. Kutscherousky v. West, 12 Vet.",
"App. 369 (1999). This claim must be afforded expeditious treatment. The law requires that all claims that are remanded by the Board of Veterans' Appeals or by the United States Court of Appeals for Veterans Claims for additional development or other appropriate action must be handled in an expeditious manner. See 38 U.S.C.A. §§ 5109B, 7112 (West Supp. 2008). _________________________________________________ K. PARAKKAL Veterans Law Judge, Board of Veterans' Appeals Under 38 U.S.C.A. § 7252 (West 2002), only a decision of the Board of Veterans' Appeals is appealable to the United States Court of Appeals for Veterans Claims. This remand is in the nature of a preliminary order and does not constitute a decision of the Board on the merits of your appeal. 38 C.F.R.",
"§ 20.1100(b) (2007)."
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
DETAILED ACTION This office action is in response to the communication received on 06/23/2021 concerning application no. 16/316,447 filed on 01/09/2019.
Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Response to Arguments Applicant's arguments filed 06/23/2021 have been fully considered but they are not persuasive. While applicant is correct regarding the dependent claims that further limit the scope of an allowable claim in a related OEE application, applicant’s cancellation of several limitations in claim 33 and addition of other limitations (including “selectively attach” the registration frame) are seen to alter the scope of claim 33 such that it no longer sufficiently corresponds to allowed claim 11 of the OEE application. The appended notice will be updated accordingly.
Patent Prosecution Highway Cases Per the decision reached on 09/09/2019 regarding the petition filed 08/09/2019, the instant application has been made special under the provisions of the Patent Prosecution Highway (PPH) program. Applicant is encouraged to review supporting material for cases made Applicant is reminded that any claims presently in the instant application or amendments made during prosecution of the instant application must sufficiently correspond to the claims allowed by the office of earlier examination. A US claim will be considered to sufficiently correspond with claims allowed by the office of earlier examination if the US claims are of the same or similar scope, or the US claims are narrower in scope than the allowed claims. The additional limitation that makes the US claims narrower in scope than the allowed claims must be presented in dependent form. Amendments which incorporate prior dependent claims into an independent claim are permissible to place an application in condition for allowance. Any amendments must be accompanied by a certification statement per section IV, paragraph III on page 4 of the notice published on the patent prosecution highway website (https://www.uspto.gov/sites/default/files/documents/global-ip5.pdf). If the certification statement is omitted, the amendment will not be entered and will be treated as a non-responsive reply.
Claim Amendments Received June 23, 2021 Consistent with paragraph 4, above, a certification statement is required for any amendments to the claims in an application participating in the patent prosecution highway program. While a certification statement was filed with the amendment received 06/23/2021 purporting to identify claim 11 in the OEE application, published as EP 3 454 770, to which The PPH program requires amendments “sufficiently correspond” to the claims of the OEE application. In the amendment filed 06/23/2021, applicant cancelled more than 32% (based on word count) of the original claim language for claim 33 and added additional claim language. For example, applicant canceled “for conducting medical navigation, the system” from the preamble of the claim and canceled “a plurality of attachment parts for selectively attaching the tracking frame directly or indirectly with the registration frame” along with “wherein the tracking marker array and the tracking frame connector are provided as separate connected pieces” from the body of the claim. Applicant added limitations directed to the tracking frame connector comprising “a tracking frame” image marker as well as addition language specifying the selective connection of the tracking frame with the registration “frame at an attachment part of the registration frame.” These extensive changes are seen to significantly alter the scope of the claim such that it no longer “sufficiently corresponds” to claim 11 as allowed by the OEE.
For ease of comparison, claims 11 – 13 from publication EP 3 454 770 (the later publication of application 17755074.6, the OEE application) are provided below:
11. A system (1) for conducting medical navigation, comprising: a) a tracking frame (13) including a tracking marker array (2) comprising at least three optical markers (3) and a tracking frame connector (6) for connecting the tracking frame (13) with the registration frame (4), wherein an image marker (11) is provided in or on the tracking frame connector (6); b) a registration frame (4), comprising:
at least three image markers (12) which are arranged in or on the registration frame (4); a plurality of attachment parts (5) for attaching the tracking frame (13) directly or indirectly to the registration frame (4),characterized in that the tracking marker array (2) and the tracking frame connector (6) are provided as separate connectable pieces. 12. The system (1) according to the preceding claim, wherein the attachment part (5) is constituted such that the tracking frame (13) is attachable to the registration frame (4) in a predetermined orientation relative to the registration frame (4). 13. The system (1) according claim 11, wherein at least three image markers (11) are provided in or on the tracking frame (13), and wherein the attachment part (5) is constituted such that the tracking frame (13) is attachable to the registration frame (4) in a not-predetermined orientation relative to the registration frame (4).
Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to LUTHER G BEHRINGER whose telephone number is (469)295-9086. The examiner can normally be reached on M-F 8 - 5 EST. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Pascal Bui-Pho can be reached on (571) 272-2714. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
/LUTHER BEHRINGER/Primary Examiner, Art Unit 3793 | 2021-07-10T14:52:07 | [
"DETAILED ACTION This office action is in response to the communication received on 06/23/2021 concerning application no. 16/316,447 filed on 01/09/2019. Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Response to Arguments Applicant's arguments filed 06/23/2021 have been fully considered but they are not persuasive.",
"While applicant is correct regarding the dependent claims that further limit the scope of an allowable claim in a related OEE application, applicant’s cancellation of several limitations in claim 33 and addition of other limitations (including “selectively attach” the registration frame) are seen to alter the scope of claim 33 such that it no longer sufficiently corresponds to allowed claim 11 of the OEE application. The appended notice will be updated accordingly. Patent Prosecution Highway Cases Per the decision reached on 09/09/2019 regarding the petition filed 08/09/2019, the instant application has been made special under the provisions of the Patent Prosecution Highway (PPH) program. Applicant is encouraged to review supporting material for cases made Applicant is reminded that any claims presently in the instant application or amendments made during prosecution of the instant application must sufficiently correspond to the claims allowed by the office of earlier examination. A US claim will be considered to sufficiently correspond with claims allowed by the office of earlier examination if the US claims are of the same or similar scope, or the US claims are narrower in scope than the allowed claims.",
"The additional limitation that makes the US claims narrower in scope than the allowed claims must be presented in dependent form. Amendments which incorporate prior dependent claims into an independent claim are permissible to place an application in condition for allowance. Any amendments must be accompanied by a certification statement per section IV, paragraph III on page 4 of the notice published on the patent prosecution highway website (https://www.uspto.gov/sites/default/files/documents/global-ip5.pdf). If the certification statement is omitted, the amendment will not be entered and will be treated as a non-responsive reply.",
"Claim Amendments Received June 23, 2021 Consistent with paragraph 4, above, a certification statement is required for any amendments to the claims in an application participating in the patent prosecution highway program. While a certification statement was filed with the amendment received 06/23/2021 purporting to identify claim 11 in the OEE application, published as EP 3 454 770, to which The PPH program requires amendments “sufficiently correspond” to the claims of the OEE application. In the amendment filed 06/23/2021, applicant cancelled more than 32% (based on word count) of the original claim language for claim 33 and added additional claim language. For example, applicant canceled “for conducting medical navigation, the system” from the preamble of the claim and canceled “a plurality of attachment parts for selectively attaching the tracking frame directly or indirectly with the registration frame” along with “wherein the tracking marker array and the tracking frame connector are provided as separate connected pieces” from the body of the claim.",
"Applicant added limitations directed to the tracking frame connector comprising “a tracking frame” image marker as well as addition language specifying the selective connection of the tracking frame with the registration “frame at an attachment part of the registration frame.” These extensive changes are seen to significantly alter the scope of the claim such that it no longer “sufficiently corresponds” to claim 11 as allowed by the OEE.",
"For ease of comparison, claims 11 – 13 from publication EP 3 454 770 (the later publication of application 17755074.6, the OEE application) are provided below: 11. A system (1) for conducting medical navigation, comprising: a) a tracking frame (13) including a tracking marker array (2) comprising at least three optical markers (3) and a tracking frame connector (6) for connecting the tracking frame (13) with the registration frame (4), wherein an image marker (11) is provided in or on the tracking frame connector (6); b) a registration frame (4), comprising: at least three image markers (12) which are arranged in or on the registration frame (4); a plurality of attachment parts (5) for attaching the tracking frame (13) directly or indirectly to the registration frame (4),characterized in that the tracking marker array (2) and the tracking frame connector (6) are provided as separate connectable pieces. 12. The system (1) according to the preceding claim, wherein the attachment part (5) is constituted such that the tracking frame (13) is attachable to the registration frame (4) in a predetermined orientation relative to the registration frame (4).",
"13. The system (1) according claim 11, wherein at least three image markers (11) are provided in or on the tracking frame (13), and wherein the attachment part (5) is constituted such that the tracking frame (13) is attachable to the registration frame (4) in a not-predetermined orientation relative to the registration frame (4). Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to LUTHER G BEHRINGER whose telephone number is (469)295-9086. The examiner can normally be reached on M-F 8 - 5 EST. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice.",
"If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Pascal Bui-Pho can be reached on (571) 272-2714. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair.",
"Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. /LUTHER BEHRINGER/Primary Examiner, Art Unit 3793"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-07-04.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM8-K CURRENT REPORT PURSUANT TO SECTION13 OR 15(D)OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported)June 21, 2010 (June 17, 2010) TechTarget,Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation) 1-33472 04-3483216 (Commission File Number) (IRS Employer Identification No.) 275 Grove Street Newton, Massachusetts (Address of Principal Executive Offices) (Zip Code) (617) 431-9200 (Registrant’s Telephone Number, Including Area Code) (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule14d-2(b)under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule13e-4(c)under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.07 Submission of Matters to a Vote of Security Holders. Voting Results. The 2010 Annual Meeting of Stockholders of TechTarget, Inc. (the “Company”) was held on June 17, 2010 (the “Annual Meeting”). There were 42,464,394 shares of the Company’s common stock eligible to vote and 33,781,793 shares present in person or by proxy at the Annual Meeting. One item of business was acted upon by stockholders at the Annual Meeting. 1. Election of Directors Stockholders elected each of Greg Strakosch and Leonard P. Forman to serve as directors for a three-year term expiring at the 2013 Annual Meeting of Stockholders.The vote totals were as follows: Nominee Votes For Votes Withheld Non-Votes Greg Strakosch 0 Leonard P. Forman 0 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TechTarget,Inc. Date: June 21, 2010 By: /s/ Jeffrey Wakely Jeffrey Wakely Chief Financial Officer | [
"UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM8-K CURRENT REPORT PURSUANT TO SECTION13 OR 15(D)OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported)June 21, 2010 (June 17, 2010) TechTarget,Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation) 1-33472 04-3483216 (Commission File Number) (IRS Employer Identification No.) 275 Grove Street Newton, Massachusetts (Address of Principal Executive Offices) (Zip Code) (617) 431-9200 (Registrant’s Telephone Number, Including Area Code) (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.",
"below): o Written communications pursuant to Rule425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule14d-2(b)under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule13e-4(c)under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.07 Submission of Matters to a Vote of Security Holders. Voting Results. The 2010 Annual Meeting of Stockholders of TechTarget, Inc. (the “Company”) was held on June 17, 2010 (the “Annual Meeting”). There were 42,464,394 shares of the Company’s common stock eligible to vote and 33,781,793 shares present in person or by proxy at the Annual Meeting. One item of business was acted upon by stockholders at the Annual Meeting. 1. Election of Directors Stockholders elected each of Greg Strakosch and Leonard P. Forman to serve as directors for a three-year term expiring at the 2013 Annual Meeting of Stockholders.The vote totals were as follows: Nominee Votes For Votes Withheld Non-Votes Greg Strakosch 0 Leonard P. Forman 0 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TechTarget,Inc. Date: June 21, 2010 By: /s/ Jeffrey Wakely Jeffrey Wakely Chief Financial Officer"
]
| https://applica-public.s3-eu-west-1.amazonaws.com/contract-discovery/edgar.txt.xz | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
Order affirmed, with costs; no opinion. Concur: HISCOCK, Ch. J., HOGAN, CARDOZO, POUND, McLAUGHLIN, CRANE and ANDREWS, JJ. | 07-06-2016 | [
"Order affirmed, with costs; no opinion. Concur: HISCOCK, Ch. J., HOGAN, CARDOZO, POUND, McLAUGHLIN, CRANE and ANDREWS, JJ."
]
| https://www.courtlistener.com/api/rest/v3/opinions/3617283/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Opinion by Mollison, J. In accordance with stipulation of counsel that the lumber is similar in all material respects to that the subject of United States v. F. W. Myers & Co., Inc. (24 C. C. P. A. 156, T. D. 48640) and F. W. Myers & Co., Inc. v. United States (73 Treas. Dec. 714, T. D. 49530), the claim of the plaintiff was sustained as to certain of the protests in question. The collector was directed to reliquidate the entries on the basis of the actual number of board feet of planed, tongued, and/or grooved lumber imported, as shown on the invoices and/or the entries covered by the said protests, or as may be calculated arithmetically from the information shown thereon. In all other respects and as to all other merchandise, the protests were overruled. | 09-09-2022 | [
"Opinion by Mollison, J. In accordance with stipulation of counsel that the lumber is similar in all material respects to that the subject of United States v. F. W. Myers & Co., Inc. (24 C. C. P. A. 156, T. D. 48640) and F. W. Myers & Co., Inc. v. United States (73 Treas. Dec. 714, T. D. 49530), the claim of the plaintiff was sustained as to certain of the protests in question. The collector was directed to reliquidate the entries on the basis of the actual number of board feet of planed, tongued, and/or grooved lumber imported, as shown on the invoices and/or the entries covered by the said protests, or as may be calculated arithmetically from the information shown thereon.",
"In all other respects and as to all other merchandise, the protests were overruled."
]
| https://www.courtlistener.com/api/rest/v3/opinions/8102108/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
United States Department of Labor Employees’ Compensation Appeals Board __________________________________________ D.A., Appellant and DEPARTMENT OF VETERANS AFFAIRS, VETERANS AMINISTRATION MEDICAL CENTER, Detroit, MI, Employer __________________________________________
) ) ) ) ) ) ) ) )
Appearances: Alan J. Shapiro, Esq., for the appellant1 Office of Solicitor, for the Director
Docket No. 16-0879 Issued: October 27, 2016
Case Submitted on the Record
DECISION AND ORDER Before: PATRICIA H. FITZGERALD, Deputy Chief Judge ALEC J. KOROMILAS, Alternate Judge VALERIE D. EVANS-HARRELL, Alternate Judge
JURISDICTION On March 23, 2016 appellant, through counsel, filed a timely appeal of a January 29, 2016 merit decision of the Office of Workers’ Compensation Programs (OWCP). Pursuant to the Federal Employees’ Compensation Act2 (FECA) and 20 C.F.R. §§ 501.2(c) and 501.3, the Board has jurisdiction over the merits of this case.
1
In all cases in which a representative has been authorized in a matter before the Board, no claim for a fee for legal or other service performed on appeal before the Board is valid unless approved by the Board. 20 C.F.R. § 501.9(e). No contract for a stipulated fee or on a contingent fee basis will be approved by the Board. Id. An attorney or representative’s collection of a fee without the Board’s approval may constitute a misdemeanor, subject to fine or imprisonment for up to one year or both. Id.; see also 18 U.S.C. § 292. Demands for payment of fees to a representative, prior to approval by the Board, may be reported to appropriate authorities for investigation. 2
5 U.S.C. § 8101 et seq.
ISSUE The issue is whether appellant met his burden of proof to establish an injury causally related to the accepted February 26, 2014 employment incident. FACTUAL HISTORY On March 5, 2014 appellant, then a 44-year-old motor vehicle operator, filed a traumatic injury claim (Form CA-1) alleging that on February 26, 2014 he strained his left shoulder when he lifted a heavy, oversized walker into a van. He stopped work on March 4, 2014. In a February 26, 2014 incident report, appellant’s supervisor indicated that on that day at around 1:00 p.m. appellant was getting ready to drive a patient home. When appellant lifted an oversized walker into the back of the van, he strained his shoulder. The supervisor noted that appellant returned to work with restrictions of no lifting. Appellant was examined in employee health by Thresiamma Idichandy, a nurse practitioner, and Dr. Sudhir G. Rao, a Board-certified internist. In a February 27, 2014 progress note, Dr. Rao indicated that appellant complained of left shoulder pain since February 26, 2014 when he lifted a male patient’s walker while transporting the patient. Physical examination revealed tenderness on the posterior part of appellant’s left shoulder and limited range of motion. Dr. Rao reported no redness, swelling, or bruising. He authorized appellant to return to work with restrictions of no pulling, pushing, or lifting with his left hand until March 3, 2014. Dr. Frances Hewitt, Board-certified in family medicine, also treated appellant. In a February 28, 2014 progress note, he noted a diagnosis of shoulder pain. In a March 4, 2014, report, Dr. Hewitt recommended that appellant remain off work from March 4 to 11, 2014. Appellant underwent various diagnostic examinations. In a March 6, 2014 magnetic resonance imaging (MRI) scan examination report of the left shoulder, Dr. Marnix Van Holsbeeck, a diagnostic radiology specialist, observed arthritic changes of the left acromioclavicular (AC) joint, bone spurring of the proximal left humerus, and narrowing of the inferior left glenohumeral joint. He diagnosed sequelae of Bankart repair with arthritic change of the left glenohumeral. In a March 6, 2014 ultrasound report of the left shoulder, Dr. Mark Diamond, a Boardcertified diagnostic radiologist, observed that appellant’s AC joint was within normal limits and supraspinatus and infraspinatus tendons were intact. He reported that appellant’s subscapularis tendon was suboptimally visualized due to appellant’s inability to externally rotate. Dr. Diamond noted that there was no evidence of rotator cuff tear, mass lesion, or glenohumeral joint effusion. Dr. Joseph Hoegler, a Board-certified orthopedic surgeon, reported in a March 7, 2014 work status note that appellant should be off work until April 3, 2014. Appellant received treatment from Dr. Nancy S. White, Board-certified in family and sports medicine. In a March 31, 2014 progress report, Dr. White opined that he should remain off work until April 18, 2014. She described that on February 26, 2014 appellant was helping a 2
300-plus pound patient into a car and experienced a pulling sensation in his left scapular region. Dr. White noted that he continued to complain of left posterior shoulder pain. She reviewed appellant’s history and noted that an ultrasound report showed no evidence of rotator cuff tear or supraspinatus muscular tear. Upon examination, Dr. White observed slight tenderness in the midline of the lower cervical segment and extreme tenderness in the left superior trapezius region. Forward flexion, extension, right and left side bending, and right and left lateral rotation were normal. Hawkins and Neer impingement signs were positive. Dr. White diagnosed persistent left posterior shoulder pain, likely cervical radiculitis. In a letter dated April 21, 2014 a human resource (HR) specialist at the employing establishment, noted that the medical evidence revealed that appellant was temporarily unable to perform his normal duties, but that he was physically able to perform alternative duty tasks. She offered him an alternative-duty assignment in the Motor Vehicle Section of the Police and Security Service. The HR specialist advised appellant that if he was unable to perform the alternative duties he must provide medical evidence to support his inability to perform the alternative duty. Dr. White continued to treat appellant and in an April 21, 2014 report advised that he may return to work on April 22, 2014 with restrictions of no lifting in excess of 15 pounds and minimal lifting above shoulder height. She recommended that the restrictions were effective until May 18, 2014. On April 22, 2014 appellant filed a claim for wage-loss compensation (Form CA-7) for the period March 4 to April 21, 2014. By letter dated April 29, 2014, OWCP informed appellant that his claim initially appeared to be a minor injury, but was now being reopened for review on the merits. It requested that he submit additional evidence to establish that he sustained a diagnosed condition causally related to the February 26, 2014 employment incident. Appellant was afforded 30 days to submit this additional evidence. In a May 16, 2014 report, Dr. White indicated that she examined appellant and noted a diagnosis of osteoarthritis of left glenohumeral joint. She recommended that he work with restrictions of no lifting in excess of 15 pounds and minimal work or lifting above shoulder height. Dr. White noted that appellant’s restrictions were effective from April 21 to May 18, 2014. OWCP denied appellant’s claim in a decision dated May 29, 2014. It accepted that the February 26, 2014 incident occurred as alleged and that he sustained a left shoulder condition, but denied his claim finding that the medical evidence was insufficient to establish that his condition was causally related to the accepted incident. Following OWCP’s denial decision, appellant submitted a June 13, 2014 report from Dr. White. Dr. White related that on February 26, 2014 he helped a male patient get into appellant’s car with his seated walker and felt a pulling sensation in the left scapular region. She noted a diagnosis of osteoarthritis of the left glenohumeral joint. Upon examination, Dr. White observed slight tenderness in the midline of the lower cervical segment, extreme tenderness in
3
the left superior trapezius region, and limited range of motion. Hawkins and Neer impingement tests were positive. Dr. White also noted pain on each of the tests along the spine of appellant’s left scapula. She reviewed his diagnostic examination results and noted that it revealed moderate glenohumeral arthritis and rotator cuff tendinosis. Dr. White explained that it was clear that appellant had underlying left shoulder pathology with glenohumeral osteoarthritis and rotator cuff tendinosis. She opined that any repetitive lifting or working above the shoulder height would aggravate this issue. On July 8, 2014 OWCP received appellant’s appeal request form, postmarked July 1, 2014, which requested a review of the written record by an OWCP hearing representative. By decision dated July 18, 2014, OWCP denied appellant’s request for review of the written record. It determined that his request was not made within 30 days of the May 29, 2014 OWCP decision and that his case could equally well be addressed by requesting reconsideration. On December 10, 2014 OWCP received appellant’s request, through counsel, for reconsideration of the May 29, 2014 OWCP decision. By decision dated December 16, 2014, OWCP denied modification of the May 29, 2014 decision. It found that the new medical report from Dr. White failed to establish causal relationship. On November 16, 2015 OWCP received appellant’s request, through counsel, for reconsideration. Appellant resubmitted Dr. White’s April 21, May 16, and June 13, 2014 reports; and March 6, 2014 diagnostic testing reports. He also submitted several physical therapy reports dated March 18 and 24, 2014. Appellant also submitted a March 6, 2014 narrative report from Dr. Hewitt who examined him for complaints of left shoulder pain. Dr. Hewitt related that appellant noted his current episode of left shoulder pain started one to four weeks ago and had gradually worsened. He noted that appellant had a history of osteoarthritis. Dr. Hewitt recounted that on February 26, 2014 appellant was helping a 340-pound plus male patient get into a van with a seated walker when he felt a pull in the left shoulder. He discussed appellant’s history and conducted an examination. Dr. Hewitt observed normal range of motion, mood, affect, and behavior. Dr. White continued to treat appellant and indicated in a September 25, 2015 narrative report that he suffered a left shoulder injury in February 2014 when he assisted a large man who was falling. She noted that he experienced limited motion and weakness at the onset of that injury. Dr. White reported that appellant had surgery in the remote past, but was without shoulder complaints until this injury occurred in 2014. She opined that at this point he needed arthroscopic debridement and decompression. By decision dated January 29, 2016, OWCP denied modification of the December 16, 2014 decision. The decision noted that because Dr. White provided an inaccurate description of the February 26, 2014 employment incident, her report was of insufficient probative value to alter OWCP’s denial decision.
4
LEGAL PRECEDENT An employee seeking benefits under FECA3 has the burden of proof to establish the essential elements of his or her claim by the weight of the reliable, probative, and substantial evidence4 including that he or she sustained an injury in the performance of duty and that any specific condition or disability for work for which he or she claims compensation is causally related to that employment injury.5 To determine whether a federal employee has sustained a traumatic injury in the performance of duty, it first must be determined whether “fact of injury” has been established.6 There are two components involved in establishing the fact of injury. First, the employee must submit sufficient evidence to establish that he or she actually experienced the employment incident at the time, place and in the manner alleged.7 Second, the employee must submit evidence, generally only in the form of probative medical evidence, to establish that the employment incident caused a personal injury.8 An employee may establish that the employment incident occurred as alleged but fail to show that his or her disability or condition relates to the employment incident.9 Whether an employee sustained an injury in the performance of duty requires the submission of rationalized medical opinion evidence.10 The opinion of the physician must be based on a complete factual and medical background of the employee, must be one of reasonable medical certainty, and must be supported by medical rationale explaining the nature of the relationship between the diagnosed condition and the specific employment factors identified by the employee.11 The weight of the medical evidence is determined by its reliability, its probative value, its convincing quality, the care of analysis manifested, and the medical rationale expressed in support of the physician’s opinion.12
3
Id.
4
J.P., 59 ECAB 178 (2007); Joseph M. Whelan, 20 ECAB 55, 58 (1968).
5
G.T., 59 ECAB 447 (2008); Elaine Pendleton, 40 ECAB 1143, 1145 (1989).
6
S.P., 59 ECAB 184 (2007); Alvin V. Gadd, 57 ECAB 172 (2005).
7
Bonnie A. Contreras, 57 ECAB 364 (2006); Edward C. Lawrence, 19 ECAB 442 (1968).
8
David Apgar, 57 ECAB 137 (2005); John J. Carlone, 41 ECAB 354 (1989).
9
T.H., 59 ECAB 388 (2008); see also Roma A. Mortenson-Kindschi, 57 ECAB 418 (2006).
10
See J.Z., 58 ECAB 529 (2007); Paul E. Thams, 56 ECAB 503 (2005).
11
I.J., 59 ECAB 408 (2008); Victor J. Woodhams, 41 ECAB 465 (2005).
12
James Mack, 43 ECAB 321 (1991).
5
ANALYSIS Appellant alleged that on February 26, 2014 he strained his left shoulder in the performance of duty. On May 29 2014 OWCP accepted that the employment incident occurred as alleged and that he was diagnosed with left shoulder osteoarthritis. However, it denied appellant’s claim finding that the medical evidence of record was insufficient to establish that his left shoulder condition was causally related to the February 26, 2014 employment incident. The Board finds that he has failed to establish that his left shoulder condition resulted from the accepted incident. Appellant initially received medical treatment in the employee health unit. In a February 27, 2014 progress note, Dr. Rao described that on February 26, 2014 appellant experienced left shoulder pain when he helped transport a patient and lifted a patient’s walker. He provided physical examination findings and authorized appellant to return to work with restrictions. The Board finds that Dr. Rao’s report is insufficient to establish appellant’s claim as he did not provide a medical diagnosis, nor did he provide an opinion as to whether the February 26, 2014 employment incident caused or contributed to appellant’s alleged condition.13 He merely described the employment incident and noted examination findings. Similarly, Dr. Hewitt’s February 28, 2014 progress note and March 6, 2014 narrative report and Dr. Hoegler’s March 7, 2014 work status note did not offer any medical diagnosis or explanation of the cause of appellant’s left shoulder pain. These reports, therefore, fail to establish appellant’s claim.14 Appellant was treated by Dr. White who provided reports dated March 31, 2014 to September 25, 2015. Dr. White initially described that on February 26, 2014 he helped a 300plus pound patient into a car and experienced a pulling sensation in his left scapular region when he lifted an oversized walker into the car. She reviewed appellant’s diagnostic examination reports and noted that they revealed moderate glenohumeral arthritis and rotator cuff tendinosis, but showed no evidence of rotator cuff tear or supraspinatus muscular tear in appellant’s left shoulder. Upon examination, Dr. White observed slight tenderness in the midline of the lower cervical segment and extreme tenderness in the left superior trapezius region. Range of motion was limited. In a May 16, 2014 report, Dr. White related that she examined appellant and diagnosed osteoarthritis of left glenohumeral joint. In a June 13, 2014 report, she explained that it was clear that he had underlying left shoulder pathology with glenohumeral osteoarthritis and rotator cuff tendinosis. Although Dr. White mentioned the February 26, 2014 work incident and diagnosed left shoulder osteoarthritis head trauma, she did not clearly opine, nor explain, how the February 26, 2014 incident caused or contributed to appellant’s left shoulder injury. The Board has held that medical evidence that does not offer any opinion regarding the cause of an employee’s condition
13
Roy L. Humphrey, 57 ECAB 238, 242 (2005); Michael E. Smith, 50 ECAB 313 (1999).
14
Id.
6
is of limited probative value on the issue of causal relationship.15 Moreover, the Board notes that Dr. White fails to provide an accurate history of injury. In a September 25, 2015 narrative report, she recounted that in February 2014 appellant sustained a left shoulder injury when he assisted a large man who was falling. The Board has held that medical reports must be based on a complete and accurate factual and medical background.16 Because Dr. White provided two different accounts of the February 26, 2014 employment incident, her report is of limited probative value to establish appellant’s claim. The additional diagnostic examination reports are insufficient to establish appellant’s claim. In a March 6, 2014 MRI scan examination report of his left shoulder, Dr. Van Holsbeeck noted sequelae of Bankart repair with arthritic change of the left glenohumeral joint. In a March 6, 2014 ultrasound examination report, Dr. Diamond observed that appellant’s AC joint was within normal limits and supraspinatus and infraspinatus tendons were intact. He noted no evidence of rotator cuff tear, mass lesion, or glenohumeral joint effusion. None of the physicians provided any opinion on the cause of appellant’s left shoulder condition.17 On appeal, counsel asserts that OWCP’s January 29, 2016 decision was contrary to law and fact. As explained above, however, none of the evidence of record established that appellant sustained a left shoulder condition as a result of the February 26, 2014 employment incident. Causal relationship is a medical issue and the medical evidence generally required to establish causal relationship is rationalized medical opinion evidence.18 Because appellant has failed to provide such rationalized medical opinion evidence in this case, the Board finds that he has not met his burden of proof. Appellant may submit new evidence or argument with a written request for reconsideration to OWCP within one year of this merit decision, pursuant to 5 U.S.C. § 8128(a) and 20 C.F.R. §§ 10.605 through 10.607. CONCLUSION The Board finds that appellant did not meet his burden of proof to establish an injury causally related to the February 26, 2014 employment incident.
15
C.B., Docket No. 09-2027 (issued May 12, 2010); J.F., Docket No. 09-1061 (issued November 17, 2009); A.D., 58 ECAB 149 (2006). 16
J.R., Docket No. 12-1099 (issued November 7, 2012); Douglas M. McQuaid, 52 ECAB 382 (2001).
17
The record also contains a March 17, 2015 work status note by a physician with an illegible signature. Because reports that are unsigned or bear illegible signatures are not considered probative medical evidence, this work status note fails to establish appellant’s claim. Thomas L. Agee, 56 ECAB 465 (2005); Richard F. Williams, 55 ECAB 343 (2004). 18
I.R., Docket No. 09-1229 (issued February 24, 2010); D.I., 59 ECAB 158 (2007).
7
ORDER IT IS HEREBY ORDERED THAT the January 29, 2016 merit decision of the Office of Workers’ Compensation Programs is affirmed. Issued: October 27, 2016 Washington, DC
Patricia H. Fitzgerald, Deputy Chief Judge Employees’ Compensation Appeals Board
Alec J. Koromilas, Alternate Judge Employees’ Compensation Appeals Board
Valerie D. Evans-Harrell, Alternate Judge Employees’ Compensation Appeals Board
8 | 10-27-2016 | [
"United States Department of Labor Employees’ Compensation Appeals Board __________________________________________ D.A., Appellant and DEPARTMENT OF VETERANS AFFAIRS, VETERANS AMINISTRATION MEDICAL CENTER, Detroit, MI, Employer __________________________________________ ) ) ) ) ) ) ) ) ) Appearances: Alan J. Shapiro, Esq., for the appellant1 Office of Solicitor, for the Director Docket No. 16-0879 Issued: October 27, 2016 Case Submitted on the Record DECISION AND ORDER Before: PATRICIA H. FITZGERALD, Deputy Chief Judge ALEC J. KOROMILAS, Alternate Judge VALERIE D. EVANS-HARRELL, Alternate Judge JURISDICTION On March 23, 2016 appellant, through counsel, filed a timely appeal of a January 29, 2016 merit decision of the Office of Workers’ Compensation Programs (OWCP). Pursuant to the Federal Employees’ Compensation Act2 (FECA) and 20 C.F.R. §§ 501.2(c) and 501.3, the Board has jurisdiction over the merits of this case.",
"1 In all cases in which a representative has been authorized in a matter before the Board, no claim for a fee for legal or other service performed on appeal before the Board is valid unless approved by the Board. 20 C.F.R. § 501.9(e). No contract for a stipulated fee or on a contingent fee basis will be approved by the Board. Id. An attorney or representative’s collection of a fee without the Board’s approval may constitute a misdemeanor, subject to fine or imprisonment for up to one year or both. Id. ; see also 18 U.S.C. § 292.",
"Demands for payment of fees to a representative, prior to approval by the Board, may be reported to appropriate authorities for investigation. 2 5 U.S.C. § 8101 et seq. ISSUE The issue is whether appellant met his burden of proof to establish an injury causally related to the accepted February 26, 2014 employment incident. FACTUAL HISTORY On March 5, 2014 appellant, then a 44-year-old motor vehicle operator, filed a traumatic injury claim (Form CA-1) alleging that on February 26, 2014 he strained his left shoulder when he lifted a heavy, oversized walker into a van.",
"He stopped work on March 4, 2014. In a February 26, 2014 incident report, appellant’s supervisor indicated that on that day at around 1:00 p.m. appellant was getting ready to drive a patient home. When appellant lifted an oversized walker into the back of the van, he strained his shoulder. The supervisor noted that appellant returned to work with restrictions of no lifting. Appellant was examined in employee health by Thresiamma Idichandy, a nurse practitioner, and Dr. Sudhir G. Rao, a Board-certified internist. In a February 27, 2014 progress note, Dr. Rao indicated that appellant complained of left shoulder pain since February 26, 2014 when he lifted a male patient’s walker while transporting the patient.",
"Physical examination revealed tenderness on the posterior part of appellant’s left shoulder and limited range of motion. Dr. Rao reported no redness, swelling, or bruising. He authorized appellant to return to work with restrictions of no pulling, pushing, or lifting with his left hand until March 3, 2014. Dr. Frances Hewitt, Board-certified in family medicine, also treated appellant. In a February 28, 2014 progress note, he noted a diagnosis of shoulder pain. In a March 4, 2014, report, Dr. Hewitt recommended that appellant remain off work from March 4 to 11, 2014.",
"Appellant underwent various diagnostic examinations. In a March 6, 2014 magnetic resonance imaging (MRI) scan examination report of the left shoulder, Dr. Marnix Van Holsbeeck, a diagnostic radiology specialist, observed arthritic changes of the left acromioclavicular (AC) joint, bone spurring of the proximal left humerus, and narrowing of the inferior left glenohumeral joint. He diagnosed sequelae of Bankart repair with arthritic change of the left glenohumeral. In a March 6, 2014 ultrasound report of the left shoulder, Dr. Mark Diamond, a Boardcertified diagnostic radiologist, observed that appellant’s AC joint was within normal limits and supraspinatus and infraspinatus tendons were intact. He reported that appellant’s subscapularis tendon was suboptimally visualized due to appellant’s inability to externally rotate. Dr. Diamond noted that there was no evidence of rotator cuff tear, mass lesion, or glenohumeral joint effusion. Dr. Joseph Hoegler, a Board-certified orthopedic surgeon, reported in a March 7, 2014 work status note that appellant should be off work until April 3, 2014. Appellant received treatment from Dr. Nancy S. White, Board-certified in family and sports medicine.",
"In a March 31, 2014 progress report, Dr. White opined that he should remain off work until April 18, 2014. She described that on February 26, 2014 appellant was helping a 2 300-plus pound patient into a car and experienced a pulling sensation in his left scapular region. Dr. White noted that he continued to complain of left posterior shoulder pain. She reviewed appellant’s history and noted that an ultrasound report showed no evidence of rotator cuff tear or supraspinatus muscular tear. Upon examination, Dr. White observed slight tenderness in the midline of the lower cervical segment and extreme tenderness in the left superior trapezius region. Forward flexion, extension, right and left side bending, and right and left lateral rotation were normal. Hawkins and Neer impingement signs were positive. Dr. White diagnosed persistent left posterior shoulder pain, likely cervical radiculitis. In a letter dated April 21, 2014 a human resource (HR) specialist at the employing establishment, noted that the medical evidence revealed that appellant was temporarily unable to perform his normal duties, but that he was physically able to perform alternative duty tasks. She offered him an alternative-duty assignment in the Motor Vehicle Section of the Police and Security Service. The HR specialist advised appellant that if he was unable to perform the alternative duties he must provide medical evidence to support his inability to perform the alternative duty. Dr. White continued to treat appellant and in an April 21, 2014 report advised that he may return to work on April 22, 2014 with restrictions of no lifting in excess of 15 pounds and minimal lifting above shoulder height.",
"She recommended that the restrictions were effective until May 18, 2014. On April 22, 2014 appellant filed a claim for wage-loss compensation (Form CA-7) for the period March 4 to April 21, 2014. By letter dated April 29, 2014, OWCP informed appellant that his claim initially appeared to be a minor injury, but was now being reopened for review on the merits. It requested that he submit additional evidence to establish that he sustained a diagnosed condition causally related to the February 26, 2014 employment incident. Appellant was afforded 30 days to submit this additional evidence.",
"In a May 16, 2014 report, Dr. White indicated that she examined appellant and noted a diagnosis of osteoarthritis of left glenohumeral joint. She recommended that he work with restrictions of no lifting in excess of 15 pounds and minimal work or lifting above shoulder height. Dr. White noted that appellant’s restrictions were effective from April 21 to May 18, 2014. OWCP denied appellant’s claim in a decision dated May 29, 2014. It accepted that the February 26, 2014 incident occurred as alleged and that he sustained a left shoulder condition, but denied his claim finding that the medical evidence was insufficient to establish that his condition was causally related to the accepted incident.",
"Following OWCP’s denial decision, appellant submitted a June 13, 2014 report from Dr. White. Dr. White related that on February 26, 2014 he helped a male patient get into appellant’s car with his seated walker and felt a pulling sensation in the left scapular region. She noted a diagnosis of osteoarthritis of the left glenohumeral joint. Upon examination, Dr. White observed slight tenderness in the midline of the lower cervical segment, extreme tenderness in 3 the left superior trapezius region, and limited range of motion. Hawkins and Neer impingement tests were positive. Dr. White also noted pain on each of the tests along the spine of appellant’s left scapula. She reviewed his diagnostic examination results and noted that it revealed moderate glenohumeral arthritis and rotator cuff tendinosis. Dr. White explained that it was clear that appellant had underlying left shoulder pathology with glenohumeral osteoarthritis and rotator cuff tendinosis. She opined that any repetitive lifting or working above the shoulder height would aggravate this issue.",
"On July 8, 2014 OWCP received appellant’s appeal request form, postmarked July 1, 2014, which requested a review of the written record by an OWCP hearing representative. By decision dated July 18, 2014, OWCP denied appellant’s request for review of the written record. It determined that his request was not made within 30 days of the May 29, 2014 OWCP decision and that his case could equally well be addressed by requesting reconsideration. On December 10, 2014 OWCP received appellant’s request, through counsel, for reconsideration of the May 29, 2014 OWCP decision. By decision dated December 16, 2014, OWCP denied modification of the May 29, 2014 decision. It found that the new medical report from Dr. White failed to establish causal relationship.",
"On November 16, 2015 OWCP received appellant’s request, through counsel, for reconsideration. Appellant resubmitted Dr. White’s April 21, May 16, and June 13, 2014 reports; and March 6, 2014 diagnostic testing reports. He also submitted several physical therapy reports dated March 18 and 24, 2014. Appellant also submitted a March 6, 2014 narrative report from Dr. Hewitt who examined him for complaints of left shoulder pain. Dr. Hewitt related that appellant noted his current episode of left shoulder pain started one to four weeks ago and had gradually worsened. He noted that appellant had a history of osteoarthritis. Dr. Hewitt recounted that on February 26, 2014 appellant was helping a 340-pound plus male patient get into a van with a seated walker when he felt a pull in the left shoulder. He discussed appellant’s history and conducted an examination. Dr. Hewitt observed normal range of motion, mood, affect, and behavior.",
"Dr. White continued to treat appellant and indicated in a September 25, 2015 narrative report that he suffered a left shoulder injury in February 2014 when he assisted a large man who was falling. She noted that he experienced limited motion and weakness at the onset of that injury. Dr. White reported that appellant had surgery in the remote past, but was without shoulder complaints until this injury occurred in 2014. She opined that at this point he needed arthroscopic debridement and decompression. By decision dated January 29, 2016, OWCP denied modification of the December 16, 2014 decision. The decision noted that because Dr. White provided an inaccurate description of the February 26, 2014 employment incident, her report was of insufficient probative value to alter OWCP’s denial decision. 4 LEGAL PRECEDENT An employee seeking benefits under FECA3 has the burden of proof to establish the essential elements of his or her claim by the weight of the reliable, probative, and substantial evidence4 including that he or she sustained an injury in the performance of duty and that any specific condition or disability for work for which he or she claims compensation is causally related to that employment injury.5 To determine whether a federal employee has sustained a traumatic injury in the performance of duty, it first must be determined whether “fact of injury” has been established.6 There are two components involved in establishing the fact of injury.",
"First, the employee must submit sufficient evidence to establish that he or she actually experienced the employment incident at the time, place and in the manner alleged.7 Second, the employee must submit evidence, generally only in the form of probative medical evidence, to establish that the employment incident caused a personal injury.8 An employee may establish that the employment incident occurred as alleged but fail to show that his or her disability or condition relates to the employment incident.9 Whether an employee sustained an injury in the performance of duty requires the submission of rationalized medical opinion evidence.10 The opinion of the physician must be based on a complete factual and medical background of the employee, must be one of reasonable medical certainty, and must be supported by medical rationale explaining the nature of the relationship between the diagnosed condition and the specific employment factors identified by the employee.11 The weight of the medical evidence is determined by its reliability, its probative value, its convincing quality, the care of analysis manifested, and the medical rationale expressed in support of the physician’s opinion.12 3 Id.",
"4 J.P., 59 ECAB 178 (2007); Joseph M. Whelan, 20 ECAB 55, 58 (1968). 5 G.T., 59 ECAB 447 (2008); Elaine Pendleton, 40 ECAB 1143, 1145 (1989). 6 S.P., 59 ECAB 184 (2007); Alvin V. Gadd, 57 ECAB 172 (2005). 7 Bonnie A. Contreras, 57 ECAB 364 (2006); Edward C. Lawrence, 19 ECAB 442 (1968). 8 David Apgar, 57 ECAB 137 (2005); John J. Carlone, 41 ECAB 354 (1989). 9 T.H., 59 ECAB 388 (2008); see also Roma A. Mortenson-Kindschi, 57 ECAB 418 (2006). 10 See J.Z., 58 ECAB 529 (2007); Paul E. Thams, 56 ECAB 503 (2005).",
"11 I.J., 59 ECAB 408 (2008); Victor J. Woodhams, 41 ECAB 465 (2005). 12 James Mack, 43 ECAB 321 (1991). 5 ANALYSIS Appellant alleged that on February 26, 2014 he strained his left shoulder in the performance of duty. On May 29 2014 OWCP accepted that the employment incident occurred as alleged and that he was diagnosed with left shoulder osteoarthritis. However, it denied appellant’s claim finding that the medical evidence of record was insufficient to establish that his left shoulder condition was causally related to the February 26, 2014 employment incident.",
"The Board finds that he has failed to establish that his left shoulder condition resulted from the accepted incident. Appellant initially received medical treatment in the employee health unit. In a February 27, 2014 progress note, Dr. Rao described that on February 26, 2014 appellant experienced left shoulder pain when he helped transport a patient and lifted a patient’s walker. He provided physical examination findings and authorized appellant to return to work with restrictions. The Board finds that Dr. Rao’s report is insufficient to establish appellant’s claim as he did not provide a medical diagnosis, nor did he provide an opinion as to whether the February 26, 2014 employment incident caused or contributed to appellant’s alleged condition.13 He merely described the employment incident and noted examination findings. Similarly, Dr. Hewitt’s February 28, 2014 progress note and March 6, 2014 narrative report and Dr. Hoegler’s March 7, 2014 work status note did not offer any medical diagnosis or explanation of the cause of appellant’s left shoulder pain. These reports, therefore, fail to establish appellant’s claim.14 Appellant was treated by Dr. White who provided reports dated March 31, 2014 to September 25, 2015.",
"Dr. White initially described that on February 26, 2014 he helped a 300plus pound patient into a car and experienced a pulling sensation in his left scapular region when he lifted an oversized walker into the car. She reviewed appellant’s diagnostic examination reports and noted that they revealed moderate glenohumeral arthritis and rotator cuff tendinosis, but showed no evidence of rotator cuff tear or supraspinatus muscular tear in appellant’s left shoulder. Upon examination, Dr. White observed slight tenderness in the midline of the lower cervical segment and extreme tenderness in the left superior trapezius region. Range of motion was limited.",
"In a May 16, 2014 report, Dr. White related that she examined appellant and diagnosed osteoarthritis of left glenohumeral joint. In a June 13, 2014 report, she explained that it was clear that he had underlying left shoulder pathology with glenohumeral osteoarthritis and rotator cuff tendinosis. Although Dr. White mentioned the February 26, 2014 work incident and diagnosed left shoulder osteoarthritis head trauma, she did not clearly opine, nor explain, how the February 26, 2014 incident caused or contributed to appellant’s left shoulder injury. The Board has held that medical evidence that does not offer any opinion regarding the cause of an employee’s condition 13 Roy L. Humphrey, 57 ECAB 238, 242 (2005); Michael E. Smith, 50 ECAB 313 (1999).",
"14 Id. 6 is of limited probative value on the issue of causal relationship.15 Moreover, the Board notes that Dr. White fails to provide an accurate history of injury. In a September 25, 2015 narrative report, she recounted that in February 2014 appellant sustained a left shoulder injury when he assisted a large man who was falling. The Board has held that medical reports must be based on a complete and accurate factual and medical background.16 Because Dr. White provided two different accounts of the February 26, 2014 employment incident, her report is of limited probative value to establish appellant’s claim. The additional diagnostic examination reports are insufficient to establish appellant’s claim. In a March 6, 2014 MRI scan examination report of his left shoulder, Dr. Van Holsbeeck noted sequelae of Bankart repair with arthritic change of the left glenohumeral joint. In a March 6, 2014 ultrasound examination report, Dr. Diamond observed that appellant’s AC joint was within normal limits and supraspinatus and infraspinatus tendons were intact. He noted no evidence of rotator cuff tear, mass lesion, or glenohumeral joint effusion.",
"None of the physicians provided any opinion on the cause of appellant’s left shoulder condition.17 On appeal, counsel asserts that OWCP’s January 29, 2016 decision was contrary to law and fact. As explained above, however, none of the evidence of record established that appellant sustained a left shoulder condition as a result of the February 26, 2014 employment incident. Causal relationship is a medical issue and the medical evidence generally required to establish causal relationship is rationalized medical opinion evidence.18 Because appellant has failed to provide such rationalized medical opinion evidence in this case, the Board finds that he has not met his burden of proof. Appellant may submit new evidence or argument with a written request for reconsideration to OWCP within one year of this merit decision, pursuant to 5 U.S.C. § 8128(a) and 20 C.F.R.",
"§§ 10.605 through 10.607. CONCLUSION The Board finds that appellant did not meet his burden of proof to establish an injury causally related to the February 26, 2014 employment incident. 15 C.B., Docket No. 09-2027 (issued May 12, 2010); J.F., Docket No. 09-1061 (issued November 17, 2009); A.D., 58 ECAB 149 (2006). 16 J.R., Docket No. 12-1099 (issued November 7, 2012); Douglas M. McQuaid, 52 ECAB 382 (2001). 17 The record also contains a March 17, 2015 work status note by a physician with an illegible signature. Because reports that are unsigned or bear illegible signatures are not considered probative medical evidence, this work status note fails to establish appellant’s claim. Thomas L. Agee, 56 ECAB 465 (2005); Richard F. Williams, 55 ECAB 343 (2004). 18 I.R., Docket No.",
"09-1229 (issued February 24, 2010); D.I., 59 ECAB 158 (2007). 7 ORDER IT IS HEREBY ORDERED THAT the January 29, 2016 merit decision of the Office of Workers’ Compensation Programs is affirmed. Issued: October 27, 2016 Washington, DC Patricia H. Fitzgerald, Deputy Chief Judge Employees’ Compensation Appeals Board Alec J. Koromilas, Alternate Judge Employees’ Compensation Appeals Board Valerie D. Evans-Harrell, Alternate Judge Employees’ Compensation Appeals Board 8"
]
| https://www.dol.gov/sites/dolgov/files/ecab/decisions/2016/Oct/16-0879.pdf | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
115 SRES 119 IS: Congressional Oversight to Start Taxpayer Savings Resolution U.S. Senate 2017-04-06 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
III115th CONGRESS1st SessionS. RES. 119IN THE SENATE OF THE UNITED STATESApril 6 (legislative day, April 4), 2017Mr. Gardner (for himself and Mr. Peters) submitted the following resolution; which was referred to the Committee on Homeland Security and Governmental AffairsRESOLUTIONRequiring authorizing committees to hold annual hearings on Government Accountability Office investigative reports on the identification, consolidation, and elimination of duplicative Government programs. 1.Short titleThis resolution may be cited as the Congressional Oversight to Start Taxpayer Savings Resolution or the COST Savings Resolution. 2.Requiring committee hearings on Government Accountability Office reports (a)Duplication reportsNot later than 90 days after the date on which the Comptroller General of the United States transmits each annual report to Congress identifying programs, agencies, offices, and initiatives with duplicative goals and activities within the Government under section 21 of the Joint Resolution entitled Joint Resolution increasing the statutory limit on the public debt (Public Law 111–139; 31 U.S.C. 712 note), each standing committee of the Senate (except the Committee on Appropriations) with jurisdiction over any such program, agency, office, or initiative covered by that report shall conduct hearings on the recommendations for consolidation and elimination of such program, agency, office, or initiative. (b)High Risk ListNot later than 90 days after the date on which the Comptroller General of the United States publishes a High Risk List, or any successor thereto, each standing committee of the Senate (except the Committee on Appropriations) with jurisdiction over any agency or program area on the High Risk List shall conduct hearings on the vulnerabilities to fraud, waste, abuse, and mismanagement, or need for transformation, of the agency or program area. (c)Joint hearingsFor any program, agency, office, initiative, or program area over which more than 1 standing committee of the Senate (except the Committee on Appropriations) has jurisdiction, to the extent determined beneficial and appropriate by the Chairmen of the committees, the committees may hold joint hearings under subsection (a) or (b). | 04-06-2017 | [
"115 SRES 119 IS: Congressional Oversight to Start Taxpayer Savings Resolution U.S. Senate 2017-04-06 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain. III115th CONGRESS1st SessionS. RES. 119IN THE SENATE OF THE UNITED STATESApril 6 (legislative day, April 4), 2017Mr. Gardner (for himself and Mr. Peters) submitted the following resolution; which was referred to the Committee on Homeland Security and Governmental AffairsRESOLUTIONRequiring authorizing committees to hold annual hearings on Government Accountability Office investigative reports on the identification, consolidation, and elimination of duplicative Government programs. 1.Short titleThis resolution may be cited as the Congressional Oversight to Start Taxpayer Savings Resolution or the COST Savings Resolution. 2.Requiring committee hearings on Government Accountability Office reports (a)Duplication reportsNot later than 90 days after the date on which the Comptroller General of the United States transmits each annual report to Congress identifying programs, agencies, offices, and initiatives with duplicative goals and activities within the Government under section 21 of the Joint Resolution entitled Joint Resolution increasing the statutory limit on the public debt (Public Law 111–139; 31 U.S.C. 712 note), each standing committee of the Senate (except the Committee on Appropriations) with jurisdiction over any such program, agency, office, or initiative covered by that report shall conduct hearings on the recommendations for consolidation and elimination of such program, agency, office, or initiative. (b)High Risk ListNot later than 90 days after the date on which the Comptroller General of the United States publishes a High Risk List, or any successor thereto, each standing committee of the Senate (except the Committee on Appropriations) with jurisdiction over any agency or program area on the High Risk List shall conduct hearings on the vulnerabilities to fraud, waste, abuse, and mismanagement, or need for transformation, of the agency or program area.",
"(c)Joint hearingsFor any program, agency, office, initiative, or program area over which more than 1 standing committee of the Senate (except the Committee on Appropriations) has jurisdiction, to the extent determined beneficial and appropriate by the Chairmen of the committees, the committees may hold joint hearings under subsection (a) or (b)."
]
| https://www.govinfo.gov/content/pkg/BILLS-115sres119is/xml/BILLS-115sres119is.xml | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
FILED JUL 17 2012 1 ORDERED PUBLISHED SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 O F TH E N IN TH C IR C U IT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 6 In re: ) BAP No. NV-11-1620-KiPaD ) 7 CAVIATA ATTACHED HOMES, LLC, ) Bk. No. 11-52458-BTB ) 8 Debtor. ) ) 9 ) CAVIATA ATTACHED HOMES, LLC, ) 10 ) Appellant, ) 11 ) v. ) A M E N D E D 12 ) U.S. BANK, NATIONAL ) O P I N I O N 13 ASSOCIATION, ) ) 14 Appellee. ) ______________________________) 15 16 Argued and Submitted on June 15, 2012 at Las Vegas, Nevada 17 Original Opinion Filed - June 29, 2012 18 Amended Opinion Filed - July 17, 2012 19 Appeal from the United States Bankruptcy Court 20 for the District of Nevada 21 Honorable Bruce T. Beesley, Bankruptcy Judge, Presiding 22 23 Appearances: Jeffrey L. Hartman, Esq. of Hartman & Hartman argued for appellant, Caviata Attached Homes, LLC; 24 Joshua D. Wayser, Esq. of Katten Muchin Rosenman LLP argued for appellee, U.S. Bank, National 25 Association. _______________________________ 26 27 Before: KIRSCHER, PAPPAS, and DUNN, Bankruptcy Judges 28 1 KIRSCHER, Bankruptcy Judge: 2 3 Appellant, chapter 111 debtor Caviata Attached Homes, LLC 4 (“Caviata”), appeals an order from the bankruptcy court dismissing 5 its second chapter 11 case due to Caviata’s inability to show that 6 an extraordinary change in circumstances substantially impaired 7 its performance under its confirmed plan to warrant the second 8 chapter 11 filing. In addressing this issue of first impression 9 within the Ninth Circuit, we AFFIRM. 10 I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 11 A. Prepetition facts. 12 Caviata, a Nevada limited liability company, was formed in 13 July 2005 for the purpose of real estate development. The sole 14 owner of Caviata is Caviata 184, LLC, a Nevada limited liability 15 company. William Pennington (“Pennington”) and Dane Hillyard 16 (“Hillyard”) are Caviata’s managers. Caviata owns and operates a 17 184-unit apartment complex located in Sparks, Nevada (the 18 “Property”). The Property was initially developed by Caviata as a 19 condominium project, but due to downturns in the real estate 20 market, it was converted to rental apartments. 21 To develop the Property, on or about September 20, 2005, 22 Caviata obtained a construction loan for $40,700,000 on a recourse 23 basis from California National Bank (“CNB”). In exchange for the 24 loan, Caviata executed a promissory note and deed of trust in 25 favor of CNB, which assigned Caviata’s right, title and interest 26 1 Unless specified otherwise, all chapter, code, and rule 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The 28 Federal Rules of Civil Procedure are referred to as “Civil Rules.”
-2- 1 in the Property, including all rents, income and profits. The 2 parties agreed to an interest rate of prime plus .25% and a 3 maturity date of September 20, 2007. Guarantors on the loan 4 included Caviata 184, LLC, Pennington, and Hillyard. 5 Caviata defaulted on the loan. On or about April 25, 2007, 6 Caviata and CNB entered into a forbearance agreement whereby CNB 7 agreed to forbear from exercising its rights under the loan 8 documents. The forbearance agreement was thereafter amended six 9 times, with the most recent amendment dated January 15, 2009. In 10 connection with the sixth amendment, Caviata and CNB executed an 11 amended note under which Caviata agreed to pay CNB the remaining 12 principal balance on the note of $27,476,632.88, plus 7% interest, 13 by no later than April 15, 2009. 14 Caviata again defaulted on the loan, and on April 24, 2009, 15 CNB sued Caviata and the loan guarantors in state court. On 16 October 30, 2009, the FDIC closed CNB, and its assets were 17 assigned to U.S. Bank, N.A. (“U.S. Bank”). Trial against the 18 guarantors was initially set for March 15, 2010. The guarantors 19 filed a motion to continue trial, contending they had no assets to 20 satisfy a judgment. 21 B. Caviata’s first chapter 11 case. 22 Caviata filed its first chapter 11 bankruptcy petition on 23 August 18, 2009 (Case No. 09-52786). The case was ultimately 24 assigned to the Hon. John L. Peterson, sitting by designation. As 25 of the petition date, U.S. Bank claimed it was owed 26 $29,564,308.77, as reflected in its filed proof of claim. Just 27 prior to Caviata’s filing, U.S. Bank had obtained an appraisal on 28 the Property on June 29, 2009, from its appraiser William Kimmel
-3- 1 (the “June 2009 Appraisal”), which valued the Property at 2 $23,100,000. 3 Caviata filed its chapter 11 plan and disclosure statement on 4 November 16, 2009, followed by a first amended plan and amendment 5 to Caviata’s disclosure statement2 on January 28, 2010 (the “First 6 Plan”).3 Pursuant to the First Plan, Caviata proposed to pay 7 U.S. Bank 4.25% interest on its allowed secured claim of 8 $27,476,632.88 for three years. After three years, Caviata 9 committed to sell the Property or refinance the loan to pay 10 U.S. Bank in full. If Caviata defaulted under the First Plan, 11 U.S. Bank was entitled to enforce its rights and foreclose. 12 Caviata’s approved disclosure statement4 specifically disclosed 13 the following risks: 14 Because the Plan provides for the reorganization of the Debtor as a going concern or sale of the Property, 15 many of the common risk factors found in typical reorganizations apply with respect to the Plan. These 16 include (a) the value of the Debtor’s property has suffered significantly as a result of the downturn in 17 the United States economy since the summer of 2007. There is no assurance that the economy will turn around 18 and that property values, in general, or the value of the Debtor’s Property, in particular, will not continue 19 20 2 This amendment only amended the treatment of CNB’s claim 21 and all other aspects of Caviata’s disclosure statement remained unchanged. 22 3 In November 2009, the parties stipulated that Caviata is a 23 “Single Asset Real Estate” case as defined by § 101(51B). An order to that effect was entered on November 10, 2009. 24 4 Caviata’s appellate appendix does not include all the 25 documents listed in its Designation of Record. We thereby exercise our discretion to independently review the docket in 26 Caviata’s first and second bankruptcy cases, and documents electronically filed therein through the court’s CM/ECF system. 27 See O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989) (appellate court may take 28 judicial notice of underlying bankruptcy records).
-4- 1 to decline; (b) the Plan is dependent, at least in part, on continued leasing of the Property. There is no 2 assurance that the Debtor’[s] predictions of the rate of stabilizing the Property and achieving performing leases 3 will occur, or that these predictions will occur within the time period projected in the Plan; (c) because the 4 Plan is dependent on continued leasing of the Property, there is a risk that the projections of net operating 5 income, with which to pay the Allowed Claims of Creditors, may not be met; (d) the Debtor may not be 6 able to sell its Property; (e) the Debtor may not be able to secure alternative financing to satisfy the 7 Allowed Secured Claim of Cal National or the Allowed Secured Claim of Specialty Trust; (f) if Cal National is 8 not paid in accordance with the Plan, and the Debtor is unable to sell the Property or to secure alternative 9 financing, Cal National may foreclose on the Property. 10 Caviata disclosure statement, Case No. 09-52786, Doc. No. 31, 11 § 12.1, pp. 25-26 (Nov. 16, 2009).5 12 U.S. Bank objected to confirmation of the First Plan 13 contending, inter alia, that it was not feasible. In support of 14 its objection, U.S. Bank offered a declaration from Kimmel 15 appraising the Property at $20 million (the “January 2010 16 Appraisal”). According to Kimmel, although the Property’s 17 occupancy rate had increased since June 2009 from 95% to 98%, 18 average rent rates were down. Considering the uncertainty in the 19 market, which Kimmel opined showed no signs of improving in the 20 near future, and the lack of financing, the Property’s value was 21 now only $20 million. U.S. Bank argued that Caviata failed to 22 submit any evidence showing its ability to sell or refinance the 23 Property in the next three years in order to pay off the note. In 24 fact, argued U.S. Bank, although Pennington asserted that Caviata 25 could sell the Property for $34 million in three years, Pennington 26 5 Caviata’s unapproved disclosure statement filed in its 27 second bankruptcy case contained the same provision in § 12.1, p. 16, except it amended the creditor’s name from “Cal National” 28 to “U.S. Bank”.
-5- 1 and Hillyard had admitted they had not marketed the Property to 2 test its worth or sought any refinancing. U.S. Bank further 3 objected to Caviata’s proposed 4.25% interest rate, contending 4 that its expert, Richard Zelle (“Zelle”), who also brokers 5 commercial real estate loans, believed no efficient market existed 6 for a loan on the Property and that 9.25% was a more appropriate 7 rate. 8 The bankruptcy court held a confirmation hearing on the First 9 Plan on March 3, 2010. Pennington, who has over thirty years 10 experience in large-scale real estate development in Northern 11 Nevada, testified that he agreed with the June 2009 Appraisal 12 valuing the Property at $23,100,000; however, he believed the 13 Property would be worth $34 million within the next couple of 14 years because of its desirability and uniqueness in the market. 15 Hr’g Tr., Mar. 3, 2010, 21:7-24:7. When asked why Caviata was 16 unwilling to sell the Property now, Pennington responded that the 17 current economic situation was unlike anything he had ever seen 18 before, and a sale now would fail to realize a maximum return on 19 the Property. Based on his experience, Pennington believed that 20 conditions were going to improve. Id. at 25:12-27:11. On cross- 21 examination, Pennington admitted that he had not tried marketing 22 the Property or obtaining refinancing because that was not part of 23 his business plan, at least not yet. Id. at 33:18-35:17. 24 Caviata’s interest rate expert, Dr. Christopher Wazzan (“Dr. 25 Wazzan”), admitted that no loan market existed for a debtor like 26 Caviata. Nonetheless, he believed a fixed rate of 4.75% was an 27 appropriate interest rate for U.S. Bank’s secured claim and that 28 the First Plan was feasible at that rate. Id. at 76-93. Dr.
-6- 1 Wazzan further testified that although forecasting was difficult, 2 the empirical data showed that things were improving. Id. at 3 93:25-94:7. 4 Appraiser Kimmel then testified about his January 2010 5 Appraisal, to which Caviata’s counsel objected because Kimmel had 6 not disclosed a new report on which he based his testimony. Hr’g 7 Tr., Mar. 3, 2010, 115-24. The court noted the objection for the 8 record. Id. at 124:18-21. Kimmel explained that the January 2010 9 Appraisal for $20 million was consistent with testimony he gave in 10 January 2010 after reviewing Caviata’s income and expense 11 statements from that time period. Id. at 125. Kimmel disagreed 12 with Pennington’s and Dr. Wazzan’s opinion that the market was 13 improving in the Reno/Sparks area. He believed it had declined 14 since June 2009 because financing had become more difficult to 15 obtain, and buyers were not willing to pay the prices they were 16 before due to larger down payment requirements. Id. at 126:1- 17 127:12. On cross-examination, Kimmel admitted that the 18 Reno/Sparks apartment market was “getting better and the rents now 19 [were] starting to creep up again.” Id. at 146:21-147:8. 20 Interest rate expert Zelle testified that Caviata’s plan to 21 payoff U.S. Bank in three years was “a dream” and “a fairy tale,” 22 and for Caviata to pay $23 million or $29 million to U.S. Bank the 23 “property [was] going to have to become Disneyland in Reno.” Id. 24 at 169:12, 170:17-21. When asked about whether the market would 25 improve, Zelle testified that selling in three years was a risk 26 factor he considered because he did not see it happening. Id. at 27 171:7-22. Zelle further concluded that the First Plan was not 28 feasible because Caviata could not make the monthly payments or
-7- 1 the balloon payment. Id. at 190:18-191:14. Zelle admitted he had 2 not provided any analysis as to why Caviata could not make the 3 balloon payment in three years. Id. at 191:15-18. 4 The bankruptcy court ordered post-hearing briefing on certain 5 issues. U.S. Bank’s supplemental brief asserted essentially the 6 same feasibility objection, contending that “the Plan [was] a mere 7 hope and prayer of the Debtor to pay off some of its debts.” 8 U.S. Bank argued that a sale price of $34 million for the 9 Property, even if realized in three years, would not cover its 10 claim, which was already over $32 million,6 let alone the junior 11 lender’s claim, which was over $6 million. 12 On April 12, 2010, the bankruptcy court entered its 13 Memorandum Decision, Findings of Fact and Conclusions of Law and 14 Order overruling U.S. Bank’s objections and confirming the First 15 Plan. The court rejected U.S. Bank’s tardy amended proof of 16 claim, determining that it improperly included the accrual of 17 postpetition interest in violation of United Sav. Ass’n of Tex. v. 18 Timbers of Inwood Forest Assocs., 484 U.S. 365 (1988), as well as 19 unreasonable (and unrequested) attorney’s fees. The court also 20 rejected Kimmel’s January 2010 Appraisal as a “devious tactic” by 21 U.S. Bank to increase the amount of its unsecured claim in order 22 to defeat Class 4 acceptance of the First Plan, and it struck it 23 from the record as an improper report prejudicial to Caviata 24 because it contained no supporting data, exhibits, or basis for 25 its $20 million value. Mem. Dec., Apr. 12, 2010, Doc. No. 152 26 pp. 8-9. The court found that what data it did provide was 27 6 On March 12, 2010, U.S. Bank filed an amended proof of 28 claim for $32,801,217.95.
-8- 1 contradicted by other data within the declaration and/or Kimmel’s 2 testimony at the confirmation hearing. Accordingly, the court 3 accepted Kimmel’s June 2009 Appraisal of the Property for 4 $23,100,000, which Caviata had accepted as its own, and determined 5 that U.S. Bank held a secured claim in that amount. 6 As for the interest rate on the secured portion of 7 U.S. Bank’s claim, the bankruptcy court found Dr. Wazzan’s 8 testimony credible and consistent with Till v. SCS Credit Corp., 9 541 U.S. 465 (2004). The court found Zelle’s approach flawed and 10 not credible because it resulted in a negative LTV ratio due to 11 failing to bifurcate U.S. Bank’s claim. The court further found 12 that Zelle’s “coerced” loan approach had been rejected in Till. 13 As a result, Dr. Wazzan’s proposed interest rate of 4.75% applied. 14 Finally, as to feasibility, the bankruptcy court found 15 Pennington’s testimony credible that Caviata should be able to 16 sell the Property for at least $34 million within three years, 17 when the cycle of downturn would improve.7 18 Per the First Plan, Caviata began making monthly payments of 19 $120,500.53 to U.S. Bank in June 2010. To date, Caviata’s plan 20 payments are current. 21 C. Caviata’s second chapter 11 case. 22 Approximately fifteen months after confirming the First Plan 23 24 7 U.S. Bank appealed the confirmation order on several grounds, including the bankruptcy court’s finding that the First 25 Plan was feasible. While the appeal was pending, Caviata filed an objection to U.S. Bank’s claim. The parties eventually entered 26 into a stipulation resolving the appeal and claim objection and agreed that U.S. Bank would have a claim of $29,564,308.77 against 27 Caviata. The order approving the stipulation was entered on January 12, 2011. The appeal of the confirmation order was 28 dismissed on January 24, 2011.
-9- 1 and almost two years after its first chapter 11 filing, Caviata 2 filed its second chapter 11 case on August 1, 2011 (Case No. 11- 3 52458). Caviata valued the Property at $23,420,928 in its 4 schedules filed on August 23, 2011. U.S. Bank’s appraiser, Scott 5 Beebe, conducted an appraisal of the Property as of August 23, 6 2011, and he asserted that the Property’s value had decreased to 7 $20,900,000. 8 On September 9, 2011, U.S. Bank moved to dismiss Caviata’s 9 second bankruptcy case. In short, U.S. Bank contended the second 10 filing was a bad faith filing and a backdoor attempt to circumvent 11 the prohibition on modifying a substantially consummated plan 12 under § 1127. While acknowledging that some courts have created a 13 limited “good faith” exception to this prohibition, U.S. Bank 14 contended that Caviata failed to demonstrate that an extraordinary 15 change in circumstances occurred after substantial consummation of 16 the First Plan, which substantially impaired its performance under 17 the First Plan. U.S. Bank argued that “extraordinary 18 circumstances” did not include decreased income, increased 19 expenses, or reasonably foreseeable changes in debtor’s 20 operations, the market or the economy. U.S. Bank noted that in 21 Caviata’s first quarter report filed on April 25, 2011, Caviata 22 represented that it did not foresee any circumstances that would 23 affect its ability to perform under the First Plan. A hearing on 24 the motion to dismiss was set for October 7, 2011. 25 Caviata opposed dismissal, contending that substantial and 26 fundamental changes had seriously impacted the finance and real 27 estate markets beyond any level that could have been foreseen, 28 and, at the time of confirmation, Caviata did not and could not
-10- 1 have known that recovery from the 2007-2009 recession would not 2 occur as predicted, but, rather, the economy would suffer a 3 relapse. Although it was not yet in default under the First Plan, 4 Caviata contended that modifications were necessary or it would be 5 unable to fully perform its confirmed plan. Caviata acknowledged 6 that while courts have typically determined that changed market 7 conditions alone are insufficient to warrant a second chapter 11 8 filing, such cases were based upon “general” market fluctuations, 9 not the global economic crisis the world was currently 10 experiencing. Notwithstanding these cases, argued Caviata, courts 11 have allowed a second filing when an “unforeseeable” economic 12 change fundamentally changes market conditions, citing Lincoln 13 Nat’l Life Ins. Co. v. Bouy, Hall & Howard and Assocs. (In re 14 Bouy, Hall & Howard and Assocs.), 208 B.R. 737, 745 (Bankr. S.D. 15 Ga. 1995) [hereinafter “Bouy Hall”]. Because Caviata believed 16 this matter involved highly disputed factual issues requiring 17 evidentiary support and expert testimony, it asked the court to 18 set an evidentiary hearing. 19 In support of its opposition, Caviata offered the declaration 20 of banking expert Tod Little (“Little”), who was retained to opine 21 on the state of the country’s economy as of March 3, 2010 –-- the 22 First Plan confirmation hearing date. Little offered his 23 declaration in lieu of a forthcoming report he claimed would 24 support his testimony at a future evidentiary hearing on 25 U.S. Bank’s motion. According to Little, no one, including 26 Caviata, could have predicted at the time of confirmation of the 27 First Plan in 2010 that a relapse in the recession not seen since 28 the Great Depression of the 1930s would occur, or that it would
-11- 1 continue for such an extended period of time. Typically, asserted 2 Little, national economic recessions cycle and recover within 10- 3 22 months, with the average duration being 18 months. Little 4 claimed that significant, unforeseen national economic changes 5 during the past eighteen months seriously impacted Caviata’s 6 ability to fully perform the First Plan. These events included: 7 ! The U.S. experienced an economic recession during 2007- 2009 which significantly impacted the residential and 8 commercial real estate markets causing real estate values to plummet, banks to collapse, and lending to become non- 9 existent; 10 ! In late 2009/early 2010 the federal government adopted numerous reforms, instituted stimulus programs and 11 created incentives for banks and lending institutions; 12 ! In early 2010, prominent national economists, including Fortune 500 CEOs and the chairman of the federal reserve, 13 and even President Obama, were touting that our economy had “hit bottom” and could only improve; 14 ! The European banking system meltdown compounded the 15 U.S. Banking crisis; 16 ! A market for new loans or refinancing of existing loans still did not exist due to few active lenders and 17 stricter underwriting guidelines, and no resolution to the banking system problem would be achieved anytime 18 soon; 19 ! FDIC policy changes, which caused lenders to benefit more from foreclosure than working out agreements with 20 borrowers, added to the disruption of the normal economic relationship between borrowers and banks. 21 22 In further support of its opposition, Caviata also offered a 23 declaration from Pennington. Pennington stated that he had 24 contacted no less than five lenders seeking refinancing of 25 Caviata’s existing loan on the Property, but all five had advised 26 him that no financing was available due to the credit markets and 27 the restrictions placed on banks by the FDIC. The lenders also 28 advised Pennington that until the economy recovered, the chances
-12- 1 of Caviata obtaining a new loan or refinancing for the Property 2 were nonexistent. Pennington further represented that he was also 3 seeking to sell the Property for $32,400,000, but was told by 4 several brokers that until the credit markets opened up to buyers 5 of multi-residential properties, it was highly doubtful the 6 Property would sell. Finally, Pennington stated that because of 7 the representations by President Obama and the nation’s leading 8 economists in early 2010 that the recession had ended and had 9 entered a state of recovery, he believed the First Plan’s three- 10 year term was reasonable at the time of confirmation, and he could 11 not have foreseen the changes articulated by Little that occurred 12 after confirmation of the First Plan.8 13 Caviata filed a proposed second plan and disclosure statement 14 on September 27, 2011, which extended the time within which it was 15 required to sell or refinance the Property from three years to ten 16 years, reduced the amount paid to U.S. Bank from $29,564,308.77 to 17 $22,420,928.00, and reduced the interest rate on U.S. Bank’s 18 secured claim from 4.75 to 4.00%. 19 In its reply, U.S. Bank contended that from the beginning of 20 the first bankruptcy case its experts had warned Caviata that the 21 First Plan was a pipe dream, but, instead of heeding these 22 warnings, Caviata essentially stuck its head in the sand and went 23 forward with its First Plan. According to U.S. Bank, Caviata’s 24 opposition failed to explain how a recession that was present 25 26 8 Caviata had also intended to submit a declaration from real estate expert Reese Perkins (“Perkins”) concerning the local 27 market and how values had been impacted by the unforeseen changed circumstances occurring since early 2010, but Perkins was out of 28 town and unavailable until just days before the dismissal hearing.
-13- 1 during the first bankruptcy case and was still present during the 2 second bankruptcy case was “unforeseeable,” or how it was a 3 “changed” market condition when the market was just as bad now as 4 it was then. U.S. Bank further argued that mere opinion of public 5 figures on the improved state of the economy in early 2010 was not 6 evidence that the recession was an unforeseeable circumstance or a 7 changed market condition. U.S. Bank opposed an evidentiary 8 hearing as a waste of the court’s time; it was common knowledge 9 that the economy was bad in both 2010 and 2011. 10 The hearing on U.S. Bank’s motion to dismiss took place on 11 October 7, 2011, before the Hon. Bruce T. Beesley. Before hearing 12 oral argument, the bankruptcy court recited a brief history of 13 Caviata’s first bankruptcy case and noted that the First Plan had 14 been ongoing for about “10 months.” Hr’g Tr., Oct. 7, 2011, 2:8- 15 19. Caviata’s counsel confirmed the court’s version of the facts. 16 Id. at 2:20. The court then noted that it had considered the 17 pleadings, declarations, attachments, and parts of the First Plan 18 and proposed second plan. It summarized the parties’ positions 19 regarding the First Plan and then posed the following question to 20 Caviata: 21 So I have difficulty understanding how this is a surprise to the debtor as a basis for filing a new . . . Chapter 22 11 while the existing Chapter 11 is pending because you have to show as I understand it some significant change 23 in circumstances that wasn’t anticipated. And I guess -- my question is and what I have real problems with is I 24 can’t see given the objection by the secured party how they can say that their -- we had no inkling that this 25 was going to happen because they were fighting with somebody who says exactly what has happened did happen. 26 It’s very difficult for me to understand how that can be a surprise, but I’m happy to hear from you. 27 28 Id. at 5:4-17. Caviata’s counsel began by noting that an
-14- 1 evidentiary hearing was necessary because not all of the facts 2 were set forth in the declarations. The court responded by asking 3 counsel for an offer of proof as to what facts he would present if 4 an evidentiary hearing were granted. Counsel stated that although 5 he had not yet obtained a declaration from Perkins, Little and 6 Pennington would testify that the economy taking such a turn for 7 the worse was an unforeseeable event, and it fundamentally changed 8 the real estate market by eliminating funding for new loans. Id. 9 at 6:11-8:12. 10 Caviata’s counsel and the court then engaged in a lengthy 11 colloquy about Bouy Hall. Id. at 8:12-9:25. When the court 12 opined that loans were also not available when the First Plan was 13 confirmed in April 2010, counsel responded that no evidence had 14 been presented at that time about the possibility of a recession 15 of this magnitude, and no such evidence could have been presented 16 because no one knew or thought it could happen. Had there been 17 any such evidence, argued counsel, the First Plan would not have 18 been confirmed. Counsel further noted that although U.S. Bank 19 disputed the First Plan’s feasibility, its experts had never 20 opined that the real estate market would collapse or that no 21 funding would be available during the First Plan’s term. 22 U.S. Bank contended that during the proceedings culminating 23 in confirmation of the First Plan, it had articulated doubts about 24 the Property appreciating in three years to a value sufficient to 25 pay off its claim. U.S. Bank further argued that the fact the 26 loan market was currently tight was not a new fact supporting the 27 extraordinary change required for filing a second case; the market 28 was also tight in 2010 and everyone knew it. Finally, U.S. Bank
-15- 1 argued that an evidentiary hearing was not necessary for a motion 2 to dismiss. 3 After hearing further argument from the parties, the 4 bankruptcy court orally granted U.S. Bank’s motion to dismiss. 5 The court again noted that it had reviewed the pleadings, 6 declarations, a number of cases including Bouy Hall, and § 1141. 7 Hr’g Tr., Oct. 7, 2011, 25:11-14. It then entered its findings 8 and conclusions on the record: 9 [A] plan of reorganization which is confirmed is a contract between two parties. It’s between the secured 10 lender here and the debtors, and the fact that the economy changes doesn’t relieve people from their 11 contractual obligations. If I have purchased a car and because of the economy I lose my job, I don’t get to go 12 back to the person who financed my car and say I want to do this over because I don’t have enough money. 13 I think the economy is terrible, but I think that in 2010 14 there were certainly inklings that the economy was very bad. It was only 10 months ago and the situation has not 15 deteriorated that badly in the last 10 months. It’s been awful. The debtor when they made their plan basically 16 said, you know, our best guess that we can get confirmed is we think we can get this done in three years. They 17 were just wrong. And I’m not saying that’s a bad faith issue in this case, but I don’t think just being wrong 18 that the economy is worse than they thought it was going to be is a basis for filing a new plan. 19 20 Id. at 25:15-26:8. As a result of the dismissal, Caviata was 21 still operating under the First Plan. Caviata’s request for an 22 evidentiary hearing was denied. Id. at 26:19-22. 23 The bankruptcy court entered an order granting U.S. Bank’s 24 motion to dismiss Caviata’s second chapter 11 case on October 27, 25 2011. Caviata timely appealed. 26 II. JURISDICTION 27 The bankruptcy court had jurisdiction under 28 U.S.C. 28 §§ 157(b)(2)(A) and 1334. We have jurisdiction under 28 U.S.C.
-16- 1 § 158. 2 III. ISSUES 3 1. Did the bankruptcy court abuse its discretion when it denied 4 Caviata’s request for an evidentiary hearing? 5 2. Did the bankruptcy court abuse its discretion in dismissing 6 Caviata’s second chapter 11 case? 7 IV. STANDARDS OF REVIEW 8 We review for an abuse of discretion the bankruptcy court’s 9 decision not to conduct an evidentiary hearing. Zurich Am. Ins. 10 Co. v. Int’l Fibercom, Inc. (In re Int’l Fibercom, Inc.), 503 F.3d 11 933, 939 (9th Cir. 2007). 12 We review the bankruptcy court’s decision to dismiss a case 13 for abuse of discretion. Leavitt v. Soto (In re Leavitt), 171 14 F.3d 1219, 1223 (9th Cir. 1999). 15 In applying the abuse of discretion standard, we first 16 “determine de novo whether the [bankruptcy] court identified the 17 correct legal rule to apply to the relief requested.” United 18 States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc). 19 If it applied the correct legal rule, we then review the 20 bankruptcy court’s fact findings for clear error. Id. at 1262 & 21 n.20. We must affirm the bankruptcy court’s fact findings unless 22 we conclude that they are “(1) ‘illogical,’ (2) ‘implausible,’ or 23 (3) without ‘support in inferences that may be drawn from the 24 facts in the record.’” Id. at 1262. 25 We may affirm on any basis supported by the record. Pac. 26 Capital Bancorp, N.A. v. E. Airport Dev., LLC (In re E. Airport 27 Dev., LLC), 443 B.R. 823, 828 (9th Cir. BAP 2011). 28
-17- 1 V. DISCUSSION 2 A. The bankruptcy court did not abuse its discretion when it denied Caviata’s request for an evidentiary hearing. 3 4 Caviata asserts that it requested an evidentiary hearing to 5 show: (1) extraordinary changed circumstances occurred in the 6 economy and market (other than a general decline) that warranted 7 its second chapter 11 filing; and (2) that the extraordinary 8 changed circumstances were unforeseeable to Caviata. Caviata 9 argues that because a factual dispute between the parties existed 10 on these issues, the bankruptcy court was required to provide 11 procedures and schedule an evidentiary hearing on the matter. 12 Caviata argues that, because the bankruptcy court weighed the 13 evidence before it knowing that the record was incomplete and yet 14 made its determination to dismiss the second chapter 11 filing, 15 the court violated Caviata’s due process rights and severely 16 prejudiced Caviata by not allowing it to present its entire case. 17 We disagree. 18 U.S. Bank’s motion to dismiss is a contested matter subject 19 to Rule 9014. See Rule 1017(f)(1). A contested matter hearing 20 under Rule 9014,9 as amended in 2002, “ordinarily requires trial 21 testimony in open court with respect to disputed material factual 22 issues in the same manner as an adversary proceeding.” Khachikyan 23 v. Hahn (In re Khachikyan), 335 B.R. 121, 126 (9th Cir. BAP 2005). 24 The advisory committee’s note provides: 25 26 9 Rule 9014(d) provides: 27 (d) Testimony of witnesses. Testimony of witnesses with respect to disputed material factual issues shall be taken in 28 the same manner as testimony in an adversary proceeding.
-18- 1 Subdivision (d) is added to clarify that if the motion cannot be decided without resolving a disputed material 2 issue of fact, an evidentiary hearing must be held at which testimony of witnesses is taken in the same manner 3 as testimony is taken in an adversary proceeding or at a trial in a district court civil case. Rule 43(a), 4 rather than Rule 43(e)[now 43(c)], F.R.Civ.P., would govern the evidentiary hearing on the factual dispute. 5 Under Rule 9017, the Federal Rules of Evidence also apply in a contested matter. Nothing in the rule 6 prohibits a court from resolving any matter that is submitted on affidavits by agreement of the parties. 7 8 Rule 9014(d), Advisory Comm. Note to 2002 amendments. 9 Consequently, through Rule 9017, such testimonial evidence is 10 taken pursuant to Civil Rule 43(a), unless the parties agree to 11 submit the contested matter on affidavits. Such agreement to use 12 affidavits did not exist between the parties in this case. If a 13 court determines that no “disputed material factual issues” exist, 14 it may then hear a motion on affidavits, oral testimony or 15 depositions when the motion relies on facts outside the record. 16 See Civil Rule 43(c) incorporated by Rule 9017. 17 Section 1112(b) provides for the dismissal of a debtor’s case 18 for cause “after notice and a hearing.” “Notice and a hearing” is 19 defined in § 102(1)(A) to mean “after such notice as is 20 appropriate in the particular circumstances, and such opportunity 21 for a hearing as is appropriate in the particular 22 circumstances[,]” subject to the discretionary limitation imposed 23 by Rule 9014(d). The bankruptcy court specifically noted its 24 partial review of the record in the first bankruptcy case in 25 conjunction with the affidavits submitted in the second case. 26 Caviata’s approved disclosure statement in the first case 27 identified through its designated risks the factual issues that 28 Caviata now argues were unforeseen at the time of confirmation in
-19- 1 the first case. Caviata specifically disclosed in § 12.1: 2 (a) the value of the Debtor’s property has suffered significantly as a result of the downturn in the United 3 States economy since the summer of 2007. There is no assurance that the economy will turn around and that 4 property values, in general, or the value of the Debtor’s Property, in particular, will not continue to 5 decline; (b) the Plan is dependent, at least in part, on continued leasing of the Property. There is no 6 assurance that the Debtor’[s] predictions of the rate of stabilizing the Property and achieving performing leases 7 will occur, or that these predictions will occur within the time period projected in the Plan; (c) because the 8 Plan is dependent on continued leasing of the Property, there is a risk that the projections of net operating 9 income, with which to pay the Allowed Claims of Creditors, may not be met; (d) the Debtor may not be 10 able to sell its Property; (e) the Debtor may not be able to secure alternative financing to satisfy the 11 Allowed Secured Claim of Cal National or the Allowed Secured Claim of Specialty Trust; (f) if Cal National is 12 not paid in accordance with the Plan, and the Debtor is unable to sell the Property or to secure alternative 13 financing, Cal National may foreclose on the Property. 14 At the confirmation hearing on March 3, 2010, U.S. Bank also 15 raised issues through its expert, William G. Kimmel, concerning 16 the ability to refinance, Hr’g Tr., Mar. 3, 2010, 126:20-127:6, 17 the poor global economic situation, id. 146:15-19, and the status 18 of the housing market, id. 126:15-19. 19 In the second case, Caviata submitted declarations from 20 Little and Pennington in support of its opposition to U.S. Bank’s 21 motion to dismiss. The bankruptcy court considered these 22 declarations. The court went one step further and asked Caviata’s 23 counsel for an offer of proof. Counsel stated that although he 24 had not yet obtained a declaration from Perkins, Little and 25 Pennington would testify that the worsening economy from 2010 to 26 2011 was an unforeseeable event, and that it fundamentally changed 27 the real estate market by eliminating funding for new loans. 28 Caviata set forth similar disclosures in the approved
-20- 1 disclosure statement filed in the first case. Additionally, 2 U.S. Bank provided such evidence during the confirmation hearing 3 in the first case. The material facts before the bankruptcy court 4 in the second case were not disputed. Such evidence already 5 existed in the record from the first case and was not disputed in 6 the second case. Any economic changes alleged by Caviata were 7 foreseeable, as affirmed by the evidence submitted by U.S. Bank in 8 both the first and second cases and by Caviata in its approved 9 disclosure statement in the first case. Consequently the factual 10 issues were not disputed as required under Rule 9014(d). “Where 11 the . . . core facts are not disputed, the bankruptcy court is 12 authorized to determine contested matters . . . on the pleadings 13 and arguments of the parties, drawing necessary inferences from 14 the record.” Tyner v. Nicholson (In re Nicholson), 435 B.R. 622, 15 636 (9th Cir. BAP 2010) (quoting Gonzalez–Ruiz v. Doral Fin. Corp. 16 (In re Gonzalez–Ruiz), 341 B.R 371, 381 (1st Cir. BAP 2006)). We 17 conclude the bankruptcy court had sufficient undisputed evidence 18 before it to issue its ruling without any further evidentiary 19 hearing and did not abuse its discretion in denying the request 20 for an evidentiary hearing. In re Int’l Fibercom, Inc., 503 F.3d 21 at 939; Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1139 (9th 22 Cir. 2004). 23 B. The bankruptcy court did not abuse its discretion in 24 dismissing Caviata’s second chapter 11 case. 25 Under § 1141(a), the terms of a confirmed plan are binding on 26 all parties. Section 1127(b) provides that a chapter 11 plan may 27 be modified before but not after “substantial consummation” of the 28
-21- 1 plan.10 Taken together, “§§ 1127(b) and 1141(a) impose an 2 important element of finality in chapter 11 proceedings, allowing 3 parties to rely on the provisions of a confirmed reorganization 4 plan.” Integon Life Ins. Corp. v. Mableton-Booper Assocs. (In re 5 Mableton-Booper Assocs.), 127 B.R. 941, 943 (Bankr. N.D. Ga. 6 1991). 7 Although § 1127(b) prohibits modification of a substantially 8 consummated plan, several courts have held that serial chapter 11 9 filings are not per se impermissible, and that a second plan may 10 modify the first plan where there has been an unforeseeable or 11 unanticipated change in circumstances. See Elmwood Dev. Co. v. 12 Gen. Electric Pension Trust (In re Elmwood Dev. Co.), 964 F.2d 13 508, 511-12 (5th Cir. 1992) (“[A] second petition would not 14 necessarily contradict the original proceedings because a 15 legitimately varied and previously unknown factual scenario might 16 require a different plan to accomplish the goals of bankruptcy 17 relief.”) (citing Johnson v. Home State Bank, 501 U.S. 78 (1991)); 18 PNC Mortg. v. Deed & Note Traders, LLC (In re Deed & Note Traders, 19 LLC), 2012 WL 1191891, at *6-7 (9th Cir. BAP Apr. 5, 2012); In re 20 Woods, 2011 WL 841270, at *3-4 (Bankr. D. Kan. Mar. 7, 2011); In 21 re 1633 Broadway Mars Rest. Corp., 388 B.R. 490, 500 (Bankr. 22 10 “Substantial consummation” is defined in § 1101(2) as: 23 (A) transfer of all or substantially all of the property 24 proposed by the plan to be transferred; (B) assumption by the debtor or by the successor to the 25 debtor under the plan of the business or of the management of all or substantially all of the property dealt with by the 26 plan; and (C) commencement of distribution under the plan. 27 The parties do not dispute that the First Plan has been 28 substantially consummated.
-22- 1 S.D.N.Y. 2008); In re Motel Props., Inc., 314 B.R. 889, 895-96 2 (Bankr. S.D. Ga. 2004); In re Tillotson, 266 B.R. 565, 569 (Bankr. 3 W.D.N.Y. 2001); In re Adams, 218 B.R. 597, 601-02 (Bankr. D. Kan. 4 1998); In re Northtown Realty, Co., 215 B.R. 906, 913 (Bankr. 5 E.D.N.Y. 1998); In re Woodson, 213 B.R. 404, 405-06 (Bankr. M.D. 6 Fla. 1997); Bouy Hall, 208 B.R. at 743-44; In re Del. Valley 7 Broadcasters L.P., 166 B.R. 36, 40 (Bankr. D. Del. 1994); In re 8 Roxy Real Estate Co., 170 B.R. 571, 576 (Bankr. E.D. Penn. 1993); 9 In re Mableton-Booper Assocs., 127 B.R. at 943-44 (“Where 10 unexpected circumstances doom the debtor’s chances for success, 11 binding the parties to the original confirmation decision in the 12 name of finality would frustrate [the goal of reorganization], and 13 the confirmation decision should be reevaluated.”); In re Casa 14 Loma Assocs., 122 B.R. 814, 817-18 (Bankr. N.D. Ga. 1991).11 15 However, “[e]ven extraordinary and unforeseeable changes will not 16 support a new Chapter 11, if these changes do not substantially 17 impair the debtor’s performance under the confirmed plan.” In re 18 Adams, 218 B.R. at 602; see also In re Woods, 2011 WL 841270, at 19 *4. Thus, for the bankruptcy court to consider a debtor’s second 20 chapter 11 filing and plan, the unforeseeable or unanticipated 21 change in circumstances must have affected the debtor’s ability to 22 fully perform under its confirmed plan. In re Woods, 2011 WL 23 841270, at *4; In re Adams, 218 B.R. at 602; In re Northtown 24 Realty, Co., 215 B.R. at 913; In re Woodson, 213 B.R. at 405; In 25 26 11 The Seventh Circuit in Fruehauf Corp. v. Jartran, Inc. (In re Jartran, Inc.), 886 F.2d 859 (7th Cir. 1989), held that 27 serial bankruptcy filings are not per se impermissible, but it did not expressly discuss unforeseen or unanticipated changed 28 circumstances as a basis for a serial filing.
-23- 1 re Roxy Real Estate, 170 B.R. at 576; In re Casa Loma Assocs., 122 2 B.R. at 818. Examples of unforeseen changed circumstances in the 3 above cases include a change in federal law affecting tenancy of 4 an apartment building, termination of service by major airlines 5 which had provided vital customers for an airport hotel, lost 6 crops due to hail, cattle and pasture lost due to fire, and 7 substantial adverse judgments. 8 In cases of economic change, courts have held generally that 9 changed market conditions alone are insufficient to warrant a 10 second chapter 11 filing. In re Elmwood Dev. Co., 964 F.2d at 11 512-13 (event of national “credit crunch” in early 1990’s might be 12 a changed circumstance justifying a second chapter 11 filing but 13 appellate court upheld bankruptcy court’s decision to reject it); 14 In re 1633 Broadway Mars Rest. Corp., 388 B.R. at 502 n.17 15 (recession of late 2007 was a change in general economic condition 16 and insufficient basis for second chapter 11 filing); In re Motel 17 Props., Inc., 314 B.R. at 896 (foreseeable risk of operating any 18 business is the fluctuation in supply and demand and its impact on 19 the market); In re Tillotson, 266 B.R. at 569 (changes associated 20 with realities of economic change are an insufficient reason to 21 allow second chapter 11 filing); In re Adams, 218 B.R. at 602 22 (same); In re Northtown Realty Co., 215 B.R. at 913; Bouy Hall, 23 208 B.R. at 745; In re Roxy Real Estate Co., 170 B.R. at 576 (a 24 change in market condition for rental properties or real estate is 25 insufficient changed circumstance); In re Mableton-Booper Assocs., 26 127 B.R. at 944; In re Casa Loma Assocs., 122 B.R. at 818. 27 However, “where a debtor experiences a ‘fundamental change in 28 its market’ and not the typical fluctuations of supply and demand,
-24- 1 if unforeseeable, the change may represent sufficiently changed 2 circumstances to warrant a second filing.” Bouy Hall, 208 B.R. at 3 745; In re Motel Props., Inc., 314 B.R. at 896 (second filing 4 permitted when an unforeseeable economic event fundamentally 5 changes the market conditions). “When an unforeseeable economic 6 change effects a significant change in the market, a second filing 7 may be permitted.” Bouy Hall, 208 B.R. at 745 (emphasis in 8 original). 9 Cases in which a chapter 11 debtor has been successful at 10 showing unforeseen changed circumstances to warrant a second 11 chapter 11 filing are clearly the exception rather than the rule. 12 Bouy Hall and In re Casa Loma Associates are two of those rare 13 exceptions. In Bouy Hall, after the debtor had confirmed and 14 substantially consummated its chapter 11 plan, the debtor’s hotel 15 business was damaged when a nearby airport which supplied much of 16 the hotel’s customer base relocated its terminal to a location 17 further away. Id. at 740. In addition, two major airlines 18 eliminated their service into the airport and another airline had 19 filed a chapter 7 bankruptcy, further eroding the debtor’s 20 customer market. Id. Based upon this showing, the bankruptcy 21 court overruled the creditor’s argument that debtor’s problems 22 were either foreseeable or purely economic and denied its motion 23 to dismiss the debtor’s second chapter 11 case. Id. at 746. 24 According to the court, the debtor had not only demonstrated that 25 the demand for its service decreased, but also that the market 26 itself had been significantly altered. Id. at 745. 27 In In re Casa Loma Associates, the bankruptcy court held that 28 an unanticipated change in federal law prohibiting “adults only”
-25- 1 apartment complexes, which severely affected debtor’s tenancy 2 rates, and discovery of fire damage and structural defects in an 3 apartment building, which were unknown at the time of plan 4 confirmation, were changed circumstances warranting the second 5 chapter 11 filing. 122 B.R. at 818-19. Accordingly, dismissal of 6 debtor’s second chapter 11 case was denied. Id. at 819. The 7 bankruptcy court did note, however, that the result would have 8 been different had the debtor relied merely on changed market 9 conditions to support the second filing. Id. at 818. 10 Caviata asserts that fundamental and significant changes in 11 the national and local economy have taken place since it confirmed 12 the First Plan, which were not only unforeseeable, but seriously 13 impacted its ability to fully perform the First Plan. Caviata 14 argues that the bankruptcy court ignored the case law and failed 15 to consider whether the change in the economy was a general market 16 decline, as opposed to a fundamental economic change effecting a 17 significant change in the market. We disagree. 18 In reviewing the statements made by the bankruptcy court at 19 the dismissal hearing, it is clear that it considered the 20 relevant, although not binding, case law, and that it recognized 21 what extraordinary circumstances Caviata needed to show to permit 22 the second chapter 11 filing. The court noted that it had 23 reviewed Bouy Hall and several other cases, and it even discussed 24 some of the facts in Bouy Hall on the record. The court also 25 warned Caviata at the beginning of the hearing that the alleged 26 changed circumstances were not unforeseeable based on U.S. Bank’s 27 objections to the First Plan. While agreeing that the current 28 economy is “terrible,” the bankruptcy court concluded Caviata had
-26- 1 not shown that at the time of confirmation of the First Plan it 2 was unforeseeable that the economy would remain depressed and not 3 improve as Caviata had predicted. 4 Caviata also argues that the bankruptcy court’s findings are 5 not supported by the record and are contrary to the evidence 6 presented. Specifically, Caviata contends the bankruptcy court 7 failed to consider its evidence that significant changes occurred 8 after confirmation of the First Plan that could not have been 9 foreseen by Caviata. We now review the evidence presented in this 10 case to see if it supports the bankruptcy court’s decision. 11 In U.S. Bank’s objection to confirmation of the First Plan, 12 Kimmel opined in his declaration that because the real estate 13 market showed no signs of improving in the near future and because 14 financing was unavailable, he believed the Property’s value was 15 now only $20 million, down from his previous June 2009 Appraisal 16 of $23,100,000. However, the bankruptcy court struck Kimmel’s 17 declaration from the record. Nonetheless, Kimmel testified at the 18 confirmation hearing in March 2010 that since June 2009, financing 19 had become more difficult to obtain, and buyers were not willing 20 to pay the prices they were before due to larger down payment 21 requirements. However, on cross-examination, Kimmel admitted that 22 the apartment market in Reno/Sparks was getting better. Interest 23 rate expert Zelle testified that Caviata’s plan to payoff 24 U.S. Bank in three years was “a dream” and “a fairy tale,” and 25 that the Property would have to become “Disneyland in Reno” in 26 order to pull it off. The bankruptcy court rejected Zelle’s 27 “coerced” loan approached to support his 9.25% interest rate. 28 However, Zelle, who brokers commercial real estate loans, also
-27- 1 testified at the confirmation hearing that he did not see the real 2 estate market improving in three years as Caviata predicted. 3 In support of the First Plan, Caviata offered the testimony 4 of interest rate expert, Dr. Wazzan, and Caviata’s manager, 5 Pennington. Dr. Wazzan testified at the confirmation hearing that 6 although forecasting was difficult, the empirical data showed that 7 things were improving. Pennington, with his thirty-plus years of 8 experience in large-scale real estate development in Northern 9 Nevada, testified that he believed conditions would improve and 10 the Property, which was worth $23,100,000 at the time of 11 confirmation, would be worth $34 million within the next couple of 12 years because of its desirability and uniqueness in the market. 13 Pennington offered no further details as to why he thought the 14 Property’s value would appreciate to such a degree in a rather 15 short period of time. 16 In support of its motion to dismiss Caviata’s second chapter 17 11 case, U.S. Bank did not offer any direct evidence, but it did 18 ask the bankruptcy court to take judicial notice of Caviata’s 19 first quarter report filed on April 25, 2011. In that report, 20 Caviata represented that it did not foresee any circumstances that 21 would affect its ability to perform under the First Plan. 22 Arguably, some (if not all) of the catastrophic events Little 23 described had occurred by then, yet Caviata did not foresee any 24 problems fully consummating the Plan in April 2011, which was 25 approximately four months before the second filing. 26 In its opposition to dismissal, Caviata offered the Little 27 and Pennington declarations. Little articulated a laundry list of 28 events occurring after confirmation of the First Plan that he
-28- 1 opined no one, including Caviata, could have predicted at the time 2 of confirmation of the First Plan in 2010, which warranted the 3 second chapter 11 filing. Pennington stated that, because of the 4 representations by President Obama and the nation’s leading 5 economists in early 2010 that the recession had ended and had 6 entered a state of recovery, he believed the First Plan’s three- 7 year term was reasonable at the time of confirmation. Pennington 8 asserted that he could not have foreseen the changes articulated 9 by Little that occurred post-confirmation. Notably, during his 10 testimony at the confirmation hearing on the First Plan, 11 Pennington never stated that his belief that the market would 12 improve or that the Property would be worth $34 million in the 13 next couple of years was based on these early 2010 representations 14 by national figures. Pennington also stated that he contacted 15 several lenders seeking refinancing of Caviata’s existing loan on 16 the Property, and all had advised him that no financing was 17 available due to the credit market and the restrictions placed on 18 banks by the FDIC. Pennington did not offer any loan application 19 documents or declarations from these lenders in the record. He 20 also did not offer any declarations from the several brokers he 21 claimed he spoke to about listing the Property for sale. 22 Not finding the testimony offered by Little and Pennington 23 persuasive, the bankruptcy court found that a decline in the 24 economy between 2010 and 2011 was not an unforeseeable and changed 25 circumstance justifying Caviata’s second chapter 11 filing.12 26 12 27 The bankruptcy court also found that Caviata’s second chapter 11 filing was not in bad faith, a necessary element for a 28 (continued...)
-29- 1 Caviata in its approved disclosure statement from the first case 2 specifically highlighted that risk. We cannot conclude, on this 3 record, that the bankruptcy court’s findings are illogical, 4 implausible, or without support in inferences that may be drawn 5 from the facts in the record. Hinkson, 585 F.3d at 1262. 6 Although it may be that no one could have anticipated the 7 precipitous decline in the economy that occurred in 2008, in late 8 2009/early 2010, when Caviata filed and sought confirmation of the 9 First Plan, the real estate market in many parts of the country, 10 including Northern Nevada, was still depressed. Even Little 11 testified that the lending market at that time was “nonexistent.” 12 Some people believed in early 2010 that the economy was 13 recovering; some believed that recovery was still to be seen. As 14 the bankruptcy court put it, Caviata took its “best guess” that 15 things would only get better in the next three years, but it 16 guessed wrong. Even if the economic changes from 2010 to 2011 17 were as catastrophic as Little indicated, it was not unforeseeable 18 that the real estate and lending markets would not recover as soon 19 as some, including Caviata, had thought especially given Caviata’s 20 disclosure of risks and facts in its approved disclosure 21 22 12 (...continued) successful second chapter 11 filing. In re Elmwood Dev. Co., 964 23 F.2d at 511-12; In re Jartran, Inc., 886 F.2d. at 866-67; In re Deed & Note Traders, LLC, 2012 WL 1191891, at *7; In re 1633 24 Broadway Mars Rest. Corp., 388 B.R. at 500; In re Motel Props., Inc., 314 B.R. at 896; In re Tillotson, 266 B.R. at 569; In re 25 Adams, 218 B.R. at 601-02; In re Northtown Realty, Co., 215 B.R. at 913; In re Woodson, 213 B.R. at 405-06; Bouy Hall, 208 B.R. at 26 744; In re Del. Valley Broadcasters L.P., 166 B.R. at 40; In re Roxy Real Estate Co., 170 B.R. at 576; In re Mableton-Booper 27 Assocs., 127 B.R. at 943-44; In re Casa Loma Assocs., 122 B.R. at 817-18. U.S. Bank does not dispute this finding, so we need not 28 elaborate on the point.
-30- 1 statement. 2 Upon the request of a party in interest, the bankruptcy court 3 may dismiss or convert a chapter 11 case for “cause.” § 1112(b). 4 Here, the “cause” relied upon by U.S. Bank and found by the 5 bankruptcy court was Caviata’s inability to show an extraordinary 6 change in circumstances which substantially impaired its 7 performance under the First Plan to warrant the second chapter 11 8 filing. Because the bankruptcy court applied the correct legal 9 standard, and its factual findings are not illogical, implausible, 10 or without support in the record, we conclude that it did not 11 abuse its discretion in dismissing Caviata’s second chapter 11 12 case. Accordingly, Caviata is still operating under the First 13 Plan. 14 VI. CONCLUSION 15 For the foregoing reasons, we AFFIRM. 16 17 18 19 20 21 22 23 24 25 26 27 28
-31- | 12-03-2014 | [
"FILED JUL 17 2012 1 ORDERED PUBLISHED SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 O F TH E N IN TH C IR C U IT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 6 In re: ) BAP No. NV-11-1620-KiPaD ) 7 CAVIATA ATTACHED HOMES, LLC, ) Bk. No. 11-52458-BTB ) 8 Debtor. ) ) 9 ) CAVIATA ATTACHED HOMES, LLC, ) 10 ) Appellant, ) 11 ) v. ) A M E N D E D 12 ) U.S. BANK, NATIONAL ) O P I N I O N 13 ASSOCIATION, ) ) 14 Appellee. ) ______________________________) 15 16 Argued and Submitted on June 15, 2012 at Las Vegas, Nevada 17 Original Opinion Filed - June 29, 2012 18 Amended Opinion Filed - July 17, 2012 19 Appeal from the United States Bankruptcy Court 20 for the District of Nevada 21 Honorable Bruce T. Beesley, Bankruptcy Judge, Presiding 22 23 Appearances: Jeffrey L. Hartman, Esq.",
"of Hartman & Hartman argued for appellant, Caviata Attached Homes, LLC; 24 Joshua D. Wayser, Esq. of Katten Muchin Rosenman LLP argued for appellee, U.S. Bank, National 25 Association. _______________________________ 26 27 Before: KIRSCHER, PAPPAS, and DUNN, Bankruptcy Judges 28 1 KIRSCHER, Bankruptcy Judge: 2 3 Appellant, chapter 111 debtor Caviata Attached Homes, LLC 4 (“Caviata”), appeals an order from the bankruptcy court dismissing 5 its second chapter 11 case due to Caviata’s inability to show that 6 an extraordinary change in circumstances substantially impaired 7 its performance under its confirmed plan to warrant the second 8 chapter 11 filing. In addressing this issue of first impression 9 within the Ninth Circuit, we AFFIRM. 10 I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 11 A. Prepetition facts. 12 Caviata, a Nevada limited liability company, was formed in 13 July 2005 for the purpose of real estate development.",
"The sole 14 owner of Caviata is Caviata 184, LLC, a Nevada limited liability 15 company. William Pennington (“Pennington”) and Dane Hillyard 16 (“Hillyard”) are Caviata’s managers. Caviata owns and operates a 17 184-unit apartment complex located in Sparks, Nevada (the 18 “Property”). The Property was initially developed by Caviata as a 19 condominium project, but due to downturns in the real estate 20 market, it was converted to rental apartments. 21 To develop the Property, on or about September 20, 2005, 22 Caviata obtained a construction loan for $40,700,000 on a recourse 23 basis from California National Bank (“CNB”).",
"In exchange for the 24 loan, Caviata executed a promissory note and deed of trust in 25 favor of CNB, which assigned Caviata’s right, title and interest 26 1 Unless specified otherwise, all chapter, code, and rule 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The 28 Federal Rules of Civil Procedure are referred to as “Civil Rules.” -2- 1 in the Property, including all rents, income and profits. The 2 parties agreed to an interest rate of prime plus .25% and a 3 maturity date of September 20, 2007.",
"Guarantors on the loan 4 included Caviata 184, LLC, Pennington, and Hillyard. 5 Caviata defaulted on the loan. On or about April 25, 2007, 6 Caviata and CNB entered into a forbearance agreement whereby CNB 7 agreed to forbear from exercising its rights under the loan 8 documents. The forbearance agreement was thereafter amended six 9 times, with the most recent amendment dated January 15, 2009. In 10 connection with the sixth amendment, Caviata and CNB executed an 11 amended note under which Caviata agreed to pay CNB the remaining 12 principal balance on the note of $27,476,632.88, plus 7% interest, 13 by no later than April 15, 2009. 14 Caviata again defaulted on the loan, and on April 24, 2009, 15 CNB sued Caviata and the loan guarantors in state court. On 16 October 30, 2009, the FDIC closed CNB, and its assets were 17 assigned to U.S. Bank, N.A. (“U.S.",
"Bank”). Trial against the 18 guarantors was initially set for March 15, 2010. The guarantors 19 filed a motion to continue trial, contending they had no assets to 20 satisfy a judgment. 21 B. Caviata’s first chapter 11 case. 22 Caviata filed its first chapter 11 bankruptcy petition on 23 August 18, 2009 (Case No. 09-52786). The case was ultimately 24 assigned to the Hon. John L. Peterson, sitting by designation. As 25 of the petition date, U.S. Bank claimed it was owed 26 $29,564,308.77, as reflected in its filed proof of claim. Just 27 prior to Caviata’s filing, U.S. Bank had obtained an appraisal on 28 the Property on June 29, 2009, from its appraiser William Kimmel -3- 1 (the “June 2009 Appraisal”), which valued the Property at 2 $23,100,000. 3 Caviata filed its chapter 11 plan and disclosure statement on 4 November 16, 2009, followed by a first amended plan and amendment 5 to Caviata’s disclosure statement2 on January 28, 2010 (the “First 6 Plan”).3 Pursuant to the First Plan, Caviata proposed to pay 7 U.S. Bank 4.25% interest on its allowed secured claim of 8 $27,476,632.88 for three years.",
"After three years, Caviata 9 committed to sell the Property or refinance the loan to pay 10 U.S. Bank in full. If Caviata defaulted under the First Plan, 11 U.S. Bank was entitled to enforce its rights and foreclose. 12 Caviata’s approved disclosure statement4 specifically disclosed 13 the following risks: 14 Because the Plan provides for the reorganization of the Debtor as a going concern or sale of the Property, 15 many of the common risk factors found in typical reorganizations apply with respect to the Plan. These 16 include (a) the value of the Debtor’s property has suffered significantly as a result of the downturn in 17 the United States economy since the summer of 2007. There is no assurance that the economy will turn around 18 and that property values, in general, or the value of the Debtor’s Property, in particular, will not continue 19 20 2 This amendment only amended the treatment of CNB’s claim 21 and all other aspects of Caviata’s disclosure statement remained unchanged.",
"22 3 In November 2009, the parties stipulated that Caviata is a 23 “Single Asset Real Estate” case as defined by § 101(51B). An order to that effect was entered on November 10, 2009. 24 4 Caviata’s appellate appendix does not include all the 25 documents listed in its Designation of Record. We thereby exercise our discretion to independently review the docket in 26 Caviata’s first and second bankruptcy cases, and documents electronically filed therein through the court’s CM/ECF system. 27 See O’Rourke v. Seaboard Sur. Co. (In re E.R.",
"Fegert, Inc.), 887 F.2d 955, 957-58 (9th Cir. 1989) (appellate court may take 28 judicial notice of underlying bankruptcy records). -4- 1 to decline; (b) the Plan is dependent, at least in part, on continued leasing of the Property. There is no 2 assurance that the Debtor’[s] predictions of the rate of stabilizing the Property and achieving performing leases 3 will occur, or that these predictions will occur within the time period projected in the Plan; (c) because the 4 Plan is dependent on continued leasing of the Property, there is a risk that the projections of net operating 5 income, with which to pay the Allowed Claims of Creditors, may not be met; (d) the Debtor may not be 6 able to sell its Property; (e) the Debtor may not be able to secure alternative financing to satisfy the 7 Allowed Secured Claim of Cal National or the Allowed Secured Claim of Specialty Trust; (f) if Cal National is 8 not paid in accordance with the Plan, and the Debtor is unable to sell the Property or to secure alternative 9 financing, Cal National may foreclose on the Property.",
"10 Caviata disclosure statement, Case No. 09-52786, Doc. No. 31, 11 § 12.1, pp. 25-26 (Nov. 16, 2009).5 12 U.S. Bank objected to confirmation of the First Plan 13 contending, inter alia, that it was not feasible. In support of 14 its objection, U.S. Bank offered a declaration from Kimmel 15 appraising the Property at $20 million (the “January 2010 16 Appraisal”). According to Kimmel, although the Property’s 17 occupancy rate had increased since June 2009 from 95% to 98%, 18 average rent rates were down. Considering the uncertainty in the 19 market, which Kimmel opined showed no signs of improving in the 20 near future, and the lack of financing, the Property’s value was 21 now only $20 million. U.S. Bank argued that Caviata failed to 22 submit any evidence showing its ability to sell or refinance the 23 Property in the next three years in order to pay off the note.",
"In 24 fact, argued U.S. Bank, although Pennington asserted that Caviata 25 could sell the Property for $34 million in three years, Pennington 26 5 Caviata’s unapproved disclosure statement filed in its 27 second bankruptcy case contained the same provision in § 12.1, p. 16, except it amended the creditor’s name from “Cal National” 28 to “U.S. Bank”. -5- 1 and Hillyard had admitted they had not marketed the Property to 2 test its worth or sought any refinancing. U.S. Bank further 3 objected to Caviata’s proposed 4.25% interest rate, contending 4 that its expert, Richard Zelle (“Zelle”), who also brokers 5 commercial real estate loans, believed no efficient market existed 6 for a loan on the Property and that 9.25% was a more appropriate 7 rate.",
"8 The bankruptcy court held a confirmation hearing on the First 9 Plan on March 3, 2010. Pennington, who has over thirty years 10 experience in large-scale real estate development in Northern 11 Nevada, testified that he agreed with the June 2009 Appraisal 12 valuing the Property at $23,100,000; however, he believed the 13 Property would be worth $34 million within the next couple of 14 years because of its desirability and uniqueness in the market. 15 Hr’g Tr., Mar. 3, 2010, 21:7-24:7. When asked why Caviata was 16 unwilling to sell the Property now, Pennington responded that the 17 current economic situation was unlike anything he had ever seen 18 before, and a sale now would fail to realize a maximum return on 19 the Property. Based on his experience, Pennington believed that 20 conditions were going to improve. Id. at 25:12-27:11.",
"On cross- 21 examination, Pennington admitted that he had not tried marketing 22 the Property or obtaining refinancing because that was not part of 23 his business plan, at least not yet. Id. at 33:18-35:17. 24 Caviata’s interest rate expert, Dr. Christopher Wazzan (“Dr. 25 Wazzan”), admitted that no loan market existed for a debtor like 26 Caviata. Nonetheless, he believed a fixed rate of 4.75% was an 27 appropriate interest rate for U.S. Bank’s secured claim and that 28 the First Plan was feasible at that rate. Id. at 76-93. Dr. -6- 1 Wazzan further testified that although forecasting was difficult, 2 the empirical data showed that things were improving. Id. at 3 93:25-94:7. 4 Appraiser Kimmel then testified about his January 2010 5 Appraisal, to which Caviata’s counsel objected because Kimmel had 6 not disclosed a new report on which he based his testimony. Hr’g 7 Tr., Mar. 3, 2010, 115-24. The court noted the objection for the 8 record. Id. at 124:18-21. Kimmel explained that the January 2010 9 Appraisal for $20 million was consistent with testimony he gave in 10 January 2010 after reviewing Caviata’s income and expense 11 statements from that time period.",
"Id. at 125. Kimmel disagreed 12 with Pennington’s and Dr. Wazzan’s opinion that the market was 13 improving in the Reno/Sparks area. He believed it had declined 14 since June 2009 because financing had become more difficult to 15 obtain, and buyers were not willing to pay the prices they were 16 before due to larger down payment requirements. Id. at 126:1- 17 127:12. On cross-examination, Kimmel admitted that the 18 Reno/Sparks apartment market was “getting better and the rents now 19 [were] starting to creep up again.” Id.",
"at 146:21-147:8. 20 Interest rate expert Zelle testified that Caviata’s plan to 21 payoff U.S. Bank in three years was “a dream” and “a fairy tale,” 22 and for Caviata to pay $23 million or $29 million to U.S. Bank the 23 “property [was] going to have to become Disneyland in Reno.” Id. 24 at 169:12, 170:17-21. When asked about whether the market would 25 improve, Zelle testified that selling in three years was a risk 26 factor he considered because he did not see it happening. Id. at 27 171:7-22. Zelle further concluded that the First Plan was not 28 feasible because Caviata could not make the monthly payments or -7- 1 the balloon payment. Id. at 190:18-191:14.",
"Zelle admitted he had 2 not provided any analysis as to why Caviata could not make the 3 balloon payment in three years. Id. at 191:15-18. 4 The bankruptcy court ordered post-hearing briefing on certain 5 issues. U.S. Bank’s supplemental brief asserted essentially the 6 same feasibility objection, contending that “the Plan [was] a mere 7 hope and prayer of the Debtor to pay off some of its debts.” 8 U.S. Bank argued that a sale price of $34 million for the 9 Property, even if realized in three years, would not cover its 10 claim, which was already over $32 million,6 let alone the junior 11 lender’s claim, which was over $6 million.",
"12 On April 12, 2010, the bankruptcy court entered its 13 Memorandum Decision, Findings of Fact and Conclusions of Law and 14 Order overruling U.S. Bank’s objections and confirming the First 15 Plan. The court rejected U.S. Bank’s tardy amended proof of 16 claim, determining that it improperly included the accrual of 17 postpetition interest in violation of United Sav. Ass’n of Tex. v. 18 Timbers of Inwood Forest Assocs., 484 U.S. 365 (1988), as well as 19 unreasonable (and unrequested) attorney’s fees. The court also 20 rejected Kimmel’s January 2010 Appraisal as a “devious tactic” by 21 U.S. Bank to increase the amount of its unsecured claim in order 22 to defeat Class 4 acceptance of the First Plan, and it struck it 23 from the record as an improper report prejudicial to Caviata 24 because it contained no supporting data, exhibits, or basis for 25 its $20 million value. Mem.",
"Dec., Apr. 12, 2010, Doc. No. 152 26 pp. 8-9. The court found that what data it did provide was 27 6 On March 12, 2010, U.S. Bank filed an amended proof of 28 claim for $32,801,217.95. -8- 1 contradicted by other data within the declaration and/or Kimmel’s 2 testimony at the confirmation hearing. Accordingly, the court 3 accepted Kimmel’s June 2009 Appraisal of the Property for 4 $23,100,000, which Caviata had accepted as its own, and determined 5 that U.S. Bank held a secured claim in that amount. 6 As for the interest rate on the secured portion of 7 U.S. Bank’s claim, the bankruptcy court found Dr. Wazzan’s 8 testimony credible and consistent with Till v. SCS Credit Corp., 9 541 U.S. 465 (2004). The court found Zelle’s approach flawed and 10 not credible because it resulted in a negative LTV ratio due to 11 failing to bifurcate U.S. Bank’s claim.",
"The court further found 12 that Zelle’s “coerced” loan approach had been rejected in Till. 13 As a result, Dr. Wazzan’s proposed interest rate of 4.75% applied. 14 Finally, as to feasibility, the bankruptcy court found 15 Pennington’s testimony credible that Caviata should be able to 16 sell the Property for at least $34 million within three years, 17 when the cycle of downturn would improve.7 18 Per the First Plan, Caviata began making monthly payments of 19 $120,500.53 to U.S. Bank in June 2010. To date, Caviata’s plan 20 payments are current.",
"21 C. Caviata’s second chapter 11 case. 22 Approximately fifteen months after confirming the First Plan 23 24 7 U.S. Bank appealed the confirmation order on several grounds, including the bankruptcy court’s finding that the First 25 Plan was feasible. While the appeal was pending, Caviata filed an objection to U.S. Bank’s claim. The parties eventually entered 26 into a stipulation resolving the appeal and claim objection and agreed that U.S. Bank would have a claim of $29,564,308.77 against 27 Caviata. The order approving the stipulation was entered on January 12, 2011. The appeal of the confirmation order was 28 dismissed on January 24, 2011. -9- 1 and almost two years after its first chapter 11 filing, Caviata 2 filed its second chapter 11 case on August 1, 2011 (Case No. 11- 3 52458).",
"Caviata valued the Property at $23,420,928 in its 4 schedules filed on August 23, 2011. U.S. Bank’s appraiser, Scott 5 Beebe, conducted an appraisal of the Property as of August 23, 6 2011, and he asserted that the Property’s value had decreased to 7 $20,900,000. 8 On September 9, 2011, U.S. Bank moved to dismiss Caviata’s 9 second bankruptcy case. In short, U.S. Bank contended the second 10 filing was a bad faith filing and a backdoor attempt to circumvent 11 the prohibition on modifying a substantially consummated plan 12 under § 1127. While acknowledging that some courts have created a 13 limited “good faith” exception to this prohibition, U.S. Bank 14 contended that Caviata failed to demonstrate that an extraordinary 15 change in circumstances occurred after substantial consummation of 16 the First Plan, which substantially impaired its performance under 17 the First Plan.",
"U.S. Bank argued that “extraordinary 18 circumstances” did not include decreased income, increased 19 expenses, or reasonably foreseeable changes in debtor’s 20 operations, the market or the economy. U.S. Bank noted that in 21 Caviata’s first quarter report filed on April 25, 2011, Caviata 22 represented that it did not foresee any circumstances that would 23 affect its ability to perform under the First Plan. A hearing on 24 the motion to dismiss was set for October 7, 2011. 25 Caviata opposed dismissal, contending that substantial and 26 fundamental changes had seriously impacted the finance and real 27 estate markets beyond any level that could have been foreseen, 28 and, at the time of confirmation, Caviata did not and could not -10- 1 have known that recovery from the 2007-2009 recession would not 2 occur as predicted, but, rather, the economy would suffer a 3 relapse.",
"Although it was not yet in default under the First Plan, 4 Caviata contended that modifications were necessary or it would be 5 unable to fully perform its confirmed plan. Caviata acknowledged 6 that while courts have typically determined that changed market 7 conditions alone are insufficient to warrant a second chapter 11 8 filing, such cases were based upon “general” market fluctuations, 9 not the global economic crisis the world was currently 10 experiencing. Notwithstanding these cases, argued Caviata, courts 11 have allowed a second filing when an “unforeseeable” economic 12 change fundamentally changes market conditions, citing Lincoln 13 Nat’l Life Ins. Co. v. Bouy, Hall & Howard and Assocs. (In re 14 Bouy, Hall & Howard and Assocs.",
"), 208 B.R. 737, 745 (Bankr. S.D. 15 Ga. 1995) [hereinafter “Bouy Hall”]. Because Caviata believed 16 this matter involved highly disputed factual issues requiring 17 evidentiary support and expert testimony, it asked the court to 18 set an evidentiary hearing. 19 In support of its opposition, Caviata offered the declaration 20 of banking expert Tod Little (“Little”), who was retained to opine 21 on the state of the country’s economy as of March 3, 2010 –-- the 22 First Plan confirmation hearing date. Little offered his 23 declaration in lieu of a forthcoming report he claimed would 24 support his testimony at a future evidentiary hearing on 25 U.S. Bank’s motion. According to Little, no one, including 26 Caviata, could have predicted at the time of confirmation of the 27 First Plan in 2010 that a relapse in the recession not seen since 28 the Great Depression of the 1930s would occur, or that it would -11- 1 continue for such an extended period of time. Typically, asserted 2 Little, national economic recessions cycle and recover within 10- 3 22 months, with the average duration being 18 months.",
"Little 4 claimed that significant, unforeseen national economic changes 5 during the past eighteen months seriously impacted Caviata’s 6 ability to fully perform the First Plan. These events included: 7 ! The U.S. experienced an economic recession during 2007- 2009 which significantly impacted the residential and 8 commercial real estate markets causing real estate values to plummet, banks to collapse, and lending to become non- 9 existent; 10 ! In late 2009/early 2010 the federal government adopted numerous reforms, instituted stimulus programs and 11 created incentives for banks and lending institutions; 12 ! In early 2010, prominent national economists, including Fortune 500 CEOs and the chairman of the federal reserve, 13 and even President Obama, were touting that our economy had “hit bottom” and could only improve; 14 ! The European banking system meltdown compounded the 15 U.S. Banking crisis; 16 ! A market for new loans or refinancing of existing loans still did not exist due to few active lenders and 17 stricter underwriting guidelines, and no resolution to the banking system problem would be achieved anytime 18 soon; 19 ! FDIC policy changes, which caused lenders to benefit more from foreclosure than working out agreements with 20 borrowers, added to the disruption of the normal economic relationship between borrowers and banks. 21 22 In further support of its opposition, Caviata also offered a 23 declaration from Pennington.",
"Pennington stated that he had 24 contacted no less than five lenders seeking refinancing of 25 Caviata’s existing loan on the Property, but all five had advised 26 him that no financing was available due to the credit markets and 27 the restrictions placed on banks by the FDIC. The lenders also 28 advised Pennington that until the economy recovered, the chances -12- 1 of Caviata obtaining a new loan or refinancing for the Property 2 were nonexistent. Pennington further represented that he was also 3 seeking to sell the Property for $32,400,000, but was told by 4 several brokers that until the credit markets opened up to buyers 5 of multi-residential properties, it was highly doubtful the 6 Property would sell. Finally, Pennington stated that because of 7 the representations by President Obama and the nation’s leading 8 economists in early 2010 that the recession had ended and had 9 entered a state of recovery, he believed the First Plan’s three- 10 year term was reasonable at the time of confirmation, and he could 11 not have foreseen the changes articulated by Little that occurred 12 after confirmation of the First Plan.8 13 Caviata filed a proposed second plan and disclosure statement 14 on September 27, 2011, which extended the time within which it was 15 required to sell or refinance the Property from three years to ten 16 years, reduced the amount paid to U.S. Bank from $29,564,308.77 to 17 $22,420,928.00, and reduced the interest rate on U.S. Bank’s 18 secured claim from 4.75 to 4.00%.",
"19 In its reply, U.S. Bank contended that from the beginning of 20 the first bankruptcy case its experts had warned Caviata that the 21 First Plan was a pipe dream, but, instead of heeding these 22 warnings, Caviata essentially stuck its head in the sand and went 23 forward with its First Plan. According to U.S. Bank, Caviata’s 24 opposition failed to explain how a recession that was present 25 26 8 Caviata had also intended to submit a declaration from real estate expert Reese Perkins (“Perkins”) concerning the local 27 market and how values had been impacted by the unforeseen changed circumstances occurring since early 2010, but Perkins was out of 28 town and unavailable until just days before the dismissal hearing. -13- 1 during the first bankruptcy case and was still present during the 2 second bankruptcy case was “unforeseeable,” or how it was a 3 “changed” market condition when the market was just as bad now as 4 it was then. U.S. Bank further argued that mere opinion of public 5 figures on the improved state of the economy in early 2010 was not 6 evidence that the recession was an unforeseeable circumstance or a 7 changed market condition.",
"U.S. Bank opposed an evidentiary 8 hearing as a waste of the court’s time; it was common knowledge 9 that the economy was bad in both 2010 and 2011. 10 The hearing on U.S. Bank’s motion to dismiss took place on 11 October 7, 2011, before the Hon. Bruce T. Beesley. Before hearing 12 oral argument, the bankruptcy court recited a brief history of 13 Caviata’s first bankruptcy case and noted that the First Plan had 14 been ongoing for about “10 months.” Hr’g Tr., Oct. 7, 2011, 2:8- 15 19. Caviata’s counsel confirmed the court’s version of the facts. 16 Id. at 2:20. The court then noted that it had considered the 17 pleadings, declarations, attachments, and parts of the First Plan 18 and proposed second plan.",
"It summarized the parties’ positions 19 regarding the First Plan and then posed the following question to 20 Caviata: 21 So I have difficulty understanding how this is a surprise to the debtor as a basis for filing a new . . . Chapter 22 11 while the existing Chapter 11 is pending because you have to show as I understand it some significant change 23 in circumstances that wasn’t anticipated. And I guess -- my question is and what I have real problems with is I 24 can’t see given the objection by the secured party how they can say that their -- we had no inkling that this 25 was going to happen because they were fighting with somebody who says exactly what has happened did happen. 26 It’s very difficult for me to understand how that can be a surprise, but I’m happy to hear from you. 27 28 Id. at 5:4-17. Caviata’s counsel began by noting that an -14- 1 evidentiary hearing was necessary because not all of the facts 2 were set forth in the declarations. The court responded by asking 3 counsel for an offer of proof as to what facts he would present if 4 an evidentiary hearing were granted. Counsel stated that although 5 he had not yet obtained a declaration from Perkins, Little and 6 Pennington would testify that the economy taking such a turn for 7 the worse was an unforeseeable event, and it fundamentally changed 8 the real estate market by eliminating funding for new loans.",
"Id. 9 at 6:11-8:12. 10 Caviata’s counsel and the court then engaged in a lengthy 11 colloquy about Bouy Hall. Id. at 8:12-9:25. When the court 12 opined that loans were also not available when the First Plan was 13 confirmed in April 2010, counsel responded that no evidence had 14 been presented at that time about the possibility of a recession 15 of this magnitude, and no such evidence could have been presented 16 because no one knew or thought it could happen.",
"Had there been 17 any such evidence, argued counsel, the First Plan would not have 18 been confirmed. Counsel further noted that although U.S. Bank 19 disputed the First Plan’s feasibility, its experts had never 20 opined that the real estate market would collapse or that no 21 funding would be available during the First Plan’s term. 22 U.S. Bank contended that during the proceedings culminating 23 in confirmation of the First Plan, it had articulated doubts about 24 the Property appreciating in three years to a value sufficient to 25 pay off its claim.",
"U.S. Bank further argued that the fact the 26 loan market was currently tight was not a new fact supporting the 27 extraordinary change required for filing a second case; the market 28 was also tight in 2010 and everyone knew it. Finally, U.S. Bank -15- 1 argued that an evidentiary hearing was not necessary for a motion 2 to dismiss. 3 After hearing further argument from the parties, the 4 bankruptcy court orally granted U.S. Bank’s motion to dismiss. 5 The court again noted that it had reviewed the pleadings, 6 declarations, a number of cases including Bouy Hall, and § 1141. 7 Hr’g Tr., Oct. 7, 2011, 25:11-14. It then entered its findings 8 and conclusions on the record: 9 [A] plan of reorganization which is confirmed is a contract between two parties.",
"It’s between the secured 10 lender here and the debtors, and the fact that the economy changes doesn’t relieve people from their 11 contractual obligations. If I have purchased a car and because of the economy I lose my job, I don’t get to go 12 back to the person who financed my car and say I want to do this over because I don’t have enough money. 13 I think the economy is terrible, but I think that in 2010 14 there were certainly inklings that the economy was very bad. It was only 10 months ago and the situation has not 15 deteriorated that badly in the last 10 months. It’s been awful. The debtor when they made their plan basically 16 said, you know, our best guess that we can get confirmed is we think we can get this done in three years. They 17 were just wrong. And I’m not saying that’s a bad faith issue in this case, but I don’t think just being wrong 18 that the economy is worse than they thought it was going to be is a basis for filing a new plan.",
"19 20 Id. at 25:15-26:8. As a result of the dismissal, Caviata was 21 still operating under the First Plan. Caviata’s request for an 22 evidentiary hearing was denied. Id. at 26:19-22. 23 The bankruptcy court entered an order granting U.S. Bank’s 24 motion to dismiss Caviata’s second chapter 11 case on October 27, 25 2011. Caviata timely appealed. 26 II. JURISDICTION 27 The bankruptcy court had jurisdiction under 28 U.S.C. 28 §§ 157(b)(2)(A) and 1334. We have jurisdiction under 28 U.S.C. -16- 1 § 158.",
"2 III. ISSUES 3 1. Did the bankruptcy court abuse its discretion when it denied 4 Caviata’s request for an evidentiary hearing? 5 2. Did the bankruptcy court abuse its discretion in dismissing 6 Caviata’s second chapter 11 case? 7 IV. STANDARDS OF REVIEW 8 We review for an abuse of discretion the bankruptcy court’s 9 decision not to conduct an evidentiary hearing. Zurich Am. Ins. 10 Co. v. Int’l Fibercom, Inc. (In re Int’l Fibercom, Inc.), 503 F.3d 11 933, 939 (9th Cir. 2007). 12 We review the bankruptcy court’s decision to dismiss a case 13 for abuse of discretion.",
"Leavitt v. Soto (In re Leavitt), 171 14 F.3d 1219, 1223 (9th Cir. 1999). 15 In applying the abuse of discretion standard, we first 16 “determine de novo whether the [bankruptcy] court identified the 17 correct legal rule to apply to the relief requested.” United 18 States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc). 19 If it applied the correct legal rule, we then review the 20 bankruptcy court’s fact findings for clear error. Id. at 1262 & 21 n.20. We must affirm the bankruptcy court’s fact findings unless 22 we conclude that they are “(1) ‘illogical,’ (2) ‘implausible,’ or 23 (3) without ‘support in inferences that may be drawn from the 24 facts in the record.’” Id.",
"at 1262. 25 We may affirm on any basis supported by the record. Pac. 26 Capital Bancorp, N.A. v. E. Airport Dev., LLC (In re E. Airport 27 Dev., LLC), 443 B.R. 823, 828 (9th Cir. BAP 2011). 28 -17- 1 V. DISCUSSION 2 A. The bankruptcy court did not abuse its discretion when it denied Caviata’s request for an evidentiary hearing. 3 4 Caviata asserts that it requested an evidentiary hearing to 5 show: (1) extraordinary changed circumstances occurred in the 6 economy and market (other than a general decline) that warranted 7 its second chapter 11 filing; and (2) that the extraordinary 8 changed circumstances were unforeseeable to Caviata. Caviata 9 argues that because a factual dispute between the parties existed 10 on these issues, the bankruptcy court was required to provide 11 procedures and schedule an evidentiary hearing on the matter.",
"12 Caviata argues that, because the bankruptcy court weighed the 13 evidence before it knowing that the record was incomplete and yet 14 made its determination to dismiss the second chapter 11 filing, 15 the court violated Caviata’s due process rights and severely 16 prejudiced Caviata by not allowing it to present its entire case. 17 We disagree. 18 U.S. Bank’s motion to dismiss is a contested matter subject 19 to Rule 9014. See Rule 1017(f)(1). A contested matter hearing 20 under Rule 9014,9 as amended in 2002, “ordinarily requires trial 21 testimony in open court with respect to disputed material factual 22 issues in the same manner as an adversary proceeding.” Khachikyan 23 v. Hahn (In re Khachikyan), 335 B.R.",
"121, 126 (9th Cir. BAP 2005). 24 The advisory committee’s note provides: 25 26 9 Rule 9014(d) provides: 27 (d) Testimony of witnesses. Testimony of witnesses with respect to disputed material factual issues shall be taken in 28 the same manner as testimony in an adversary proceeding. -18- 1 Subdivision (d) is added to clarify that if the motion cannot be decided without resolving a disputed material 2 issue of fact, an evidentiary hearing must be held at which testimony of witnesses is taken in the same manner 3 as testimony is taken in an adversary proceeding or at a trial in a district court civil case. Rule 43(a), 4 rather than Rule 43(e)[now 43(c)], F.R.Civ.P., would govern the evidentiary hearing on the factual dispute. 5 Under Rule 9017, the Federal Rules of Evidence also apply in a contested matter.",
"Nothing in the rule 6 prohibits a court from resolving any matter that is submitted on affidavits by agreement of the parties. 7 8 Rule 9014(d), Advisory Comm. Note to 2002 amendments. 9 Consequently, through Rule 9017, such testimonial evidence is 10 taken pursuant to Civil Rule 43(a), unless the parties agree to 11 submit the contested matter on affidavits. Such agreement to use 12 affidavits did not exist between the parties in this case. If a 13 court determines that no “disputed material factual issues” exist, 14 it may then hear a motion on affidavits, oral testimony or 15 depositions when the motion relies on facts outside the record. 16 See Civil Rule 43(c) incorporated by Rule 9017. 17 Section 1112(b) provides for the dismissal of a debtor’s case 18 for cause “after notice and a hearing.” “Notice and a hearing” is 19 defined in § 102(1)(A) to mean “after such notice as is 20 appropriate in the particular circumstances, and such opportunity 21 for a hearing as is appropriate in the particular 22 circumstances[,]” subject to the discretionary limitation imposed 23 by Rule 9014(d). The bankruptcy court specifically noted its 24 partial review of the record in the first bankruptcy case in 25 conjunction with the affidavits submitted in the second case.",
"26 Caviata’s approved disclosure statement in the first case 27 identified through its designated risks the factual issues that 28 Caviata now argues were unforeseen at the time of confirmation in -19- 1 the first case. Caviata specifically disclosed in § 12.1: 2 (a) the value of the Debtor’s property has suffered significantly as a result of the downturn in the United 3 States economy since the summer of 2007. There is no assurance that the economy will turn around and that 4 property values, in general, or the value of the Debtor’s Property, in particular, will not continue to 5 decline; (b) the Plan is dependent, at least in part, on continued leasing of the Property. There is no 6 assurance that the Debtor’[s] predictions of the rate of stabilizing the Property and achieving performing leases 7 will occur, or that these predictions will occur within the time period projected in the Plan; (c) because the 8 Plan is dependent on continued leasing of the Property, there is a risk that the projections of net operating 9 income, with which to pay the Allowed Claims of Creditors, may not be met; (d) the Debtor may not be 10 able to sell its Property; (e) the Debtor may not be able to secure alternative financing to satisfy the 11 Allowed Secured Claim of Cal National or the Allowed Secured Claim of Specialty Trust; (f) if Cal National is 12 not paid in accordance with the Plan, and the Debtor is unable to sell the Property or to secure alternative 13 financing, Cal National may foreclose on the Property.",
"14 At the confirmation hearing on March 3, 2010, U.S. Bank also 15 raised issues through its expert, William G. Kimmel, concerning 16 the ability to refinance, Hr’g Tr., Mar. 3, 2010, 126:20-127:6, 17 the poor global economic situation, id. 146:15-19, and the status 18 of the housing market, id. 126:15-19. 19 In the second case, Caviata submitted declarations from 20 Little and Pennington in support of its opposition to U.S. Bank’s 21 motion to dismiss. The bankruptcy court considered these 22 declarations. The court went one step further and asked Caviata’s 23 counsel for an offer of proof. Counsel stated that although he 24 had not yet obtained a declaration from Perkins, Little and 25 Pennington would testify that the worsening economy from 2010 to 26 2011 was an unforeseeable event, and that it fundamentally changed 27 the real estate market by eliminating funding for new loans. 28 Caviata set forth similar disclosures in the approved -20- 1 disclosure statement filed in the first case.",
"Additionally, 2 U.S. Bank provided such evidence during the confirmation hearing 3 in the first case. The material facts before the bankruptcy court 4 in the second case were not disputed. Such evidence already 5 existed in the record from the first case and was not disputed in 6 the second case. Any economic changes alleged by Caviata were 7 foreseeable, as affirmed by the evidence submitted by U.S. Bank in 8 both the first and second cases and by Caviata in its approved 9 disclosure statement in the first case. Consequently the factual 10 issues were not disputed as required under Rule 9014(d). “Where 11 the . .",
". core facts are not disputed, the bankruptcy court is 12 authorized to determine contested matters . . . on the pleadings 13 and arguments of the parties, drawing necessary inferences from 14 the record.” Tyner v. Nicholson (In re Nicholson), 435 B.R. 622, 15 636 (9th Cir. BAP 2010) (quoting Gonzalez–Ruiz v. Doral Fin. Corp. 16 (In re Gonzalez–Ruiz), 341 B.R 371, 381 (1st Cir. BAP 2006)). We 17 conclude the bankruptcy court had sufficient undisputed evidence 18 before it to issue its ruling without any further evidentiary 19 hearing and did not abuse its discretion in denying the request 20 for an evidentiary hearing. In re Int’l Fibercom, Inc., 503 F.3d 21 at 939; Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1139 (9th 22 Cir.",
"2004). 23 B. The bankruptcy court did not abuse its discretion in 24 dismissing Caviata’s second chapter 11 case. 25 Under § 1141(a), the terms of a confirmed plan are binding on 26 all parties. Section 1127(b) provides that a chapter 11 plan may 27 be modified before but not after “substantial consummation” of the 28 -21- 1 plan.10 Taken together, “§§ 1127(b) and 1141(a) impose an 2 important element of finality in chapter 11 proceedings, allowing 3 parties to rely on the provisions of a confirmed reorganization 4 plan.” Integon Life Ins. Corp. v. Mableton-Booper Assocs. (In re 5 Mableton-Booper Assocs. ), 127 B.R. 941, 943 (Bankr. N.D. Ga. 6 1991). 7 Although § 1127(b) prohibits modification of a substantially 8 consummated plan, several courts have held that serial chapter 11 9 filings are not per se impermissible, and that a second plan may 10 modify the first plan where there has been an unforeseeable or 11 unanticipated change in circumstances. See Elmwood Dev.",
"Co. v. 12 Gen. Electric Pension Trust (In re Elmwood Dev. Co.), 964 F.2d 13 508, 511-12 (5th Cir. 1992) (“[A] second petition would not 14 necessarily contradict the original proceedings because a 15 legitimately varied and previously unknown factual scenario might 16 require a different plan to accomplish the goals of bankruptcy 17 relief.”) (citing Johnson v. Home State Bank, 501 U.S. 78 (1991)); 18 PNC Mortg. v. Deed & Note Traders, LLC (In re Deed & Note Traders, 19 LLC), 2012 WL 1191891, at *6-7 (9th Cir. BAP Apr. 5, 2012); In re 20 Woods, 2011 WL 841270, at *3-4 (Bankr. D. Kan. Mar. 7, 2011); In 21 re 1633 Broadway Mars Rest.",
"Corp., 388 B.R. 490, 500 (Bankr. 22 10 “Substantial consummation” is defined in § 1101(2) as: 23 (A) transfer of all or substantially all of the property 24 proposed by the plan to be transferred; (B) assumption by the debtor or by the successor to the 25 debtor under the plan of the business or of the management of all or substantially all of the property dealt with by the 26 plan; and (C) commencement of distribution under the plan. 27 The parties do not dispute that the First Plan has been 28 substantially consummated. -22- 1 S.D.N.Y. 2008); In re Motel Props., Inc., 314 B.R.",
"889, 895-96 2 (Bankr. S.D. Ga. 2004); In re Tillotson, 266 B.R. 565, 569 (Bankr. 3 W.D.N.Y. 2001); In re Adams, 218 B.R. 597, 601-02 (Bankr. D. Kan. 4 1998); In re Northtown Realty, Co., 215 B.R. 906, 913 (Bankr. 5 E.D.N.Y. 1998); In re Woodson, 213 B.R. 404, 405-06 (Bankr. M.D. 6 Fla. 1997); Bouy Hall, 208 B.R. at 743-44; In re Del. Valley 7 Broadcasters L.P., 166 B.R.",
"36, 40 (Bankr. D. Del. 1994); In re 8 Roxy Real Estate Co., 170 B.R. 571, 576 (Bankr. E.D. Penn. 1993); 9 In re Mableton-Booper Assocs., 127 B.R. at 943-44 (“Where 10 unexpected circumstances doom the debtor’s chances for success, 11 binding the parties to the original confirmation decision in the 12 name of finality would frustrate [the goal of reorganization], and 13 the confirmation decision should be reevaluated.”); In re Casa 14 Loma Assocs., 122 B.R. 814, 817-18 (Bankr. N.D. Ga. 1991).11 15 However, “[e]ven extraordinary and unforeseeable changes will not 16 support a new Chapter 11, if these changes do not substantially 17 impair the debtor’s performance under the confirmed plan.” In re 18 Adams, 218 B.R. at 602; see also In re Woods, 2011 WL 841270, at 19 *4. Thus, for the bankruptcy court to consider a debtor’s second 20 chapter 11 filing and plan, the unforeseeable or unanticipated 21 change in circumstances must have affected the debtor’s ability to 22 fully perform under its confirmed plan.",
"In re Woods, 2011 WL 23 841270, at *4; In re Adams, 218 B.R. at 602; In re Northtown 24 Realty, Co., 215 B.R. at 913; In re Woodson, 213 B.R. at 405; In 25 26 11 The Seventh Circuit in Fruehauf Corp. v. Jartran, Inc. (In re Jartran, Inc.), 886 F.2d 859 (7th Cir. 1989), held that 27 serial bankruptcy filings are not per se impermissible, but it did not expressly discuss unforeseen or unanticipated changed 28 circumstances as a basis for a serial filing. -23- 1 re Roxy Real Estate, 170 B.R. at 576; In re Casa Loma Assocs., 122 2 B.R. at 818. Examples of unforeseen changed circumstances in the 3 above cases include a change in federal law affecting tenancy of 4 an apartment building, termination of service by major airlines 5 which had provided vital customers for an airport hotel, lost 6 crops due to hail, cattle and pasture lost due to fire, and 7 substantial adverse judgments.",
"8 In cases of economic change, courts have held generally that 9 changed market conditions alone are insufficient to warrant a 10 second chapter 11 filing. In re Elmwood Dev. Co., 964 F.2d at 11 512-13 (event of national “credit crunch” in early 1990’s might be 12 a changed circumstance justifying a second chapter 11 filing but 13 appellate court upheld bankruptcy court’s decision to reject it); 14 In re 1633 Broadway Mars Rest.",
"Corp., 388 B.R. at 502 n.17 15 (recession of late 2007 was a change in general economic condition 16 and insufficient basis for second chapter 11 filing); In re Motel 17 Props., Inc., 314 B.R. at 896 (foreseeable risk of operating any 18 business is the fluctuation in supply and demand and its impact on 19 the market); In re Tillotson, 266 B.R. at 569 (changes associated 20 with realities of economic change are an insufficient reason to 21 allow second chapter 11 filing); In re Adams, 218 B.R. at 602 22 (same); In re Northtown Realty Co., 215 B.R. at 913; Bouy Hall, 23 208 B.R. at 745; In re Roxy Real Estate Co., 170 B.R. at 576 (a 24 change in market condition for rental properties or real estate is 25 insufficient changed circumstance); In re Mableton-Booper Assocs., 26 127 B.R.",
"at 944; In re Casa Loma Assocs., 122 B.R. at 818. 27 However, “where a debtor experiences a ‘fundamental change in 28 its market’ and not the typical fluctuations of supply and demand, -24- 1 if unforeseeable, the change may represent sufficiently changed 2 circumstances to warrant a second filing.” Bouy Hall, 208 B.R. at 3 745; In re Motel Props., Inc., 314 B.R. at 896 (second filing 4 permitted when an unforeseeable economic event fundamentally 5 changes the market conditions). “When an unforeseeable economic 6 change effects a significant change in the market, a second filing 7 may be permitted.” Bouy Hall, 208 B.R. at 745 (emphasis in 8 original). 9 Cases in which a chapter 11 debtor has been successful at 10 showing unforeseen changed circumstances to warrant a second 11 chapter 11 filing are clearly the exception rather than the rule. 12 Bouy Hall and In re Casa Loma Associates are two of those rare 13 exceptions. In Bouy Hall, after the debtor had confirmed and 14 substantially consummated its chapter 11 plan, the debtor’s hotel 15 business was damaged when a nearby airport which supplied much of 16 the hotel’s customer base relocated its terminal to a location 17 further away.",
"Id. at 740. In addition, two major airlines 18 eliminated their service into the airport and another airline had 19 filed a chapter 7 bankruptcy, further eroding the debtor’s 20 customer market. Id. Based upon this showing, the bankruptcy 21 court overruled the creditor’s argument that debtor’s problems 22 were either foreseeable or purely economic and denied its motion 23 to dismiss the debtor’s second chapter 11 case. Id. at 746. 24 According to the court, the debtor had not only demonstrated that 25 the demand for its service decreased, but also that the market 26 itself had been significantly altered. Id. at 745. 27 In In re Casa Loma Associates, the bankruptcy court held that 28 an unanticipated change in federal law prohibiting “adults only” -25- 1 apartment complexes, which severely affected debtor’s tenancy 2 rates, and discovery of fire damage and structural defects in an 3 apartment building, which were unknown at the time of plan 4 confirmation, were changed circumstances warranting the second 5 chapter 11 filing.",
"122 B.R. at 818-19. Accordingly, dismissal of 6 debtor’s second chapter 11 case was denied. Id. at 819. The 7 bankruptcy court did note, however, that the result would have 8 been different had the debtor relied merely on changed market 9 conditions to support the second filing. Id. at 818. 10 Caviata asserts that fundamental and significant changes in 11 the national and local economy have taken place since it confirmed 12 the First Plan, which were not only unforeseeable, but seriously 13 impacted its ability to fully perform the First Plan.",
"Caviata 14 argues that the bankruptcy court ignored the case law and failed 15 to consider whether the change in the economy was a general market 16 decline, as opposed to a fundamental economic change effecting a 17 significant change in the market. We disagree. 18 In reviewing the statements made by the bankruptcy court at 19 the dismissal hearing, it is clear that it considered the 20 relevant, although not binding, case law, and that it recognized 21 what extraordinary circumstances Caviata needed to show to permit 22 the second chapter 11 filing. The court noted that it had 23 reviewed Bouy Hall and several other cases, and it even discussed 24 some of the facts in Bouy Hall on the record. The court also 25 warned Caviata at the beginning of the hearing that the alleged 26 changed circumstances were not unforeseeable based on U.S. Bank’s 27 objections to the First Plan. While agreeing that the current 28 economy is “terrible,” the bankruptcy court concluded Caviata had -26- 1 not shown that at the time of confirmation of the First Plan it 2 was unforeseeable that the economy would remain depressed and not 3 improve as Caviata had predicted. 4 Caviata also argues that the bankruptcy court’s findings are 5 not supported by the record and are contrary to the evidence 6 presented.",
"Specifically, Caviata contends the bankruptcy court 7 failed to consider its evidence that significant changes occurred 8 after confirmation of the First Plan that could not have been 9 foreseen by Caviata. We now review the evidence presented in this 10 case to see if it supports the bankruptcy court’s decision. 11 In U.S. Bank’s objection to confirmation of the First Plan, 12 Kimmel opined in his declaration that because the real estate 13 market showed no signs of improving in the near future and because 14 financing was unavailable, he believed the Property’s value was 15 now only $20 million, down from his previous June 2009 Appraisal 16 of $23,100,000. However, the bankruptcy court struck Kimmel’s 17 declaration from the record. Nonetheless, Kimmel testified at the 18 confirmation hearing in March 2010 that since June 2009, financing 19 had become more difficult to obtain, and buyers were not willing 20 to pay the prices they were before due to larger down payment 21 requirements.",
"However, on cross-examination, Kimmel admitted that 22 the apartment market in Reno/Sparks was getting better. Interest 23 rate expert Zelle testified that Caviata’s plan to payoff 24 U.S. Bank in three years was “a dream” and “a fairy tale,” and 25 that the Property would have to become “Disneyland in Reno” in 26 order to pull it off. The bankruptcy court rejected Zelle’s 27 “coerced” loan approached to support his 9.25% interest rate. 28 However, Zelle, who brokers commercial real estate loans, also -27- 1 testified at the confirmation hearing that he did not see the real 2 estate market improving in three years as Caviata predicted.",
"3 In support of the First Plan, Caviata offered the testimony 4 of interest rate expert, Dr. Wazzan, and Caviata’s manager, 5 Pennington. Dr. Wazzan testified at the confirmation hearing that 6 although forecasting was difficult, the empirical data showed that 7 things were improving. Pennington, with his thirty-plus years of 8 experience in large-scale real estate development in Northern 9 Nevada, testified that he believed conditions would improve and 10 the Property, which was worth $23,100,000 at the time of 11 confirmation, would be worth $34 million within the next couple of 12 years because of its desirability and uniqueness in the market. 13 Pennington offered no further details as to why he thought the 14 Property’s value would appreciate to such a degree in a rather 15 short period of time. 16 In support of its motion to dismiss Caviata’s second chapter 17 11 case, U.S. Bank did not offer any direct evidence, but it did 18 ask the bankruptcy court to take judicial notice of Caviata’s 19 first quarter report filed on April 25, 2011.",
"In that report, 20 Caviata represented that it did not foresee any circumstances that 21 would affect its ability to perform under the First Plan. 22 Arguably, some (if not all) of the catastrophic events Little 23 described had occurred by then, yet Caviata did not foresee any 24 problems fully consummating the Plan in April 2011, which was 25 approximately four months before the second filing. 26 In its opposition to dismissal, Caviata offered the Little 27 and Pennington declarations. Little articulated a laundry list of 28 events occurring after confirmation of the First Plan that he -28- 1 opined no one, including Caviata, could have predicted at the time 2 of confirmation of the First Plan in 2010, which warranted the 3 second chapter 11 filing. Pennington stated that, because of the 4 representations by President Obama and the nation’s leading 5 economists in early 2010 that the recession had ended and had 6 entered a state of recovery, he believed the First Plan’s three- 7 year term was reasonable at the time of confirmation.",
"Pennington 8 asserted that he could not have foreseen the changes articulated 9 by Little that occurred post-confirmation. Notably, during his 10 testimony at the confirmation hearing on the First Plan, 11 Pennington never stated that his belief that the market would 12 improve or that the Property would be worth $34 million in the 13 next couple of years was based on these early 2010 representations 14 by national figures. Pennington also stated that he contacted 15 several lenders seeking refinancing of Caviata’s existing loan on 16 the Property, and all had advised him that no financing was 17 available due to the credit market and the restrictions placed on 18 banks by the FDIC. Pennington did not offer any loan application 19 documents or declarations from these lenders in the record. He 20 also did not offer any declarations from the several brokers he 21 claimed he spoke to about listing the Property for sale. 22 Not finding the testimony offered by Little and Pennington 23 persuasive, the bankruptcy court found that a decline in the 24 economy between 2010 and 2011 was not an unforeseeable and changed 25 circumstance justifying Caviata’s second chapter 11 filing.12 26 12 27 The bankruptcy court also found that Caviata’s second chapter 11 filing was not in bad faith, a necessary element for a 28 (continued...) -29- 1 Caviata in its approved disclosure statement from the first case 2 specifically highlighted that risk.",
"We cannot conclude, on this 3 record, that the bankruptcy court’s findings are illogical, 4 implausible, or without support in inferences that may be drawn 5 from the facts in the record. Hinkson, 585 F.3d at 1262. 6 Although it may be that no one could have anticipated the 7 precipitous decline in the economy that occurred in 2008, in late 8 2009/early 2010, when Caviata filed and sought confirmation of the 9 First Plan, the real estate market in many parts of the country, 10 including Northern Nevada, was still depressed. Even Little 11 testified that the lending market at that time was “nonexistent.” 12 Some people believed in early 2010 that the economy was 13 recovering; some believed that recovery was still to be seen. As 14 the bankruptcy court put it, Caviata took its “best guess” that 15 things would only get better in the next three years, but it 16 guessed wrong.",
"Even if the economic changes from 2010 to 2011 17 were as catastrophic as Little indicated, it was not unforeseeable 18 that the real estate and lending markets would not recover as soon 19 as some, including Caviata, had thought especially given Caviata’s 20 disclosure of risks and facts in its approved disclosure 21 22 12 (...continued) successful second chapter 11 filing. In re Elmwood Dev. Co., 964 23 F.2d at 511-12; In re Jartran, Inc., 886 F.2d. at 866-67; In re Deed & Note Traders, LLC, 2012 WL 1191891, at *7; In re 1633 24 Broadway Mars Rest. Corp., 388 B.R. at 500; In re Motel Props., Inc., 314 B.R. at 896; In re Tillotson, 266 B.R. at 569; In re 25 Adams, 218 B.R. at 601-02; In re Northtown Realty, Co., 215 B.R.",
"at 913; In re Woodson, 213 B.R. at 405-06; Bouy Hall, 208 B.R. at 26 744; In re Del. Valley Broadcasters L.P., 166 B.R. at 40; In re Roxy Real Estate Co., 170 B.R. at 576; In re Mableton-Booper 27 Assocs., 127 B.R. at 943-44; In re Casa Loma Assocs., 122 B.R. at 817-18. U.S. Bank does not dispute this finding, so we need not 28 elaborate on the point. -30- 1 statement. 2 Upon the request of a party in interest, the bankruptcy court 3 may dismiss or convert a chapter 11 case for “cause.” § 1112(b). 4 Here, the “cause” relied upon by U.S. Bank and found by the 5 bankruptcy court was Caviata’s inability to show an extraordinary 6 change in circumstances which substantially impaired its 7 performance under the First Plan to warrant the second chapter 11 8 filing. Because the bankruptcy court applied the correct legal 9 standard, and its factual findings are not illogical, implausible, 10 or without support in the record, we conclude that it did not 11 abuse its discretion in dismissing Caviata’s second chapter 11 12 case. Accordingly, Caviata is still operating under the First 13 Plan. 14 VI.",
"CONCLUSION 15 For the foregoing reasons, we AFFIRM. 16 17 18 19 20 21 22 23 24 25 26 27 28 -31-"
]
| https://www.courtlistener.com/api/rest/v3/opinions/2757082/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
478 F.3d 474 Riyad Darwich Mustafa ABU HASIRAH, Petitioner,v.The DEPARTMENT OF HOMELAND SECURITY, f/k/a The United States Immigration and Naturalization Service, Respondent. Docket No. 04-0914-ag. United States Court of Appeals, Second Circuit. Submitted: January 18, 2007. Decided: February 22, 2007.
Frederick P. Korkosz, Law Offices of Alice K. Berke, Albany, NY, for Petitioner. Richard L. Pomeroy, Assistant United States Attorney (Timothy M. Burgess, United States Attorney for the District of Alaska, on the brief), Anchorage, AK, for Respondent. Before LEVAL and STRAUB, Circuit Judges, and UNDERHILL, District Judge.* PER CURIAM.
1 Riyad Darwich Mustafa Abu Hasirah ("Abu Hasirah" or "Petitioner") petitions for review of the order by the Board of Immigration Appeals ("BIA"), affirming Immigration Judge ("IJ") Michael Rocco's denial of his motion to reopen proceedings following the entry of an order of removal in absentia. In re Abu Hasirah, No. Alj-tso-qul (B.I.A. Jan. 26, 2004), aff'g No. Avr-ukb-zka (Immig. Ct. Buffalo Nov. 18, 2002). Because the Petitioner's unintentional lateness to the removal proceeding by fifteen minutes did not constitute a failure to appear within the meaning of 8 U.S.C. § 1229a(b)(5), the agency's order removing him in absentia under that statute was premised on legal error. We therefore grant the petition, vacate the BIA's order, and remand for further proceedings in accordance with this opinion.
BACKGROUND
2 Abu Hasirah, a native and citizen of Jordan, was paroled into the United States on October 18, 1997 to pursue an application for adjustment of status under section 245 of the Immigration and Naturalization Act ("Act"), 8 U.S.C. § 1255. His application for adjustment of status was denied on November 29, 1999. By Notice to Appear dated November 30, 1999, Abu Hasirah was charged as being removable pursuant to (1) section 212(a)(6)(C)(i) of the Act, 8 U.S.C. § 1182(a)(6)(C)(i), for attempting to procure adjustment of status by fraud or by willfully misrepresenting a material fact, specifically, by entering into a fraudulent marriage with a U.S. citizen; and (2) section 212(a)(7)(A)(i)(I) of the Act, 8 U.S.C. § 1182a(7)(A)(i)(I), as an immigrant not in possession of a valid unexpired immigrant visa or other valid entry document as required by the Act.
3 At a preliminary hearing held on September 26, 2000, Abu Hasirah, through counsel, conceded inadmissibility for non-possession of a valid immigrant visa, but denied inadmissibility on the charge of misrepresentation. A hearing on the merits of the contested charge was initially set for February 16, 2001; it was subsequently rescheduled several times due to circumstances involving Petitioner's counsel. On February 4, 2002, Abu Hasirah appeared with new counsel, James Davis, Esq., and requested a continuance to allow new counsel time to prepare. The IJ granted the request and reset the matter for July 19, 2002, at 9:00 a.m. Abu Hasirah was personally served with the Notice to Appear, which clearly stated the date, time, and place of the hearing, and explained the consequences should he fail to attend.
4 On July 19, 2002, neither Abu Hasirah nor his new attorney appeared at the hearing at 9:00 a.m. The IJ went forward with the hearing in absentia, found Abu Hasirah inadmissible as charged, and ordered him removed from the United States. According to the court's log-in sheet, Abu Hasirah arrived fifteen minutes late, at 9:15 a.m.; Davis signed in shortly thereafter, at 9:22 a.m. Court staff personally served Abu Hasirah, Davis, and the government with the written removal order at 9:22 a.m.
5 On September 17, 2002, Abu Hasirah filed a motion to reopen and to rescind the in absentia order of removal. In support of the motion, Abu Hasirah submitted an affidavit explaining the circumstances of his tardiness on the morning of July 19. According to the affidavit, Abu Hasirah went to meet Davis at the latter's office at 8:00 a.m., and waited there until a few minutes past 9:00 a.m. At that point, Abu Hasirah proceeded to the courthouse on his own, and after a slight delay getting through the security checkpoint, reached the assigned room at 9:05 a.m. When Davis arrived at 9:18 a.m., the Assistant U.S. Attorney and Arabic interpreter were still outside the courtroom; they informed Davis and Abu Hasirah that the case had already been heard.
6 On October 8, 2002, Abu Hasirah, with the assistance of his present attorney, filed a supplemental affidavit in support of the pending motion to reopen. In the supplemental affidavit, Abu Hasirah stated that he went to Davis's office instead of going straight to the courthouse because Davis told him to meet there at 8:00 a.m. to discuss the case prior to the hearing. Davis never came to the office, however. Abu Hasirah asserted that after waiting for Davis for nearly an hour, he left for the courthouse, located directly across the street, approximately five minutes before 9:00 a.m. Abu Hasirah claimed that it took him more than ten minutes to clear the security checkpoint, however, which pushed his arrival time in the courtroom to 9:15 a.m.
7 On November 18, 2002, the IJ denied the motion to reopen, finding Abu Hasirah had failed to establish that exceptional circumstances prevented him from appearing at the hearing on time. The BIA affirmed without opinion pursuant to 8 C.F.R. § 1003.1(e)(4). This petition for review followed.
DISCUSSION
8 Where, as here, the BIA affirms the IJ's decision without opinion, we review the IJ's decision as the final agency determination. Alrefae v. Chertoff, 471 F.3d 353, 357 (2d Cir.2006). We review the denial of a motion to reopen a removal proceeding for abuse of discretion. Id. The standard of abuse of discretion is satisfied where the agency, in making a discretionary determination, has misunderstood or misapplied the governing law. See Ratliff v. Davis Polk & Wardwell, 354 F.3d 165, 168 (2d Cir.2003). We review de novo the agency's determinations of law. Mardones v. McElroy, 197 F.3d 619, 624 (2d Cir.1999).
9 Here, Abu Hasirah sought to reopen proceedings for purposes of rescinding an order of removal issued in absentia under the standards of 8 U.S.C. § 1229a. That section provides that "[a]ny alien who, after written notice . . . has been provided to the alien or the alien's counsel of record, does not attend a proceeding under this section, shall be ordered removed in absentia if the [government] establishes by clear, unequivocal, and convincing evidence that the written notice was so provided and that the alien is removable." 8 U.S.C. § 1229a(b)(5)(A) (emphasis added). With exceptions not relevant here, "[s]uch an order may be rescinded only . . . upon a motion to reopen filed within 180 days after the date of removal if the alien demonstrates that the failure to appear was because of exceptional circumstances. . . ." Id. § 1229a(b)(5)(C)(i). The term "exceptional circumstances" is defined as circumstances beyond the control of the alien, "such as battery or extreme cruelty to the alien or any child or parent of the alien, serious illness of the alien, or serious illness or death of the spouse, child, or parent of the alien, but not including less compelling circumstances." Id. § 1229a(e)(1).
10 Abu Hasirah contends that the in absentia order should be rescinded because his briefly and innocently delayed appearance did not amount to a failure to "attend a proceeding" under § 1229a(b)(5)(A). Alternatively, Abu Hasirah argues that the IJ abused his discretion in refusing to reopen proceedings because the confusion regarding his attorney's whereabouts, and the delay caused by the security checks, constitute "exceptional circumstances" within the meaning of § 1229a(e)(1). Finally, Abu Hasirah asserts that the ineffective assistance of his former attorney, James Davis, warrants rescission of the removal order.
11 We begin with Petitioner's argument that his fifteen-minute delay was not a failure to appear, for such failure is a prerequisite for entry of an order of removal in absentia.1 Although this is a matter of first impression for this Court, several other circuits have considered the issue in cases involving factual circumstances very similar to those presented here. In Alarcon-Chavez v. Gonzales, 403 F.3d 343 (5th Cir.2005), for instance, the petitioner arrived at his asylum hearing twenty minutes late because he missed the correct highway exit during rush-hour traffic. Id. at 344-45. By the time the petitioner entered the courtroom, the IJ had already exited the courtroom after issuing an order of deportation in absentia. The petitioner filed a timely motion to reopen the proceeding and to rescind the in absentia removal order, but the IJ denied relief, ruling that the petitioner had failed to demonstrate exceptional circumstances for his failure to appear. The BIA affirmed without opinion. Id. at 345.
12 The Fifth Circuit granted the petition for review and reversed the BIA's decision. The court emphasized that Alarcon-Chavez had been on time to his previous hearings, and that his "unfortunate but fully understandable mistake of taking the wrong exit off the busy interstate" had resulted in a mere twenty-minute delay. Id. at 346. Under these circumstances, the Fifth Circuit concluded, "there was no failure to attend." Id. More generally, it held that where "(1) there is no failure but only a slight tardiness, (2) the IJ is either still on the bench or recently retired and still close by, and (3) the time of the [alien]'s delayed arrival is still during `business hours,' it is an abuse of discretion—if not worse—to treat such slight tardiness as a non-appearance." Id.
13 The Third Circuit reached a similar holding in Cabrera-Perez v. Gonzales, 456 F.3d 109 (3d Cir.2006) (per curiam). In the facts of that case, the petitioner missed her removal proceeding by fifteen or twenty minutes because heavy traffic delayed a witness in getting to the meeting place, and because the person who drove the petitioner and the witness to the courthouse was unfamiliar with the area. See id. at 117. As the petitioner had previously conceded removability, the IJ ordered removal in absentia. Id. at 113. The petitioner promptly moved to reopen the proceeding, but the IJ denied the motion, concluding that the petitioner's "problems arriving on time were foreseeable and not beyond her control." Id. at 114. The BIA adopted and affirmed the IJ's decision. Id.
14 The Third Circuit reversed the denial of the motion to reopen and the in absentia order of removal. The court held that the petitioner's tardiness should not have been treated as a failure to appear, since the delay was minimal, "there ha[d] been no prior instances of tardiness, and the IJ [was] either still on the bench or recently retired and close by." Id. at 116. Thus, even though the circumstances of the petitioner's delay were probably not "exceptional," the Third Circuit concluded that the IJ had abused his discretion in refusing to rescind the in absentia order and reopen the removal proceeding. See id.
15 We agree with the Third and Fifth Circuits that a brief, innocent lateness does not constitute a failure to appear within the meaning of 8 U.S.C. § 1229a. The IJ's application of the in absentia statutory provision to Abu Hasirah in the circumstances of this case was therefore premised on legal error.
16 Congress's choice of words, specifying the consequences when an alien "does not attend" a proceeding, coupled with the grave consequences Congress attached to that circumstance, strongly suggest that Congress did not intend the provisions of § 1229a(b)(5) to apply to a brief, innocent and understandable tardiness. We believe the provision for virtually non-revocable in absentia orders of removal was intended for the more serious case of an alien who failed entirely to appear for a hearing. See Herbert v. Ashcroft, 325 F.3d 68, 71 (1st Cir.2003) (noting that the statute's harsh provisions for those who failed to appear "were adopted in response to a serious problem: some aliens deliberately did not appear for hearings and thus effectively extended their stay in this country"); see also H.R.Rep. No. 101-681(I) (1990), reprinted in 1990 U.S.C.C.A.N. 6472, at 6556-57 (finding, in a report accompanying H.R. 5269 which contained language similar to § 1229a, that in one sample study 27% of aliens failed to appear for deportation hearings, and that "willful and unjustifiable failure to attend deportation hearings that have been properly noticed is intolerable" (emphasis added)).
17 The court's log-in sheet shows that Abu Hasirah was late by a mere fifteen minutes, and that his attorney arrived just seven minutes afterwards, at 9:22 a.m. Nothing about the circumstances suggested an intention to evade the court process. Although a few minutes late, Abu Hasirah arrived during normal business hours, when one would expect the court to be in session. Furthermore, this was Abu Hasirah's first instance of tardiness.
18 We hold that the IJ erroneously found that Abu Hasirah "[did] not attend" his proceeding, and therefore erroneously ordered him removed in absentia. Section 1229a's provision for in absentia removal, which may be rescinded only in "exceptional circumstances," is not applicable to such a brief, innocent delay. Because the IJ's denial of Abu Hasirah's motion to reopen was premised on a misinterpretation of the governing statute, we find that the standard of abuse of discretion has been satisfied. The BIA's order, which affirmed the IJ's denial of the motion to reopen and upheld the removal order, is accordingly vacated.
CONCLUSION
19 For the foregoing reasons, the petition is GRANTED. The BIA's decision affirming the denial of Petitioner's motion to reopen is VACATED, and the case is REMANDED for further proceedings consistent with this opinion. Our review having been completed, the pending motion for stay of removal is DENIED as moot.
Notes:
* The Honorable Stefan R. Underhill, United States District Judge for the District of Connecticut, sitting by designation
1 Our jurisdiction to review orders of removal enteredin absentia is generally limited to "(i) the validity of the notice provided to the alien, (ii) the reasons for the alien's not attending the proceeding, and (iii) whether or not the alien is removable." 8 U.S.C. § 1229a(b)(5)(D). As further explained below, however, whether Abu Hasirah's tardiness should be considered a failure to appear is a question of statutory interpretation. We have jurisdiction to review questions of law, notwithstanding the strictures of § 1229a(b)(5)(D). See 8 U.S.C. § 1252(a)(2)(D) ("Nothing . . . in any other provision of this chapter (other than this section) which limits or eliminates judicial review, shall be construed as precluding review of constitutional claims or questions of law raised upon a petition for review filed with an appropriate court of appeals in accordance with this section." (emphasis added)). | 04-19-2012 | [
"478 F.3d 474 Riyad Darwich Mustafa ABU HASIRAH, Petitioner,v.The DEPARTMENT OF HOMELAND SECURITY, f/k/a The United States Immigration and Naturalization Service, Respondent. Docket No. 04-0914-ag. United States Court of Appeals, Second Circuit. Submitted: January 18, 2007. Decided: February 22, 2007. Frederick P. Korkosz, Law Offices of Alice K. Berke, Albany, NY, for Petitioner. Richard L. Pomeroy, Assistant United States Attorney (Timothy M. Burgess, United States Attorney for the District of Alaska, on the brief), Anchorage, AK, for Respondent. Before LEVAL and STRAUB, Circuit Judges, and UNDERHILL, District Judge. * PER CURIAM. 1 Riyad Darwich Mustafa Abu Hasirah (\"Abu Hasirah\" or \"Petitioner\") petitions for review of the order by the Board of Immigration Appeals (\"BIA\"), affirming Immigration Judge (\"IJ\") Michael Rocco's denial of his motion to reopen proceedings following the entry of an order of removal in absentia. In re Abu Hasirah, No. Alj-tso-qul (B.I.A. Jan. 26, 2004), aff'g No.",
"Avr-ukb-zka (Immig. Ct. Buffalo Nov. 18, 2002). Because the Petitioner's unintentional lateness to the removal proceeding by fifteen minutes did not constitute a failure to appear within the meaning of 8 U.S.C. § 1229a(b)(5), the agency's order removing him in absentia under that statute was premised on legal error. We therefore grant the petition, vacate the BIA's order, and remand for further proceedings in accordance with this opinion. BACKGROUND 2 Abu Hasirah, a native and citizen of Jordan, was paroled into the United States on October 18, 1997 to pursue an application for adjustment of status under section 245 of the Immigration and Naturalization Act (\"Act\"), 8 U.S.C. § 1255.",
"His application for adjustment of status was denied on November 29, 1999. By Notice to Appear dated November 30, 1999, Abu Hasirah was charged as being removable pursuant to (1) section 212(a)(6)(C)(i) of the Act, 8 U.S.C. § 1182(a)(6)(C)(i), for attempting to procure adjustment of status by fraud or by willfully misrepresenting a material fact, specifically, by entering into a fraudulent marriage with a U.S. citizen; and (2) section 212(a)(7)(A)(i)(I) of the Act, 8 U.S.C. § 1182a(7)(A)(i)(I), as an immigrant not in possession of a valid unexpired immigrant visa or other valid entry document as required by the Act. 3 At a preliminary hearing held on September 26, 2000, Abu Hasirah, through counsel, conceded inadmissibility for non-possession of a valid immigrant visa, but denied inadmissibility on the charge of misrepresentation.",
"A hearing on the merits of the contested charge was initially set for February 16, 2001; it was subsequently rescheduled several times due to circumstances involving Petitioner's counsel. On February 4, 2002, Abu Hasirah appeared with new counsel, James Davis, Esq., and requested a continuance to allow new counsel time to prepare. The IJ granted the request and reset the matter for July 19, 2002, at 9:00 a.m. Abu Hasirah was personally served with the Notice to Appear, which clearly stated the date, time, and place of the hearing, and explained the consequences should he fail to attend. 4 On July 19, 2002, neither Abu Hasirah nor his new attorney appeared at the hearing at 9:00 a.m. The IJ went forward with the hearing in absentia, found Abu Hasirah inadmissible as charged, and ordered him removed from the United States. According to the court's log-in sheet, Abu Hasirah arrived fifteen minutes late, at 9:15 a.m.; Davis signed in shortly thereafter, at 9:22 a.m. Court staff personally served Abu Hasirah, Davis, and the government with the written removal order at 9:22 a.m. 5 On September 17, 2002, Abu Hasirah filed a motion to reopen and to rescind the in absentia order of removal. In support of the motion, Abu Hasirah submitted an affidavit explaining the circumstances of his tardiness on the morning of July 19. According to the affidavit, Abu Hasirah went to meet Davis at the latter's office at 8:00 a.m., and waited there until a few minutes past 9:00 a.m. At that point, Abu Hasirah proceeded to the courthouse on his own, and after a slight delay getting through the security checkpoint, reached the assigned room at 9:05 a.m.",
"When Davis arrived at 9:18 a.m., the Assistant U.S. Attorney and Arabic interpreter were still outside the courtroom; they informed Davis and Abu Hasirah that the case had already been heard. 6 On October 8, 2002, Abu Hasirah, with the assistance of his present attorney, filed a supplemental affidavit in support of the pending motion to reopen. In the supplemental affidavit, Abu Hasirah stated that he went to Davis's office instead of going straight to the courthouse because Davis told him to meet there at 8:00 a.m. to discuss the case prior to the hearing. Davis never came to the office, however. Abu Hasirah asserted that after waiting for Davis for nearly an hour, he left for the courthouse, located directly across the street, approximately five minutes before 9:00 a.m. Abu Hasirah claimed that it took him more than ten minutes to clear the security checkpoint, however, which pushed his arrival time in the courtroom to 9:15 a.m. 7 On November 18, 2002, the IJ denied the motion to reopen, finding Abu Hasirah had failed to establish that exceptional circumstances prevented him from appearing at the hearing on time.",
"The BIA affirmed without opinion pursuant to 8 C.F.R. § 1003.1(e)(4). This petition for review followed. DISCUSSION 8 Where, as here, the BIA affirms the IJ's decision without opinion, we review the IJ's decision as the final agency determination. Alrefae v. Chertoff, 471 F.3d 353, 357 (2d Cir.2006). We review the denial of a motion to reopen a removal proceeding for abuse of discretion. Id. The standard of abuse of discretion is satisfied where the agency, in making a discretionary determination, has misunderstood or misapplied the governing law. See Ratliff v. Davis Polk & Wardwell, 354 F.3d 165, 168 (2d Cir.2003).",
"We review de novo the agency's determinations of law. Mardones v. McElroy, 197 F.3d 619, 624 (2d Cir.1999). 9 Here, Abu Hasirah sought to reopen proceedings for purposes of rescinding an order of removal issued in absentia under the standards of 8 U.S.C. § 1229a. That section provides that \"[a]ny alien who, after written notice . . . has been provided to the alien or the alien's counsel of record, does not attend a proceeding under this section, shall be ordered removed in absentia if the [government] establishes by clear, unequivocal, and convincing evidence that the written notice was so provided and that the alien is removable.\" 8 U.S.C. § 1229a(b)(5)(A) (emphasis added). With exceptions not relevant here, \"[s]uch an order may be rescinded only .",
". . upon a motion to reopen filed within 180 days after the date of removal if the alien demonstrates that the failure to appear was because of exceptional circumstances. . . .\" Id. § 1229a(b)(5)(C)(i). The term \"exceptional circumstances\" is defined as circumstances beyond the control of the alien, \"such as battery or extreme cruelty to the alien or any child or parent of the alien, serious illness of the alien, or serious illness or death of the spouse, child, or parent of the alien, but not including less compelling circumstances.\" Id.",
"§ 1229a(e)(1). 10 Abu Hasirah contends that the in absentia order should be rescinded because his briefly and innocently delayed appearance did not amount to a failure to \"attend a proceeding\" under § 1229a(b)(5)(A). Alternatively, Abu Hasirah argues that the IJ abused his discretion in refusing to reopen proceedings because the confusion regarding his attorney's whereabouts, and the delay caused by the security checks, constitute \"exceptional circumstances\" within the meaning of § 1229a(e)(1). Finally, Abu Hasirah asserts that the ineffective assistance of his former attorney, James Davis, warrants rescission of the removal order. 11 We begin with Petitioner's argument that his fifteen-minute delay was not a failure to appear, for such failure is a prerequisite for entry of an order of removal in absentia.1 Although this is a matter of first impression for this Court, several other circuits have considered the issue in cases involving factual circumstances very similar to those presented here.",
"In Alarcon-Chavez v. Gonzales, 403 F.3d 343 (5th Cir.2005), for instance, the petitioner arrived at his asylum hearing twenty minutes late because he missed the correct highway exit during rush-hour traffic. Id. at 344-45. By the time the petitioner entered the courtroom, the IJ had already exited the courtroom after issuing an order of deportation in absentia. The petitioner filed a timely motion to reopen the proceeding and to rescind the in absentia removal order, but the IJ denied relief, ruling that the petitioner had failed to demonstrate exceptional circumstances for his failure to appear. The BIA affirmed without opinion.",
"Id. at 345. 12 The Fifth Circuit granted the petition for review and reversed the BIA's decision. The court emphasized that Alarcon-Chavez had been on time to his previous hearings, and that his \"unfortunate but fully understandable mistake of taking the wrong exit off the busy interstate\" had resulted in a mere twenty-minute delay. Id. at 346. Under these circumstances, the Fifth Circuit concluded, \"there was no failure to attend.\" Id. More generally, it held that where \"(1) there is no failure but only a slight tardiness, (2) the IJ is either still on the bench or recently retired and still close by, and (3) the time of the [alien]'s delayed arrival is still during `business hours,' it is an abuse of discretion—if not worse—to treat such slight tardiness as a non-appearance.\"",
"Id. 13 The Third Circuit reached a similar holding in Cabrera-Perez v. Gonzales, 456 F.3d 109 (3d Cir.2006) (per curiam). In the facts of that case, the petitioner missed her removal proceeding by fifteen or twenty minutes because heavy traffic delayed a witness in getting to the meeting place, and because the person who drove the petitioner and the witness to the courthouse was unfamiliar with the area. See id. at 117. As the petitioner had previously conceded removability, the IJ ordered removal in absentia. Id. at 113. The petitioner promptly moved to reopen the proceeding, but the IJ denied the motion, concluding that the petitioner's \"problems arriving on time were foreseeable and not beyond her control.\"",
"Id. at 114. The BIA adopted and affirmed the IJ's decision. Id. 14 The Third Circuit reversed the denial of the motion to reopen and the in absentia order of removal. The court held that the petitioner's tardiness should not have been treated as a failure to appear, since the delay was minimal, \"there ha[d] been no prior instances of tardiness, and the IJ [was] either still on the bench or recently retired and close by.\" Id. at 116. Thus, even though the circumstances of the petitioner's delay were probably not \"exceptional,\" the Third Circuit concluded that the IJ had abused his discretion in refusing to rescind the in absentia order and reopen the removal proceeding. See id.",
"15 We agree with the Third and Fifth Circuits that a brief, innocent lateness does not constitute a failure to appear within the meaning of 8 U.S.C. § 1229a. The IJ's application of the in absentia statutory provision to Abu Hasirah in the circumstances of this case was therefore premised on legal error. 16 Congress's choice of words, specifying the consequences when an alien \"does not attend\" a proceeding, coupled with the grave consequences Congress attached to that circumstance, strongly suggest that Congress did not intend the provisions of § 1229a(b)(5) to apply to a brief, innocent and understandable tardiness. We believe the provision for virtually non-revocable in absentia orders of removal was intended for the more serious case of an alien who failed entirely to appear for a hearing. See Herbert v. Ashcroft, 325 F.3d 68, 71 (1st Cir.2003) (noting that the statute's harsh provisions for those who failed to appear \"were adopted in response to a serious problem: some aliens deliberately did not appear for hearings and thus effectively extended their stay in this country\"); see also H.R.Rep.",
"No. 101-681(I) (1990), reprinted in 1990 U.S.C.C.A.N. 6472, at 6556-57 (finding, in a report accompanying H.R. 5269 which contained language similar to § 1229a, that in one sample study 27% of aliens failed to appear for deportation hearings, and that \"willful and unjustifiable failure to attend deportation hearings that have been properly noticed is intolerable\" (emphasis added)). 17 The court's log-in sheet shows that Abu Hasirah was late by a mere fifteen minutes, and that his attorney arrived just seven minutes afterwards, at 9:22 a.m. Nothing about the circumstances suggested an intention to evade the court process. Although a few minutes late, Abu Hasirah arrived during normal business hours, when one would expect the court to be in session. Furthermore, this was Abu Hasirah's first instance of tardiness. 18 We hold that the IJ erroneously found that Abu Hasirah \"[did] not attend\" his proceeding, and therefore erroneously ordered him removed in absentia. Section 1229a's provision for in absentia removal, which may be rescinded only in \"exceptional circumstances,\" is not applicable to such a brief, innocent delay. Because the IJ's denial of Abu Hasirah's motion to reopen was premised on a misinterpretation of the governing statute, we find that the standard of abuse of discretion has been satisfied.",
"The BIA's order, which affirmed the IJ's denial of the motion to reopen and upheld the removal order, is accordingly vacated. CONCLUSION 19 For the foregoing reasons, the petition is GRANTED. The BIA's decision affirming the denial of Petitioner's motion to reopen is VACATED, and the case is REMANDED for further proceedings consistent with this opinion. Our review having been completed, the pending motion for stay of removal is DENIED as moot. Notes: * The Honorable Stefan R. Underhill, United States District Judge for the District of Connecticut, sitting by designation 1 Our jurisdiction to review orders of removal enteredin absentia is generally limited to \"(i) the validity of the notice provided to the alien, (ii) the reasons for the alien's not attending the proceeding, and (iii) whether or not the alien is removable.\"",
"8 U.S.C. § 1229a(b)(5)(D). As further explained below, however, whether Abu Hasirah's tardiness should be considered a failure to appear is a question of statutory interpretation. We have jurisdiction to review questions of law, notwithstanding the strictures of § 1229a(b)(5)(D). See 8 U.S.C. § 1252(a)(2)(D) (\"Nothing . . . in any other provision of this chapter (other than this section) which limits or eliminates judicial review, shall be construed as precluding review of constitutional claims or questions of law raised upon a petition for review filed with an appropriate court of appeals in accordance with this section.\"",
"(emphasis added))."
]
| https://www.courtlistener.com/api/rest/v3/opinions/796970/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
In the United States Court of Appeals For the Seventh Circuit ____________
No. 04-1497 EULAH WILLIAMS, Plaintiff-Appellant, v.
JOHN LAMPE and VILLAGE OF CAHOKIA POLICE DEPARTMENT, Defendants-Appellees. ____________ Appeal from the United States District Court for the Southern District of Illinois. No. 03 C 551—David R. Herndon, Judge. ____________ ARGUED DECEMBER 15, 2004—DECIDED MARCH 1, 2005 ____________
Before BAUER, COFFEY and SYKES, Circuit Judges. PER CURIAM. On September 22, 2000, Eulah Williams filed a complaint in Illinois state court alleging state- law tort claims against the Village of Cahokia, Illinois, and Cahokia Police Officer John Lampe for injuries that Lampe allegedly inflicted on September 25, 1998, almost two years before. The defendants answered an amended version of the complaint, failing to raise any affirmative defenses. Nevertheless, almost two years later they moved to dismiss on the ground that the claims were barred by a one-year statute of limitations. With leave of court, Williams filed another amended complaint based on the same events, but claiming for the first time under 42 U.S.C. 2 No. 04-1497
§ 1983 that her constitutional rights were violated. The defendants removed the case to federal court and promptly moved to dismiss, arguing that all of the claims were time- barred. The district court dismissed and Williams appeals, arguing only that the defendants waived their right to assert the statute of limitations defense by not asserting it “at the earliest possible moment.” We affirm. In her original complaint Williams alleged that Lampe injured her back and head by dragging her down stairs at the Cahokia police station and set forth state-law tort claims under theories of “intentional conduct” and “negli- gence.” After two amendments of no consequence here, the defendants answered Williams’ second amended com- plaint in September 2001. Though the parties presum- ably proceeded with discovery, there is no record of any further activity in the state court before July 2003 when the defendants moved to dismiss the case, arguing for the first time that the original complaint was not filed within the one-year statute of limitations. The state judge implicitly allowed the defense by granting Williams leave to amend her complaint yet again to try and meet the defense. In her third amended complaint, filed on July 29, 2003, Williams retained her common law claims and for the first time set forth a claim under § 1983. Accordingly, the defendants removed the case to federal court and filed a motion under Fed. R. Civ. P. 12(b)(6) to dismiss the complaint on the grounds that the one-year statute of limitations had run on her state-law claims before she filed her original complaint and that the two-year statute of limitations had run on her § 1983 claim before she amended her complaint to include it. In January 2004 the district court granted the defendants’ motion and dismissed the case with prejudice. The judge held that Williams’ § 1983 claim was time-barred because she did not raise it until she filed her third amended complaint in July 2003, well over two years (almost five years, actually) after the alleged No. 04-1497 3
violation. The judge held that Williams’ state tort claims were time-barred because her original complaint was not filed within the one-year period allowed in Illinois for civil actions based on common law claims against governmental entities and their employees. Williams’ only argument on appeal is that the defendants waived the statute of limitations defense by not asserting it “at the earliest possible moment.” The following legal background explains why this is the only issue before us. First, as the district court concluded, the statute of limita- tions applicable to Williams’ state-law claims is one year. A two-year statute of limitations generally applies to personal injury actions in Illinois, 735 Ill. Comp. Stat. 5/13-202; thus, § 1983 claims in Illinois are also governed by a two-year limitations period, Hileman v. Maze, 367 F.3d 694, 696 (7th Cir. 2004). Illinois local governmental entities and their employees, however, benefit from a one-year statute of limitations for “civil actions” against them. 745 Ill. Comp. Stat. 10/8-101. While the two-year period still applies to § 1983 claims against such defendants, Ashafa v. City of Chicago, 146 F.3d 459, 462 (7th Cir. 1998), the one-year period applies to state-law claims that are joined with a § 1983 claim. American Nat’l Bank & Trust Co. of Chi. v. Town of Cicero, No. 01 C 1396, 2001 WL 1631871, *14 (N.D. Ill. 2001). Therefore, Williams’ state-law claims were, as she concedes, already time-barred when they were first brought. American Nat’l Bank & Trust Co. of Chi., 2001 WL 1631871, at *14. Second, the district court’s unspoken assumption that Williams’ § 1983 claim did not relate back to her orig- inal complaint was also correct. In order to benefit from Fed. R. Civ. P. 15(c)’s “relation back” doctrine, the orig- inal complaint must have been timely filed. Henderson v. Bolanda, 253 F.3d 928, 931-32 (7th Cir. 2001). If an original complaint against Illinois local governmental defendants is not filed within one year of the injury and does not claim a 4 No. 04-1497
constitutional violation, we will not deem a later § 1983 claim timely merely because it rests on the same factual allegations included in the original complaint. Id. at 932 & n.3. As the original complaint was not timely, it cannot “act as a lifeline for a later complaint, filed after the two-year statute of limitations for the claims which it contained.” Id. Thus, even though Williams’ § 1983 claim arises from the same incident as her tort claims, and even though her original complaint was filed within two years of that incident, her § 1983 was time-barred because the tort claims were not timely filed. Williams argues, however, that the defendants waived their limitations defense to all her claims by not asserting it in their answer to the second amended complaint or at any other time during the next twenty months. This argument of course is frivolous with respect to her § 1983 claim insofar as the defendants moved to dismiss that claim as soon as Williams amended her complaint to add it. See Massey v. Helman, 196 F.3d 727, 735 (7th Cir. 1999) (holding that failure to plead affirmative defense to original complaint does not amount to waiver where defense is raised in response to amended complaint). That leaves only Williams’ contention that the defendants waived their limitations defense to the state-law claims by failing to raise it earlier in the state court proceedings. Though the district court dismissed the federal claim forming the basis for removal jurisdiction, the court prop- erly retained jurisdiction to decide this remaining issue. See 28 U.S.C. § 1367(c)(2) (district court has discretion to retain jurisdiction after dismissing all claims forming basis for federal jurisdiction); Baker v. Kingsley, 387 F.3d 655-56 (7th Cir. 2004) (applying same rule in removal context). A removed action proceeds as if it had originally been brought in federal court; thus, we take the case as though every- thing done in the state court had been done in the federal district court. See First Republic Bank Fort Worth v. No. 04-1497 5
Norglass, Inc., 958 F.2d 117, 119 (5th Cir. 1992); Chicago R.I. & P.R. Co. v. Igoe, 212 F.2d 378, 382 (7th Cir. 1954). Federal Rule of Civil Procedure 8(c) requires a defendant to include affirmative defenses like a statute of limitations in its answer, which the defendants did not do. However, the district court has the discretion to allow an answer to be amended to assert an affirmative defense not raised initially. See Fed. R. Civ. P. 15(a); Jackson v. Rockford Housing Auth. 213 F.3d 389, 392-93 (7th Cir. 2000) (“Amendment is allowed absent undue surprise or prejudice to the plaintiff.”). In this case the limitations defense came late as to the state-law claims since the defendants already had answered Williams’ second amended complaint. Nevertheless, we can infer that the state judge implicitly allowed the defense to be asserted because rather than denying the motion, he granted Williams leave to amend her complaint in response to the defendants’ motion. Williams asserts that the state judge abused his discretion in allowing the defense to be asserted. Though she does not develop the argument, she points to our decision in Venters v. City of Delphi, 123 F.3d 956 (7th Cir. 1997). In Venters, the district judge allowed assertion of a limitations defense even though the defen- dants raised it for the first time in a reply memorandum in support of their summary judgment motion, on the eve of oral argument. Id. at 968. We reversed because the plaintiff was prejudiced by the defendants’ delay as the delay effectively “deprived [her] of any reasonable opportunity to address that defense.” Id. By permitting the defendant to raise the issue at the eleventh hour and giving the plaintiff almost no time to respond, we concluded the district court had “bushwhacked” the plaintiff. See id. at 969. In contrast, the state judge here gave Williams time to respond to the defendants’ limitations defense. The purpose of Rule 8(c) is to give the opposing party notice of the affirmative defense and a chance to rebut it. Blonder-Tongue Labs., Inc. v. 6 No. 04-1497
Univ. of Ill. Found., 402 U.S. 313, 350 (1971). Thus, where the plaintiff has an opportunity to respond to a late affirma- tive defense, he cannot establish prejudice merely by showing that the case has progressed significantly since the defendants answered his complaint. See Jackson, 213 F.3d at 393; Brinkley v. Harbour Recreation Club, 180 F.3d 598, 612 (4th Cir. 1999); Camarillo v. McCarthy, 998 F.2d 638, 639 (9th Cir. 1993); Moore, Owen, Thomas & Co. v. Coffey, 992 F.2d 1439, 1445 (6th Cir. 1993); Kleinknecht v. Gettys- burg Coll., 989 F.2d 1360, 1374 (3d Cir. 1993). Because Williams does not suggest any prejudice to her from the defendants’ delay other than her subsequent preparation for trial, the court did not abuse its discretion in allow- ing the defense. AFFIRMED.
A true Copy: Teste:
________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit
USCA-02-C-0072—3-1-05 | 09-24-2015 | [
"In the United States Court of Appeals For the Seventh Circuit ____________ No. 04-1497 EULAH WILLIAMS, Plaintiff-Appellant, v. JOHN LAMPE and VILLAGE OF CAHOKIA POLICE DEPARTMENT, Defendants-Appellees. ____________ Appeal from the United States District Court for the Southern District of Illinois. No. 03 C 551—David R. Herndon, Judge. ____________ ARGUED DECEMBER 15, 2004—DECIDED MARCH 1, 2005 ____________ Before BAUER, COFFEY and SYKES, Circuit Judges. PER CURIAM. On September 22, 2000, Eulah Williams filed a complaint in Illinois state court alleging state- law tort claims against the Village of Cahokia, Illinois, and Cahokia Police Officer John Lampe for injuries that Lampe allegedly inflicted on September 25, 1998, almost two years before. The defendants answered an amended version of the complaint, failing to raise any affirmative defenses. Nevertheless, almost two years later they moved to dismiss on the ground that the claims were barred by a one-year statute of limitations. With leave of court, Williams filed another amended complaint based on the same events, but claiming for the first time under 42 U.S.C.",
"2 No. 04-1497 § 1983 that her constitutional rights were violated. The defendants removed the case to federal court and promptly moved to dismiss, arguing that all of the claims were time- barred. The district court dismissed and Williams appeals, arguing only that the defendants waived their right to assert the statute of limitations defense by not asserting it “at the earliest possible moment.” We affirm. In her original complaint Williams alleged that Lampe injured her back and head by dragging her down stairs at the Cahokia police station and set forth state-law tort claims under theories of “intentional conduct” and “negli- gence.” After two amendments of no consequence here, the defendants answered Williams’ second amended com- plaint in September 2001. Though the parties presum- ably proceeded with discovery, there is no record of any further activity in the state court before July 2003 when the defendants moved to dismiss the case, arguing for the first time that the original complaint was not filed within the one-year statute of limitations. The state judge implicitly allowed the defense by granting Williams leave to amend her complaint yet again to try and meet the defense. In her third amended complaint, filed on July 29, 2003, Williams retained her common law claims and for the first time set forth a claim under § 1983.",
"Accordingly, the defendants removed the case to federal court and filed a motion under Fed. R. Civ. P. 12(b)(6) to dismiss the complaint on the grounds that the one-year statute of limitations had run on her state-law claims before she filed her original complaint and that the two-year statute of limitations had run on her § 1983 claim before she amended her complaint to include it. In January 2004 the district court granted the defendants’ motion and dismissed the case with prejudice. The judge held that Williams’ § 1983 claim was time-barred because she did not raise it until she filed her third amended complaint in July 2003, well over two years (almost five years, actually) after the alleged No.",
"04-1497 3 violation. The judge held that Williams’ state tort claims were time-barred because her original complaint was not filed within the one-year period allowed in Illinois for civil actions based on common law claims against governmental entities and their employees. Williams’ only argument on appeal is that the defendants waived the statute of limitations defense by not asserting it “at the earliest possible moment.” The following legal background explains why this is the only issue before us. First, as the district court concluded, the statute of limita- tions applicable to Williams’ state-law claims is one year. A two-year statute of limitations generally applies to personal injury actions in Illinois, 735 Ill. Comp. Stat.",
"5/13-202; thus, § 1983 claims in Illinois are also governed by a two-year limitations period, Hileman v. Maze, 367 F.3d 694, 696 (7th Cir. 2004). Illinois local governmental entities and their employees, however, benefit from a one-year statute of limitations for “civil actions” against them. 745 Ill. Comp. Stat. 10/8-101. While the two-year period still applies to § 1983 claims against such defendants, Ashafa v. City of Chicago, 146 F.3d 459, 462 (7th Cir. 1998), the one-year period applies to state-law claims that are joined with a § 1983 claim. American Nat’l Bank & Trust Co. of Chi. v. Town of Cicero, No.",
"01 C 1396, 2001 WL 1631871, *14 (N.D. Ill. 2001). Therefore, Williams’ state-law claims were, as she concedes, already time-barred when they were first brought. American Nat’l Bank & Trust Co. of Chi., 2001 WL 1631871, at *14. Second, the district court’s unspoken assumption that Williams’ § 1983 claim did not relate back to her orig- inal complaint was also correct. In order to benefit from Fed. R. Civ. P. 15(c)’s “relation back” doctrine, the orig- inal complaint must have been timely filed. Henderson v. Bolanda, 253 F.3d 928, 931-32 (7th Cir. 2001). If an original complaint against Illinois local governmental defendants is not filed within one year of the injury and does not claim a 4 No. 04-1497 constitutional violation, we will not deem a later § 1983 claim timely merely because it rests on the same factual allegations included in the original complaint.",
"Id. at 932 & n.3. As the original complaint was not timely, it cannot “act as a lifeline for a later complaint, filed after the two-year statute of limitations for the claims which it contained.” Id. Thus, even though Williams’ § 1983 claim arises from the same incident as her tort claims, and even though her original complaint was filed within two years of that incident, her § 1983 was time-barred because the tort claims were not timely filed. Williams argues, however, that the defendants waived their limitations defense to all her claims by not asserting it in their answer to the second amended complaint or at any other time during the next twenty months. This argument of course is frivolous with respect to her § 1983 claim insofar as the defendants moved to dismiss that claim as soon as Williams amended her complaint to add it. See Massey v. Helman, 196 F.3d 727, 735 (7th Cir. 1999) (holding that failure to plead affirmative defense to original complaint does not amount to waiver where defense is raised in response to amended complaint). That leaves only Williams’ contention that the defendants waived their limitations defense to the state-law claims by failing to raise it earlier in the state court proceedings. Though the district court dismissed the federal claim forming the basis for removal jurisdiction, the court prop- erly retained jurisdiction to decide this remaining issue.",
"See 28 U.S.C. § 1367(c)(2) (district court has discretion to retain jurisdiction after dismissing all claims forming basis for federal jurisdiction); Baker v. Kingsley, 387 F.3d 655-56 (7th Cir. 2004) (applying same rule in removal context). A removed action proceeds as if it had originally been brought in federal court; thus, we take the case as though every- thing done in the state court had been done in the federal district court. See First Republic Bank Fort Worth v. No. 04-1497 5 Norglass, Inc., 958 F.2d 117, 119 (5th Cir. 1992); Chicago R.I. & P.R. Co. v. Igoe, 212 F.2d 378, 382 (7th Cir. 1954). Federal Rule of Civil Procedure 8(c) requires a defendant to include affirmative defenses like a statute of limitations in its answer, which the defendants did not do. However, the district court has the discretion to allow an answer to be amended to assert an affirmative defense not raised initially.",
"See Fed. R. Civ. P. 15(a); Jackson v. Rockford Housing Auth. 213 F.3d 389, 392-93 (7th Cir. 2000) (“Amendment is allowed absent undue surprise or prejudice to the plaintiff.”). In this case the limitations defense came late as to the state-law claims since the defendants already had answered Williams’ second amended complaint. Nevertheless, we can infer that the state judge implicitly allowed the defense to be asserted because rather than denying the motion, he granted Williams leave to amend her complaint in response to the defendants’ motion. Williams asserts that the state judge abused his discretion in allowing the defense to be asserted. Though she does not develop the argument, she points to our decision in Venters v. City of Delphi, 123 F.3d 956 (7th Cir. 1997).",
"In Venters, the district judge allowed assertion of a limitations defense even though the defen- dants raised it for the first time in a reply memorandum in support of their summary judgment motion, on the eve of oral argument. Id. at 968. We reversed because the plaintiff was prejudiced by the defendants’ delay as the delay effectively “deprived [her] of any reasonable opportunity to address that defense.” Id. By permitting the defendant to raise the issue at the eleventh hour and giving the plaintiff almost no time to respond, we concluded the district court had “bushwhacked” the plaintiff.",
"See id. at 969. In contrast, the state judge here gave Williams time to respond to the defendants’ limitations defense. The purpose of Rule 8(c) is to give the opposing party notice of the affirmative defense and a chance to rebut it. Blonder-Tongue Labs., Inc. v. 6 No. 04-1497 Univ. of Ill. Found., 402 U.S. 313, 350 (1971). Thus, where the plaintiff has an opportunity to respond to a late affirma- tive defense, he cannot establish prejudice merely by showing that the case has progressed significantly since the defendants answered his complaint. See Jackson, 213 F.3d at 393; Brinkley v. Harbour Recreation Club, 180 F.3d 598, 612 (4th Cir. 1999); Camarillo v. McCarthy, 998 F.2d 638, 639 (9th Cir. 1993); Moore, Owen, Thomas & Co. v. Coffey, 992 F.2d 1439, 1445 (6th Cir. 1993); Kleinknecht v. Gettys- burg Coll., 989 F.2d 1360, 1374 (3d Cir. 1993). Because Williams does not suggest any prejudice to her from the defendants’ delay other than her subsequent preparation for trial, the court did not abuse its discretion in allow- ing the defense. AFFIRMED. A true Copy: Teste: ________________________________ Clerk of the United States Court of Appeals for the Seventh Circuit USCA-02-C-0072—3-1-05"
]
| https://www.courtlistener.com/api/rest/v3/opinions/2997474/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
b"No. 20A-9\n\nIN THE\nSupreme Court of the United States\n___________\nWILLIAM P. BARR, ATTORNEY GENERAL, ET AL.,\nApplicants,\nv.\nWESLEY IRA PURKEY,\n(CAPITAL CASE)\n___________\nResponse in Opposition to Application for a Stay or Vacatur of the\nInjunction Issued by the United States District Court\nfor the District of Columbia\n___________\n\nTimothy P. O\xe2\x80\x99Toole\nCounsel of Record\nMiller & Chevalier Chartered\n900 Sixteenth St. NW\nWashington, DC 20006\n(202) 626-5800\ntotoole@milchev.com\n\n\x0cThe Government asks this Court to vacate the preliminary injunction entered\nby the District Court of the District of Columbia. The injunction was entered after\nthe District Court\xe2\x80\x99s considered review of the facts underlying Petitioner\xe2\x80\x99s dementia\nand mental illness, which render him incompetent to be executed.\nPetitioner and his counsel have been pursuing his claim of incompetence since\nNovember of last year. As the Government repeatedly emphasizes, it was only this\nmorning, that the District Court addressed the merits of his request and\npreliminarily enjoined his execution, having determined that he had made a\nsubstantial threshold showing of incompetence. The Government would have this\nCourt vacate this injunction because, in its view (1) it was addressed to the wrong\ntribunal and reliance on the wrong cause of action and (2) Petitioner has failed to\nmake the required threshold showing. Intervening on the Government\xe2\x80\x99s behalf would\ncut short the process contemplated by federal statute and the Constitution.\nThere is no merit to these arguments, as the district court correctly found, and\ncertainly no showing of merit that is sufficiently high to meet the government\xe2\x80\x99s\nburden. Indeed, the district court\xe2\x80\x99s injunction relies on settled, relevant precedent\nfrom this Court that the government effectively ignores in its application to vacate.\nThe government claims this is a \xe2\x80\x9ccore habeas\xe2\x80\x9d case that challenges Mr. Purkey\xe2\x80\x99s\ndeath sentence. But the controlling decision in Ford v. Wainwright, 477 U.S. 399,\n425 (1986) says otherwise: \xe2\x80\x9cthe only question raised is not whether, but when, his\nexecution may take place.\xe2\x80\x9d Ford, 477 U.S. at 425 (emphasis in original) (Powell, J.,\nconcurring); see also Panetti v. Quarterman, 551 U.S. 930, 945 (2007) (finding that\n\n-1-\n\n\x0cJustice Powell\xe2\x80\x99s concurring opinion controls procedure for Ford claims).\n\nThe\n\ngovernment also says that Mr. Purkey\xe2\x80\x99s extensive showing of incompetency does not\nmeet the requisite threshold, but it ignores the many similarities in the record here\nto the record in Panetti v. Quarterman, 551 U.S. 930, 949 (2007), which easily met\nthe threshold. In short, there can be no meaningful dispute there that Mr. Purkey\xe2\x80\x99s\nshowing of incompetency exceeded the threshold needed to compel a full and fair\nprocess for resolving his claims.\nTo be sure, the government has some leeway on what that process can look like\nat the outset; it could have, for example, set up a process for resolving Ford claims in\na manner or proceeding, and Mr. Purkey would have been bound to honor those\nprocedures to the extent they were adequate to meet the standard set forth in Panetti.\nBut it cannot set up no procedures at all, and then complain about how Mr. Purkey\nchose to litigate his claims, so long as he acts diligently in doing so. And that is\nindisputably what occurred here. Mr. Purkey is the first federal prisoner to raise a\nFord claim, and, in the 35 years since Ford, the Defendants have neglected to create\nany process at all.\nAs part of his effort to diligently pursue protection from unlawful execution,\nPetitioner has long sought his own medical records as well as access to medical\nprofessionals. Despite requesting those records from Respondent for the past nine\nmonths, Respondent has yet to disclose them, instead providing them to the lawyers\nfor the Government. They, in turn, have declined to provide them to counsel, claiming\nonly that the Eighth Amendment does not require as much.\n\n-2-\n\n\x0cPetitioner has also sought access to brain imaging that would corroborate his\nmental decline related to Alzheimer\xe2\x80\x99s disease. The Government only this week\nprovided the imaging that he had been requesting for months. And Mr. Purkey\xe2\x80\x99s\ncounsel has just learned, for the first time, that the government appears to have had\nscientific confirmation in their possession of significant structural abnormalities in\nthe brain that are consistent with cognitive impairment such as vascular dementia\nor other conditions. Access to this testing had been requested by Plaintiff for months,\nand arbitrarily denied by Defendants. Defendants reversed course last week, and\npermitted the testing at the expense of the defense team. Even though the testing\nwas paid for and requested by Plaintiff\xe2\x80\x99s counsel and their experts the results were\ninitially delivered only to the Government, last week. The government provided\nreports based on this data late last week, but did not deliver the underlying scans to\nMr. Purkey\xe2\x80\x99s defense expert until yesterday. Although Mr. Purkey\xe2\x80\x99s expert has not\nbeen able to verify the extent of the atrophy and damage to Plaintiff's brain through\nthe actual scans, the reports themselves make clear that significant abnormalities\nexist.\nIt is against this backdrop, that Defendants seek to vacate the injunction, and\navoid the judicial review and process owed to Mr. Purkey under Ford. The issue before\nthe Court at this time is not whether the district court\xe2\x80\x99s ruling was correct\xe2\x80\x94though\nwe firmly believe that it is because it simply follows settled Supreme Court precedent.\nRather, the question is whether, despite Defendants\xe2\x80\x99 obstructionist behavior in the\ndistrict court and attempt to rush this serious competency claim through to execution\n\n-3-\n\n\x0cwithout meaningful review, the balance of the equities cuts so strongly in its favor\nthat this Court should allow the Government to short-circuit a significant and\nindisputably timely Constitutional claim altogether by vacating the preliminary\ninjunction. The answer is clearly no. As a matter of settled law, Plaintiff is entitled\nto such process review and, without it, his execution would violate the United States\nConstitution. Defendants-Appellants have not come close to carrying the \xe2\x80\x9cheavy\nburden\xe2\x80\x9d necessary to justify a stay.\nBackground\nOn November 26, 2019, Mr. Purkey initiated the present action in the D.C.\nDistrict Court, including extensive factual allegations and evidentiary support,\nchallenging the constitutionality of his execution during his period of incompetency\npursuant to Ford. See Complaint, ECF No. 1. Mr. Purkey\xe2\x80\x99s Ford civil complaint did\nnot challenge his conviction or sentence but, rather, his current competency to be\nexecuted and the failure of Appellants to effectuate any process under Ford. In\naddition, Mr. Purkey\xe2\x80\x99s complaint challenged the complete lack of process in federal\nFord determinations. See id. \xc2\xb6\xc2\xb6 118\xe2\x80\x9321; Pl.\xe2\x80\x99s Opp\xe2\x80\x99n to MTD at 7\xe2\x80\x9310, ECF No. 20; Pl.\xe2\x80\x99s\nReply in Supp. of Pl.\xe2\x80\x99s Renewed Mot. for a Prelim. Inj. at 2, 16\xe2\x80\x9317, ECF No. 29\n(comparing the complete lack of any federal Ford procedure with the many state\nprocedures in those states that recognize the death penalty). Mr. Purkey first brought\nhis Ford complaint after the issuance of a warrant scheduling his execution because\na competency to be executed claim is not ripe until the execution is imminent. See\n\n-4-\n\n\x0cPanetti v. Quarterman, 551 U.S. 937, 947 (2007) (citing Stewart v. Martinez-Villareal,\n523 U.S. 637, 644\xe2\x80\x9345 (1998)).\nMr. Purkey is also a plaintiff in a related case in the D.C. District Court that\nchallenged the constitutionality of the Government\xe2\x80\x99s proposed lethal injection\nprotocol. See In re Fed. Bureau of Prisons\xe2\x80\x99 Execution Protocol Cases, No. 1:19-mc00145-TSC (D.D.C. Aug. 20. 2019) (the \xe2\x80\x9cProtocol case\xe2\x80\x9d). On November 20, 2019, the\nD.C. District Court entered a preliminary injunction in the Protocol case, preventing\nMr. Purkey\xe2\x80\x99s December 13, 2019 execution date. However, on December 4, 2019, Mr.\nPurkey filed a parallel protective Motion for a Preliminary Injunction (ECF No. 7) in\nhis Ford case out of an abundance of caution to ensure he would not be executed while\nincompetent if the Protocol Case injunction was lifted. On December 17, 2020, after\nthe initial execution warrant had expired, and after Appellants had filed an\nopposition to Mr. Purkey\xe2\x80\x99s Preliminary Injunction Motion (ECF No.10), Mr. Purkey\nfiled a Motion to Withdraw the protective Motion for Preliminary Injunction, agreeing\nwith the Government that since his execution was no longer imminent, the\npreliminary injunction motion was no longer ripe. See Mot. to Withdraw, ECF No. 11.\nOn December 31, 2019, the D.C. District Court granted the motion to withdraw and\nsua sponte ordered Mr. Purkey to respond to jurisdictional arguments raised in the\nGovernment\xe2\x80\x99s Opposition to Mr. Purkey\xe2\x80\x99s preliminary injunction motion, including\nargument relating to the court\xe2\x80\x99s jurisdiction over a civil rights Ford claim brought\noutside habeas. The parties completed briefing on January 28, 2020. ECF Nos. 14\xe2\x80\x93\n17. Defendants-Appellants then filed a Motion to Dismiss or, in the alternative, to\n\n-5-\n\n\x0cTransfer to the Southern District of Indiana, where Mr. Purkey is incarcerated.\nDefendants-Appellants\xe2\x80\x99 motion to dismiss or transfer was fully briefed. ECF Nos. 18\xe2\x80\x93\n21. Throughout this period and before, Plaintiffs diligently sought Mr. Purkey\xe2\x80\x99s\nmedical and other records from the Appellants to assist his expert in preparing\nreports about Mr. Purkey\xe2\x80\x99s competency. App. A, ECF No. 30-1. The Government\nrefused throughout this period to provide any information, largely ignoring Mr.\nPurkey\xe2\x80\x99s requests.\nOn April 7, 2020, the preliminary injunction issued in the Protocol Case was\nvacated by the D.C. Circuit. See Judgment, FBOP Execution Protocol Cases, No. 195322 (D.C. Cir. Apr. 7, 2020). On June 15, 2020, the next business day after the\nissuance of the mandate in connection with that D.C. Circuit litigation, Attorney\nGeneral Barr issued another warrant for Mr. Purkey\xe2\x80\x99s execution with only 30 days\xe2\x80\x99\nnotice, setting his execution date for July 15, 2020. This was done despite Mr.\nPurkey\xe2\x80\x99s unresolved and substantiated Ford claim, a lack of promulgated federal\nFord procedures in any form (draft or otherwise), a global pandemic that caused USP\nTerre Haute, where Mr. Purkey is located, to prohibit visitations, and documented\nCOVID-19 cases in the prison, including at least one COVID-19-related death. At the\ntime the new warrant was issued, neither the Attorney General nor the BOP had\npromulgated any procedures to ensure critical visitors could consult with Mr. Purkey\nsafely without unnecessary risk of exposure to the deadly virus known to be present\ninside the prison. R. Woodman Decl. \xc2\xb6\xc2\xb6 37\xe2\x80\x9338, ECF No. 23-6.\n\n-6-\n\n\x0cDue to the imminence of the newly issued execution warrant and Appellants\xe2\x80\x99\ncontinued delay and refusal to provide Mr. Purkey relevant materials related to his\nFord claim, as described further herein, on June 22, 2020, Mr. Purkey moved the D.C.\nDistrict Court for a renewed preliminary injunction of the scheduled execution in\norder to ensure he receives (a) a fair hearing on the issue of his competency to be\nexecuted; (b) a determination of his competency vel non to be executed; and (c) the\ncompletion of expedited discovery in advance of a Ford hearing, to which he is entitled\nbased on his substantial threshold showing of incompetency. Pl.\xe2\x80\x99s Renewed Mot. for\na Prelim. Inj. Barring Execution of Wesley Purkey Pending Final Disposition on the\nMerits 1\xe2\x80\x932, ECF No. 23. On June 23, 2020, Mr. Purkey also filed a motion for\nexpedited discovery in that matter, seeking information relevant to his Ford claim\nthat is in the sole possession and control of Appellants and which he has long been\ndenied. Pl.\xe2\x80\x99s Mot. for Expedited Disc., ECF No. 24.\nOn July 14, 2020, in an abundance of caution Mr. Purkey filed a Motion to\nPreserve Jurisdiction and Stay Execution (\xe2\x80\x9cMotion to Preserve\xe2\x80\x9d) in an action in the\nSouthern District of Indiana. Wesley Ira Purkey v. William P. Barr, et al., No. 2:19cv-00517-JMS-DLP (S.D. Ind.) (\xe2\x80\x9cBivens Action\xe2\x80\x9d). That court was currently\nconsidering a motion to hold those proceedings in abeyance pending resolution of\nclaims related to Mr. Purkey\xe2\x80\x99s competency, and Mr. Purkey sought to have that court\nenter an order to preserve its jurisdiction to consider the underlying competency\nissue, should this matter be transferred to Indiana at the last minute. The\ngovernment seeks to characterize that as some form of \xe2\x80\x9cforum shopping\xe2\x80\x9d but it was\n\n-7-\n\n\x0creally another action of diligence and prudence. Although Mr. Purkey was confident\nthat the district court had jurisdiction in D.C. over his civil rights action (as the\ndistrict court ultimately determined that it did), Mr. Purkey noted in his motion to\npreserve his intent to file a protective petition for habeas corpus relief under 28 U.S.C.\n\xc2\xa7 2241. The need for this sort of protective filing became apparent when, in connection\nwith the execution of Mr. Lee on July 13, 2020, the proceedings culminated with the\nApplicants\xe2\x80\x99 issuance of a new warrant for Mr. Lee\xe2\x80\x99s execution bearing the same date,\ndespite the serious due process issues raised by the implementation of an execution\nwarrant with no notice whatsoever. Given that lack of any process and protocols for\naddressing these issues, and specifically execution of the mentally incompetent, and\nthe demonstrated rush to execution without full and fair consideration of his claims,\nMr. Purkey became concerned that the government might take advantage of a last\nminute transfer to carry out his execution before he could move for a stay. Because\nhis claims are meritorious and deserving of judicial review and adjudication on the\nmerits, and only just became ripe, that motion was filed solely to protect his interest\nto have some court hear his Ford claim on the merits before Mr. Purkey was put to\ndeath. While the Indiana court denied the motion almost immediately, it expressed\nsympathy with Plaintiff\xe2\x80\x99s counsel\xe2\x80\x99s \xe2\x80\x9cdesire to avoid the frantic pace of recent related\nlitigation.\xe2\x80\x9d ECF No. 83. Nonetheless, that court concluded that if \xe2\x80\x9cif [Plaintiff] is\ndirected to bring a Ford claim in a \xc2\xa7 2241 petition in [the Indiana district court],\xe2\x80\x9d\nthen he must file such a claim in a \xc2\xa7 2241 petition in that court, not as part of the\nBivens Action. Id.\n\n-8-\n\n\x0cThis morning, at 5:09 a.m., the D.C. District Court issued its ruling, enjoining\nMr. Purkey\xe2\x80\x99s execution, scheduled for today. The district court correctly held that\nPlaintiffs are likely to prevail on their claims. The court found that, because Mr.\nPurkey\xe2\x80\x99s claim is of constitutional dimension and falls outside the core of habeas,\njurisdiction is appropriate under 28 U.S.C. \xc2\xa7 1331. Order at 9, ECF No. 36. Even if\nthe claims were core habeas, the court found that it would still have jurisdiction\nbecause \xe2\x80\x9cthe question of personal jurisdiction or venue\xe2\x80\x9d was not raised by the\nGovernment in their motion to dismiss and was therefore waived. Id. The court also\ncorrectly found that \xe2\x80\x9cPlaintiff has made the substantial threshold showing required\nby Ford, and in doing so, has demonstrated a likelihood of success on his claim for a\ncompetency hearing.\xe2\x80\x9d Id. at 11.\nTHE RECORD IN FRONT OF THE DISTRICT COURT\nThe district court issued its ruling based on extensive evidence proffered by\nMr. Purkey detailing his incompetence, his diligence, and the government dilatory\ntactics.\nI.\n\nMR. PURKEY\xe2\x80\x99S INCOMPETENCY\nMr. Wesley Purkey is a 68-year-old man suffering from progressive dementia,\n\nschizophrenia, complex-Post Traumatic Stress Disorder (\xe2\x80\x9cPTSD\xe2\x80\x9d), and severe mental\nillness including significant delusions and paranoia, rendering him unable to\ncomprehend the reason for his execution and thus entitled to process on the issue of\nhis competency to be executed under Ford v. Wainwright, 477 U.S. 399 (1986).\nAlthough no such process has yet been afforded, and despite Appellants\xe2\x80\x99 repeated\nroadblocks to gaining additional relevant information in pursuit of Mr. Purkey\xe2\x80\x99s Ford\n-9-\n\n\x0cclaim, the evidence of his incompetency is already extensive. Mr. Purkey\xe2\x80\x99s cognitive\ndeterioration, memory loss, paranoia, confusion, and delusion are well established in\nthe record through declarations and reports from counsel, defense team members, and\nmedical experts, as well as through medical testing and relevant documents.\nFirst, Mr. Purkey\xe2\x80\x99s defense lawyers, investigators, and medical experts who\nhave evaluated him over decades have described his paranoia and delusions in detail.\nSee, e.g., Complaint, Exhibit 1 at 10, ECF No. 1-1 (explaining Mr. Purkey\xe2\x80\x99s\nlongstanding belief that the prison and guards are poisoning him in retaliation for his\nlegal work); Complaint, Exhibit 13 at 561, ECF No. 1-8 (May 15, 1981, psychiatric\nevaluation reporting auditory hallucinations as Mr. Purkey held two conversations at\nthe same time, \xe2\x80\x9cwhisper[ing] in an entirely different conversation from what he was\ntalking aloud.\xe2\x80\x9d); Id. at 345, ECF No. 1-6 (May 1998 emergency room record noting Mr.\nPurkey was admitted because he \xe2\x80\x9cstarted to act paranoid,\xe2\x80\x9d stating that \xe2\x80\x9cthey\xe2\x80\x9d were\nwatching him at all times and sprayed him with \xe2\x80\x9cpoisonous mist several times\xe2\x80\x9d while\nhe was sleeping\xe2\x80\x9d); Complaint, Exhibit 5 at 40, ECF No. 1-1 at 40 (\xe2\x80\x9cEarly in my\ninvolvement [as Wes\xe2\x80\x99s mitigation specialist], Wes began exhibiting delusional\nthinking\xe2\x80\x9d); Complaint, Exhibit 7 at 74, ECF No. 1-1 (\xe2\x80\x9cWes was constantly paranoid\nthat various prison officials were trying to harm him in retaliation for his \xe2\x80\x98jailhouse\nlawyering,\xe2\x80\x99\xe2\x80\x9d and his \xe2\x80\x9cparanoia also increased over time.\xe2\x80\x9d); E. Vartkessian Decl., ECF\nNo. 23-5; R. Woodman Decl., ECF No. 23-6.\nSecond, testing has confirmed Mr. Purkey\xe2\x80\x99s cognitive decline. In 2003,\nneuropsychological testing of Mr. Purkey revealed moderate microsomia on the Smell\n\n- 10 -\n\n\x0cIdentification Test (SIT)\xe2\x80\x94an early marker of dementia, including Alzheimer\xe2\x80\x99s\nDisease. Complaint, Exhibit 3 at 12, ECF No. 1-1. Additionally, a brain scan from\n2003 \xe2\x80\x9cindicated abnormalities in the area of the brain involved in memory and\ntypically implicated in Alzheimer\xe2\x80\x99s disease.\xe2\x80\x9d Id. at 20. Thirteen years later, in 2016,\nneuropsychological testing revealed that Mr. Purkey was suffering from frontal lobe\ndeficits and progressive dementia consistent with Alzheimer\xe2\x80\x99s disease. Complaint,\nExhibit 9 at 88, ECF No. 1-1. The testing revealed that Mr. Purkey had experienced\nsignificant declines in both memory and executive functioning since the previous\ntesting in 2003. Id. A follow-up report in 2018 revealed that Mr. Purkey\xe2\x80\x99s condition\nhad continued to deteriorate since 2016, and the report recommended a further\nneurology work-up, including brain imaging, and a reassessment of his neurological\nstatus. Complaint, Exhibit 15 at 120, ECF No. 1-18.\nAdditional testing administered in August 2019 by Dr. DeRight, a\nneuropsychologist, led him to diagnose Mr. Purkey with Alzheimer\xe2\x80\x99s disease, a\nprogressive neurodegenerative disease that impacts memory, intellectual function,\nand behavior. Complaint, Exhibit 3 at 28CF No. 1-1; Complaint, Exhibit 6 at 89, ECF\nNo. 1-1 (testing, medical and family history \xe2\x80\x9cstrongly suggest\xe2\x80\x9d in 2016 that \xe2\x80\x9cMr.\nomplaint, Exhibit 12 at 120, ECF No. 1-2 (describing the reports of cognitive, physical\nand psychiatric decline and finding that this \xe2\x80\x9creported pattern of change is very much\nconsistent with progression of a cortical dementia\xe2\x80\x9d); Encyclopedia of Psychology at 71\n(4th ed., vol. 1 2010) (describing Alzheimer\xe2\x80\x99s Disease). Dr. DeRight worsening\ncognitive symptoms, including paraphasic word efforts, word loss, impaired recall of\n\n- 11 -\n\n\x0cinformation he knew before, and incontinence, was also highly consistent with the\nprogression of Alzheimer\xe2\x80\x99s disease. See Complaint, Exhibit 3 at 27, ECF No. 1-1;\nEncyclopedia of Psychology at 71 (4th ed., vol. 1 2010) (describing Alzheimer\xe2\x80\x99s\nDisease). Dr. DeRight opined that collateral information about Mr. Purkey\xe2\x80\x99s\nworsening cognitive symptoms, including paraphasic word efforts, word loss,\nimpaired recall of information he knew before, and incontinence, was also highly\nconsistent with the progression of Alzheimer\xe2\x80\x99s disease. See Complaint, Exhibit 3 at\n27.\nThird, expert review of relevant records supports the conclusion that Mr.\nPurkey is suffering from cognitive impairment due to a dementing disorder. Dr.\nThomas Hyde, a neurologist, similarly concluded that there is \xe2\x80\x9csubstantive evidence\nof Mr. Purkey\xe2\x80\x99s neurological deterioration over time affecting memory and cognitive\nfunction that is compatible with the diagnosis of a dementing disorder,\xe2\x80\x9d based on a\nclose review of Mr. Purkey\xe2\x80\x99s available records, including medical records, family birth\nand death records, and expert reports. Dr. Hyde Decl. \xc2\xb6 13, ECF No. 23-4. While\nunable to make a definitive diagnosis without the benefit of an in-person visit\xe2\x80\x94\nrendered impossible due to the COVID-19 pandemic\xe2\x80\x94or a review of recent medical\nrecords or current diagnostic testing\xe2\x80\x94rendered impossible by Appellants\xe2\x80\x99 failure to\nprovide requested materials\xe2\x80\x94Dr. Hyde nevertheless concluded that Mr. Purkey\xe2\x80\x99s\n\xe2\x80\x9cintellectual deficits, paranoia, and delusional beliefs, and the course of his\nprogressive deterioration are consistent with the diagnosis of dementia.\xe2\x80\x9d Id. at 81.\n\n- 12 -\n\n\x0cFourth, Mr. Purkey\xe2\x80\x99s confusion and memory loss has been witnessed over time\nby those most familiar with him. Mr. Purkey\xe2\x80\x99s mitigation specialist, Dr. Elizabeth\nVartkessian, PhD, who has had close contact with Mr. Purkey for the last five years,\nhas witnessed Mr. Purkey\xe2\x80\x99s recent, continual, and rapidly declining cognitive abilities\nboth in-person before the USP Terre Haute lockdown and even by telephone since the\nlockdown began, despite the severe limitations of telephonic consultations. See\ngenerally Vartkessian Decl., ECF No. 23-5. In Dr. Vartkessian\xe2\x80\x99s most recent visits\nwith Mr. Purkey, the last of which was early March 2020, he struggled to remember\nwords for simple items and could not recall names of individuals he knew well. Id. at\n2-4.\nFifth, the evidence indicates that Mr. Purkey\xe2\x80\x99s cognitive decline and paranoia\nrender him incapable of understanding the reason for his execution. Dr. Bhushan\nAgharkar, a neuropsychiatrist, observed that while Mr. Purkey could recite the\nGovernment\xe2\x80\x99s position that his execution is for the murder of Jennifer Long, this was\nmerely \xe2\x80\x9cparroting,\xe2\x80\x9d meaning he can repeat what others say but cannot rationally\nunderstand what it means. Mr. Purkey holds \xe2\x80\x9ca fixed belief that he is going to be\nexecuted in retaliation for his legal work, to prevent him from being a hassle for the\ngovernment.\xe2\x80\x9d Id. This is not a standalone belief but rather serves as a foundation for\nan entire delusional system involving conspiracies of retaliation. Mr. Purkey holds an\nhonest and deeply entrenched belief that the federal Government plans to execute him\nnot as punishment for the murder of Jennifer Long, but because of his \xe2\x80\x9cprotracted\njailhouse lawyering.\xe2\x80\x9d Complaint, Exhibit 15 at 994 (D.D.C. Nov. 26, 2019), ECF No.\n\n- 13 -\n\n\x0c1-18. In Mr. Purkey\xe2\x80\x99s mind, the voluminous grievances and lawsuits he has filed\nthroughout his incarceration \xe2\x80\x9chave had a monumental impact in preventing\ncorrectional officers from depriving prisoners of their constitutional rights.\xe2\x80\x9d\nComplaint, Exhibit 5 at 41 (D.D.C. Nov. 26, 2019), ECF No. 1-1. Mr. Purkey\xe2\x80\x99s ongoing\nparanoia and inability to connect cause and effect is demonstrated through his strong\nbelief that Attorney General Barr and the BOP are plotting to kill him in retaliation\nfor his litigation and to prevent him from future filings. See, e.g., Complaint, Exhibit\n1 at 12, ECF No. 1-1 (finding that Mr. Purkey insists the Government is \xe2\x80\x9ceager[] to be\nrid of him and his successful litigation\xe2\x80\x9d). Moreover, Mr. Purkey perceives his own\ncounsel \xe2\x80\x9cas part of the conspiracy against him and his efforts to litigate against the\nprison\xe2\x80\x9d\xe2\x80\x94a belief that prevents him from cooperating with them on matters related to\nhis execution. Complaint, Exhibit 5 at 54, ECF No. 1-1. Dr. Agharkar concluded to a\nreasonable degree of medical certainty that Mr. Purkey \xe2\x80\x9clacked a rational\nunderstanding of the basis for his execution.\xe2\x80\x9d Complaint, Exhibit 1 at 12, 13, ECF No.\n1-1 (\xe2\x80\x9cThe lack of rationality from Mr. Purkey\xe2\x80\x99s delusional thoughts and paranoia are\ncompounded by the deterioration of his brain from his dementia.\xe2\x80\x9d).\nII.\n\nTHE GOVERNMENT\xe2\x80\x99S CONTINUED REFUSAL TO PROVIDE MR.\nPURKEY INFORMATION RELEVANT TO HIS COMPETENCY\nNotably, the extensive evidence of Mr. Purkey\xe2\x80\x99s incompetency presented to\n\ndate does not yet include current records and other evidence that is directly relevant\nto his Ford claim, for the simple reason that Appellants have refused to provide any\nof this evidence in the nine months since the filing of his complaint, despite\nnumerous requests. See R. Woodman Decl. at 3, ECF No. 23-6. Records in\n- 14 -\n\n\x0cAppellants\xe2\x80\x99 sole possession include Mr. Purkey\xe2\x80\x99s updated BOP medical and mental\nhealth records, disciplinary records, and administrative records. Id. Access to Mr.\nPurkey himself is necessary for medical experts to conduct in-person assessments\nof his declining mental competency as well as the ability to conduct neurological\ntesting. Complaint, Exhibit 1, ECF No. 1-1 (Dr. Agharkar Report); Dr. DeRight June\n14, 2020 Letter, ECF No. 23-2; Dr. Hyde Decl., ECF No. 23-4. Appellants have\nrepeatedly refused to provide any of this information. R. Woodman Decl. at 3, ECF\nNo. 23-6; App. A, ECF No. 30-1.\nSince August 2019, counsel for Mr. Purkey has made repeated efforts to\nobtain this information to further evaluate Mr. Purkey\xe2\x80\x99s competency. See R.\nWoodman Decl., ECF No. 23-6; see also App. A, ECF No. 30-1; R. Woodman Suppl.\nDecl. \xc2\xb6 28. Appellants have ignored or stonewalled these efforts, refusing to provide\nthe requested information, moving the goalposts on access to expert testing, and\nwithholding highly probative contemporaneous information about Mr. Purkey\xe2\x80\x99s\nmental and physical health. As of today, the day of Mr. Purkey\xe2\x80\x99s execution, counsel\nhad\n\nstill\n\nnot\n\nreceived\n\nrequested\n\ninformation\n\nas\n\nnarrowly-tailored\n\nand\n\nstraightforward as his most recent medical records. See R. Woodman Suppl. Decl.\n\xc2\xb6\xc2\xb6 5\xe2\x80\x937.\nMr. Purkey\xe2\x80\x99s updated BOP medical, administrative, and mental health\nrecords, the surveillance video from Mr. Purkey\xe2\x80\x99s cell, and the BOP death watch\nprotocol are all relevant to Mr. Purkey\xe2\x80\x99s current mental state and functioning. See\nApp. A, ECF No. 30-1. The BOP first told Mr. Purkey\xe2\x80\x99s counsel that the information\n\n- 15 -\n\n\x0ccould only be obtained indirectly, such as through the Freedom of Information Act\n(\xe2\x80\x9cFOIA\xe2\x80\x9d) process (even though the request was for Mr. Purkey\xe2\x80\x99s own records and\nmade by Mr. Purkey\xe2\x80\x99s attorney of record). , ECF No. 23-6. On October 9, 2019, Mr.\nPurkey\xe2\x80\x99s counsel submitted expedited FOIA requests for the information to the BOP\nwhen his execution was scheduled for December 13, 2019. R. Woodman Decl., ECF\nNo. 23-6; Complaint, Exhibit 17. Counsel had also unsuccessfully requested the cell\nvideo footage on September 17, 2019. R. Woodman Decl., ECF No. 23-6. Expedited\nFOIA processing was granted but the BOP indicated that processing may\nnonetheless take up to six months. Complaint, Exhibit 16 at 1454\xe2\x80\x9355pending\nexecution date only two months away. R. Woodman Decl., ECF No. 23-6. BOP Legal\nCounsel responded on October 16, 2019 that she would follow up to see about a more\nexpedited time frame. Id. \xc2\xb6 13. Purkey\xe2\x80\x99s pending execution date only two months\naway. R. Woodman Decl., ECF No. 23-6. BOP Legal Counsel responded on October\n16, 2019 that she would follow up to see about a more expedited time frame. Id. at\n155 \xc2\xb6 13. . BOP Legal Counsel responded on October 16, 2019 that she would follow\nup to see about a more expedited time frame. Id. at 155 \xc2\xb6 13. Id. at 155 \xc2\xb6 13.\nThe records went unproduced, and counsel for Mr. Purkey again asked for\nthem on November 11, 2019. Id. at 155, 206\xe2\x80\x9307 (R. Woodman Decl.). This time,\ncounsel asked that BOP provide the records within ten days, given Mr. Purkey\xe2\x80\x99s\nthen-pending execution date. Id. BOP Legal Counsel acknowledged that \xe2\x80\x9ceveryone\ninvolved is cognizant that time is of the essence,\xe2\x80\x9d and agreed to forward the\ncommunication to FOIA personnel. Id. Again, no records were produced. Id.\n\n- 16 -\n\n\x0cEven after Mr. Purkey\xe2\x80\x99s initial execution warrant expired, Mr. Purkey\xe2\x80\x99s\ncounsel continued to pursue these critical records and the BOP continued to refuse\nto provide them. On February 3, 2020, Mr. Purkey\xe2\x80\x99s counsel submitted updated and\nrenewed FOIA requests seeking: (1) BOP policies and procedures pertaining to BOP\nsurveillance of Mr. Purkey as well as copies of video surveillance tapes of his cell,\nand (2) Mr. Purkey\xe2\x80\x99s medical, mental health, and administrative BOP file (including\ndisciplinary records). See id. at 161, 301\xe2\x80\x9312 (R. Woodman Decl.). A supervisory\nattorney at the BOP acknowledged receipt of the requests and confirmed they would\nbe forwarded to the FOIA processor who would reach out if they needed any more\ninformation to fulfill them. See id. at 161, 323\xe2\x80\x9325 (R. Woodman Decl.). Mr. Purkey\xe2\x80\x99s\ncounsel received no requests for further information to facilitate the FOIA request,\nand, again no records were produced. R. Woodman Suppl. Decl. \xc2\xb6 7.\nRemarkably, Appellants thereafter disputed that Mr. Purkey renewed his\nFOIA requests at all, and then represented that the BOP did not have any record of\nthe updated or renewed FOIA request. See R. Woodman Decl., ECF No. 23-6 Mr.\nPurkey\xe2\x80\x99s counsel again pressed the complete failure to provide Mr. Purkey\xe2\x80\x99s records\nor grant access for testing in filings in the Ford matter. Purkey\xe2\x80\x99s Opp\xe2\x80\x99n to MTD\n(D.D.C. Mar. 16, 2020), ECF No. 20.1 On June 15, 2020, shortly before receiving\n\n1 Counsel specifically argued that Defendants should grant access to the necessary\nmaterials (even while an injunction was in place in the Protocols case) because waiting for a\nshort warrant period would impose an \xe2\x80\x9c\xe2\x80\x98unrealistic time-frame\xe2\x80\x99 to allow counsel to obtain\nthe information it needs to prepare for a competency hearing, this court to conduct it, and\nan appellate court to review it.\xe2\x80\x9d Memorandum in Support of Plaintiff\xe2\x80\x99s Opposition to\nDefendants Motion to Dismiss, ECF No. 20.\n\n- 17 -\n\n\x0cnotice of the new execution warrant, and on June 25, 2020, Mr. Purkey\xe2\x80\x99s counsel\nagain followed up with BOP Legal Counsel about the 2020 FOIA requests. See R.\nWoodman Decl. \xc2\xb6 32, ECF No. 23-6; R. Woodman Suppl. Decl., ECF No. 30-2. On\nJune 26, 2020, BOP Legal Counsel claimed that she was \xe2\x80\x9cunaware of any\noutstanding requests for medical and psychological records\xe2\x80\x9d and that \xe2\x80\x9cthe two\nquickest ways\xe2\x80\x9d to obtain \xe2\x80\x9cmedical and psych\xe2\x80\x9d files were to ask Mr. Purkey to request\nthem or \xe2\x80\x9cthrough the discovery process.\xe2\x80\x9d R. Woodman Suppl. Decl., ECF No. 30-2.\nOn June 23, 2020, Mr. Purkey filed a motion for expedited discovery of the\nmaterials he had long sought in relation to his Ford claim. In response, on June 29,\n2020, Appellants in the Ford matter continued to refuse to provide the relevant\nrecords and failed to address why, after eight months, Mr. Purkey had not received\nthe materials through the \xe2\x80\x9cexpedited\xe2\x80\x9d FOIA process. See Defendants\xe2\x80\x99 Opp. to\nPlaintiff\xe2\x80\x99s Mot. for Expedited Discovery, ECF No. 27; see also Defendants\xe2\x80\x99\nOpposition to Plaintiff\xe2\x80\x99s Motion for Renewed Preliminary Inj., ECF No. 26.\nOn July 4, 2020, a federal holiday, BOP Legal Counsel inexplicably purported\nto change position, stating that \xe2\x80\x9cI have provided Mr. Purkey\xe2\x80\x99s entire medical and\npsychological files to the AUSAs [Assistant United States Attorneys] involved in his\ncase (copied here). They have agreed to produce the same to you under the rules for\ndiscovery.\xe2\x80\x9d R. Woodman Suppl. Decl. \xc2\xb6\xc2\xb6 5,7. But the referenced records do not\ninclude all requested information, such as video records and administrative file and\ndisciplinary records. R. Woodman Suppl. Decl. \xc2\xb6 7. And, on the day of Mr. Purkey\xe2\x80\x99s\n\n- 18 -\n\n\x0cscheduled execution, these records, allegedly sitting in the hands of defense counsel\nin the Ford matter, still had not been produced. See id.\nThe reports from Drs. DeRight and Agharkar and declaration from Dr. Hyde\nillustrate that important questions of fact regarding Mr. Purkey\xe2\x80\x99s competency\ncannot be fully assessed without the withheld medical and BOP records. For\nexample, Mr. Purkey\xe2\x80\x99s legal team reports that Mr. Purkey appears to be incontinent.\nComplaint, Exhibit 3 at 25, ECF No. 1-1. This is an important marker of Alzheimer\xe2\x80\x99s\nDisease. Id. at 28. The medical records may shed light on when Mr. Purkey\xe2\x80\x99s\nincontinence began and the extent of his loss of this biological function. Dr.\nAgharkar noted that Mr. Purkey has less movement on the right side of his face, as\nif he had suffered a stroke. Complaint, Exhibit 1 at 11, ECF No. 1-1. Without the\nmedical records, counsel lacks information about whether Mr. Purkey has had a\nstroke that could indicate further cause for his cognitive decline. These questions\nare merely illustrative, not exhaustive, of the information withheld. The need for\nthe withheld medical records is especially pressing because neither Mr. Purkey\xe2\x80\x99s\ncounsel nor his expert witnesses have been able to visit Mr. Purkey in-person since\nMarch 2020. Continuous observation is imperative to identify the declining\nfunctions and cognitive awareness that are hallmarks of persons with dementia.\nThis is one reason the surveillance footage from Mr. Purkey\xe2\x80\x99s cell is so critical in\naddition to his medical and administrative records. Range video surveillance, which\nshows Mr. Purkey in his typical prison setting, will provide for observation of Mr.\n\n- 19 -\n\n\x0cPurkey\xe2\x80\x99s condition in a way that the somewhat artificial setting of a visitation\ncannot.\nAppellants have also prevented Mr. Purkey\xe2\x80\x99s access to highly probative\ntesting ordered by his experts. On September 26, 2019, Dr. Agharkar ordered brain\nimage testing based on Mr. Purkey\xe2\x80\x99s history of cognitive deficits and the need to rule\nout an intracranial process. See ECF No. 23-6. On June 15, 2020, Mr. Purkey\xe2\x80\x99s\ncounsel requested that Dr. DeRight be allowed to visit and evaluate Mr. Purkey in\nperson. Dr. DeRight had last conducted an in-person examination of Mr. Purkey in\nAugust of 2019. See ECF No. 23-2. Standard best medical practices require repeated\nneuropsychological examinations, including up-to-date neuroimaging and blood\nlaboratory tests, to assess Mr. Purkey\xe2\x80\x99s current abilities and the progression of his\ndementia. Id. Dr. Hyde also made clear that additional examination and testing is\nnecessary but has been unable to safely examine Mr. Purkey in person due to the\nprison closure and the pandemic. See id. at 74 \xc2\xb6 8 (stating that \xe2\x80\x9ca complete\nneurological assessment includes a face-to-face interview and physical neurological\nexamination of Mr. Purkey, and follow-up with relevant diagnostic testing,\xe2\x80\x9d to\ninclude an MRI, EEG, a variety of blood tests, spinal tap, and PET scans). For\nmonths, the BOP refused to permit such testing, claiming a lack of ability or\nauthority to allow it, and stating, among other things, that the testing required a\ncourt order\nPetitioner has also sought access to brain imaging that would corroborate his\nmental decline related to Alzheimer\xe2\x80\x99s disease. The Government only this week\n\n- 20 -\n\n\x0cprovided the imaging that he had been requesting for months. And Mr. Purkey\xe2\x80\x99s\ncounsel has just learned, for the first time, that the government appears to have had\nscientific confirmation in their possession of significant structural abnormalities in\nthe brain that are consistent with cognitive impairment such as vascular dementia\nor other conditions. Access to this testing had been requested by Plaintiff for months,\nand arbitrarily denied by Appellants. Appellants reversed course last week, and\npermitted the testing at the expense of the defense team. Even though the testing\nwas paid for and requested by Plaintiff\xe2\x80\x99s counsel and their experts the results were\ninitially delivered only to the Government, last week. The government provided\nreports based on this data late last week, but did not deliver the underlying scans\nto Mr. Purkey\xe2\x80\x99s defense expert until yesterday. Although Petioner\xe2\x80\x99s expert has not\nbeen able to verify the extent of the atrophy and damage to Plaintiff's brain through\nthe actual scans, the reports themselves make clear that significant abnormalities\nexists.\nAppellants\xe2\x80\x99 months-long failure to provide relevant information has been\nexacerbated by the COVID-19 pandemic. Cases continue to rise in states across the\ncountry, including in the Midwest. Id. at 53 \xc2\xb6 8 (J. Goldenson Decl.). Prisons and\nother detention facilities pose heightened risks for COVID-19 exposure and\ntransmission. Id. at 56 \xc2\xb6 17. The lack of adequate ventilation, inability of all\nprisoners and staff to practice social distancing, inadequate hand washing, and\ninsufficient cleaning practices all contribute to the increased risk for the rapid spread\nof COVD-19 in prisons. Id. at 56\xe2\x80\x9359. In recognition of the threat of COVID-19, the\n\n- 21 -\n\n\x0cBOP suspended all social and legal visits across the country.2 All visitation at USP\nTerre Haute has been suspended since March 13, 2020. At the time of this filing, the\nBOP website still states that no visitors are allowed at USP Terre Haute and that\nall social and legal visits for all BOP facilities remain suspended. Id. at 61 \xc2\xb6 39. USP\nTerre Haute has reported cases of COVID-19 among its prisoner population, and,\nnotably, it has recently been reported that a BOP staff member coordinating the\nupcoming executions tested positive for COVID-19. R. Woodman Suppl. Decl. \xc2\xb6 8.\nWith scant testing, it is impossible to know the full scale of the infection. Id. \xc2\xb6 37.\nMr. Purkey\xe2\x80\x99s counsel immediately contacted BOP Legal Counsel to discuss\nUSP Terre Haute\xe2\x80\x99s visitation policy after receiving notice of Mr. Purkey\xe2\x80\x99s new\nexecution warrant. Id. at 166, 363\xe2\x80\x9364 (R. Woodman Decl.). BOP Legal Counsel\nexpressed willingness for legal visits to resume for prisoners with scheduled\nexecutions but could not provide any official protocols regarding visitation or safety\nprecautions. See id. at. 166, 365\xe2\x80\x9366. Although BOP Legal Counsel stated that she\nwould provide Mr. Purkey\xe2\x80\x99s counsel with a written policy on June 17, 2020, Mr.\nPurkey\xe2\x80\x99s counsel has yet to receive any such official documentation regarding legal\nor expert visits. Id. at 166, 367\xe2\x80\x9369. The BOP has not explained how visitation would\nbe safe for the four inmates with execution warrants and their visitors when it\nremains suspended for the over 1200 other prisoners at USP Terre Haute and their\nvisitors. The BOP\xe2\x80\x99s cursory and unplanned approach to resuming legal visits is\n\n2 BOP Implementing Modified Operations, Fed. Bureau of Prisons,\nhttps://www.bop.gov/coronavirus/covid19_status.jsp (last visited July 12, 2020).\n\n- 22 -\n\n\x0centirely insufficient, particularly given the close quarters and limited ventilation\nand air flow within death row visitation rooms. J. Goldenson Decl. ECF No. 23-3.\nNor does the BOP\xe2\x80\x99s approach provide adequate access to Mr. Purkey to make\nmeaningful assessments. Mr. Purkey\xe2\x80\x99s counsel and medical experts have been\nunable to visit Mr. Purkey for months. See (E. Vartkessian Suppl. Decl., ECF No.\n23-5; R. Woodman Decl., ECF No. 23-6; R. Woodman Suppl. Decl., ECF No. 30-2.\nThese in-person visits by individuals who have long known Mr. Purkey and have\nwitnessed his mental decline over the years are critical to understanding the\ntrajectory of his progressive dementia and his present mental state. See Letter from\nJonathan DeRight, PhD, ABPP-CN, Woodbridge Psychological Associate, PC, to\nRebecca E. Woodman, Esq., Attorney at Law, L.C. (June 14, 2020), ECF No. 23-2;\nDr. Hyde Decl. \xc2\xb6\xc2\xb6 11\xe2\x80\x9312, 14, ECF No. 23-4; E. Vartkessian Decl. \xc2\xb6\xc2\xb6 4, 11, 22\xe2\x80\x9325,\nECF No. 23-5. All three of Mr. Purkey\xe2\x80\x99s expert witnesses have made clear how vital\nit is for Mr. Purkey\xe2\x80\x99s legal team to have in-person visits, testing, imaging, and\nexaminations to obtain an accurate assessment of the progression of his dementia.\nSee Complaint, Exhibit 1, ECF No. 1-1 (Dr. Agharkar Report); Dr. Hyde Decl. \xc2\xb6\xc2\xb6 8\xe2\x80\x93\n9, 11\xe2\x80\x9312, 15\xe2\x80\x9317, ECF No. 23-4; DeRight June 14, 2020 Letter, ECF No. 23-2.\nMore fundamentally, the decision to fast-track Mr. Purkey\xe2\x80\x99s execution during\nthe pandemic and the BOP\xe2\x80\x99s lack of adequate preparation or procedures to facilitate\nsafe visitations, let alone executions, given the USP Terre Haute COVID-19\noutbreak, creates an impossible situation for all involved in the days leading up to\nMr. Purkey\xe2\x80\x99s execution. In order to advocate for their client\xe2\x80\x99s constitutional rights\n\n- 23 -\n\n\x0cand uphold the core values of the U.S. Constitution, Mr. Purkey\xe2\x80\x99s counsel and\nexperts must risk their own lives and the lives of their family members or medically\nvulnerable persons to whom they provide care. Mr. Purkey must face the prospect of\ndying without his legal and spiritual advisors, and without familial support by his\nside\xe2\x80\x94either because they will not be permitted to visit him, or because they must\nrisk their lives to do so. Even the family members of the victim of Mr. Purkey\xe2\x80\x99s crime\nmust make this difficult decision, as it is their right to attend the execution.\nAppellants\xe2\x80\x99 decision to schedule Mr. Purkey\xe2\x80\x99s execution with only one month\xe2\x80\x99s\nnotice, after the months-long refusal to provide relevant materials and access to Mr.\nPurkey, and in the midst of a global pandemic that creates new difficulties and\ndangers associated with in-person visits, deprives him of his constitutional rights\nunder the Fifth and Eighth Amendments.\nARGUMENT\nThe standard of review on an application to vacate a stay of execution is highly\ndeferential. A stay of execution is an equitable remedy that lies within a court\xe2\x80\x99s discretion.\nSee Kemp v. Smith, 463 U.S. 1321 (1983) (Powell, J., in chambers). \xe2\x80\x9cOnly when the lower\ncourts have clearly abused their discretion in granting a stay should [this Court] take the\nextraordinary step of overturning such a decision.\xe2\x80\x9d Dugger v. Johnson, 485 U.S. 945, 947\n(1988) (O\xe2\x80\x99Connor, J., joined by Rehnquist, C.J., dissenting); see also Doe v. Gonzales, 546\nU.S. 1301, 1307, 1309 (2005) (Ginsburg, J., in chambers) (denying application to vacate\nstay entered by court of appeals \xe2\x80\x9c[a]lthough there is a question as to the likelihood of ...\nsuccess on the merits\xe2\x80\x9d because \xe2\x80\x9cthe applicants have not shown cause so extraordinary\n\n- 24 -\n\n\x0cas to justify this Court\xe2\x80\x99s intervention in advance of the expeditious determination of the\nmerits toward which the Second Circuit is swiftly proceeding\xe2\x80\x9d (internal quotation marks\nomitted)).\nA stay pending appeal is available \xe2\x80\x9conly under extraordinary circumstances,\xe2\x80\x9d\nand the \xe2\x80\x9cdistrict court\xe2\x80\x99s conclusion that a stay is unwarranted is entitled to\nconsiderable deference.\xe2\x80\x9d Ruckelshaus v. Monsanto Co., 463 U.S. 1315, 1316 (1983)\n(Blackmun, J., in chambers). The Government has not carried its \xe2\x80\x9cheavy burden\xe2\x80\x9d to\njustify such relief here, id., as (1) it has not \xe2\x80\x9cmade a strong showing that [it] is likely\nto succeed\xe2\x80\x9d in challenging the injunction on appeal; (2) it will not \xe2\x80\x9cbe irreparably\ninjured absent a stay\xe2\x80\x9d; (3) a stay would substantially and irreparably injure\nPlaintiffs; and (4) a stay is not in the public interest. Nken v. Holder, 556 U.S. 418,\n434 (2009).\n\nWhere, as here, the court below issued a stay based on its careful review of the\nextensive evidence offered by Mr. Purkey and the Appellants have engaged in dilatory\ntactics and obstruction, this Court should not vacate the decision below.\n\nI.\n\nAPPELLANTS ARE NOT LIKELY TO SUCCEED ON THE MERITS\nThe district court correctly held that Mr. Purkey is likely to prevail on his\n\nclaims. The court found that, because Mr. Purkey\xe2\x80\x99s claim is of constitutional\ndimension and falls outside the core of habeas, jurisdiction is appropriate under 28\nU.S.C. \xc2\xa7 1331. Order at 9, ECF No. 36. Even if the claims were core habeas, the court\nfound that it would still have jurisdiction because \xe2\x80\x9cthe question of personal\njurisdiction or venue\xe2\x80\x9d was not raised by the Government in their motion to dismiss\n- 25 -\n\n\x0cand was therefore waived. Id. The court also correctly found that \xe2\x80\x9cPlaintiff has made\nthe substantial threshold showing required by Ford, and in doing so, has\ndemonstrated a likelihood of success on his claim for a competency hearing.\xe2\x80\x9d Id. at\n11.\n\nA.\n\nThe District Court Properly Found That It Has Jurisdiction to\nHear Mr. Purkey\xe2\x80\x99s Claims\n\nThe district court correctly found that claims pursuant to Ford are not\ntraditional \xe2\x80\x9ccore habeas\xe2\x80\x9d claims required to be brought under 28 U.S.C. \xc2\xa7 2241. Order\nat 7, ECF No. 36. In a capital case, the test for whether a claim is within the bounds\nof \xe2\x80\x9ccore habeas\xe2\x80\x9d is whether it would permanently prevent his execution. Clearly\nestablished Supreme Court precedent shows that this case is outside that core\nbecause \xe2\x80\x9c[u]nder Ford, when a plaintiff claims incompetence, \xe2\x80\x98the only question\nraised is not whether, but when, his execution may take place.\xe2\x80\x99 This temporal\nquestion is distinct from \xe2\x80\x98the antecedent question whether petitioner should be\nexecuted at all.\xe2\x80\x99\xe2\x80\x9d Id. (citing Ford, 477 U.S. at 425 (internal citations omitted)); see also\nStanley v. Davis, No. 07-cv-4727, 2015 WL 435077, at *4 n.4, *5 (N.D. Cal. Feb. 2,\n2015) (it is \xe2\x80\x9cdifficult to discern a meaningful difference between a Ford challenge and\na methods challenge. . . .[which] may be brought under section 1983.\xe2\x80\x9d); Ward v.\nHutchinson, 558 S.W.3d 856 (Ark. 2018) (a state prisoner sought declaratory and\ninjunctive relief in a civil rights action under 42 U.S.C. \xc2\xa7 1983 challenging, in part,\nhis competency to be executed); Hubbard v. Campbell, 379 F.3d 1245, 1247\xe2\x80\x9348 (11th\nCir. 2004) (Barkett, J., dissenting) (a civil rights action is an appropriate vehicle to\nraise a Ford claim because it does not challenge the fact or validity of the sentence,\n- 26 -\n\n\x0conly the constitutionality of the execution at a specific temporal point of\nincompetency, an issue not reached by the majority).\nA \xe2\x80\x9ccore habeas\xe2\x80\x9d is one in which \xe2\x80\x9ca judgment in favor of the plaintiff would\nnecessarily imply the invalidity of his conviction or sentence.\xe2\x80\x9d Heck v. Humphrey, 512\nU.S. 477 (1994). In such cases, a civil rights action is not an available remedy. \xe2\x80\x9cBut if\n. . . the plaintiff's action, even if successful, will not demonstrate the invalidity of [his\nconviction or sentence], the [\xc2\xa7 1983] action should be allowed to proceed . . . .\xe2\x80\x9d Skinner\nv. Switzer, 131 S. Ct. 1289, 1298 (2011) (quoting Heck v. Humphrey, 512 U.S. at 487);\nsee also Savory v. Lyons, 469 F.3d 667, 672 (7th Cir. Nov. 29, 2006) (action to obtain\nDNA appropriate pursuant to \xc2\xa7 1983 because \xe2\x80\x9csuch access would not imply the\ninvalidity of his conviction\xe2\x80\x9d even if it may eventually lead to such a claim)).\nIt is clear that where a prisoner seeks injunctive relief that \xe2\x80\x9cwould not\nnecessarily bar the inmate\xe2\x80\x99s execution,\xe2\x80\x9d the challenge is not limited to habeas because\nthe challenge does not seek to establish \xe2\x80\x9cunlawfulness [that] would render a\nconviction or sentence invalid.\xe2\x80\x9d Hill v. McDonough, 547 U.S. 573, 574 (2006) (citations\nomitted); Nelson v. Campbell, 541 U.S. 637, 643\xe2\x80\x9344 (2004) (citations omitted)\n(allowing a challenge to the method of execution outside of habeas because it did \xe2\x80\x9cnot\ndirectly call into question the \xe2\x80\x98fact\xe2\x80\x99 or \xe2\x80\x98validity\xe2\x80\x99 of the sentence itself\xe2\x80\x9d). This is true\neven if the challenge would \xe2\x80\x9cfrustrate an execution as a practical matter.\xe2\x80\x9d Hill, 547\nU.S. at 574 (explicitly rejecting an amici argument that any \xe2\x80\x9cchallenge that would\nfrustrate an execution as a practical matter must proceed in habeas.\xe2\x80\x9d).\n\n- 27 -\n\n\x0cAs Mr. Purkey emphasized in his renewed motion for preliminary injunction\n(ECF No. 23) and the district court correctly observed in granting it, Ford \xe2\x80\x9cnoted that\nincompetence may be temporary, and that a person may be returned to competency\nin order to carry out his sentence.\xe2\x80\x9d Ford, 477 U.S. at 425 n.5 (Powell, J., concurring).\nIt is a well-settled principle that competency is not inherently static and may be\nrestored\xe2\x80\x94a concept that Appellants continue to ignore and refuse to disclaim even\nthough the Government is a vocal advocate of that principle. See Indiana v. Edwards,\n554 U.S. 164, 175 (2008) (\xe2\x80\x9c[Competency] varies in degree. [Competency] can vary over\ntime. [Competency] interferes with an individual\xe2\x80\x99s functioning at different times in\ndifferent ways.\xe2\x80\x9d); Davis v. Kelley, 854 F.3d 967, 971 (8th Cir. 2017) (\xe2\x80\x9ccompetency can\nbe lost or regained over time\xe2\x80\x9d in the context of Ford); United States v. Dahl, 807 F.3d\n900, 904 (8th Cir. 2015) (\xe2\x80\x9c[C]ompetency is not static and may change over even a\nshort period of time[.]\xe2\x80\x9d) (internal quotation marks omitted); United States v. Grape,\n549 F.3d 591, 597\xe2\x80\x9398 (3d Cir. 2008) (the Government could restore competency by\nmedicating currently incompetent defendant who became mentally ill in prison);\nSingleton v. Norris, 319 F.3d 1018, 1026 (8th Cir. 2003) (upholding the state\xe2\x80\x99s forced\nmedication of a prisoner to restore him to competency); Commonwealth v. Sam, 952\nA.2d 565, 582 (Pa. 2008) (allowing involuntary medical intervention to restore an\ninmate to competency); Pl.\xe2\x80\x99s Reply to Defs.\xe2\x80\x99 Resp. to Mr. Purkey\xe2\x80\x99s Br. Filed Pursuant\nto this Court\xe2\x80\x99s Order of Dec. 31, 2019 at 3 n.1, ECF No. 17 (\xe2\x80\x9cNearly all death penalty\njurisdictions that have implemented procedures that govern Ford claims include\nprovisions for restoring competency.\xe2\x80\x9d).\n\n- 28 -\n\n\x0cNotably, as the district court found, Appellants do not contest the court\xe2\x80\x99s\njurisdiction as to Mr. Purkey\xe2\x80\x99s process challenge. See Order at 8, ECF No. 36.\n\xe2\x80\x9cPlaintiff\xe2\x80\x99s second claim challenges the manner of his execution by arguing that due\nprocess entitles him to a competency hearing before he can be executed. Compl. \xc2\xb6 119,\nECF No. 1. Success on this claim would not challenge his death sentence but would\nonly provide him a competency hearing. Again, Appellants appear to concede that\nthere is an acceptable alternative\xe2\x80\x94his execution can occur after he is found\ncompetent. Pl.\xe2\x80\x99s Opp\xe2\x80\x99n to MTD at 15\xe2\x80\x9316, ECF No. 20.\nFinally, the district court determined that, even if it could be said that Mr.\nPurkey\xe2\x80\x99s claims were \xe2\x80\x9ccore habeas\xe2\x80\x9d, the court would still have jurisdiction because\nthe requirement that habeas petitioners file in the district of confinement \xe2\x80\x9c\xe2\x80\x98is a\nquestion of personal jurisdiction or venue not a question of subject matter\njurisdiction.\xe2\x80\x99\xe2\x80\x9d Order at 9, ECF No. 36 (citing Rumsfeld v. Padilla, 542 U.S. 426, 447,\n451 (Kennedy, J., concurring)). Because Appellants conceded that personal\njurisdiction and venue were appropriate in the D.C. District Court and only moved to\ndismiss for failure to state a claim under Fed. R. Civ. Proc. 12(b)(6), the Government\nwaived that requirement. Id.\nWhen the Court reaches the merits after full briefing, it is much more likely\nthat it will affirm the district court in its correct application of clearly established\nprecedent. The Government cannot satisfy its \xe2\x80\x9cheavy burden\xe2\x80\x9d to justify a stay of\nexecution.\n\n- 29 -\n\n\x0cB.\n\nThe District Court Properly Found That Mr. Purkey Met\nPanetti\xe2\x80\x99s Threshold Showing of Incompetence\n\nThe district court correctly found that Mr. Purkey \xe2\x80\x9cmade a substantial showing\nof incompetence\xe2\x80\x9d and was thus \xe2\x80\x9centitled to an opportunity to be heard, including a\nfair hearing.\xe2\x80\x9d Order at 10\xe2\x80\x9311, ECF No. 36 (citing Ford, 477 U.S. at 425\xe2\x80\x9326 (Powell,\nJ., concurring)). In making this determination, the district court credited the\nextensive evidence submitted by Mr. Purkey in support of his incompetence and\nconcluded 1) that Mr. Purkey \xe2\x80\x9cdoes not understand that his execution is punishment\nfor his capital crime\xe2\x80\x9d; 2) that \xe2\x80\x9che has a documented history of mental illness,\nincluding delusional and paranoid thinking, starting in childhood and continuing to\nthe present\xe2\x80\x9d; 3) that \xe2\x80\x9chis dementia has caused a decline in his mental health\xe2\x80\x9d; and 4)\nthat \xe2\x80\x9chis long-term inability to communicate with counsel evinces his incompetence.\xe2\x80\x9d\nOrder at 10, ECF No. 36. The Court also credited the report by Dr. Bhushan Agharkar\nconcluding that Mr. Purkey lacks a rational understanding of the basis for his\nexecution. Id. (citing Agharkar Report, at 11\xe2\x80\x9312, Complaint, Ex. 1, ECF No. 1-1.)\nFurther, the Court observed that, while Appellants disputed Mr. Purkey\xe2\x80\x99s claim of\nincompetence, they provided no independent evidence of competence. Order at 10,\nECF No. 36. Having met the substantial threshold showing, the district court\ncorrectly found that Mr. Purkey \xe2\x80\x9chas demonstrated a likelihood of success on his\nclaim for a competency hearing.\xe2\x80\x9d Id. at 11.\nAppellants advance the same arguments here that were unavailing in\nthe court below, and these arguments must again fail. See Mot. to Dismiss at\n21\xe2\x80\x9325, 29, ECF No. 18. As the district court recognized, Mr. Purkey has\n- 30 -\n\n\x0csubmitted substantial and reliable evidence of his progressive dementia,\nschizophrenia, delusions, and paranoia, including through numerous\ndeclarations and reports from counsel, defense team members, and multiple\nmedical experts, as well as through medical testing results, medical records,\nand other relevant documents. Compl., ECF Nos. 1 to 1-52; Pl.\xe2\x80\x99s Renewed Mot.\nfor Prelim. Inj. & Supporting Documents, ECF Nos. 23 to 23-7. Appellants\nattack Dr. Agharkar\xe2\x80\x99s expert conclusions based solely on their layperson,\nuninformed understanding of mental health. Appellants argue that Mr.\nPurkey\xe2\x80\x99s lack of rational understanding for his execution is really a lack of\nunderstanding of the reason for scheduling his execution, but as the district\ncourt observed, this is not \xe2\x80\x9cindependent evidence of competence.\xe2\x80\x9d Order at 10,\nECF No. 36. Further, any factual disputes raised by Appellants, even if they\nwere valid\xe2\x80\x94which they are not\xe2\x80\x94support the district court\xe2\x80\x99s finding that a\nhearing is warranted.\nFord and Panetti make clear that once a prisoner has made a\n\xe2\x80\x9csubstantial threshold showing of insanity\xe2\x80\x9d he is entitled to \xe2\x80\x9cthe protection\nafforded by procedural due process,\xe2\x80\x9d including a hearing at which to present\nevidence on the ultimate issue of competency. See Panetti, 551 U.S. at 949.\nPanetti explains the substance of these procedures, emanating from Justice\nPowell\xe2\x80\x99s controlling opinion in Ford setting out the minimum procedures for\ncompetency determinations:\n[I]f the Constitution renders the fact or timing of [the condemned\nprisoner\xe2\x80\x99s] execution contingent upon establishment of a further fact,\n- 31 -\n\n\x0cthen that fact must be determined with the high regard for truth that\nbefits a decision affecting the life or death of a human being. Thus, the\nascertainment of a prisoner\xe2\x80\x99s sanity as a predicate to lawful execution\ncalls for no less stringent standards than those demanded in any other\naspect of a capital proceeding.\nPanetti, 551 U.S. at 948\xe2\x80\x9349 (quoting Ford, 477 U.S. at 411\xe2\x80\x9312). A \xe2\x80\x9cfair hearing\xe2\x80\x9d is\nnecessary under Panetti and Ford because there are facts that must be established\nat the time of, or shortly before, an execution date to determine if sanity is an issue.\nPanetti, 551 U.S. at 948\xe2\x80\x9349 (quoting Ford, 477 U.S. at 426). The fact of the condemned\nperson\xe2\x80\x99s sanity is the necessary predicate for the retributive justification of death as\na punishment. Id. Without this, the punishment becomes indefensible. This critical\nconstitutional inquiry must be subject to the adversarial process and judicial\nscrutiny.\nNotably, Mr. Purkey made this substantial threshold showing despite\nAppellants\xe2\x80\x99 significant interference with his attempts to gather critical evidence. The\nGovernment\xe2\x80\x99s refusal to honor Mr. Purkey\xe2\x80\x99s repeated requests over the past nine\nmonths for medical and mental health records, surveillance video from his cell, and\naccess to medical testing, as well as the interference with access to visitations because\nof the COVID-19 pandemic, has deprived him of expert and legal assistance and the\nopportunity to review and submit additional relevant evidence of his incompetency.\nWith no authority, Appellants argue that a failure to meet the threshold\nshowing entitles a prisoner to \xe2\x80\x9cno process \xe2\x80\x93including information sharing.\xe2\x80\x9d ECF No.\n39 at 16. Neither Panetti nor Ford stands for the proposition that the government\nmay obstruct a prisoner\xe2\x80\x99s access to his own counsel and medical records and then\ncomplain that the prisoner has failed to demonstrate current incompetency. Panetti\n- 32 -\n\n\x0cand Ford are premised on the opposite assumption: that counsel will have access to\ntheir client in making a substantial threshold showing. In Ford, counsel relied on,\ninter alia, the inmate\xe2\x80\x99s medical records that showed a pattern of deterioration into a\nparanoid psychosis. Ford, 477 at 402. In Panetti, counsel and a psychiatrist were able\nto meet with Panetti on the eve of his execution to corroborate the apparent illness\nas described by prison staff. Panetti, 551 U.S. at 940-42. In neither case did the state\nseek a litigation advantage by depriving counsel of information about their client.\nThat is what Appellants attempted to do here. Mr. Purkey\xe2\x80\x99s counsel requested\nhis medical records for months, complying with every procedural mechanism and rule\nAppellants put forth. To date, Appellants have failed to produce any of Mr. Purkey\xe2\x80\x99s\nupdated records despite repeated requests, nor have his experts been able to conduct\nnecessary in-person examinations. The brain scans that Mr. Purkey requested for\nmonths took place only last week, and Appellants\xe2\x80\x99 representation that they sent\n\xe2\x80\x9ccounsel the reports and original imaging from Purkey\xe2\x80\x99s most recent medical scans\xe2\x80\x9d\nis misleading at best. ECF No. 39 at 5. In fact, despite being informed by BOP that\nthe requested scans and imaging were conducted on or after July 8, 2020 and that\none of Mr. Purkey\xe2\x80\x99s experts would receive those scans and imaging from BOP by July\n11, 2020, the expert did not receive them until July 14, 2020, i.e., the day before the\nMr. Purkey\xe2\x80\x99s scheduled execution. He has yet to receive the EEG results.\nCritically, five minutes before this filing, Mr. Purkey\xe2\x80\x99s counsel learned that the\nGovernment appears to have had scientific confirmation in their possession of\nsignificant structural abnormalities in Mr. Purkey\xe2\x80\x99s brain that are consistent with\n\n- 33 -\n\n\x0ccognitive impairment such as vascular dementia or other conditions. Access to this\ntesting had been requested by Plaintiff for months, and arbitrarily denied by\nAppellants. Appellants reversed course last week, and permitted the testing at the\nexpense of the Mr. Purkey\xe2\x80\x99s team. Even though the testing was paid for and requested\nby Plaintiff\xe2\x80\x99s counsel and their experts, the results were initially delivered only to the\nGovernment, last week. The Government provided reports based on this data late\nlast week, but did not deliver the underlying scans to Mr. Purkey\xe2\x80\x99s expert until\nyesterday. Although Plaintiff\xe2\x80\x99s expert has not been able to verify the extent of the\natrophy and damage to Plaintiff's brain through the actual scans, the reports\nthemselves make clear that significant abnormalities exists.\n\nII.\n\nAPPELLANTS WILL NOT BE IRREPARABLY HARMED BY THE\nPRELIMINARY INJUNCTION\nAppellants have not shown that they would be harmed\xe2\x80\x94much less irreparably\n\nso\xe2\x80\x94absent a stay. Appellants complain that their \xe2\x80\x9csignificant advanced planning and\ncoordination\xe2\x80\x9d will be frustrated. Defs.\xe2\x80\x99 Mot. to Stay Prelim. Inj. Pending Appeal at 6,\nECF No. 39. But Appellants created this situation when they filed a truncated\nexecution warrant while Mr. Purkey diligently sought to litigate his claim. Any\nscheduling inconveniences for Appellants are of their own making and fail to rise to\nthe level of irreparable harm.3\n\n3 Counsel object to Appellants\xe2\x80\x99 proposition that they can execute him \xe2\x80\x9clater today or\npossibly tomorrow.\xe2\x80\x9d According to the regulation, Mr. Purkey\xe2\x80\x99s warrant has been\nissued for a specific \xe2\x80\x9cdate\xe2\x80\x9d\xe2\x80\x94i.e., today. Appellants\xe2\x80\x99 suggestion appears to\ncontravene the regulation. ECF No. 39 at 19.\n- 34 -\n\n\x0cIII.\n\nPLAINTIFF WILL BE IRREPARABLY HARMED BY A STAY OF THE\nINJUNCTION\nPlaintiff, by contrast, would suffer irreparable harm of the highest order if the\n\npreliminary injunction is stayed. As the district court observed, \xe2\x80\x9c[i]n Ford, Justice\nMarshall acknowledged that \xe2\x80\x98execution is the most irremediable and unfathomable\nof penalties.\xe2\x80\x99 477 U.S. at 411 (citing Woodson v. North Carolina, 428 U.S. 280, 305\n(1976) (plurality opinion).\xe2\x80\x9d Order at 11, ECF No. 36. As the district court correctly\nfound, \xe2\x80\x9cabsent a preliminary injunction, Plaintiff would be executed without being\ngiven the opportunity to be heard regarding his competence to suffer such a sentence\xe2\x80\x9d\nhaving \xe2\x80\x9cmade a substantial threshold showing of innocence.\xe2\x80\x9d Id. at 11\xe2\x80\x9312.\nImportantly, the district court noted that Appellants \xe2\x80\x9cdo not dispute that irreparable\nharm is likely.\xe2\x80\x9d Id. at 12.\n\nIV.\n\nA STAY IS NOT IN THE PUBLIC INTEREST\nThe balance of the equities and public interest also favor a stay. Where the\n\nGovernment opposes a stay, these two factors merge. See Nken, 556 U.S. at 434\xe2\x80\x9335.\nThis Court has an interest in granting a stay in order \xe2\x80\x9cto protect the Court\xe2\x80\x99s\njurisdiction over the case, for if the inmate was executed while the competency\nquestion was pending, the case would become moot even if it later appeared that the\ninmate clearly was incompetent.\xe2\x80\x9d Smith ex rel. Smith v. Armontrout, 626 F. Supp.\n936, 939 n.1 (W.D. Mo. 1986). A cognizable Ford claim presents important\nconstitutional questions courts must approach with \xe2\x80\x9cdeliberate and thoughtful\xe2\x80\x9d\nconsideration, for \xe2\x80\x9ca ripe Ford claim is due the same consideration as other issues\nraised in a first habeas petition.\xe2\x80\x9d Amaya-Ruiz v. Stewart, 136 F. Supp. 2d 1014, 1030\xe2\x80\x93\n- 35 -\n\n\x0c31 (D. Ariz. 2001) (granting stay of execution pending resolution of Ford claim). A\nstay in this matter to ensure an incompetent person is not executed in violation of the\nU.S. Constitution:\nwill not substantially harm the government, which has waited at least\nseven years to move forward on Purkey\xe2\x80\x99s case. . . . the public interest is\nsurely served by treating this case with the same time for consideration\nand deliberation that we would give any case. Just because the death\npenalty is involved is no reason to take short-cuts\xe2\x80\x94indeed, it is a reason\nnot to do so.\nNotice of Recent Decision, Ex. A at 26\xe2\x80\x9327, ECF No. 31-1.\nOther courts have found \xe2\x80\x9clittle potential for injury\xe2\x80\x9d as a result of a delayed\nexecution date. See, e.g., Harris v. Johnson, 323 F. Supp. 2d 797, 809 (S.D. Tex. 2004).\nAny potential harm to the Government caused by a delayed execution is outweighed\nby the obvious harm to Mr. Purkey and the public\xe2\x80\x99s interest in a constitutional\napplication executions. Not delaying the execution undermines the rule of law as\npronounced by Ford and Panetti\xe2\x80\x94that we as a society do not execute the incompetent.\nFurther, the only delays in this matter have been caused by Appellants. Since\nAugust 2019, despite repeated requests and efforts by Mr. Purkey\xe2\x80\x99s counsel,\nAppellants have continuously refused to provide his medical, mental health, and\nadministrative records or, to furnish (or possibly even preserve) video evidence\ndepicting Mr. Purkey\xe2\x80\x99s dementia, all of which is integral to Mr. Purkey\xe2\x80\x99s claim. See\ngenerally e.g., R. Woodman Decl., ECF No. 23-6; Pl.\xe2\x80\x99s Mot. For Expedited Disc., ECF\nNo. 24; Reply in Supp. of Pl.\xe2\x80\x99s Mot. For Expedited Disc. & App. A, ECF Nos. 30, 30-1.\nAdditionally, due to the COVID-19 pandemic, BOP has precluded all visitors into\nUSP Terre Haute beginning March 13, 2020, and now is only allowing visitors for\n- 36 -\n\n\x0cprisoners with execution dates. See E. Vartkessian Suppl. Decl. at 2, ECF No. 23-5.\nUSP Terre Haute has documented cases of COVID-19 and at least one COVID-related\ndeath. Any alleged concern about the victims rings hollow given Appellants\xe2\x80\x99 choice to\nrecklessly execute Mr. Purkey during a global pandemic with minimal safety\nprocedures in place, putting the victim\xe2\x80\x99s family in a position to choose between\nattending the execution (as is their right) and risking their health and safety (and\npossibly their lives). BOP still has released only cursory guidance on keeping visitors\nsafe and have refused to provide meaningful information related testing, ventilation,\nand other necessary procedures to keep visitors safe. R. Woodman Decl. \xc2\xb6\xc2\xb6 33\xe2\x80\x9338,\nECF No. 23-6.\nBy contrast, Mr. Purkey has acted diligently and expediently to protect his\nconstitutional rights. This case falls into a category of cases where filing is not ripe\nuntil execution is imminent. See Panetti, 551 U.S. at 947 (citing Stewart v. MartinezVillareal, 523 U.S. 637, 644\xe2\x80\x9345 (1998) (a competency to be executed claim is not ripe\nuntil it is time to execute the sentence)). Mr. Purkey\xe2\x80\x99s status has declined over the\nyears, including in the months and weeks leading up to his initial execution date, and\nhas declined even more since. E. Vartkessian Suppl. Decl. \xc2\xb6\xc2\xb6 5\xe2\x80\x9321, ECF No. 23-5; R.\nWoodman Decl. \xc2\xb6\xc2\xb6 14\xe2\x80\x9323, ECF No. 23-6. It is due to this decline, Mr. Purkey\xe2\x80\x99s current\nmental incompetency, and the imposition of the sentence, that the case is properly\nbefore the district court.\nEven where Appellants have a \xe2\x80\x9cstrong interest in enforcing its criminal\njudgments,\xe2\x80\x9d that interest is outweighed by the public\xe2\x80\x99s interest in a \xe2\x80\x9chumane and\n\n- 37 -\n\n\x0cconstitutional\xe2\x80\x9d application of the federal execution protocol. Nooner v. Norris, No.\n5:06CV00110 SWW, 2006 WL 8445125, at *4 (E.D. Ark. June 26, 2006). Mr. Purkey\ndoes not contest his conviction or the sentence of death. He contests only the\nunconstitutional way in which the Government proposes to execute him in his\ncurrent condition of incompetency. In any event, \xe2\x80\x9cthe fact that the government has\nnot\xe2\x80\x94until now\xe2\x80\x94sought to\xe2\x80\x9d schedule Mr. Purkey\xe2\x80\x99s execution \xe2\x80\x9cundermines any\nurgency surrounding\xe2\x80\x9d its need to carry out Mr. Purkey\xe2\x80\x99s sentence. Osorio-Martinez\nv. Attorney Gen. of the U.S., 893 F.3d 153, 179 (3d Cir. 2018). The preliminary\ninjunction will therefore \xe2\x80\x9cnot substantially injure other interested parties,\xe2\x80\x9d the\npublic, or the Government. Chaplaincy, 454 F.3d at 297.\nAnd, the COVID-19 pandemic inescapably impacts what can be considered a\nhumane and constitutional execution. Based on Mr. Purkey\xe2\x80\x99s deteriorating\ncondition, it is very likely that Mr. Purkey\xe2\x80\x99s competency has only continued to\ndecline. But Mr. Purkey\xe2\x80\x99s counsel has been unable to assess this without access to\nin-person visits with her client. R. Woodman Decl. \xc2\xb6\xc2\xb6 33\xe2\x80\x9338, ECF No. 23-6; E.\nVartkessian Suppl. Decl. \xc2\xb6\xc2\xb6 22\xe2\x80\x9325, ECF No. 23-5. Further, the lack of access to one\nof the only forms of contact with the outside world has itself likely exacerbated his\nserious mental illness and deteriorating mental capacity. E. Vartkessian Suppl.\nDecl. \xc2\xb6 25, ECF No. 23-5. Even if BOP begins to permit visits, Mr. Purkey\xe2\x80\x99s legal\ncounsel, expert witnesses, and others will need to risk their lives to save Mr.\n\n- 38 -\n\n\x0cPurkey\xe2\x80\x99s. It is not in the public interest to subject citizens to undue and unnecessary\nhealth hazards.4\nFinally, it is clearly not in the public interest to execute an incompetent\nperson. The public interest is not served by executing an individual presenting a\nprima facie case of incompetency before he has the opportunity to avail himself of the\nlegitimate procedures to challenge his competence, as required by clearly existing\nUnited States Supreme Court authority. Accordingly, the public interest is only\nserved by preliminarily enjoining Mr. Purkey\xe2\x80\x99s execution because it will allow for the\nequal application of the law in judicial processes.\nThe public interest lies in ensuring that Appellants comply with the\nConstitution and the laws Congress enacted.\n\n4 Appellate\n\nstate courts have stayed several executions in light of the COVID-19\npandemic. See ECF No. 23 at 36 n.6.\n\n- 39 -\n\n\x0cJuly 2020\n\nRespectfully submitted,\n\nTimothy P. O\xe2\x80\x99Toole\nCounsel of Record\nMiller & Chevalier Chartered\n900 Sixteenth St. NW\nWashington, DC 20006\n(202) 626-5800\\\ntotoole@milchev.com\n\n- 40 -\n\n\x0c" | 07-15-2020 | [
"b\"No. 20A-9\\n\\nIN THE\\nSupreme Court of the United States\\n___________\\nWILLIAM P. BARR, ATTORNEY GENERAL, ET AL.,\\nApplicants,\\nv.\\nWESLEY IRA PURKEY,\\n(CAPITAL CASE)\\n___________\\nResponse in Opposition to Application for a Stay or Vacatur of the\\nInjunction Issued by the United States District Court\\nfor the District of Columbia\\n___________\\n\\nTimothy P. O\\xe2\\x80\\x99Toole\\nCounsel of Record\\nMiller & Chevalier Chartered\\n900 Sixteenth St. NW\\nWashington, DC 20006\\n(202) 626-5800\\ntotoole@milchev.com\\n\\n\\x0cThe Government asks this Court to vacate the preliminary injunction entered\\nby the District Court of the District of Columbia. The injunction was entered after\\nthe District Court\\xe2\\x80\\x99s considered review of the facts underlying Petitioner\\xe2\\x80\\x99s dementia\\nand mental illness, which render him incompetent to be executed.\\nPetitioner and his counsel have been pursuing his claim of incompetence since\\nNovember of last year.",
"As the Government repeatedly emphasizes, it was only this\\nmorning, that the District Court addressed the merits of his request and\\npreliminarily enjoined his execution, having determined that he had made a\\nsubstantial threshold showing of incompetence. The Government would have this\\nCourt vacate this injunction because, in its view (1) it was addressed to the wrong\\ntribunal and reliance on the wrong cause of action and (2) Petitioner has failed to\\nmake the required threshold showing. Intervening on the Government\\xe2\\x80\\x99s behalf would\\ncut short the process contemplated by federal statute and the Constitution.\\nThere is no merit to these arguments, as the district court correctly found, and\\ncertainly no showing of merit that is sufficiently high to meet the government\\xe2\\x80\\x99s\\nburden. Indeed, the district court\\xe2\\x80\\x99s injunction relies on settled, relevant precedent\\nfrom this Court that the government effectively ignores in its application to vacate.\\nThe government claims this is a \\xe2\\x80\\x9ccore habeas\\xe2\\x80\\x9d case that challenges Mr. Purkey\\xe2\\x80\\x99s\\ndeath sentence.",
"But the controlling decision in Ford v. Wainwright, 477 U.S. 399,\\n425 (1986) says otherwise: \\xe2\\x80\\x9cthe only question raised is not whether, but when, his\\nexecution may take place.\\xe2\\x80\\x9d Ford, 477 U.S. at 425 (emphasis in original) (Powell, J.,\\nconcurring); see also Panetti v. Quarterman, 551 U.S. 930, 945 (2007) (finding that\\n\\n-1-\\n\\n\\x0cJustice Powell\\xe2\\x80\\x99s concurring opinion controls procedure for Ford claims).\\n\\nThe\\n\\ngovernment also says that Mr. Purkey\\xe2\\x80\\x99s extensive showing of incompetency does not\\nmeet the requisite threshold, but it ignores the many similarities in the record here\\nto the record in Panetti v. Quarterman, 551 U.S. 930, 949 (2007), which easily met\\nthe threshold. In short, there can be no meaningful dispute there that Mr. Purkey\\xe2\\x80\\x99s\\nshowing of incompetency exceeded the threshold needed to compel a full and fair\\nprocess for resolving his claims.\\nTo be sure, the government has some leeway on what that process can look like\\nat the outset; it could have, for example, set up a process for resolving Ford claims in\\na manner or proceeding, and Mr. Purkey would have been bound to honor those\\nprocedures to the extent they were adequate to meet the standard set forth in Panetti.\\nBut it cannot set up no procedures at all, and then complain about how Mr. Purkey\\nchose to litigate his claims, so long as he acts diligently in doing so.",
"And that is\\nindisputably what occurred here. Mr. Purkey is the first federal prisoner to raise a\\nFord claim, and, in the 35 years since Ford, the Defendants have neglected to create\\nany process at all.\\nAs part of his effort to diligently pursue protection from unlawful execution,\\nPetitioner has long sought his own medical records as well as access to medical\\nprofessionals. Despite requesting those records from Respondent for the past nine\\nmonths, Respondent has yet to disclose them, instead providing them to the lawyers\\nfor the Government. They, in turn, have declined to provide them to counsel, claiming\\nonly that the Eighth Amendment does not require as much.\\n\\n-2-\\n\\n\\x0cPetitioner has also sought access to brain imaging that would corroborate his\\nmental decline related to Alzheimer\\xe2\\x80\\x99s disease.",
"The Government only this week\\nprovided the imaging that he had been requesting for months. And Mr. Purkey\\xe2\\x80\\x99s\\ncounsel has just learned, for the first time, that the government appears to have had\\nscientific confirmation in their possession of significant structural abnormalities in\\nthe brain that are consistent with cognitive impairment such as vascular dementia\\nor other conditions. Access to this testing had been requested by Plaintiff for months,\\nand arbitrarily denied by Defendants. Defendants reversed course last week, and\\npermitted the testing at the expense of the defense team.",
"Even though the testing\\nwas paid for and requested by Plaintiff\\xe2\\x80\\x99s counsel and their experts the results were\\ninitially delivered only to the Government, last week. The government provided\\nreports based on this data late last week, but did not deliver the underlying scans to\\nMr. Purkey\\xe2\\x80\\x99s defense expert until yesterday. Although Mr. Purkey\\xe2\\x80\\x99s expert has not\\nbeen able to verify the extent of the atrophy and damage to Plaintiff's brain through\\nthe actual scans, the reports themselves make clear that significant abnormalities\\nexist.\\nIt is against this backdrop, that Defendants seek to vacate the injunction, and\\navoid the judicial review and process owed to Mr. Purkey under Ford. The issue before\\nthe Court at this time is not whether the district court\\xe2\\x80\\x99s ruling was correct\\xe2\\x80\\x94though\\nwe firmly believe that it is because it simply follows settled Supreme Court precedent.\\nRather, the question is whether, despite Defendants\\xe2\\x80\\x99 obstructionist behavior in the\\ndistrict court and attempt to rush this serious competency claim through to execution\\n\\n-3-\\n\\n\\x0cwithout meaningful review, the balance of the equities cuts so strongly in its favor\\nthat this Court should allow the Government to short-circuit a significant and\\nindisputably timely Constitutional claim altogether by vacating the preliminary\\ninjunction. The answer is clearly no.",
"As a matter of settled law, Plaintiff is entitled\\nto such process review and, without it, his execution would violate the United States\\nConstitution. Defendants-Appellants have not come close to carrying the \\xe2\\x80\\x9cheavy\\nburden\\xe2\\x80\\x9d necessary to justify a stay.\\nBackground\\nOn November 26, 2019, Mr. Purkey initiated the present action in the D.C.\\nDistrict Court, including extensive factual allegations and evidentiary support,\\nchallenging the constitutionality of his execution during his period of incompetency\\npursuant to Ford. See Complaint, ECF No. 1. Mr. Purkey\\xe2\\x80\\x99s Ford civil complaint did\\nnot challenge his conviction or sentence but, rather, his current competency to be\\nexecuted and the failure of Appellants to effectuate any process under Ford. In\\naddition, Mr. Purkey\\xe2\\x80\\x99s complaint challenged the complete lack of process in federal\\nFord determinations. See id. \\xc2\\xb6\\xc2\\xb6 118\\xe2\\x80\\x9321; Pl.\\xe2\\x80\\x99s Opp\\xe2\\x80\\x99n to MTD at 7\\xe2\\x80\\x9310, ECF No.",
"20; Pl.\\xe2\\x80\\x99s\\nReply in Supp. of Pl.\\xe2\\x80\\x99s Renewed Mot. for a Prelim. Inj. at 2, 16\\xe2\\x80\\x9317, ECF No. 29\\n(comparing the complete lack of any federal Ford procedure with the many state\\nprocedures in those states that recognize the death penalty). Mr. Purkey first brought\\nhis Ford complaint after the issuance of a warrant scheduling his execution because\\na competency to be executed claim is not ripe until the execution is imminent. See\\n\\n-4-\\n\\n\\x0cPanetti v. Quarterman, 551 U.S. 937, 947 (2007) (citing Stewart v. Martinez-Villareal,\\n523 U.S. 637, 644\\xe2\\x80\\x9345 (1998)).\\nMr. Purkey is also a plaintiff in a related case in the D.C. District Court that\\nchallenged the constitutionality of the Government\\xe2\\x80\\x99s proposed lethal injection\\nprotocol.",
"See In re Fed. Bureau of Prisons\\xe2\\x80\\x99 Execution Protocol Cases, No. 1:19-mc00145-TSC (D.D.C. Aug. 20. 2019) (the \\xe2\\x80\\x9cProtocol case\\xe2\\x80\\x9d). On November 20, 2019, the\\nD.C. District Court entered a preliminary injunction in the Protocol case, preventing\\nMr. Purkey\\xe2\\x80\\x99s December 13, 2019 execution date. However, on December 4, 2019, Mr.\\nPurkey filed a parallel protective Motion for a Preliminary Injunction (ECF No. 7) in\\nhis Ford case out of an abundance of caution to ensure he would not be executed while\\nincompetent if the Protocol Case injunction was lifted. On December 17, 2020, after\\nthe initial execution warrant had expired, and after Appellants had filed an\\nopposition to Mr. Purkey\\xe2\\x80\\x99s Preliminary Injunction Motion (ECF No.10), Mr. Purkey\\nfiled a Motion to Withdraw the protective Motion for Preliminary Injunction, agreeing\\nwith the Government that since his execution was no longer imminent, the\\npreliminary injunction motion was no longer ripe.",
"See Mot. to Withdraw, ECF No. 11.\\nOn December 31, 2019, the D.C. District Court granted the motion to withdraw and\\nsua sponte ordered Mr. Purkey to respond to jurisdictional arguments raised in the\\nGovernment\\xe2\\x80\\x99s Opposition to Mr. Purkey\\xe2\\x80\\x99s preliminary injunction motion, including\\nargument relating to the court\\xe2\\x80\\x99s jurisdiction over a civil rights Ford claim brought\\noutside habeas. The parties completed briefing on January 28, 2020. ECF Nos. 14\\xe2\\x80\\x93\\n17. Defendants-Appellants then filed a Motion to Dismiss or, in the alternative, to\\n\\n-5-\\n\\n\\x0cTransfer to the Southern District of Indiana, where Mr. Purkey is incarcerated.\\nDefendants-Appellants\\xe2\\x80\\x99 motion to dismiss or transfer was fully briefed. ECF Nos. 18\\xe2\\x80\\x93\\n21.",
"Throughout this period and before, Plaintiffs diligently sought Mr. Purkey\\xe2\\x80\\x99s\\nmedical and other records from the Appellants to assist his expert in preparing\\nreports about Mr. Purkey\\xe2\\x80\\x99s competency. App. A, ECF No. 30-1. The Government\\nrefused throughout this period to provide any information, largely ignoring Mr.\\nPurkey\\xe2\\x80\\x99s requests.\\nOn April 7, 2020, the preliminary injunction issued in the Protocol Case was\\nvacated by the D.C. Circuit. See Judgment, FBOP Execution Protocol Cases, No. 195322 (D.C. Cir. Apr. 7, 2020). On June 15, 2020, the next business day after the\\nissuance of the mandate in connection with that D.C.",
"Circuit litigation, Attorney\\nGeneral Barr issued another warrant for Mr. Purkey\\xe2\\x80\\x99s execution with only 30 days\\xe2\\x80\\x99\\nnotice, setting his execution date for July 15, 2020. This was done despite Mr.\\nPurkey\\xe2\\x80\\x99s unresolved and substantiated Ford claim, a lack of promulgated federal\\nFord procedures in any form (draft or otherwise), a global pandemic that caused USP\\nTerre Haute, where Mr. Purkey is located, to prohibit visitations, and documented\\nCOVID-19 cases in the prison, including at least one COVID-19-related death. At the\\ntime the new warrant was issued, neither the Attorney General nor the BOP had\\npromulgated any procedures to ensure critical visitors could consult with Mr. Purkey\\nsafely without unnecessary risk of exposure to the deadly virus known to be present\\ninside the prison. R. Woodman Decl. \\xc2\\xb6\\xc2\\xb6 37\\xe2\\x80\\x9338, ECF No. 23-6.\\n\\n-6-\\n\\n\\x0cDue to the imminence of the newly issued execution warrant and Appellants\\xe2\\x80\\x99\\ncontinued delay and refusal to provide Mr. Purkey relevant materials related to his\\nFord claim, as described further herein, on June 22, 2020, Mr. Purkey moved the D.C.\\nDistrict Court for a renewed preliminary injunction of the scheduled execution in\\norder to ensure he receives (a) a fair hearing on the issue of his competency to be\\nexecuted; (b) a determination of his competency vel non to be executed; and (c) the\\ncompletion of expedited discovery in advance of a Ford hearing, to which he is entitled\\nbased on his substantial threshold showing of incompetency. Pl.\\xe2\\x80\\x99s Renewed Mot.",
"for\\na Prelim. Inj. Barring Execution of Wesley Purkey Pending Final Disposition on the\\nMerits 1\\xe2\\x80\\x932, ECF No. 23. On June 23, 2020, Mr. Purkey also filed a motion for\\nexpedited discovery in that matter, seeking information relevant to his Ford claim\\nthat is in the sole possession and control of Appellants and which he has long been\\ndenied. Pl.\\xe2\\x80\\x99s Mot. for Expedited Disc., ECF No. 24.\\nOn July 14, 2020, in an abundance of caution Mr. Purkey filed a Motion to\\nPreserve Jurisdiction and Stay Execution (\\xe2\\x80\\x9cMotion to Preserve\\xe2\\x80\\x9d) in an action in the\\nSouthern District of Indiana. Wesley Ira Purkey v. William P. Barr, et al., No. 2:19cv-00517-JMS-DLP (S.D. Ind.) (\\xe2\\x80\\x9cBivens Action\\xe2\\x80\\x9d). That court was currently\\nconsidering a motion to hold those proceedings in abeyance pending resolution of\\nclaims related to Mr. Purkey\\xe2\\x80\\x99s competency, and Mr. Purkey sought to have that court\\nenter an order to preserve its jurisdiction to consider the underlying competency\\nissue, should this matter be transferred to Indiana at the last minute. The\\ngovernment seeks to characterize that as some form of \\xe2\\x80\\x9cforum shopping\\xe2\\x80\\x9d but it was\\n\\n-7-\\n\\n\\x0creally another action of diligence and prudence. Although Mr. Purkey was confident\\nthat the district court had jurisdiction in D.C. over his civil rights action (as the\\ndistrict court ultimately determined that it did), Mr. Purkey noted in his motion to\\npreserve his intent to file a protective petition for habeas corpus relief under 28 U.S.C.\\n\\xc2\\xa7 2241. The need for this sort of protective filing became apparent when, in connection\\nwith the execution of Mr. Lee on July 13, 2020, the proceedings culminated with the\\nApplicants\\xe2\\x80\\x99 issuance of a new warrant for Mr. Lee\\xe2\\x80\\x99s execution bearing the same date,\\ndespite the serious due process issues raised by the implementation of an execution\\nwarrant with no notice whatsoever. Given that lack of any process and protocols for\\naddressing these issues, and specifically execution of the mentally incompetent, and\\nthe demonstrated rush to execution without full and fair consideration of his claims,\\nMr.",
"Purkey became concerned that the government might take advantage of a last\\nminute transfer to carry out his execution before he could move for a stay. Because\\nhis claims are meritorious and deserving of judicial review and adjudication on the\\nmerits, and only just became ripe, that motion was filed solely to protect his interest\\nto have some court hear his Ford claim on the merits before Mr. Purkey was put to\\ndeath. While the Indiana court denied the motion almost immediately, it expressed\\nsympathy with Plaintiff\\xe2\\x80\\x99s counsel\\xe2\\x80\\x99s \\xe2\\x80\\x9cdesire to avoid the frantic pace of recent related\\nlitigation.\\xe2\\x80\\x9d ECF No. 83. Nonetheless, that court concluded that if \\xe2\\x80\\x9cif [Plaintiff] is\\ndirected to bring a Ford claim in a \\xc2\\xa7 2241 petition in [the Indiana district court],\\xe2\\x80\\x9d\\nthen he must file such a claim in a \\xc2\\xa7 2241 petition in that court, not as part of the\\nBivens Action. Id.\\n\\n-8-\\n\\n\\x0cThis morning, at 5:09 a.m., the D.C. District Court issued its ruling, enjoining\\nMr. Purkey\\xe2\\x80\\x99s execution, scheduled for today. The district court correctly held that\\nPlaintiffs are likely to prevail on their claims. The court found that, because Mr.\\nPurkey\\xe2\\x80\\x99s claim is of constitutional dimension and falls outside the core of habeas,\\njurisdiction is appropriate under 28 U.S.C.",
"\\xc2\\xa7 1331. Order at 9, ECF No. 36. Even if\\nthe claims were core habeas, the court found that it would still have jurisdiction\\nbecause \\xe2\\x80\\x9cthe question of personal jurisdiction or venue\\xe2\\x80\\x9d was not raised by the\\nGovernment in their motion to dismiss and was therefore waived. Id. The court also\\ncorrectly found that \\xe2\\x80\\x9cPlaintiff has made the substantial threshold showing required\\nby Ford, and in doing so, has demonstrated a likelihood of success on his claim for a\\ncompetency hearing.\\xe2\\x80\\x9d Id. at 11.\\nTHE RECORD IN FRONT OF THE DISTRICT COURT\\nThe district court issued its ruling based on extensive evidence proffered by\\nMr. Purkey detailing his incompetence, his diligence, and the government dilatory\\ntactics.\\nI.\\n\\nMR. PURKEY\\xe2\\x80\\x99S INCOMPETENCY\\nMr. Wesley Purkey is a 68-year-old man suffering from progressive dementia,\\n\\nschizophrenia, complex-Post Traumatic Stress Disorder (\\xe2\\x80\\x9cPTSD\\xe2\\x80\\x9d), and severe mental\\nillness including significant delusions and paranoia, rendering him unable to\\ncomprehend the reason for his execution and thus entitled to process on the issue of\\nhis competency to be executed under Ford v. Wainwright, 477 U.S. 399 (1986).\\nAlthough no such process has yet been afforded, and despite Appellants\\xe2\\x80\\x99 repeated\\nroadblocks to gaining additional relevant information in pursuit of Mr. Purkey\\xe2\\x80\\x99s Ford\\n-9-\\n\\n\\x0cclaim, the evidence of his incompetency is already extensive. Mr. Purkey\\xe2\\x80\\x99s cognitive\\ndeterioration, memory loss, paranoia, confusion, and delusion are well established in\\nthe record through declarations and reports from counsel, defense team members, and\\nmedical experts, as well as through medical testing and relevant documents.\\nFirst, Mr. Purkey\\xe2\\x80\\x99s defense lawyers, investigators, and medical experts who\\nhave evaluated him over decades have described his paranoia and delusions in detail.\\nSee, e.g., Complaint, Exhibit 1 at 10, ECF No.",
"1-1 (explaining Mr. Purkey\\xe2\\x80\\x99s\\nlongstanding belief that the prison and guards are poisoning him in retaliation for his\\nlegal work); Complaint, Exhibit 13 at 561, ECF No. 1-8 (May 15, 1981, psychiatric\\nevaluation reporting auditory hallucinations as Mr. Purkey held two conversations at\\nthe same time, \\xe2\\x80\\x9cwhisper[ing] in an entirely different conversation from what he was\\ntalking aloud.\\xe2\\x80\\x9d); Id. at 345, ECF No. 1-6 (May 1998 emergency room record noting Mr.\\nPurkey was admitted because he \\xe2\\x80\\x9cstarted to act paranoid,\\xe2\\x80\\x9d stating that \\xe2\\x80\\x9cthey\\xe2\\x80\\x9d were\\nwatching him at all times and sprayed him with \\xe2\\x80\\x9cpoisonous mist several times\\xe2\\x80\\x9d while\\nhe was sleeping\\xe2\\x80\\x9d); Complaint, Exhibit 5 at 40, ECF No. 1-1 at 40 (\\xe2\\x80\\x9cEarly in my\\ninvolvement [as Wes\\xe2\\x80\\x99s mitigation specialist], Wes began exhibiting delusional\\nthinking\\xe2\\x80\\x9d); Complaint, Exhibit 7 at 74, ECF No. 1-1 (\\xe2\\x80\\x9cWes was constantly paranoid\\nthat various prison officials were trying to harm him in retaliation for his \\xe2\\x80\\x98jailhouse\\nlawyering,\\xe2\\x80\\x99\\xe2\\x80\\x9d and his \\xe2\\x80\\x9cparanoia also increased over time.\\xe2\\x80\\x9d); E. Vartkessian Decl., ECF\\nNo. 23-5; R. Woodman Decl., ECF No. 23-6.\\nSecond, testing has confirmed Mr. Purkey\\xe2\\x80\\x99s cognitive decline. In 2003,\\nneuropsychological testing of Mr. Purkey revealed moderate microsomia on the Smell\\n\\n- 10 -\\n\\n\\x0cIdentification Test (SIT)\\xe2\\x80\\x94an early marker of dementia, including Alzheimer\\xe2\\x80\\x99s\\nDisease. Complaint, Exhibit 3 at 12, ECF No. 1-1.",
"Additionally, a brain scan from\\n2003 \\xe2\\x80\\x9cindicated abnormalities in the area of the brain involved in memory and\\ntypically implicated in Alzheimer\\xe2\\x80\\x99s disease.\\xe2\\x80\\x9d Id. at 20. Thirteen years later, in 2016,\\nneuropsychological testing revealed that Mr. Purkey was suffering from frontal lobe\\ndeficits and progressive dementia consistent with Alzheimer\\xe2\\x80\\x99s disease. Complaint,\\nExhibit 9 at 88, ECF No. 1-1. The testing revealed that Mr. Purkey had experienced\\nsignificant declines in both memory and executive functioning since the previous\\ntesting in 2003. Id. A follow-up report in 2018 revealed that Mr. Purkey\\xe2\\x80\\x99s condition\\nhad continued to deteriorate since 2016, and the report recommended a further\\nneurology work-up, including brain imaging, and a reassessment of his neurological\\nstatus. Complaint, Exhibit 15 at 120, ECF No. 1-18.\\nAdditional testing administered in August 2019 by Dr. DeRight, a\\nneuropsychologist, led him to diagnose Mr. Purkey with Alzheimer\\xe2\\x80\\x99s disease, a\\nprogressive neurodegenerative disease that impacts memory, intellectual function,\\nand behavior.",
"Complaint, Exhibit 3 at 28CF No. 1-1; Complaint, Exhibit 6 at 89, ECF\\nNo. 1-1 (testing, medical and family history \\xe2\\x80\\x9cstrongly suggest\\xe2\\x80\\x9d in 2016 that \\xe2\\x80\\x9cMr.\\nomplaint, Exhibit 12 at 120, ECF No. 1-2 (describing the reports of cognitive, physical\\nand psychiatric decline and finding that this \\xe2\\x80\\x9creported pattern of change is very much\\nconsistent with progression of a cortical dementia\\xe2\\x80\\x9d); Encyclopedia of Psychology at 71\\n(4th ed., vol. 1 2010) (describing Alzheimer\\xe2\\x80\\x99s Disease). Dr. DeRight worsening\\ncognitive symptoms, including paraphasic word efforts, word loss, impaired recall of\\n\\n- 11 -\\n\\n\\x0cinformation he knew before, and incontinence, was also highly consistent with the\\nprogression of Alzheimer\\xe2\\x80\\x99s disease.",
"See Complaint, Exhibit 3 at 27, ECF No. 1-1;\\nEncyclopedia of Psychology at 71 (4th ed., vol. 1 2010) (describing Alzheimer\\xe2\\x80\\x99s\\nDisease). Dr. DeRight opined that collateral information about Mr. Purkey\\xe2\\x80\\x99s\\nworsening cognitive symptoms, including paraphasic word efforts, word loss,\\nimpaired recall of information he knew before, and incontinence, was also highly\\nconsistent with the progression of Alzheimer\\xe2\\x80\\x99s disease. See Complaint, Exhibit 3 at\\n27.\\nThird, expert review of relevant records supports the conclusion that Mr.\\nPurkey is suffering from cognitive impairment due to a dementing disorder. Dr.\\nThomas Hyde, a neurologist, similarly concluded that there is \\xe2\\x80\\x9csubstantive evidence\\nof Mr. Purkey\\xe2\\x80\\x99s neurological deterioration over time affecting memory and cognitive\\nfunction that is compatible with the diagnosis of a dementing disorder,\\xe2\\x80\\x9d based on a\\nclose review of Mr. Purkey\\xe2\\x80\\x99s available records, including medical records, family birth\\nand death records, and expert reports. Dr. Hyde Decl.",
"\\xc2\\xb6 13, ECF No. 23-4. While\\nunable to make a definitive diagnosis without the benefit of an in-person visit\\xe2\\x80\\x94\\nrendered impossible due to the COVID-19 pandemic\\xe2\\x80\\x94or a review of recent medical\\nrecords or current diagnostic testing\\xe2\\x80\\x94rendered impossible by Appellants\\xe2\\x80\\x99 failure to\\nprovide requested materials\\xe2\\x80\\x94Dr. Hyde nevertheless concluded that Mr. Purkey\\xe2\\x80\\x99s\\n\\xe2\\x80\\x9cintellectual deficits, paranoia, and delusional beliefs, and the course of his\\nprogressive deterioration are consistent with the diagnosis of dementia.\\xe2\\x80\\x9d Id. at 81.\\n\\n- 12 -\\n\\n\\x0cFourth, Mr. Purkey\\xe2\\x80\\x99s confusion and memory loss has been witnessed over time\\nby those most familiar with him. Mr. Purkey\\xe2\\x80\\x99s mitigation specialist, Dr. Elizabeth\\nVartkessian, PhD, who has had close contact with Mr. Purkey for the last five years,\\nhas witnessed Mr. Purkey\\xe2\\x80\\x99s recent, continual, and rapidly declining cognitive abilities\\nboth in-person before the USP Terre Haute lockdown and even by telephone since the\\nlockdown began, despite the severe limitations of telephonic consultations. See\\ngenerally Vartkessian Decl., ECF No. 23-5.",
"In Dr. Vartkessian\\xe2\\x80\\x99s most recent visits\\nwith Mr. Purkey, the last of which was early March 2020, he struggled to remember\\nwords for simple items and could not recall names of individuals he knew well. Id. at\\n2-4.\\nFifth, the evidence indicates that Mr. Purkey\\xe2\\x80\\x99s cognitive decline and paranoia\\nrender him incapable of understanding the reason for his execution. Dr. Bhushan\\nAgharkar, a neuropsychiatrist, observed that while Mr. Purkey could recite the\\nGovernment\\xe2\\x80\\x99s position that his execution is for the murder of Jennifer Long, this was\\nmerely \\xe2\\x80\\x9cparroting,\\xe2\\x80\\x9d meaning he can repeat what others say but cannot rationally\\nunderstand what it means.",
"Mr. Purkey holds \\xe2\\x80\\x9ca fixed belief that he is going to be\\nexecuted in retaliation for his legal work, to prevent him from being a hassle for the\\ngovernment.\\xe2\\x80\\x9d Id. This is not a standalone belief but rather serves as a foundation for\\nan entire delusional system involving conspiracies of retaliation. Mr. Purkey holds an\\nhonest and deeply entrenched belief that the federal Government plans to execute him\\nnot as punishment for the murder of Jennifer Long, but because of his \\xe2\\x80\\x9cprotracted\\njailhouse lawyering.\\xe2\\x80\\x9d Complaint, Exhibit 15 at 994 (D.D.C. Nov. 26, 2019), ECF No.\\n\\n- 13 -\\n\\n\\x0c1-18. In Mr. Purkey\\xe2\\x80\\x99s mind, the voluminous grievances and lawsuits he has filed\\nthroughout his incarceration \\xe2\\x80\\x9chave had a monumental impact in preventing\\ncorrectional officers from depriving prisoners of their constitutional rights.\\xe2\\x80\\x9d\\nComplaint, Exhibit 5 at 41 (D.D.C. Nov. 26, 2019), ECF No. 1-1.",
"Mr. Purkey\\xe2\\x80\\x99s ongoing\\nparanoia and inability to connect cause and effect is demonstrated through his strong\\nbelief that Attorney General Barr and the BOP are plotting to kill him in retaliation\\nfor his litigation and to prevent him from future filings. See, e.g., Complaint, Exhibit\\n1 at 12, ECF No. 1-1 (finding that Mr. Purkey insists the Government is \\xe2\\x80\\x9ceager[] to be\\nrid of him and his successful litigation\\xe2\\x80\\x9d). Moreover, Mr. Purkey perceives his own\\ncounsel \\xe2\\x80\\x9cas part of the conspiracy against him and his efforts to litigate against the\\nprison\\xe2\\x80\\x9d\\xe2\\x80\\x94a belief that prevents him from cooperating with them on matters related to\\nhis execution. Complaint, Exhibit 5 at 54, ECF No. 1-1. Dr. Agharkar concluded to a\\nreasonable degree of medical certainty that Mr. Purkey \\xe2\\x80\\x9clacked a rational\\nunderstanding of the basis for his execution.\\xe2\\x80\\x9d Complaint, Exhibit 1 at 12, 13, ECF No.\\n1-1 (\\xe2\\x80\\x9cThe lack of rationality from Mr. Purkey\\xe2\\x80\\x99s delusional thoughts and paranoia are\\ncompounded by the deterioration of his brain from his dementia.\\xe2\\x80\\x9d).\\nII.\\n\\nTHE GOVERNMENT\\xe2\\x80\\x99S CONTINUED REFUSAL TO PROVIDE MR.\\nPURKEY INFORMATION RELEVANT TO HIS COMPETENCY\\nNotably, the extensive evidence of Mr. Purkey\\xe2\\x80\\x99s incompetency presented to\\n\\ndate does not yet include current records and other evidence that is directly relevant\\nto his Ford claim, for the simple reason that Appellants have refused to provide any\\nof this evidence in the nine months since the filing of his complaint, despite\\nnumerous requests.",
"See R. Woodman Decl. at 3, ECF No. 23-6. Records in\\n- 14 -\\n\\n\\x0cAppellants\\xe2\\x80\\x99 sole possession include Mr. Purkey\\xe2\\x80\\x99s updated BOP medical and mental\\nhealth records, disciplinary records, and administrative records. Id. Access to Mr.\\nPurkey himself is necessary for medical experts to conduct in-person assessments\\nof his declining mental competency as well as the ability to conduct neurological\\ntesting. Complaint, Exhibit 1, ECF No. 1-1 (Dr. Agharkar Report); Dr. DeRight June\\n14, 2020 Letter, ECF No. 23-2; Dr. Hyde Decl., ECF No. 23-4.",
"Appellants have\\nrepeatedly refused to provide any of this information. R. Woodman Decl. at 3, ECF\\nNo. 23-6; App. A, ECF No. 30-1.\\nSince August 2019, counsel for Mr. Purkey has made repeated efforts to\\nobtain this information to further evaluate Mr. Purkey\\xe2\\x80\\x99s competency. See R.\\nWoodman Decl., ECF No. 23-6; see also App. A, ECF No. 30-1; R. Woodman Suppl.\\nDecl. \\xc2\\xb6 28. Appellants have ignored or stonewalled these efforts, refusing to provide\\nthe requested information, moving the goalposts on access to expert testing, and\\nwithholding highly probative contemporaneous information about Mr. Purkey\\xe2\\x80\\x99s\\nmental and physical health. As of today, the day of Mr. Purkey\\xe2\\x80\\x99s execution, counsel\\nhad\\n\\nstill\\n\\nnot\\n\\nreceived\\n\\nrequested\\n\\ninformation\\n\\nas\\n\\nnarrowly-tailored\\n\\nand\\n\\nstraightforward as his most recent medical records. See R. Woodman Suppl. Decl.\\n\\xc2\\xb6\\xc2\\xb6 5\\xe2\\x80\\x937.\\nMr. Purkey\\xe2\\x80\\x99s updated BOP medical, administrative, and mental health\\nrecords, the surveillance video from Mr. Purkey\\xe2\\x80\\x99s cell, and the BOP death watch\\nprotocol are all relevant to Mr. Purkey\\xe2\\x80\\x99s current mental state and functioning. See\\nApp. A, ECF No. 30-1.",
"The BOP first told Mr. Purkey\\xe2\\x80\\x99s counsel that the information\\n\\n- 15 -\\n\\n\\x0ccould only be obtained indirectly, such as through the Freedom of Information Act\\n(\\xe2\\x80\\x9cFOIA\\xe2\\x80\\x9d) process (even though the request was for Mr. Purkey\\xe2\\x80\\x99s own records and\\nmade by Mr. Purkey\\xe2\\x80\\x99s attorney of record). , ECF No. 23-6. On October 9, 2019, Mr.\\nPurkey\\xe2\\x80\\x99s counsel submitted expedited FOIA requests for the information to the BOP\\nwhen his execution was scheduled for December 13, 2019. R. Woodman Decl., ECF\\nNo. 23-6; Complaint, Exhibit 17. Counsel had also unsuccessfully requested the cell\\nvideo footage on September 17, 2019. R. Woodman Decl., ECF No. 23-6. Expedited\\nFOIA processing was granted but the BOP indicated that processing may\\nnonetheless take up to six months. Complaint, Exhibit 16 at 1454\\xe2\\x80\\x9355pending\\nexecution date only two months away.",
"R. Woodman Decl., ECF No. 23-6. BOP Legal\\nCounsel responded on October 16, 2019 that she would follow up to see about a more\\nexpedited time frame. Id. \\xc2\\xb6 13. Purkey\\xe2\\x80\\x99s pending execution date only two months\\naway. R. Woodman Decl., ECF No. 23-6. BOP Legal Counsel responded on October\\n16, 2019 that she would follow up to see about a more expedited time frame. Id. at\\n155 \\xc2\\xb6 13. . BOP Legal Counsel responded on October 16, 2019 that she would follow\\nup to see about a more expedited time frame. Id. at 155 \\xc2\\xb6 13. Id. at 155 \\xc2\\xb6 13.\\nThe records went unproduced, and counsel for Mr. Purkey again asked for\\nthem on November 11, 2019. Id.",
"at 155, 206\\xe2\\x80\\x9307 (R. Woodman Decl.). This time,\\ncounsel asked that BOP provide the records within ten days, given Mr. Purkey\\xe2\\x80\\x99s\\nthen-pending execution date. Id. BOP Legal Counsel acknowledged that \\xe2\\x80\\x9ceveryone\\ninvolved is cognizant that time is of the essence,\\xe2\\x80\\x9d and agreed to forward the\\ncommunication to FOIA personnel. Id. Again, no records were produced. Id.\\n\\n- 16 -\\n\\n\\x0cEven after Mr. Purkey\\xe2\\x80\\x99s initial execution warrant expired, Mr. Purkey\\xe2\\x80\\x99s\\ncounsel continued to pursue these critical records and the BOP continued to refuse\\nto provide them. On February 3, 2020, Mr. Purkey\\xe2\\x80\\x99s counsel submitted updated and\\nrenewed FOIA requests seeking: (1) BOP policies and procedures pertaining to BOP\\nsurveillance of Mr. Purkey as well as copies of video surveillance tapes of his cell,\\nand (2) Mr. Purkey\\xe2\\x80\\x99s medical, mental health, and administrative BOP file (including\\ndisciplinary records). See id. at 161, 301\\xe2\\x80\\x9312 (R. Woodman Decl.).",
"A supervisory\\nattorney at the BOP acknowledged receipt of the requests and confirmed they would\\nbe forwarded to the FOIA processor who would reach out if they needed any more\\ninformation to fulfill them. See id. at 161, 323\\xe2\\x80\\x9325 (R. Woodman Decl.). Mr. Purkey\\xe2\\x80\\x99s\\ncounsel received no requests for further information to facilitate the FOIA request,\\nand, again no records were produced. R. Woodman Suppl. Decl. \\xc2\\xb6 7.\\nRemarkably, Appellants thereafter disputed that Mr. Purkey renewed his\\nFOIA requests at all, and then represented that the BOP did not have any record of\\nthe updated or renewed FOIA request. See R. Woodman Decl., ECF No.",
"23-6 Mr.\\nPurkey\\xe2\\x80\\x99s counsel again pressed the complete failure to provide Mr. Purkey\\xe2\\x80\\x99s records\\nor grant access for testing in filings in the Ford matter. Purkey\\xe2\\x80\\x99s Opp\\xe2\\x80\\x99n to MTD\\n(D.D.C. Mar. 16, 2020), ECF No. 20.1 On June 15, 2020, shortly before receiving\\n\\n1 Counsel specifically argued that Defendants should grant access to the necessary\\nmaterials (even while an injunction was in place in the Protocols case) because waiting for a\\nshort warrant period would impose an \\xe2\\x80\\x9c\\xe2\\x80\\x98unrealistic time-frame\\xe2\\x80\\x99 to allow counsel to obtain\\nthe information it needs to prepare for a competency hearing, this court to conduct it, and\\nan appellate court to review it.\\xe2\\x80\\x9d Memorandum in Support of Plaintiff\\xe2\\x80\\x99s Opposition to\\nDefendants Motion to Dismiss, ECF No. 20.\\n\\n- 17 -\\n\\n\\x0cnotice of the new execution warrant, and on June 25, 2020, Mr. Purkey\\xe2\\x80\\x99s counsel\\nagain followed up with BOP Legal Counsel about the 2020 FOIA requests. See R.\\nWoodman Decl. \\xc2\\xb6 32, ECF No. 23-6; R. Woodman Suppl.",
"Decl., ECF No. 30-2. On\\nJune 26, 2020, BOP Legal Counsel claimed that she was \\xe2\\x80\\x9cunaware of any\\noutstanding requests for medical and psychological records\\xe2\\x80\\x9d and that \\xe2\\x80\\x9cthe two\\nquickest ways\\xe2\\x80\\x9d to obtain \\xe2\\x80\\x9cmedical and psych\\xe2\\x80\\x9d files were to ask Mr. Purkey to request\\nthem or \\xe2\\x80\\x9cthrough the discovery process.\\xe2\\x80\\x9d R. Woodman Suppl. Decl., ECF No. 30-2.\\nOn June 23, 2020, Mr. Purkey filed a motion for expedited discovery of the\\nmaterials he had long sought in relation to his Ford claim. In response, on June 29,\\n2020, Appellants in the Ford matter continued to refuse to provide the relevant\\nrecords and failed to address why, after eight months, Mr. Purkey had not received\\nthe materials through the \\xe2\\x80\\x9cexpedited\\xe2\\x80\\x9d FOIA process. See Defendants\\xe2\\x80\\x99 Opp.",
"to\\nPlaintiff\\xe2\\x80\\x99s Mot. for Expedited Discovery, ECF No. 27; see also Defendants\\xe2\\x80\\x99\\nOpposition to Plaintiff\\xe2\\x80\\x99s Motion for Renewed Preliminary Inj., ECF No. 26.\\nOn July 4, 2020, a federal holiday, BOP Legal Counsel inexplicably purported\\nto change position, stating that \\xe2\\x80\\x9cI have provided Mr. Purkey\\xe2\\x80\\x99s entire medical and\\npsychological files to the AUSAs [Assistant United States Attorneys] involved in his\\ncase (copied here). They have agreed to produce the same to you under the rules for\\ndiscovery.\\xe2\\x80\\x9d R. Woodman Suppl. Decl. \\xc2\\xb6\\xc2\\xb6 5,7. But the referenced records do not\\ninclude all requested information, such as video records and administrative file and\\ndisciplinary records. R. Woodman Suppl. Decl. \\xc2\\xb6 7. And, on the day of Mr. Purkey\\xe2\\x80\\x99s\\n\\n- 18 -\\n\\n\\x0cscheduled execution, these records, allegedly sitting in the hands of defense counsel\\nin the Ford matter, still had not been produced. See id.\\nThe reports from Drs.",
"DeRight and Agharkar and declaration from Dr. Hyde\\nillustrate that important questions of fact regarding Mr. Purkey\\xe2\\x80\\x99s competency\\ncannot be fully assessed without the withheld medical and BOP records. For\\nexample, Mr. Purkey\\xe2\\x80\\x99s legal team reports that Mr. Purkey appears to be incontinent.\\nComplaint, Exhibit 3 at 25, ECF No. 1-1. This is an important marker of Alzheimer\\xe2\\x80\\x99s\\nDisease. Id. at 28. The medical records may shed light on when Mr. Purkey\\xe2\\x80\\x99s\\nincontinence began and the extent of his loss of this biological function. Dr.\\nAgharkar noted that Mr. Purkey has less movement on the right side of his face, as\\nif he had suffered a stroke.",
"Complaint, Exhibit 1 at 11, ECF No. 1-1. Without the\\nmedical records, counsel lacks information about whether Mr. Purkey has had a\\nstroke that could indicate further cause for his cognitive decline. These questions\\nare merely illustrative, not exhaustive, of the information withheld. The need for\\nthe withheld medical records is especially pressing because neither Mr. Purkey\\xe2\\x80\\x99s\\ncounsel nor his expert witnesses have been able to visit Mr. Purkey in-person since\\nMarch 2020. Continuous observation is imperative to identify the declining\\nfunctions and cognitive awareness that are hallmarks of persons with dementia.\\nThis is one reason the surveillance footage from Mr. Purkey\\xe2\\x80\\x99s cell is so critical in\\naddition to his medical and administrative records. Range video surveillance, which\\nshows Mr. Purkey in his typical prison setting, will provide for observation of Mr.\\n\\n- 19 -\\n\\n\\x0cPurkey\\xe2\\x80\\x99s condition in a way that the somewhat artificial setting of a visitation\\ncannot.\\nAppellants have also prevented Mr. Purkey\\xe2\\x80\\x99s access to highly probative\\ntesting ordered by his experts. On September 26, 2019, Dr. Agharkar ordered brain\\nimage testing based on Mr. Purkey\\xe2\\x80\\x99s history of cognitive deficits and the need to rule\\nout an intracranial process.",
"See ECF No. 23-6. On June 15, 2020, Mr. Purkey\\xe2\\x80\\x99s\\ncounsel requested that Dr. DeRight be allowed to visit and evaluate Mr. Purkey in\\nperson. Dr. DeRight had last conducted an in-person examination of Mr. Purkey in\\nAugust of 2019. See ECF No. 23-2. Standard best medical practices require repeated\\nneuropsychological examinations, including up-to-date neuroimaging and blood\\nlaboratory tests, to assess Mr. Purkey\\xe2\\x80\\x99s current abilities and the progression of his\\ndementia. Id. Dr. Hyde also made clear that additional examination and testing is\\nnecessary but has been unable to safely examine Mr. Purkey in person due to the\\nprison closure and the pandemic. See id. at 74 \\xc2\\xb6 8 (stating that \\xe2\\x80\\x9ca complete\\nneurological assessment includes a face-to-face interview and physical neurological\\nexamination of Mr. Purkey, and follow-up with relevant diagnostic testing,\\xe2\\x80\\x9d to\\ninclude an MRI, EEG, a variety of blood tests, spinal tap, and PET scans). For\\nmonths, the BOP refused to permit such testing, claiming a lack of ability or\\nauthority to allow it, and stating, among other things, that the testing required a\\ncourt order\\nPetitioner has also sought access to brain imaging that would corroborate his\\nmental decline related to Alzheimer\\xe2\\x80\\x99s disease.",
"The Government only this week\\n\\n- 20 -\\n\\n\\x0cprovided the imaging that he had been requesting for months. And Mr. Purkey\\xe2\\x80\\x99s\\ncounsel has just learned, for the first time, that the government appears to have had\\nscientific confirmation in their possession of significant structural abnormalities in\\nthe brain that are consistent with cognitive impairment such as vascular dementia\\nor other conditions. Access to this testing had been requested by Plaintiff for months,\\nand arbitrarily denied by Appellants. Appellants reversed course last week, and\\npermitted the testing at the expense of the defense team.",
"Even though the testing\\nwas paid for and requested by Plaintiff\\xe2\\x80\\x99s counsel and their experts the results were\\ninitially delivered only to the Government, last week. The government provided\\nreports based on this data late last week, but did not deliver the underlying scans\\nto Mr. Purkey\\xe2\\x80\\x99s defense expert until yesterday. Although Petioner\\xe2\\x80\\x99s expert has not\\nbeen able to verify the extent of the atrophy and damage to Plaintiff's brain through\\nthe actual scans, the reports themselves make clear that significant abnormalities\\nexists.\\nAppellants\\xe2\\x80\\x99 months-long failure to provide relevant information has been\\nexacerbated by the COVID-19 pandemic. Cases continue to rise in states across the\\ncountry, including in the Midwest.",
"Id. at 53 \\xc2\\xb6 8 (J. Goldenson Decl.). Prisons and\\nother detention facilities pose heightened risks for COVID-19 exposure and\\ntransmission. Id. at 56 \\xc2\\xb6 17. The lack of adequate ventilation, inability of all\\nprisoners and staff to practice social distancing, inadequate hand washing, and\\ninsufficient cleaning practices all contribute to the increased risk for the rapid spread\\nof COVD-19 in prisons. Id. at 56\\xe2\\x80\\x9359. In recognition of the threat of COVID-19, the\\n\\n- 21 -\\n\\n\\x0cBOP suspended all social and legal visits across the country.2 All visitation at USP\\nTerre Haute has been suspended since March 13, 2020.",
"At the time of this filing, the\\nBOP website still states that no visitors are allowed at USP Terre Haute and that\\nall social and legal visits for all BOP facilities remain suspended. Id. at 61 \\xc2\\xb6 39. USP\\nTerre Haute has reported cases of COVID-19 among its prisoner population, and,\\nnotably, it has recently been reported that a BOP staff member coordinating the\\nupcoming executions tested positive for COVID-19. R. Woodman Suppl. Decl. \\xc2\\xb6 8.\\nWith scant testing, it is impossible to know the full scale of the infection.",
"Id. \\xc2\\xb6 37.\\nMr. Purkey\\xe2\\x80\\x99s counsel immediately contacted BOP Legal Counsel to discuss\\nUSP Terre Haute\\xe2\\x80\\x99s visitation policy after receiving notice of Mr. Purkey\\xe2\\x80\\x99s new\\nexecution warrant. Id. at 166, 363\\xe2\\x80\\x9364 (R. Woodman Decl.). BOP Legal Counsel\\nexpressed willingness for legal visits to resume for prisoners with scheduled\\nexecutions but could not provide any official protocols regarding visitation or safety\\nprecautions. See id. at. 166, 365\\xe2\\x80\\x9366. Although BOP Legal Counsel stated that she\\nwould provide Mr. Purkey\\xe2\\x80\\x99s counsel with a written policy on June 17, 2020, Mr.\\nPurkey\\xe2\\x80\\x99s counsel has yet to receive any such official documentation regarding legal\\nor expert visits.",
"Id. at 166, 367\\xe2\\x80\\x9369. The BOP has not explained how visitation would\\nbe safe for the four inmates with execution warrants and their visitors when it\\nremains suspended for the over 1200 other prisoners at USP Terre Haute and their\\nvisitors. The BOP\\xe2\\x80\\x99s cursory and unplanned approach to resuming legal visits is\\n\\n2 BOP Implementing Modified Operations, Fed. Bureau of Prisons,\\nhttps://www.bop.gov/coronavirus/covid19_status.jsp (last visited July 12, 2020).\\n\\n- 22 -\\n\\n\\x0centirely insufficient, particularly given the close quarters and limited ventilation\\nand air flow within death row visitation rooms. J. Goldenson Decl. ECF No. 23-3.\\nNor does the BOP\\xe2\\x80\\x99s approach provide adequate access to Mr. Purkey to make\\nmeaningful assessments. Mr. Purkey\\xe2\\x80\\x99s counsel and medical experts have been\\nunable to visit Mr. Purkey for months.",
"See (E. Vartkessian Suppl. Decl., ECF No.\\n23-5; R. Woodman Decl., ECF No. 23-6; R. Woodman Suppl. Decl., ECF No. 30-2.\\nThese in-person visits by individuals who have long known Mr. Purkey and have\\nwitnessed his mental decline over the years are critical to understanding the\\ntrajectory of his progressive dementia and his present mental state. See Letter from\\nJonathan DeRight, PhD, ABPP-CN, Woodbridge Psychological Associate, PC, to\\nRebecca E. Woodman, Esq., Attorney at Law, L.C. (June 14, 2020), ECF No. 23-2;\\nDr.",
"Hyde Decl. \\xc2\\xb6\\xc2\\xb6 11\\xe2\\x80\\x9312, 14, ECF No. 23-4; E. Vartkessian Decl. \\xc2\\xb6\\xc2\\xb6 4, 11, 22\\xe2\\x80\\x9325,\\nECF No. 23-5. All three of Mr. Purkey\\xe2\\x80\\x99s expert witnesses have made clear how vital\\nit is for Mr. Purkey\\xe2\\x80\\x99s legal team to have in-person visits, testing, imaging, and\\nexaminations to obtain an accurate assessment of the progression of his dementia.\\nSee Complaint, Exhibit 1, ECF No. 1-1 (Dr. Agharkar Report); Dr. Hyde Decl. \\xc2\\xb6\\xc2\\xb6 8\\xe2\\x80\\x93\\n9, 11\\xe2\\x80\\x9312, 15\\xe2\\x80\\x9317, ECF No. 23-4; DeRight June 14, 2020 Letter, ECF No. 23-2.\\nMore fundamentally, the decision to fast-track Mr. Purkey\\xe2\\x80\\x99s execution during\\nthe pandemic and the BOP\\xe2\\x80\\x99s lack of adequate preparation or procedures to facilitate\\nsafe visitations, let alone executions, given the USP Terre Haute COVID-19\\noutbreak, creates an impossible situation for all involved in the days leading up to\\nMr. Purkey\\xe2\\x80\\x99s execution. In order to advocate for their client\\xe2\\x80\\x99s constitutional rights\\n\\n- 23 -\\n\\n\\x0cand uphold the core values of the U.S. Constitution, Mr. Purkey\\xe2\\x80\\x99s counsel and\\nexperts must risk their own lives and the lives of their family members or medically\\nvulnerable persons to whom they provide care.",
"Mr. Purkey must face the prospect of\\ndying without his legal and spiritual advisors, and without familial support by his\\nside\\xe2\\x80\\x94either because they will not be permitted to visit him, or because they must\\nrisk their lives to do so. Even the family members of the victim of Mr. Purkey\\xe2\\x80\\x99s crime\\nmust make this difficult decision, as it is their right to attend the execution.\\nAppellants\\xe2\\x80\\x99 decision to schedule Mr. Purkey\\xe2\\x80\\x99s execution with only one month\\xe2\\x80\\x99s\\nnotice, after the months-long refusal to provide relevant materials and access to Mr.\\nPurkey, and in the midst of a global pandemic that creates new difficulties and\\ndangers associated with in-person visits, deprives him of his constitutional rights\\nunder the Fifth and Eighth Amendments.\\nARGUMENT\\nThe standard of review on an application to vacate a stay of execution is highly\\ndeferential.",
"A stay of execution is an equitable remedy that lies within a court\\xe2\\x80\\x99s discretion.\\nSee Kemp v. Smith, 463 U.S. 1321 (1983) (Powell, J., in chambers). \\xe2\\x80\\x9cOnly when the lower\\ncourts have clearly abused their discretion in granting a stay should [this Court] take the\\nextraordinary step of overturning such a decision.\\xe2\\x80\\x9d Dugger v. Johnson, 485 U.S. 945, 947\\n(1988) (O\\xe2\\x80\\x99Connor, J., joined by Rehnquist, C.J., dissenting); see also Doe v. Gonzales, 546\\nU.S.",
"1301, 1307, 1309 (2005) (Ginsburg, J., in chambers) (denying application to vacate\\nstay entered by court of appeals \\xe2\\x80\\x9c[a]lthough there is a question as to the likelihood of ...\\nsuccess on the merits\\xe2\\x80\\x9d because \\xe2\\x80\\x9cthe applicants have not shown cause so extraordinary\\n\\n- 24 -\\n\\n\\x0cas to justify this Court\\xe2\\x80\\x99s intervention in advance of the expeditious determination of the\\nmerits toward which the Second Circuit is swiftly proceeding\\xe2\\x80\\x9d (internal quotation marks\\nomitted)).\\nA stay pending appeal is available \\xe2\\x80\\x9conly under extraordinary circumstances,\\xe2\\x80\\x9d\\nand the \\xe2\\x80\\x9cdistrict court\\xe2\\x80\\x99s conclusion that a stay is unwarranted is entitled to\\nconsiderable deference.\\xe2\\x80\\x9d Ruckelshaus v. Monsanto Co., 463 U.S. 1315, 1316 (1983)\\n(Blackmun, J., in chambers). The Government has not carried its \\xe2\\x80\\x9cheavy burden\\xe2\\x80\\x9d to\\njustify such relief here, id., as (1) it has not \\xe2\\x80\\x9cmade a strong showing that [it] is likely\\nto succeed\\xe2\\x80\\x9d in challenging the injunction on appeal; (2) it will not \\xe2\\x80\\x9cbe irreparably\\ninjured absent a stay\\xe2\\x80\\x9d; (3) a stay would substantially and irreparably injure\\nPlaintiffs; and (4) a stay is not in the public interest.",
"Nken v. Holder, 556 U.S. 418,\\n434 (2009).\\n\\nWhere, as here, the court below issued a stay based on its careful review of the\\nextensive evidence offered by Mr. Purkey and the Appellants have engaged in dilatory\\ntactics and obstruction, this Court should not vacate the decision below.\\n\\nI.\\n\\nAPPELLANTS ARE NOT LIKELY TO SUCCEED ON THE MERITS\\nThe district court correctly held that Mr. Purkey is likely to prevail on his\\n\\nclaims. The court found that, because Mr. Purkey\\xe2\\x80\\x99s claim is of constitutional\\ndimension and falls outside the core of habeas, jurisdiction is appropriate under 28\\nU.S.C.",
"\\xc2\\xa7 1331. Order at 9, ECF No. 36. Even if the claims were core habeas, the court\\nfound that it would still have jurisdiction because \\xe2\\x80\\x9cthe question of personal\\njurisdiction or venue\\xe2\\x80\\x9d was not raised by the Government in their motion to dismiss\\n- 25 -\\n\\n\\x0cand was therefore waived. Id. The court also correctly found that \\xe2\\x80\\x9cPlaintiff has made\\nthe substantial threshold showing required by Ford, and in doing so, has\\ndemonstrated a likelihood of success on his claim for a competency hearing.\\xe2\\x80\\x9d Id. at\\n11.\\n\\nA.\\n\\nThe District Court Properly Found That It Has Jurisdiction to\\nHear Mr. Purkey\\xe2\\x80\\x99s Claims\\n\\nThe district court correctly found that claims pursuant to Ford are not\\ntraditional \\xe2\\x80\\x9ccore habeas\\xe2\\x80\\x9d claims required to be brought under 28 U.S.C. \\xc2\\xa7 2241.",
"Order\\nat 7, ECF No. 36. In a capital case, the test for whether a claim is within the bounds\\nof \\xe2\\x80\\x9ccore habeas\\xe2\\x80\\x9d is whether it would permanently prevent his execution. Clearly\\nestablished Supreme Court precedent shows that this case is outside that core\\nbecause \\xe2\\x80\\x9c[u]nder Ford, when a plaintiff claims incompetence, \\xe2\\x80\\x98the only question\\nraised is not whether, but when, his execution may take place.\\xe2\\x80\\x99 This temporal\\nquestion is distinct from \\xe2\\x80\\x98the antecedent question whether petitioner should be\\nexecuted at all.\\xe2\\x80\\x99\\xe2\\x80\\x9d Id. (citing Ford, 477 U.S. at 425 (internal citations omitted)); see also\\nStanley v. Davis, No.",
"07-cv-4727, 2015 WL 435077, at *4 n.4, *5 (N.D. Cal. Feb. 2,\\n2015) (it is \\xe2\\x80\\x9cdifficult to discern a meaningful difference between a Ford challenge and\\na methods challenge. . . . [which] may be brought under section 1983.\\xe2\\x80\\x9d); Ward v.\\nHutchinson, 558 S.W.3d 856 (Ark. 2018) (a state prisoner sought declaratory and\\ninjunctive relief in a civil rights action under 42 U.S.C. \\xc2\\xa7 1983 challenging, in part,\\nhis competency to be executed); Hubbard v. Campbell, 379 F.3d 1245, 1247\\xe2\\x80\\x9348 (11th\\nCir. 2004) (Barkett, J., dissenting) (a civil rights action is an appropriate vehicle to\\nraise a Ford claim because it does not challenge the fact or validity of the sentence,\\n- 26 -\\n\\n\\x0conly the constitutionality of the execution at a specific temporal point of\\nincompetency, an issue not reached by the majority).\\nA \\xe2\\x80\\x9ccore habeas\\xe2\\x80\\x9d is one in which \\xe2\\x80\\x9ca judgment in favor of the plaintiff would\\nnecessarily imply the invalidity of his conviction or sentence.\\xe2\\x80\\x9d Heck v. Humphrey, 512\\nU.S.",
"477 (1994). In such cases, a civil rights action is not an available remedy. \\xe2\\x80\\x9cBut if\\n. . . the plaintiff's action, even if successful, will not demonstrate the invalidity of [his\\nconviction or sentence], the [\\xc2\\xa7 1983] action should be allowed to proceed . . . .\\xe2\\x80\\x9d Skinner\\nv. Switzer, 131 S. Ct. 1289, 1298 (2011) (quoting Heck v. Humphrey, 512 U.S. at 487);\\nsee also Savory v. Lyons, 469 F.3d 667, 672 (7th Cir. Nov. 29, 2006) (action to obtain\\nDNA appropriate pursuant to \\xc2\\xa7 1983 because \\xe2\\x80\\x9csuch access would not imply the\\ninvalidity of his conviction\\xe2\\x80\\x9d even if it may eventually lead to such a claim)).\\nIt is clear that where a prisoner seeks injunctive relief that \\xe2\\x80\\x9cwould not\\nnecessarily bar the inmate\\xe2\\x80\\x99s execution,\\xe2\\x80\\x9d the challenge is not limited to habeas because\\nthe challenge does not seek to establish \\xe2\\x80\\x9cunlawfulness [that] would render a\\nconviction or sentence invalid.\\xe2\\x80\\x9d Hill v. McDonough, 547 U.S. 573, 574 (2006) (citations\\nomitted); Nelson v. Campbell, 541 U.S. 637, 643\\xe2\\x80\\x9344 (2004) (citations omitted)\\n(allowing a challenge to the method of execution outside of habeas because it did \\xe2\\x80\\x9cnot\\ndirectly call into question the \\xe2\\x80\\x98fact\\xe2\\x80\\x99 or \\xe2\\x80\\x98validity\\xe2\\x80\\x99 of the sentence itself\\xe2\\x80\\x9d).",
"This is true\\neven if the challenge would \\xe2\\x80\\x9cfrustrate an execution as a practical matter.\\xe2\\x80\\x9d Hill, 547\\nU.S. at 574 (explicitly rejecting an amici argument that any \\xe2\\x80\\x9cchallenge that would\\nfrustrate an execution as a practical matter must proceed in habeas.\\xe2\\x80\\x9d).\\n\\n- 27 -\\n\\n\\x0cAs Mr. Purkey emphasized in his renewed motion for preliminary injunction\\n(ECF No. 23) and the district court correctly observed in granting it, Ford \\xe2\\x80\\x9cnoted that\\nincompetence may be temporary, and that a person may be returned to competency\\nin order to carry out his sentence.\\xe2\\x80\\x9d Ford, 477 U.S. at 425 n.5 (Powell, J., concurring).\\nIt is a well-settled principle that competency is not inherently static and may be\\nrestored\\xe2\\x80\\x94a concept that Appellants continue to ignore and refuse to disclaim even\\nthough the Government is a vocal advocate of that principle. See Indiana v. Edwards,\\n554 U.S. 164, 175 (2008) (\\xe2\\x80\\x9c[Competency] varies in degree.",
"[Competency] can vary over\\ntime. [Competency] interferes with an individual\\xe2\\x80\\x99s functioning at different times in\\ndifferent ways.\\xe2\\x80\\x9d); Davis v. Kelley, 854 F.3d 967, 971 (8th Cir. 2017) (\\xe2\\x80\\x9ccompetency can\\nbe lost or regained over time\\xe2\\x80\\x9d in the context of Ford); United States v. Dahl, 807 F.3d\\n900, 904 (8th Cir. 2015) (\\xe2\\x80\\x9c[C]ompetency is not static and may change over even a\\nshort period of time[. ]\\xe2\\x80\\x9d) (internal quotation marks omitted); United States v. Grape,\\n549 F.3d 591, 597\\xe2\\x80\\x9398 (3d Cir. 2008) (the Government could restore competency by\\nmedicating currently incompetent defendant who became mentally ill in prison);\\nSingleton v. Norris, 319 F.3d 1018, 1026 (8th Cir. 2003) (upholding the state\\xe2\\x80\\x99s forced\\nmedication of a prisoner to restore him to competency); Commonwealth v. Sam, 952\\nA.2d 565, 582 (Pa. 2008) (allowing involuntary medical intervention to restore an\\ninmate to competency); Pl.\\xe2\\x80\\x99s Reply to Defs.\\xe2\\x80\\x99 Resp. to Mr. Purkey\\xe2\\x80\\x99s Br.",
"Filed Pursuant\\nto this Court\\xe2\\x80\\x99s Order of Dec. 31, 2019 at 3 n.1, ECF No. 17 (\\xe2\\x80\\x9cNearly all death penalty\\njurisdictions that have implemented procedures that govern Ford claims include\\nprovisions for restoring competency.\\xe2\\x80\\x9d).\\n\\n- 28 -\\n\\n\\x0cNotably, as the district court found, Appellants do not contest the court\\xe2\\x80\\x99s\\njurisdiction as to Mr. Purkey\\xe2\\x80\\x99s process challenge. See Order at 8, ECF No. 36.\\n\\xe2\\x80\\x9cPlaintiff\\xe2\\x80\\x99s second claim challenges the manner of his execution by arguing that due\\nprocess entitles him to a competency hearing before he can be executed. Compl. \\xc2\\xb6 119,\\nECF No. 1. Success on this claim would not challenge his death sentence but would\\nonly provide him a competency hearing. Again, Appellants appear to concede that\\nthere is an acceptable alternative\\xe2\\x80\\x94his execution can occur after he is found\\ncompetent. Pl.\\xe2\\x80\\x99s Opp\\xe2\\x80\\x99n to MTD at 15\\xe2\\x80\\x9316, ECF No. 20.\\nFinally, the district court determined that, even if it could be said that Mr.\\nPurkey\\xe2\\x80\\x99s claims were \\xe2\\x80\\x9ccore habeas\\xe2\\x80\\x9d, the court would still have jurisdiction because\\nthe requirement that habeas petitioners file in the district of confinement \\xe2\\x80\\x9c\\xe2\\x80\\x98is a\\nquestion of personal jurisdiction or venue not a question of subject matter\\njurisdiction.\\xe2\\x80\\x99\\xe2\\x80\\x9d Order at 9, ECF No.",
"36 (citing Rumsfeld v. Padilla, 542 U.S. 426, 447,\\n451 (Kennedy, J., concurring)). Because Appellants conceded that personal\\njurisdiction and venue were appropriate in the D.C. District Court and only moved to\\ndismiss for failure to state a claim under Fed. R. Civ. Proc. 12(b)(6), the Government\\nwaived that requirement. Id.\\nWhen the Court reaches the merits after full briefing, it is much more likely\\nthat it will affirm the district court in its correct application of clearly established\\nprecedent. The Government cannot satisfy its \\xe2\\x80\\x9cheavy burden\\xe2\\x80\\x9d to justify a stay of\\nexecution.\\n\\n- 29 -\\n\\n\\x0cB.\\n\\nThe District Court Properly Found That Mr. Purkey Met\\nPanetti\\xe2\\x80\\x99s Threshold Showing of Incompetence\\n\\nThe district court correctly found that Mr. Purkey \\xe2\\x80\\x9cmade a substantial showing\\nof incompetence\\xe2\\x80\\x9d and was thus \\xe2\\x80\\x9centitled to an opportunity to be heard, including a\\nfair hearing.\\xe2\\x80\\x9d Order at 10\\xe2\\x80\\x9311, ECF No.",
"36 (citing Ford, 477 U.S. at 425\\xe2\\x80\\x9326 (Powell,\\nJ., concurring)). In making this determination, the district court credited the\\nextensive evidence submitted by Mr. Purkey in support of his incompetence and\\nconcluded 1) that Mr. Purkey \\xe2\\x80\\x9cdoes not understand that his execution is punishment\\nfor his capital crime\\xe2\\x80\\x9d; 2) that \\xe2\\x80\\x9che has a documented history of mental illness,\\nincluding delusional and paranoid thinking, starting in childhood and continuing to\\nthe present\\xe2\\x80\\x9d; 3) that \\xe2\\x80\\x9chis dementia has caused a decline in his mental health\\xe2\\x80\\x9d; and 4)\\nthat \\xe2\\x80\\x9chis long-term inability to communicate with counsel evinces his incompetence.\\xe2\\x80\\x9d\\nOrder at 10, ECF No. 36. The Court also credited the report by Dr. Bhushan Agharkar\\nconcluding that Mr. Purkey lacks a rational understanding of the basis for his\\nexecution. Id. (citing Agharkar Report, at 11\\xe2\\x80\\x9312, Complaint, Ex. 1, ECF No. 1-1. )\\nFurther, the Court observed that, while Appellants disputed Mr. Purkey\\xe2\\x80\\x99s claim of\\nincompetence, they provided no independent evidence of competence. Order at 10,\\nECF No. 36.",
"Having met the substantial threshold showing, the district court\\ncorrectly found that Mr. Purkey \\xe2\\x80\\x9chas demonstrated a likelihood of success on his\\nclaim for a competency hearing.\\xe2\\x80\\x9d Id. at 11.\\nAppellants advance the same arguments here that were unavailing in\\nthe court below, and these arguments must again fail. See Mot. to Dismiss at\\n21\\xe2\\x80\\x9325, 29, ECF No. 18. As the district court recognized, Mr. Purkey has\\n- 30 -\\n\\n\\x0csubmitted substantial and reliable evidence of his progressive dementia,\\nschizophrenia, delusions, and paranoia, including through numerous\\ndeclarations and reports from counsel, defense team members, and multiple\\nmedical experts, as well as through medical testing results, medical records,\\nand other relevant documents. Compl., ECF Nos. 1 to 1-52; Pl.\\xe2\\x80\\x99s Renewed Mot.\\nfor Prelim. Inj. & Supporting Documents, ECF Nos. 23 to 23-7. Appellants\\nattack Dr. Agharkar\\xe2\\x80\\x99s expert conclusions based solely on their layperson,\\nuninformed understanding of mental health.",
"Appellants argue that Mr.\\nPurkey\\xe2\\x80\\x99s lack of rational understanding for his execution is really a lack of\\nunderstanding of the reason for scheduling his execution, but as the district\\ncourt observed, this is not \\xe2\\x80\\x9cindependent evidence of competence.\\xe2\\x80\\x9d Order at 10,\\nECF No. 36. Further, any factual disputes raised by Appellants, even if they\\nwere valid\\xe2\\x80\\x94which they are not\\xe2\\x80\\x94support the district court\\xe2\\x80\\x99s finding that a\\nhearing is warranted.\\nFord and Panetti make clear that once a prisoner has made a\\n\\xe2\\x80\\x9csubstantial threshold showing of insanity\\xe2\\x80\\x9d he is entitled to \\xe2\\x80\\x9cthe protection\\nafforded by procedural due process,\\xe2\\x80\\x9d including a hearing at which to present\\nevidence on the ultimate issue of competency. See Panetti, 551 U.S. at 949.\\nPanetti explains the substance of these procedures, emanating from Justice\\nPowell\\xe2\\x80\\x99s controlling opinion in Ford setting out the minimum procedures for\\ncompetency determinations:\\n[I]f the Constitution renders the fact or timing of [the condemned\\nprisoner\\xe2\\x80\\x99s] execution contingent upon establishment of a further fact,\\n- 31 -\\n\\n\\x0cthen that fact must be determined with the high regard for truth that\\nbefits a decision affecting the life or death of a human being. Thus, the\\nascertainment of a prisoner\\xe2\\x80\\x99s sanity as a predicate to lawful execution\\ncalls for no less stringent standards than those demanded in any other\\naspect of a capital proceeding.\\nPanetti, 551 U.S. at 948\\xe2\\x80\\x9349 (quoting Ford, 477 U.S. at 411\\xe2\\x80\\x9312).",
"A \\xe2\\x80\\x9cfair hearing\\xe2\\x80\\x9d is\\nnecessary under Panetti and Ford because there are facts that must be established\\nat the time of, or shortly before, an execution date to determine if sanity is an issue.\\nPanetti, 551 U.S. at 948\\xe2\\x80\\x9349 (quoting Ford, 477 U.S. at 426). The fact of the condemned\\nperson\\xe2\\x80\\x99s sanity is the necessary predicate for the retributive justification of death as\\na punishment. Id. Without this, the punishment becomes indefensible. This critical\\nconstitutional inquiry must be subject to the adversarial process and judicial\\nscrutiny.\\nNotably, Mr. Purkey made this substantial threshold showing despite\\nAppellants\\xe2\\x80\\x99 significant interference with his attempts to gather critical evidence. The\\nGovernment\\xe2\\x80\\x99s refusal to honor Mr. Purkey\\xe2\\x80\\x99s repeated requests over the past nine\\nmonths for medical and mental health records, surveillance video from his cell, and\\naccess to medical testing, as well as the interference with access to visitations because\\nof the COVID-19 pandemic, has deprived him of expert and legal assistance and the\\nopportunity to review and submit additional relevant evidence of his incompetency.\\nWith no authority, Appellants argue that a failure to meet the threshold\\nshowing entitles a prisoner to \\xe2\\x80\\x9cno process \\xe2\\x80\\x93including information sharing.\\xe2\\x80\\x9d ECF No.\\n39 at 16.",
"Neither Panetti nor Ford stands for the proposition that the government\\nmay obstruct a prisoner\\xe2\\x80\\x99s access to his own counsel and medical records and then\\ncomplain that the prisoner has failed to demonstrate current incompetency. Panetti\\n- 32 -\\n\\n\\x0cand Ford are premised on the opposite assumption: that counsel will have access to\\ntheir client in making a substantial threshold showing. In Ford, counsel relied on,\\ninter alia, the inmate\\xe2\\x80\\x99s medical records that showed a pattern of deterioration into a\\nparanoid psychosis. Ford, 477 at 402. In Panetti, counsel and a psychiatrist were able\\nto meet with Panetti on the eve of his execution to corroborate the apparent illness\\nas described by prison staff. Panetti, 551 U.S. at 940-42.",
"In neither case did the state\\nseek a litigation advantage by depriving counsel of information about their client.\\nThat is what Appellants attempted to do here. Mr. Purkey\\xe2\\x80\\x99s counsel requested\\nhis medical records for months, complying with every procedural mechanism and rule\\nAppellants put forth. To date, Appellants have failed to produce any of Mr. Purkey\\xe2\\x80\\x99s\\nupdated records despite repeated requests, nor have his experts been able to conduct\\nnecessary in-person examinations. The brain scans that Mr. Purkey requested for\\nmonths took place only last week, and Appellants\\xe2\\x80\\x99 representation that they sent\\n\\xe2\\x80\\x9ccounsel the reports and original imaging from Purkey\\xe2\\x80\\x99s most recent medical scans\\xe2\\x80\\x9d\\nis misleading at best.",
"ECF No. 39 at 5. In fact, despite being informed by BOP that\\nthe requested scans and imaging were conducted on or after July 8, 2020 and that\\none of Mr. Purkey\\xe2\\x80\\x99s experts would receive those scans and imaging from BOP by July\\n11, 2020, the expert did not receive them until July 14, 2020, i.e., the day before the\\nMr. Purkey\\xe2\\x80\\x99s scheduled execution. He has yet to receive the EEG results.\\nCritically, five minutes before this filing, Mr. Purkey\\xe2\\x80\\x99s counsel learned that the\\nGovernment appears to have had scientific confirmation in their possession of\\nsignificant structural abnormalities in Mr. Purkey\\xe2\\x80\\x99s brain that are consistent with\\n\\n- 33 -\\n\\n\\x0ccognitive impairment such as vascular dementia or other conditions. Access to this\\ntesting had been requested by Plaintiff for months, and arbitrarily denied by\\nAppellants. Appellants reversed course last week, and permitted the testing at the\\nexpense of the Mr. Purkey\\xe2\\x80\\x99s team.",
"Even though the testing was paid for and requested\\nby Plaintiff\\xe2\\x80\\x99s counsel and their experts, the results were initially delivered only to the\\nGovernment, last week. The Government provided reports based on this data late\\nlast week, but did not deliver the underlying scans to Mr. Purkey\\xe2\\x80\\x99s expert until\\nyesterday. Although Plaintiff\\xe2\\x80\\x99s expert has not been able to verify the extent of the\\natrophy and damage to Plaintiff's brain through the actual scans, the reports\\nthemselves make clear that significant abnormalities exists.\\n\\nII.\\n\\nAPPELLANTS WILL NOT BE IRREPARABLY HARMED BY THE\\nPRELIMINARY INJUNCTION\\nAppellants have not shown that they would be harmed\\xe2\\x80\\x94much less irreparably\\n\\nso\\xe2\\x80\\x94absent a stay. Appellants complain that their \\xe2\\x80\\x9csignificant advanced planning and\\ncoordination\\xe2\\x80\\x9d will be frustrated. Defs.\\xe2\\x80\\x99 Mot. to Stay Prelim. Inj. Pending Appeal at 6,\\nECF No. 39. But Appellants created this situation when they filed a truncated\\nexecution warrant while Mr. Purkey diligently sought to litigate his claim. Any\\nscheduling inconveniences for Appellants are of their own making and fail to rise to\\nthe level of irreparable harm.3\\n\\n3 Counsel object to Appellants\\xe2\\x80\\x99 proposition that they can execute him \\xe2\\x80\\x9clater today or\\npossibly tomorrow.\\xe2\\x80\\x9d According to the regulation, Mr. Purkey\\xe2\\x80\\x99s warrant has been\\nissued for a specific \\xe2\\x80\\x9cdate\\xe2\\x80\\x9d\\xe2\\x80\\x94i.e., today. Appellants\\xe2\\x80\\x99 suggestion appears to\\ncontravene the regulation. ECF No.",
"39 at 19.\\n- 34 -\\n\\n\\x0cIII.\\n\\nPLAINTIFF WILL BE IRREPARABLY HARMED BY A STAY OF THE\\nINJUNCTION\\nPlaintiff, by contrast, would suffer irreparable harm of the highest order if the\\n\\npreliminary injunction is stayed. As the district court observed, \\xe2\\x80\\x9c[i]n Ford, Justice\\nMarshall acknowledged that \\xe2\\x80\\x98execution is the most irremediable and unfathomable\\nof penalties.\\xe2\\x80\\x99 477 U.S. at 411 (citing Woodson v. North Carolina, 428 U.S. 280, 305\\n(1976) (plurality opinion).\\xe2\\x80\\x9d Order at 11, ECF No. 36. As the district court correctly\\nfound, \\xe2\\x80\\x9cabsent a preliminary injunction, Plaintiff would be executed without being\\ngiven the opportunity to be heard regarding his competence to suffer such a sentence\\xe2\\x80\\x9d\\nhaving \\xe2\\x80\\x9cmade a substantial threshold showing of innocence.\\xe2\\x80\\x9d Id. at 11\\xe2\\x80\\x9312.\\nImportantly, the district court noted that Appellants \\xe2\\x80\\x9cdo not dispute that irreparable\\nharm is likely.\\xe2\\x80\\x9d Id. at 12.\\n\\nIV.\\n\\nA STAY IS NOT IN THE PUBLIC INTEREST\\nThe balance of the equities and public interest also favor a stay.",
"Where the\\n\\nGovernment opposes a stay, these two factors merge. See Nken, 556 U.S. at 434\\xe2\\x80\\x9335.\\nThis Court has an interest in granting a stay in order \\xe2\\x80\\x9cto protect the Court\\xe2\\x80\\x99s\\njurisdiction over the case, for if the inmate was executed while the competency\\nquestion was pending, the case would become moot even if it later appeared that the\\ninmate clearly was incompetent.\\xe2\\x80\\x9d Smith ex rel. Smith v. Armontrout, 626 F. Supp.\\n936, 939 n.1 (W.D. Mo. 1986). A cognizable Ford claim presents important\\nconstitutional questions courts must approach with \\xe2\\x80\\x9cdeliberate and thoughtful\\xe2\\x80\\x9d\\nconsideration, for \\xe2\\x80\\x9ca ripe Ford claim is due the same consideration as other issues\\nraised in a first habeas petition.\\xe2\\x80\\x9d Amaya-Ruiz v. Stewart, 136 F. Supp. 2d 1014, 1030\\xe2\\x80\\x93\\n- 35 -\\n\\n\\x0c31 (D. Ariz. 2001) (granting stay of execution pending resolution of Ford claim). A\\nstay in this matter to ensure an incompetent person is not executed in violation of the\\nU.S. Constitution:\\nwill not substantially harm the government, which has waited at least\\nseven years to move forward on Purkey\\xe2\\x80\\x99s case. . . . the public interest is\\nsurely served by treating this case with the same time for consideration\\nand deliberation that we would give any case. Just because the death\\npenalty is involved is no reason to take short-cuts\\xe2\\x80\\x94indeed, it is a reason\\nnot to do so.\\nNotice of Recent Decision, Ex.",
"A at 26\\xe2\\x80\\x9327, ECF No. 31-1.\\nOther courts have found \\xe2\\x80\\x9clittle potential for injury\\xe2\\x80\\x9d as a result of a delayed\\nexecution date. See, e.g., Harris v. Johnson, 323 F. Supp. 2d 797, 809 (S.D. Tex. 2004).\\nAny potential harm to the Government caused by a delayed execution is outweighed\\nby the obvious harm to Mr. Purkey and the public\\xe2\\x80\\x99s interest in a constitutional\\napplication executions. Not delaying the execution undermines the rule of law as\\npronounced by Ford and Panetti\\xe2\\x80\\x94that we as a society do not execute the incompetent.\\nFurther, the only delays in this matter have been caused by Appellants. Since\\nAugust 2019, despite repeated requests and efforts by Mr. Purkey\\xe2\\x80\\x99s counsel,\\nAppellants have continuously refused to provide his medical, mental health, and\\nadministrative records or, to furnish (or possibly even preserve) video evidence\\ndepicting Mr. Purkey\\xe2\\x80\\x99s dementia, all of which is integral to Mr. Purkey\\xe2\\x80\\x99s claim.",
"See\\ngenerally e.g., R. Woodman Decl., ECF No. 23-6; Pl.\\xe2\\x80\\x99s Mot. For Expedited Disc., ECF\\nNo. 24; Reply in Supp. of Pl.\\xe2\\x80\\x99s Mot. For Expedited Disc. & App. A, ECF Nos. 30, 30-1.\\nAdditionally, due to the COVID-19 pandemic, BOP has precluded all visitors into\\nUSP Terre Haute beginning March 13, 2020, and now is only allowing visitors for\\n- 36 -\\n\\n\\x0cprisoners with execution dates. See E. Vartkessian Suppl. Decl. at 2, ECF No. 23-5.\\nUSP Terre Haute has documented cases of COVID-19 and at least one COVID-related\\ndeath. Any alleged concern about the victims rings hollow given Appellants\\xe2\\x80\\x99 choice to\\nrecklessly execute Mr. Purkey during a global pandemic with minimal safety\\nprocedures in place, putting the victim\\xe2\\x80\\x99s family in a position to choose between\\nattending the execution (as is their right) and risking their health and safety (and\\npossibly their lives). BOP still has released only cursory guidance on keeping visitors\\nsafe and have refused to provide meaningful information related testing, ventilation,\\nand other necessary procedures to keep visitors safe. R. Woodman Decl. \\xc2\\xb6\\xc2\\xb6 33\\xe2\\x80\\x9338,\\nECF No.",
"23-6.\\nBy contrast, Mr. Purkey has acted diligently and expediently to protect his\\nconstitutional rights. This case falls into a category of cases where filing is not ripe\\nuntil execution is imminent. See Panetti, 551 U.S. at 947 (citing Stewart v. MartinezVillareal, 523 U.S. 637, 644\\xe2\\x80\\x9345 (1998) (a competency to be executed claim is not ripe\\nuntil it is time to execute the sentence)). Mr. Purkey\\xe2\\x80\\x99s status has declined over the\\nyears, including in the months and weeks leading up to his initial execution date, and\\nhas declined even more since. E. Vartkessian Suppl. Decl. \\xc2\\xb6\\xc2\\xb6 5\\xe2\\x80\\x9321, ECF No. 23-5; R.\\nWoodman Decl.",
"\\xc2\\xb6\\xc2\\xb6 14\\xe2\\x80\\x9323, ECF No. 23-6. It is due to this decline, Mr. Purkey\\xe2\\x80\\x99s current\\nmental incompetency, and the imposition of the sentence, that the case is properly\\nbefore the district court.\\nEven where Appellants have a \\xe2\\x80\\x9cstrong interest in enforcing its criminal\\njudgments,\\xe2\\x80\\x9d that interest is outweighed by the public\\xe2\\x80\\x99s interest in a \\xe2\\x80\\x9chumane and\\n\\n- 37 -\\n\\n\\x0cconstitutional\\xe2\\x80\\x9d application of the federal execution protocol. Nooner v. Norris, No.\\n5:06CV00110 SWW, 2006 WL 8445125, at *4 (E.D. Ark. June 26, 2006). Mr. Purkey\\ndoes not contest his conviction or the sentence of death.",
"He contests only the\\nunconstitutional way in which the Government proposes to execute him in his\\ncurrent condition of incompetency. In any event, \\xe2\\x80\\x9cthe fact that the government has\\nnot\\xe2\\x80\\x94until now\\xe2\\x80\\x94sought to\\xe2\\x80\\x9d schedule Mr. Purkey\\xe2\\x80\\x99s execution \\xe2\\x80\\x9cundermines any\\nurgency surrounding\\xe2\\x80\\x9d its need to carry out Mr. Purkey\\xe2\\x80\\x99s sentence. Osorio-Martinez\\nv. Attorney Gen. of the U.S., 893 F.3d 153, 179 (3d Cir. 2018). The preliminary\\ninjunction will therefore \\xe2\\x80\\x9cnot substantially injure other interested parties,\\xe2\\x80\\x9d the\\npublic, or the Government. Chaplaincy, 454 F.3d at 297.\\nAnd, the COVID-19 pandemic inescapably impacts what can be considered a\\nhumane and constitutional execution. Based on Mr. Purkey\\xe2\\x80\\x99s deteriorating\\ncondition, it is very likely that Mr. Purkey\\xe2\\x80\\x99s competency has only continued to\\ndecline. But Mr. Purkey\\xe2\\x80\\x99s counsel has been unable to assess this without access to\\nin-person visits with her client.",
"R. Woodman Decl. \\xc2\\xb6\\xc2\\xb6 33\\xe2\\x80\\x9338, ECF No. 23-6; E.\\nVartkessian Suppl. Decl. \\xc2\\xb6\\xc2\\xb6 22\\xe2\\x80\\x9325, ECF No. 23-5. Further, the lack of access to one\\nof the only forms of contact with the outside world has itself likely exacerbated his\\nserious mental illness and deteriorating mental capacity. E. Vartkessian Suppl.\\nDecl. \\xc2\\xb6 25, ECF No. 23-5. Even if BOP begins to permit visits, Mr. Purkey\\xe2\\x80\\x99s legal\\ncounsel, expert witnesses, and others will need to risk their lives to save Mr.\\n\\n- 38 -\\n\\n\\x0cPurkey\\xe2\\x80\\x99s. It is not in the public interest to subject citizens to undue and unnecessary\\nhealth hazards.4\\nFinally, it is clearly not in the public interest to execute an incompetent\\nperson. The public interest is not served by executing an individual presenting a\\nprima facie case of incompetency before he has the opportunity to avail himself of the\\nlegitimate procedures to challenge his competence, as required by clearly existing\\nUnited States Supreme Court authority.",
"Accordingly, the public interest is only\\nserved by preliminarily enjoining Mr. Purkey\\xe2\\x80\\x99s execution because it will allow for the\\nequal application of the law in judicial processes.\\nThe public interest lies in ensuring that Appellants comply with the\\nConstitution and the laws Congress enacted.\\n\\n4 Appellate\\n\\nstate courts have stayed several executions in light of the COVID-19\\npandemic. See ECF No. 23 at 36 n.6.\\n\\n- 39 -\\n\\n\\x0cJuly 2020\\n\\nRespectfully submitted,\\n\\nTimothy P. O\\xe2\\x80\\x99Toole\\nCounsel of Record\\nMiller & Chevalier Chartered\\n900 Sixteenth St. NW\\nWashington, DC 20006\\n(202) 626-5800\\\\\\ntotoole@milchev.com\\n\\n- 40 -\\n\\n\\x0c\""
]
| http://www.supremecourt.gov/DocketPDF/20/20A9/147869/20200715171250903_2020.07.15%20Response%20to%20Application.pdf | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 1 of 13
Tyler J. Anderson, ISB No. 6632 John C. Hughes, ISB No. 7606 Caitlin D. Kling, ISB No. 9565 HAWLEY TROXELL ENNIS & HAWLEY LLP 877 Main Street, Suite 1000 P.O. Box 1617 Boise, ID 83701-1617 Telephone: 208.344.6000 Facsimile: 208.954.5275 Email: tanderson@hawleytroxell.com jhughes@hawleytroxell.com ckling@hawleytroxell.com
Attorneys for Defendants
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
STAR DIALYSIS, LLC; ORDUST DIALYSIS, LLC; ROUTT DIALYSIS, LLC; Case No. 1:18-cv-00482-EJL-CWD PANTHER DIALYSIS, LLC; DAVITA INC., DEFENDANTS’ REPLY Plaintiffs, MEMORANDUM IN SUPPORT OF MOTION TO DISMISS vs.
WINCO FOODS EMPLOYEE BENEFIT PLAN; WINCO FOODS, LLC; and WINCO HOLDINGS, INC.,
Defendants.
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 2 of 13
TABLE OF CONTENTS
Page
I. INTRODUCTION ....................................................................................................... 1
II. ARGUMENT ............................................................................................................... 1
A. DaVita Does Not Have Standing To Bring ERISA Claims............................. 1
B. DaVita Fails To State A Claim For Relief Under The MSPA (Count One). .................................................................................................... 4
C. DaVita Fails To State A Claim For Injunctive Or Equitable Relief Under ERISA (Count Two). ............................................................................ 6
D. DaVita Fails To Allege Sufficient Facts To State A Claim For Benefits (Count Three). ................................................................................... 7
E. DaVita Fails To State A Claim For Equitable Relief (Count Four)................................................................................................................. 8
F. DaVita Cannot State Claims Under State Law (Count Five). ......................... 9
III. CONCLUSION.......................................................................................................... 10
-i- 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 3 of 13
I. INTRODUCTION
This case is, and always has been, about DaVita’s bottom line and profit. Despite the
blurred lines in DaVita’s Response to Defendants’ Motion to Dismiss (Dkt. #31), as compared to
its Complaint (Dkt. #1), DaVita’s claims are simple: as providers, they were not paid as much as
they billed and desired to be paid. As such, the heart of this case is a garden variety ERISA
benefit claim, yet the Complaint and DaVita’s Response are tangled together in an effort to
circumvent well-established authorities limiting the causes of action relative to ERISA-covered
plans (and those who may seek recovery). It is DaVita’s service charges that are unreasonable
and discriminatory. The Complaint and the Response do not overcome the arguments and
authorities set forth in Defendants’ opening brief, and thus the claims must be dismissed.
II. ARGUMENT
A. DaVita Does Not Have Standing To Bring ERISA Claims.
DaVita glosses over the fact that it lacks standing, and instead maintains that it holds
valid assignments for Patients 1 through 6. It is well settled that health care providers are not
considered “beneficiaries” within the meaning of ERISA, and “a non-participant health care
provider . . . cannot bring claims for benefits on its own behalf.” Spinedex Physical Therapy
USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1289 (9th Cir. 2014), cert. denied,
136 S. Ct. 317 (2015). Therefore, in order to bring a claim for benefits, health care providers
must do so derivatively, relying on its patients’ assignments of their benefit claims. Id.
It is true that ERISA does not forbid assignments in certain cases. However, where a
plan contains an antiassignment clause, health care providers will lack derivative standing. DB
Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 852 F.3d 868, 876 (9th Cir. 2017).
Where there is an express antiassignment clause in a plan, ERISA welfare plan payments are not
assignable. Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1481 (9th Cir. 1991);
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 1 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 4 of 13
Reg’l Med. Ctr. of San Jose v. WH Adm’rs, Inc., 2017 WL 6513441, at *4 (N.D. Cal. 2017)
(observing ample authority holding that antiassignment provisions are valid and enforceable).
This is precisely the situation in this case. While DaVita attempts to argue that it has
standing through these “valid” assignments, DaVita lacks derivative standing to sue under 29
U.S.C. § 1132(a)(1)(B) or 29 U.S.C. § 1132(a)(3) because the WinCo Holdings, Inc. Employee
Benefit Plan Document and Summary Plan Description (the “WinCo Plan” or “Plan”) contains
an antiassignment provision that is clear on its face. See Decl. of Nikki Hyer Ex. A at 74. (Dkt.
#20-2.) Because the Plan contains an antiassignment clause, DaVita’s ERISA-based claims are
not assignable. See Davidowitz, 946 F.2d at 1481 (“ERISA welfare plan payments are not
assignable in the face of an express non-assignment clause in the plan”). Though DaVita
contends the antiassignment clause is ambiguous, the provision is clear on its face that
assignments shall not be recognized. To save its claim from dismissal, DaVita jumps straight to
arguing ambiguity, but skips the critical step of offering a reasonable interpretation of the
antiassignment clause that conflicts with WinCo’s reasonable interpretation of the unambiguous
language. Before arguing ambiguity, DaVita must come forward with a competing reasonable
interpretation of the clause that creates an ambiguity. DaVita fails to do so and, therefore, the
antiassignment clause in the Plan overrides any purported assignments DaVita may hold.
Further, Defendants are not estopped from relying on the Plan’s antiassignment clause.
Under equitable estoppel, “(1) the party to be estopped must know the facts; (2) he must intend
that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to
believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on
the former’s conduct to his injury.” Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 955
(9th Cir. 2014). Additionally, a plaintiff seeking equitable estoppel in the ERISA context must
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 2 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 5 of 13
meet additional requirements. First, a party cannot maintain an estoppel claim in the ERISA
context when recovery would contradict written plan provisions. Id. at 955-56. Second, an
ERISA beneficiary must establish “extraordinary circumstances” to recover benefits under
equitable estoppel. Id. at 956 (citation omitted).
However, DaVita has not pled that Defendants made false representations with respect to
the Plan or the antiassignment clause, or that Defendants concealed the antiassignment clause.
Further, DaVita is attempting to maintain a recovery that is in contradiction with the written Plan
provisions. Id. at 955-56. While DaVita attempts to rely on statements allegedly made by
Defendants with respect to standing, any purported statements by Defendants will only amount
to reasonable reliance where DaVita can show that the Plan documents were never made
available to it. See Care First Surgical Ctr. v. ILWU-PMA Welfare Plan, No. 2014 WL
6603761, at *17 (C.D. Cal. July 28, 2014) (Reasonable reliance on the administrator’s statements
concerning the assignability of rights under the plan will satisfy estoppel only so long as the plan
was not furnished or made available to the provider). DaVita has failed to plead such facts.
Moreover, DaVita has failed to plead facts sufficient to show that Defendants waived
enforcement of the antiassignment clause; instead, DaVita relies solely on Defendants’ alleged
silence with respect to claim forms that purport to show DaVita’s assignment. See Response Br.
at 18-19. (Dkt. #31.) “Waiver must be voluntary and [that] there must be a clear act showing the
intent to waive the right to rely on the anti-assignment provision.” Care First Surgical Ctr.,
2014 WL 6603761, at *18. Further, “routine processing of a claim form, issuing payment at the
out-of-network rate, and summarily denying the informal appeal do not demonstrate ‘an evident
purpose to surrender’ an objection to a provider’s standing in a federal lawsuit.” See Am.
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 3 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 6 of 13
Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield, 890 F.3d 445, 453–54 (3d Cir.
2018). Mere silence is insufficient to manifest an intent to waive the antiassignment clause.
B. DaVita Fails To State A Claim For Relief Under The MSPA (Count One).
DaVita spins a complicated web to explain its failure to offer any allegations in the
Complaint sufficient to demonstrate that the MSPA applies as between these private parties.
DaVita would have the Court believe that Congress intended the MSPA to be used as a
mechanism to boost the profits of a private medical provider. Tellingly, DaVita fails to offer
authorities supporting that view, let alone any authority permitting a case to go forward without a
concrete, particularized injury compensable under the MSPA. Even the cases DaVita cites do
not get past the motion to dismiss stage as a result of this failure. See, e.g., Nat’l Renal Alliance,
LLC v. Blue Cross and Blue Shield of Ga., Inc., 598 F. Supp. 2d 1344 (N.D. Ga. 2009)
(dismissing MSPA claim for failure to state a claim and holding that a “health plan’s decision to
lower reimbursement rates to its members for services received at an out-of-network facility”
does not impact Medicare); Parra v. PacifiCare of Ariz., 715 F.3d 1146, 1154 (9th Cir. 2013)
(upholding motion to dismiss on appeal for failure to state a claim under the MSPA).
DaVita is now flummoxed to the point that it actually requests this Court to reject the
central holding of Bio-Med Applications of Tenn. v. Cent. Sts. Se. & Sw. Areas Health & Welfare
Fund, 656 F.3d. 277 (6th Cir. 2011) (“Bio-Med of Tenn.”), which DaVita repeatedly cited in its
Complaint as the basis for its MSPA claim. In response to Defendants’ motion to dismiss,
DaVita now does an about-face and “respectfully submits that this Court should draw a different
conclusion” from the Bio-Med of Tenn. holding. See Response Br. at 10. (Dkt. #31.) To support
its argument, DaVita offers one-sentence quotes from the CMS Manual and an inapposite Ninth
Circuit decision. Id., citing Parra, 715 F.3d at 1154; CMS Manual Ch. 1 § 30.B. Both cited
authorities simply restate what is already in the plain text of the MSPA private action provision,
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 4 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 7 of 13
i.e., a private cause of action is available when a plan fails to provide for primary payment. It is
that failure, which then shifts the payment obligation to Medicare and makes Medicare
“primary” and no longer “secondary.”
There are no allegations in the Complaint that Defendants’ actions have caused Medicare
to become a primary payer. There are no allegations in the Complaint that Medicare has paid
anything. In fact, the opposite is true, as DaVita affirmatively alleges that Defendants made and
continue to make payments for services directly to DaVita. See Compl. (Dkt. #1) at ¶¶ 6, 53
60.h, 60.k, 61.h., 61.k, 62.h, 63.h, 64.h and 65.h. DaVita also alleges that the Plan “today covers
dialysis.” Id. at ¶ 31. A private cause of action only exists under the MSPA where the plan has
failed to provide for payment, yet DaVita affirmatively alleges throughout the Complaint that the
Plan continues to make payments for treatment rendered and that the Plan covers dialysis today.
Accordingly, even if this Court were to adopt a holding different from the Sixth Circuit’s
decision in Bio-Med of Tenn., DaVita affirmatively alleges facts that destroy its MSPA claim.
The truth is that Defendants continue to offer coverage for dialysis patients and the Plan issues
payments to DaVita for such services. Boiled down to its essence, this case presents a private
dispute between Defendants and DaVita that in no way implicates the MSPA or a drain on the
public fisc that led Congress to create a private right of action.
Whether or not DaVita is considered to be in-network or out-of-network is a red herring
that has nothing to do with the absence of any allegations sufficient to invoke the MSPA. In
Nat’l Renal Alliance, a renal provider brought suit because Blue Cross cut its reimbursement for
out-of-network dialysis to levels below the customer charges associated with such care, just as
DaVita alleges in the Complaint. 598 F. Supp. 2d at 1349. In granting Blue Cross’ motion to
dismiss, the district court held that a dispute between two private parties over rates of
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 5 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 8 of 13
reimbursement did not impact Medicare and, therefore, the MSPA did not apply. Id. at 1354.
Specifically, the Court stated “Plaintiff’s proposed theory of damages is the difference between
the cost of the services and the rate of payment set by the provider. This calculation, however,
has no impact on Medicare. The damages provided for in the statue simply do not fit the
situation here.” Id. at 1355. DaVita’s proposed theory of damages is the higher rate it wishes to
charge as its UCR rate versus the lower rate the Plan is currently paying for dialysis services.
That calculation has no impact on Medicare.
C. DaVita Fails To State A Claim For Injunctive Or Equitable Relief Under ERISA (Count Two).
Count Two alleges the existence of illegal plan terms under MSPA and ERISA, and seeks
equitable relief pursuant to 29 U.S.C. § 1132(a)(3). Compl. at ¶¶ 86-90. (Dkt. #1.) As
explained in Defendants’ opening brief: (1) equitable relief is not available under ERISA to
redress violations of statutes other than ERISA itself, and (2) the factual allegations of
discriminatory Plan terms, even if accepted as true, do not violate 29 U.S.C. § 1182(a)(1).
DaVita asserts that relief is available under Section 1132(a)(3) for MSPA violations per
Bio-Med of Tenn., 656 F.3d 277. See Response Br. at 5-6. (Dkt. #31.) However, Bio-Med of
Tenn. does not make any connection between an MSPA violation and the availability of
equitable relief under ERISA. The ERISA claim at issue in Bio-Med of Tenn. was a benefit
claim under Section 1132(a)(1)(B). Id. at 280. In fact, the word “equitable” does not appear in
the Bio-Med of Tenn. decision, nor is there any citation to Section 1132(a)(3). Additionally,
Section 1132(a)(3) is clear as providing remedies only for ERISA violations.
Regarding the alleged Section 1182(a)(1) violation, DaVita argues that its violation is a
question of fact. See Response Br. at fn 6. (Dkt. #31.) The facts as alleged do not reveal a
violation as compared to the authorities discussed in Defendants’ Memorandum at 20-23.
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 6 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 9 of 13
(Dkt. #20-1.) A violation is not plausible given the alleged facts and the applicable authorities.
As such, the claim relative to an alleged Section 1182(a)(1) violation should be dismissed.
D. DaVita Fails To Allege Sufficient Facts To State A Claim For Benefits (Count Three).
The Complaint does not allege facts identifying breached Plan terms, those on whose
behalf payment was insufficient, treatment dates at issue, location of the treatments, amounts
paid for specific treatments, the amounts not paid for specific treatments, or the terms of the Plan
that entitle DaVita to additional payments. In short, DaVita fails to identify the promises made
that were not fulfilled or benefits not delivered. Instead, DaVita bluntly asserts it provided
services to six individuals (and perhaps unidentified others) over time for which it is not satisfied
with the payments. Although DaVita identifies the Plan at issue, it offers no other details such as
names, charges, dates of service, and most importantly, the Plan terms that were supposedly
breached. See, e.g., Polk Medical Center, Inc. v. Blue Cross and Blue Shield of Georgia, Inc.,
2018 WL 624882, at *3 (N.D. Ga. Jan. 30, 2018). The pleading is therefore insufficient.
Moreover, elimination of in-network coverage, even if true, does not mean that benefits
remain owing per the Plan terms. DaVita’s desire to design (or redesign) the Plan is not
actionable. If DaVita is arguing that the Plan prohibits Defendants from making changes to the
Plan design, such is unsupported by the law (which allows plan sponsors to make changes to
their plan design) and by the Plan itself (see Plan at § 1.5 (page 6)). See, e.g., Curtiss-Wright
Corp. v. Schoonejongen, 515 U.S. 73, 78 (1995).
The Plan states that dialysis is covered, and DaVita alleges the same. The Plan states
simply and clearly that dialysis treatment will be paid based either on an agreement between the
provider and EthiCare (the Plan’s dialysis administrator) or at the Plan’s UCR reimbursement
rate (the former labelled “In-Network,” and the latter, “Out-of-Network”). See Hyer Decl.,
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 7 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 10 of 13
Ex. A at §§ 10.1 (page 25), 11.9.9.C.1 (page 33), and 12.10 (page 42). (Dkt. #20-2.) Although it
is a common design, there is no requirement for any plan to provide in-network and out-of-
network benefits. DaVita was reimbursed at the UCR rate (defined at Plan § 26 (page 106)) in
accordance with the Plan terms. DaVita is not satisfied with the Plan terms, but such
dissatisfaction is not actionable. Finally, while the Complaint alleges that Patients 1 and 2 went
through the Plan’s appeal process and exhausted their remedies, the Complaint conspicuously
does not make those allegations relative to Patients 3-6. Instead, DaVita alleges it treated those
patients and was paid, but fails to explain how the Plan terms were violated.
E. DaVita Fails To State A Claim For Equitable Relief (Count Four).
Aside from the ERISA-based equitable relief claim under Count Two, DaVita alleges
entitlement to ERISA equitable relief under Count Four. Equitable relief under ERISA is
available to redress violations of ERISA or violations of Plan terms. See 29 U.S.C. § 1132(a)(3).
No violation of ERISA is alleged, except with regard to Section 1182(a)(1) (the lacking violation
of such is discussed above), and no identifiable Plan terms are alleged to have been violated.
In the event the Court is able to identify either of those allegations (i.e., potential ERISA
or Plan term violations), the specific equitable doctrines are inapplicable. As DaVita indicates,
surcharge requires a loss resulting from a trustee’s breach of duty or to prevent a trustee’s unjust
enrichment. See Response Br. at 26. (Dkt. #31.) The Plan does not have a trust or trustee.
There are no allegations of a trustee’s breach of duty or unjust enrichment. There are vague
allegations to the effect that the Plan terms were not adequately disclosed; however, DaVita
seems well aware of those terms and their meaning is entirely clear. See Hyer Decl., Ex. A at
§§ 10.1 (page 25), 11.9.9.C.1 (page 33), and 12.10 (page 42). (Dkt. #20-2.) Also,
notwithstanding the ruling in CIGNA Corp. v. Amara, 563 U.S. 421, 444 (2011), the law still
requires that the relief sought be equitable, not legal, regardless of DaVita’s label. See The
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 8 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 11 of 13
Depot, Inc. v. Caring for Montanans, Inc., 2019 WL 453485, at *10 (9th Cir. Feb. 6, 2019).
DaVita improperly seeks to recover money damages under ERISA by calling it equitable relief.
DaVita cannot proceed under the doctrines of reformation and estoppel because there
were no violations of ERISA or Plan terms, but also because there is no allegation of fraud (even
accepting DaVita’s described lower threshold of what that might mean), and because there is
nothing extraordinary about a Plan paying for services in accordance with the Plan terms.
DaVita states the Plan should be reformed to compensate providers at usual and customary rates.
The Plan already says this; there is nothing to reform. The Complaint is not at all clear in terms
of what was not disclosed or misrepresented in the Plan.
Finally, Count Four is not plead in the alternative as contemplated by Moyle v. Liberty
Mutual Retirement Benefit Plan, 823 F.3d 948, 962 (9th Cir. 2017). Notwithstanding the ability
in the Ninth Circuit for both causes of action to proceed at the same time (in the alternative) in
some circumstances, this is an issue that should proceed as a benefit claim (if sufficient factual
allegations are made at some point). This is because the claim for equitable relief does not pass
though the threshold of alleging an ERISA or Plan term violation.
F. DaVita Cannot State Claims Under State Law (Count Five).
ERISA broadly preempts state law causes of action with few exceptions that are not
present in this case. See Aetna Health v. Davila, 542 U.S. 200, 124 S. Ct. 2488, 159 L.Ed.2d 312
(2004). As such, the state law causes of action must be dismissed.
Preemption notwithstanding, DaVita’s Complaint expresses dissatisfaction with being
reimbursed at a lower rate for dialysis services. Such dissatisfaction, however, is insufficient to
meet the requirements of promissory estoppel and quantum meruit. The Plan is not prohibited by
law from taking steps to reduce its costs. Further, there is nothing that requires the Plan to keep
reimbursement rates at the same amount in perpetuity. There is no allegation that Defendants
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 9 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 12 of 13
intended that DaVita rely on mistaken facts or promises in the Plan provisions as amended.
DaVita’s allegations are, in essence, that the Plan was amended, and DaVita is dissatisfied with
being reimbursed at a lower rate for dialysis services. Without facts to support the allegations of
reliance or some other implied contract contrary to the terms of the Plan, dissatisfaction with
reimbursement rates does not amount to promissory estoppel or quantum meruit.
III. CONCLUSION
Defendants respectfully request the Court dismiss DaVita’s Complaint in its entirety.
DATED THIS 15th day of February, 2019.
HAWLEY TROXELL ENNIS & HAWLEY LLP
By: /s/ Tyler J. Anderson Tyler J. Anderson, ISB No. 6632 Attorneys for Defendants
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 10 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 13 of 13
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 15th day of February, 2019, I electronically filed the foregoing DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF MOTION TO DISMISS with the Clerk of the Court using the CM/ECF system which sent a Notice of Electronic Filing to the following persons:
Jay Gustavsen gus@davisoncopple.com DAVISON, COPPLE, COPPLE & COPPLE 199 N. Capitol Blvd., Ste. 600 Boise, ID 83702 T: (208) 342-3658 | F: (208) 386-9428 Attorneys for Plaintiffs
Peter K. Stris (pro hac vice) peter.stris@strismaher.com Brendan S. Maher (pro hac vice) brendan.maher@strismaher.com Rachana A. Pathak (pro hac vice) radha.pathak@strismaher.com John Stokes (pro hac vice) john.stokes@strismaher.com STRIS & MAHER, LLP 725 South Figueroa Street, Suite 1830 Los Angeles, CA 90017 T: (213) 995-6800 | F: (213) 261-0299 Attorneys for Plaintiffs
/s/ Tyler J. Anderson Tyler J. Anderson
DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 11 47568.0004.11703875.5 | 2019-02-15 | [
"Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 1 of 13 Tyler J. Anderson, ISB No. 6632 John C. Hughes, ISB No. 7606 Caitlin D. Kling, ISB No. 9565 HAWLEY TROXELL ENNIS & HAWLEY LLP 877 Main Street, Suite 1000 P.O. Box 1617 Boise, ID 83701-1617 Telephone: 208.344.6000 Facsimile: 208.954.5275 Email: tanderson@hawleytroxell.com jhughes@hawleytroxell.com ckling@hawleytroxell.com Attorneys for Defendants UNITED STATES DISTRICT COURT FOR THE DISTRICT OF IDAHO STAR DIALYSIS, LLC; ORDUST DIALYSIS, LLC; ROUTT DIALYSIS, LLC; Case No. 1:18-cv-00482-EJL-CWD PANTHER DIALYSIS, LLC; DAVITA INC., DEFENDANTS’ REPLY Plaintiffs, MEMORANDUM IN SUPPORT OF MOTION TO DISMISS vs. WINCO FOODS EMPLOYEE BENEFIT PLAN; WINCO FOODS, LLC; and WINCO HOLDINGS, INC., Defendants. DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 2 of 13 TABLE OF CONTENTS Page I. INTRODUCTION ....................................................................................................... 1 II. ARGUMENT ............................................................................................................... 1 A. DaVita Does Not Have Standing To Bring ERISA Claims............................. 1 B. DaVita Fails To State A Claim For Relief Under The MSPA (Count One).",
".................................................................................................... 4 C. DaVita Fails To State A Claim For Injunctive Or Equitable Relief Under ERISA (Count Two). ............................................................................ 6 D. DaVita Fails To Allege Sufficient Facts To State A Claim For Benefits (Count Three). ................................................................................... 7 E. DaVita Fails To State A Claim For Equitable Relief (Count Four)................................................................................................................. 8 F. DaVita Cannot State Claims Under State Law (Count Five). ......................... 9 III. CONCLUSION.......................................................................................................... 10 -i- 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 3 of 13 I. INTRODUCTION This case is, and always has been, about DaVita’s bottom line and profit.",
"Despite the blurred lines in DaVita’s Response to Defendants’ Motion to Dismiss (Dkt. #31), as compared to its Complaint (Dkt. #1), DaVita’s claims are simple: as providers, they were not paid as much as they billed and desired to be paid. As such, the heart of this case is a garden variety ERISA benefit claim, yet the Complaint and DaVita’s Response are tangled together in an effort to circumvent well-established authorities limiting the causes of action relative to ERISA-covered plans (and those who may seek recovery). It is DaVita’s service charges that are unreasonable and discriminatory. The Complaint and the Response do not overcome the arguments and authorities set forth in Defendants’ opening brief, and thus the claims must be dismissed. II. ARGUMENT A. DaVita Does Not Have Standing To Bring ERISA Claims. DaVita glosses over the fact that it lacks standing, and instead maintains that it holds valid assignments for Patients 1 through 6. It is well settled that health care providers are not considered “beneficiaries” within the meaning of ERISA, and “a non-participant health care provider . . .",
"cannot bring claims for benefits on its own behalf.” Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282, 1289 (9th Cir. 2014), cert. denied, 136 S. Ct. 317 (2015). Therefore, in order to bring a claim for benefits, health care providers must do so derivatively, relying on its patients’ assignments of their benefit claims. Id. It is true that ERISA does not forbid assignments in certain cases. However, where a plan contains an antiassignment clause, health care providers will lack derivative standing.",
"DB Healthcare, LLC v. Blue Cross Blue Shield of Ariz., Inc., 852 F.3d 868, 876 (9th Cir. 2017). Where there is an express antiassignment clause in a plan, ERISA welfare plan payments are not assignable. Davidowitz v. Delta Dental Plan of Cal., Inc., 946 F.2d 1476, 1481 (9th Cir. 1991); DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 1 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 4 of 13 Reg’l Med. Ctr. of San Jose v. WH Adm’rs, Inc., 2017 WL 6513441, at *4 (N.D. Cal. 2017) (observing ample authority holding that antiassignment provisions are valid and enforceable). This is precisely the situation in this case. While DaVita attempts to argue that it has standing through these “valid” assignments, DaVita lacks derivative standing to sue under 29 U.S.C. § 1132(a)(1)(B) or 29 U.S.C. § 1132(a)(3) because the WinCo Holdings, Inc. Employee Benefit Plan Document and Summary Plan Description (the “WinCo Plan” or “Plan”) contains an antiassignment provision that is clear on its face.",
"See Decl. of Nikki Hyer Ex. A at 74. (Dkt. #20-2.) Because the Plan contains an antiassignment clause, DaVita’s ERISA-based claims are not assignable. See Davidowitz, 946 F.2d at 1481 (“ERISA welfare plan payments are not assignable in the face of an express non-assignment clause in the plan”). Though DaVita contends the antiassignment clause is ambiguous, the provision is clear on its face that assignments shall not be recognized. To save its claim from dismissal, DaVita jumps straight to arguing ambiguity, but skips the critical step of offering a reasonable interpretation of the antiassignment clause that conflicts with WinCo’s reasonable interpretation of the unambiguous language. Before arguing ambiguity, DaVita must come forward with a competing reasonable interpretation of the clause that creates an ambiguity.",
"DaVita fails to do so and, therefore, the antiassignment clause in the Plan overrides any purported assignments DaVita may hold. Further, Defendants are not estopped from relying on the Plan’s antiassignment clause. Under equitable estoppel, “(1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former’s conduct to his injury.” Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 955 (9th Cir. 2014). Additionally, a plaintiff seeking equitable estoppel in the ERISA context must DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 2 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 5 of 13 meet additional requirements.",
"First, a party cannot maintain an estoppel claim in the ERISA context when recovery would contradict written plan provisions. Id. at 955-56. Second, an ERISA beneficiary must establish “extraordinary circumstances” to recover benefits under equitable estoppel. Id. at 956 (citation omitted). However, DaVita has not pled that Defendants made false representations with respect to the Plan or the antiassignment clause, or that Defendants concealed the antiassignment clause. Further, DaVita is attempting to maintain a recovery that is in contradiction with the written Plan provisions. Id. at 955-56. While DaVita attempts to rely on statements allegedly made by Defendants with respect to standing, any purported statements by Defendants will only amount to reasonable reliance where DaVita can show that the Plan documents were never made available to it. See Care First Surgical Ctr. v. ILWU-PMA Welfare Plan, No. 2014 WL 6603761, at *17 (C.D. Cal.",
"July 28, 2014) (Reasonable reliance on the administrator’s statements concerning the assignability of rights under the plan will satisfy estoppel only so long as the plan was not furnished or made available to the provider). DaVita has failed to plead such facts. Moreover, DaVita has failed to plead facts sufficient to show that Defendants waived enforcement of the antiassignment clause; instead, DaVita relies solely on Defendants’ alleged silence with respect to claim forms that purport to show DaVita’s assignment. See Response Br. at 18-19. (Dkt.",
"#31.) “Waiver must be voluntary and [that] there must be a clear act showing the intent to waive the right to rely on the anti-assignment provision.” Care First Surgical Ctr., 2014 WL 6603761, at *18. Further, “routine processing of a claim form, issuing payment at the out-of-network rate, and summarily denying the informal appeal do not demonstrate ‘an evident purpose to surrender’ an objection to a provider’s standing in a federal lawsuit.” See Am. DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 3 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 6 of 13 Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield, 890 F.3d 445, 453–54 (3d Cir.",
"2018). Mere silence is insufficient to manifest an intent to waive the antiassignment clause. B. DaVita Fails To State A Claim For Relief Under The MSPA (Count One). DaVita spins a complicated web to explain its failure to offer any allegations in the Complaint sufficient to demonstrate that the MSPA applies as between these private parties. DaVita would have the Court believe that Congress intended the MSPA to be used as a mechanism to boost the profits of a private medical provider. Tellingly, DaVita fails to offer authorities supporting that view, let alone any authority permitting a case to go forward without a concrete, particularized injury compensable under the MSPA.",
"Even the cases DaVita cites do not get past the motion to dismiss stage as a result of this failure. See, e.g., Nat’l Renal Alliance, LLC v. Blue Cross and Blue Shield of Ga., Inc., 598 F. Supp. 2d 1344 (N.D. Ga. 2009) (dismissing MSPA claim for failure to state a claim and holding that a “health plan’s decision to lower reimbursement rates to its members for services received at an out-of-network facility” does not impact Medicare); Parra v. PacifiCare of Ariz., 715 F.3d 1146, 1154 (9th Cir. 2013) (upholding motion to dismiss on appeal for failure to state a claim under the MSPA).",
"DaVita is now flummoxed to the point that it actually requests this Court to reject the central holding of Bio-Med Applications of Tenn. v. Cent. Sts. Se. & Sw. Areas Health & Welfare Fund, 656 F.3d. 277 (6th Cir. 2011) (“Bio-Med of Tenn.”), which DaVita repeatedly cited in its Complaint as the basis for its MSPA claim. In response to Defendants’ motion to dismiss, DaVita now does an about-face and “respectfully submits that this Court should draw a different conclusion” from the Bio-Med of Tenn. holding. See Response Br. at 10. (Dkt. #31.) To support its argument, DaVita offers one-sentence quotes from the CMS Manual and an inapposite Ninth Circuit decision. Id., citing Parra, 715 F.3d at 1154; CMS Manual Ch. 1 § 30.B. Both cited authorities simply restate what is already in the plain text of the MSPA private action provision, DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 4 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 7 of 13 i.e., a private cause of action is available when a plan fails to provide for primary payment. It is that failure, which then shifts the payment obligation to Medicare and makes Medicare “primary” and no longer “secondary.” There are no allegations in the Complaint that Defendants’ actions have caused Medicare to become a primary payer. There are no allegations in the Complaint that Medicare has paid anything.",
"In fact, the opposite is true, as DaVita affirmatively alleges that Defendants made and continue to make payments for services directly to DaVita. See Compl. (Dkt. #1) at ¶¶ 6, 53 60.h, 60.k, 61.h., 61.k, 62.h, 63.h, 64.h and 65.h. DaVita also alleges that the Plan “today covers dialysis.” Id. at ¶ 31. A private cause of action only exists under the MSPA where the plan has failed to provide for payment, yet DaVita affirmatively alleges throughout the Complaint that the Plan continues to make payments for treatment rendered and that the Plan covers dialysis today.",
"Accordingly, even if this Court were to adopt a holding different from the Sixth Circuit’s decision in Bio-Med of Tenn., DaVita affirmatively alleges facts that destroy its MSPA claim. The truth is that Defendants continue to offer coverage for dialysis patients and the Plan issues payments to DaVita for such services. Boiled down to its essence, this case presents a private dispute between Defendants and DaVita that in no way implicates the MSPA or a drain on the public fisc that led Congress to create a private right of action. Whether or not DaVita is considered to be in-network or out-of-network is a red herring that has nothing to do with the absence of any allegations sufficient to invoke the MSPA. In Nat’l Renal Alliance, a renal provider brought suit because Blue Cross cut its reimbursement for out-of-network dialysis to levels below the customer charges associated with such care, just as DaVita alleges in the Complaint.",
"598 F. Supp. 2d at 1349. In granting Blue Cross’ motion to dismiss, the district court held that a dispute between two private parties over rates of DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 5 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 8 of 13 reimbursement did not impact Medicare and, therefore, the MSPA did not apply. Id. at 1354. Specifically, the Court stated “Plaintiff’s proposed theory of damages is the difference between the cost of the services and the rate of payment set by the provider.",
"This calculation, however, has no impact on Medicare. The damages provided for in the statue simply do not fit the situation here.” Id. at 1355. DaVita’s proposed theory of damages is the higher rate it wishes to charge as its UCR rate versus the lower rate the Plan is currently paying for dialysis services. That calculation has no impact on Medicare. C. DaVita Fails To State A Claim For Injunctive Or Equitable Relief Under ERISA (Count Two). Count Two alleges the existence of illegal plan terms under MSPA and ERISA, and seeks equitable relief pursuant to 29 U.S.C. § 1132(a)(3). Compl. at ¶¶ 86-90. (Dkt. #1.) As explained in Defendants’ opening brief: (1) equitable relief is not available under ERISA to redress violations of statutes other than ERISA itself, and (2) the factual allegations of discriminatory Plan terms, even if accepted as true, do not violate 29 U.S.C.",
"§ 1182(a)(1). DaVita asserts that relief is available under Section 1132(a)(3) for MSPA violations per Bio-Med of Tenn., 656 F.3d 277. See Response Br. at 5-6. (Dkt. #31.) However, Bio-Med of Tenn. does not make any connection between an MSPA violation and the availability of equitable relief under ERISA. The ERISA claim at issue in Bio-Med of Tenn. was a benefit claim under Section 1132(a)(1)(B). Id. at 280. In fact, the word “equitable” does not appear in the Bio-Med of Tenn. decision, nor is there any citation to Section 1132(a)(3). Additionally, Section 1132(a)(3) is clear as providing remedies only for ERISA violations. Regarding the alleged Section 1182(a)(1) violation, DaVita argues that its violation is a question of fact. See Response Br. at fn 6. (Dkt.",
"#31.) The facts as alleged do not reveal a violation as compared to the authorities discussed in Defendants’ Memorandum at 20-23. DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 6 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 9 of 13 (Dkt. #20-1.) A violation is not plausible given the alleged facts and the applicable authorities. As such, the claim relative to an alleged Section 1182(a)(1) violation should be dismissed. D. DaVita Fails To Allege Sufficient Facts To State A Claim For Benefits (Count Three). The Complaint does not allege facts identifying breached Plan terms, those on whose behalf payment was insufficient, treatment dates at issue, location of the treatments, amounts paid for specific treatments, the amounts not paid for specific treatments, or the terms of the Plan that entitle DaVita to additional payments.",
"In short, DaVita fails to identify the promises made that were not fulfilled or benefits not delivered. Instead, DaVita bluntly asserts it provided services to six individuals (and perhaps unidentified others) over time for which it is not satisfied with the payments. Although DaVita identifies the Plan at issue, it offers no other details such as names, charges, dates of service, and most importantly, the Plan terms that were supposedly breached. See, e.g., Polk Medical Center, Inc. v. Blue Cross and Blue Shield of Georgia, Inc., 2018 WL 624882, at *3 (N.D. Ga. Jan. 30, 2018). The pleading is therefore insufficient. Moreover, elimination of in-network coverage, even if true, does not mean that benefits remain owing per the Plan terms. DaVita’s desire to design (or redesign) the Plan is not actionable.",
"If DaVita is arguing that the Plan prohibits Defendants from making changes to the Plan design, such is unsupported by the law (which allows plan sponsors to make changes to their plan design) and by the Plan itself (see Plan at § 1.5 (page 6)). See, e.g., Curtiss-Wright Corp. v. Schoonejongen, 515 U.S. 73, 78 (1995). The Plan states that dialysis is covered, and DaVita alleges the same. The Plan states simply and clearly that dialysis treatment will be paid based either on an agreement between the provider and EthiCare (the Plan’s dialysis administrator) or at the Plan’s UCR reimbursement rate (the former labelled “In-Network,” and the latter, “Out-of-Network”). See Hyer Decl., DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 7 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 10 of 13 Ex. A at §§ 10.1 (page 25), 11.9.9.C.1 (page 33), and 12.10 (page 42).",
"(Dkt. #20-2.) Although it is a common design, there is no requirement for any plan to provide in-network and out-of- network benefits. DaVita was reimbursed at the UCR rate (defined at Plan § 26 (page 106)) in accordance with the Plan terms. DaVita is not satisfied with the Plan terms, but such dissatisfaction is not actionable. Finally, while the Complaint alleges that Patients 1 and 2 went through the Plan’s appeal process and exhausted their remedies, the Complaint conspicuously does not make those allegations relative to Patients 3-6. Instead, DaVita alleges it treated those patients and was paid, but fails to explain how the Plan terms were violated. E. DaVita Fails To State A Claim For Equitable Relief (Count Four). Aside from the ERISA-based equitable relief claim under Count Two, DaVita alleges entitlement to ERISA equitable relief under Count Four. Equitable relief under ERISA is available to redress violations of ERISA or violations of Plan terms.",
"See 29 U.S.C. § 1132(a)(3). No violation of ERISA is alleged, except with regard to Section 1182(a)(1) (the lacking violation of such is discussed above), and no identifiable Plan terms are alleged to have been violated. In the event the Court is able to identify either of those allegations (i.e., potential ERISA or Plan term violations), the specific equitable doctrines are inapplicable. As DaVita indicates, surcharge requires a loss resulting from a trustee’s breach of duty or to prevent a trustee’s unjust enrichment.",
"See Response Br. at 26. (Dkt. #31.) The Plan does not have a trust or trustee. There are no allegations of a trustee’s breach of duty or unjust enrichment. There are vague allegations to the effect that the Plan terms were not adequately disclosed; however, DaVita seems well aware of those terms and their meaning is entirely clear. See Hyer Decl., Ex. A at §§ 10.1 (page 25), 11.9.9.C.1 (page 33), and 12.10 (page 42). (Dkt. #20-2.) Also, notwithstanding the ruling in CIGNA Corp. v. Amara, 563 U.S. 421, 444 (2011), the law still requires that the relief sought be equitable, not legal, regardless of DaVita’s label. See The DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 8 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 11 of 13 Depot, Inc. v. Caring for Montanans, Inc., 2019 WL 453485, at *10 (9th Cir.",
"Feb. 6, 2019). DaVita improperly seeks to recover money damages under ERISA by calling it equitable relief. DaVita cannot proceed under the doctrines of reformation and estoppel because there were no violations of ERISA or Plan terms, but also because there is no allegation of fraud (even accepting DaVita’s described lower threshold of what that might mean), and because there is nothing extraordinary about a Plan paying for services in accordance with the Plan terms. DaVita states the Plan should be reformed to compensate providers at usual and customary rates. The Plan already says this; there is nothing to reform. The Complaint is not at all clear in terms of what was not disclosed or misrepresented in the Plan. Finally, Count Four is not plead in the alternative as contemplated by Moyle v. Liberty Mutual Retirement Benefit Plan, 823 F.3d 948, 962 (9th Cir.",
"2017). Notwithstanding the ability in the Ninth Circuit for both causes of action to proceed at the same time (in the alternative) in some circumstances, this is an issue that should proceed as a benefit claim (if sufficient factual allegations are made at some point). This is because the claim for equitable relief does not pass though the threshold of alleging an ERISA or Plan term violation. F. DaVita Cannot State Claims Under State Law (Count Five). ERISA broadly preempts state law causes of action with few exceptions that are not present in this case. See Aetna Health v. Davila, 542 U.S. 200, 124 S. Ct. 2488, 159 L.Ed.2d 312 (2004). As such, the state law causes of action must be dismissed.",
"Preemption notwithstanding, DaVita’s Complaint expresses dissatisfaction with being reimbursed at a lower rate for dialysis services. Such dissatisfaction, however, is insufficient to meet the requirements of promissory estoppel and quantum meruit. The Plan is not prohibited by law from taking steps to reduce its costs. Further, there is nothing that requires the Plan to keep reimbursement rates at the same amount in perpetuity. There is no allegation that Defendants DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 9 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 12 of 13 intended that DaVita rely on mistaken facts or promises in the Plan provisions as amended. DaVita’s allegations are, in essence, that the Plan was amended, and DaVita is dissatisfied with being reimbursed at a lower rate for dialysis services. Without facts to support the allegations of reliance or some other implied contract contrary to the terms of the Plan, dissatisfaction with reimbursement rates does not amount to promissory estoppel or quantum meruit. III. CONCLUSION Defendants respectfully request the Court dismiss DaVita’s Complaint in its entirety.",
"DATED THIS 15th day of February, 2019. HAWLEY TROXELL ENNIS & HAWLEY LLP By: /s/ Tyler J. Anderson Tyler J. Anderson, ISB No. 6632 Attorneys for Defendants DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 10 47568.0004.11703875.5 Case 1:18-cv-00482-CWD Document 36 Filed 02/15/19 Page 13 of 13 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 15th day of February, 2019, I electronically filed the foregoing DEFENDANTS’ REPLY MEMORANDUM IN SUPPORT OF MOTION TO DISMISS with the Clerk of the Court using the CM/ECF system which sent a Notice of Electronic Filing to the following persons: Jay Gustavsen gus@davisoncopple.com DAVISON, COPPLE, COPPLE & COPPLE 199 N. Capitol Blvd., Ste. 600 Boise, ID 83702 T: (208) 342-3658 | F: (208) 386-9428 Attorneys for Plaintiffs Peter K. Stris (pro hac vice) peter.stris@strismaher.com Brendan S. Maher (pro hac vice) brendan.maher@strismaher.com Rachana A. Pathak (pro hac vice) radha.pathak@strismaher.com John Stokes (pro hac vice) john.stokes@strismaher.com STRIS & MAHER, LLP 725 South Figueroa Street, Suite 1830 Los Angeles, CA 90017 T: (213) 995-6800 | F: (213) 261-0299 Attorneys for Plaintiffs /s/ Tyler J. Anderson Tyler J. Anderson DEFENDANTS’ REPLY IN SUPPORT OF MOTION TO DISMISS - 11 47568.0004.11703875.5"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/60718812/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
J-S52016-14
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellee
v.
FERNANDO REAL,
Appellant No. 1495 EDA 2013
Appeal from the PCRA Order entered May 3, 2013, in the Court of Common Pleas of Philadelphia County, Criminal Division, at No(s): CP-51-CR-0207721-2004
BEFORE: GANTMAN, P.J., ALLEN and FITZGERALD*, JJ.
MEMORANDUM BY ALLEN, J.: FILED AUGUST 27, 2014
pro se from the order denying his
sections 9541-46. We affirm.
We previously summarized the factual background as follows:
On September 11, 200[2], Appellant shot and killed
Frankford section of the City and County of Philadelphia, Pennsylvania. According to eyewitness testimony of R when the victim placed an insufficient bet. A verbal argument between Appellant and the victim ensued.
with two other men. Shortly after Appellant returned to where the game was being played, the victim walked away from the game. Mr. Milburn then heard gun shots [sic] and saw Appellant with a 9 mm gun in his hand, standing over the victim who had fallen to the curb. After the
*Former Justice specially assigned to the Superior Court. J-S52016-14
shooting, Appellant ran away. Mr. Milburn had seen Appellant with the same 9 mm gun about a week earlier in a local bar. According to Mr. Milburn, nearby police officers immediately responded to the gunshots and, without waiting for an ambulance, transported the victim to the hospital. [The victim later died.]
Commonwealth v. Real, 972 A.2d 560 (Pa. Super. 2009), unpublished
memorandum at 1-2 (citations omitted).
A jury convicted Appellant of first-degree murder and possession of an
instrument of crime. Thereafter, the trial court sentenced Appellant to a
term of life in prison for his murder conviction, and a concurrent sentence of
two and one-half to five years in prison for possessing an instrument of
crime. Appellant filed a direct appeal to this Court. In an unpublished
sentence. Real, supra. On October 7, 2009, our Supreme Court denied
Commonwealth v. Real, 982 A.2d 65 (Pa. 2009). On April 5, 2010, the United States Supreme Court
certiorari.
Meanwhile, on February 26, 2010, Appellant filed a pro se PCRA
petition. Although the PCRA court appointed counsel, and PCRA counsel filed
an amended petition, on July 16, 2012, Appellant filed a motion to proceed
pro se, and an amended petition in which he raised several claims of
ineffective assistance of counsel. On September 13, 2012, the PCRA court
-2- J-S52016-14
conducted a Grazier1 hearing, and granted Appellant permission to proceed
pro se. The PCRA court then held several days of evidentiary hearings. By
PCRA petition. This timely appeal followed. The PCRA court did not require
Pa.R.A.P. 1925 compliance.
Appellant raises the following issues:
A. Whether the PCRA court erred when it held [Appellant]
prosecutor eliciting evidence of another crime previously ruled inadmissible the shooting at Officer Spence
under the Pennsylvania and United States Constitutions?
B. Whether the PCRA court erred when in denying [Appellant] relief when [his] right to effective assistance of
counsel was violated by the prosecutor displaying a photograph of [Appellant] to a witness, post formal charging without defense counsel being present?
-3.
In reviewing the propriety of an order granting or denying PCRA relief,
an appellate court is limited to ascertaining whether the record supports the
determination of the PCRA court and whether the ruling is free of legal error.
Commonwealth v. Johnson, 966 A.2d 523, 532 (Pa. 2009). We pay great
____________________________________________
1 See Commonwealth v. Grazier, 713 A.2d 81 (Pa. 1998).
-3- J-S52016-14
Johnson, 966 A.2d at 532. To be entitled
to relief under the PCRA, the petitioner must plead and prove by a
preponderance of the evidence that the conviction or sentence arose from
one or more of the errors enumerated in section 9543(a)(2) of the PCRA.
One such error involves the ineffectiveness of counsel.
To obtain relief under the PCRA premised on a claim that counsel was
ineffective, a petitioner must establish by a preponderance of the evidence
that counsel's ineffectiveness so undermined the truth-determining process
that no reliable adjudication of guilt or innocence could have taken place.
Id.
adequate, and counsel will only be deemed ineffective upon a sufficient
Id. This requires the petitioner to demonstrate
that: (1) the underlying claim is of arguable merit; (2) counsel had no
reasonable strategic basis for his or her action or inaction; and (3) petitioner
was prejudiced by counsel's act or omission. Id. at 533. A finding of
"prejudice" requires the petitioner to show "that there is a reasonable
proceeding would have been different." Id. In assessing a claim of
ineffectiveness, when it is clear that appellant has failed to meet the
prejudice prong, the court may dispose of the claim on that basis alone,
without a determination of whether the first two prongs have been met.
Commonwealth v. Travaglia, 661 A.2d 352, 357 (Pa. 1995). Counsel
-4- J-S52016-14
cannot be deemed ineffective for failing to pursue a meritless claim.
Commonwealth v. Loner, 836 A.2d 125, 132 (Pa. Super. 2003) (en banc),
appeal denied, 852 A.2d 311 (Pa. 2004).
Appellant first claims that trial counsel was ineffective for failing to
object and request a mistrial after Sergeant John Spence testified at trial
another occupant fired at the officer.
According to Appellant, the trial court previously ruled this evidence
cken[ed]
in the minds of the jury. Absent this error, the jury was free to believe
ad arguable merit, and
trial counsel did not provide a reasonable basis for his omission, the PCRA
court concluded that Appellant could not establish the requisite prejudice. In
ruling on the record, the PCRA court stated:
[T]his Court cannot find that there was a reasonable probability that the outcome of the trial would have been different had this evidence been excluded due to the overwhelming evidence of guilt in this case and the general cautionary instruction given to the jury regarding bad acts.
***
-5- J-S52016-14
This Court reviewed the jury instructions. In their totality, the instructions informed the jury of the limited purpose for which evidence of flight could be used, as well as any other evidence of bad acts by [Appellant].
N.T., 5/3/13, at 12-13.
because Appellant could not establish prejudice, his ineffectiveness claim
fails. Travaglia, supra. Earlier in the hearing, the PCRA court summarized
the overwhelming evidence of Appel
read to the jury since he was found to be unavailable to testify by the Trial Court.
described the circumstances surrounding the shooting. It was an improperly placed bet at a dice game. He described the gun used in the shooting as a 9 millimeter. Ballistics confirmed this. The victim was shot from behind. He testified that the victim was shot from behind. The medical examiner confirmed this. [Mr. Milburn] said that [Appellant] stood over the victim after he was down and fired more shots at him. Ballistics confirmed this. There
Milburn] testified that numerous shots were fired. The murder weapon was recovered empty and the victim was shot 12 times.
Marquise Nixon gave a statement to police. He recanted at trial, however, under the law, his prior inconsistent, signed statement to police must be considered by a reviewing Court in the same manner as any other type of validly admitted substantive evidence when determining if sufficient evidence exists to sustain a criminal conviction.
game. He heard shots, [Appellant] as the shooter and he stated that he saw [Appellant] run toward Harrison Street. Police Officer
-6- J-S52016-14
photo out of an array[.]
***
Brian Perry also gave a statement to police. He was an eyewitness. He recanted at trial, but since it was a signed statement to police, which he adopted, that must be considered as substantive evidence, as well.
He stated that he was at a craps game, that he heard approximately seven shots coming from the area where he last saw [Appellant] behind him, that [Appellant] was wearing a white T-shirt and blue jeans, tall, real light, looks Puerto Rican, approximately 5, 11.
Police Officer Vincent - - I am going to purposely leave out her in- most likely should not have been permitted. She sees a light-skinned black male, 5,9 to 5,11, skinny, from 20 to 30 feet away in well-lit conditions. This male looks in her direction, stands flush against the wall, then runs toward Harrison Street.
Police Officer Vincent testified that she found the gun on the path along which she chased this person. That gun was later determined to be the murder weapon.
Other evidence presented in the case was that
attempted to reclaim it. Also [Appellant] could not be found for over one year. [Appellant] was finally found in a motel room in New Jersey with a loaded weapon which was a 9 millimeter and he gave a false name.
and there is no claim regarding the statements as a part of the PCRA. So the statements are substantive evidence that was legally admitted during the trial. The statements being I like shooting people and I already got two bodies.
N.T., 5/3/13, at 4-7.
-7- J-S52016-14
that the jury was adequately instructed as to the limited use of the evidence
in question. See N.T., 6/27/05, at 199-201. It is well settled that juries are
Commonwealth v.
Speight, 854 A.2d 450, 458 (Pa. 2004); see also Commonwealth v.
John, 596 A.2d
instructions may suffice to eradicate any prejudice that might result from
In his next issue, Appellant claims that the PCRA court erred in
on appeal his claim that his constitutional right to counsel was violated.
Prior to addressing this claim, the PCRA explained the circumstances
Now, by way of factual background, Police Officer Vincent arrived on the scene of the homicide. She saw a male run in her direction, then look in her direction and place his body flat against the wall. The male then ran off toward Harrison Street. Police Officer Vincent gave chase. She lost the male but recovered a gun on the path along which she chased the male which was later determined to be the murder weapon.
Police Officer Vincent gave a statement to homicide detectives wherein she described the male as a light- skinned black male, 5,9 to 5,11, skinny. Police Officer
[Appellant] that evening.
Approximately six weeks after the homicide, a wanted poster of [Appellant] was placed in the 15th Police District.
-8- J-S52016-14
Police Officer Vincent testified that she saw the poster and recognized it to be the person she chased on the night of the homicide. She failed to disclose this information to homicide detectives or to the Assistant District Attorney until pretrial preparation which was a few days before the trial.
When Police Officer Vincent told the Assistant District Attorney, which was close to three years after [Appellant] had been arrested and the wanted poster had been taken down, Police Officer Vincent, unbeknownst to the Defense Attorney beforehand, identified [Appellant] in court. The
colloquied Police Officer Vincent regarding the basis for her in-court identification.
Police Officer Vincent testified to seeing the wanted poster near the time of the homicide but also testified that she was shown the poster again by the Assistant District Attorney during the trial prep.
N.T., 5/3/13, at 15-17.
the first two prongs of the tripartite test applied to an ineffectiveness claim,
the PCRA denied relief based upon its conclusion that Appellant could not
establish the requisite prejudice:
[Even if the trial court had] afforded relief to the Defense in the form of a complete suppression of any identification by Police Officer Vincent, that still would not likely have changed the outcome of this case.
description. The direction in which he ran was consistent with the direction in which other witnesses say he ran and there were three other identification witnesses - - and this is the most important fact - - there were three other identification witnesses aside from Police Officer Vincent, witnesses who knew [Appellant]. Also, Police Officer Vincent was fully cross-examined and her credibility
-9- J-S52016-14
notice of her ability to make an identification in the case.
Id. at 21-22.
g that he was
prejudiced by any violation of his right to counsel. See, e.g.,
Commonwealth v. Spencer, 275 A.2d 299, 332 (Pa. 1971) (refusing to
improperly denied during pretrial identification, when the error was harmless
that prejudice is presumed is inapt. See
In sum, because the PCRA court correctly concluded that Appellant
order denying post-conviction relief.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 8/27/2014
- 10 - | 08-27-2014 | [
"J-S52016-14 NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37 COMMONWEALTH OF PENNSYLVANIA, IN THE SUPERIOR COURT OF PENNSYLVANIA Appellee v. FERNANDO REAL, Appellant No. 1495 EDA 2013 Appeal from the PCRA Order entered May 3, 2013, in the Court of Common Pleas of Philadelphia County, Criminal Division, at No(s): CP-51-CR-0207721-2004 BEFORE: GANTMAN, P.J., ALLEN and FITZGERALD*, JJ. MEMORANDUM BY ALLEN, J.: FILED AUGUST 27, 2014 pro se from the order denying his sections 9541-46. We affirm. We previously summarized the factual background as follows: On September 11, 200[2], Appellant shot and killed Frankford section of the City and County of Philadelphia, Pennsylvania. According to eyewitness testimony of R when the victim placed an insufficient bet. A verbal argument between Appellant and the victim ensued.",
"with two other men. Shortly after Appellant returned to where the game was being played, the victim walked away from the game. Mr. Milburn then heard gun shots [sic] and saw Appellant with a 9 mm gun in his hand, standing over the victim who had fallen to the curb. After the *Former Justice specially assigned to the Superior Court. J-S52016-14 shooting, Appellant ran away. Mr. Milburn had seen Appellant with the same 9 mm gun about a week earlier in a local bar.",
"According to Mr. Milburn, nearby police officers immediately responded to the gunshots and, without waiting for an ambulance, transported the victim to the hospital. [The victim later died.] Commonwealth v. Real, 972 A.2d 560 (Pa. Super. 2009), unpublished memorandum at 1-2 (citations omitted). A jury convicted Appellant of first-degree murder and possession of an instrument of crime. Thereafter, the trial court sentenced Appellant to a term of life in prison for his murder conviction, and a concurrent sentence of two and one-half to five years in prison for possessing an instrument of crime.",
"Appellant filed a direct appeal to this Court. In an unpublished sentence. Real, supra. On October 7, 2009, our Supreme Court denied Commonwealth v. Real, 982 A.2d 65 (Pa. 2009). On April 5, 2010, the United States Supreme Court certiorari. Meanwhile, on February 26, 2010, Appellant filed a pro se PCRA petition. Although the PCRA court appointed counsel, and PCRA counsel filed an amended petition, on July 16, 2012, Appellant filed a motion to proceed pro se, and an amended petition in which he raised several claims of ineffective assistance of counsel. On September 13, 2012, the PCRA court -2- J-S52016-14 conducted a Grazier1 hearing, and granted Appellant permission to proceed pro se. The PCRA court then held several days of evidentiary hearings.",
"By PCRA petition. This timely appeal followed. The PCRA court did not require Pa.R.A.P. 1925 compliance. Appellant raises the following issues: A. Whether the PCRA court erred when it held [Appellant] prosecutor eliciting evidence of another crime previously ruled inadmissible the shooting at Officer Spence under the Pennsylvania and United States Constitutions? B. Whether the PCRA court erred when in denying [Appellant] relief when [his] right to effective assistance of counsel was violated by the prosecutor displaying a photograph of [Appellant] to a witness, post formal charging without defense counsel being present? -3. In reviewing the propriety of an order granting or denying PCRA relief, an appellate court is limited to ascertaining whether the record supports the determination of the PCRA court and whether the ruling is free of legal error.",
"Commonwealth v. Johnson, 966 A.2d 523, 532 (Pa. 2009). We pay great ____________________________________________ 1 See Commonwealth v. Grazier, 713 A.2d 81 (Pa. 1998). -3- J-S52016-14 Johnson, 966 A.2d at 532. To be entitled to relief under the PCRA, the petitioner must plead and prove by a preponderance of the evidence that the conviction or sentence arose from one or more of the errors enumerated in section 9543(a)(2) of the PCRA. One such error involves the ineffectiveness of counsel. To obtain relief under the PCRA premised on a claim that counsel was ineffective, a petitioner must establish by a preponderance of the evidence that counsel's ineffectiveness so undermined the truth-determining process that no reliable adjudication of guilt or innocence could have taken place. Id. adequate, and counsel will only be deemed ineffective upon a sufficient Id.",
"This requires the petitioner to demonstrate that: (1) the underlying claim is of arguable merit; (2) counsel had no reasonable strategic basis for his or her action or inaction; and (3) petitioner was prejudiced by counsel's act or omission. Id. at 533. A finding of \"prejudice\" requires the petitioner to show \"that there is a reasonable proceeding would have been different.\" Id. In assessing a claim of ineffectiveness, when it is clear that appellant has failed to meet the prejudice prong, the court may dispose of the claim on that basis alone, without a determination of whether the first two prongs have been met.",
"Commonwealth v. Travaglia, 661 A.2d 352, 357 (Pa. 1995). Counsel -4- J-S52016-14 cannot be deemed ineffective for failing to pursue a meritless claim. Commonwealth v. Loner, 836 A.2d 125, 132 (Pa. Super. 2003) (en banc), appeal denied, 852 A.2d 311 (Pa. 2004). Appellant first claims that trial counsel was ineffective for failing to object and request a mistrial after Sergeant John Spence testified at trial another occupant fired at the officer.",
"According to Appellant, the trial court previously ruled this evidence cken[ed] in the minds of the jury. Absent this error, the jury was free to believe ad arguable merit, and trial counsel did not provide a reasonable basis for his omission, the PCRA court concluded that Appellant could not establish the requisite prejudice. In ruling on the record, the PCRA court stated: [T]his Court cannot find that there was a reasonable probability that the outcome of the trial would have been different had this evidence been excluded due to the overwhelming evidence of guilt in this case and the general cautionary instruction given to the jury regarding bad acts. *** -5- J-S52016-14 This Court reviewed the jury instructions. In their totality, the instructions informed the jury of the limited purpose for which evidence of flight could be used, as well as any other evidence of bad acts by [Appellant]. N.T., 5/3/13, at 12-13. because Appellant could not establish prejudice, his ineffectiveness claim fails. Travaglia, supra. Earlier in the hearing, the PCRA court summarized the overwhelming evidence of Appel read to the jury since he was found to be unavailable to testify by the Trial Court.",
"described the circumstances surrounding the shooting. It was an improperly placed bet at a dice game. He described the gun used in the shooting as a 9 millimeter. Ballistics confirmed this. The victim was shot from behind. He testified that the victim was shot from behind. The medical examiner confirmed this. [Mr. Milburn] said that [Appellant] stood over the victim after he was down and fired more shots at him. Ballistics confirmed this. There Milburn] testified that numerous shots were fired. The murder weapon was recovered empty and the victim was shot 12 times. Marquise Nixon gave a statement to police. He recanted at trial, however, under the law, his prior inconsistent, signed statement to police must be considered by a reviewing Court in the same manner as any other type of validly admitted substantive evidence when determining if sufficient evidence exists to sustain a criminal conviction. game. He heard shots, [Appellant] as the shooter and he stated that he saw [Appellant] run toward Harrison Street. Police Officer -6- J-S52016-14 photo out of an array[.] *** Brian Perry also gave a statement to police.",
"He was an eyewitness. He recanted at trial, but since it was a signed statement to police, which he adopted, that must be considered as substantive evidence, as well. He stated that he was at a craps game, that he heard approximately seven shots coming from the area where he last saw [Appellant] behind him, that [Appellant] was wearing a white T-shirt and blue jeans, tall, real light, looks Puerto Rican, approximately 5, 11. Police Officer Vincent - - I am going to purposely leave out her in- most likely should not have been permitted. She sees a light-skinned black male, 5,9 to 5,11, skinny, from 20 to 30 feet away in well-lit conditions.",
"This male looks in her direction, stands flush against the wall, then runs toward Harrison Street. Police Officer Vincent testified that she found the gun on the path along which she chased this person. That gun was later determined to be the murder weapon. Other evidence presented in the case was that attempted to reclaim it. Also [Appellant] could not be found for over one year. [Appellant] was finally found in a motel room in New Jersey with a loaded weapon which was a 9 millimeter and he gave a false name. and there is no claim regarding the statements as a part of the PCRA. So the statements are substantive evidence that was legally admitted during the trial. The statements being I like shooting people and I already got two bodies. N.T., 5/3/13, at 4-7.",
"-7- J-S52016-14 that the jury was adequately instructed as to the limited use of the evidence in question. See N.T., 6/27/05, at 199-201. It is well settled that juries are Commonwealth v. Speight, 854 A.2d 450, 458 (Pa. 2004); see also Commonwealth v. John, 596 A.2d instructions may suffice to eradicate any prejudice that might result from In his next issue, Appellant claims that the PCRA court erred in on appeal his claim that his constitutional right to counsel was violated. Prior to addressing this claim, the PCRA explained the circumstances Now, by way of factual background, Police Officer Vincent arrived on the scene of the homicide. She saw a male run in her direction, then look in her direction and place his body flat against the wall.",
"The male then ran off toward Harrison Street. Police Officer Vincent gave chase. She lost the male but recovered a gun on the path along which she chased the male which was later determined to be the murder weapon. Police Officer Vincent gave a statement to homicide detectives wherein she described the male as a light- skinned black male, 5,9 to 5,11, skinny. Police Officer [Appellant] that evening. Approximately six weeks after the homicide, a wanted poster of [Appellant] was placed in the 15th Police District.",
"-8- J-S52016-14 Police Officer Vincent testified that she saw the poster and recognized it to be the person she chased on the night of the homicide. She failed to disclose this information to homicide detectives or to the Assistant District Attorney until pretrial preparation which was a few days before the trial. When Police Officer Vincent told the Assistant District Attorney, which was close to three years after [Appellant] had been arrested and the wanted poster had been taken down, Police Officer Vincent, unbeknownst to the Defense Attorney beforehand, identified [Appellant] in court. The colloquied Police Officer Vincent regarding the basis for her in-court identification. Police Officer Vincent testified to seeing the wanted poster near the time of the homicide but also testified that she was shown the poster again by the Assistant District Attorney during the trial prep.",
"N.T., 5/3/13, at 15-17. the first two prongs of the tripartite test applied to an ineffectiveness claim, the PCRA denied relief based upon its conclusion that Appellant could not establish the requisite prejudice: [Even if the trial court had] afforded relief to the Defense in the form of a complete suppression of any identification by Police Officer Vincent, that still would not likely have changed the outcome of this case. description. The direction in which he ran was consistent with the direction in which other witnesses say he ran and there were three other identification witnesses - - and this is the most important fact - - there were three other identification witnesses aside from Police Officer Vincent, witnesses who knew [Appellant]. Also, Police Officer Vincent was fully cross-examined and her credibility -9- J-S52016-14 notice of her ability to make an identification in the case.",
"Id. at 21-22. g that he was prejudiced by any violation of his right to counsel. See, e.g., Commonwealth v. Spencer, 275 A.2d 299, 332 (Pa. 1971) (refusing to improperly denied during pretrial identification, when the error was harmless that prejudice is presumed is inapt. See In sum, because the PCRA court correctly concluded that Appellant order denying post-conviction relief. Order affirmed. Judgment Entered. Joseph D. Seletyn, Esq. Prothonotary Date: 8/27/2014 - 10 -"
]
| https://www.courtlistener.com/api/rest/v3/opinions/2721487/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
UNPUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 08-4425
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
VINCENT EDWARD LARKIN,
Defendant - Appellant.
Appeal from the United States District Court for the Southern District of West Virginia, at Beckley. Thomas E. Johnston, District Judge. (5:05-cr-00221-1)
Submitted: August 11, 2008 Decided: September 23, 2008
Before MICHAEL, KING, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Mary Lou Newberger, Federal Public Defender, Jonathan D. Byrne, Appellate Counsel, Christian M. Capece, Assistant Federal Public Defender, Charleston, West Virginia, for Appellant. Charles T. Miller, United States Attorney, Miller A. Bushong, Assistant United States Attorney, Beckley, West Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. PER CURIAM:
Vincent Edward Larkin appeals the district court’s order
revoking his supervised release and sentencing him to twelve months
of imprisonment. He argues that the sentence is plainly
unreasonable because it does not further the purposes of supervised
release. We affirm.
This court will affirm a sentence imposed after
revocation of supervised release if it is within the applicable
statutory maximum and is not plainly unreasonable. United
States v. Crudup, 461 F.3d 433, 437, 439-40 (4th Cir. 2006). We
first assess the sentence for reasonableness, “follow[ing]
generally the procedural and substantive considerations that we
employ in our review of original sentences, . . . with some
necessary modifications to take into account the unique nature of
supervised release revocation sentences.” Id. at 438-39; see
United States v. Finley, 531 F.3d 288, 294 (4th Cir. 2008) (“In
applying the ‘plainly unreasonable’ standard, we first determine,
using the instructions given in Gall [v. United States, 128 S. Ct.
586, 597 (2007)], whether a sentence is ‘unreasonable.’”). Only if
a sentence is found procedurally or substantively unreasonable will
we “decide whether the sentence is plainly unreasonable.” Id.; see
Finley, 531 F.3d at 294. Although the district court must consider
the Chapter 7 policy statements and the requirements of 18 U.S.C.A.
§§ 3553(a), 3583 (West 2000 & Supp. 2008), “the [district] court
2 ultimately has broad discretion to revoke its previous sentence and
impose a term of imprisonment up to the statutory maximum.”
Crudup, 461 F.3d at 439 (internal quotation marks and citations
omitted).
Larkin does not challenge the procedural aspects of his
sentence, or assert that it exceeds either the Guidelines range or
the statutory maximum. Rather, he argues that the district court’s
remarks about domestic violence indicate that the court failed to
adequately consider the purposes of supervised release in choosing
to impose imprisonment rather than home detention. “In determining
the reasonableness of a sentence, we ‘give due deference to the
district court’s decision.’” Finley, 531 F.3d at 297 (quoting
Gall, 128 S. Ct. at 597). Our review of the record leads us to
conclude that the sentence is not unreasonable.
Accordingly, we affirm Larkin’s sentence. We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
AFFIRMED
3 | 07-05-2013 | [
"UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 08-4425 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. VINCENT EDWARD LARKIN, Defendant - Appellant. Appeal from the United States District Court for the Southern District of West Virginia, at Beckley. Thomas E. Johnston, District Judge. (5:05-cr-00221-1) Submitted: August 11, 2008 Decided: September 23, 2008 Before MICHAEL, KING, and DUNCAN, Circuit Judges. Affirmed by unpublished per curiam opinion. Mary Lou Newberger, Federal Public Defender, Jonathan D. Byrne, Appellate Counsel, Christian M. Capece, Assistant Federal Public Defender, Charleston, West Virginia, for Appellant.",
"Charles T. Miller, United States Attorney, Miller A. Bushong, Assistant United States Attorney, Beckley, West Virginia, for Appellee. Unpublished opinions are not binding precedent in this circuit. PER CURIAM: Vincent Edward Larkin appeals the district court’s order revoking his supervised release and sentencing him to twelve months of imprisonment. He argues that the sentence is plainly unreasonable because it does not further the purposes of supervised release. We affirm. This court will affirm a sentence imposed after revocation of supervised release if it is within the applicable statutory maximum and is not plainly unreasonable. United States v. Crudup, 461 F.3d 433, 437, 439-40 (4th Cir.",
"2006). We first assess the sentence for reasonableness, “follow[ing] generally the procedural and substantive considerations that we employ in our review of original sentences, . . . with some necessary modifications to take into account the unique nature of supervised release revocation sentences.” Id. at 438-39; see United States v. Finley, 531 F.3d 288, 294 (4th Cir. 2008) (“In applying the ‘plainly unreasonable’ standard, we first determine, using the instructions given in Gall [v. United States, 128 S. Ct. 586, 597 (2007)], whether a sentence is ‘unreasonable.’”). Only if a sentence is found procedurally or substantively unreasonable will we “decide whether the sentence is plainly unreasonable.” Id. ; see Finley, 531 F.3d at 294.",
"Although the district court must consider the Chapter 7 policy statements and the requirements of 18 U.S.C.A. §§ 3553(a), 3583 (West 2000 & Supp. 2008), “the [district] court 2 ultimately has broad discretion to revoke its previous sentence and impose a term of imprisonment up to the statutory maximum.” Crudup, 461 F.3d at 439 (internal quotation marks and citations omitted). Larkin does not challenge the procedural aspects of his sentence, or assert that it exceeds either the Guidelines range or the statutory maximum. Rather, he argues that the district court’s remarks about domestic violence indicate that the court failed to adequately consider the purposes of supervised release in choosing to impose imprisonment rather than home detention. “In determining the reasonableness of a sentence, we ‘give due deference to the district court’s decision.’” Finley, 531 F.3d at 297 (quoting Gall, 128 S. Ct. at 597).",
"Our review of the record leads us to conclude that the sentence is not unreasonable. Accordingly, we affirm Larkin’s sentence. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. AFFIRMED 3"
]
| https://www.courtlistener.com/api/rest/v3/opinions/1026776/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
116 Wis. 2d 360 (1983) 342 N.W.2d 258 STATE of Wisconsin, Plaintiff-Respondent, v. Peter E. BERG, Defendant-Appellant.[] No. 83-252-CR. Court of Appeals of Wisconsin. Submitted on briefs October 3, 1983. Decided November 23, 1983. *363 For the defendant-appellant the cause was submitted on the briefs of Peter E. Berg of Vienna, Virginia. For the plaintiff-respondent the cause was submitted on the brief of Bronson C. La Follette, attorney general, and Kirbie Knutson, assistant attorney general. Before Gartzke, P.J., Dykman, J. and Gordon Myse, Reserve Judge. DYKMAN, J. Defendant appeals from a judgment of conviction for theft in violation of sec. 943.20(1) (a), Stats.[1] Issues on appeal are whether (1) defendant was properly charged, (2) the evidence was sufficient to sustain the verdict, (3) the trial court erred in allowing certain hypothetical questions to be asked of defendant's character witnesses, and (4) the trial court erred in denying motions for continuance. We conclude defendant was properly charged and the elements of theft were proved by sufficient evidence to sustain the verdict and that the trial court did not err in allowing the hypothetical questions or in denying the continuances. We affirm. Defendant, an attorney, was retained in March 1979 to represent Cheryl O'Reilly in a personal injury case. The *364 client agreed that defendant's fees would be contingent upon the amount recovered and would be one-third of that amount. Defendant did not discuss with O'Reilly payment of expenses associated with the claim. He entered negotiations with Herbert Breidel, a claims adjuster for State Farm Insurance Company, to settle the O'Reilly claim. During the negotiations, defendant obtained a blank release form from Breidel and sent it to the O'Reillys. Mr. O'Reilly signed the blank form which Mrs. O'Reilly then took to defendant's office. Defendant discussed settling the case for $9,000 or $10,000 but did not fill in any amount on the release before Mrs. O'Reilly signed it. Defendant and Breidel eventually agreed to settle the claim for $12,000. Defendant arranged for Breidel to draft a check payable to him as attorney for the O'Reillys so that only his signature was necessary to cash it. Breidel then filled in the amount of $12,581.70 on the release. Defendant endorsed the check and deposited it into his trust account. He told the O'Reillys the claim had been settled for $10,000 and wrote them a check for two-thirds of that amount. He wrote a check to himself for $2,500 and cashed it. The O'Reillys never saw the completed release or the check from State Farm and did not know the actual amount of the settlement until this action was started. In July 1982, a criminal complaint for theft was issued against defendant. Before trial, he made a motion for a continuance to allow substitution for his attorney who thought he might be called to testify. The motion was denied. Defendant was tried and found guilty. At sentencing, he again moved for a continuance to allow time to make post-conviction motions. This motion also was denied.
*365 PROPER CHARGE Defendant argues that he should have been charged under sec. 943.20(1) (b), Stats., instead of sec. 943.20(1) (a), and, therefore, the state failed to prove an element of the crime. He contends that, as their attorney, he had a right to possession of the O'Reillys' money and could be charged with embezzlement but not larceny. He claims the state failed to prove he did not have a right to possession. Challenges to the sufficiency of a complaint must be made prior to the preliminary hearing. Sec. 971.31(5) (c), Stats. Failure to object to a defect in the institution of a criminal proceeding constitutes a waiver. State v. Copening, 103 Wis. 2d 564, 570, 309 N.W.2d 850, 853 (Ct. App. 1981). Defendant waived his right to a preliminary hearing and did not, at any time during the course of the proceedings against him, make a motion challenging the complaint or evidence against him. He raises this issue for the first time on appeal. His failure to present his argument to the trial court precludes appellate review. Id. at 571, 309 N.W.2d at 853.
SUFFICIENCY OF THE EVIDENCE Defendant challenges the sufficiency of the evidence supporting the verdict on the grounds that there was no evidence that the O'Reillys owned the money he withheld from them, that the O'Reillys failed to consent to his possession of it, and that he concealed the money. On review, we must uphold the jury verdict unless, "under all the evidence presented, the jury could not have found guilt beyond a reasonable doubt." State v. Alles, 106 Wis. 2d 368, 377, 316 N.W.2d 378, 382 (1982). If any *366 possibility exists that the jury could have drawn the appropriate inferences from the evidence at trial to find the requisite guilt, the jury verdict will not be overturned. Id. Section 943.20(1) (a), Stats., requires proof beyond a reasonable doubt of four elements: (1) intentional possession of the movable property of another without the owner's consent; (2) possession without the owner's consent; (3) knowledge that possession was without consent; and, (4) intention to deprive the owner of the property permanently. Genova v. State, 91 Wis. 2d 595, 613 n. 19, 283 N.W.2d 483, 491 (Ct. App. 1979). Sufficient evidence supported the jury's findings of the necessary elements. A reasonable jury could have found the O'Reillys owned two-thirds of the $2,000 defendant received from State Farm and kept for himself. Both O'Reillys and defendant testified they entered into an oral agreement that the O'Reillys would receive two-thirds and defendant one-third of any settlement with State Farm. Defendant testified that, as a condition for settling the O'Reillys claim for $10,000, he had to agree with Breidel to cash a $12,000 settlement check and return $2,000 to Breidel and a second adjuster. He characterized the $2,000 as an expense associated with settling the claim. The O'Reillys said they never discussed payment of expenses with defendant and that his full compensation was to be one-third of the settlement. Defendant stated he believed he did tell the O'Reillys about payment of expenses in addition to the percentage of settlement as that was his usual practice with clients. The jury's duty is to weigh the credibility of the witnesses. Alles, 106 Wis. 2d at 376, 316 N.W.2d at 382. Its decision to believe the O'Reillys and find that they were entitled to two-thirds of $12,000 is reasonable. *367 Sufficient evidence also supports the jury's finding that the O'Reillys did not consent to defendant's retention of the $2,000. Both Kevin and Cheryl O'Reilly testified that they did not authorize defendant to keep the $2,000 in addition to his percentage of the $10,000. They also testified they did not know the claim was settled for $12,000 until November 1981. They could not consent to something of which they had no knowledge. Finally, sufficient evidence supports the jury's finding that defendant concealed the extra $2,000 from the O'Reillys. Breidel testified he drafted and delivered the $12,000 check payable to defendant on November 2, 1979. On November 8, 1979, Cheryl O'Reilly signed the blank release after a discussion in which defendant told her the settlement would be between $9,000 and $10,000. Neither O'Reilly ever saw the completed release, the State Farm check or any other documentation or accounting of the $12,000 settlement. Both testified that defendant told them the settlement amount was $10,000.
HYPOTHETICAL QUESTIONS At trial, the prosecutor cross-examined defendant's character witnesses in part by posing the following hypothetical questions: 1) Would you say that a man who participates in a scheme to defraud an insurance company is an honest man? 2) Would you say that a man who settles a client's claim for $12,000 and tells the clients that it was settled for $10,000 is a truthful man? The trial court overruled defendant's objections to these questions. Defendant contends the questions relied on facts of the case, suggested defendant was guilty of criminal conduct, elicited opinions of character rather than reputation, were used to prejudice the jury, and that the court erred in allowing them. *368 No Wisconsin court has determined whether hypothetical questions may be used to cross-examine a defendant's character witnesses. Only Georgia appellate courts have well-developed case law on this issue. In Georgia, hypothetical questions based on evidence as to what the accused has allegedly done and whether the witness would consider a person who would do such things a person of good character have been recognized as proper. Jackson v. State, 254 S.E.2d 739, 741 (Ga. App. 1979). We conclude Georgia law merely extends the rule on hypothetical questions as it has developed in Wisconsin to cover the specific instance of cross-examining character witnesses. We therefore follow it in this case. Wisconsin law allows hypothetical questions in examining and cross-examining expert witnesses in criminal. cases. State v. Rice, 38 Wis. 2d 344, 156 N.W.2d 409 (1968). Questions asked in hypothetical form are not limited to the purpose of testing skill and knowledge but may be used to test the weight to be given to the testimony. Id. at 353-54, 156 N.W.2d at 414. Hypothetical questions must be based on facts which have been admitted as evidence. King v. State, 75 Wis. 2d 26, 41-42, 248 N.W.2d 458, 466 (1977). A proper hypothetical may elicit an expert's opinion on material facts of the case because of the safeguards that the opposing party may supply omitted facts and the court may require questions to be rephrased. Rice, 38 Wis. 2d at 357, 156 N.W.2d at 416. It is then for the jury to decide what weight will be accorded the expert's opinion. Id. Whether opinion testimony should be admitted is a matter left to the trial court's discretion. Maci v. State Farm. Fire & Casualty Co., 105 Wis. 2d 710, 720, 314 N.W.2d 914, 920 (Ct. App. 1981). We will uphold the trial court's exercise of discretion unless the ruling was *369 wrong and an abuse of discretion. Hampton v. State, 92 Wis. 2d 450, 458, 285 N.W.2d 868, 872 (1979). In reviewing the trial court's decision to allow the hypothetical questions, we look first for evidence that the trial court exercised its discretion and next for a statement as to the basis for that exercise. State v. Ascencio, 92 Wis. 2d 822, 829, 285 N.W.2d 910, 914 (Ct. App. 1979). The record shows the trial court exercised its discretion in allowing the hypothetical questions. The court heard arguments from both parties on defendant's objections, required rephrasing of one of the questions, and then overruled defendant's objection. The court's basis for allowing the question was that both questions accurately reflected the defendant's testimony. The court required careful wording of the questions to minimize prejudicial effects on the jury. It did not abuse its discretion.
MOTIONS FOR CONTINUANCE Defendant contends the trial court abused its discretion by denying his pre-trial motion for a continuance to allow him to obtain new counsel. At the pre-trial conference on the day of trial, defense counsel notified the court of a possible conflict of interest based on his being the only person who could impeach certain prosecution witnesses. The trial court required counsel to choose between representing defendant and acting as an impeachment witness. Defendant's co-counsel moved for a continuance to allow him time to prepare to conduct defendant's case. The motion was denied and defense counsel chose to conduct the defense. Defendant argues that he was prejudiced by being forced to make this choice. A motion for continuance is directed to the discretion of the trial court and will not be reversed unless abuse of *370 discretion is shown. State v. Anastas, 107 Wis. 2d 270, 272, 320 N.W.2d 15, 16 (Ct. App. 1982). Where, as here, the trial court does not state its reasons for its decision, we independently review the record for facts which support the decision had discretion been exercised on the basis of those facts. Ascencio, 92 Wis. 2d at 829, 285 N.W.2d at 914. The record indicates that defendant's counsel had represented him for at least two months prior to trial. Defendant should have known of the potential conflict because Herb Breidel, one of the witnesses whom he expected to impeach, was the state's primary witness. Defendant had no reason for not finding another attorney to represent him earlier. Further, it is not clear that defense counsel's testimony would have been necessary. The jury heard the testimony of defendant and Breidel and was able to assess the credibility of the two people directly involved in the negotiations. We conclude that these facts support the discretionary decision of the trial court in denying defendant's motion for a continuance to obtain new counsel. Defendant's final argument is that the trial court erred in denying his post-trial motion for a continuance. At defendant's sentencing, he requested a continuance to prepare post-trial motions which his trial counsel had failed to do. Defendant was represented at the hearing by an attorney from trial counsel's firm because defendant's trial counsel was hospitalized. Defendant argues that failure of his trial counsel to appear and file motions after verdict constitutes ineffective assistance of counsel which denies him due process and equal protection of law. He claims the trial court's denial of his motion for continuance was error. Though we review denial of a motion for continuance for abuse of discretion, we review the record de novo for *371 the possibility of prejudice arising from the absence of counsel at a critical stage of the proceedings. State v. Mills, 107 Wis. 2d 368, 372, 320 N.W.2d 38, 40 (Ct. App. 1982). The harmless error rule applies if prejudice is found beyond a reasonable doubt to be merely speculative or hypothetical. Id. Defendant was not prejudiced by trial counsel's failure to make post-trial motions or appear at sentencing. Defendant raised numerous issues on appeal which presumably were those he would have raised in post-trial motions and which would have been reviewed had post-trial motions been made. He was represented at sentencing by an attorney and he, also an attorney, spoke on his own behalf. If the trial court's refusal to grant a continuance was error, A was harmless was beyond a reasonable doubt. We affirm. By the Court.Judgment affirmed. NOTES [] Petition to review denied. [1] Section 943.20(1) (a), Stats., provides in part:
Whoever does any of the following may be penalized as provided in sub. (3): (a) Intentionally takes and carries away, uses, transfers, conceals, or retains possession of movable property of another without his consent and with intent to deprive the owner permanently of possession of such property. | 10-30-2013 | [
"116 Wis. 2d 360 (1983) 342 N.W.2d 258 STATE of Wisconsin, Plaintiff-Respondent, v. Peter E. BERG, Defendant-Appellant. [] No. 83-252-CR. Court of Appeals of Wisconsin. Submitted on briefs October 3, 1983. Decided November 23, 1983. *363 For the defendant-appellant the cause was submitted on the briefs of Peter E. Berg of Vienna, Virginia. For the plaintiff-respondent the cause was submitted on the brief of Bronson C. La Follette, attorney general, and Kirbie Knutson, assistant attorney general. Before Gartzke, P.J., Dykman, J. and Gordon Myse, Reserve Judge.",
"DYKMAN, J. Defendant appeals from a judgment of conviction for theft in violation of sec. 943.20(1) (a), Stats. [1] Issues on appeal are whether (1) defendant was properly charged, (2) the evidence was sufficient to sustain the verdict, (3) the trial court erred in allowing certain hypothetical questions to be asked of defendant's character witnesses, and (4) the trial court erred in denying motions for continuance. We conclude defendant was properly charged and the elements of theft were proved by sufficient evidence to sustain the verdict and that the trial court did not err in allowing the hypothetical questions or in denying the continuances. We affirm. Defendant, an attorney, was retained in March 1979 to represent Cheryl O'Reilly in a personal injury case. The *364 client agreed that defendant's fees would be contingent upon the amount recovered and would be one-third of that amount.",
"Defendant did not discuss with O'Reilly payment of expenses associated with the claim. He entered negotiations with Herbert Breidel, a claims adjuster for State Farm Insurance Company, to settle the O'Reilly claim. During the negotiations, defendant obtained a blank release form from Breidel and sent it to the O'Reillys. Mr. O'Reilly signed the blank form which Mrs. O'Reilly then took to defendant's office. Defendant discussed settling the case for $9,000 or $10,000 but did not fill in any amount on the release before Mrs. O'Reilly signed it. Defendant and Breidel eventually agreed to settle the claim for $12,000. Defendant arranged for Breidel to draft a check payable to him as attorney for the O'Reillys so that only his signature was necessary to cash it. Breidel then filled in the amount of $12,581.70 on the release. Defendant endorsed the check and deposited it into his trust account. He told the O'Reillys the claim had been settled for $10,000 and wrote them a check for two-thirds of that amount.",
"He wrote a check to himself for $2,500 and cashed it. The O'Reillys never saw the completed release or the check from State Farm and did not know the actual amount of the settlement until this action was started. In July 1982, a criminal complaint for theft was issued against defendant. Before trial, he made a motion for a continuance to allow substitution for his attorney who thought he might be called to testify. The motion was denied. Defendant was tried and found guilty.",
"At sentencing, he again moved for a continuance to allow time to make post-conviction motions. This motion also was denied. *365 PROPER CHARGE Defendant argues that he should have been charged under sec. 943.20(1) (b), Stats., instead of sec. 943.20(1) (a), and, therefore, the state failed to prove an element of the crime. He contends that, as their attorney, he had a right to possession of the O'Reillys' money and could be charged with embezzlement but not larceny.",
"He claims the state failed to prove he did not have a right to possession. Challenges to the sufficiency of a complaint must be made prior to the preliminary hearing. Sec. 971.31(5) (c), Stats. Failure to object to a defect in the institution of a criminal proceeding constitutes a waiver. State v. Copening, 103 Wis. 2d 564, 570, 309 N.W.2d 850, 853 (Ct. App. 1981). Defendant waived his right to a preliminary hearing and did not, at any time during the course of the proceedings against him, make a motion challenging the complaint or evidence against him. He raises this issue for the first time on appeal. His failure to present his argument to the trial court precludes appellate review. Id.",
"at 571, 309 N.W.2d at 853. SUFFICIENCY OF THE EVIDENCE Defendant challenges the sufficiency of the evidence supporting the verdict on the grounds that there was no evidence that the O'Reillys owned the money he withheld from them, that the O'Reillys failed to consent to his possession of it, and that he concealed the money. On review, we must uphold the jury verdict unless, \"under all the evidence presented, the jury could not have found guilt beyond a reasonable doubt.\" State v. Alles, 106 Wis. 2d 368, 377, 316 N.W.2d 378, 382 (1982).",
"If any *366 possibility exists that the jury could have drawn the appropriate inferences from the evidence at trial to find the requisite guilt, the jury verdict will not be overturned. Id. Section 943.20(1) (a), Stats., requires proof beyond a reasonable doubt of four elements: (1) intentional possession of the movable property of another without the owner's consent; (2) possession without the owner's consent; (3) knowledge that possession was without consent; and, (4) intention to deprive the owner of the property permanently. Genova v. State, 91 Wis. 2d 595, 613 n. 19, 283 N.W.2d 483, 491 (Ct. App. 1979).",
"Sufficient evidence supported the jury's findings of the necessary elements. A reasonable jury could have found the O'Reillys owned two-thirds of the $2,000 defendant received from State Farm and kept for himself. Both O'Reillys and defendant testified they entered into an oral agreement that the O'Reillys would receive two-thirds and defendant one-third of any settlement with State Farm. Defendant testified that, as a condition for settling the O'Reillys claim for $10,000, he had to agree with Breidel to cash a $12,000 settlement check and return $2,000 to Breidel and a second adjuster. He characterized the $2,000 as an expense associated with settling the claim. The O'Reillys said they never discussed payment of expenses with defendant and that his full compensation was to be one-third of the settlement. Defendant stated he believed he did tell the O'Reillys about payment of expenses in addition to the percentage of settlement as that was his usual practice with clients.",
"The jury's duty is to weigh the credibility of the witnesses. Alles, 106 Wis. 2d at 376, 316 N.W.2d at 382. Its decision to believe the O'Reillys and find that they were entitled to two-thirds of $12,000 is reasonable. *367 Sufficient evidence also supports the jury's finding that the O'Reillys did not consent to defendant's retention of the $2,000. Both Kevin and Cheryl O'Reilly testified that they did not authorize defendant to keep the $2,000 in addition to his percentage of the $10,000. They also testified they did not know the claim was settled for $12,000 until November 1981. They could not consent to something of which they had no knowledge.",
"Finally, sufficient evidence supports the jury's finding that defendant concealed the extra $2,000 from the O'Reillys. Breidel testified he drafted and delivered the $12,000 check payable to defendant on November 2, 1979. On November 8, 1979, Cheryl O'Reilly signed the blank release after a discussion in which defendant told her the settlement would be between $9,000 and $10,000. Neither O'Reilly ever saw the completed release, the State Farm check or any other documentation or accounting of the $12,000 settlement. Both testified that defendant told them the settlement amount was $10,000. HYPOTHETICAL QUESTIONS At trial, the prosecutor cross-examined defendant's character witnesses in part by posing the following hypothetical questions: 1) Would you say that a man who participates in a scheme to defraud an insurance company is an honest man? 2) Would you say that a man who settles a client's claim for $12,000 and tells the clients that it was settled for $10,000 is a truthful man?",
"The trial court overruled defendant's objections to these questions. Defendant contends the questions relied on facts of the case, suggested defendant was guilty of criminal conduct, elicited opinions of character rather than reputation, were used to prejudice the jury, and that the court erred in allowing them. *368 No Wisconsin court has determined whether hypothetical questions may be used to cross-examine a defendant's character witnesses. Only Georgia appellate courts have well-developed case law on this issue. In Georgia, hypothetical questions based on evidence as to what the accused has allegedly done and whether the witness would consider a person who would do such things a person of good character have been recognized as proper. Jackson v. State, 254 S.E.2d 739, 741 (Ga. App.",
"1979). We conclude Georgia law merely extends the rule on hypothetical questions as it has developed in Wisconsin to cover the specific instance of cross-examining character witnesses. We therefore follow it in this case. Wisconsin law allows hypothetical questions in examining and cross-examining expert witnesses in criminal. cases. State v. Rice, 38 Wis. 2d 344, 156 N.W.2d 409 (1968). Questions asked in hypothetical form are not limited to the purpose of testing skill and knowledge but may be used to test the weight to be given to the testimony.",
"Id. at 353-54, 156 N.W.2d at 414. Hypothetical questions must be based on facts which have been admitted as evidence. King v. State, 75 Wis. 2d 26, 41-42, 248 N.W.2d 458, 466 (1977). A proper hypothetical may elicit an expert's opinion on material facts of the case because of the safeguards that the opposing party may supply omitted facts and the court may require questions to be rephrased. Rice, 38 Wis. 2d at 357, 156 N.W.2d at 416. It is then for the jury to decide what weight will be accorded the expert's opinion.",
"Id. Whether opinion testimony should be admitted is a matter left to the trial court's discretion. Maci v. State Farm. Fire & Casualty Co., 105 Wis. 2d 710, 720, 314 N.W.2d 914, 920 (Ct. App. 1981). We will uphold the trial court's exercise of discretion unless the ruling was *369 wrong and an abuse of discretion. Hampton v. State, 92 Wis. 2d 450, 458, 285 N.W.2d 868, 872 (1979). In reviewing the trial court's decision to allow the hypothetical questions, we look first for evidence that the trial court exercised its discretion and next for a statement as to the basis for that exercise. State v. Ascencio, 92 Wis. 2d 822, 829, 285 N.W.2d 910, 914 (Ct. App. 1979). The record shows the trial court exercised its discretion in allowing the hypothetical questions. The court heard arguments from both parties on defendant's objections, required rephrasing of one of the questions, and then overruled defendant's objection. The court's basis for allowing the question was that both questions accurately reflected the defendant's testimony.",
"The court required careful wording of the questions to minimize prejudicial effects on the jury. It did not abuse its discretion. MOTIONS FOR CONTINUANCE Defendant contends the trial court abused its discretion by denying his pre-trial motion for a continuance to allow him to obtain new counsel. At the pre-trial conference on the day of trial, defense counsel notified the court of a possible conflict of interest based on his being the only person who could impeach certain prosecution witnesses. The trial court required counsel to choose between representing defendant and acting as an impeachment witness. Defendant's co-counsel moved for a continuance to allow him time to prepare to conduct defendant's case. The motion was denied and defense counsel chose to conduct the defense. Defendant argues that he was prejudiced by being forced to make this choice. A motion for continuance is directed to the discretion of the trial court and will not be reversed unless abuse of *370 discretion is shown. State v. Anastas, 107 Wis. 2d 270, 272, 320 N.W.2d 15, 16 (Ct. App. 1982). Where, as here, the trial court does not state its reasons for its decision, we independently review the record for facts which support the decision had discretion been exercised on the basis of those facts.",
"Ascencio, 92 Wis. 2d at 829, 285 N.W.2d at 914. The record indicates that defendant's counsel had represented him for at least two months prior to trial. Defendant should have known of the potential conflict because Herb Breidel, one of the witnesses whom he expected to impeach, was the state's primary witness. Defendant had no reason for not finding another attorney to represent him earlier. Further, it is not clear that defense counsel's testimony would have been necessary. The jury heard the testimony of defendant and Breidel and was able to assess the credibility of the two people directly involved in the negotiations.",
"We conclude that these facts support the discretionary decision of the trial court in denying defendant's motion for a continuance to obtain new counsel. Defendant's final argument is that the trial court erred in denying his post-trial motion for a continuance. At defendant's sentencing, he requested a continuance to prepare post-trial motions which his trial counsel had failed to do. Defendant was represented at the hearing by an attorney from trial counsel's firm because defendant's trial counsel was hospitalized. Defendant argues that failure of his trial counsel to appear and file motions after verdict constitutes ineffective assistance of counsel which denies him due process and equal protection of law. He claims the trial court's denial of his motion for continuance was error. Though we review denial of a motion for continuance for abuse of discretion, we review the record de novo for *371 the possibility of prejudice arising from the absence of counsel at a critical stage of the proceedings. State v. Mills, 107 Wis. 2d 368, 372, 320 N.W.2d 38, 40 (Ct. App. 1982).",
"The harmless error rule applies if prejudice is found beyond a reasonable doubt to be merely speculative or hypothetical. Id. Defendant was not prejudiced by trial counsel's failure to make post-trial motions or appear at sentencing. Defendant raised numerous issues on appeal which presumably were those he would have raised in post-trial motions and which would have been reviewed had post-trial motions been made. He was represented at sentencing by an attorney and he, also an attorney, spoke on his own behalf. If the trial court's refusal to grant a continuance was error, A was harmless was beyond a reasonable doubt. We affirm. By the Court.Judgment affirmed. NOTES [] Petition to review denied.",
"[1] Section 943.20(1) (a), Stats., provides in part: Whoever does any of the following may be penalized as provided in sub. (3): (a) Intentionally takes and carries away, uses, transfers, conceals, or retains possession of movable property of another without his consent and with intent to deprive the owner permanently of possession of such property."
]
| https://www.courtlistener.com/api/rest/v3/opinions/1270797/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Appeal from an order of the Supreme Court at Special Term, entered July 17, 1979 in Montgomery County, which conditionally granted defendant’s motion to vacate a judgment of divorce upon his payment of $600 for plaintiffs counsel fees. Since plaintiffs papers opposing this motion only requested an award of $550 in counsel fees, it was error for Special Term to award a sum for that purpose in excess of that demand. Order modified, on the law and the facts, by reducing the award of counsel fees from $600 to $550, and, as so modified, affirmed, without costs. Mahoney, P. J., Sweeney, Kane, Casey and Herlihy, JJ., concur. | 01-12-2022 | [
"Appeal from an order of the Supreme Court at Special Term, entered July 17, 1979 in Montgomery County, which conditionally granted defendant’s motion to vacate a judgment of divorce upon his payment of $600 for plaintiffs counsel fees. Since plaintiffs papers opposing this motion only requested an award of $550 in counsel fees, it was error for Special Term to award a sum for that purpose in excess of that demand. Order modified, on the law and the facts, by reducing the award of counsel fees from $600 to $550, and, as so modified, affirmed, without costs. Mahoney, P. J., Sweeney, Kane, Casey and Herlihy, JJ., concur."
]
| https://www.courtlistener.com/api/rest/v3/opinions/5841924/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
nd; WR-77,402-47
v. TMjrun ju&uial 0j<,7/lut L-XMB VF IttM, IS7TXNC XN AUmM llSSQEIVED IN .8
•Vktitim APR 172015 to THfc' cLtnk'<> tmu: AbsSAcosia.Cferk i. tame- neu) Teilt-lett&t. Oktrsll J. UuiMl 9e4UU*i tilt, Aou// Pe, it
u /; rlu ^[h "JH? ,**'" "i***** »k<* ^w„„/
H. Af Yofcft £„// jf 4^4,
4/»
Ve,y Truly You/4. DkAAlU A JiilvfU^ Otitrell Tj Vkiteet hote 0. fi. *//,'* (iu/f /*47 FM 4£0 | 09-29-2016 | [
"nd; WR-77,402-47 v. TMjrun ju&uial 0j<,7/lut L-XMB VF IttM, IS7TXNC XN AUmM llSSQEIVED IN .8 •Vktitim APR 172015 to THfc' cLtnk'<> tmu: AbsSAcosia.Cferk i. tame- neu) Teilt-lett&t. Oktrsll J. UuiMl 9e4UU*i tilt, Aou// Pe, it u /; rlu ^[h \"JH? ,**'\" \"i***** »k<* ^w„„/ H. Af Yofcft £„// jf 4^4, 4/» Ve,y Truly You/4. DkAAlU A JiilvfU^ Otitrell Tj Vkiteet hote 0. fi. *//,'* (iu/f /*47 FM 4£0"
]
| https://www.courtlistener.com/api/rest/v3/opinions/4054553/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Citation Nr: 1424746
Decision Date: 06/02/14 Archive Date: 06/16/14
DOCKET NO. 07-13 768 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Waco, Texas
THE ISSUE
Entitlement to a compensable evaluation for headaches.
REPRESENTATION
Appellant represented by: Vietnam Veterans of America
ATTORNEY FOR THE BOARD
G. E. Wilkerson, Counsel
INTRODUCTION
The Veteran served on active duty from August 1993 to October 2005.
This matter comes before the Board of Veterans' Appeals (Board) on appeal of a December 2006 rating decision by the Department of Veterans Affairs (VA) Regional Office (RO) in Waco, Texas.
In an April 2009 decision, the Board denied the Veteran's increased rating claim. The Veteran appealed the Board's decision to the United States Court of Appeals for Veterans Claims (the Court). In a Memorandum Decision dated in March 2011, the Court vacated the Board's decision and remanded the case. The Veteran's claim was subsequently remanded by the Board in July 2011 and November 2011 for additional development of the record.
In an October 2012 decision, the Board denied the Veteran's claim for a compensable rating for headaches. The Veteran appealed the Board's decision to the Court. While the matter was pending before the Court, in June 2013, the Veteran's attorney and a representative of VA's Office of General Counsel filed a Joint Motion for Remand.
In a June 2013 Order, the Court vacated the Board's October 2012 decision and remanded the matter for readjudication in light of the Joint Motion.
In the above-mentioned October 2012 decision, the Board also denied the Veteran's claim of entitlement to service connection for bilateral hearing loss. Based on the request of the parties in the Joint Motion, this issue was dismissed by the Court's June 2013 Order and is no longer in appellate status.
In the October 2012 decision, the Board also observed that the issue of entitlement to service connection for tinnitus has been raised by the record but had not been adjudicated by the Agency of Original Jurisdiction (AOJ). As this issue still has not been adjudicated, the Board again refers it to the AOJ for appropriate action.
In September 2013, the Board remanded the case to the RO, via the Appeals Management Center (AMC) for additional development of the record. The matter has since been returned the Board for further appellate action. As will be discussed, the RO is deemed to have complied with the Board's remand instructions. Stegall v. West, 11 Vet. App. 268, 271 (1998).
This appeal was processed using the Virtual VA and VBMS paperless claims processing system. Accordingly, any future consideration of this appellant's case should take into consideration the existence of this electronic record.
FINDINGS OF FACT
1. The appellant's manifestations do not rise to the level of a characteristic prostrating attack of migraine.
2. Although the Veteran has reported headaches occurring 2 to 3 times per week, there has been no credible evidence of characteristic prostrating attacks.
CONCLUSION OF LAW
The criteria for a compensable rating for headaches are not met. 38 U.S.C.A. §§ 1155, 5107 (West 2002); 38 C.F.R. §§ 3.102, 3.655, 4.1, 4.3, 4.7, 4.10, 4.20, 4.27, 4.124a, Diagnostic Code 8100 (2013).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
I. The Veterans Claims Assistance Act
The Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000) (codified at 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002 & Supp. 2012)) redefined VA's duty to assist the Veteran in the development of a claim. VA regulations for the implementation of the VCAA were codified as amended at 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2013).
Under the VCAA, VA must inform the claimant of any information and evidence not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; (3) that the claimant is expected to provide; and (4) must request that the claimant provide any evidence in her possession that pertains to the claim. Pelegrini v. Principi, 18 Vet. App. 112, 120-21 (2004); 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b).
The United States Court of Appeals for Veterans Claims (Court) has also held that the VCAA notice requirements of 38 U.S.C.A. § 5103(a) and 38 C.F.R. § 3.159(b) apply to all five elements of a service connection claim. Those five elements include: 1) Veteran status; 2) existence of a disability; 3) a connection between the Veteran's service and the disability; 4) degree of disability; and 5) effective date of the disability. Dingess/Hartman v. Nicholson, 19 Vet. App. 473 (2006).
The claim on appeal arises from the Veteran's disagreement with the rating assigned in connection with the grant of service connection for this disability. The courts have held, and VA's General Counsel has agreed, that where an underlying claim for service connection has been granted and there is disagreement as to "downstream" questions, the claim has been substantiated and there is no need to provide additional VCAA notice or prejudice from absent VCAA notice. Hartman v. Nicholson, 483 F.3d 1311, 1314-15 (Fed. Cir. 2007); Dunlap v. Nicholson, 21 Vet. App. 112, 116-17 (2007); VAOPGCPREC 8-2003 (2003). The Court has elaborated that filing a notice of disagreement begins the appellate process, and any remaining concerns regarding evidence necessary to establish a more favorable decision with respect to downstream elements (such as a disability rating) are appropriately addressed under the notice provisions of 38 U.S.C.A. §§ 5104 and 7105 (West 2002). Goodwin v. Peake, 22 Vet. App. 128, 137 (2008). Consequently, further discussion of the VCAA's notification requirements with regard to the claim on appeal is unnecessary.
The VCAA also requires VA to make reasonable efforts to help a claimant obtain evidence necessary to substantiate his claim. 38 U.S.C.A. § 5103A; 38 C.F.R. § 3.159(c), (d). This "duty to assist" contemplates that VA will help a claimant obtain records relevant to her claim, whether or not the records are in Federal custody, and that VA will provide a medical examination or obtain an opinion when necessary to make a decision on the claim. 38 C.F.R. § 3.159(c)(4).
In this case, VA obtained the Veteran's service treatment records and all of the identified post-service treatment records.
The Veteran was provided with a medical examination in connection with her claim in October 2006, July 2007 and January 2012.
Pursuant to the Board's September 2013 remand, the Veteran was scheduled for another examination in October 2013, but failed to report. The record reflects that VA contacted the Veteran in November 2013 in reference to the VA examination, the Veteran indicated that she would like to report for an examination. However, subsequent notice from the VA Medical Center indicates that she failed to respond to a voicemail and letter sent to her last known address.
While the Veteran's representative has indicated that the Veteran did not receive notice of the rescheduled examination, the Board notes that neither the Veteran nor her representative has indicated why she missed the first examination scheduled in October 2013. While the notification letter is not of record, the VA Medical Center report notes the Veteran's last-known address and no mail has been returned as undeliverable. Furthermore, she did not respond to a voicemail or letter mailed to her last-known address to reschedule the examination. Accordingly, the Board finds that good cause for failing to report to the examination has not been shown.
The Board points out that, in order for VA to process claims, individuals applying for VA benefits have a responsibility to cooperate with the agency in the gathering of the evidence necessary to establish allowance of benefits. See Morris v. Derwinski, 1 Vet. App. 260, 264 (1991). Moreover, VA's duty to assist is not always a one-way street. See Wood v. Derwinski, 1 Vet. App. 190, 193 (1991); see Swann v. Brown, 5 Vet. App. 229, 233 (1993).
In an original claim for disability compensation, if a Veteran fails to appear for her examination, the claim must be rated on the evidence of record. 38 C.F.R. § 3.655. To the extent that additional examination would have provided helpful information, such information is unavailable due to the Veteran's lack of cooperation in assisting with her claim.
Moreover, given the foregoing, the Board finds that VA has substantially complied with the Board's prior remand with regard to this appeal. See Dyment v. West, 13 Vet. App. 141, 146-47 (1999) (remand not required under Stegall, 11 Vet. App. at 268 where there was substantial compliance with Board's remand instructions).
For the reasons set forth above, the Board finds that VA has complied with the VCAA's notification and assistance requirements. The claim on appeal is thus ready to be considered on the merits.
II. Analysis
Disability evaluations are determined by application of the criteria set forth in the VA's Schedule for Rating Disabilities, which is based on average impairment in earning capacity. 38 U.S.C.A. § 1155; 38 C.F.R. Part 4. An evaluation of the level of disability present must also include consideration of the functional impairment of the Veteran's ability to engage in ordinary activities, including employment. 38 C.F.R. § 4.10. When a question arises as to which of two ratings apply under a particular diagnostic code, the higher evaluation is assigned if the disability more closely approximates the criteria for the higher rating. 38 C.F.R. § 4.7. After careful consideration of the evidence, any reasonable doubt remaining is resolved in favor of the Veteran. 38 C.F.R. § 4.3.
The Veteran's entire history is to be considered when making disability evaluations. See generally 38 C.F.R. § 4.1; Schafrath v. Derwinski, 1 Vet. App. 589 (1995).
The Court has held that "staged" ratings are appropriate for any rating claim when the factual findings show distinct time periods where the service-connected disability exhibits symptoms that would warrant different ratings. See Hart v. Mansfield, 21 Vet. App. 505 (2007); Fenderson v. West, 12 Vet. App 119 (1999). Here, as discussed in greater detail below, the disability on appeal has not significantly changed during the relevant time period, and a uniform evaluation is warranted.
The Veteran's headaches are rated as noncompensable pursuant to the provisions of 38 C.F.R. § 4.124a, Diagnostic Code 8100.
Under Diagnostic Code (Code) 8100, a compensable, 10 percent rating, is warranted for migraine headaches with characteristic prostrating attacks averaging one in 2 months over the last several months. A 30 percent rating is warranted for characteristic prostrating attacks occurring on an average of once a month over the last several months. A maximum 50 percent rating is warranted for very frequent completely prostrating and prolonged attacks productive of severe economic inadaptability. 38 C.F.R. § 4.124a , Diagnostic Code 8011. The rating criteria do not define prostrating. Other sources have defined prostrating as "extreme exhaustion or powerlessness." See Kaiser v. Shinseki, No. 08-4039, slip op. at 2 (Vet. App. Feb. 23, 2010) (citing DORLAND'S ILLUSTRATED MEDICAL DICTIONARY 1554 (31st Ed. 2007) (cited for definitional purposes only).
The Veteran reported at an October 2006 ear, nose and throat (ENT) VA examination that she had a history of frontal headaches since 1994 or 1995 and reported that they occur an average of three times a week. She attributed the headaches to sinus problems, but denied a history of recurrent or chronic sinus infections. The examiner reported that a computed tomography (CT) scan of the sinuses was performed in September 2006 showing normal paranasal sinuses. The examiner then opined that since the paranasal sinuses were normal and since the Veteran did not provide a history indicative of acute or chronic sinusitis, and based on the normal ENT findings, it would seem apparent that neither acute nor chronic sinusitis was present. He relayed that although the Veteran felt that her current frontal headaches would be tension headaches or headaches of myofascial origin, her recurrent headaches would not be related to any type of ENT pathology.
A VA general examiner in October 2006 relayed the Veteran's report of experiencing the onset of headaches in 1993 which she described as frontal occurring just above the eyes with associated eye pain. She also reported occasional visual disturbances with the headaches. She denied experiencing nausea, vomiting, photophobia or phonophobia. She reported increased pain associated with the headaches when moving her head quickly in any direction. She reported using Tylenol with varying and partial relief. She said the headaches occurred once or twice a week and last approximately two hours. She said sometimes she tried to close her eyes and rest until the headache went away. The examiner opined that the Veteran's headaches were not related to her sinuses, but were vascular headaches consistent with atypical migraine.
The Veteran reported in her February 2007 notice of disagreement that her headaches were worse than a noncompensable rating.
At a VA neurological examination in July 2007, the Veteran reported experiencing headaches once or twice a week lasting for three to four hours at a time with no nausea or vomiting. She said she had some light sensitivity and occasionally was bothered by loud noises. She said she took Tylenol and occasionally took Motrin, 800 milligrams, which sometimes helped. She reported that there were no precipitating, aggravating or alleviating factors and no functional loss or weakness during the headache. She said she tries to sit down and relax when having a headache, but continues with her regular activities. She was noted to be a stay-at-home mom with a two year old child. Neurologic findings revealed that the Veteran was alert and oriented with normal stance, gait and coordination. Cranial nerves III through XII were intact and motor strength was 5/5 throughout. Deep tendon reflexes were 2+ and equal. The Veteran was diagnosed as having headaches.
At a another VA examination in January 2012, the Veteran described her headaches as left frontal constant moderate pressure like, not associated with photophobia or nausea, but with occasional eye pain. She reported that Motrin and Tylenol helped to reduce her headaches. Noted symptoms included constant head pain localized to the left side of the head without very frequent prostrating and prolonged attacks or migraine headache pain and not characteristic prostrating attacks of migraine headache pain. The examiner reported that based on the Veteran's chart review and history of headache, she likely experiences chronic daily headache (tension headache) which started in 1996. The examiner noted that the Veteran had a normal sinus computed tomography scan in 2006 and opined that it was likely that her left frontal constant moderate pressure-like headache was chronic daily tension headache starting in 1996.
The Veteran's representative asserted in written argument in August 2012 that "[the Veteran's] tension headaches approaches the impairment of a monthly prostrating migraine attack."
Applying the rating criteria to the facts of this case, the Board finds that the criteria for a compensable rating for tension headaches have not been met for any time during the applicable appeal period. As noted, to warrant a compensable rating for headaches under Code 8100, there must be evidence of characteristic prostrating attacks averaging one in 2 months over the last several months.
The Veteran has reported that her headaches occurred on a daily basis and she described them as productive of constant head pain localized to the left side of the head. The VA examiner at the January 2012 examination similarly described them as left frontal constant moderate pressure like headaches and opined that the Veteran likely had chronic daily headache (tension headache). In short, such manifestations are not productive of characteristic prostrating attacks averaging one in two months over the last several months. While consideration has been given to the Veteran and her representative's argument that her headaches produce an impairment similar to prostrating attacks and therefore should be analogously rated, the Board does not agree that her symptoms rise to that level of impairment, even by analogy.
The Veteran has asserted that Tylenol and Motrin help her headaches and she has repeatedly denied any associated photophobia or nausea. Moreover, she denied at the July 2007 VA neurology examination any functional loss or weakness during a headache and said that she tried to sit down and relax when having a headache, but that she continued with her regular activities. She similarly reported at the VA general examination in October 2006 that when the headaches occurred she sometimes tried to close her eyes and rest until the headache went away. Thus, while the Veteran reports trying to rest during a headache by closing her eyes and/or sitting down to relax, she does not do so because she is physically incapacitated, but because she desires that the headache passes. See Kaiser v. Shinseki, Slip Opinion No. 08-4039 (Fed. 2010). The VA examiner in January 2012 denied that the Veteran had prostrating attacks of migraine or non-migraine headache pain, but went on to note that she had very frequent prostrating and prolonged attacks of non-migraine headache pain. However, based on his description of the Veteran's headaches as chronic daily tension headaches, as well as the Veteran's denial that she experiences any functional loss or weakness during a headache and her report that she can continue with her regular activities during a headache, the Board finds that the weight of evidence is against the claim for a compensable rating.
Here, the Veteran has presented evidence regarding the severity of her headaches. Layno v. Brown, 6 Vet. App. 465 (1994). However, such credible evidence constitutes negative evidence. In sum, the weight of evidence is against, to include by analogy, the criteria requiring prostrating attacks averaging one in two months over the last several months. Stated differently, despite a report of atypical migraine, the most probative evidence establishes that the appellant does not have migraine and she does not have manifestations that would approximate the characteristic prostrating attacks of migraine.
The Board observes that, in response to the June 2013 Joint Motion for Remand, the Veteran was scheduled for examination in 2013 to determine the severity of her headache disability, to include clarification as to whether she suffered from characteristic prostrating attacks. As noted above, she failed to report examination. While this examination may have provided information to support her appeal, such information is unavailable due to the Veteran's failure to attend the scheduled examination.
As to consideration of referral for an extraschedular rating, such consideration requires a three-step inquiry. See Thun v. Peake, 22 Vet. App. 111 (2008), aff'd sub nom. Thun v. Shinseki, 572 F.3d 1366 (Fed. Cir. 2009). The first question is whether the schedular rating adequately contemplates the Veteran's disability picture. Thun, 22 Vet. App. at 115. If the criteria reasonably describe the claimant's disability level and symptomatology, then the claimant's disability picture is contemplated by the rating schedule, the assigned schedular evaluation is, therefore, adequate, and no referral is required. If the schedular evaluation does not contemplate the claimant's level of disability and symptomatology and is found inadequate, then the second inquiry is whether the claimant's exceptional disability picture exhibits other related factors such as those provided by the regulation as governing norms. If the Veteran's disability picture meets the second inquiry, then the third step is to refer the case to the Under Secretary for Benefits or the Director of the Compensation and Pension Service to determine whether an extraschedular rating is warranted.
The discussion above reflects that the symptomatology associated with the Veteran's disability is fully contemplated by the applicable rating criteria. The symptomatology reported by the Veteran and shown on examination is contemplated by the rating criteria used to assign disability evaluations, and there is no characteristic or manifestations shown that is outside the purview of the applicable rating criteria or is so exceptional as to render the criteria in applicable. All potentially relevant rating codes have been considered and evaluated. Consideration of whether the Veteran's disability picture exhibits other related factors such as those provided by the regulations as "governing norms" is therefore not required. In any event, the Veteran did not claim, and the evidence does not reflect, that there has been marked interference with employment, frequent hospitalization, or that the Veteran's symptoms have otherwise rendered impractical the application of the regular schedular standards. The evidence of record certainly shows that the Veteran's disability has impacted his ability to work. However, the level of interference shown is contemplated by the disability evaluation already assigned to the Veteran's disorder. Therefore, referral for consideration of an extraschedular rating for the disability on appeal is not warranted. 38 C.F.R. § 3.321(b)(1).
The Board finds that an initial compensable rating for this disability is not warranted. In reaching this decision, the Board has considered the benefit-of-the-doubt doctrine; however, the preponderance of the evidence is against the claim. See 38 U.S.C.A. § 5107(b); 38 C.F.R. §§ 3.102, 4.3; Gilbert v. Derwinski, 1 Vet. App. 49, 55-56 (1990).
ORDER
A compensable rating for headaches is denied.
____________________________________________
H. N. SCHWARTZ
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs | 06-02-2014 | [
"Citation Nr: 1424746 Decision Date: 06/02/14 Archive Date: 06/16/14 DOCKET NO. 07-13 768 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Waco, Texas THE ISSUE Entitlement to a compensable evaluation for headaches. REPRESENTATION Appellant represented by: Vietnam Veterans of America ATTORNEY FOR THE BOARD G. E. Wilkerson, Counsel INTRODUCTION The Veteran served on active duty from August 1993 to October 2005. This matter comes before the Board of Veterans' Appeals (Board) on appeal of a December 2006 rating decision by the Department of Veterans Affairs (VA) Regional Office (RO) in Waco, Texas. In an April 2009 decision, the Board denied the Veteran's increased rating claim. The Veteran appealed the Board's decision to the United States Court of Appeals for Veterans Claims (the Court).",
"In a Memorandum Decision dated in March 2011, the Court vacated the Board's decision and remanded the case. The Veteran's claim was subsequently remanded by the Board in July 2011 and November 2011 for additional development of the record. In an October 2012 decision, the Board denied the Veteran's claim for a compensable rating for headaches. The Veteran appealed the Board's decision to the Court. While the matter was pending before the Court, in June 2013, the Veteran's attorney and a representative of VA's Office of General Counsel filed a Joint Motion for Remand.",
"In a June 2013 Order, the Court vacated the Board's October 2012 decision and remanded the matter for readjudication in light of the Joint Motion. In the above-mentioned October 2012 decision, the Board also denied the Veteran's claim of entitlement to service connection for bilateral hearing loss. Based on the request of the parties in the Joint Motion, this issue was dismissed by the Court's June 2013 Order and is no longer in appellate status. In the October 2012 decision, the Board also observed that the issue of entitlement to service connection for tinnitus has been raised by the record but had not been adjudicated by the Agency of Original Jurisdiction (AOJ). As this issue still has not been adjudicated, the Board again refers it to the AOJ for appropriate action. In September 2013, the Board remanded the case to the RO, via the Appeals Management Center (AMC) for additional development of the record.",
"The matter has since been returned the Board for further appellate action. As will be discussed, the RO is deemed to have complied with the Board's remand instructions. Stegall v. West, 11 Vet. App. 268, 271 (1998). This appeal was processed using the Virtual VA and VBMS paperless claims processing system. Accordingly, any future consideration of this appellant's case should take into consideration the existence of this electronic record. FINDINGS OF FACT 1. The appellant's manifestations do not rise to the level of a characteristic prostrating attack of migraine. 2. Although the Veteran has reported headaches occurring 2 to 3 times per week, there has been no credible evidence of characteristic prostrating attacks.",
"CONCLUSION OF LAW The criteria for a compensable rating for headaches are not met. 38 U.S.C.A. §§ 1155, 5107 (West 2002); 38 C.F.R. §§ 3.102, 3.655, 4.1, 4.3, 4.7, 4.10, 4.20, 4.27, 4.124a, Diagnostic Code 8100 (2013). REASONS AND BASES FOR FINDINGS AND CONCLUSION I. The Veterans Claims Assistance Act The Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (Nov. 9, 2000) (codified at 38 U.S.C.A.",
"§§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2002 & Supp. 2012)) redefined VA's duty to assist the Veteran in the development of a claim. VA regulations for the implementation of the VCAA were codified as amended at 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326(a) (2013). Under the VCAA, VA must inform the claimant of any information and evidence not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; (3) that the claimant is expected to provide; and (4) must request that the claimant provide any evidence in her possession that pertains to the claim. Pelegrini v. Principi, 18 Vet.",
"App. 112, 120-21 (2004); 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b). The United States Court of Appeals for Veterans Claims (Court) has also held that the VCAA notice requirements of 38 U.S.C.A. § 5103(a) and 38 C.F.R. § 3.159(b) apply to all five elements of a service connection claim. Those five elements include: 1) Veteran status; 2) existence of a disability; 3) a connection between the Veteran's service and the disability; 4) degree of disability; and 5) effective date of the disability. Dingess/Hartman v. Nicholson, 19 Vet.",
"App. 473 (2006). The claim on appeal arises from the Veteran's disagreement with the rating assigned in connection with the grant of service connection for this disability. The courts have held, and VA's General Counsel has agreed, that where an underlying claim for service connection has been granted and there is disagreement as to \"downstream\" questions, the claim has been substantiated and there is no need to provide additional VCAA notice or prejudice from absent VCAA notice. Hartman v. Nicholson, 483 F.3d 1311, 1314-15 (Fed. Cir. 2007); Dunlap v. Nicholson, 21 Vet.",
"App. 112, 116-17 (2007); VAOPGCPREC 8-2003 (2003). The Court has elaborated that filing a notice of disagreement begins the appellate process, and any remaining concerns regarding evidence necessary to establish a more favorable decision with respect to downstream elements (such as a disability rating) are appropriately addressed under the notice provisions of 38 U.S.C.A. §§ 5104 and 7105 (West 2002). Goodwin v. Peake, 22 Vet. App. 128, 137 (2008). Consequently, further discussion of the VCAA's notification requirements with regard to the claim on appeal is unnecessary. The VCAA also requires VA to make reasonable efforts to help a claimant obtain evidence necessary to substantiate his claim. 38 U.S.C.A. § 5103A; 38 C.F.R. § 3.159(c), (d). This \"duty to assist\" contemplates that VA will help a claimant obtain records relevant to her claim, whether or not the records are in Federal custody, and that VA will provide a medical examination or obtain an opinion when necessary to make a decision on the claim.",
"38 C.F.R. § 3.159(c)(4). In this case, VA obtained the Veteran's service treatment records and all of the identified post-service treatment records. The Veteran was provided with a medical examination in connection with her claim in October 2006, July 2007 and January 2012. Pursuant to the Board's September 2013 remand, the Veteran was scheduled for another examination in October 2013, but failed to report. The record reflects that VA contacted the Veteran in November 2013 in reference to the VA examination, the Veteran indicated that she would like to report for an examination. However, subsequent notice from the VA Medical Center indicates that she failed to respond to a voicemail and letter sent to her last known address.",
"While the Veteran's representative has indicated that the Veteran did not receive notice of the rescheduled examination, the Board notes that neither the Veteran nor her representative has indicated why she missed the first examination scheduled in October 2013. While the notification letter is not of record, the VA Medical Center report notes the Veteran's last-known address and no mail has been returned as undeliverable. Furthermore, she did not respond to a voicemail or letter mailed to her last-known address to reschedule the examination. Accordingly, the Board finds that good cause for failing to report to the examination has not been shown. The Board points out that, in order for VA to process claims, individuals applying for VA benefits have a responsibility to cooperate with the agency in the gathering of the evidence necessary to establish allowance of benefits.",
"See Morris v. Derwinski, 1 Vet. App. 260, 264 (1991). Moreover, VA's duty to assist is not always a one-way street. See Wood v. Derwinski, 1 Vet. App. 190, 193 (1991); see Swann v. Brown, 5 Vet. App. 229, 233 (1993). In an original claim for disability compensation, if a Veteran fails to appear for her examination, the claim must be rated on the evidence of record. 38 C.F.R. § 3.655. To the extent that additional examination would have provided helpful information, such information is unavailable due to the Veteran's lack of cooperation in assisting with her claim. Moreover, given the foregoing, the Board finds that VA has substantially complied with the Board's prior remand with regard to this appeal. See Dyment v. West, 13 Vet. App.",
"141, 146-47 (1999) (remand not required under Stegall, 11 Vet. App. at 268 where there was substantial compliance with Board's remand instructions). For the reasons set forth above, the Board finds that VA has complied with the VCAA's notification and assistance requirements. The claim on appeal is thus ready to be considered on the merits. II. Analysis Disability evaluations are determined by application of the criteria set forth in the VA's Schedule for Rating Disabilities, which is based on average impairment in earning capacity. 38 U.S.C.A. § 1155; 38 C.F.R. Part 4. An evaluation of the level of disability present must also include consideration of the functional impairment of the Veteran's ability to engage in ordinary activities, including employment. 38 C.F.R. § 4.10.",
"When a question arises as to which of two ratings apply under a particular diagnostic code, the higher evaluation is assigned if the disability more closely approximates the criteria for the higher rating. 38 C.F.R. § 4.7. After careful consideration of the evidence, any reasonable doubt remaining is resolved in favor of the Veteran. 38 C.F.R. § 4.3. The Veteran's entire history is to be considered when making disability evaluations. See generally 38 C.F.R. § 4.1; Schafrath v. Derwinski, 1 Vet. App. 589 (1995). The Court has held that \"staged\" ratings are appropriate for any rating claim when the factual findings show distinct time periods where the service-connected disability exhibits symptoms that would warrant different ratings. See Hart v. Mansfield, 21 Vet. App. 505 (2007); Fenderson v. West, 12 Vet.",
"App 119 (1999). Here, as discussed in greater detail below, the disability on appeal has not significantly changed during the relevant time period, and a uniform evaluation is warranted. The Veteran's headaches are rated as noncompensable pursuant to the provisions of 38 C.F.R. § 4.124a, Diagnostic Code 8100. Under Diagnostic Code (Code) 8100, a compensable, 10 percent rating, is warranted for migraine headaches with characteristic prostrating attacks averaging one in 2 months over the last several months. A 30 percent rating is warranted for characteristic prostrating attacks occurring on an average of once a month over the last several months. A maximum 50 percent rating is warranted for very frequent completely prostrating and prolonged attacks productive of severe economic inadaptability. 38 C.F.R. § 4.124a , Diagnostic Code 8011. The rating criteria do not define prostrating. Other sources have defined prostrating as \"extreme exhaustion or powerlessness.\" See Kaiser v. Shinseki, No. 08-4039, slip op. at 2 (Vet. App. Feb. 23, 2010) (citing DORLAND'S ILLUSTRATED MEDICAL DICTIONARY 1554 (31st Ed.",
"2007) (cited for definitional purposes only). The Veteran reported at an October 2006 ear, nose and throat (ENT) VA examination that she had a history of frontal headaches since 1994 or 1995 and reported that they occur an average of three times a week. She attributed the headaches to sinus problems, but denied a history of recurrent or chronic sinus infections. The examiner reported that a computed tomography (CT) scan of the sinuses was performed in September 2006 showing normal paranasal sinuses. The examiner then opined that since the paranasal sinuses were normal and since the Veteran did not provide a history indicative of acute or chronic sinusitis, and based on the normal ENT findings, it would seem apparent that neither acute nor chronic sinusitis was present. He relayed that although the Veteran felt that her current frontal headaches would be tension headaches or headaches of myofascial origin, her recurrent headaches would not be related to any type of ENT pathology.",
"A VA general examiner in October 2006 relayed the Veteran's report of experiencing the onset of headaches in 1993 which she described as frontal occurring just above the eyes with associated eye pain. She also reported occasional visual disturbances with the headaches. She denied experiencing nausea, vomiting, photophobia or phonophobia. She reported increased pain associated with the headaches when moving her head quickly in any direction. She reported using Tylenol with varying and partial relief. She said the headaches occurred once or twice a week and last approximately two hours. She said sometimes she tried to close her eyes and rest until the headache went away. The examiner opined that the Veteran's headaches were not related to her sinuses, but were vascular headaches consistent with atypical migraine. The Veteran reported in her February 2007 notice of disagreement that her headaches were worse than a noncompensable rating. At a VA neurological examination in July 2007, the Veteran reported experiencing headaches once or twice a week lasting for three to four hours at a time with no nausea or vomiting.",
"She said she had some light sensitivity and occasionally was bothered by loud noises. She said she took Tylenol and occasionally took Motrin, 800 milligrams, which sometimes helped. She reported that there were no precipitating, aggravating or alleviating factors and no functional loss or weakness during the headache. She said she tries to sit down and relax when having a headache, but continues with her regular activities. She was noted to be a stay-at-home mom with a two year old child. Neurologic findings revealed that the Veteran was alert and oriented with normal stance, gait and coordination. Cranial nerves III through XII were intact and motor strength was 5/5 throughout. Deep tendon reflexes were 2+ and equal. The Veteran was diagnosed as having headaches. At a another VA examination in January 2012, the Veteran described her headaches as left frontal constant moderate pressure like, not associated with photophobia or nausea, but with occasional eye pain. She reported that Motrin and Tylenol helped to reduce her headaches. Noted symptoms included constant head pain localized to the left side of the head without very frequent prostrating and prolonged attacks or migraine headache pain and not characteristic prostrating attacks of migraine headache pain. The examiner reported that based on the Veteran's chart review and history of headache, she likely experiences chronic daily headache (tension headache) which started in 1996. The examiner noted that the Veteran had a normal sinus computed tomography scan in 2006 and opined that it was likely that her left frontal constant moderate pressure-like headache was chronic daily tension headache starting in 1996.",
"The Veteran's representative asserted in written argument in August 2012 that \"[the Veteran's] tension headaches approaches the impairment of a monthly prostrating migraine attack.\" Applying the rating criteria to the facts of this case, the Board finds that the criteria for a compensable rating for tension headaches have not been met for any time during the applicable appeal period. As noted, to warrant a compensable rating for headaches under Code 8100, there must be evidence of characteristic prostrating attacks averaging one in 2 months over the last several months. The Veteran has reported that her headaches occurred on a daily basis and she described them as productive of constant head pain localized to the left side of the head.",
"The VA examiner at the January 2012 examination similarly described them as left frontal constant moderate pressure like headaches and opined that the Veteran likely had chronic daily headache (tension headache). In short, such manifestations are not productive of characteristic prostrating attacks averaging one in two months over the last several months. While consideration has been given to the Veteran and her representative's argument that her headaches produce an impairment similar to prostrating attacks and therefore should be analogously rated, the Board does not agree that her symptoms rise to that level of impairment, even by analogy. The Veteran has asserted that Tylenol and Motrin help her headaches and she has repeatedly denied any associated photophobia or nausea.",
"Moreover, she denied at the July 2007 VA neurology examination any functional loss or weakness during a headache and said that she tried to sit down and relax when having a headache, but that she continued with her regular activities. She similarly reported at the VA general examination in October 2006 that when the headaches occurred she sometimes tried to close her eyes and rest until the headache went away. Thus, while the Veteran reports trying to rest during a headache by closing her eyes and/or sitting down to relax, she does not do so because she is physically incapacitated, but because she desires that the headache passes.",
"See Kaiser v. Shinseki, Slip Opinion No. 08-4039 (Fed. 2010). The VA examiner in January 2012 denied that the Veteran had prostrating attacks of migraine or non-migraine headache pain, but went on to note that she had very frequent prostrating and prolonged attacks of non-migraine headache pain. However, based on his description of the Veteran's headaches as chronic daily tension headaches, as well as the Veteran's denial that she experiences any functional loss or weakness during a headache and her report that she can continue with her regular activities during a headache, the Board finds that the weight of evidence is against the claim for a compensable rating. Here, the Veteran has presented evidence regarding the severity of her headaches. Layno v. Brown, 6 Vet.",
"App. 465 (1994). However, such credible evidence constitutes negative evidence. In sum, the weight of evidence is against, to include by analogy, the criteria requiring prostrating attacks averaging one in two months over the last several months. Stated differently, despite a report of atypical migraine, the most probative evidence establishes that the appellant does not have migraine and she does not have manifestations that would approximate the characteristic prostrating attacks of migraine. The Board observes that, in response to the June 2013 Joint Motion for Remand, the Veteran was scheduled for examination in 2013 to determine the severity of her headache disability, to include clarification as to whether she suffered from characteristic prostrating attacks.",
"As noted above, she failed to report examination. While this examination may have provided information to support her appeal, such information is unavailable due to the Veteran's failure to attend the scheduled examination. As to consideration of referral for an extraschedular rating, such consideration requires a three-step inquiry. See Thun v. Peake, 22 Vet. App. 111 (2008), aff'd sub nom. Thun v. Shinseki, 572 F.3d 1366 (Fed. Cir. 2009). The first question is whether the schedular rating adequately contemplates the Veteran's disability picture.",
"Thun, 22 Vet. App. at 115. If the criteria reasonably describe the claimant's disability level and symptomatology, then the claimant's disability picture is contemplated by the rating schedule, the assigned schedular evaluation is, therefore, adequate, and no referral is required. If the schedular evaluation does not contemplate the claimant's level of disability and symptomatology and is found inadequate, then the second inquiry is whether the claimant's exceptional disability picture exhibits other related factors such as those provided by the regulation as governing norms.",
"If the Veteran's disability picture meets the second inquiry, then the third step is to refer the case to the Under Secretary for Benefits or the Director of the Compensation and Pension Service to determine whether an extraschedular rating is warranted. The discussion above reflects that the symptomatology associated with the Veteran's disability is fully contemplated by the applicable rating criteria. The symptomatology reported by the Veteran and shown on examination is contemplated by the rating criteria used to assign disability evaluations, and there is no characteristic or manifestations shown that is outside the purview of the applicable rating criteria or is so exceptional as to render the criteria in applicable. All potentially relevant rating codes have been considered and evaluated. Consideration of whether the Veteran's disability picture exhibits other related factors such as those provided by the regulations as \"governing norms\" is therefore not required. In any event, the Veteran did not claim, and the evidence does not reflect, that there has been marked interference with employment, frequent hospitalization, or that the Veteran's symptoms have otherwise rendered impractical the application of the regular schedular standards.",
"The evidence of record certainly shows that the Veteran's disability has impacted his ability to work. However, the level of interference shown is contemplated by the disability evaluation already assigned to the Veteran's disorder. Therefore, referral for consideration of an extraschedular rating for the disability on appeal is not warranted. 38 C.F.R. § 3.321(b)(1). The Board finds that an initial compensable rating for this disability is not warranted. In reaching this decision, the Board has considered the benefit-of-the-doubt doctrine; however, the preponderance of the evidence is against the claim. See 38 U.S.C.A. § 5107(b); 38 C.F.R. §§ 3.102, 4.3; Gilbert v. Derwinski, 1 Vet. App. 49, 55-56 (1990). ORDER A compensable rating for headaches is denied. ____________________________________________ H. N. SCHWARTZ Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs"
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
ORDER DENYING MOTION TO REOPEN
MARY D. SCOTT, Bankruptcy Judge. THIS CAUSE is before the Court upon the debtor’s second Motion to Reopen Chapter Seven Case, filed on October 3, 1995. The debtor originally filed her Chapter 7 petition in bankruptcy on January 22, 1992, the schedules for which failed to list Gwatney Chevrolet as a creditor. The debtor received her discharge and the case was closed in May 1992. It was not until March 8, 1995, that the debtor first moved to reopen her case in order to amend her schedules and file a complaint to determine the dischargeability of the debt. The Order granting the motion was entered on April 11, 1995, but gave no time limit for filing the complaint to determine dischargeability. Over two months later, on June 28, 1995, the debtor filed a one paragraph document entitled “Amended Schedules.” No adversary proceeding was filed. Accordingly, on June 30, 1995, the case was again closed. It was not until October 3, 1995, that the debtor took any action, filing a second Motion to Reopen Chapter 7 Case, stating as grounds that she wished to pursue a complaint to determine the dischargeability of the debt to Gwatney Chevrolet. Although the motion asserts that a complaint was pending, no complaint had in fact been filed with the Clerk of the U.S. Bankruptcy Court. The Bankruptcy Code provides that a case may be reopened “to administer assets, to accord relief to the debtor, or for other cause.” 11 U.S.C. § 350(b); Fed. R.Bankr.Proc. 5010. Section 350(b) is not mandatory, but is within the discretion of the Bankruptcy Court. In re Cummings, 172 B.R. 268 (Bankr.W.D.Ark.1994); In re Rhodes, 88 B.R. 199, 200 (Bankr.E.D.Ark. 1988). Of course, while Rule 9024(1), Federal Rules of Bankruptcy Procedure, excepts a motion to reopen a case from the one year limitation prescribed in Rule 60(b), the motion must be brought within a reasonable time. See In re Nelson, 100 B.R. 905, 906 (Bankr.N.D.Ohio 1989). The Court does not believe that the debtor brought her second motion within a reasonable time. The ease was originally closed in May 1992. The first motion to reopen was not filed until April 1995, three years after the case was closed. Although this Court granted the debtor’s request for relief on the first motion to reopen, the debt- or failed to take the action required to discharge the debt. Indeed, although given an opportunity to remedy her situation, the debtor did not even file her one-paragraph amendment to her schedules for over twelve weeks after the entry of the Order granting her motion to reopen. Under the Order of April 11, 1995, the debtor was to amend her schedules and file a complaint to determine dischargeability. No complaint to determine dischargeability was ever filed during the lengthy twelve week period during which the case was open. Although the case was again closed on June 30, 1995, the debtor did not file her second motion to reopen the case for another three months. The Court believes that, under the totality of the circumstances, the instant motion should not be granted. The debtor waited for three years before filing a first motion to reopen, and, despite being given over twelve weeks to file a simple amendment and a complaint to determine dischargeability, she failed to take action. The debtor then waited an additional three months past the time the case was closed to file another motion to reopen. Debtor delayed taking action not once, but on three occasions: after the case was first closed (three years), after she was given an opportunity to reopen the case (twelve weeks) and after the case was closed a second time (three months). The debtor *400squandered her opportunity to determine the dischargeability of the debt in this manner. The instant motion is untimely.1 Accordingly, it is ORDERED that the debtor’s Motion to Reopen Chapter Seven Case, filed on October 3, 1995, is DENIED. IT IS SO ORDERED.
. A state court has concurrent jurisdiction to determine the dischargeability of this debt, See In re Benham, 157 B.R. 655 (Bankr.E.D.Ark.1993, assuming its requirements regarding timeliness arc met.) | 11-22-2022 | [
"ORDER DENYING MOTION TO REOPEN MARY D. SCOTT, Bankruptcy Judge. THIS CAUSE is before the Court upon the debtor’s second Motion to Reopen Chapter Seven Case, filed on October 3, 1995. The debtor originally filed her Chapter 7 petition in bankruptcy on January 22, 1992, the schedules for which failed to list Gwatney Chevrolet as a creditor. The debtor received her discharge and the case was closed in May 1992. It was not until March 8, 1995, that the debtor first moved to reopen her case in order to amend her schedules and file a complaint to determine the dischargeability of the debt. The Order granting the motion was entered on April 11, 1995, but gave no time limit for filing the complaint to determine dischargeability. Over two months later, on June 28, 1995, the debtor filed a one paragraph document entitled “Amended Schedules.” No adversary proceeding was filed.",
"Accordingly, on June 30, 1995, the case was again closed. It was not until October 3, 1995, that the debtor took any action, filing a second Motion to Reopen Chapter 7 Case, stating as grounds that she wished to pursue a complaint to determine the dischargeability of the debt to Gwatney Chevrolet. Although the motion asserts that a complaint was pending, no complaint had in fact been filed with the Clerk of the U.S. Bankruptcy Court. The Bankruptcy Code provides that a case may be reopened “to administer assets, to accord relief to the debtor, or for other cause.” 11 U.S.C. § 350(b); Fed.",
"R.Bankr.Proc. 5010. Section 350(b) is not mandatory, but is within the discretion of the Bankruptcy Court. In re Cummings, 172 B.R. 268 (Bankr.W.D.Ark.1994); In re Rhodes, 88 B.R. 199, 200 (Bankr.E.D.Ark. 1988). Of course, while Rule 9024(1), Federal Rules of Bankruptcy Procedure, excepts a motion to reopen a case from the one year limitation prescribed in Rule 60(b), the motion must be brought within a reasonable time. See In re Nelson, 100 B.R. 905, 906 (Bankr.N.D.Ohio 1989). The Court does not believe that the debtor brought her second motion within a reasonable time. The ease was originally closed in May 1992. The first motion to reopen was not filed until April 1995, three years after the case was closed. Although this Court granted the debtor’s request for relief on the first motion to reopen, the debt- or failed to take the action required to discharge the debt. Indeed, although given an opportunity to remedy her situation, the debtor did not even file her one-paragraph amendment to her schedules for over twelve weeks after the entry of the Order granting her motion to reopen.",
"Under the Order of April 11, 1995, the debtor was to amend her schedules and file a complaint to determine dischargeability. No complaint to determine dischargeability was ever filed during the lengthy twelve week period during which the case was open. Although the case was again closed on June 30, 1995, the debtor did not file her second motion to reopen the case for another three months. The Court believes that, under the totality of the circumstances, the instant motion should not be granted. The debtor waited for three years before filing a first motion to reopen, and, despite being given over twelve weeks to file a simple amendment and a complaint to determine dischargeability, she failed to take action.",
"The debtor then waited an additional three months past the time the case was closed to file another motion to reopen. Debtor delayed taking action not once, but on three occasions: after the case was first closed (three years), after she was given an opportunity to reopen the case (twelve weeks) and after the case was closed a second time (three months). The debtor *400squandered her opportunity to determine the dischargeability of the debt in this manner. The instant motion is untimely.1 Accordingly, it is ORDERED that the debtor’s Motion to Reopen Chapter Seven Case, filed on October 3, 1995, is DENIED. IT IS SO ORDERED. . A state court has concurrent jurisdiction to determine the dischargeability of this debt, See In re Benham, 157 B.R.",
"655 (Bankr.E.D.Ark.1993, assuming its requirements regarding timeliness arc met.)"
]
| https://www.courtlistener.com/api/rest/v3/opinions/8492214/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
[v014003_ex10-25x1x1.jpg]
--------------------------------------------------------------------------------
[v014003_ex10-25x2x1.jpg]
--------------------------------------------------------------------------------
[v014003_ex10-25x3x1.jpg]
-------------------------------------------------------------------------------- | [
"[v014003_ex10-25x1x1.jpg] -------------------------------------------------------------------------------- [v014003_ex10-25x2x1.jpg] -------------------------------------------------------------------------------- [v014003_ex10-25x3x1.jpg] --------------------------------------------------------------------------------"
]
| https://github.com/TheAtticusProject/cuad | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
DETAILED ACTION Acknowledgements The present application is being examined under the pre-AIA first to invent provisions. Claims 31-50 are pending. This action is Non-Final.
Double Patenting In the instant form of the claims, no double patenting rejection is being applied (in regards to US 8414499, US 10092200), however, should applicant amend the claims or make statements on the record to necessitate such rejections, such will not be a new grounds of rejection for finality of the next action.
Claim Objections Claims 32, 42 are objected to because of the following informalities: claims 32, 42 “the pulses” should read “the plurality of pulses”. Appropriate correction is required.
Claim Rejections - 35 USC § 112 The following is a quotation of the first paragraph of 35 U.S.C. 112(a): (a) IN GENERAL.—The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.
The following is a quotation of the first paragraph of pre-AIA 35 U.S.C. 112: The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person
Claims 31-50 are rejected under 35 U.S.C. 112(a) or 35 U.S.C. 112 (pre-AIA ), first paragraph, as failing to comply with the written description requirement. The claim(s) contains subject matter which was not described in the specification in such a way as to reasonably convey to one skilled in the relevant art that the inventor or a joint inventor, or for applications subject to pre-AIA 35 U.S.C. 112, the inventor(s), at the time the application was filed, had possession of the claimed invention. Regarding claims 31, 41, the limitations “comparing the first measure of variability of the first plurality of perfusion parameters with one or more second measures of variability of a second plurality of perfusion parameters; and based at least in part on the comparing, causing a display device to display an indication of at least one of one or more respiratory conditions or an efficacy of treatment for the one or more respiratory conditions” (claim 31 used as representative) are rejected for lack of adequate written description/new matter. The limitations are not original to the disclosure as filed as the amended claims were filed after the filing date. The limitations do not find express support in the disclosure as filed. The limitation scope as claimed is unclear where implicit or inherent support is found in the disclosure as filed. Applicant is invited to explain where the support is found by citation to specific passages, and explain how such specification description provides support for the claimed limitations and scope. Lastly, the sub-genus “breathing conditions” is new matter for such scope. The disclosure as filed contains no mention of breathing condition diagnosis, but merely references a downward trend in PV of an asthma patient during drug administration indicates efficacy. This is not the same scope to show possession of the scope now being claimed. Applicant can remedy this aspect of the rejection by amending the claim to recite asthma instead of breathing conditions. As The dependent claims are rejected for depending on a rejected claim.
The following is a quotation of 35 U.S.C. 112(b): (b) CONCLUSION.—The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.
The following is a quotation of 35 U.S.C. 112 (pre-AIA ), second paragraph: The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.
Claims 31-50 are rejected under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), second paragraph, as being indefinite for failing to particularly point out and distinctly claim the subject matter which the inventor or a joint inventor (or for applications subject to pre-AIA 35 U.S.C. 112, the applicant), regards as the invention. Claims 31, 34, 41, 44 recite similar limitations “determining a first plurality of perfusion parameters, wherein a particular perfusion parameter of the first plurality of perfusion parameters is determined based at least in part on a peak amplitude and a valley amplitude of a particular pulse of the plurality of pulses; determining a first measure of variability of the first plurality of perfusion parameters based at least in part on a difference between a first and second perfusion parameter of the first plurality of perfusion parameters relative to the first perfusion parameter of the first plurality of perfusion parameters” (claim 31 used as representative claim) renders the claims indefinite. The claims each set forth “a particular perfusion parameter” but not in an active step, and then “a first…a second perfusion parameter”, but this “particular” is unclear if it is the same or different from the first/second perfusion parameters later referenced. This appears to make the limitation superfluous to the remaining requirements and not clear whether such is The dependent claims are rejected for depending on a rejected claim.
Claim Rejections - 35 USC § 101 The presented claims have been considered and found to be eligible under 101 for the same reasons similar subject matter was argued and found to be patent eligible in 13858249 (see response filed 4/23/2018).
Conclusion The prior art made of record and not relied upon is considered pertinent to applicant's disclosure. US 20080064965, 2005/0085702, US 6385,471, US 20080079299, WO 2005/096922A1. No prior art has been applied to the claimed invention due to the features related to displaying of treatment efficacy and breathing conditions related to comparing two measured of variability of the perfusion parameters, however, the claims are not in condition for allowance due to the outstanding rejections under 35 U.S.C. 101 and 112, upon overcoming these rejections the claims will be evaluated in view of the art of record. Any inquiry concerning this communication or earlier communications from the examiner should be directed to MICHAEL R BLOCH whose telephone number is (571)270-3252. The examiner can normally be reached on M-F 11-8 EST.
If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Robert (Tse) Chen can be reached on (571)272-3672. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
/MICHAEL R BLOCH/ Primary Examiner, Art Unit 3791 | 2021-03-26T06:44:58 | [
"DETAILED ACTION Acknowledgements The present application is being examined under the pre-AIA first to invent provisions. Claims 31-50 are pending. This action is Non-Final. Double Patenting In the instant form of the claims, no double patenting rejection is being applied (in regards to US 8414499, US 10092200), however, should applicant amend the claims or make statements on the record to necessitate such rejections, such will not be a new grounds of rejection for finality of the next action. Claim Objections Claims 32, 42 are objected to because of the following informalities: claims 32, 42 “the pulses” should read “the plurality of pulses”. Appropriate correction is required. Claim Rejections - 35 USC § 112 The following is a quotation of the first paragraph of 35 U.S.C. 112(a): (a) IN GENERAL.—The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.",
"The following is a quotation of the first paragraph of pre-AIA 35 U.S.C. 112: The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person Claims 31-50 are rejected under 35 U.S.C. 112(a) or 35 U.S.C. 112 (pre-AIA ), first paragraph, as failing to comply with the written description requirement. The claim(s) contains subject matter which was not described in the specification in such a way as to reasonably convey to one skilled in the relevant art that the inventor or a joint inventor, or for applications subject to pre-AIA 35 U.S.C. 112, the inventor(s), at the time the application was filed, had possession of the claimed invention. Regarding claims 31, 41, the limitations “comparing the first measure of variability of the first plurality of perfusion parameters with one or more second measures of variability of a second plurality of perfusion parameters; and based at least in part on the comparing, causing a display device to display an indication of at least one of one or more respiratory conditions or an efficacy of treatment for the one or more respiratory conditions” (claim 31 used as representative) are rejected for lack of adequate written description/new matter.",
"The limitations are not original to the disclosure as filed as the amended claims were filed after the filing date. The limitations do not find express support in the disclosure as filed. The limitation scope as claimed is unclear where implicit or inherent support is found in the disclosure as filed. Applicant is invited to explain where the support is found by citation to specific passages, and explain how such specification description provides support for the claimed limitations and scope. Lastly, the sub-genus “breathing conditions” is new matter for such scope. The disclosure as filed contains no mention of breathing condition diagnosis, but merely references a downward trend in PV of an asthma patient during drug administration indicates efficacy. This is not the same scope to show possession of the scope now being claimed. Applicant can remedy this aspect of the rejection by amending the claim to recite asthma instead of breathing conditions. As The dependent claims are rejected for depending on a rejected claim. The following is a quotation of 35 U.S.C. 112(b): (b) CONCLUSION.—The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention. The following is a quotation of 35 U.S.C.",
"112 (pre-AIA ), second paragraph: The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention. Claims 31-50 are rejected under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), second paragraph, as being indefinite for failing to particularly point out and distinctly claim the subject matter which the inventor or a joint inventor (or for applications subject to pre-AIA 35 U.S.C. 112, the applicant), regards as the invention. Claims 31, 34, 41, 44 recite similar limitations “determining a first plurality of perfusion parameters, wherein a particular perfusion parameter of the first plurality of perfusion parameters is determined based at least in part on a peak amplitude and a valley amplitude of a particular pulse of the plurality of pulses; determining a first measure of variability of the first plurality of perfusion parameters based at least in part on a difference between a first and second perfusion parameter of the first plurality of perfusion parameters relative to the first perfusion parameter of the first plurality of perfusion parameters” (claim 31 used as representative claim) renders the claims indefinite.",
"The claims each set forth “a particular perfusion parameter” but not in an active step, and then “a first…a second perfusion parameter”, but this “particular” is unclear if it is the same or different from the first/second perfusion parameters later referenced. This appears to make the limitation superfluous to the remaining requirements and not clear whether such is The dependent claims are rejected for depending on a rejected claim. Claim Rejections - 35 USC § 101 The presented claims have been considered and found to be eligible under 101 for the same reasons similar subject matter was argued and found to be patent eligible in 13858249 (see response filed 4/23/2018). Conclusion The prior art made of record and not relied upon is considered pertinent to applicant's disclosure.",
"US 20080064965, 2005/0085702, US 6385,471, US 20080079299, WO 2005/096922A1. No prior art has been applied to the claimed invention due to the features related to displaying of treatment efficacy and breathing conditions related to comparing two measured of variability of the perfusion parameters, however, the claims are not in condition for allowance due to the outstanding rejections under 35 U.S.C. 101 and 112, upon overcoming these rejections the claims will be evaluated in view of the art of record. Any inquiry concerning this communication or earlier communications from the examiner should be directed to MICHAEL R BLOCH whose telephone number is (571)270-3252.",
"The examiner can normally be reached on M-F 11-8 EST. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Robert (Tse) Chen can be reached on (571)272-3672. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. /MICHAEL R BLOCH/ Primary Examiner, Art Unit 3791"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-03-28.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
721 A.2d 207 (1998) 352 Md. 97 STATE of Maryland v. Edward Charles STOUFFER. No. 28, Sept. Term, 1998. Court of Appeals of Maryland. December 9, 1998. *208 Diane E. Keller, Assistant Attorney General (J. Joseph Curran, Jr., Attorney General, on brief), Baltimore, for petitioner. John L. Kopolow, Assistant Public Defender (Stephen E. Harris, Public Defender), Baltimore, for respondent. Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ. WILNER, Judge. This case arises out of the killing of Jeffrey Fiddler on February 26-27, 1989. Respondent Edward Stouffer was convicted of felony murder and kidnapping, the kidnapping being the underlying felony for the felony murder. A co-defendant, William Burral, who was tried separately and whose appeal is currently pending in this Court, was convicted of second degree murder. The Court of Special Appeals concluded that, although there was legally sufficient evidence to sustain Stouffer's conviction for kidnapping, there was insufficient evidence to establish that the killing was committed in the perpetration or course of the kidnapping. It thus affirmed the kidnapping judgment but reversed the judgment for felony murder. Stouffer v. State, 118 Md.App. 590, 703 A.2d 861 (1997). We granted the State's petition for certiorari to review the reversal of the felony murder judgment and Stouffer's cross-petition to review the affirmance of the kidnapping judgment. We shall affirm the Court of Special Appeals as to the kidnapping and reverse as to the felony murder, thereby sustaining the judgments entered by the circuit court.
BACKGROUND This was not an easy case for the police to put together. Six years elapsed between the time Fiddler was murdered and the time Stouffer and Burral were indicted. Most of the people interviewed by the police and most of the non-police witnesses who ultimately testified were, at the time of Fiddler's murder, part of a dysfunctional community of youngsters, in their twenties, who knew, lived for various periods with, were once married to, or had children with each other and who socialized and frequently "partied" together. Some of them were associated with drugs, weapons, and other criminal activity conducted from an establishment known as Rocky's Pizza, and there was evidence that Fiddler's killing may have been connected with that activitythat the participants were concerned that Fiddler was saying more than was prudent about the activity, that their intent was to frighten him or teach him a lesson, and that the endeavor to do so got out of hand. There was also some evidence that Stouffer and others were simply upset over attention Fiddler was paying to one "Becky." The direct evidence in this case of exactly what occurred is rather thin. No one claims to have witnessed the actual kidnapping, beating, or killing of Fiddler. No weapon was recovered. No fingerprints linking Stouffer or anyone else to the murder were recovered. No confession was obtained. The State's evidence as to where the beating or the killing occurred was in dispute. There was some evidence indicating that it may have occurred in or just outside of Robert Schell's apartment at 12 Elizabeth Street, in Hagerstown; other evidence suggested that it occurred in a field or parking lot. Ultimately, the State abandoned the notion that the beating or killing occurred at 12 Elizabeth Street. There was evidence that Schell was involved and evidence that he was not involved. The various witnesses, some of whom had consumed a great deal of alcohol on the night in question, gave different stories of who was involved, what happened, and where it happened. Some of those stories changed over timetrial was held more than seven years after the murderand a good bit of the evidence was in the form of earlier written statements made to the police that were inconsistent with the witnesses's trial *209 testimony. Much of the evidence was in the form of inculpatory statements allegedly made by Stouffer after Fiddler's death that were overheard and, six years later, reported to the police. Some facts were not in substantial dispute. Fiddler's body was discovered early on the morning of February 27, 1989, in a ditch by the side of an entrance ramp to Interstate 81, just over the Pennsylvania-Maryland line. He was clad in pants, a sweatshirt, and unlaced shoes, but had on no socks or underwear. It was not Fiddler's common practice to go without socks or underwear or to wear his shoes unlaced. There were two stab wounds in the chest, one about eight inches deep, defensive wounds on the right hand, a bruise on the back of the neck, and abrasions on the buttocks and left leg. Based on his entire examination, including blood patterns on the body, the clothes, and the shoes, grass and leaves on the ball of Fiddler's left foot, and greasy and granular material on Fiddler's back, the medical examiner opined that (1) Fiddler died of the large stab wound to the chest, which punctured a lung; (2) that wound would have caused extensive bleeding; (3) the stabbing did not occur where the body was found; (4) Fiddler was probably wearing the sweatshirt, but not the pants or shoes, when stabbed; (5) the pants and shoes were placed back on the body after the stabbing; (6) before Fiddler died and without his pants on, his body had been dragged across a rough granular black surface; and (7) death was not instantaneous, but ensued from bleeding within a half hour after the stabbing. The conclusion that the stabbing occurred elsewhere was supported by the fact that there was very little blood found in the ditch where the body was discovered. The State's theory was that Stouffer, Burral, and perhaps others in the group kidnapped Fiddler in Hagerstown, that they took him to a field where they forced him to partially disrobe, that they beat him and, possibly to avert his attempt to escape, stabbed him, that they then drove him, as he lay dying, to the Interstate ramp, where they dumped the body. It is not necessary for us to recount all of the evidence in support of that theory, much of which is marginal. We note, however, the following. Rebekah Kogar, who was Stouffer's girlfriend at the time, testified that, on the evening Fiddler was killed, she, Stouffer, Burral, and others were at James Russell's apartment in Hagerstown, that Stouffer, Burral, and Russell left in the late afternoon or evening (as late as between 10:30 and 11:00) and did not return until early the next morning. Upon his return, Burral had "some kind of red stuff all over him," and he changed his clothes. Ms. Kogar overheard a conversation between Stouffer and Burral"[s]omething that happened up at Elizabeth Street I think it was. Something got out of hand." They mentioned Fiddler. Barbara Kelly told the jury that, on the evening before she heard that Fiddler had been killed, she was in downtown Hagerstown, near Rocky's Pizza, when she saw four men, including Stouffer and someone she knew as Billy (inferentially Burral), chasing Fiddler and that she heard Stouffer warn Fiddler to stay away from "Becky." She recalled seeing Stouffer and some men get into a white car, although she could not be certain if that was the same night as the chase. In an earlier statement given to the police, she indicated that it was the same night as the chase. Evidence was presented that Stouffer then owned a white Volkswagen Rabbit. Although Stouffer had told Hagerstown Detective Johnson that Fiddler had never been in his car, FBI agent Wayne Oakes, a forensic scientist, testified that three hairs found in that car were microscopically indistinguishable from sample hairs taken from Fiddler's hairbrush.[1] There was some evidence of a blood trace on the inside of the door of the car, but the sample was not taken until 1995, and it was not suitable for testing. Kathy Argo recalled a conversation in 1989 in which Stouffer told her that the police were trying to connect him to Fiddler's murder, but "they can't prove anything." He added that there had been blood in his car, "but it's been cleaned out." *210 Much of the evidence against Stouffer came from his own mouth, through statements made to or overheard by others. Richard Ford recalled a conversation with Stouffer in 1990, in which Stouffer mentioned beating a person, for "sticking his nose where it didn't belong." Stouffer added that the beating took place in an alleyway around the corner from Rocky's, that three other men, including Burral, were with him, and that "they beat the heck out of him and he didn't give a damn if he lived or died and said that he ... that they put him in the van and dropped him off at the interstate right there at State Line." In an earlier written statement to the police, which was admitted as substantive evidence, Ford recounted that Stouffer had said that "I killed the fucking guy." Fiddler's name, in particular, was not mentioned. Brian Burchett recalled overhearing a conversation between his former girlfriend, Annette Bowman, Stouffer, and Russell in July, 1990, in which Stouffer remarked that "Jeff Fiddler was running his mouth too much and that he deserve[d] what he got." Patricia Moore, who was part of the operation at Rocky's and was a friend of Stouffer, gave a statement in June, 1995 to Detective Sternera statement that she disavowed at trial but which was admitted into evidencerecounting a conversation with Stouffer in which he admitted that he helped to beat Fiddler and that he rode around in a car with him. She recited in her statement Stouffer's admission that "there was a struggle and [Fiddler] was trying to get away a couple of times" and "[t]hat's where they stabbed him there at the field." Stouffer boasted, according to her statement, that he "got a rush and a thrill," that the police would never find out, that "he had gotten away with it," that Fiddler had been in the trunk of the car, and that there were blood stains in the back of the trunk. Connie Minnick said she overheard a conversation between Stouffer and her sister in which Stouffer said that "he didn't want it to go that far." In an earlier statement to the police, she noted Stouffer's further comments that "he just freaked out" and that "he didn't know if [Fiddler] was dead or not. And they were just scared." Ginger Eavey, a friend of Stouffer, recalled hearing him say that Fiddler had been stabbed, put in a vehicle, and dumped "along the State line." Robert Schell testified to a number of altercations with Stouffer. On the night Fiddler was killed, Schell returned downtown after a good bit of drinking and two previous altercations and encountered Stouffer, who threatened him to the point that he ran for safety into a hotel. Later that evening, he saw Stouffer again. Stouffer accused him of "narking" and warned him that "if I didn't get out of his face I could be taken care of too." At that point, a police officer came by and separated the two. In March, 1989, according to Schell, he encountered Stouffer in downtown Hagerstown. They had an argument, following which Stouffer began chasing Schell and allegedly pushed him into an oncoming truck. Angela Tobery saw Stouffer and others chasing Schell on that occasion, but she did not see the push. Stouffer was initially charged with premeditated first degree murder, a variety of first and second degree sexual offenses committed against Fiddler, kidnapping, and felony murder based on the sexual offenses and kidnapping. The only counts submitted to the jury were first degree premeditated murder, of which appellant was acquitted, kidnapping, of which he was convicted, felony murder based on the kidnapping, of which he was convicted, and second degree murder, as to which no verdict was returned. As noted, the Court of Special Appeals affirmed the kidnapping judgment but reversed the felony murder judgment.
DISCUSSION
Evidence of Kidnapping As we indicated, the State contended that Stouffer and others abducted Fiddler in Hagerstown, forced him into Stouffer's car, drove him somewhere where they beat and stabbed him, and then drove him into Pennsylvania, where they dumped his body. On the theory that the intent of this enterprise was to beat Fiddler in order to teach him a lesson, Stouffer urges that the asportation of Fiddler from where he was seized was simply to remove him to a place where he could be *211 beaten, and that an asportation for that purpose does not constitute kidnapping. Nor, he contends, would it constitute kidnapping to transport Fiddler's dead body from the place of stabbing to the ditch in Pennsylvania. The evidentiary challenge, in other words, is not with respect to the proof of his criminal agency, but as to whether (1) the asportation of Fiddler, while still alive, was simply to facilitate the assault, or murder, and did not, therefore, constitute the separate crime of kidnapping, and (2) the asportation of his dead body, following the stabbing, can constitute kidnapping. Kidnapping is a statutory crime in Maryland. With an exception not relevant here, Maryland Code (1957 and 1996 Repl.Vol.), Article 27, § 337 makes it a felony to forcibly or fraudulently carry or cause "any person" to be carried out of or within Maryland with the intent to have the victim carried or concealed in or out of the State. That statute, first enacted in 1809, enlarged the common law crime of kidnapping, which was limited to forcibly abducting or stealing a person and sending him or her to another country. See Midgett v. State, 216 Md. 26, 38-40, 139 A.2d 209 (1958); Moore v. State, 23 Md.App. 540, 329 A.2d 48, cert. denied, 274 Md. 730 (1975). Although no cases are cited by either side, the State essentially concedes that one may not be convicted of kidnapping for carrying around a corpse. The statute speaks in terms of carrying "any person," and, at least for purposes of this case, we shall assume that a corpse is not a "person" within the meaning of the statute. The court below specifically instructed the jury that, to convict Stouffer of kidnapping, it must find that Fiddler was alive when the kidnapping occurred. The question thus focuses on what happened to Fiddler before he died. In that regard, the evidence, recounted above, suffices to show that Stouffer, together with others, in order to frighten Fiddler or "teach him a lesson," abducted Fiddler from somewhere in Hagerstown, took him to a parking lot or field, beat him, stabbed him either to prevent his escape or because the beating enterprise "got out of hand," put him in a car while he was bleeding to death, and dumped his body in Pennsylvania. The evidence permits a reasonable inference of at least two asportations: one from the point of initial abduction to the place where the beating and stabbing occurred, and a second from that point to the entrance ramp in Pennsylvania. In light of the medical examiner's testimony that Fiddler may have lived for as long as a half hour after he was stabbed, the evidence also permits a reasonable inference that he was still alive, for at least part of the time, while he was dragged into the car after being stabbed and driven to Pennsylvania. There are literally hundreds of reported decisions around the country dealing with whether, and under what circumstances, the detention, confinement, or asportation of a victim initially accosted for the purpose of robbery, sexual assault, or some other crime will suffice to sustain a separate conviction for kidnapping. See Frank J. Wozniak, Annotation, Seizure or Detention for Purpose of Committing Rape, Robbery, or Other Offense as Constituting Separate Crime of Kidnapping, 39 A.L.R. 5th 283 (1996). Not only do the facts vary from one case to another, so do the State or Federal kidnapping statutes at issue. Some statutes proscribe the confining or restraining of a person, more akin to false imprisonment; others speak of "taking" a person; some, like the Model Penal Code (§ 212.1), include both a confinement and a taking or removal; some are divided into degrees, dependent in part on the defendant's mental state or whether the kidnapping is for the purpose of ransom. Maryland's statute, as noted, requires a "carrying" and is not divided into degrees. Both because of the varying fact patterns and the different statutory provisions, one needs to be very careful in looking for precedential or persuasive decisions. Courts in dozens of State and Federal cases have followed what has been described as the "traditional rule in American jurisprudence" that "any asportationi.e., carrying awayof the victim, no matter how short in distance or duration, was sufficient to establish the crime of kidnapping." Government of Virgin Islands v. Berry, 604 F.2d 221, 225 (3d Cir.1979); also Wozniak, supra, 39 A.L.R. 5th at 356. See, for example, State v. Vass, 191 Conn. 604, 469 A.2d 767 (Conn.1983), *212 where the defendant, a customer in a grocery story, ordered the clerk at knifepoint to a stockroom at the back of the store, where he attempted to rape her. Rejecting his argument that he could not be convicted of kidnapping if that offense was "integral or incidental" to the crime of rape, the court concluded that, if the State proved all of the elements of kidnapping, the defendant could be convicted of that offense in addition to another felony "even though the two offenses arose out of the same conduct." Id. at 774. See also State v. Jacobs, 93 Ariz. 336, 380 P.2d 998 (Ariz.1963); Bailey v. State, 146 Ga.App. 774, 247 S.E.2d 588 (1978); Wilson v. State, 253 Ind. 585, 255 N.E.2d 817 (Ind.1970) Harris v. State, 78 Wis. 2d 357, 254 N.W.2d 291 (Wis.1977). The rationale behind that view is that it is the fact of the forcible removal, not its distance, that constitutes the separate crime of kidnapping. The statutory language is read literally and given its broadest meaning. As the annotator points out, however, a majority of courts have moved away from that approach and now hold that "kidnapping statutes do not apply to unlawful confinements or movements `incidental' to the commission of other felonies." 39 A.L.R. 5th at 356. The rationale of that approach is the concern that a literal reading of the kidnapping statutes, which often carry significant penalties, can lead to an overzealous enforcement, with the result that "persons who have committed such substantive crimes as robbery or assaultwhich inherently involve the temporary detention or seizure of the victimwill suffer the far greater penalties prescribed by the kidnapping statutes." Government of Virgin Islands, supra, 604 F.2d at 226; also People v. Levy, 15 N.Y.2d 159, 256 N.Y.S.2d 793, 204 N.E.2d 842 (N.Y.1965), observing that, if read literally, the kidnapping statute would "overrun" other crimes, such as robbery, rape, and assault; Cotton v. Superior Court, 56 Cal. 2d 459, 15 Cal. Rptr. 65, 364 P.2d 241, 244 (Cal.1961) and People v. Daniels, 71 Cal. 2d 1119, 80 Cal. Rptr. 897, 459 P.2d 225, 231 (Cal.1969), expressing concern that "every assault could also be prosecuted for kidnapping ... as long as the slightest movement was involved." Although some courts have applied that principle to reverse kidnapping convictions even upon proof that a robbery or sex offense victim was taken a considerable distance and held for more than just a brief period of time, most courts following the majority view are more flexible and take a close look at the circumstances to determine whether the confinement or movement truly was "incidental" or "integral" to another crime.[2] Among other things, courts have looked at how long the victim was held, how far the victim was taken, where the victim was taken, whether the abduction exceeded what was necessary to the commission of the other crime, and whether the abduction itself substantially increased the risk of harm, beyond the risk inherent in the commission of the other crime. See State v. Farmer, 191 W.Va. 372, 445 S.E.2d 759 (W.Va.1994); State v. St. Cloud, 465 N.W.2d 177 (S.D.1991). *213 In an effort to guide judges and juries in determining when a separate conviction for kidnapping is permissible, some courts have devised standards or guidelines, focusing principally on distance, duration, and danger. In Government of Virgin Islands v. Berry, supra, 604 F.2d 221, the court reviewed earlier pronouncements and concluded, at 227: "We believe that despite the variance in terminology, four factors are central to each of these approaches. Those factors are: (1) the duration of the detention or asportation; (2) whether the detention or asportation occurred during the commission of a separate offense; (3) whether the detention or asportation which occurred is inherent in the separate offense; and (4) whether the asportation or detention created a significant danger to the victim independent of that posed by the separate offense." That "test" has also been adopted in the Eleventh Circuit. See United States v. Howard, 918 F.2d 1529 (11th Cir.1990). In State v. Buggs, 219 Kan. 203, 547 P.2d 720, 731 (Kan.1976), the Kansas court adopted a tripartite test of whether the movement or confinement was "slight, inconsequential," whether it was "of the kind inherent in the nature of the other crime," and whether it had "some significance independent of the other crime in that it makes the other crime substantially easier of commission or substantially lessens the risk of detection." That test has been adopted in Delaware and Florida as well. See Burton v. State, 426 A.2d 829 (Del.Supr.Ct.1981); Faison v. State, 426 So. 2d 963 (Fla.1983). The District of Columbia court has focused on "whether the kidnapping substantially increased the risk of harm to the victim beyond that inherent in the underlying crime." Nelson v. U.S., 601 A.2d 582, 598 (D.C.1991). A wide variety of cases are reviewed in the A.L.R. annotation. They involve victims forced into an office or residence and robbed, raped, or assaulted, victims moved from an office or residence to some other place, victims confined within one room, victims moved from one room to another, carjack victims forced to drive or remain as passengers in their own car, victims forced into the defendant's vehicle and driven to some other place, victims detained and transported in commercial vehicles, and victims forced from where they were accosted into alleys, fields, woods, or buildings of one kind or another. They involve situations in which the victim was transported only a few yards, several blocks, several miles, or many miles, victims held for varying periods of time from a few minutes to several hours to more than a day, victims released promptly after commission of the other crime and victims restrained for longer periods or killed. In each of these categories are cases sustaining and cases reversing separate kidnapping convictions. Wharton echoes the splintering of the decisions: "At times, in committing the crime of robbery or rape, the victim may be moved, as where a robbery victim is pushed from the sidewalk into a nearby alley or hallway so that his wallet can be taken, where a robbery victim is moved from room to room in his home so that the house can be searched for valuables, or where a rape victim is pushed from the sidewalk into a nearby alley or driven to a more distant place. In such cases, depending upon whether the movement of the victim is merely incidental to the commission of the crime of robbery or rape, the movement will or will not constitute the separate offense of kidnapping. Similarly, depending upon whether the movement of a victim is merely incidental to the commission of some other crime, the movement will or will not constitute the separate offense of kidnapping." 2 Charles E. Torcia, WHARTON'S CRIMINAL LAW (15th ed.) § 207. The one thing that seems clear from the decisions following the majority view is that most of them are fact-specific. Whether the confinement or movement of the victim is merely incidental to another crime depends, in nearly every case, on the circumstances, even when guidelines of the types noted above are applied. If the victim is not moved too far, is not held for longer than is necessary to complete the other crime, and is not subjected to any significant peril from the confinement or movement itself, if the confinement or movement can reasonably be viewed as undertaken solely to facilitate the *214 commission of the other crime, and if commission of the other crime normally involves (even if it does not legally require) some detention or asportation of the victim, the court is likely to conclude that the confinement or movement was merely incidental to the other crime and thus reverse a separate kidnapping conviction. If any of those factors are missing, however, there is a greater prospect of the court sustaining a separate kidnapping conviction. See In re Earley, 14 Cal. 3d 122, 120 Cal. Rptr. 881, 534 P.2d 721 (Cal.1975); State v. Lykken, 484 N.W.2d 869 (S.D.1992). The Court of Special Appeals has dealt with the issue on a number of occasions. In the first two cases, Lester v. State, 9 Md.App. 542, 266 A.2d 361, cert. denied, 259 Md. 733 (1970) and Rice v. State, 9 Md.App. 552, 267 A.2d 261, cert. denied, 259 Md. 735 (1970), the court recognized the "incidental" or "integral part" issue but held that the facts justified a separate kidnapping conviction. In Lester, the defendant seized the victim on a parking lot, forced her at knifepoint into his car, drove some distance to a wooded area where he raped her, and then drove her back to the parking lot. Affirming separate convictions for rape and kidnapping, the court noted, at 544-45, 266 A.2d 361: "Whether under a given set of circumstances, acts which fall within the technical statutory definition of kidnapping would not be sufficient to support a conviction of that crime because they were an `integral part' of another crime is a problem which does not confront us in this case for an examination of the record discloses that there was ample evidence before the trial judge from which he could find, beyond a reasonable doubt, that the kidnapping and rape were separate and distinct crimes and that, contrary to appellant's contention, the kidnapping was not merely `a means to an end.'" In Rice, the defendant, believing the victim to be a prostitute, broke into her apartment, assaulted her, took her forcibly several blocks away to his apartment where he committed a number of sexual offenses, kept her there all night, and walked her home the next morning. On appeal, he argued that his convictions for rape and kidnapping should merge. Rejecting that argument, the court noted that "the problem here is different from when the victim was moved and confined only slightly, as would be necessary to complete the crime of rape. In the instant case the victim was dragged from her apartment and carried several blocks into the accused's apartment. These actions completed the crime of kidnapping." Id. at 566, 267 A.2d at 269. In three later cases, the court, though it could have sustained a separate kidnapping conviction on the ground that the kidnapping was not incidental to or an integral part of the other crime, nonetheless articulated the principle, taken from Rollin M. Perkins, CRIMINAL LAW, § 7 at 177 (2d ed.1953), that "[i]t is the fact of asportation and not the distance that is controlling." In Moore v. State, supra 23 Md.App. 540, 329 A.2d 48, the defendant accosted the 11-year old victim as she was riding her bicycle, forced her into his car, drove to an abandoned farmhouse, took her into some bushes, and raped her. The court rejected the defendant's complaint that the State failed to prove how far the child was transported, on the ground that the distance was irrelevant. That principle was applied as well in Isaacs v. State, 31 Md.App. 604, 616, 358 A.2d 273, cert. denied, 278 Md. 724 (1976). The defendants there abducted the victim in Pennsylvania as part of a carjacking, drove him into Maryland where they killed him, and then proceeded to Florida in his car. The point made by the court was that the evidence sufficed to show a kidnapping in Maryland, not just in Pennsylvania. See also Tate and Hall v. State, 32 Md.App. 613, 363 A.2d 622 (1976). Finally, in Carey v. State, 54 Md.App. 448, 458 A.2d 90, aff'd, 299 Md. 17, 472 A.2d 444 (1984), where the defendant sexually assaulted the victim in an upstairs bedroom and then dragged her down to the basement and locked her in a closet for more than a day, the court, though repeating the principle that "`it matters not that the victim was asported but a short distance,'" affirmed the separate kidnapping conviction on the basis that "the necessary asportation and concealment occurred after the sexual offenses had been terminated." Id. at 452, 458 A.2d at 92. *215 As we observed earlier, the Maryland kidnapping statute, § 337, requires a carrying of the victim. To that extent, it is unlike the allied crime of false imprisonment and other kidnapping statutes that punish certain unlawful detentions and concealments, even in the absence of an asportation. Midgett v. State, supra, 216 Md. at 38-40, 139 A.2d at 215-16. We recognize the problem articulated by the Third Circuit, New York, and California courts, among others, that a literal reading of the kidnapping law could have the effect of transforming a host of lesser-punished sex and street crimes into 30-year eligible kidnappings, and we do not believe that the Legislature ever intended for § 337 to be read in that broad a fashion. On the other hand, we recognize equally well the fact noted in People v. Miles, supra, 297 N.Y.S.2d 913, 245 N.E.2d at 695, that "it is the rare kidnapping that is an end in itself; almost invariably there is another ultimate crime." True kidnappings are usually undertaken for the purpose of committing some other crime, often extortion. We aline ourselves with the majority approach that examines the circumstances of each case and determines from them whether the kidnappingthe intentional asportationwas merely incidental to the commission of another offense. We do not adopt, however, any specific formulation of standards for making that determination, but rather focus on those factors that seem to be central to most of the articulated guidelines, principally: How far, and where, was the victim taken? How long was the victim detained in relation to what was necessary to complete the crime? Was the movement either inherent as an element, or, as a practical matter, necessary to the commission, of the other crime? Did it have some independent purpose? Did the asportation subject the victim to any additional significant danger? Applying those factors, it is clear that the evidence sufficed to sustain a separate kidnapping conviction for Stouffer. Although the record does not establish precisely where Fiddler was taken, there is certainly a fair inference, to be drawn from the fact that he was driven there and that it may have been a field outside the center of Hagerstown, that the distance was a considerable one. This was not a situation where the victim was simply dragged a short distance into a nearby alley or building. If the objective was simply to beat Fiddler, as Stouffer suggests, that kind of asportation was unnecessary. As noted, Stouffer was not above physical violence in the middle of Hagerstown; he was seen chasing and threatening Fiddler along the streets and later was seen chasing and threatening Schell. Fiddler could have been beaten anywhere. If, on the other hand, the desire to "teach him a lesson" extended beyond a beating, which the evidence also suggests, the kidnapping would have had an independent purpose; the seizure and asportation, coupled with stripping him from the waist down, would have been part of the frightening lesson. In that scenario as well, therefore, the kidnapping would not have been incidental to any other crime, but would have had its own function and significance. Even if we accept that Stouffer's intent was principally to beat Fiddler, the kidnapping substantially increased his peril. Apart from the risks associated simply with being forced into a compact car with three or four other men and driven for some distance as a hostage, the grave peril implicit from being taken to a field somewhere, alone, completely at the mercy of his abductors, and with no prospect of escape or assistance, is obvious. That peril is different from and far exceeds the risks inherent in an assault on the streets of downtown Hagerstown. Moreover, the kidnapping did not end at the place where Fiddler was stripped and beaten. After he was stabbed, whether because of a "thrill" or a "rush," to prevent his escape, or because the enterprise "got out of hand," the evidence indicates that he was dragged into the car and, while still alive, driven to Pennsylvania. That conduct suffices at least as a continuation of the kidnapping. As noted in State v. Gomez, 225 Conn. 347, 622 A.2d 1014, 1016 (Conn.1993), [b]ecause kidnapping involves interfering with the victim's liberty, it continues until that liberty is restored." See also State v. Dove, 52 Wash.App. 81, 757 P.2d 990 (Wash.App.1988). As was the case in Gomez, supra, *216 "[b]ecause the victim in this case was never released, the kidnapping ended only with his death." That aspect of the kidnapping was certainly not merely incidental to the beating.
The Felony Murder As noted, the jury was specifically instructed that, to convict Stouffer of felony murder, the State was required to prove "that the defendant or another participating with the defendant committed a felony and specifically kidnaping, that the defendant or another participating in the crime killed Jeffrey Lynn Fiddler and that the act resulting in the death of Jeffrey Lynn Fiddler occurred during the commission of the kidnaping." The jury obviously believed, beyond a reasonable doubt, that the State had proved those things. The Court of Special Appeals concluded otherwise. It determined that "[i]n no sense can Fiddler's death be viewed as the `result or outcome' of a kidnapping that [Stouffer] and his bellicose band intended to perpetrate." Stouffer v. State, supra, 118 Md.App. at 616, 703 A.2d at 874. That, in turn, arose from the appellate court's determination that Stouffer's "overarching intent" was not to kidnap Fiddler but simply to beat him. The court held at 118 Md.App. at 620, 703 A.2d at 875, that "[t]here was no direct or inferential evidence before the trier of fact that the announced purpose of Stouffer's missionto scare Fiddlerwas to be accomplished by forcibly confining and transporting him." All of the evidence, it said, indicates that "the means to be employed in intimidating Fiddler or placing him in fear" was "the infliction of serious bodily harm in a reckless and dangerous manner with indifference to the consequences." Id. at 620, 703 A.2d at 876. In his brief, Stouffer puts the point more succinctly: "The beating that culminated in the fatal stabbing was not done to further the kidnapping; rather, the kidnapping was carried out to further the beating. As a result there was no felony murder." In supporting the conclusion of the intermediate appellate court, Stouffer cites Campbell v. State, 293 Md. 438, 444 A.2d 1034 (1982) and a number of out-of-State cases that we cited in Campbell. The issue in Campbell and in most of the cases cited by Stouffer was whether a participant in a robbery or other felony could properly be convicted of felony murder when the person killed was killed by someone other than a participant. In Campbell, for example, a co-participant with Campbell in an armed robbery was killed either by the robbery victim, shooting in self-defense, or by a police officer in a concurrent attempt to apprehend the co-participant. We joined the prevailing view that "under the felony-murder doctrine a participating felon is not guilty of murder when the killing is done by a person other than the participating felon or his co-felons." Campbell, supra, 293 Md. at 443, 444 A.2d at 1037. That is not, of course, the issue here. The more pertinent point sought to be drawn from Campbell and the other cases is that stated in Commonwealth v. Redline, 391 Pa. 486, 137 A.2d 472, 476 (Pa.1958) and quoted by us in Campbell, that "[t]he mere coincidence of homicide and felony is not enough to satisfy the requirements of the felony-murder doctrine. `It is necessary ... to show that the conduct causing death was done in furtherance of the design to commit the felony.'" That principle, that there must be some nexus between the killing and the underlying felony, is not really in dispute and, indeed, is clear from the Maryland felony murder statute itself. Maryland Code, Article 27, § 410 makes all murder committed "in the perpetration of, or attempt to perpetrate, any ... kidnapping as defined in [§ 337]... murder in the first degree." The question, then, is simply whether the evidence sufficed to show that Fiddler was murdered "in the perpetration of" a kidnapping. In that regard, we take issue with Stouffer and the Court of Special Appeals that the "overarching intent" of Stouffer and his cohorts was simply to beat Fiddler and that the kidnapping was carried out solely in furtherance of that intent. For one thing, that presumed "overarching intent" found by the Court of Special Appeals is quite irrelevant. Whatever may have been Stouffer's motive, we have already determined that there was sufficient evidence to establish a kidnapping, and it is clear, *217 really beyond cavil, that the stabbing occurred "in the perpetration" of that kidnapping. There was evidence that Fiddler was stabbed in order to prevent his escape. Because kidnapping is a continuing crime, remaining in effect until the hostage is safely released, the stabbing was necessarily "in furtherance of the felonious undertaking." Campbell v. State, supra, 293 Md. at 446, 444 A.2d at 1039, quoting from Commonwealth v. Redline, supra, 397 Pa. at 496, 137 A.2d at 476. It appears as well that there was evidence of an independent intent to kidnap Fiddler, that the kidnapping itselfthe forcible removal of Fiddler to a place where he would be isolated and helpless, where he could be stripped, humiliated, and beatenwas what was intended to "teach him a lesson." The evidence therefore did suffice to indicate that the beating may have been part of the kidnapping, not the other way around. In both events, the Court of Special Appeals erred in reversing the felony murder judgment.
Erroneous Instruction Stouffer adds to his brief the additional complaint that the court improperly instructed the jury that it could find him guilty of felony murder if it found that the killing occurred during a kidnapping. Apart from the fact that no objection was made to that instruction, the complaint was not included in Stouffer's conditional cross-petition. We therefore shall not address the issue. JUDGMENT OF COURT OF SPECIAL APPEALS AFFIRMED IN PART AND REVERSED IN PART; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO AFFIRM JUDGMENTS OF CIRCUIT COURT FOR WASHINGTON COUNTY; RESPONDENT STOUFFER TO PAY THE COSTS IN THIS COURT AND IN COURT OF SPECIAL APPEALS. NOTES [1] Agent Oakes made clear that the microscopic similarity could not be taken as a basis for absolute personal identification and that it was possible, though extremely rare, for someone else to have hair that would be indistinguishable from that of Fiddler. [2] Examples of the somewhat rigid view are the decisions of the New York Court of Appeals in People v. Levy, supra, 15 N.Y.2d 159, 256 N.Y.S.2d 793, 204 N.E.2d 842 and People v. Lombardi, 20 N.Y.2d 266, 282 N.Y.S.2d 519, 229 N.E.2d 206 (N.Y.1967). In Levy, the victims were abducted in their car and driven around New York City for about 20 minutes, covering some 27 blocks, during which time they were robbed of their jewelry. The New York kidnapping law at the time made an unlawful confinement a kidnapping. Noting that some restraint or confinement was inherent in the crime of robbery, the court gave the kidnapping statute a narrow meaning and reversed the kidnapping convictions in that case. The same narrow reading was given in Lombardi, where the court held that the transportation of drugged girls from Manhattan to a motel in Queens was part of the crimes of assault and attempted rape and did not justify a separate conviction for kidnapping. In People v. Miles, 23 N.Y.2d 527, 297 N.Y.S.2d 913, 245 N.E.2d 688, 695 (N.Y.1969), the court, noting a change in the New York kidnapping statute following Lombardi, retreated somewhat, observing that the Levy-Lombardi rule "was designed to prevent gross distortion of lesser crimes into a much more serious crime by excess of prosecutorial zeal" and was not intended "to merge `true' kidnappings into other crimes merely because the kidnappings were used to accomplish ultimate crimes of lesser or equal or greater gravity." Upholding the kidnapping conviction in that case, the court further observed that "it is the rare kidnapping that is an end in itself; almost invariably there is another ultimate crime." Id. | 10-30-2013 | [
"721 A.2d 207 (1998) 352 Md. 97 STATE of Maryland v. Edward Charles STOUFFER. No. 28, Sept. Term, 1998. Court of Appeals of Maryland. December 9, 1998. *208 Diane E. Keller, Assistant Attorney General (J. Joseph Curran, Jr., Attorney General, on brief), Baltimore, for petitioner. John L. Kopolow, Assistant Public Defender (Stephen E. Harris, Public Defender), Baltimore, for respondent. Argued before BELL, C.J., and ELDRIDGE, RODOWSKY, CHASANOW, RAKER, WILNER and CATHELL, JJ. WILNER, Judge. This case arises out of the killing of Jeffrey Fiddler on February 26-27, 1989. Respondent Edward Stouffer was convicted of felony murder and kidnapping, the kidnapping being the underlying felony for the felony murder. A co-defendant, William Burral, who was tried separately and whose appeal is currently pending in this Court, was convicted of second degree murder. The Court of Special Appeals concluded that, although there was legally sufficient evidence to sustain Stouffer's conviction for kidnapping, there was insufficient evidence to establish that the killing was committed in the perpetration or course of the kidnapping. It thus affirmed the kidnapping judgment but reversed the judgment for felony murder.",
"Stouffer v. State, 118 Md.App. 590, 703 A.2d 861 (1997). We granted the State's petition for certiorari to review the reversal of the felony murder judgment and Stouffer's cross-petition to review the affirmance of the kidnapping judgment. We shall affirm the Court of Special Appeals as to the kidnapping and reverse as to the felony murder, thereby sustaining the judgments entered by the circuit court. BACKGROUND This was not an easy case for the police to put together. Six years elapsed between the time Fiddler was murdered and the time Stouffer and Burral were indicted.",
"Most of the people interviewed by the police and most of the non-police witnesses who ultimately testified were, at the time of Fiddler's murder, part of a dysfunctional community of youngsters, in their twenties, who knew, lived for various periods with, were once married to, or had children with each other and who socialized and frequently \"partied\" together. Some of them were associated with drugs, weapons, and other criminal activity conducted from an establishment known as Rocky's Pizza, and there was evidence that Fiddler's killing may have been connected with that activitythat the participants were concerned that Fiddler was saying more than was prudent about the activity, that their intent was to frighten him or teach him a lesson, and that the endeavor to do so got out of hand. There was also some evidence that Stouffer and others were simply upset over attention Fiddler was paying to one \"Becky.\" The direct evidence in this case of exactly what occurred is rather thin.",
"No one claims to have witnessed the actual kidnapping, beating, or killing of Fiddler. No weapon was recovered. No fingerprints linking Stouffer or anyone else to the murder were recovered. No confession was obtained. The State's evidence as to where the beating or the killing occurred was in dispute. There was some evidence indicating that it may have occurred in or just outside of Robert Schell's apartment at 12 Elizabeth Street, in Hagerstown; other evidence suggested that it occurred in a field or parking lot. Ultimately, the State abandoned the notion that the beating or killing occurred at 12 Elizabeth Street. There was evidence that Schell was involved and evidence that he was not involved.",
"The various witnesses, some of whom had consumed a great deal of alcohol on the night in question, gave different stories of who was involved, what happened, and where it happened. Some of those stories changed over timetrial was held more than seven years after the murderand a good bit of the evidence was in the form of earlier written statements made to the police that were inconsistent with the witnesses's trial *209 testimony. Much of the evidence was in the form of inculpatory statements allegedly made by Stouffer after Fiddler's death that were overheard and, six years later, reported to the police. Some facts were not in substantial dispute. Fiddler's body was discovered early on the morning of February 27, 1989, in a ditch by the side of an entrance ramp to Interstate 81, just over the Pennsylvania-Maryland line. He was clad in pants, a sweatshirt, and unlaced shoes, but had on no socks or underwear. It was not Fiddler's common practice to go without socks or underwear or to wear his shoes unlaced. There were two stab wounds in the chest, one about eight inches deep, defensive wounds on the right hand, a bruise on the back of the neck, and abrasions on the buttocks and left leg. Based on his entire examination, including blood patterns on the body, the clothes, and the shoes, grass and leaves on the ball of Fiddler's left foot, and greasy and granular material on Fiddler's back, the medical examiner opined that (1) Fiddler died of the large stab wound to the chest, which punctured a lung; (2) that wound would have caused extensive bleeding; (3) the stabbing did not occur where the body was found; (4) Fiddler was probably wearing the sweatshirt, but not the pants or shoes, when stabbed; (5) the pants and shoes were placed back on the body after the stabbing; (6) before Fiddler died and without his pants on, his body had been dragged across a rough granular black surface; and (7) death was not instantaneous, but ensued from bleeding within a half hour after the stabbing.",
"The conclusion that the stabbing occurred elsewhere was supported by the fact that there was very little blood found in the ditch where the body was discovered. The State's theory was that Stouffer, Burral, and perhaps others in the group kidnapped Fiddler in Hagerstown, that they took him to a field where they forced him to partially disrobe, that they beat him and, possibly to avert his attempt to escape, stabbed him, that they then drove him, as he lay dying, to the Interstate ramp, where they dumped the body. It is not necessary for us to recount all of the evidence in support of that theory, much of which is marginal. We note, however, the following. Rebekah Kogar, who was Stouffer's girlfriend at the time, testified that, on the evening Fiddler was killed, she, Stouffer, Burral, and others were at James Russell's apartment in Hagerstown, that Stouffer, Burral, and Russell left in the late afternoon or evening (as late as between 10:30 and 11:00) and did not return until early the next morning. Upon his return, Burral had \"some kind of red stuff all over him,\" and he changed his clothes.",
"Ms. Kogar overheard a conversation between Stouffer and Burral\"[s]omething that happened up at Elizabeth Street I think it was. Something got out of hand.\" They mentioned Fiddler. Barbara Kelly told the jury that, on the evening before she heard that Fiddler had been killed, she was in downtown Hagerstown, near Rocky's Pizza, when she saw four men, including Stouffer and someone she knew as Billy (inferentially Burral), chasing Fiddler and that she heard Stouffer warn Fiddler to stay away from \"Becky.\"",
"She recalled seeing Stouffer and some men get into a white car, although she could not be certain if that was the same night as the chase. In an earlier statement given to the police, she indicated that it was the same night as the chase. Evidence was presented that Stouffer then owned a white Volkswagen Rabbit. Although Stouffer had told Hagerstown Detective Johnson that Fiddler had never been in his car, FBI agent Wayne Oakes, a forensic scientist, testified that three hairs found in that car were microscopically indistinguishable from sample hairs taken from Fiddler's hairbrush. [1] There was some evidence of a blood trace on the inside of the door of the car, but the sample was not taken until 1995, and it was not suitable for testing. Kathy Argo recalled a conversation in 1989 in which Stouffer told her that the police were trying to connect him to Fiddler's murder, but \"they can't prove anything.\" He added that there had been blood in his car, \"but it's been cleaned out.\"",
"*210 Much of the evidence against Stouffer came from his own mouth, through statements made to or overheard by others. Richard Ford recalled a conversation with Stouffer in 1990, in which Stouffer mentioned beating a person, for \"sticking his nose where it didn't belong.\" Stouffer added that the beating took place in an alleyway around the corner from Rocky's, that three other men, including Burral, were with him, and that \"they beat the heck out of him and he didn't give a damn if he lived or died and said that he ... that they put him in the van and dropped him off at the interstate right there at State Line.\" In an earlier written statement to the police, which was admitted as substantive evidence, Ford recounted that Stouffer had said that \"I killed the fucking guy.\"",
"Fiddler's name, in particular, was not mentioned. Brian Burchett recalled overhearing a conversation between his former girlfriend, Annette Bowman, Stouffer, and Russell in July, 1990, in which Stouffer remarked that \"Jeff Fiddler was running his mouth too much and that he deserve[d] what he got.\" Patricia Moore, who was part of the operation at Rocky's and was a friend of Stouffer, gave a statement in June, 1995 to Detective Sternera statement that she disavowed at trial but which was admitted into evidencerecounting a conversation with Stouffer in which he admitted that he helped to beat Fiddler and that he rode around in a car with him. She recited in her statement Stouffer's admission that \"there was a struggle and [Fiddler] was trying to get away a couple of times\" and \"[t]hat's where they stabbed him there at the field.\"",
"Stouffer boasted, according to her statement, that he \"got a rush and a thrill,\" that the police would never find out, that \"he had gotten away with it,\" that Fiddler had been in the trunk of the car, and that there were blood stains in the back of the trunk. Connie Minnick said she overheard a conversation between Stouffer and her sister in which Stouffer said that \"he didn't want it to go that far.\" In an earlier statement to the police, she noted Stouffer's further comments that \"he just freaked out\" and that \"he didn't know if [Fiddler] was dead or not. And they were just scared.\" Ginger Eavey, a friend of Stouffer, recalled hearing him say that Fiddler had been stabbed, put in a vehicle, and dumped \"along the State line.\"",
"Robert Schell testified to a number of altercations with Stouffer. On the night Fiddler was killed, Schell returned downtown after a good bit of drinking and two previous altercations and encountered Stouffer, who threatened him to the point that he ran for safety into a hotel. Later that evening, he saw Stouffer again. Stouffer accused him of \"narking\" and warned him that \"if I didn't get out of his face I could be taken care of too.\"",
"At that point, a police officer came by and separated the two. In March, 1989, according to Schell, he encountered Stouffer in downtown Hagerstown. They had an argument, following which Stouffer began chasing Schell and allegedly pushed him into an oncoming truck. Angela Tobery saw Stouffer and others chasing Schell on that occasion, but she did not see the push. Stouffer was initially charged with premeditated first degree murder, a variety of first and second degree sexual offenses committed against Fiddler, kidnapping, and felony murder based on the sexual offenses and kidnapping. The only counts submitted to the jury were first degree premeditated murder, of which appellant was acquitted, kidnapping, of which he was convicted, felony murder based on the kidnapping, of which he was convicted, and second degree murder, as to which no verdict was returned. As noted, the Court of Special Appeals affirmed the kidnapping judgment but reversed the felony murder judgment. DISCUSSION Evidence of Kidnapping As we indicated, the State contended that Stouffer and others abducted Fiddler in Hagerstown, forced him into Stouffer's car, drove him somewhere where they beat and stabbed him, and then drove him into Pennsylvania, where they dumped his body. On the theory that the intent of this enterprise was to beat Fiddler in order to teach him a lesson, Stouffer urges that the asportation of Fiddler from where he was seized was simply to remove him to a place where he could be *211 beaten, and that an asportation for that purpose does not constitute kidnapping.",
"Nor, he contends, would it constitute kidnapping to transport Fiddler's dead body from the place of stabbing to the ditch in Pennsylvania. The evidentiary challenge, in other words, is not with respect to the proof of his criminal agency, but as to whether (1) the asportation of Fiddler, while still alive, was simply to facilitate the assault, or murder, and did not, therefore, constitute the separate crime of kidnapping, and (2) the asportation of his dead body, following the stabbing, can constitute kidnapping. Kidnapping is a statutory crime in Maryland. With an exception not relevant here, Maryland Code (1957 and 1996 Repl.Vol.",
"), Article 27, § 337 makes it a felony to forcibly or fraudulently carry or cause \"any person\" to be carried out of or within Maryland with the intent to have the victim carried or concealed in or out of the State. That statute, first enacted in 1809, enlarged the common law crime of kidnapping, which was limited to forcibly abducting or stealing a person and sending him or her to another country. See Midgett v. State, 216 Md. 26, 38-40, 139 A.2d 209 (1958); Moore v. State, 23 Md.App. 540, 329 A.2d 48, cert. denied, 274 Md. 730 (1975). Although no cases are cited by either side, the State essentially concedes that one may not be convicted of kidnapping for carrying around a corpse. The statute speaks in terms of carrying \"any person,\" and, at least for purposes of this case, we shall assume that a corpse is not a \"person\" within the meaning of the statute. The court below specifically instructed the jury that, to convict Stouffer of kidnapping, it must find that Fiddler was alive when the kidnapping occurred. The question thus focuses on what happened to Fiddler before he died.",
"In that regard, the evidence, recounted above, suffices to show that Stouffer, together with others, in order to frighten Fiddler or \"teach him a lesson,\" abducted Fiddler from somewhere in Hagerstown, took him to a parking lot or field, beat him, stabbed him either to prevent his escape or because the beating enterprise \"got out of hand,\" put him in a car while he was bleeding to death, and dumped his body in Pennsylvania. The evidence permits a reasonable inference of at least two asportations: one from the point of initial abduction to the place where the beating and stabbing occurred, and a second from that point to the entrance ramp in Pennsylvania. In light of the medical examiner's testimony that Fiddler may have lived for as long as a half hour after he was stabbed, the evidence also permits a reasonable inference that he was still alive, for at least part of the time, while he was dragged into the car after being stabbed and driven to Pennsylvania.",
"There are literally hundreds of reported decisions around the country dealing with whether, and under what circumstances, the detention, confinement, or asportation of a victim initially accosted for the purpose of robbery, sexual assault, or some other crime will suffice to sustain a separate conviction for kidnapping. See Frank J. Wozniak, Annotation, Seizure or Detention for Purpose of Committing Rape, Robbery, or Other Offense as Constituting Separate Crime of Kidnapping, 39 A.L.R. 5th 283 (1996).",
"Not only do the facts vary from one case to another, so do the State or Federal kidnapping statutes at issue. Some statutes proscribe the confining or restraining of a person, more akin to false imprisonment; others speak of \"taking\" a person; some, like the Model Penal Code (§ 212.1), include both a confinement and a taking or removal; some are divided into degrees, dependent in part on the defendant's mental state or whether the kidnapping is for the purpose of ransom. Maryland's statute, as noted, requires a \"carrying\" and is not divided into degrees.",
"Both because of the varying fact patterns and the different statutory provisions, one needs to be very careful in looking for precedential or persuasive decisions. Courts in dozens of State and Federal cases have followed what has been described as the \"traditional rule in American jurisprudence\" that \"any asportationi.e., carrying awayof the victim, no matter how short in distance or duration, was sufficient to establish the crime of kidnapping.\" Government of Virgin Islands v. Berry, 604 F.2d 221, 225 (3d Cir.1979); also Wozniak, supra, 39 A.L.R. 5th at 356.",
"See, for example, State v. Vass, 191 Conn. 604, 469 A.2d 767 (Conn.1983), *212 where the defendant, a customer in a grocery story, ordered the clerk at knifepoint to a stockroom at the back of the store, where he attempted to rape her. Rejecting his argument that he could not be convicted of kidnapping if that offense was \"integral or incidental\" to the crime of rape, the court concluded that, if the State proved all of the elements of kidnapping, the defendant could be convicted of that offense in addition to another felony \"even though the two offenses arose out of the same conduct.\" Id. at 774. See also State v. Jacobs, 93 Ariz. 336, 380 P.2d 998 (Ariz.1963); Bailey v. State, 146 Ga.App. 774, 247 S.E.2d 588 (1978); Wilson v. State, 253 Ind. 585, 255 N.E.2d 817 (Ind.1970) Harris v. State, 78 Wis. 2d 357, 254 N.W.2d 291 (Wis.1977). The rationale behind that view is that it is the fact of the forcible removal, not its distance, that constitutes the separate crime of kidnapping.",
"The statutory language is read literally and given its broadest meaning. As the annotator points out, however, a majority of courts have moved away from that approach and now hold that \"kidnapping statutes do not apply to unlawful confinements or movements `incidental' to the commission of other felonies.\" 39 A.L.R. 5th at 356. The rationale of that approach is the concern that a literal reading of the kidnapping statutes, which often carry significant penalties, can lead to an overzealous enforcement, with the result that \"persons who have committed such substantive crimes as robbery or assaultwhich inherently involve the temporary detention or seizure of the victimwill suffer the far greater penalties prescribed by the kidnapping statutes.\" Government of Virgin Islands, supra, 604 F.2d at 226; also People v. Levy, 15 N.Y.2d 159, 256 N.Y.S.2d 793, 204 N.E.2d 842 (N.Y.1965), observing that, if read literally, the kidnapping statute would \"overrun\" other crimes, such as robbery, rape, and assault; Cotton v. Superior Court, 56 Cal. 2d 459, 15 Cal.",
"Rptr. 65, 364 P.2d 241, 244 (Cal.1961) and People v. Daniels, 71 Cal. 2d 1119, 80 Cal. Rptr. 897, 459 P.2d 225, 231 (Cal.1969), expressing concern that \"every assault could also be prosecuted for kidnapping ... as long as the slightest movement was involved.\" Although some courts have applied that principle to reverse kidnapping convictions even upon proof that a robbery or sex offense victim was taken a considerable distance and held for more than just a brief period of time, most courts following the majority view are more flexible and take a close look at the circumstances to determine whether the confinement or movement truly was \"incidental\" or \"integral\" to another crime. [2] Among other things, courts have looked at how long the victim was held, how far the victim was taken, where the victim was taken, whether the abduction exceeded what was necessary to the commission of the other crime, and whether the abduction itself substantially increased the risk of harm, beyond the risk inherent in the commission of the other crime.",
"See State v. Farmer, 191 W.Va. 372, 445 S.E.2d 759 (W.Va.1994); State v. St. Cloud, 465 N.W.2d 177 (S.D.1991). *213 In an effort to guide judges and juries in determining when a separate conviction for kidnapping is permissible, some courts have devised standards or guidelines, focusing principally on distance, duration, and danger. In Government of Virgin Islands v. Berry, supra, 604 F.2d 221, the court reviewed earlier pronouncements and concluded, at 227: \"We believe that despite the variance in terminology, four factors are central to each of these approaches. Those factors are: (1) the duration of the detention or asportation; (2) whether the detention or asportation occurred during the commission of a separate offense; (3) whether the detention or asportation which occurred is inherent in the separate offense; and (4) whether the asportation or detention created a significant danger to the victim independent of that posed by the separate offense.\" That \"test\" has also been adopted in the Eleventh Circuit.",
"See United States v. Howard, 918 F.2d 1529 (11th Cir.1990). In State v. Buggs, 219 Kan. 203, 547 P.2d 720, 731 (Kan.1976), the Kansas court adopted a tripartite test of whether the movement or confinement was \"slight, inconsequential,\" whether it was \"of the kind inherent in the nature of the other crime,\" and whether it had \"some significance independent of the other crime in that it makes the other crime substantially easier of commission or substantially lessens the risk of detection.\" That test has been adopted in Delaware and Florida as well. See Burton v. State, 426 A.2d 829 (Del.Supr.Ct.1981); Faison v. State, 426 So. 2d 963 (Fla.1983). The District of Columbia court has focused on \"whether the kidnapping substantially increased the risk of harm to the victim beyond that inherent in the underlying crime.\" Nelson v. U.S., 601 A.2d 582, 598 (D.C.1991). A wide variety of cases are reviewed in the A.L.R.",
"annotation. They involve victims forced into an office or residence and robbed, raped, or assaulted, victims moved from an office or residence to some other place, victims confined within one room, victims moved from one room to another, carjack victims forced to drive or remain as passengers in their own car, victims forced into the defendant's vehicle and driven to some other place, victims detained and transported in commercial vehicles, and victims forced from where they were accosted into alleys, fields, woods, or buildings of one kind or another.",
"They involve situations in which the victim was transported only a few yards, several blocks, several miles, or many miles, victims held for varying periods of time from a few minutes to several hours to more than a day, victims released promptly after commission of the other crime and victims restrained for longer periods or killed. In each of these categories are cases sustaining and cases reversing separate kidnapping convictions. Wharton echoes the splintering of the decisions: \"At times, in committing the crime of robbery or rape, the victim may be moved, as where a robbery victim is pushed from the sidewalk into a nearby alley or hallway so that his wallet can be taken, where a robbery victim is moved from room to room in his home so that the house can be searched for valuables, or where a rape victim is pushed from the sidewalk into a nearby alley or driven to a more distant place. In such cases, depending upon whether the movement of the victim is merely incidental to the commission of the crime of robbery or rape, the movement will or will not constitute the separate offense of kidnapping.",
"Similarly, depending upon whether the movement of a victim is merely incidental to the commission of some other crime, the movement will or will not constitute the separate offense of kidnapping.\" 2 Charles E. Torcia, WHARTON'S CRIMINAL LAW (15th ed.) § 207. The one thing that seems clear from the decisions following the majority view is that most of them are fact-specific. Whether the confinement or movement of the victim is merely incidental to another crime depends, in nearly every case, on the circumstances, even when guidelines of the types noted above are applied.",
"If the victim is not moved too far, is not held for longer than is necessary to complete the other crime, and is not subjected to any significant peril from the confinement or movement itself, if the confinement or movement can reasonably be viewed as undertaken solely to facilitate the *214 commission of the other crime, and if commission of the other crime normally involves (even if it does not legally require) some detention or asportation of the victim, the court is likely to conclude that the confinement or movement was merely incidental to the other crime and thus reverse a separate kidnapping conviction. If any of those factors are missing, however, there is a greater prospect of the court sustaining a separate kidnapping conviction. See In re Earley, 14 Cal. 3d 122, 120 Cal.",
"Rptr. 881, 534 P.2d 721 (Cal.1975); State v. Lykken, 484 N.W.2d 869 (S.D.1992). The Court of Special Appeals has dealt with the issue on a number of occasions. In the first two cases, Lester v. State, 9 Md.App. 542, 266 A.2d 361, cert. denied, 259 Md. 733 (1970) and Rice v. State, 9 Md.App. 552, 267 A.2d 261, cert. denied, 259 Md. 735 (1970), the court recognized the \"incidental\" or \"integral part\" issue but held that the facts justified a separate kidnapping conviction. In Lester, the defendant seized the victim on a parking lot, forced her at knifepoint into his car, drove some distance to a wooded area where he raped her, and then drove her back to the parking lot. Affirming separate convictions for rape and kidnapping, the court noted, at 544-45, 266 A.2d 361: \"Whether under a given set of circumstances, acts which fall within the technical statutory definition of kidnapping would not be sufficient to support a conviction of that crime because they were an `integral part' of another crime is a problem which does not confront us in this case for an examination of the record discloses that there was ample evidence before the trial judge from which he could find, beyond a reasonable doubt, that the kidnapping and rape were separate and distinct crimes and that, contrary to appellant's contention, the kidnapping was not merely `a means to an end.'\"",
"In Rice, the defendant, believing the victim to be a prostitute, broke into her apartment, assaulted her, took her forcibly several blocks away to his apartment where he committed a number of sexual offenses, kept her there all night, and walked her home the next morning. On appeal, he argued that his convictions for rape and kidnapping should merge. Rejecting that argument, the court noted that \"the problem here is different from when the victim was moved and confined only slightly, as would be necessary to complete the crime of rape. In the instant case the victim was dragged from her apartment and carried several blocks into the accused's apartment. These actions completed the crime of kidnapping.\" Id.",
"at 566, 267 A.2d at 269. In three later cases, the court, though it could have sustained a separate kidnapping conviction on the ground that the kidnapping was not incidental to or an integral part of the other crime, nonetheless articulated the principle, taken from Rollin M. Perkins, CRIMINAL LAW, § 7 at 177 (2d ed.1953), that \"[i]t is the fact of asportation and not the distance that is controlling.\" In Moore v. State, supra 23 Md.App. 540, 329 A.2d 48, the defendant accosted the 11-year old victim as she was riding her bicycle, forced her into his car, drove to an abandoned farmhouse, took her into some bushes, and raped her. The court rejected the defendant's complaint that the State failed to prove how far the child was transported, on the ground that the distance was irrelevant. That principle was applied as well in Isaacs v. State, 31 Md.App.",
"604, 616, 358 A.2d 273, cert. denied, 278 Md. 724 (1976). The defendants there abducted the victim in Pennsylvania as part of a carjacking, drove him into Maryland where they killed him, and then proceeded to Florida in his car. The point made by the court was that the evidence sufficed to show a kidnapping in Maryland, not just in Pennsylvania. See also Tate and Hall v. State, 32 Md.App. 613, 363 A.2d 622 (1976). Finally, in Carey v. State, 54 Md.App. 448, 458 A.2d 90, aff'd, 299 Md.",
"17, 472 A.2d 444 (1984), where the defendant sexually assaulted the victim in an upstairs bedroom and then dragged her down to the basement and locked her in a closet for more than a day, the court, though repeating the principle that \"`it matters not that the victim was asported but a short distance,'\" affirmed the separate kidnapping conviction on the basis that \"the necessary asportation and concealment occurred after the sexual offenses had been terminated.\" Id. at 452, 458 A.2d at 92. *215 As we observed earlier, the Maryland kidnapping statute, § 337, requires a carrying of the victim. To that extent, it is unlike the allied crime of false imprisonment and other kidnapping statutes that punish certain unlawful detentions and concealments, even in the absence of an asportation.",
"Midgett v. State, supra, 216 Md. at 38-40, 139 A.2d at 215-16. We recognize the problem articulated by the Third Circuit, New York, and California courts, among others, that a literal reading of the kidnapping law could have the effect of transforming a host of lesser-punished sex and street crimes into 30-year eligible kidnappings, and we do not believe that the Legislature ever intended for § 337 to be read in that broad a fashion. On the other hand, we recognize equally well the fact noted in People v. Miles, supra, 297 N.Y.S.2d 913, 245 N.E.2d at 695, that \"it is the rare kidnapping that is an end in itself; almost invariably there is another ultimate crime.\" True kidnappings are usually undertaken for the purpose of committing some other crime, often extortion. We aline ourselves with the majority approach that examines the circumstances of each case and determines from them whether the kidnappingthe intentional asportationwas merely incidental to the commission of another offense. We do not adopt, however, any specific formulation of standards for making that determination, but rather focus on those factors that seem to be central to most of the articulated guidelines, principally: How far, and where, was the victim taken?",
"How long was the victim detained in relation to what was necessary to complete the crime? Was the movement either inherent as an element, or, as a practical matter, necessary to the commission, of the other crime? Did it have some independent purpose? Did the asportation subject the victim to any additional significant danger? Applying those factors, it is clear that the evidence sufficed to sustain a separate kidnapping conviction for Stouffer. Although the record does not establish precisely where Fiddler was taken, there is certainly a fair inference, to be drawn from the fact that he was driven there and that it may have been a field outside the center of Hagerstown, that the distance was a considerable one. This was not a situation where the victim was simply dragged a short distance into a nearby alley or building. If the objective was simply to beat Fiddler, as Stouffer suggests, that kind of asportation was unnecessary.",
"As noted, Stouffer was not above physical violence in the middle of Hagerstown; he was seen chasing and threatening Fiddler along the streets and later was seen chasing and threatening Schell. Fiddler could have been beaten anywhere. If, on the other hand, the desire to \"teach him a lesson\" extended beyond a beating, which the evidence also suggests, the kidnapping would have had an independent purpose; the seizure and asportation, coupled with stripping him from the waist down, would have been part of the frightening lesson. In that scenario as well, therefore, the kidnapping would not have been incidental to any other crime, but would have had its own function and significance.",
"Even if we accept that Stouffer's intent was principally to beat Fiddler, the kidnapping substantially increased his peril. Apart from the risks associated simply with being forced into a compact car with three or four other men and driven for some distance as a hostage, the grave peril implicit from being taken to a field somewhere, alone, completely at the mercy of his abductors, and with no prospect of escape or assistance, is obvious. That peril is different from and far exceeds the risks inherent in an assault on the streets of downtown Hagerstown. Moreover, the kidnapping did not end at the place where Fiddler was stripped and beaten. After he was stabbed, whether because of a \"thrill\" or a \"rush,\" to prevent his escape, or because the enterprise \"got out of hand,\" the evidence indicates that he was dragged into the car and, while still alive, driven to Pennsylvania. That conduct suffices at least as a continuation of the kidnapping.",
"As noted in State v. Gomez, 225 Conn. 347, 622 A.2d 1014, 1016 (Conn.1993), [b]ecause kidnapping involves interfering with the victim's liberty, it continues until that liberty is restored.\" See also State v. Dove, 52 Wash.App. 81, 757 P.2d 990 (Wash.App.1988). As was the case in Gomez, supra, *216 \"[b]ecause the victim in this case was never released, the kidnapping ended only with his death.\" That aspect of the kidnapping was certainly not merely incidental to the beating. The Felony Murder As noted, the jury was specifically instructed that, to convict Stouffer of felony murder, the State was required to prove \"that the defendant or another participating with the defendant committed a felony and specifically kidnaping, that the defendant or another participating in the crime killed Jeffrey Lynn Fiddler and that the act resulting in the death of Jeffrey Lynn Fiddler occurred during the commission of the kidnaping.\"",
"The jury obviously believed, beyond a reasonable doubt, that the State had proved those things. The Court of Special Appeals concluded otherwise. It determined that \"[i]n no sense can Fiddler's death be viewed as the `result or outcome' of a kidnapping that [Stouffer] and his bellicose band intended to perpetrate.\" Stouffer v. State, supra, 118 Md.App. at 616, 703 A.2d at 874. That, in turn, arose from the appellate court's determination that Stouffer's \"overarching intent\" was not to kidnap Fiddler but simply to beat him.",
"The court held at 118 Md.App. at 620, 703 A.2d at 875, that \"[t]here was no direct or inferential evidence before the trier of fact that the announced purpose of Stouffer's missionto scare Fiddlerwas to be accomplished by forcibly confining and transporting him.\" All of the evidence, it said, indicates that \"the means to be employed in intimidating Fiddler or placing him in fear\" was \"the infliction of serious bodily harm in a reckless and dangerous manner with indifference to the consequences.\" Id. at 620, 703 A.2d at 876. In his brief, Stouffer puts the point more succinctly: \"The beating that culminated in the fatal stabbing was not done to further the kidnapping; rather, the kidnapping was carried out to further the beating.",
"As a result there was no felony murder.\" In supporting the conclusion of the intermediate appellate court, Stouffer cites Campbell v. State, 293 Md. 438, 444 A.2d 1034 (1982) and a number of out-of-State cases that we cited in Campbell. The issue in Campbell and in most of the cases cited by Stouffer was whether a participant in a robbery or other felony could properly be convicted of felony murder when the person killed was killed by someone other than a participant. In Campbell, for example, a co-participant with Campbell in an armed robbery was killed either by the robbery victim, shooting in self-defense, or by a police officer in a concurrent attempt to apprehend the co-participant. We joined the prevailing view that \"under the felony-murder doctrine a participating felon is not guilty of murder when the killing is done by a person other than the participating felon or his co-felons.\" Campbell, supra, 293 Md. at 443, 444 A.2d at 1037. That is not, of course, the issue here. The more pertinent point sought to be drawn from Campbell and the other cases is that stated in Commonwealth v. Redline, 391 Pa. 486, 137 A.2d 472, 476 (Pa.1958) and quoted by us in Campbell, that \"[t]he mere coincidence of homicide and felony is not enough to satisfy the requirements of the felony-murder doctrine.",
"`It is necessary ... to show that the conduct causing death was done in furtherance of the design to commit the felony.'\" That principle, that there must be some nexus between the killing and the underlying felony, is not really in dispute and, indeed, is clear from the Maryland felony murder statute itself. Maryland Code, Article 27, § 410 makes all murder committed \"in the perpetration of, or attempt to perpetrate, any ... kidnapping as defined in [§ 337]... murder in the first degree.\" The question, then, is simply whether the evidence sufficed to show that Fiddler was murdered \"in the perpetration of\" a kidnapping. In that regard, we take issue with Stouffer and the Court of Special Appeals that the \"overarching intent\" of Stouffer and his cohorts was simply to beat Fiddler and that the kidnapping was carried out solely in furtherance of that intent.",
"For one thing, that presumed \"overarching intent\" found by the Court of Special Appeals is quite irrelevant. Whatever may have been Stouffer's motive, we have already determined that there was sufficient evidence to establish a kidnapping, and it is clear, *217 really beyond cavil, that the stabbing occurred \"in the perpetration\" of that kidnapping. There was evidence that Fiddler was stabbed in order to prevent his escape. Because kidnapping is a continuing crime, remaining in effect until the hostage is safely released, the stabbing was necessarily \"in furtherance of the felonious undertaking.\"",
"Campbell v. State, supra, 293 Md. at 446, 444 A.2d at 1039, quoting from Commonwealth v. Redline, supra, 397 Pa. at 496, 137 A.2d at 476. It appears as well that there was evidence of an independent intent to kidnap Fiddler, that the kidnapping itselfthe forcible removal of Fiddler to a place where he would be isolated and helpless, where he could be stripped, humiliated, and beatenwas what was intended to \"teach him a lesson.\" The evidence therefore did suffice to indicate that the beating may have been part of the kidnapping, not the other way around.",
"In both events, the Court of Special Appeals erred in reversing the felony murder judgment. Erroneous Instruction Stouffer adds to his brief the additional complaint that the court improperly instructed the jury that it could find him guilty of felony murder if it found that the killing occurred during a kidnapping. Apart from the fact that no objection was made to that instruction, the complaint was not included in Stouffer's conditional cross-petition. We therefore shall not address the issue.",
"JUDGMENT OF COURT OF SPECIAL APPEALS AFFIRMED IN PART AND REVERSED IN PART; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO AFFIRM JUDGMENTS OF CIRCUIT COURT FOR WASHINGTON COUNTY; RESPONDENT STOUFFER TO PAY THE COSTS IN THIS COURT AND IN COURT OF SPECIAL APPEALS. NOTES [1] Agent Oakes made clear that the microscopic similarity could not be taken as a basis for absolute personal identification and that it was possible, though extremely rare, for someone else to have hair that would be indistinguishable from that of Fiddler. [2] Examples of the somewhat rigid view are the decisions of the New York Court of Appeals in People v. Levy, supra, 15 N.Y.2d 159, 256 N.Y.S.2d 793, 204 N.E.2d 842 and People v. Lombardi, 20 N.Y.2d 266, 282 N.Y.S.2d 519, 229 N.E.2d 206 (N.Y.1967). In Levy, the victims were abducted in their car and driven around New York City for about 20 minutes, covering some 27 blocks, during which time they were robbed of their jewelry. The New York kidnapping law at the time made an unlawful confinement a kidnapping. Noting that some restraint or confinement was inherent in the crime of robbery, the court gave the kidnapping statute a narrow meaning and reversed the kidnapping convictions in that case. The same narrow reading was given in Lombardi, where the court held that the transportation of drugged girls from Manhattan to a motel in Queens was part of the crimes of assault and attempted rape and did not justify a separate conviction for kidnapping.",
"In People v. Miles, 23 N.Y.2d 527, 297 N.Y.S.2d 913, 245 N.E.2d 688, 695 (N.Y.1969), the court, noting a change in the New York kidnapping statute following Lombardi, retreated somewhat, observing that the Levy-Lombardi rule \"was designed to prevent gross distortion of lesser crimes into a much more serious crime by excess of prosecutorial zeal\" and was not intended \"to merge `true' kidnappings into other crimes merely because the kidnappings were used to accomplish ultimate crimes of lesser or equal or greater gravity.\" Upholding the kidnapping conviction in that case, the court further observed that \"it is the rare kidnapping that is an end in itself; almost invariably there is another ultimate crime.\" Id."
]
| https://www.courtlistener.com/api/rest/v3/opinions/1508408/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
United States Department of Labor Employees’ Compensation Appeals Board __________________________________________ K.P., Appellant and DEPARTMENT OF VETERANS AFFAIRS, VETERANS HEALTH ADMINISTRATION MEDICAL CENTER, East Orange, NJ, Employer __________________________________________
) ) ) ) ) ) ) ) ) )
Appearances: Thomas R. Uliase, Esq., for the appellant Office of Solicitor, for the Director
Docket No. 13-1042 Issued: September 17, 2013
Case Submitted on the Record
DECISION AND ORDER Before: RICHARD J. DASCHBACH, Chief Judge ALEC J. KOROMILAS, Alternate Judge MICHAEL E. GROOM, Alternate Judge
JURISDICTION On March 26, 2013 appellant, through his attorney, filed a timely appeal from a January 29, 2013 merit decision of the Office of Workers’ Compensation Programs (OWCP). Pursuant to the Federal Employees’ Compensation Act1 (FECA) and 20 C.F.R. §§ 501.2(c) and 501.3, the Board has jurisdiction over the merits of the claim. ISSUES The issues are: (1) whether OWCP established that it properly selected the impartial medical specialist pursuant to the Medical Management Application (MMA); (2) whether appellant has more than 13 percent impairment of the right lower extremity and more than 13 percent impairment of the left lower extremity, for which he received a schedule award; (3) whether OWCP properly found an overpayment of $8,281.90 for the period January 21, 2006
1
5 U.S.C. § 8101-8193.
through June 29, 2007 was created; and (4) whether it properly denied waiver of the overpayment. FACTUAL HISTORY This case has previously been before the Board. In a decision dated January 13, 2012, the Board set aside a December 13, 2010 OWCP decision which granted appellant schedule awards for 13 percent impairment to both lower extremities. There remained an outstanding conflict in medical opinion regarding the extent of the permanent impairment to appellant’s legs.2 The Board found that the opinion of Dr. Robert Dennis, a Board-certified orthopedic surgeon selected as the impartial medical specialist, was insufficient to resolve the matter. OWCP’s hearing representative improperly relied on a medical adviser’s opinion to resolve the conflict. The case was remanded for a further development and a de novo decision as to whether appellant had more than 13 percent impairment to each leg. The facts of this case as set forth in the Board’s prior decision are hereby incorporated by reference.3 On February 27, 2012 OWCP referred appellant for an impartial medical examination with Dr. Michael Gordon, a Board-certified orthopedist. Regarding Dr. Gordon’s selection, the record reflects that the MMA initially bypassed him for the reason “Doctor does not accept DOL patients.” The next physician selected was Dr. Dennis, who was bypassed as he previously examined appellant. Dr. Gordon was the next physician selected. In an April 16, 2012 report, Dr. Gordon noted his review of the medical record, the statement of accepted facts and presented from the March 13, 2012 findings examination. Under the sixth edition of the American Medical Association, Guides to the Evaluation of Permanent Impairment (A.M.A., Guides) and The Guides Newsletter, July/August 2011, he stated that Table 16-12 was appropriate to rate lower extremity sensory and motor function peripheral nerve impairment. Dr. Gordon found that appellant reached maximum medical improvement on January 21, 2006 and identified the sciatic nerve as the most appropriate to rate impairment. Under Table 16-12, page 535, mild motor deficit of 4/5 represented a class 1 deficit for which nine percent impairment was allowed for each lower extremity. Dr. Gordon noted that there was no indication of sensory loss in the medical record and appellant’s subjective complaints on examination did not fit a typical peripheral nerve or even a radicular pattern. While appellant had subjective complaints of numbness in the feet, there was no sensory loss in the lower extremities which corresponded to a peripheral nerve and specific sensory loss was not noted by other examiners. As there was no clear sensory pattern, Dr. Gordon did not feel it appropriate to use sensory and motor deficits. As to the net adjustment formula under section 16.4c, subset 3b of the A.M.A., Guides, he did not take a physical examination grade modifier into consideration. For clinical studies a grade modifier was not used as they were interpreted as normal. 2
Docket No. 11-1012 (issued January 13, 2012). The period of the awards ran 74.88 weeks for the period January 21, 2006 through June 29, 2007. In the December 13, 2010 decision, OWCP’s hearing representative modified the date of maximum medical improvement from January 21, 2006 to January 5, 2009. 3
On June 3, 2003 appellant, then a 48-year-old electronics technician, filed a traumatic injury claim alleging that he hurt his lower back while moving a 27-inch television. OWCP accepted the claim for L5-S1 lumbar displacement and radiculopathy. Appellant underwent authorized L5-S1 surgery on July 10, 2003 and January 22, 2004 and subsequently had a spinal cord stimulator inserted.
2
Dr. Gordon allowed a grade modifier 2 for functional history. Under the net adjustment formula, he found grade modifier for functional history 2 minus CDX (1) equaled 1 or grade D. Under Table 16-12, page 535, a grade D sciatic nerve motor deficit equaled 11 percent impairment of each lower extremity. Portions of Dr. Gordon’s report were illegible, including summary of appellant’s medical history, current complaints, review of symptoms, physical examination results, radiographic studies and review of prior medical reports. In a July 10, 2012 report, OWCP’s medical adviser concurred with Dr. Gordon’s impairment rating. He agreed that appellant reached maximum medical improvement on January 21, 2006. By decision dated August 21, 2012, OWCP denied an additional schedule award. It found that the medical evidence demonstrated an 11 percent impairment of each lower extremity. Since appellant previously received schedule awards for a 13 percent impairment of both legs, the evidence did not support an increase in impairment above that previously awarded. By letter dated August 21, 2012, OWCP notified appellant of a preliminary determination that an overpayment of $8,281.90 was created as he received a schedule award for 13 percent impairment of each lower extremity, while the medical evidence supported only an 11 percent impairment. The prior awards of 13 percent impairment for each lower extremity ran for 524.16 days of compensation (74.88 weeks) for a total of $53,547.55. An 11 percent impairment represented 221.76 days of compensation (31.68 weeks) of each lower extremity, for a total of 443.52 days. OWCP calculated the daily pay rate of the prior award ($53,547.55 award paid divided by 524.16 days of compensation) as $102.16. It then multiplied the daily pay rate of $102.16 by the total days of the new award 443.52 and found appellant was due $45,265.65 for 11 percent impairment of both lower extremities. $54,547.55 minus $45,265.65 resulted in an $8,281.90 overpayment. With respect to fault, OWCP found that appellant was not at fault in creating the overpayment. Appellant was advised to complete an overpayment recovery questionnaire (OWCP-20) and submit supporting financial documents. On August 24, 2012 appellant, through his attorney, disagreed with the August 21, 2012 schedule award decision and the preliminary overpayment notification. He requested oral hearings before OWCP’s hearing representative. The hearing was held on November 13, 2012. No new evidence was submitted. By decision dated January 29, 2013, OWCP’s hearing representative affirmed the August 21, 2012 schedule award decision. The hearing representative considered the attorney’s argument regarding the selection of Dr. Gordon as the impartial medical specialist and found that the MMA was used appropriately and the selection was documented. While Dr. Gordon had initially been bypassed because he did not accept DOL patients, he was selected upon second contact. The hearing representative noted that Dr. Gordon had two ID numbers in the MMA system. No evidence was found of preselection or misuse of the MMA system by the medical scheduling clerk. The hearing representative also found that while parts of Dr. Gordon’s report were difficult to read, his discussion of the tables and charts of the A.M.A., Guides was legible and accorded special weight.
3
By decision also dated January 29, 2013, OWCP’s hearing representative found that Dr. Gordon had properly determined the degree of appellant’s permanent impairment. The hearing representative finalized the determination that an $8,281.90 overpayment was created. The hearing representative found that while appellant was without fault in the overpayment, neither waiver of the overpayment or an equitable repayment schedule could be considered as appellant failed to complete an overpayment questionnaire or provide any supportive financial information regarding his monthly expenses, household income or assets. LEGAL PRECEDENT -- ISSUE 1 Section 8123(a) of FECA provides that, if there is disagreement between the physician making the examination for the United States and the physician of the employee, the Secretary shall appoint a third physician who shall make an examination.4 The implementing regulations state that, if a conflict exists between the medical opinion of the employee’s physician and the medical opinion of either a second opinion physician or an OWCP medical adviser, OWCP shall appoint a third physician to make an examination. This is called a referee examination and OWCP will select a physician who is qualified in the appropriate specialty and who has no prior connection with the case.5 In situations where there exist opposing medical reports of virtually equal weight and rationale and the case is referred to an impartial medical specialist for the purpose of resolving the conflict, the opinion of such specialist, if sufficiently well rationalized and based upon a proper factual background, must be given special weight.6 Congress did not address the manner by which an impartial medical referee is to be selected.7 Under the Federal (FECA) Procedure Manual, the Director has exercised discretion to implement practices pertaining to the selection of the impartial medical referee. Unlike second opinion physicians, the selection of referee physicians is made from a strict rotational system.8 OWCP will select a physician who is qualified in the appropriate medical specialty and who has no prior connection with the case.9 Physicians who may not serve as impartial specialists include those employed by, under contract to or regularly associated with federal agencies; physicians previously connected with the claim or claimant or physicians in partnership with those already so connected and physicians who have acted as a medical consultant to OWCP.10 The fact that a physician has conducted second opinion examinations in connection with FECA claims does not
4
5 U.S.C. § 8123(a).
5
20 C.F.R. § 10.321.
6
Gloria J. Godfrey, 52 ECAB 486 (2001); Jacqueline Brasch (Ronald Brasch), 52 ECAB 252 (2001).
7
J.S., Docket No. 12-1343 (issued April 22, 2013).
8
Federal (FECA) Procedure Manual, Part 3 -- Medical, Medical Examinations, Chapter 3.500.4(b) (July 2011).
9
Id. at Chapter 3.500.4(b)(1).
10
Id. at Chapter 3.500.4(b)(3).
4
eliminate that individual from serving as an impartial referee in a case in which he or she has no prior involvement.11 In turn, the Director has delegated authority to each district OWCP for selection of the referee physician by use of the MMA within the iFECS.12 This application contains the names of physicians who are Board-certified in over 30 medical specialties for use as referees within appropriate geographical areas.13 The MMA in iFECS replaces the prior Physician Directory System (PDS) method of appointment.14 It provides for a rotation among physicians from the American Board of Medical Specialties, including the medical boards of the American Medical Association and those physicians Board-certified with the American Osteopathic Association.15 Selection of the referee physician is made through use of the application by a medical scheduler. The claims examiner may not dictate the physician to serve as the referee examiner.16 The medical scheduler imputes the claim number into the application, from which the claimant’s home zip code is loaded.17 The scheduler chooses the type of examination to be performed (second opinion or impartial referee) and the applicable medical specialty. The next physician in the roster appears on the screen and remains until an appointment is scheduled or the physician is bypassed.18 If the physician agrees to the appointment, the date and time are entered into the application. Upon entry of the appointment information, the application prompts the medical scheduler to prepare a Form ME023, appointment notification report for imaging into the case file.19 Once an appointment with a medical referee is scheduled the claimant and any authorized representative is to be notified.20 ANALYSIS -- ISSUE 1 The Board previously remanded this case to OWCP based upon a finding that the impartial medical specialist, Dr. Dennis, had not provided a probative medical opinion regarding the degree of appellant’s permanent impairment. Following the Board’s remand, OWCP selected Dr. Gordon to act as the impartial medical specialist. Counsel contended before OWCP and on appeal that it did not properly select Dr. Gordon as the two identification numbers in the 11
Id.
12
Id. at Chapter 3.500.4(b)(6).
13
Id. at Chapter 3.500.4(b)(6)(a).
14
Id. at Chapter 3.500.5.
15
Id at Chapter 3.500.5(a).
16
Id. at Chapter 3.500.5)b).
17
Id. at Chapter 3.500.5( c).
18
Id. Upon entry of a bypass code, the MMA will present the next physician based on specialty and zip code.
19
Id. at Chapter 3.500.5(g).
20
Id. at Chapter 3.500.4(d).
5
PDS system gave an appearance of impropriety, and his selection was not supported on a strict rotational basis. The Board finds that the record does not substantiate that Dr. Gordon was properly selected to act as the impairment specialist in this case. The record indicates that on February 24, 2012 a medical scheduler undertook selection of an impartial medical examiner, utilizing the MMA process. Dr. Gordon was the first physician selected by the MMA. His initial selection was bypassed for the reason that he did not accept FECA patients for evaluation. The second physician selected was Dr. Dennis, the previous referral. After a bypass of Dr. Dennis for the reason that he had previously evaluated appellant, Dr. Gordon was again selected under the MMA. The MMA screen shots substantiate that Dr. Gordon, with the same address in Wall Township NJ, appears in the MMA system under two identification numbers, with differing dates as to when he was added to the directory service, different information regarding his last referee examination, last bypass, number of bypasses and whether he accepted DOL patients. OWCP has not adequately documented why a physician would appear twice in a strict rotational selection system or why differing information pertaining to the same physician would appear in the MMA. The Board also notes that a substantial question is raised regarding the proper use of the strict rotational system in this case. Dr. Gordon practices in a Wall Township NJ, a metropolitan area. He appeared as the first and third physician listed in this search of orthopedic surgeons, in the metropolitan area of Wall Township, NJ. If more than two physicians were available in the MMA, OWCP has not explained why the other available physicians were bypassed. A physician selected by OWCP to serve as an impartial medical specialist should be one wholly free to make a completely independent evaluation and judgment. In order to achieve this, OWCP has developed specific procedures for the selection of impartial medical specialists designed to provide adequate safeguards against any possible appearance that the selected physician’s opinion was biased or prejudiced. The procedures contemplate that impartial medical specialists will be selected on a strict rotating basis in order to negate any appearance that preferential treatment exists between a particular physician and OWCP.21 OWCP has an obligation to verify that it selected Dr. Gordon in a fair and unbiased manner. It maintains records for this very purpose.22 The Board has placed great importance on the appearance as well as the fact of impartiality and only if the selection procedures which were designed to achieve this result are scrupulously followed may the selected physician carry the special weight accorded to an impartial specialist. OWCP has not met its affirmative obligation to establish that it properly followed its selection procedures.23 On remand it shall select another impartial medical examiner to evaluate appellant’s permanent impairment. After such further development as necessary, OWCP shall issue an appropriate decision. 21
Raymond J. Brown, 52 ECAB 192 (2001).
22
M.A., Docket No. 07-1344 (issued February 19, 2008).
23
As OWCP has not properly resolved the conflict of medical opinion regarding the degree of appellant’s permanent impairment, the issues regarding his schedule award and overpayment of compensation are not in posture for decision.
6
CONCLUSION The Board finds that this case is not in posture for decision. ORDER IT IS ORDERED THAT the January 29, 2013 decision of the Office of Workers’ Compensation Programs is set aside and this case is remanded to OWCP for further proceedings consistent with this opinion. Issued: September 17, 2013 Washington, DC
Richard J. Daschbach, Chief Judge Employees’ Compensation Appeals Board
Alec J. Koromilas, Alternate Judge Employees’ Compensation Appeals Board
Michael E. Groom, Alternate Judge Employees’ Compensation Appeals Board
7 | 09-17-2013 | [
"United States Department of Labor Employees’ Compensation Appeals Board __________________________________________ K.P., Appellant and DEPARTMENT OF VETERANS AFFAIRS, VETERANS HEALTH ADMINISTRATION MEDICAL CENTER, East Orange, NJ, Employer __________________________________________ ) ) ) ) ) ) ) ) ) ) Appearances: Thomas R. Uliase, Esq., for the appellant Office of Solicitor, for the Director Docket No. 13-1042 Issued: September 17, 2013 Case Submitted on the Record DECISION AND ORDER Before: RICHARD J. DASCHBACH, Chief Judge ALEC J. KOROMILAS, Alternate Judge MICHAEL E. GROOM, Alternate Judge JURISDICTION On March 26, 2013 appellant, through his attorney, filed a timely appeal from a January 29, 2013 merit decision of the Office of Workers’ Compensation Programs (OWCP).",
"Pursuant to the Federal Employees’ Compensation Act1 (FECA) and 20 C.F.R. §§ 501.2(c) and 501.3, the Board has jurisdiction over the merits of the claim. ISSUES The issues are: (1) whether OWCP established that it properly selected the impartial medical specialist pursuant to the Medical Management Application (MMA); (2) whether appellant has more than 13 percent impairment of the right lower extremity and more than 13 percent impairment of the left lower extremity, for which he received a schedule award; (3) whether OWCP properly found an overpayment of $8,281.90 for the period January 21, 2006 1 5 U.S.C.",
"§ 8101-8193. through June 29, 2007 was created; and (4) whether it properly denied waiver of the overpayment. FACTUAL HISTORY This case has previously been before the Board. In a decision dated January 13, 2012, the Board set aside a December 13, 2010 OWCP decision which granted appellant schedule awards for 13 percent impairment to both lower extremities. There remained an outstanding conflict in medical opinion regarding the extent of the permanent impairment to appellant’s legs.2 The Board found that the opinion of Dr. Robert Dennis, a Board-certified orthopedic surgeon selected as the impartial medical specialist, was insufficient to resolve the matter. OWCP’s hearing representative improperly relied on a medical adviser’s opinion to resolve the conflict. The case was remanded for a further development and a de novo decision as to whether appellant had more than 13 percent impairment to each leg. The facts of this case as set forth in the Board’s prior decision are hereby incorporated by reference.3 On February 27, 2012 OWCP referred appellant for an impartial medical examination with Dr. Michael Gordon, a Board-certified orthopedist.",
"Regarding Dr. Gordon’s selection, the record reflects that the MMA initially bypassed him for the reason “Doctor does not accept DOL patients.” The next physician selected was Dr. Dennis, who was bypassed as he previously examined appellant. Dr. Gordon was the next physician selected. In an April 16, 2012 report, Dr. Gordon noted his review of the medical record, the statement of accepted facts and presented from the March 13, 2012 findings examination. Under the sixth edition of the American Medical Association, Guides to the Evaluation of Permanent Impairment (A.M.A., Guides) and The Guides Newsletter, July/August 2011, he stated that Table 16-12 was appropriate to rate lower extremity sensory and motor function peripheral nerve impairment. Dr. Gordon found that appellant reached maximum medical improvement on January 21, 2006 and identified the sciatic nerve as the most appropriate to rate impairment.",
"Under Table 16-12, page 535, mild motor deficit of 4/5 represented a class 1 deficit for which nine percent impairment was allowed for each lower extremity. Dr. Gordon noted that there was no indication of sensory loss in the medical record and appellant’s subjective complaints on examination did not fit a typical peripheral nerve or even a radicular pattern. While appellant had subjective complaints of numbness in the feet, there was no sensory loss in the lower extremities which corresponded to a peripheral nerve and specific sensory loss was not noted by other examiners.",
"As there was no clear sensory pattern, Dr. Gordon did not feel it appropriate to use sensory and motor deficits. As to the net adjustment formula under section 16.4c, subset 3b of the A.M.A., Guides, he did not take a physical examination grade modifier into consideration. For clinical studies a grade modifier was not used as they were interpreted as normal. 2 Docket No. 11-1012 (issued January 13, 2012). The period of the awards ran 74.88 weeks for the period January 21, 2006 through June 29, 2007. In the December 13, 2010 decision, OWCP’s hearing representative modified the date of maximum medical improvement from January 21, 2006 to January 5, 2009. 3 On June 3, 2003 appellant, then a 48-year-old electronics technician, filed a traumatic injury claim alleging that he hurt his lower back while moving a 27-inch television. OWCP accepted the claim for L5-S1 lumbar displacement and radiculopathy.",
"Appellant underwent authorized L5-S1 surgery on July 10, 2003 and January 22, 2004 and subsequently had a spinal cord stimulator inserted. 2 Dr. Gordon allowed a grade modifier 2 for functional history. Under the net adjustment formula, he found grade modifier for functional history 2 minus CDX (1) equaled 1 or grade D. Under Table 16-12, page 535, a grade D sciatic nerve motor deficit equaled 11 percent impairment of each lower extremity. Portions of Dr. Gordon’s report were illegible, including summary of appellant’s medical history, current complaints, review of symptoms, physical examination results, radiographic studies and review of prior medical reports.",
"In a July 10, 2012 report, OWCP’s medical adviser concurred with Dr. Gordon’s impairment rating. He agreed that appellant reached maximum medical improvement on January 21, 2006. By decision dated August 21, 2012, OWCP denied an additional schedule award. It found that the medical evidence demonstrated an 11 percent impairment of each lower extremity. Since appellant previously received schedule awards for a 13 percent impairment of both legs, the evidence did not support an increase in impairment above that previously awarded. By letter dated August 21, 2012, OWCP notified appellant of a preliminary determination that an overpayment of $8,281.90 was created as he received a schedule award for 13 percent impairment of each lower extremity, while the medical evidence supported only an 11 percent impairment.",
"The prior awards of 13 percent impairment for each lower extremity ran for 524.16 days of compensation (74.88 weeks) for a total of $53,547.55. An 11 percent impairment represented 221.76 days of compensation (31.68 weeks) of each lower extremity, for a total of 443.52 days. OWCP calculated the daily pay rate of the prior award ($53,547.55 award paid divided by 524.16 days of compensation) as $102.16. It then multiplied the daily pay rate of $102.16 by the total days of the new award 443.52 and found appellant was due $45,265.65 for 11 percent impairment of both lower extremities.",
"$54,547.55 minus $45,265.65 resulted in an $8,281.90 overpayment. With respect to fault, OWCP found that appellant was not at fault in creating the overpayment. Appellant was advised to complete an overpayment recovery questionnaire (OWCP-20) and submit supporting financial documents. On August 24, 2012 appellant, through his attorney, disagreed with the August 21, 2012 schedule award decision and the preliminary overpayment notification. He requested oral hearings before OWCP’s hearing representative. The hearing was held on November 13, 2012. No new evidence was submitted. By decision dated January 29, 2013, OWCP’s hearing representative affirmed the August 21, 2012 schedule award decision. The hearing representative considered the attorney’s argument regarding the selection of Dr. Gordon as the impartial medical specialist and found that the MMA was used appropriately and the selection was documented. While Dr. Gordon had initially been bypassed because he did not accept DOL patients, he was selected upon second contact.",
"The hearing representative noted that Dr. Gordon had two ID numbers in the MMA system. No evidence was found of preselection or misuse of the MMA system by the medical scheduling clerk. The hearing representative also found that while parts of Dr. Gordon’s report were difficult to read, his discussion of the tables and charts of the A.M.A., Guides was legible and accorded special weight. 3 By decision also dated January 29, 2013, OWCP’s hearing representative found that Dr. Gordon had properly determined the degree of appellant’s permanent impairment. The hearing representative finalized the determination that an $8,281.90 overpayment was created. The hearing representative found that while appellant was without fault in the overpayment, neither waiver of the overpayment or an equitable repayment schedule could be considered as appellant failed to complete an overpayment questionnaire or provide any supportive financial information regarding his monthly expenses, household income or assets. LEGAL PRECEDENT -- ISSUE 1 Section 8123(a) of FECA provides that, if there is disagreement between the physician making the examination for the United States and the physician of the employee, the Secretary shall appoint a third physician who shall make an examination.4 The implementing regulations state that, if a conflict exists between the medical opinion of the employee’s physician and the medical opinion of either a second opinion physician or an OWCP medical adviser, OWCP shall appoint a third physician to make an examination.",
"This is called a referee examination and OWCP will select a physician who is qualified in the appropriate specialty and who has no prior connection with the case.5 In situations where there exist opposing medical reports of virtually equal weight and rationale and the case is referred to an impartial medical specialist for the purpose of resolving the conflict, the opinion of such specialist, if sufficiently well rationalized and based upon a proper factual background, must be given special weight.6 Congress did not address the manner by which an impartial medical referee is to be selected.7 Under the Federal (FECA) Procedure Manual, the Director has exercised discretion to implement practices pertaining to the selection of the impartial medical referee. Unlike second opinion physicians, the selection of referee physicians is made from a strict rotational system.8 OWCP will select a physician who is qualified in the appropriate medical specialty and who has no prior connection with the case.9 Physicians who may not serve as impartial specialists include those employed by, under contract to or regularly associated with federal agencies; physicians previously connected with the claim or claimant or physicians in partnership with those already so connected and physicians who have acted as a medical consultant to OWCP.10 The fact that a physician has conducted second opinion examinations in connection with FECA claims does not 4 5 U.S.C.",
"§ 8123(a). 5 20 C.F.R. § 10.321. 6 Gloria J. Godfrey, 52 ECAB 486 (2001); Jacqueline Brasch (Ronald Brasch), 52 ECAB 252 (2001). 7 J.S., Docket No. 12-1343 (issued April 22, 2013). 8 Federal (FECA) Procedure Manual, Part 3 -- Medical, Medical Examinations, Chapter 3.500.4(b) (July 2011). 9 Id. at Chapter 3.500.4(b)(1). 10 Id. at Chapter 3.500.4(b)(3). 4 eliminate that individual from serving as an impartial referee in a case in which he or she has no prior involvement.11 In turn, the Director has delegated authority to each district OWCP for selection of the referee physician by use of the MMA within the iFECS.12 This application contains the names of physicians who are Board-certified in over 30 medical specialties for use as referees within appropriate geographical areas.13 The MMA in iFECS replaces the prior Physician Directory System (PDS) method of appointment.14 It provides for a rotation among physicians from the American Board of Medical Specialties, including the medical boards of the American Medical Association and those physicians Board-certified with the American Osteopathic Association.15 Selection of the referee physician is made through use of the application by a medical scheduler. The claims examiner may not dictate the physician to serve as the referee examiner.16 The medical scheduler imputes the claim number into the application, from which the claimant’s home zip code is loaded.17 The scheduler chooses the type of examination to be performed (second opinion or impartial referee) and the applicable medical specialty.",
"The next physician in the roster appears on the screen and remains until an appointment is scheduled or the physician is bypassed.18 If the physician agrees to the appointment, the date and time are entered into the application. Upon entry of the appointment information, the application prompts the medical scheduler to prepare a Form ME023, appointment notification report for imaging into the case file.19 Once an appointment with a medical referee is scheduled the claimant and any authorized representative is to be notified.20 ANALYSIS -- ISSUE 1 The Board previously remanded this case to OWCP based upon a finding that the impartial medical specialist, Dr. Dennis, had not provided a probative medical opinion regarding the degree of appellant’s permanent impairment.",
"Following the Board’s remand, OWCP selected Dr. Gordon to act as the impartial medical specialist. Counsel contended before OWCP and on appeal that it did not properly select Dr. Gordon as the two identification numbers in the 11 Id. 12 Id. at Chapter 3.500.4(b)(6). 13 Id. at Chapter 3.500.4(b)(6)(a). 14 Id. at Chapter 3.500.5. 15 Id at Chapter 3.500.5(a). 16 Id. at Chapter 3.500.5)b). 17 Id. at Chapter 3.500.5( c). 18 Id. Upon entry of a bypass code, the MMA will present the next physician based on specialty and zip code. 19 Id. at Chapter 3.500.5(g). 20 Id. at Chapter 3.500.4(d). 5 PDS system gave an appearance of impropriety, and his selection was not supported on a strict rotational basis. The Board finds that the record does not substantiate that Dr. Gordon was properly selected to act as the impairment specialist in this case.",
"The record indicates that on February 24, 2012 a medical scheduler undertook selection of an impartial medical examiner, utilizing the MMA process. Dr. Gordon was the first physician selected by the MMA. His initial selection was bypassed for the reason that he did not accept FECA patients for evaluation. The second physician selected was Dr. Dennis, the previous referral. After a bypass of Dr. Dennis for the reason that he had previously evaluated appellant, Dr. Gordon was again selected under the MMA. The MMA screen shots substantiate that Dr. Gordon, with the same address in Wall Township NJ, appears in the MMA system under two identification numbers, with differing dates as to when he was added to the directory service, different information regarding his last referee examination, last bypass, number of bypasses and whether he accepted DOL patients.",
"OWCP has not adequately documented why a physician would appear twice in a strict rotational selection system or why differing information pertaining to the same physician would appear in the MMA. The Board also notes that a substantial question is raised regarding the proper use of the strict rotational system in this case. Dr. Gordon practices in a Wall Township NJ, a metropolitan area. He appeared as the first and third physician listed in this search of orthopedic surgeons, in the metropolitan area of Wall Township, NJ. If more than two physicians were available in the MMA, OWCP has not explained why the other available physicians were bypassed. A physician selected by OWCP to serve as an impartial medical specialist should be one wholly free to make a completely independent evaluation and judgment. In order to achieve this, OWCP has developed specific procedures for the selection of impartial medical specialists designed to provide adequate safeguards against any possible appearance that the selected physician’s opinion was biased or prejudiced.",
"The procedures contemplate that impartial medical specialists will be selected on a strict rotating basis in order to negate any appearance that preferential treatment exists between a particular physician and OWCP.21 OWCP has an obligation to verify that it selected Dr. Gordon in a fair and unbiased manner. It maintains records for this very purpose.22 The Board has placed great importance on the appearance as well as the fact of impartiality and only if the selection procedures which were designed to achieve this result are scrupulously followed may the selected physician carry the special weight accorded to an impartial specialist.",
"OWCP has not met its affirmative obligation to establish that it properly followed its selection procedures.23 On remand it shall select another impartial medical examiner to evaluate appellant’s permanent impairment. After such further development as necessary, OWCP shall issue an appropriate decision. 21 Raymond J. Brown, 52 ECAB 192 (2001). 22 M.A., Docket No. 07-1344 (issued February 19, 2008). 23 As OWCP has not properly resolved the conflict of medical opinion regarding the degree of appellant’s permanent impairment, the issues regarding his schedule award and overpayment of compensation are not in posture for decision. 6 CONCLUSION The Board finds that this case is not in posture for decision.",
"ORDER IT IS ORDERED THAT the January 29, 2013 decision of the Office of Workers’ Compensation Programs is set aside and this case is remanded to OWCP for further proceedings consistent with this opinion. Issued: September 17, 2013 Washington, DC Richard J. Daschbach, Chief Judge Employees’ Compensation Appeals Board Alec J. Koromilas, Alternate Judge Employees’ Compensation Appeals Board Michael E. Groom, Alternate Judge Employees’ Compensation Appeals Board 7"
]
| https://www.dol.gov/sites/dolgov/files/ecab/decisions/2013/Sep/13-1042.pdf | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
IN THE SUPREME COURT OF MISSISSIPPI
NO. 2013-IA-01112-SCT
DOROTHY ANN GLENN
v.
ANDREW POWELL
DATE OF JUDGMENT: 06/27/2013 TRIAL JUDGE: HON. HENRY L. LACKEY TRIAL COURT ATTORNEYS: WILLIE JAMES PERKINS, SR. JAMES D. BELL PAUL CALEB KOONCE COURT FROM WHICH APPEALED: LEFLORE COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: ERIC CHARLES HAWKINS WILLIE JAMES PERKINS, SR. ATTORNEYS FOR APPELLEE: JAMES D. BELL PAUL CALEB KOONCE NATURE OF THE CASE: CIVIL - ELECTION CONTEST DISPOSITION: AFFIRMED IN PART; REVERSED AND VACATED IN PART - 10/23/2014 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC.
KITCHENS, JUSTICE, FOR THE COURT:
¶1. Following the May 7, 2013, Democratic primary for the Ward 5 seat on the
Greenwood City Council, the Greenwood Municipal Democratic Executive Committee
certified Dorothy Ann Glenn as the winner and thus the Democratic nominee for the Ward
5 seat on the City Council.1 Andrew Powell, the runner-up for the Democratic nomination
1 At present, Glenn is the Greenwood City Council Member for Ward 5, having faced no other contenders for the position in the general election in June 2013, which occurred during the pendency of the present suit. for the Ward 5 seat, challenged the election results, contending that Glenn was not a resident
of Ward 5 at the time of the election and that she consequently was ineligible to run for that
office. Powell sought a special primary runoff election, without Glenn’s name on the ballot.
The Circuit Court of Leflore County, Special Election Tribunal, found that Glenn was not
a resident of Ward 5, held that she was not qualified to hold the position of Greenwood City
Council Member for Ward 5, set aside the results of the primary election of May 7, 2013, and
ordered a special primary runoff election without Glenn’s name on the ballot. Finding no
error below, we affirm in part. We reverse in part and vacate the order of the circuit court for
a special primary runoff election.
FACTS AND PROCEEDINGS BELOW
¶2. In the May 7, 2013, Democratic primary, Glenn garnered 55.51% of the votes cast;
the runner-up, Andrew Powell, garnered 39.73% of the votes cast; and Norman Smith, a third
contender, garnered 4.56% of the votes cast.2 Three days after the primary, on May 10, 2013,
Powell filed a “Petition for Certification of the True Results of the Democratic Primary
Election for City Council Member, Ward 5,” pursuant to Mississippi Code Section 23-15-921
(Rev. 2007),3 with the Greenwood Municipal Democratic Executive Committee (“Executive
2 A write-in candidate received a single vote, garnering 0.2% of the votes cast. 3 Section 23-15-921 provides the following:
Except as otherwise provided by Section 23-15-961, a person desiring to contest the election of another person returned as the nominee of the party to any county or county district office, or as the nominee of a legislative district composed of one (1) county or less, may, within twenty (20) days after the primary election, file a petition with the secretary, or any member of the county executive committee in the county in which the election was held, setting forth the grounds upon which the primary election is contested . . . .
2 Committee”). Powell stated that “Glenn is not currently a resident of the 5th ward of
Greenwood, M[ississippi] and was not a resident at the time she qualified to run for office,
and is therefore ineligible to run for and/or represent the Democratic Party in the general
election . . . .” Attached to Powell’s petition were affidavits of relatives and acquaintances
of Glenn attesting that Glenn did not reside in Ward 5. According to Powell, Glenn
erroneously claimed residence at 116 Longino Street in Greenwood in order to qualify to run
for the Ward 5 seat when, in actuality, her residence was 301 East Percy Street in
Greenwood, a dwelling not situated within Ward 5.4 Powell requested that the Executive
Committee “declare that the true result of the May 7, 2013 primary is that there are two
eligible candidates, namely Andrew Powell and Norman Smith, that shall be in a run-off
primary election.”
¶3. Having received no response from the Executive Committee as of May 16, 2013,
Powell filed a “Petition for Judicial Review of the Democratic Primary Results for the
Election of the Position of City Councilman, Ward 5” in the Circuit Court of Leflore County.
That same day, this Court appointed a special judge to preside over the matter. Glenn
responded with a Motion to Dismiss, asserting that the court lacked subject matter and
personal jurisdiction and that Powell had failed to state a claim upon which relief could be
granted. Alternatively, Glenn asserted an entitlement to summary judgment “on the ground
that there is no genuine issue of material fact.”
4 Mississippi Code Section 21-8-7(4)(a) (Supp. 2014) provides that “[c]ouncilmen elected to represent wards must be residents of their wards at the time of qualification for election, and any council member who removes the member’s residence from the municipality or from the ward from which he was elected shall vacate that office.”
3 ¶4. A bench trial was conducted on May 24, 2013. Persons whose affidavits were attached
to Powell’s Petition for Certification testified at trial that Glenn did not reside at the 116
Longino Street address, but that she actually resided at 301 East Percy Street, a house not
situated within Ward 5. Glenn did testify on her own behalf, denying that she falsely claimed
residency at 116 Longino Street in order to meet the residency requirement. Nevertheless,
Glenn testified that she had multiple residences, and that she had resided for a time at a
business she owned at 601 Broad Street, an address situated in Ward 7. A Registered Voters
Report was admitted into evidence showing an address for Glenn (also known as Dorothy
Ann Nichols) at 514 East McLaurin Street. But another Voters Report demonstrated that
Willie Wayne Gatewood lived at that same address. Gatewood testified that Glenn had never
lived at 514 East McLaurin Street, but that she had asked his permission to use that address
as her mailing address.
¶5. The trial court filed Findings of Fact and Conclusions of Law on June 28, 2013,
finding that “Glenn has no credibility as a witness” and that “her testimony and the evidence
received proves that Ms. Glenn has a propensity to use false addresses to attempt to meet the
requirement for candidacy for public office.” Finding further that “[t]he overwhelming
preponderance of the evidence received during the trial convinced the Court that Dorothy
Ann Glenn is not currently a resident of the 5th Ward of Greenwood, Mississippi and was
not a resident at the time that she applied to run for office,” the trial court held that Glenn had
been ineligible to represent the Democratic Party in the general election for the office of
Greenwood Municipal City Council Member, Ward 5. As a result of Glenn’s disqualification
to run as the Democratic nominee, the trial court held further that “the result of the general
4 election for that position is set aside and held for naught,” and that if Glenn “has assumed
office by the time this order is made final, then she is by Order of this Court removed from
office.” The trial court ordered a special runoff election to take place “on the first Tuesday
after two weeks after the entry of this Order.”
¶6. Aggrieved, Glenn filed on June 30, 2013, a Petition for Interlocutory Appeal in this
Court. A panel of this Court granted Glenn’s petition and stayed execution of the judgment
on July 2, 2013. Glenn raises two issues for interlocutory review:
1. Whether the lower court had jurisdiction to decide a contest of qualifications of candidates for primary election under Miss. Code Ann. Section 23-15-927 as opposed to Section 23-15-961.
2. Whether the lower court erred in ordering a special primary runoff election within two weeks between the two losing candidates.
We address each assignment of error in turn.
DISCUSSION
¶7. “In an election contest, the standard of review for questions of law is de novo.”
Sumner v. City of Como Democratic Executive Comm., 972 So. 2d 616, 618 (Miss. 2008)
(quoting Garner v. State Democratic Executive Comm., 956 So. 2d 906, 909 (Miss. 2007)
(citing Ladner v. Necaise, 771 So. 2d 353, 355 (Miss. 2000))). “When a trial judge sits as
a fact finder, his or her findings are reviewed for manifest error, and the verdict will not be
disturbed unless it ‘is a result of prejudice, bias, or fraud, or is manifestly against the weight
of credible evidence.’” Boyd v. Tishomingo County Democratic Executive Comm., 912 So. 2d 124, 128-129 (quoting Miss. Dep’t of Transp. v. Johnson, 873 So. 2d 108, 111 (Miss.
2004)).
5 1. Whether the lower court had jurisdiction to decide a contest of qualifications of candidates for primary election under Mississippi Code Section 23-15-927 as opposed to Section 23-15-961.
¶8. Glenn contends that the lower court lacked jurisdiction under Mississippi Code
Sections 23-15-921 and 23-15-927. She urges that, because Powell contested Glenn’s
qualification as a candidate, his sole remedy consisted of filing a contest under Mississippi
Code Section 23-15-961. Mississippi Code Section 23-15-961(1) provides:
Any person desiring to contest the qualifications of another person as a candidate for nomination in a political party primary election shall file a petition specifically setting forth the grounds of the challenge within ten (10) days after the qualifying deadline for the office in question. The petition shall be filed with the executive committee with whom the candidate in question qualified.
Miss. Code Ann. § 23-15-961(1) (Rev. 2007) (emphasis added).
¶9. Powell admittedly filed, on April 23, 2013, an untimely challenge to Glenn’s
qualifications pursuant to Mississippi Code Section 23-15-961(1), which he concedes was
“properly denied by the Greenwood Municipal Democratic Executive Committee.” The
qualifying deadline was March 8, 2013, and thus Powell had until March 18, 2013, to file a
timely challenge to Glenn’s qualifications as a candidate for nomination.
¶10. But, as Powell and the trial court recognize, our examination of Glenn’s “lawful
qualifications to run for or hold office does not end there,” for Powell brought his Petition
for Certification and his Petition for Judicial Review after the primary election pursuant to
Mississippi Code Sections 23-15-921 and 23-15-927. We must ascertain whether the trial
court’s exercise of jurisdiction under Sections 23-15-921 and 23-15-927 was proper. Section
23-15-921 provides:
6 Except as otherwise provided by Section 23-15-961, a person desiring to contest the election of another person returned as the nominee of the party to any county or county district office, or as the nominee of a legislative district composed of one (1) county or less, may, within twenty (20) days after the primary election, file a petition with the secretary, or any member of the county executive committee 5 in the county in which the election was held, setting forth the grounds upon which the primary election is contested . . . .
Miss. Code Ann. § 23-15-921 (Rev. 2007) (emphasis added). Likewise, Mississippi Code
Section 23-15-927 provides:
When and after any contest has been filed with the county executive committee, or complaint with the State Executive Committee, and the executive committee having jurisdiction fails to promptly meet or, having met, fails or unreasonably delays to fully act upon the contest or complaint or fails to give with reasonable promptness the full relief required by the facts and the law, the contestant shall have the right forthwith to file in the circuit court of the county in which the irregularities are charged to have occurred . . . .
Miss. Code Ann. § 23-15-927 (Supp. 2014).
¶11. The Democratic primary election was held on May 7, 2013, and Powell filed his
Petition for Certification on May 10, 2013, within the twenty-day filing period allowed under
Section 23-15-921. Citing Mississippi Code Section 23-15-961(7), which states that “[t]he
procedure set forth above shall be the sole and only manner in which the qualifications of a
candidate seeking public office as a party may be challenged prior to the time of his
nomination or election,” the trial court held that “[a]fter the Primary on May 7, 2013,
Dorothy Ann Glenn transformed from a ‘candidate for nomination’ to an apparent or actual
5 See Miss. Code Ann. § 23-15-171(1) (Rev. 2007) (“At such primary election the municipal executive committee shall perform the same duties as are specified by law and performed by members of the county executive committee with regard to state and county primary elections.”); Miss. Code Ann. § 23-15-171(3) (Rev. 2007) (“All primary elections in municipalities shall be held and conducted in the same manner as is provided by law for state and county primary elections.”).
7 ‘nominee.’” Thus, the trial court held that Section 23-15-961(1) no longer applied to Glenn,
since, after May 7, 2013, she was no longer the “candidate for nomination,” but instead had
been certified as the Democratic party nominee. The trial court ruled that Section 23-15-921
is “a separate statute governing challenges of a party nominee.” We agree. The language of
Section 23-15-961 renders it inapplicable to the present case. At the time of Powell’s contest
filing, Glenn no longer was the “candidate for nomination in a political party primary” under
Section 23-15-961(1), but had been “returned as the nominee of the party” under Section 23-
15-921. So Powell’s contest pursuant to Section 23-15-921 was both procedurally timely and
substantively meritorious.
¶12. Glenn, however, urges that this Court’s holding in Gourlay v. Williams, 874 So. 2d 987 (Miss. 2004), stands for the proposition that Section 23-15-961 provided Powell an
exclusive means of contesting Glenn’s qualifications to run for the Ward 5 office. In that
case, Gourlay contested Williams’s qualifications to run as the Democratic nominee for the
position of Bolivar County Supervisor, District 1, pursuant to Mississippi Code Section 23-
15-963 (Rev. 2001). Id. at 988. This Court held that Section 23-15-961 provided, “prior to
the general election,” “the sole means for contesting the qualifications of a candidate seeking
office as a party nominee.” Id. at 989 (emphasis added). This Court determined that any suit
under Section 23-15-961 was time barred, since Gourlay filed the contest on September 4,
2003, well beyond ten days following the March 1, 2003, qualifying deadline. Highlighting
8 language from Section 23-15-961(7),6 this Court left “it to Gourlay to determine what other
procedures are ‘otherwise provided by law.’” Id.
¶13. The language employed by this Court in Gourlay renders that case inapposite from
the present one. At the outset, the Gourlay Court distinguished Sections 23-15-961 and 23-
15-963, a question not before this Court in the present case. Moreover, here, Glenn was a
“candidate seeking office as a party nominee” in the primary election. Id. at 989 (emphasis
added). But by the time Powell contested Glenn’s election, the primary was complete and
Glenn had been “returned as the nominee” of the Democratic party. See Miss. Code Ann. §
23-15-921 (Rev. 2007). Therefore, Powell, like Gourlay, was left “to determine what other
procedures are ‘otherwise provided by law,’” since, according Section 23-15-961(7), he was
challenging Glenn’s nomination not “prior to,” but after “the time of [her] nomination . . .
.” Gourlay, 874 So. 2d at 989. For Powell, those procedures “otherwise provided by law” can
be found in Section 23-15-921.
¶14. Additionally, Section 23-15-927 vests the circuit court with subject-matter jurisdiction
following the filing of an election contest with the executive committee, “in which the
6 Miss. Code Ann. § 23-15-961(7) (Supp. 2014) provides:
The procedure set forth in this section shall be the sole and only manner in which the qualifications of a candidate seeking public office as a party nominee may be challenged prior to the time of his nomination or election. After a party nominee has been elected to public office, the election may be challenged as otherwise provided by law. After a party nominee assumes an elective office, his qualifications to hold that office may be contested as otherwise provided by law.
(Emphasis added.)
9 irregularities are charged to have occurred,” where that committee “having jurisdiction fails
to promptly meet or, having met, fails or unreasonably delays to fully act upon the contest
or complaint. . . .” Miss. Code Ann. § 23-15-927 (Supp. 2014). Powell filed his Petition for
Certification with the Executive Committee on May 10, 2013. According to Powell, as of
May 15, 2013, the Executive Committee had not “investigated the grounds for [the]
challenge set forth by Andrew Powell’s Petition, had not notified the parties concerned with
Andrew Powell’s Petition, and had not taken a vote or declared the true results of the
Democratic primary for the position of City Council Member, Ward 5,” pursuant to Section
23-15-921, as of eight days after the primary election. See Barbour v. Gunn, 890 So. 2d 843,
847 (Miss. 2004) (trial court’s exercise of jurisdiction was considered proper by this Court
where “the general election was so near at hand that a revote was needed immediately to
preserve the rights of voters.”) Thus, Powell filed his Petition for Judicial Review pursuant
to Section 23-15-927 with the Circuit Court of Leflore County on May 16, 2013, with the
June 2013 general election looming. A Special Tribunal of the Circuit Court of Leflore
County therefore had jurisdiction of Powell’s election contest pursuant to Sections 23-15-921
and 23-15-927.
¶15. The dissent finds that the trial court lacked jurisdiction, averring that “a plain reading
of [Section 23-15-961(1)] leads to the conclusion that it is the only means by which someone
may ‘contest the qualifications of another person as a candidate for nomination in a political
party primary election.’” Miss. Code Ann. § 23-15-961(1) (Supp. 2014). It is true that
Section 23-15-961(7) provides that “[t]he procedure set forth in this section shall be the sole
and only manner in which the qualifications of a candidate seeking public office as a party
10 nominee may be challenged . . .” Miss. Code Ann. § 23-15-961(7) (Supp. 2014). But that
language, absolute at first blush, is qualified by the following: “prior to the time of his
nomination or election.” Id. Once the primary election has occurred, the candidate who
sought the party nomination has transformed into the party nominee. This process, which is
at issue in the present case, clearly is contemplated by Section 23-15-921, which provides
an avenue of relief to an individual desirous of contesting “the election of another person
returned as the nominee of the party to any county or county district office . . . .” Miss. Code
Ann. § 23-15-921 (Rev. 2007) (emphasis added).
¶16. Powell was contesting Glenn’s qualifications as a “person returned as” the Democratic
nominee for the position of Greenwood City Council Member, Ward 5, under Sections 23-
15-921 and 23-15-927, and not her qualifications as “a candidate for nomination” prior to
nomination under Section 23-15-961(1). Thus, the trial court did not err in exercising
jurisdiction pursuant to Mississippi Code Sections 23-15-921 and 23-15-927.
2. Whether the lower court erred in ordering a special primary runoff election within two weeks between the two losing candidates.
¶17. Glenn next avers that Mississippi Code Section 23-15-937 mandates that the governor
call special elections, and that the trial court here exceeded its authority by so doing. Section
23-15-937 provides:
When no final decision has been made by the time the official ballots are required to be printed, the name of the nominee declared by the party executive committee shall be printed on the official ballots as the party nominee, but the contest or complaint shall not thereby be dismissed but the cause shall nevertheless proceed to final judgment and if the judgment is in favor of the contestant, the election of the contestee shall thereby be vacated and the Governor, or the Lieutenant Governor, in case the Governor is a party to the contest, shall call a special election for the office or offices involved. If
11 the contestee has already entered upon the term he shall vacate the office upon the qualification of the person elected at the special election, and may be removed by quo warranto if he fail so to do.
Miss. Code Ann. § 23-15-937 (Supp. 2014). Powell, in the absence of any relevant citation,
states that, “[b]ecause this case was pending when the general election occurred, the Tribunal
retained jurisdiction over the parties, over the outcome of the general election and over the
right of Ms. Glenn to assume and hold office if elected at the general election.” The trial
court here ordered “a special primary run-off election . . . to take place on the first Tuesday
after two weeks after the entry of this order.”
¶18. We agree with Powell that the trial court retained jurisdiction over vacation of Glenn’s
election, since Section 23-15-937 states that, despite the party nominee’s name being placed
upon the general election ballot,“the cause shall nevertheless proceed to final judgment and
if the judgment is in favor of the contestant, the election of the contestee shall thereby be
vacated.” The very next phrase provides that “the Governor . . . shall call a special election
for the office or offices involved.” Miss. Code Ann. § 23-15-937 (Supp. 2014). While the
statute vests the trial court with the authority to render a judgment, and even to vacate the
election, the legislature mandated that, in such circumstance, the governor shall call a special
election. This Court previously has reversed and rendered the judgment of the trial court in
the context of a contest of the results of the Democratic primary election for the position of
mayor of Houston, Mississippi. Moore v. Parker, 962 So. 2d 558, 561 (Miss. 2007). This
Court ruled that “[t]he special tribunal erred in ordering a special primary run-off election
to be held when it is statutorily mandated that the Governor call such election.” Id. at 568.
12 ¶19. To the limited extent the trial court ordered a special primary runoff election, we
reverse the judgment of the trial court and render a judgment that the governor shall call a
special primary runoff election for the office of Greenwood City Council Member for Ward
5 to take place between the remaining qualified candidates, Andrew Powell and Norman
Smith.
CONCLUSION
¶20. The Circuit Court of Leflore County, Special Election Tribunal, correctly found that
Glenn was not a resident of Ward 5 and that she was not qualified to hold the position as
Greenwood City Council Member for Ward 5. To the extent the trial court vacated the results
of the May 7, 2013, primary election, we affirm. But the trial court exceeded its statutory
authority by ordering a special primary runoff election, which the governor is mandated to
do. We therefore reverse and vacate the order of the circuit court for a special primary runoff
election.
¶21. AFFIRMED IN PART; REVERSED AND VACATED IN PART.
WALLER, C.J., RANDOLPH, P.J., CHANDLER, PIERCE, KING AND COLEMAN, JJ., CONCUR. DICKINSON, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY LAMAR, J.
DICKINSON, PRESIDING JUSTICE, DISSENTING:
¶22. Because the trial court lacked jurisdiction to consider Powell’s challenge of Glenn’s
qualifications for office, I respectfully dissent.
¶23. Both Dorothy Glenn and Andrew Powell sought the Democratic nomination for the
Ward 5 city council seat. Glenn prevailed, advanced to an uncontested general election, and
assumed office. On May 10, 2013, three days after Glenn took the Democratic primary, but
13 prior to the general election, Powell petitioned the municipal Democratic Executive
Committee pursuant to Mississippi Code Section 23-15-921 to challenge whether Glenn
possessed the minimum qualifications for that office.7 Then, having received no response,
Powell filed a petition for judicial review pursuant to Mississippi Code Section 23-15-927
in the Circuit Court of Leflore County.8 The circuit court exercised jurisdiction, found that
Glenn lacked the necessary qualifications, removed her from office, and ordered a special
election.
¶24. As a threshold issue, we must determine whether the circuit court possessed
jurisdiction over Powell’s claim. He initiated this circuit court proceeding pursuant to
Section 23-15-927, which provides judicial review after a county executive committee fails
to promptly respond to a complaint.9 Powell filed his complaint with the county executive
committee pursuant to Section 23-15-921.10 So the pertinent question is whether Powell
properly brought this challenge pursuant to that section, which provides:
Except as otherwise provided by Section 23-15-961, a person desiring to contest the election of another person returned as the nominee of the party to any county or county district office, or as the nominee of a legislative district composed of one (1) county or less, may, within twenty (20) days after the primary election, file a petition with the secretary, or any member of the county executive committee in the county in which the election was held, setting forth the grounds upon which the primary election is contested; and it shall be the duty of the executive committee to assemble by call of the chairman or three (3) members of said committee, notice of which contest shall
7 Miss. Code Ann. § 23-15-921 (Rev. 2007). 8 Miss. Code Ann. § 23-15-927 (Rev. 2007). 9 Id. 10 Miss. Code Ann. § 23-15-921 (Rev. 2007).
14 be served five (5) days before said meeting, and after notifying all parties concerned proceed to investigate the grounds upon which the election is contested and, by majority vote of members present, declare the true results of such primary.11
By its terms, Section 23-15-921 provides a procedural avenue “to contest the election of
another person returned as the nominee of the party to any county or county district office,”
except “as otherwise provided by Section 23-15-961.” 12
¶25. Section 23-15-961(1) provides:
(1) Any person desiring to contest the qualifications of another person as a candidate for nomination in a political party primary election shall file a petition specifically setting forth the grounds of the challenge within ten (10) days after the qualifying deadline for the office in question. The petition shall be filed with the executive committee with whom the candidate in question qualified.13
Given the all-encompassing language “any person” and the mandatory word “shall,” a plain
reading of this statute leads to the conclusion that it is the only means by which someone may
“contest the qualifications of another person as a candidate for nomination in a political party
primary election.” 14
¶26. But subsection (7) of that statute provides two exceptions and states:
(7) The procedure set forth in this section shall be the sole and only manner in which the qualifications of a candidate seeking public office as a party nominee may be challenged prior to the time of his nomination or election. After a party nominee has been elected to public office, the election may be challenged as otherwise provided by law. After a party nominee assumes an
11 Id. (emphasis added). 12 Id. 13 Miss. Code Ann. § 23-15-961(1) (Rev. 2007) (emphasis added). 14 Id.
15 elective office, his qualifications to hold that office may be contested as otherwise provided by law.15
So the statute limits its all-inclusive language by permitting challenges to a candidate’s
qualifications after the candidate assumes office, if the law otherwise provides for such a
challenge. The majority finds that Section 23-15-921 is the “otherwise provided by law.” 16
But that interpretation fails for several reasons.
¶27. First, Section 23-15-961’s exception states “[a]fter a party nominee assumes an
elective office, his qualifications to hold that office may be contested as otherwise provided
by law.” 17 Section 23-15-921 provides for a challenge “within twenty (20) days after the
primary election,” not after the candidate assumes office. So Section 23-15-921 cannot fit
as an alternative avenue within the plain language of Section 23-15-961.
¶28. Second, Section 23-15-921 begins by stating “[e]xcept as otherwise provided by
Section 23-15-961 . . . .” 18 It is simply illogical to find that this statute falls within the “as
otherwise provided by law” language of the statute it identifies as an exception to its own
rule.
¶29. Finally, Section 23-15-921 provides a legal avenue to “contest the election of another
person . . . .” 19 But the last two sentences of Section 23-15-961(7) clearly recognize that
15 Miss. Code Ann. § 23-15-961(7) (Rev. 2007) (emphasis added). 16 Id. 17 Id. (emphasis added). 18 Miss. Code Ann. § 23-15-921 (Rev. 2007). 19 Id.
16 challenges to the election and challenges to a candidate’s qualifications are distinct things.
So the election challenge statute, Section 23-15-921, cannot satisfy the qualification
provision’s “as otherwise provided in law.” 20 And it is here that the majority’s response to
this opinion fails. The majority focuses on the “nominee” language of Section 23-15-921,
but fails to recognize that Section 23-15-921 permits only challenges to the nominee’s
election, not their qualifications to be elected.21
¶30. The plain language of Section 23-15-961 limited Powell’s opportunity to challenge
Glenn’s qualifications to the ten days following the qualification deadline, unless some other
provision of law provided for challenges after Glenn assumed office. Because Powell
brought this challenge after the primary, but before Glenn took office, pursuant to Section
23-15-921, the circuit court lacked jurisdiction.
LAMAR, J., JOINS THIS OPINION.
20 Miss. Code Ann. § 23-15-961(7) (Rev. 2007). 21 Miss. Code Ann. § 23-15-921 (Rev. 2007).
17 | 10-23-2014 | [
"IN THE SUPREME COURT OF MISSISSIPPI NO. 2013-IA-01112-SCT DOROTHY ANN GLENN v. ANDREW POWELL DATE OF JUDGMENT: 06/27/2013 TRIAL JUDGE: HON. HENRY L. LACKEY TRIAL COURT ATTORNEYS: WILLIE JAMES PERKINS, SR. JAMES D. BELL PAUL CALEB KOONCE COURT FROM WHICH APPEALED: LEFLORE COUNTY CIRCUIT COURT ATTORNEYS FOR APPELLANT: ERIC CHARLES HAWKINS WILLIE JAMES PERKINS, SR. ATTORNEYS FOR APPELLEE: JAMES D. BELL PAUL CALEB KOONCE NATURE OF THE CASE: CIVIL - ELECTION CONTEST DISPOSITION: AFFIRMED IN PART; REVERSED AND VACATED IN PART - 10/23/2014 MOTION FOR REHEARING FILED: MANDATE ISSUED: EN BANC. KITCHENS, JUSTICE, FOR THE COURT: ¶1.",
"Following the May 7, 2013, Democratic primary for the Ward 5 seat on the Greenwood City Council, the Greenwood Municipal Democratic Executive Committee certified Dorothy Ann Glenn as the winner and thus the Democratic nominee for the Ward 5 seat on the City Council.1 Andrew Powell, the runner-up for the Democratic nomination 1 At present, Glenn is the Greenwood City Council Member for Ward 5, having faced no other contenders for the position in the general election in June 2013, which occurred during the pendency of the present suit. for the Ward 5 seat, challenged the election results, contending that Glenn was not a resident of Ward 5 at the time of the election and that she consequently was ineligible to run for that office. Powell sought a special primary runoff election, without Glenn’s name on the ballot. The Circuit Court of Leflore County, Special Election Tribunal, found that Glenn was not a resident of Ward 5, held that she was not qualified to hold the position of Greenwood City Council Member for Ward 5, set aside the results of the primary election of May 7, 2013, and ordered a special primary runoff election without Glenn’s name on the ballot.",
"Finding no error below, we affirm in part. We reverse in part and vacate the order of the circuit court for a special primary runoff election. FACTS AND PROCEEDINGS BELOW ¶2. In the May 7, 2013, Democratic primary, Glenn garnered 55.51% of the votes cast; the runner-up, Andrew Powell, garnered 39.73% of the votes cast; and Norman Smith, a third contender, garnered 4.56% of the votes cast.2 Three days after the primary, on May 10, 2013, Powell filed a “Petition for Certification of the True Results of the Democratic Primary Election for City Council Member, Ward 5,” pursuant to Mississippi Code Section 23-15-921 (Rev. 2007),3 with the Greenwood Municipal Democratic Executive Committee (“Executive 2 A write-in candidate received a single vote, garnering 0.2% of the votes cast. 3 Section 23-15-921 provides the following: Except as otherwise provided by Section 23-15-961, a person desiring to contest the election of another person returned as the nominee of the party to any county or county district office, or as the nominee of a legislative district composed of one (1) county or less, may, within twenty (20) days after the primary election, file a petition with the secretary, or any member of the county executive committee in the county in which the election was held, setting forth the grounds upon which the primary election is contested .",
". . . 2 Committee”). Powell stated that “Glenn is not currently a resident of the 5th ward of Greenwood, M[ississippi] and was not a resident at the time she qualified to run for office, and is therefore ineligible to run for and/or represent the Democratic Party in the general election . . . .” Attached to Powell’s petition were affidavits of relatives and acquaintances of Glenn attesting that Glenn did not reside in Ward 5. According to Powell, Glenn erroneously claimed residence at 116 Longino Street in Greenwood in order to qualify to run for the Ward 5 seat when, in actuality, her residence was 301 East Percy Street in Greenwood, a dwelling not situated within Ward 5.4 Powell requested that the Executive Committee “declare that the true result of the May 7, 2013 primary is that there are two eligible candidates, namely Andrew Powell and Norman Smith, that shall be in a run-off primary election.” ¶3. Having received no response from the Executive Committee as of May 16, 2013, Powell filed a “Petition for Judicial Review of the Democratic Primary Results for the Election of the Position of City Councilman, Ward 5” in the Circuit Court of Leflore County. That same day, this Court appointed a special judge to preside over the matter.",
"Glenn responded with a Motion to Dismiss, asserting that the court lacked subject matter and personal jurisdiction and that Powell had failed to state a claim upon which relief could be granted. Alternatively, Glenn asserted an entitlement to summary judgment “on the ground that there is no genuine issue of material fact.” 4 Mississippi Code Section 21-8-7(4)(a) (Supp. 2014) provides that “[c]ouncilmen elected to represent wards must be residents of their wards at the time of qualification for election, and any council member who removes the member’s residence from the municipality or from the ward from which he was elected shall vacate that office.” 3 ¶4. A bench trial was conducted on May 24, 2013.",
"Persons whose affidavits were attached to Powell’s Petition for Certification testified at trial that Glenn did not reside at the 116 Longino Street address, but that she actually resided at 301 East Percy Street, a house not situated within Ward 5. Glenn did testify on her own behalf, denying that she falsely claimed residency at 116 Longino Street in order to meet the residency requirement. Nevertheless, Glenn testified that she had multiple residences, and that she had resided for a time at a business she owned at 601 Broad Street, an address situated in Ward 7. A Registered Voters Report was admitted into evidence showing an address for Glenn (also known as Dorothy Ann Nichols) at 514 East McLaurin Street. But another Voters Report demonstrated that Willie Wayne Gatewood lived at that same address. Gatewood testified that Glenn had never lived at 514 East McLaurin Street, but that she had asked his permission to use that address as her mailing address. ¶5. The trial court filed Findings of Fact and Conclusions of Law on June 28, 2013, finding that “Glenn has no credibility as a witness” and that “her testimony and the evidence received proves that Ms. Glenn has a propensity to use false addresses to attempt to meet the requirement for candidacy for public office.” Finding further that “[t]he overwhelming preponderance of the evidence received during the trial convinced the Court that Dorothy Ann Glenn is not currently a resident of the 5th Ward of Greenwood, Mississippi and was not a resident at the time that she applied to run for office,” the trial court held that Glenn had been ineligible to represent the Democratic Party in the general election for the office of Greenwood Municipal City Council Member, Ward 5.",
"As a result of Glenn’s disqualification to run as the Democratic nominee, the trial court held further that “the result of the general 4 election for that position is set aside and held for naught,” and that if Glenn “has assumed office by the time this order is made final, then she is by Order of this Court removed from office.” The trial court ordered a special runoff election to take place “on the first Tuesday after two weeks after the entry of this Order.” ¶6. Aggrieved, Glenn filed on June 30, 2013, a Petition for Interlocutory Appeal in this Court. A panel of this Court granted Glenn’s petition and stayed execution of the judgment on July 2, 2013.",
"Glenn raises two issues for interlocutory review: 1. Whether the lower court had jurisdiction to decide a contest of qualifications of candidates for primary election under Miss. Code Ann. Section 23-15-927 as opposed to Section 23-15-961. 2. Whether the lower court erred in ordering a special primary runoff election within two weeks between the two losing candidates. We address each assignment of error in turn. DISCUSSION ¶7. “In an election contest, the standard of review for questions of law is de novo.” Sumner v. City of Como Democratic Executive Comm., 972 So.",
"2d 616, 618 (Miss. 2008) (quoting Garner v. State Democratic Executive Comm., 956 So. 2d 906, 909 (Miss. 2007) (citing Ladner v. Necaise, 771 So. 2d 353, 355 (Miss. 2000))). “When a trial judge sits as a fact finder, his or her findings are reviewed for manifest error, and the verdict will not be disturbed unless it ‘is a result of prejudice, bias, or fraud, or is manifestly against the weight of credible evidence.’” Boyd v. Tishomingo County Democratic Executive Comm., 912 So. 2d 124, 128-129 (quoting Miss. Dep’t of Transp. v. Johnson, 873 So. 2d 108, 111 (Miss. 2004)). 5 1. Whether the lower court had jurisdiction to decide a contest of qualifications of candidates for primary election under Mississippi Code Section 23-15-927 as opposed to Section 23-15-961. ¶8. Glenn contends that the lower court lacked jurisdiction under Mississippi Code Sections 23-15-921 and 23-15-927. She urges that, because Powell contested Glenn’s qualification as a candidate, his sole remedy consisted of filing a contest under Mississippi Code Section 23-15-961.",
"Mississippi Code Section 23-15-961(1) provides: Any person desiring to contest the qualifications of another person as a candidate for nomination in a political party primary election shall file a petition specifically setting forth the grounds of the challenge within ten (10) days after the qualifying deadline for the office in question. The petition shall be filed with the executive committee with whom the candidate in question qualified. Miss. Code Ann. § 23-15-961(1) (Rev. 2007) (emphasis added). ¶9. Powell admittedly filed, on April 23, 2013, an untimely challenge to Glenn’s qualifications pursuant to Mississippi Code Section 23-15-961(1), which he concedes was “properly denied by the Greenwood Municipal Democratic Executive Committee.” The qualifying deadline was March 8, 2013, and thus Powell had until March 18, 2013, to file a timely challenge to Glenn’s qualifications as a candidate for nomination. ¶10. But, as Powell and the trial court recognize, our examination of Glenn’s “lawful qualifications to run for or hold office does not end there,” for Powell brought his Petition for Certification and his Petition for Judicial Review after the primary election pursuant to Mississippi Code Sections 23-15-921 and 23-15-927.",
"We must ascertain whether the trial court’s exercise of jurisdiction under Sections 23-15-921 and 23-15-927 was proper. Section 23-15-921 provides: 6 Except as otherwise provided by Section 23-15-961, a person desiring to contest the election of another person returned as the nominee of the party to any county or county district office, or as the nominee of a legislative district composed of one (1) county or less, may, within twenty (20) days after the primary election, file a petition with the secretary, or any member of the county executive committee 5 in the county in which the election was held, setting forth the grounds upon which the primary election is contested . . . . Miss.",
"Code Ann. § 23-15-921 (Rev. 2007) (emphasis added). Likewise, Mississippi Code Section 23-15-927 provides: When and after any contest has been filed with the county executive committee, or complaint with the State Executive Committee, and the executive committee having jurisdiction fails to promptly meet or, having met, fails or unreasonably delays to fully act upon the contest or complaint or fails to give with reasonable promptness the full relief required by the facts and the law, the contestant shall have the right forthwith to file in the circuit court of the county in which the irregularities are charged to have occurred .",
". . . Miss. Code Ann. § 23-15-927 (Supp. 2014). ¶11. The Democratic primary election was held on May 7, 2013, and Powell filed his Petition for Certification on May 10, 2013, within the twenty-day filing period allowed under Section 23-15-921. Citing Mississippi Code Section 23-15-961(7), which states that “[t]he procedure set forth above shall be the sole and only manner in which the qualifications of a candidate seeking public office as a party may be challenged prior to the time of his nomination or election,” the trial court held that “[a]fter the Primary on May 7, 2013, Dorothy Ann Glenn transformed from a ‘candidate for nomination’ to an apparent or actual 5 See Miss. Code Ann. § 23-15-171(1) (Rev. 2007) (“At such primary election the municipal executive committee shall perform the same duties as are specified by law and performed by members of the county executive committee with regard to state and county primary elections.”); Miss. Code Ann. § 23-15-171(3) (Rev.",
"2007) (“All primary elections in municipalities shall be held and conducted in the same manner as is provided by law for state and county primary elections.”). 7 ‘nominee.’” Thus, the trial court held that Section 23-15-961(1) no longer applied to Glenn, since, after May 7, 2013, she was no longer the “candidate for nomination,” but instead had been certified as the Democratic party nominee. The trial court ruled that Section 23-15-921 is “a separate statute governing challenges of a party nominee.” We agree. The language of Section 23-15-961 renders it inapplicable to the present case. At the time of Powell’s contest filing, Glenn no longer was the “candidate for nomination in a political party primary” under Section 23-15-961(1), but had been “returned as the nominee of the party” under Section 23- 15-921. So Powell’s contest pursuant to Section 23-15-921 was both procedurally timely and substantively meritorious. ¶12. Glenn, however, urges that this Court’s holding in Gourlay v. Williams, 874 So.",
"2d 987 (Miss. 2004), stands for the proposition that Section 23-15-961 provided Powell an exclusive means of contesting Glenn’s qualifications to run for the Ward 5 office. In that case, Gourlay contested Williams’s qualifications to run as the Democratic nominee for the position of Bolivar County Supervisor, District 1, pursuant to Mississippi Code Section 23- 15-963 (Rev. 2001). Id. at 988. This Court held that Section 23-15-961 provided, “prior to the general election,” “the sole means for contesting the qualifications of a candidate seeking office as a party nominee.” Id. at 989 (emphasis added).",
"This Court determined that any suit under Section 23-15-961 was time barred, since Gourlay filed the contest on September 4, 2003, well beyond ten days following the March 1, 2003, qualifying deadline. Highlighting 8 language from Section 23-15-961(7),6 this Court left “it to Gourlay to determine what other procedures are ‘otherwise provided by law.’” Id. ¶13. The language employed by this Court in Gourlay renders that case inapposite from the present one. At the outset, the Gourlay Court distinguished Sections 23-15-961 and 23- 15-963, a question not before this Court in the present case. Moreover, here, Glenn was a “candidate seeking office as a party nominee” in the primary election.",
"Id. at 989 (emphasis added). But by the time Powell contested Glenn’s election, the primary was complete and Glenn had been “returned as the nominee” of the Democratic party. See Miss. Code Ann. § 23-15-921 (Rev. 2007). Therefore, Powell, like Gourlay, was left “to determine what other procedures are ‘otherwise provided by law,’” since, according Section 23-15-961(7), he was challenging Glenn’s nomination not “prior to,” but after “the time of [her] nomination . . . .” Gourlay, 874 So. 2d at 989. For Powell, those procedures “otherwise provided by law” can be found in Section 23-15-921. ¶14.",
"Additionally, Section 23-15-927 vests the circuit court with subject-matter jurisdiction following the filing of an election contest with the executive committee, “in which the 6 Miss. Code Ann. § 23-15-961(7) (Supp. 2014) provides: The procedure set forth in this section shall be the sole and only manner in which the qualifications of a candidate seeking public office as a party nominee may be challenged prior to the time of his nomination or election. After a party nominee has been elected to public office, the election may be challenged as otherwise provided by law. After a party nominee assumes an elective office, his qualifications to hold that office may be contested as otherwise provided by law. (Emphasis added.) 9 irregularities are charged to have occurred,” where that committee “having jurisdiction fails to promptly meet or, having met, fails or unreasonably delays to fully act upon the contest or complaint. . . .” Miss.",
"Code Ann. § 23-15-927 (Supp. 2014). Powell filed his Petition for Certification with the Executive Committee on May 10, 2013. According to Powell, as of May 15, 2013, the Executive Committee had not “investigated the grounds for [the] challenge set forth by Andrew Powell’s Petition, had not notified the parties concerned with Andrew Powell’s Petition, and had not taken a vote or declared the true results of the Democratic primary for the position of City Council Member, Ward 5,” pursuant to Section 23-15-921, as of eight days after the primary election. See Barbour v. Gunn, 890 So. 2d 843, 847 (Miss. 2004) (trial court’s exercise of jurisdiction was considered proper by this Court where “the general election was so near at hand that a revote was needed immediately to preserve the rights of voters.”) Thus, Powell filed his Petition for Judicial Review pursuant to Section 23-15-927 with the Circuit Court of Leflore County on May 16, 2013, with the June 2013 general election looming.",
"A Special Tribunal of the Circuit Court of Leflore County therefore had jurisdiction of Powell’s election contest pursuant to Sections 23-15-921 and 23-15-927. ¶15. The dissent finds that the trial court lacked jurisdiction, averring that “a plain reading of [Section 23-15-961(1)] leads to the conclusion that it is the only means by which someone may ‘contest the qualifications of another person as a candidate for nomination in a political party primary election.’” Miss. Code Ann. § 23-15-961(1) (Supp. 2014). It is true that Section 23-15-961(7) provides that “[t]he procedure set forth in this section shall be the sole and only manner in which the qualifications of a candidate seeking public office as a party 10 nominee may be challenged . . .” Miss. Code Ann.",
"§ 23-15-961(7) (Supp. 2014). But that language, absolute at first blush, is qualified by the following: “prior to the time of his nomination or election.” Id. Once the primary election has occurred, the candidate who sought the party nomination has transformed into the party nominee. This process, which is at issue in the present case, clearly is contemplated by Section 23-15-921, which provides an avenue of relief to an individual desirous of contesting “the election of another person returned as the nominee of the party to any county or county district office . .",
". .” Miss. Code Ann. § 23-15-921 (Rev. 2007) (emphasis added). ¶16. Powell was contesting Glenn’s qualifications as a “person returned as” the Democratic nominee for the position of Greenwood City Council Member, Ward 5, under Sections 23- 15-921 and 23-15-927, and not her qualifications as “a candidate for nomination” prior to nomination under Section 23-15-961(1). Thus, the trial court did not err in exercising jurisdiction pursuant to Mississippi Code Sections 23-15-921 and 23-15-927. 2.",
"Whether the lower court erred in ordering a special primary runoff election within two weeks between the two losing candidates. ¶17. Glenn next avers that Mississippi Code Section 23-15-937 mandates that the governor call special elections, and that the trial court here exceeded its authority by so doing. Section 23-15-937 provides: When no final decision has been made by the time the official ballots are required to be printed, the name of the nominee declared by the party executive committee shall be printed on the official ballots as the party nominee, but the contest or complaint shall not thereby be dismissed but the cause shall nevertheless proceed to final judgment and if the judgment is in favor of the contestant, the election of the contestee shall thereby be vacated and the Governor, or the Lieutenant Governor, in case the Governor is a party to the contest, shall call a special election for the office or offices involved. If 11 the contestee has already entered upon the term he shall vacate the office upon the qualification of the person elected at the special election, and may be removed by quo warranto if he fail so to do.",
"Miss. Code Ann. § 23-15-937 (Supp. 2014). Powell, in the absence of any relevant citation, states that, “[b]ecause this case was pending when the general election occurred, the Tribunal retained jurisdiction over the parties, over the outcome of the general election and over the right of Ms. Glenn to assume and hold office if elected at the general election.” The trial court here ordered “a special primary run-off election . . . to take place on the first Tuesday after two weeks after the entry of this order.” ¶18. We agree with Powell that the trial court retained jurisdiction over vacation of Glenn’s election, since Section 23-15-937 states that, despite the party nominee’s name being placed upon the general election ballot,“the cause shall nevertheless proceed to final judgment and if the judgment is in favor of the contestant, the election of the contestee shall thereby be vacated.” The very next phrase provides that “the Governor . .",
". shall call a special election for the office or offices involved.” Miss. Code Ann. § 23-15-937 (Supp. 2014). While the statute vests the trial court with the authority to render a judgment, and even to vacate the election, the legislature mandated that, in such circumstance, the governor shall call a special election. This Court previously has reversed and rendered the judgment of the trial court in the context of a contest of the results of the Democratic primary election for the position of mayor of Houston, Mississippi. Moore v. Parker, 962 So. 2d 558, 561 (Miss. 2007).",
"This Court ruled that “[t]he special tribunal erred in ordering a special primary run-off election to be held when it is statutorily mandated that the Governor call such election.” Id. at 568. 12 ¶19. To the limited extent the trial court ordered a special primary runoff election, we reverse the judgment of the trial court and render a judgment that the governor shall call a special primary runoff election for the office of Greenwood City Council Member for Ward 5 to take place between the remaining qualified candidates, Andrew Powell and Norman Smith. CONCLUSION ¶20. The Circuit Court of Leflore County, Special Election Tribunal, correctly found that Glenn was not a resident of Ward 5 and that she was not qualified to hold the position as Greenwood City Council Member for Ward 5. To the extent the trial court vacated the results of the May 7, 2013, primary election, we affirm.",
"But the trial court exceeded its statutory authority by ordering a special primary runoff election, which the governor is mandated to do. We therefore reverse and vacate the order of the circuit court for a special primary runoff election. ¶21. AFFIRMED IN PART; REVERSED AND VACATED IN PART. WALLER, C.J., RANDOLPH, P.J., CHANDLER, PIERCE, KING AND COLEMAN, JJ., CONCUR. DICKINSON, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY LAMAR, J. DICKINSON, PRESIDING JUSTICE, DISSENTING: ¶22. Because the trial court lacked jurisdiction to consider Powell’s challenge of Glenn’s qualifications for office, I respectfully dissent. ¶23. Both Dorothy Glenn and Andrew Powell sought the Democratic nomination for the Ward 5 city council seat.",
"Glenn prevailed, advanced to an uncontested general election, and assumed office. On May 10, 2013, three days after Glenn took the Democratic primary, but 13 prior to the general election, Powell petitioned the municipal Democratic Executive Committee pursuant to Mississippi Code Section 23-15-921 to challenge whether Glenn possessed the minimum qualifications for that office.7 Then, having received no response, Powell filed a petition for judicial review pursuant to Mississippi Code Section 23-15-927 in the Circuit Court of Leflore County.8 The circuit court exercised jurisdiction, found that Glenn lacked the necessary qualifications, removed her from office, and ordered a special election. ¶24. As a threshold issue, we must determine whether the circuit court possessed jurisdiction over Powell’s claim. He initiated this circuit court proceeding pursuant to Section 23-15-927, which provides judicial review after a county executive committee fails to promptly respond to a complaint.9 Powell filed his complaint with the county executive committee pursuant to Section 23-15-921.10 So the pertinent question is whether Powell properly brought this challenge pursuant to that section, which provides: Except as otherwise provided by Section 23-15-961, a person desiring to contest the election of another person returned as the nominee of the party to any county or county district office, or as the nominee of a legislative district composed of one (1) county or less, may, within twenty (20) days after the primary election, file a petition with the secretary, or any member of the county executive committee in the county in which the election was held, setting forth the grounds upon which the primary election is contested; and it shall be the duty of the executive committee to assemble by call of the chairman or three (3) members of said committee, notice of which contest shall 7 Miss.",
"Code Ann. § 23-15-921 (Rev. 2007). 8 Miss. Code Ann. § 23-15-927 (Rev. 2007). 9 Id. 10 Miss. Code Ann. § 23-15-921 (Rev. 2007). 14 be served five (5) days before said meeting, and after notifying all parties concerned proceed to investigate the grounds upon which the election is contested and, by majority vote of members present, declare the true results of such primary.11 By its terms, Section 23-15-921 provides a procedural avenue “to contest the election of another person returned as the nominee of the party to any county or county district office,” except “as otherwise provided by Section 23-15-961.” 12 ¶25.",
"Section 23-15-961(1) provides: (1) Any person desiring to contest the qualifications of another person as a candidate for nomination in a political party primary election shall file a petition specifically setting forth the grounds of the challenge within ten (10) days after the qualifying deadline for the office in question. The petition shall be filed with the executive committee with whom the candidate in question qualified.13 Given the all-encompassing language “any person” and the mandatory word “shall,” a plain reading of this statute leads to the conclusion that it is the only means by which someone may “contest the qualifications of another person as a candidate for nomination in a political party primary election.” 14 ¶26. But subsection (7) of that statute provides two exceptions and states: (7) The procedure set forth in this section shall be the sole and only manner in which the qualifications of a candidate seeking public office as a party nominee may be challenged prior to the time of his nomination or election. After a party nominee has been elected to public office, the election may be challenged as otherwise provided by law.",
"After a party nominee assumes an 11 Id. (emphasis added). 12 Id. 13 Miss. Code Ann. § 23-15-961(1) (Rev. 2007) (emphasis added). 14 Id. 15 elective office, his qualifications to hold that office may be contested as otherwise provided by law.15 So the statute limits its all-inclusive language by permitting challenges to a candidate’s qualifications after the candidate assumes office, if the law otherwise provides for such a challenge. The majority finds that Section 23-15-921 is the “otherwise provided by law.” 16 But that interpretation fails for several reasons. ¶27. First, Section 23-15-961’s exception states “[a]fter a party nominee assumes an elective office, his qualifications to hold that office may be contested as otherwise provided by law.” 17 Section 23-15-921 provides for a challenge “within twenty (20) days after the primary election,” not after the candidate assumes office. So Section 23-15-921 cannot fit as an alternative avenue within the plain language of Section 23-15-961.",
"¶28. Second, Section 23-15-921 begins by stating “[e]xcept as otherwise provided by Section 23-15-961 . . . .” 18 It is simply illogical to find that this statute falls within the “as otherwise provided by law” language of the statute it identifies as an exception to its own rule. ¶29. Finally, Section 23-15-921 provides a legal avenue to “contest the election of another person . . . .” 19 But the last two sentences of Section 23-15-961(7) clearly recognize that 15 Miss. Code Ann. § 23-15-961(7) (Rev. 2007) (emphasis added). 16 Id. 17 Id. (emphasis added). 18 Miss. Code Ann. § 23-15-921 (Rev. 2007).",
"19 Id. 16 challenges to the election and challenges to a candidate’s qualifications are distinct things. So the election challenge statute, Section 23-15-921, cannot satisfy the qualification provision’s “as otherwise provided in law.” 20 And it is here that the majority’s response to this opinion fails. The majority focuses on the “nominee” language of Section 23-15-921, but fails to recognize that Section 23-15-921 permits only challenges to the nominee’s election, not their qualifications to be elected.21 ¶30. The plain language of Section 23-15-961 limited Powell’s opportunity to challenge Glenn’s qualifications to the ten days following the qualification deadline, unless some other provision of law provided for challenges after Glenn assumed office. Because Powell brought this challenge after the primary, but before Glenn took office, pursuant to Section 23-15-921, the circuit court lacked jurisdiction. LAMAR, J., JOINS THIS OPINION. 20 Miss. Code Ann.",
"§ 23-15-961(7) (Rev. 2007). 21 Miss. Code Ann. § 23-15-921 (Rev. 2007). 17"
]
| https://www.courtlistener.com/api/rest/v3/opinions/2745275/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Motion granted and appeal dismissed, with costs and ten dollars costs of motion. | 07-06-2016 | [
"Motion granted and appeal dismissed, with costs and ten dollars costs of motion."
]
| https://www.courtlistener.com/api/rest/v3/opinions/3626577/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
105 Cal. App. 2d 27 (1951) 232 P.2d 564 THE PEOPLE, Respondent, v. CHARLES ARTHUR GREBE, Appellant. Docket No. 752. Court of Appeals of California, Fourth District. June 22, 1951. *28 Charles Elwyn Karpinski and Ann Wansley for Appellant. Edmund G. Brown, Attorney General, and Dan Kaufmann, Deputy Attorney General, for Respondent. BARNARD, P.J. The defendant was charged, in separate counts, with robbery, with failing to perform the duties required by section 480 of the Vehicle Code, and with assault with a deadly weapon with intent to commit murder. He pleaded not guilty, and not guilty by reason of insanity. Shortly before the trial he moved, under section 1368 of the Penal Code, for an order suspending proceedings, and for a jury trial on the question of his present sanity. After a hearing this motion was denied. He then withdrew his plea of not guilty, and a jury found him sane at the time the offenses *29 were committed. He has appealed from the judgment and from an order denying his motion for a new trial. The appellant was a dental technician, first class, in the United States Navy, and was stationed in San Diego. On October 21, 1950, he purchased a gun, to be delivered the next day. On October 22, he talked about the gun several times to a waitress in a cafe, saying he did not know what to do with it as he did not have a permit to carry it. He got the gun about 4 p.m., and the waitress persuaded him to put it in his locker in a near-by locker club. He kept talking about the gun, told her he wanted to kill somebody, and took the gun out of the locker two or three times but she persuaded him to put it back. He left this waitress about 6:15 p.m. Shortly after 7 p.m. he used the gun to take a car from the owner, in downtown San Diego, telling the owner that he needed the car because he had to go to Los Angeles. A few minutes later, while driving down Broadway, he struck and injured a boy who was crossing the street at a marked cross-walk, and drove on without stopping. At about 8 p.m. he left the stolen car in La Jolla, and persuaded the driver of another car to take him to a bar and buy him a drink. They then went for a drive during which the appellant took out the gun and told the other man he thought of killing him but would not do so because "you bought me a drink." When asked why he wanted to do that he replied that he had already killed two people that night. As they were returning to the business district of La Jolla an officer on a motorcycle approached from the rear, on his way to assist in a road block being set up to catch the appellant. When the appellant saw the officer approaching he stepped on the brake. The other man jumped out and yelled for help. The appellant also got out and, while the officer was resting his motorcycle on its stand, fired five shots two of which struck the officer. The appellant then ran up a hill and hid in some bushes. He was arrested about an hour later as he approached a bus stop in La Jolla. On the way to the police station he expressed concern as to whether the officer he had shot had a family, and asked whether or not capital punishment was used in this state. He was questioned at the police station, his statements being taken down by a shorthand reporter. He gave a detailed statement of all that had occurred, claiming he was drunk, and expressed regret at having struck the boy. He said that when the motorcycle officer approached and the driver of the car yelled for *30 help he was desperate and shot so he would have a chance to run for the bushes. He also said that he shot at the motorcycle, and that these were warning shots to keep the officer from chasing him. He stated that he had taken the car in San Diego because he hated the Navy and wanted to get away from it. At the trial, witnesses who had seen the appellant on October 22, including the owner of the stolen car, the driver of the second car, and the officers who talked with him that evening, testified as to his actions and statements. All of them said he was not drunk when they saw him. There was evidence that he had been in the Navy about nine years, a part of the time on the reserve list; that during World War II he spent some months in two hospitals, being diagnosed as having "Occupational fatigue"; that after World War II he studied to become a mortician and passed the examination; that after working a while at that trade he had been recalled to active service; and that his work in the Navy was of a highly satisfactory character. Copies of his medical reports while in the Navy were introduced in evidence. Five doctors testified. One was a Navy doctor who explained the appellant's naval hospital records, and testified that he saw no evidence of psychosis in appellant's actions as shown by the records. Three were called by the appellant, two of them having been appointed by the court. The fifth was called in rebuttal by the prosecution. All of the defense doctors agreed that the appellant was not "psychotic" at the time they examined him or at the time of the trial. One of them testified that he showed signs of a psychopathic personality, meaning that when confronted with problems of everyday living he at times found himself incapable of adjusting himself to ordinary standards; and that in his opinion he was psychotic and did not know the difference between right and wrong at the times these crimes were committed. The main reason he gave for this opinion was that his behavior on the occasion in question was erratic and impulsive and he had nothing to gain from it. While he stated that the appellant's behavior after he stole the car was such as might be attributable to either a normal person or a psychotic one, he stated that he concluded that if the appellant had been sane he probably would have shot more accurately at the motorcycle officer. Another of these doctors, who had been appointed by the court, expressed the opinion that the appellant did not know the difference between right and wrong at the times in *31 question because he thought the appellant was probably then "suffering from an abnormal state of intoxication, pathological intoxication." He explained that pathological intoxication is a condition following the consumption of alcohol and associated with very abnormal or very unusual conduct whereas ordinary intoxication is associated with belligerent and aggressive acts. The third of these doctors, also appointed by the court, testified that he thought the appellant had a psychopathic personality "with psychotic episodes" and that at such times he believed the appellant was, quite likely, psychotic; that it was very difficult to say whether the appellant knew the difference between right and wrong at the time in question, that "possibly he did not know the difference between right and wrong but we have no way of accurately determining it"; that the appellant's behavior at the time in question might be compared to a person who is under the influence of alcohol or what might be called a pathological intoxication; and that while such people appreciate at the time that what they are doing is wrong they go ahead and carry out these antisocial acts. He admitted that the desire to have an automobile would constitute a motivation for stealing a car and that a hurried departure after stealing a car, a hit and run, and an attempt to escape from an officer after committing these crimes would not be psychotic. He finally testified that it was quite possible that the appellant knew that he was doing wrong and that part of his acts were caused by fear and panic. The doctor called in rebuttal by the prosecution testified, from an examination of the medical records of the appellant and in response to a hypothetical question based upon a summary of his actions which resulted in these charges, that he saw no evidence that the appellant was psychotic. He concluded, on the basis of the facts presented to him that the appellant was a psychopathic personality, and that while he had periods of emotional outbursts he was able to distinguish between right and wrong and appreciated the nature and quality of his acts during such periods. [1] The appellant first contends that the court erred in denying his motion to have the question of his present sanity submitted to a jury, under section 1368 of the Penal Code. At the hearing on this motion two psychiatrists testified. One of them testified that at the time he saw the appellant "I couldn't make a diagnosis of a psychosis within the meaning of the law." The other testified that the appellant is a psychopathic personality with antisocial trends, and that "I would *32 hesitate to state that he is psychotic at this particular time." While both doctors stated that the appellant was emotionally unstable neither would state positively that he considered the appellant unable to assist his attorneys in a rational defense of the case. With the permission of counsel the appellant was himself called to the stand and the judge asked him many questions concerning his past life and service in the Navy, all of which he answered with a rather unusual showing of clarity and intelligence. While conceding that the doubt here involved must be one arising in the mind of the trial judge (People v. Perry, 14 Cal. 2d 387 [94 P.2d 559, 124 A.L.R. 1123]) it is argued, citing People v. West, 25 Cal. App. 369 [143 P. 793], that where there are statements under oath of a credible person that the defendant is insane a doubt arises as a matter of law. In People v. West, the defendants committed the crime while confined in a state hospital for the insane, where they had been but for a short time, and the statement under oath there involved disclosed that the defendants could not, or would not, say anything to their attorneys about the facts of the case. No abuse of discretion here appears. [2] It is next contended that the court was guilty of prejudicial misconduct in questioning the witnesses for the appellant. While conceding the right of the court to ask a few questions of the witnesses, it is contended that this was here done so extensively as to indicate that the court assumed the guilt of the defendant, and that the court thus disclosed to the jury that he discredited the appellant's witnesses, had no confidence in his case, and believed him guilty. The argument on this point covers 63 pages of the appellant's briefs and it is unnecessary to review it in detail. Nearly all of these questions were asked of the expert witnesses. Most of them were asked after the cross-examination was finished, although some were asked prior thereto. It clearly appears from the record that these questions were asked for the purpose of bringing out material facts and disclosing the true situation. It was thus brought out that these experts had formed their opinions from short interviews with the appellant and his brother and from a reading of the Naval medical reports, and that they had not talked with anyone who had seen the appellant at or near the time the crimes were committed. These witnesses had all testified to the effect that the appellant was not in a settled state of insanity, that he had a psychopathic personality with antisocial trends at times, *33 and that on occasions he may have lapsed into a "psychotic episode." Some of them thought there were two or three such episodes in his past life, basing this upon his statements to them and the medical records from the Navy. The effect of their testimony was that they were of the opinion that he had had another such episode at the time these crimes were committed. The reasons they gave for these opinions were unsatisfactory on their face. The questions asked by the court were directed to the facts underlying these reasons, and to whether or not an effort had been made to learn all material facts which were available. In no instance did the court express his own opinion. The effect of the questions asked, of which complaint is made, was unfavorable to the appellant only because of the admissions made in the answers thereto which disclosed the weakness of the reasons given for the opinions expressed. After reading the entire record we are unable to view the questions thus asked as constituting either error or prejudice. This is particularly true in such a case as this where commission of the acts was conceded, and the sole question presented was whether or not the appellant was sane at the time. In the decision of that question the opinion of expert witnesses is important, but the weight to be given to such opinions depends on the reasons upon which they are based. To that end the full facts should be brought out, and it is not improper for the court to ask questions for that purpose when the evidence seems to indicate that important facts and considerations have been overlooked. The right to thus examine the alienists appointed by the court is expressly given by section 1027 of the Penal Code. The questions were not objected to at the time they were asked. Moreover, the court fully instructed the jury that he had not intended to express during the trial any opinion as to which witnesses were or were not worthy of belief, or what inferences should be drawn from their testimony; that if he had said or done anything which may have suggested that he was inclined to favor either party the jury was not to be influenced thereby; that in asking questions of certain witnesses his object had been merely to bring out in greater detail facts not fully covered; and that the jury was not to assume that because he had asked any questions of the witnesses he held any opinion as to the matters to which the questions related. *34 [3] It is contended that the court committed prejudicial error in making the following statement to the jury: "As I will instruct you later on, as I instruct you in every case in which experts testify, although they do testify the jury may disregard any testimony which any of them give, all the testimony any of them give, if you so desire. It is entirely up to you. You don't have to take into consideration their testimony. You may reject it. So it is entirely up to you whether you want to accept their testimony." It is argued that the court thus indicated his belief that the appellant's witnesses should be disregarded, and also told the jury that, in considering expert testimony, it was to be guided by its own whim or desire rather than by the rule of reason. The remarks in question were a part of an explanation made by the court immediately prior to giving his instructions. In arguing to the jury counsel for the appellant had contended that some of the doctors, having been appointed by the court, were the court's witnesses rather than witnesses for the appellant, and had endeavored to create an impression that their testimony was entitled to greater weight because of that fact. Before beginning his instructions the court referred to this matter and explained that he had appointed two psychiatrists as required by law; that neither side had to call them; that each side might call them if it wished; that "Whoever calls them, it is that person's witness"; that in this case four doctors, including the two appointed by the court, were called by the defense, and another doctor by the prosecution; and that either side was free to call any psychiatrist it desired. The court then used the language first above quoted. The instructions followed and at the appropriate time the court, as the appellant admits, gave a correct instruction on expert testimony following the language of section 1127b of the Penal Code. While the remarks complained of are not to be commended, and are in part erroneous, they were made for the purpose of correcting the impression left by an argument which had been improperly made. The remarks applied equally to all the expert testimony, and the jury was told that the real instruction on this subject would be given later, which was done. The oral recommendation made after the verdict was returned discloses that the jury did consider the expert testimony, and understood its real purport and effect. No reversible error appears. [4] It is argued that this was a close case as shown by the fact that the jury was out nearly eight hours, and that after *35 the verdict was read and the jury polled the foreman announced that "The jury would like to recommend special consideration." These facts seem to be explained by the testimony of the doctors. While their testimony was vague and unsatisfactory they agreed that the appellant had an unfortunate personality and that he was not entirely normal in every respect. Several of them testified that he needed help and some form of treatment, but none knew just what treatment should be given, and two expressed doubt of the success of any treatment. On the motion for a new trial the affidavits of two jurors were presented in which they said that the jury intended to indicate their feeling that the appellant was "in need of medical and psychiatric treatment." While the jury realized that the appellant was in need of treatment of some sort, it did not believe he was insane in the legal sense. While two of the doctors expressed the opinion that the appellant was insane at the time the acts were committed, and a third expressed the opinion that he was probably insane, the reasons they gave for those opinions were far from satisfactory and there was ample evidence to the contrary. Moreover, the doctors expressing that opinion testified that he was sane at the times they examined him and at the time of the trial, but thought he had had two or three psychotic periods in his past life and must have had such a period at the time in question. They had not seen or talked to anyone who had seen him near the time in question. Evidence of what he said and did at, before and shortly after that time strongly indicates that he then knew the difference between right and wrong and knew exactly what he was doing. The evidence amply supports the verdict, and when the entire record is considered the question of insanity, in a legal sense, does not appear to have been a close one. Complaint is further made with respect to several other instructions given and refused, which were admittedly correct in themselves. Neither error nor prejudice appears and the matters are not sufficiently important to require amplification. The judgment and order are affirmed. Griffin, J., and Mussell, J., concurred. A petition for a rehearing was denied July 2, 1951, and appellant's petition for a hearing by the Supreme Court was denied July 19, 1951. Carter, J., and Schauer, J., voted for a hearing. | 10-30-2013 | [
"105 Cal. App. 2d 27 (1951) 232 P.2d 564 THE PEOPLE, Respondent, v. CHARLES ARTHUR GREBE, Appellant. Docket No. 752. Court of Appeals of California, Fourth District. June 22, 1951. *28 Charles Elwyn Karpinski and Ann Wansley for Appellant. Edmund G. Brown, Attorney General, and Dan Kaufmann, Deputy Attorney General, for Respondent. BARNARD, P.J. The defendant was charged, in separate counts, with robbery, with failing to perform the duties required by section 480 of the Vehicle Code, and with assault with a deadly weapon with intent to commit murder. He pleaded not guilty, and not guilty by reason of insanity. Shortly before the trial he moved, under section 1368 of the Penal Code, for an order suspending proceedings, and for a jury trial on the question of his present sanity. After a hearing this motion was denied.",
"He then withdrew his plea of not guilty, and a jury found him sane at the time the offenses *29 were committed. He has appealed from the judgment and from an order denying his motion for a new trial. The appellant was a dental technician, first class, in the United States Navy, and was stationed in San Diego. On October 21, 1950, he purchased a gun, to be delivered the next day. On October 22, he talked about the gun several times to a waitress in a cafe, saying he did not know what to do with it as he did not have a permit to carry it. He got the gun about 4 p.m., and the waitress persuaded him to put it in his locker in a near-by locker club. He kept talking about the gun, told her he wanted to kill somebody, and took the gun out of the locker two or three times but she persuaded him to put it back.",
"He left this waitress about 6:15 p.m. Shortly after 7 p.m. he used the gun to take a car from the owner, in downtown San Diego, telling the owner that he needed the car because he had to go to Los Angeles. A few minutes later, while driving down Broadway, he struck and injured a boy who was crossing the street at a marked cross-walk, and drove on without stopping. At about 8 p.m. he left the stolen car in La Jolla, and persuaded the driver of another car to take him to a bar and buy him a drink. They then went for a drive during which the appellant took out the gun and told the other man he thought of killing him but would not do so because \"you bought me a drink.\"",
"When asked why he wanted to do that he replied that he had already killed two people that night. As they were returning to the business district of La Jolla an officer on a motorcycle approached from the rear, on his way to assist in a road block being set up to catch the appellant. When the appellant saw the officer approaching he stepped on the brake. The other man jumped out and yelled for help. The appellant also got out and, while the officer was resting his motorcycle on its stand, fired five shots two of which struck the officer. The appellant then ran up a hill and hid in some bushes.",
"He was arrested about an hour later as he approached a bus stop in La Jolla. On the way to the police station he expressed concern as to whether the officer he had shot had a family, and asked whether or not capital punishment was used in this state. He was questioned at the police station, his statements being taken down by a shorthand reporter. He gave a detailed statement of all that had occurred, claiming he was drunk, and expressed regret at having struck the boy. He said that when the motorcycle officer approached and the driver of the car yelled for *30 help he was desperate and shot so he would have a chance to run for the bushes. He also said that he shot at the motorcycle, and that these were warning shots to keep the officer from chasing him. He stated that he had taken the car in San Diego because he hated the Navy and wanted to get away from it.",
"At the trial, witnesses who had seen the appellant on October 22, including the owner of the stolen car, the driver of the second car, and the officers who talked with him that evening, testified as to his actions and statements. All of them said he was not drunk when they saw him. There was evidence that he had been in the Navy about nine years, a part of the time on the reserve list; that during World War II he spent some months in two hospitals, being diagnosed as having \"Occupational fatigue\"; that after World War II he studied to become a mortician and passed the examination; that after working a while at that trade he had been recalled to active service; and that his work in the Navy was of a highly satisfactory character. Copies of his medical reports while in the Navy were introduced in evidence. Five doctors testified.",
"One was a Navy doctor who explained the appellant's naval hospital records, and testified that he saw no evidence of psychosis in appellant's actions as shown by the records. Three were called by the appellant, two of them having been appointed by the court. The fifth was called in rebuttal by the prosecution. All of the defense doctors agreed that the appellant was not \"psychotic\" at the time they examined him or at the time of the trial. One of them testified that he showed signs of a psychopathic personality, meaning that when confronted with problems of everyday living he at times found himself incapable of adjusting himself to ordinary standards; and that in his opinion he was psychotic and did not know the difference between right and wrong at the times these crimes were committed. The main reason he gave for this opinion was that his behavior on the occasion in question was erratic and impulsive and he had nothing to gain from it.",
"While he stated that the appellant's behavior after he stole the car was such as might be attributable to either a normal person or a psychotic one, he stated that he concluded that if the appellant had been sane he probably would have shot more accurately at the motorcycle officer. Another of these doctors, who had been appointed by the court, expressed the opinion that the appellant did not know the difference between right and wrong at the times in *31 question because he thought the appellant was probably then \"suffering from an abnormal state of intoxication, pathological intoxication.\" He explained that pathological intoxication is a condition following the consumption of alcohol and associated with very abnormal or very unusual conduct whereas ordinary intoxication is associated with belligerent and aggressive acts.",
"The third of these doctors, also appointed by the court, testified that he thought the appellant had a psychopathic personality \"with psychotic episodes\" and that at such times he believed the appellant was, quite likely, psychotic; that it was very difficult to say whether the appellant knew the difference between right and wrong at the time in question, that \"possibly he did not know the difference between right and wrong but we have no way of accurately determining it\"; that the appellant's behavior at the time in question might be compared to a person who is under the influence of alcohol or what might be called a pathological intoxication; and that while such people appreciate at the time that what they are doing is wrong they go ahead and carry out these antisocial acts.",
"He admitted that the desire to have an automobile would constitute a motivation for stealing a car and that a hurried departure after stealing a car, a hit and run, and an attempt to escape from an officer after committing these crimes would not be psychotic. He finally testified that it was quite possible that the appellant knew that he was doing wrong and that part of his acts were caused by fear and panic. The doctor called in rebuttal by the prosecution testified, from an examination of the medical records of the appellant and in response to a hypothetical question based upon a summary of his actions which resulted in these charges, that he saw no evidence that the appellant was psychotic. He concluded, on the basis of the facts presented to him that the appellant was a psychopathic personality, and that while he had periods of emotional outbursts he was able to distinguish between right and wrong and appreciated the nature and quality of his acts during such periods. [1] The appellant first contends that the court erred in denying his motion to have the question of his present sanity submitted to a jury, under section 1368 of the Penal Code.",
"At the hearing on this motion two psychiatrists testified. One of them testified that at the time he saw the appellant \"I couldn't make a diagnosis of a psychosis within the meaning of the law.\" The other testified that the appellant is a psychopathic personality with antisocial trends, and that \"I would *32 hesitate to state that he is psychotic at this particular time.\" While both doctors stated that the appellant was emotionally unstable neither would state positively that he considered the appellant unable to assist his attorneys in a rational defense of the case. With the permission of counsel the appellant was himself called to the stand and the judge asked him many questions concerning his past life and service in the Navy, all of which he answered with a rather unusual showing of clarity and intelligence. While conceding that the doubt here involved must be one arising in the mind of the trial judge (People v. Perry, 14 Cal.",
"2d 387 [94 P.2d 559, 124 A.L.R. 1123]) it is argued, citing People v. West, 25 Cal. App. 369 [143 P. 793], that where there are statements under oath of a credible person that the defendant is insane a doubt arises as a matter of law. In People v. West, the defendants committed the crime while confined in a state hospital for the insane, where they had been but for a short time, and the statement under oath there involved disclosed that the defendants could not, or would not, say anything to their attorneys about the facts of the case. No abuse of discretion here appears.",
"[2] It is next contended that the court was guilty of prejudicial misconduct in questioning the witnesses for the appellant. While conceding the right of the court to ask a few questions of the witnesses, it is contended that this was here done so extensively as to indicate that the court assumed the guilt of the defendant, and that the court thus disclosed to the jury that he discredited the appellant's witnesses, had no confidence in his case, and believed him guilty. The argument on this point covers 63 pages of the appellant's briefs and it is unnecessary to review it in detail. Nearly all of these questions were asked of the expert witnesses. Most of them were asked after the cross-examination was finished, although some were asked prior thereto.",
"It clearly appears from the record that these questions were asked for the purpose of bringing out material facts and disclosing the true situation. It was thus brought out that these experts had formed their opinions from short interviews with the appellant and his brother and from a reading of the Naval medical reports, and that they had not talked with anyone who had seen the appellant at or near the time the crimes were committed. These witnesses had all testified to the effect that the appellant was not in a settled state of insanity, that he had a psychopathic personality with antisocial trends at times, *33 and that on occasions he may have lapsed into a \"psychotic episode.\"",
"Some of them thought there were two or three such episodes in his past life, basing this upon his statements to them and the medical records from the Navy. The effect of their testimony was that they were of the opinion that he had had another such episode at the time these crimes were committed. The reasons they gave for these opinions were unsatisfactory on their face. The questions asked by the court were directed to the facts underlying these reasons, and to whether or not an effort had been made to learn all material facts which were available.",
"In no instance did the court express his own opinion. The effect of the questions asked, of which complaint is made, was unfavorable to the appellant only because of the admissions made in the answers thereto which disclosed the weakness of the reasons given for the opinions expressed. After reading the entire record we are unable to view the questions thus asked as constituting either error or prejudice. This is particularly true in such a case as this where commission of the acts was conceded, and the sole question presented was whether or not the appellant was sane at the time. In the decision of that question the opinion of expert witnesses is important, but the weight to be given to such opinions depends on the reasons upon which they are based. To that end the full facts should be brought out, and it is not improper for the court to ask questions for that purpose when the evidence seems to indicate that important facts and considerations have been overlooked.",
"The right to thus examine the alienists appointed by the court is expressly given by section 1027 of the Penal Code. The questions were not objected to at the time they were asked. Moreover, the court fully instructed the jury that he had not intended to express during the trial any opinion as to which witnesses were or were not worthy of belief, or what inferences should be drawn from their testimony; that if he had said or done anything which may have suggested that he was inclined to favor either party the jury was not to be influenced thereby; that in asking questions of certain witnesses his object had been merely to bring out in greater detail facts not fully covered; and that the jury was not to assume that because he had asked any questions of the witnesses he held any opinion as to the matters to which the questions related. *34 [3] It is contended that the court committed prejudicial error in making the following statement to the jury: \"As I will instruct you later on, as I instruct you in every case in which experts testify, although they do testify the jury may disregard any testimony which any of them give, all the testimony any of them give, if you so desire.",
"It is entirely up to you. You don't have to take into consideration their testimony. You may reject it. So it is entirely up to you whether you want to accept their testimony.\" It is argued that the court thus indicated his belief that the appellant's witnesses should be disregarded, and also told the jury that, in considering expert testimony, it was to be guided by its own whim or desire rather than by the rule of reason. The remarks in question were a part of an explanation made by the court immediately prior to giving his instructions. In arguing to the jury counsel for the appellant had contended that some of the doctors, having been appointed by the court, were the court's witnesses rather than witnesses for the appellant, and had endeavored to create an impression that their testimony was entitled to greater weight because of that fact.",
"Before beginning his instructions the court referred to this matter and explained that he had appointed two psychiatrists as required by law; that neither side had to call them; that each side might call them if it wished; that \"Whoever calls them, it is that person's witness\"; that in this case four doctors, including the two appointed by the court, were called by the defense, and another doctor by the prosecution; and that either side was free to call any psychiatrist it desired. The court then used the language first above quoted. The instructions followed and at the appropriate time the court, as the appellant admits, gave a correct instruction on expert testimony following the language of section 1127b of the Penal Code. While the remarks complained of are not to be commended, and are in part erroneous, they were made for the purpose of correcting the impression left by an argument which had been improperly made. The remarks applied equally to all the expert testimony, and the jury was told that the real instruction on this subject would be given later, which was done. The oral recommendation made after the verdict was returned discloses that the jury did consider the expert testimony, and understood its real purport and effect.",
"No reversible error appears. [4] It is argued that this was a close case as shown by the fact that the jury was out nearly eight hours, and that after *35 the verdict was read and the jury polled the foreman announced that \"The jury would like to recommend special consideration.\" These facts seem to be explained by the testimony of the doctors. While their testimony was vague and unsatisfactory they agreed that the appellant had an unfortunate personality and that he was not entirely normal in every respect. Several of them testified that he needed help and some form of treatment, but none knew just what treatment should be given, and two expressed doubt of the success of any treatment. On the motion for a new trial the affidavits of two jurors were presented in which they said that the jury intended to indicate their feeling that the appellant was \"in need of medical and psychiatric treatment.\"",
"While the jury realized that the appellant was in need of treatment of some sort, it did not believe he was insane in the legal sense. While two of the doctors expressed the opinion that the appellant was insane at the time the acts were committed, and a third expressed the opinion that he was probably insane, the reasons they gave for those opinions were far from satisfactory and there was ample evidence to the contrary. Moreover, the doctors expressing that opinion testified that he was sane at the times they examined him and at the time of the trial, but thought he had had two or three psychotic periods in his past life and must have had such a period at the time in question. They had not seen or talked to anyone who had seen him near the time in question. Evidence of what he said and did at, before and shortly after that time strongly indicates that he then knew the difference between right and wrong and knew exactly what he was doing. The evidence amply supports the verdict, and when the entire record is considered the question of insanity, in a legal sense, does not appear to have been a close one.",
"Complaint is further made with respect to several other instructions given and refused, which were admittedly correct in themselves. Neither error nor prejudice appears and the matters are not sufficiently important to require amplification. The judgment and order are affirmed. Griffin, J., and Mussell, J., concurred. A petition for a rehearing was denied July 2, 1951, and appellant's petition for a hearing by the Supreme Court was denied July 19, 1951. Carter, J., and Schauer, J., voted for a hearing."
]
| https://www.courtlistener.com/api/rest/v3/opinions/1380164/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
— Order affirmed, without costs of this appeal to any party. All concur. (Appeal from an order denying claimants’ motion for permission to file claims against the State.) Present — Taylor, P. J., MeCurn, Vaughan, Piper and Wheeler, JJ. | 02-03-2022 | [
"— Order affirmed, without costs of this appeal to any party. All concur. (Appeal from an order denying claimants’ motion for permission to file claims against the State.) Present — Taylor, P. J., MeCurn, Vaughan, Piper and Wheeler, JJ."
]
| https://www.courtlistener.com/api/rest/v3/opinions/6118288/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 1 of 21
EXHIBIT EEE FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 2 of 21 RECEIVED NYSCEF: 01/17/2020
6835(0(&28572)7+(67$7(2)1(:<25. &2817<2)52&./$1' [
,QWKH0DWWHURIWKH$SSOLFDWLRQRI *UDFH%DSWLVW&KXUFKRI1DQXHW 25$/$5*80(175(48(67(' )RU$SSURYDOWR6HOO5HDO3URSHUW\ 3XUVXDQWWR1RWIRU3URILW&RUSRUDWLRQV/DZ DQG5HOLJLRXV&RUSRUDWLRQV/DZ ,QGH[1R
0(025$1'80,16833257 2)$%<¶6$33/,&$7,21 )25,17(59(17,21$1'$ 67$<2)352&((',1*6
[
$WHUHV%DLV<DDNRY$FDGHP\RI5RFNODQG ³$%<´ E\DQGWKURXJKLWVXQGHUVLJQHG
FRXQVHOUHVSHFWIXOO\PRYHVWRLQWHUYHQHSXUVXDQWWR&3/5DQGDVZHOODVIRUDQ
RUGHUXQGHU&3/5WRVWD\SURFHHGLQJVLQWKHDERYHFDSWLRQHGPDWWHUFRQFHUQLQJ WKH*UDFH
%DSWLVW&KXUFKRI1DQXHW¶V ³*%&´ YHULILHGSHWLWLRQIRUDSSURYDORIWKHVDOHRIUHDOSURSHUW\
ORFDWHGDW'HPDUHVW$YHQXH'HPDUHVW$YHQXH'HPDUHVW$YHQXH'HPDUHVW
$YHQXHDQG +LJKYLHZ$YHQXH1DQXHW1HZ<RUN WKH³3URSHUW\´ WRWKH7RZQRI
&ODUNVWRZQ WKH³7RZQ´
,1752'8&7,21$1')$&78$/%$&.*5281'
$%< VHHNV D OLPLWHG VWD\ RI WKHVH SURFHHGLQJV SHQGLQJ DSSHDO RI LWV $UWLFOH
3HWLWLRQZKLFK DOOHJHVWKDWWKH7RZQ¶VGLVFULPLQDWRU\DQGXQODZIXOFRQGXFWHYLVFHUDWHG$%<¶V
YDOLGDJUHHPHQWWRSXUFKDVHWKH3URSHUW\DWLVVXH$V$%<VRXJKWWRYLQGLFDWHLWVULJKWVWKURXJK
WKHSURSHUOHJDOSURFHVVHVWKH 7RZQVZRRSHGLQWRSXUFKDVHWKH3URSHUW\DQGHOLPLQDWHDQ\FKDQFH
DWGXHSURFHVVWRKDYH$%<¶VFDVHKHDUGDQGVHHNDSSURSULDWHUHOLHI:KLOH$%<LVUHOXFWDQWWR
LQWHUYHQH LQ WKLV PDWWHU LQ GHIHUHQFH WR *%& LW FDQQRW ORRN WKH RWKHU ZD\ JLYHQ WKH 7RZQ¶V
1 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 3 of 21 RECEIVED NYSCEF: 01/17/2020
PDQLIHVWO\XQMXVWDFWLRQV ,QGHHGDVWD\XOWLPDWHO\ZLOO LQXUHWRWKHEHQHILWRI*%&EHFDXVHDV
ZHH[SODLQEHORZ$%<LVSUHSDUHGWRSD\PRUHWKDQWKH7RZQ LIRQO\$%<FDQILQDOO\REWDLQWKH
SHUPLWVLWODZIXOO\DSSOLHGIRULQWKHILUVWSODFH,QWKDWHYHQW PRUHRYHU *%&ZLOOKDYHDQHZ
PDUNHW RI EX\HUV LQVWHDG RI D FRUQHUHG PDUNHW WKDW WKH 7RZQ FUHDWHG WKURXJK LWV PLVXVH RI LWV
]RQLQJSRZHUV$WERWWRP$%<PHUHO\DVNVWKLV&RXUWWRGHOD\WKHVDOHRIWKH3URSHUW\XQWLOLWV
DSSHDOLVKHDUGDQGGHFLGHGE\ WKH6HFRQG'HSDUWPHQW
$%< LVD1HZ<RUN6WDWHFKDUWHUHGHGXFDWLRQFRUSRUDWLRQSURYLGLQJERWKVHFXODU
DQG2UWKRGR[-HZLVKUHOLJLRXVLQVWUXFWLRQWRJLUOVLQJUDGHVSUH.WKURXJKVLQFH See $II
RI5DEEL$DURQ)LQN 3UHYLRXVO\$%<ZDVORFDWHGDW&KHUU\/DQHLQWKH9LOODJHRI
$LUPRQW $%<FXUUHQWO\RFFXSLHVWHPSRUDU\TXDUWHUVLQWKH9LOODJHRI1HZ+HPSVWHDG WKH³1HZ
+HPSVWHDG3URSHUW\´ Id. 7KRVHTXDUWHUVDUHPDGHXSRIWZRPRGXODUEXLOGLQJV Id. $%<¶V
SHUPLWWRUHPDLQRQWKH1HZ+HPSVWHDG3URSHUW\KDYLQJDOUHDG\EHHQH[WHQGHGH[SLUHVDWWKH
FRQFOXVLRQRIWKH VFKRRO\HDUDWZKLFKWLPHWKHPRGXODUEXLOGLQJVPXVWEHUHPRYHG Id.
7KHSHUPLWVFDQQRWEHUHQHZHGDQG$%<KDVSXWWKH1HZ+HPSVWHDG3URSHUW\XSIRUVDOH
2Q 2FWREHU $%< HQWHUHG LQWR D FRQWUDFW ZLWK *%& WR SXUFKDVH WKH
3URSHUW\ H[FHSWIRUWKHSDUVRQDJHORFDWHGDW'HPDUHVW$YHQXH Id. 8SRQHQWHULQJLQWR
WKH FRQWUDFW ZLWK *%& $%< DSSOLHG WR WKH 5RFNODQG (FRQRPLF $VVLVWDQFH &RUSRUDWLRQ
³5($&´ ²ZKLFK LV DGPLQLVWHUHG E\ WKH 5RFNODQG &RXQW\ ,QGXVWULDO 'HYHORSPHQW $JHQF\
³,'$´ ²IRUSHUPLVVLRQWRUHFHLYHWD[H[HPSWERQGVId. $%<KDG VXFFHVVIXOO\QDYLJDWHG
WKH,'$SURFHVVLQZKHQLWREWDLQHG PLOOLRQLQWD[H[HPSWERQGVWRIXQGWKHFRQVWUXFWLRQ
RIDVFKRROEXLOGLQJRQWKH1HZ+HPSVWHDG3URSHUW\WKRXJK$%<XOWLPDWHO\GLGQRWJRWKURXJK
ZLWK WKH FRQVWUXFWLRQ Id. 7KH 5($& VFKHGXOHG D SXEOLF KHDULQJ IRU -DQXDU\ DQG
SHQGLQJWKDWKHDULQJYRWHGWRWUDQVIHUWKDWHDUOLHUDSSURYDOWR$%<¶VSXUFKDVH RIWKH3URSHUW\ Id.
2 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 4 of 21 RECEIVED NYSCEF: 01/17/2020
$%<DOVRVHFXUHGD/HWWHURI,QWHQWIURP,QYHVWRUV%DQNH[SUHVVLQJWKHEDQN¶VLQWHUHVWLQ
SURYLGLQJ$%<ILQDQFLQJRIXSWRPLOOLRQIRUWKHSXUFKDVHRIWKH3URSHUW\ Id.
1HZVRI$%<¶VLQWHUHVWLQWKH3URSHUW\GLGQRWVLWZHOOZLWKYDULRXV YRFDOPHPEHUV
RI WKH 1DQXHW FRPPXQLW\ FHUWDLQ &ODUNVWRZQ UHVLGHQWV DQG ORFDO SROLWLFDO ILJXUHV ZKR FDOOHG
$%<¶VPRYHWR1DQXHWD³hostile invasion´ See $IIRI<HKXGDK/%XFKZHLW] ([V
:KLOHVRPHUHVLGHQWVFDUHIXOO\FRXFKHG WKHLUREMHFWLRQVLQWHUPVRI³LQFUHDVHGWUDIILF´ DQ
XQVXSSRUWHG FRQFHUQ JLYHQ $%<¶V VL]H DQGLWVRIIHU WR ZRUN ZLWK WKH7RZQ WR DOWHU LWV VFKRRO
KRXUV RWKHUVEDUHO\FRQWDLQHG WKHLUKRVWLOLW\VKRXWLQJDWUDXFRXVSXEOLFPHHWLQJV³go away, we
don’t want you, go back to Ramapo´ *%&¶VSDVWRU5HY:LOOLDP)UHQFKZDV DOVR SXEOLFO\
FULWLFL]HGIRUDJUHHLQJ WRVHOOWKH3URSHUW\WRDQ2UWKRGR[-HZLVKLQVWLWXWLRQ
$VGHWDLOHG EHORZ$%<HQGXUHGDILUHVWRUPRIORFDORSSRVLWLRQDQGGLVFULPLQDWLRQ
IURP WKH PRPHQW QHZV RI LWV SURSRVHG SXUFKDVH RI WKH 3URSHUW\ VXUIDFHG )RU H[DPSOH DW D
1RYHPEHU7RZQ %RDUG0HHWLQJ6XSHUYLVRU*HRUJH+RHKPDQQVWDWHGWKDWZKLOH³>W@KH
7RZQFDQQRWLQWHUIHUHZLWKDSULYDWHSURSHUW\PDWWHUEHWZHHQWZRSDUWLHV´WKH³7RZQZLOOVWURQJO\
HQIRUFHRXU]RQLQJODZVDQGRXUEXLOGLQJFRGHZLWKLQWKHHQWLUH7RZQRI&ODUNVWRZQ´ ([
6XSHUYLVRU+RHKPDQQDGGHGWKDW$%<¶VSXUFKDVHZRXOG³127RFFXULQWKH7RZQRI&ODUNVWRZQ
ZLWKRXW$//DSSURYDOV´ DQGWKDWLQHQIRUFLQJLWV]RQLQJFRGHWKH7RZQZRXOG³LVVXHVHDUFK
ZDUUDQWVLIQHFHVVDU\´ HPSKDVLVDGGHG Id. 3XEOLFFRPPHQWVRI7RZQ UHVLGHQWV DWWKLVVDPH
PHHWLQJ LQFOXGHGLQDSSURSULDWHTXHVWLRQVDERXWKRZ$%<¶VGHDQ5DEEL$DURQ)LQN ZDVJHWWLQJ
WKHPRQH\IRUWKH3URSHUW\DQGUKHWRULFDOTXHVWLRQVDERXWZKDWKDSSHQV³>L@IWKLV*RGDZIXOGHDO
GRHVJRWKURXJK´ Id. 7KHUHZHUH DOVR ad hominem VWDWHPHQWVDERXWQRWZDQWLQJ³1DQXHWWRWXUQ
$OOH[KLELWUHIHUHQFHVKHUHLQDUHWRWKH%XFKZHLW]$IILUPDWLRQ <:1 <HVKLYD :RUOG 1HZV Clarkstown Residents Attack Rabbi Over School Project 1RY KWWSV ZZZ\RXWXEHFRPZDWFK"Y =%4J )*+2DW
3 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 5 of 21 RECEIVED NYSCEF: 01/17/2020
LQWR5DPDSR´FDOOVIRUWKH7RZQWR³KDYHZRUNHGKDUGHU´WRSXUFKDVHWKH3URSHUW\ Id.
7KH ORFDO RSSRVLWLRQ DOVR IRUPHG D FLWL]HQV¶ JURXS FDOOHG ³&LWL]HQV 8QLWHG WR
3URWHFW2XU1HLJKERUKRRG´RU³&8321RI*UHDWHU1DQXHW´ ³&8321´ IRUWKHH[SUHVVSXUSRVH
RISUHYHQWLQJ$%<IURPRSHUDWLQJDQ2UWKRGR[-HZLVKVFKRROLQWKH7RZQ&8321LVDORFDO
FKDSWHURI&8321RI5RFNODQGDQRUJDQL]DWLRQQRWRULRXVIRULWVDQWL6HPLWLFDJHQGDWRSUHYHQW
2UWKRGR[-HZVIURPPRYLQJLQWRFRPPXQLWLHVWKURXJKRXW5RFNODQG&RXQW\XQGHUWKHIDoDGHRI
³RYHUGHYHORSPHQW´DQGSUHVHUYLQJWKH³FKDUDFWHU´RIWKHFRPPXQLW\
2Q 'HFHPEHU &8321 DOVR VWDUWHG D ³*R)XQG0H´ FDPSDLJQ ,W KDV
UDLVHG D WRWDO RI DV RI -DQXDU\ ([ &8321¶V YHU\ SXUSRVH DV SHU LWV
IXQGUDLVLQJSDJHZKLFKLWKDVVLQFHXSGDWHGLQDQDSSDUHQWDWWHPSWWRZKLWHZDVKLWVXQGHUO\LQJ
PLVVLRQZDVDQGLVWRSUHYHQW$%<¶VSXUFKDVHRIWKH3URSHUW\ ³1DQXHWKDVEHFRPHXQLWHGLQLWV
HIIRUWVWRHQVXUHWKDWWKHVDOHRIWKH*UDFH%DSWLVW&KXUFKLVRQHWKDWPDNHVVHQVHIRUWKHWRZQLWV
UHVLGHQWVDQGWKHLUFKLOGUHQ¶VIXWXUH´ ([WR([ ,QGHHGXSRQLWVHVWDEOLVKPHQW&8321
FUHDWHG D SHWLWLRQ RQ &KDQJHRUJ HQWLWOHG ³3HWLWLRQ DJDLQVW *UDFH %DSWLVW &KXUFK EHFRPLQJ D
VFKRRO´ $VRI'HFHPEHU WKHSHWLWLRQKDVEHHQVLJQHGE\SHRSOH ([
2QRUDERXW'HFHPEHU± DPLGWKLV KHDWHGSXEOLFRSSRVLWLRQWRWKHVDOHRI
WKH3URSHUW\WR$%<± WKH5($&FDQFHOHGWKHSXEOLFKHDULQJ,'$¶VH[HFXWLYHGLUHFWRUH[SODLQHG
WKDWKROGLQJDKHDULQJEHIRUH$%<KDGUHFHLYHGSUHOLPLQDU\SHUPLWVRUDSSURYDOVIURPWKH7RZQ
ZRXOGEH³SXWWLQJWKHFDUWEHIRUHWKHKRUVH´ :KLOH VXFKPHHWLQJVDUHW\SLFDOO\VSDUVHO\DWWHQGHG
WKH5($&NQHZ WKDW$%<¶VKHDULQJZDVOLNHO\WRDWWUDFWKXQGUHGV Id.
'HVSLWH WKH KRVWLOH FOLPDWH $%< SHUVLVWHG 2Q 'HFHPEHU LQ
5REHUW%UXPNanuet church $5M sale: Hearing shelved amid lack of approvals52&./$1':(67&+(67(5 -2851$/1(:6 'HF KWWSV ZZZORKXGFRPVWRU\QHZVORFDOURFNODQGQDQXHWQDQXHW FKXUFKVDOHKHDULQJVKHOYHG
4 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 6 of 21 RECEIVED NYSCEF: 01/17/2020
FRQIRUPDQFH ZLWK WKH SURFHGXUHV RI WKH 7RZQ¶V %XLOGLQJ 'HSDUWPHQW $%< VXEPLWWHG DQ
DSSOLFDWLRQWRWKH%XLOGLQJ'HSDUWPHQWIRUDSHUPLWWRPDNHVRPHQHHGHGLPSURYHPHQWVWRWKH
EXLOGLQJV WKH³%XLOGLQJ3HUPLW$SSOLFDWLRQ´
2Q-DQXDU\ &8321 KHOGDPHHWLQJDWDVFKRRORSHUDWHGE\WKH1DQXHW
8QLRQ )UHH 6FKRRO 'LVWULFW DW ZKLFK 6XSHUYLVRU +RHKPDQQ ERWK DWWHQGHG DQG RIIHUHG FORVLQJ
UHPDUNV $W WKLV PHHWLQJ &8321¶V FRXQVHO HQJDJHG LQ DQ LQGHSWK WUDLQLQJ VHVVLRQ DGYLVLQJ
&8321PHPEHUVDQG7RZQUHSUHVHQWDWLYHV± LQFOXGLQJ6XSHUYLVRU+RHKPDQQ± RQ KRZWRDSSHDU
³IDFLDOO\ QHXWUDO´²LQ RWKHU ZRUGV KRZ WR PDVN WKH RUJDQL]DWLRQ¶V XQGHUO\LQJ GLVFULPLQDWRU\
PRWLYHV&RXQVHOIRU&8321H[KRUWHG LWVPHPEHUVIRUH[DPSOH WKDWWKH\KDG³DGYHUVDULHV´QRW
³HQHPLHV´DQGWKDWWKH\VKRXOGQRWRSHUDWHRQWKHEDVLVRI³KDWH´%XWKHWROGWKHFURZG³RI\RX
FDQ¶WJHWWKDWKDWHRXWRI\RXUKHDUWWKHQSOHDVHNHHS\RXUPRXWKVKXW´ 2QLQIRUPDWLRQDQG
EHOLHIFRXQVHODGYLVHGWKHDWWHQGHHVWRIRFXVWKHLUFRPSODLQWV RQLQQRFXRXVWRSLFVOLNHWUDIILFDQG
DYRLGRYHUWFRPSODLQWVWKDWLWZDV2UWKRGR[-HZVWKDWZDQWHGWRSXUFKDVHDQGRSHUDWHWKH3URSHUW\
7KH QH[W GD\ LQ D SRVW RQ LWV RIILFLDO )DFHERRN SDJH WKH 5RFNODQG &RXQW\
FRPPLWWHH RI D PDMRU SROLWLFDO SDUW\ VXPPDUL]HG WKH &8321 PHHWLQJ DV D ³UHVSHFWIXO DQG
SURIHVVLRQDOKRXUSUHVHQWDWLRQWKDWIRFXVHGRQKRZWKHFRPPXQLW\FDQSURWHFWWKHPVHOYHVIURP
D hostile invasion´See ([ HPSKDVLVDGGHG $VLIWKDW[HQRSKRELFVPHDU QHHGHGHODERUDWLRQ
DFRPPHQWHUGRXEOHGGRZQRQWKHKDWUHG
/HW¶VDOOEHKRQHVWDQGYHUEDODERXWWKHWHUP³KRVWLOHLQYDVLRQ´ :KLFKLV PD\EHDELWKDUVKEXWQRWE\DORW &DQZHDOOVD\WKLVRXWORXGWRJHWKHU" 7KHUHVLGHQWVRI1DQXHWDQG2UDQJHWRZQGRQRWZDQWWRVHHRXUWRZQVRQHV ZH SD\KLJKWD[HVWROLYHLQIRUZRQGHUIXOVFKRROVSDUNVOLEUDULHVHWFRQHV WKDWZHKDYHDOOSDLGIRUKRPHVLQRQHRIWKHFRVWOLHVWSODFHVLQWKHQDWLRQ RYHUFRPHZLWK<HVKLYDVDQGWKHSULYDWHKRPHVWKDWDUHQRWWD[HGEHFDXVH WKH\DUHDOO\HVKLYDVQRW UHVSRQVLEOHIRUWD[HVEXWZHSD\IRUWKHLUEXVVLQJ
&ODUNVWRZQ± :KDW7KH\'RQ¶W:DQW <RXWR.QRZCUPON’s Attorney Steven Mogel Discusses Possible Litigation )$&(%22. -DQ KWWSV ZZZIDFHERRNFRP&7:7':<7.YLGHRVDW
5 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 7 of 21 RECEIVED NYSCEF: 01/17/2020
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¶P FOHDUO\ QRW VSHDNLQJIRUDOOEXW,DPVXUHDODUJHPDMRULW\
([ HPSKDVLVDGGHG 7KHSRVWDQGUHVSRQVHUHPDLQRQWKH)DFHERRNSDJH
7KDWYHU\VDPHGD\WKH7RZQ¶V%XLOGLQJ,QVSHFWRUGHQLHG$%<¶V%XLOGLQJ3HUPLW
$SSOLFDWLRQ WKH³'HQLDO/HWWHU´ See ([ +HVXPPDULO\FRQFOXGHGWKDWEHFDXVH WKH%XLOGLQJ
'HSDUWPHQWKDGQRUHFRUGVRID1HZ<RUN6WDWH)LUH,QVSHFWLRQRQWKH3URSHUW\VLQFH *%&¶V
VFKRROXVHDWWKH3URSHUW\KDGFHDVHGXQGHU&ODUNVWRZQ7RZQ&RGHVHFWLRQ & Id. $QG
EHFDXVHWKH%XLOGLQJ,QVSHFWRULQWHUSUHWHG&ODUNVWRZQ7RZQ&RGHVHFWLRQ , WRFUHDWH
QHZXVHUHTXLUHPHQWV ± DGHWHUPLQDWLRQWKDWLVZKROO\HUURQHRXVDQGFRQWUDU\WRDSSOLFDEOHODZ±
KHFRQFOXGHGWKDW³>D@YDULDQFHIURPWKH>=%$@ZRXOGEHUHTXLUHGIRUWKHXVHRIWKHVFKRRORI
JHQHUDOLQVWUXFWLRQ´ Id. +RZHYHUWKHUHFRUGZDVFOHDUWKDW*%&KDGRSHUDWHG DVFKRRORQWKH
3URSHUW\FRQWLQXRXVO\VLQFH See ([WR([1RWDEO\ WKH7RZQKDVHIIHFWLYHO\FRQFHGHG
LWVXQODZIXOPLVDSSOLFDWLRQRIWKHODZHYLGHQFHGE\LWV VXEVHTXHQWDWWHPSW DQGIDLOXUH WRDPHQG
LWV]RQLQJFRGHWRDOLJQZLWKLWVGHVLUHG PLVDSSOLFDWLRQ
6SHFLILFDOO\LQKLV'HQLDO/HWWHUWKH%XLOGLQJ,QVSHFWRUVWDWHG
$ YDULDQFH IURP WKH &ODUNVWRZQ =RQLQJ %RDUG RI $SSHDOV ZRXOG EH UHTXLUHGIRUWKHXVHRIWKHVFKRRORIJHQHUDOLQVWUXFWLRQ2XUUHFRUGVVKRZ WKH ODVW UHTXLUHG 1< 6WDWH )LUH 6DIHW\ LQVSHFWLRQ IRU D VFKRRO RI JHQHUDO LQVWUXFWLRQ RQ WKLV SURSHUW\ ZDV FRQGXFWHG RQ 'HFHPEHU &ODUNVWRZQ 7RZQ &RGH VHFWLRQ & QRQFRQIRUPLQJ XVH ³'LVFRQWLQXDQFHRIXVH,IDFWLYHDQGFRQWLQXRXVRSHUDWLRQVDUHQRWFDUULHG
6 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 8 of 21 RECEIVED NYSCEF: 01/17/2020
RQZLWKUHVSHFWWRDQRQFRQIRUPLQJXVHGXULQJDFRQWLQXRXVSHULRGRIRQH \HDUWKHEXLOGLQJRUODQGZKHUHVXFKQRQFRQIRUPLQJXVHSUHYLRXVO\H[LVWHG VKDOO WKHUHDIWHU EH RFFXSLHG DQG XVHG RQO\ IRU D FRQIRUPLQJ XVH´ &ODUNVWRZQ7RZQ&RGHVHFWLRQ , DGGLWLRQDOUHJXODWLRQV$OOXVHV RWKHUWKDQVLQJOHIDPLO\UHVLGHQFHVVKDOOKDYHPLQLPXPIURQWDJHRIIHHW DQGDFFHVVWRHLWKHUDVWDWHRUFRXQW\PDMRURUVHFRQGDU\URDGDVFODVVLILHG RQWKH7RZQ2IILFLDO0DS
([
)ROORZLQJWKHGHQLDORILWV %XLOGLQJ3HUPLW$SSOLFDWLRQ$%<VXEPLWWHGD WLPHO\
DSSHDOWRWKH&ODUNVWRZQ=RQLQJ%RDUGRI$SSHDOV WKH³=%$´ RQ0DUFK See ([
$%<¶VDSSHDOFRQWHQGHG WKDWWKH%XLOGLQJ,QVSHFWRU¶VDSSOLFDWLRQRILWV]RQLQJFRGHWR$%<ZDV
ZKROO\LPSURSHUDQGFRQWUDU\WRDSSOLFDEOHODZId. $%< DOWHUQDWLYHO\VRXJKWDQDUHDYDULDQFH
IURP WKH UHTXLUHPHQWV RI 6HFWLRQ , DOORZLQJ WKHXVH RI WKH 3URSHUW\ DV D VFKRRO DQG
KRXVHRIZRUVKLSZLWKRXWKDYLQJIURQWDJHRQDQGDFFHVVWRD³DVWDWHRUFRXQW\PDMRURUVHFRQGDU\
URDG´Id. $%<PDGHFOHDUWKDWLWKDG QRSODQVWRHUHFWQHZEXLOGLQJVDGGRQWRWKHH[LVWLQJ
EXLOGLQJVRUGHPROLVKWKHH[LVWLQJEXLOGLQJV Id. ,WDOVRKDG QRSODQVWRDOWHUWKHH[LVWLQJSDUNLQJ
DUHDRUVWUHHWJULG $%<H[SODLQHGWKDWRWKHUWKDQDIHZFRVPHWLFFKDQJHVDQGWKHUHPRYDORIQRQ
-HZLVKUHOLJLRXVV\PEROVLWZLVKHGRQO\WRPRGLI\WKHLQWHULRUWRPHHWLWVHGXFDWLRQDOQHHGV Id.
7KHonly FKDQJHWRWKHQHLJKERUKRRGZRXOGEHWKHXVHRIDVFKRROEXLOGLQJDQGLWVDFFRPSDQ\LQJ
VDQFWXDULHVE\D-HZLVKHQWLW\UDWKHUWKDQD&KULVWLDQRQH Id.
0HUHGD\VDIWHU $%<¶VDSSHDOLWIDFHGDGGLWLRQDOGLVFULPLQDWRU\EDFNODVK &HUWDLQ
UHVLGHQWV± ZKRXSRQLQIRUPDWLRQDQGEHOLHIZHUH&8321PHPEHUV± WRRNWRVRFLDOPHGLDWR
YRLFHWKHLUKDWUHG
x ³They are nothing but parasites! 7KH\GRQ¶WZDQWWRIROORZWKHUXOHVthey are disgusting! 8QIRUWXQDWHO\ ZKDW >@ VDLG ZDV SUHWW\ FORVH WR ZKDW ZLOO KDSSHQ7KH\ZLOOKLUHODZ\HUVIRUWKHcult DQGWLUHOHVVO\GUDJLWWKURXJKWKH FRXUWV XQWLO WKH\ JHW WKH GHVLUHG UHVXOWV PRQVH\FRZER\V SDUDVLWHV KRSHWKH\DOOJHWPHDVOHV´ HPSKDVLVDGGHG
x ³<RXEHWWHUEHIRUHWKH>\@infest 3HDUO5LYHU*RRGOXFN´ HPSKDVLVDGGHG
7 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 9 of 21 RECEIVED NYSCEF: 01/17/2020
x ³,ZDVZDLWLQJIRUWKLV:KDW5RFNODQG&RXQW\QHHGVLVDQDZHVRPHODZ\HU WRDUJXHEHIRUHWKH6XSUHPH&RXUWWKDW5/8,3$LVXQFRQVWLWXWLRQDO$QG ZHQHHGWKDWODZ\HUQRZ´
x ³2IFRXUVHWKH\DUHDSSHDOLQJ2IFRXUVHWKH\EODPHWKH1DQXHWFRPPXQLW\ 2IFRXUVHWKH\ KLUHG5/8,3$ODZ\HUV1DQXHWZHOFRPHWRWKHJDPH\RX ZLOOEHODEHOHGDQWL6HPLWLF<RXZLOODOOEHKDUDVVHGDQGLQWLPLGDWHGRQ VRFLDOPHGLDDW\RXUZRUNSODFHDQGDWSXEOLFIRUXPV´
([ HPSKDVLV DGGHG
2Q 0DUFK HYHQ WKRXJK $%<¶V DSSHDO LQFOXGHG DOO HOHPHQWV DQG
GRFXPHQWVUHTXLUHGE\WKH7RZQ&RGHDQGWKH=%$¶VRZQSXEOLVKHGUXOHVWKH=%$LQH[SOLFDEO\
GHFOLQHGWReven schedule a hearing,QVWHDGLW SODFHGRQ$%<WKHDGGLWLRQDOEXUGHQRIVXEPLWWLQJ
DVXUYH\RIWKH3URSHUW\ D UHTXLUHPHQWWKDWZDVXQQHFHVVDU\EXW ZLWKZKLFK $%<FRPSOLHGDW
JUHDWH[SHQVH See ([V
$V D GLUHFW UHVXOW RI WKH %XLOGLQJ ,QVSHFWRU¶V GHQLDO RI $%<¶V %XLOGLQJ 3HUPLW
$SSOLFDWLRQDQGWKH=%$¶VXQGXHGHOD\LQ VFKHGXOLQJ DKHDULQJ ,QYHVWRUV%DQNUHYRNHGLWV/HWWHU
RI,QWHQWWRSURYLGH$%<ZLWKILQDQFLQJWRSXUFKDVHWKH3URSHUW\See )LQN$II $%<ZDV
XQDEOHWRREWDLQDOWHUQDWLYHPHDQV RIILQDQFLQJWKHDFTXLVLWLRQRIWKH3URSHUW\ EHFDXVHOHQGHUV
IHDUHGWKDW$%<ZRXOGQRWEHDEOHWRRYHUFRPHWKH7RZQ¶VPDQLIHVWKRVWLOLW\ DQGFOHDULQWHUHVWLQ
SUHYHQWLQJDQ2UWKRGR[-HZLVKVFKRROIURP³LQYDGLQJ´WKHLU7RZQ$VDUHVXOW$%<ZDVXQDEOH
WRFORVHE\WKHWLPHRIWKHHVVHQFHGDWHVHWE\ *%&DQGWKHFRQWUDFWZDVWHUPLQDWHG
2Q0D\ *%&ILOHGDOHWWHUZLWKWKH=%$³UHYRN>LQJ@DQ\FRQVHQWWRODQG
XVH DSSOLFDWLRQV´ UHODWLQJ WR WKH 3URSHUW\ See ([ 7KDW VDPH GD\ 6XSHUYLVRU +RHKPDQQ
2Q0D\ $%<UHFHLYHGDOHWWHUIURP*%&WHUPLQDWLQJWKHFRQWUDFW See )LQN$II see also ([ &RQWUDU\ WR WKH3HWLWLRQDWQRSRLQWGLG$%<VHHNWRWHUPLQDWHRUFDQFHOWKHFRQWUDFWZLWK*%&QHLWKHURQLWVRZQ DFFRUGRUWKURXJKLWVFRXQVHO See )LQN$II ³$WQRSRLQWGLG,FDQFHOWKHFRQWUDFWRUGLUHFWRUDXWKRUL]HDQ\ DJHQWRIPLQHRU$%<¶VWRFDQFHOWKHFRQWUDFW´
8 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 10 of NYSCEF: RECEIVED 21 01/17/2020
SXEOLFO\VWDWHG WKDW³WKH>7@RZQKDVLQWHUHVWLQWKHSURSHUW\DQGZLOOHYDOXDWHLWVRSWLRQVLQWKH
FRPLQJZHHNV´
2Q-XQH 6XSHUYLVRU+RHKPDQQOHIWQRGRXEWDERXWWKH7RZQ¶VLQWHQWLRQV
³,DPH[FLWHGDERXWWKHSURVSHFWVIRUWKHDFTXLVLWLRQRI*UDFH%DSWLVW&KXUFK$OORSWLRQVDUH
RQWKHWDEOHDQG,ORRNIRUZDUGWRWKHLQYROYHPHQWRIWKHVFKRROGLVWULFWDQGSRWHQWLDOO\WKHSULYDWH
VHFWRUWRFUHDWHVRPHWKLQJXQLTXHIRUWKHEHQHILWRIDOOUHVLGHQWV´
$OVR RQ -XQH $%< ILOHG D OHWWHU ZLWK WKH =%$ REMHFWLQJ WR *%&¶V
ZLWKGUDZDORIFRQVHQWDQGXUJLQJWKH=%$WRVFKHGXOHDKHDULQJ ([ $%<DUWLFXODWHGLQLWV
OHWWHU WKDWWKH7RZQ¶VLQWHUIHUHQFHZDVWKHGLUHFWFDXVHRI$%<ORVLQJLWVILQDQFLQJUHVRXUFHV Id.
$%<DWWDFKHGDVSHFLDOPHPRUDQGXPRIODZFRQFHUQLQJUHOLJLRXVGLVFULPLQDWLRQIURPLWVpro bono
DWWRUQH\VZKLFKIRFXVHGXSRQKRZWKH%XLOGLQJ,QVSHFWRU¶VGHQLDORIDEXLOGLQJSHUPLWLQIULQJHG
XSRQ$%<¶VUHOLJLRXVOLEHUWLHV ZDVULIHZLWKLQYLGLRXVGLVFULPLQDWLRQDQGUDQFRQWUDU\WR6HFRQG
'HSDUWPHQWODZUHTXLULQJPXQLFLSDOLWLHVDQG]RQLQJDXWKRULWLHVWRUHDVRQDEO\DFFRPPRGDWHWKH
IUHHH[HUFLVHRIUHOLJLRQZKLFKLVLQKHUHQWO\EHQHILFLDO
5REHUW %UXP Nanuet: Grace Baptist Church terminates sale to Ateres Bais Yaacov 52&./$1':(67&+(67(5 -2851$/1(:6 0D\ KWWSV ZZZORKXGFRPVWRU\QHZVORFDOURFNODQGQDQXHW JUDFHEDSWLVW FKXUFKWHUPLQDWHVVDOH\HVKLYDQDQXHW 5REHUW%UXPNanuet: Town, school district exploring Grace Baptist Church purchase52&./$1':(67&+(67(5 -2851$/ 1(:6 -XQH KWWSV ZZZORKXGFRPVWRU\QHZVORFDOURFNODQGQDQXHW QDQXHWWRZQ VFKRROGLVWULFWH[SORULQJJUDFHEDSWLVWFKXUFKSXUFKDVH Id. see, e.g.East End Eruv Ass’n, Inc. v. Town of Southampton1R:/DW 1< 6XS&W 6XIIRON&W\-XQH FRQFOXGLQJWKDW³JUHDWHUIOH[LELOLW\LVUHTXLUHGLQHYDOXDWLQJDQDSSOLFDWLRQIRU DUHOLJLRXVXVH´DQGWKDW]RQLQJERDUGVKDYH³DQDIILUPDWLYHGXW\WRVXJJHVWPHDVXUHV WRDFFRPPRGDWHWKH SODQQHGUHOLJLRXVXVH FLWDWLRQRPLWWHG Smith v. Cmty. Bd. No. 140LVFG 1<6XS&W 4XHHQV &W\ aff’d$'G G'HS¶W FRQFOXGLQJWKDW³1HZ<RUNFRXUWVKDYHORQJUHFRJQL]HGWKH SULQFLSOHRIDFFRPPRGDWLRQ´DQG³KDYHUHSHDWHGO\KHOGWKDWE\WKHLUYHU\QDWXUHUHOLJLRXVLQVWLWXWLRQVDUHEHQHILFLDO WRWKHSXEOLFZHOIDUHDQGFRQVHTXHQWO\SURSRVHGUHOLJLRXVXVHVVKRXOGEHDFFRPPRGDWHG´ see also Westchester Reform Temple v. Brown1<G UHYHUVLQJ3ODQQLQJ&RPPLVVLRQ¶VUHMHFWLRQRI V\QDJRJXH¶VH[SDQVLRQSODQFRQFOXGLQJWKDW³XQGHUWKHJXLVHRIUHDVRQDEOHUHJXODWLRQ>WKH3ODQQLQJ&RPPLVVLRQ@ KDVXQFRQVWLWXWLRQDOO\DEULGJHGUHOLJLRXVIUHHGRP´ St. Thomas Malankara Orthodox Church, Inc., Long Island v. Bd. of Appeals, Town of Hempstead$'G± G'HS¶W ]RQLQJERDUG¶VGHQLDORIFKXUFK¶V DSSOLFDWLRQWRZDLYHFHUWDLQRIIVWUHHWSDUNLQJUHTXLUHPHQWVZDV³DUELWUDU\FDSULFLRXVDQGDQDEXVHRIGLVFUHWLRQDQG ZDVSURSHUO\DQQXOOHG´EHFDXVHERDUGZDVUHTXLUHGWRUHFRPPHQGRWKHUDOWHUQDWLYHVWR³DFFRPPRGDWHSURSRVHG
9 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 11 of NYSCEF: RECEIVED 21 01/17/2020
$%< HPSKDVL]HG WKDW WKH =%$ ZDV VWLOO ODZIXOO\ REOLJDWHG WR FRQWLQXH WR KHDU
$%<¶VDSSHDOEHFDXVHGHFODUDWRU\UHOLHIRQWKHPLVDSSOLFDWLRQRI7RZQ&RGHVHFWLRQV &
DQG , DQGRU D JUDQW RI DQ DUHD YDULDQFH ZRXOG QHFHVVDULO\ ELQG WKRVH LQWHUHVWHG LQ
SXUFKDVLQJWKH3URSHUW\ LQWKHIXWXUH ZKHWKHUWKDWEH$%<RURWKHUZLVH DQGZRXOGDOVRDIIHFW
RWKHU SURSHUWLHV WR ZKLFK WKHVH VHFWLRQV RI WKH 7RZQ &RGH KDYH EHHQ RU ZLOO EH VLPLODUO\
PLVDSSOLHG ([ $%<QRWHGWKDWWKLVZDVHVSHFLDOO\WUXHEHFDXVHWKH7RZQ¶VRZQDFWLRQV
FRQYHQLHQWO\OHIWitself DVRQHRIWKHIHZLIQRWWKHRQO\YLDEOH SXUFKDVHUVRIWKH3URSHUW\ Id.
$%<IXUWKHUFRQWHQGHGWKDWLWVDSSHDODQGDSSOLFDWLRQIRUDQDUHDYDULDQFHZDVQRW
PRRWEHFDXVHWKHQDWXUHRIWKHDFWLRQLVFDSDEOHRIUHSHWLWLRQ\HWHYDGLQJUHYLHZ Id. $%<DUJXHG
WKDW SXEOLFSROLF\VKRXOGQRWLQFHQWLYL]HWRZQVWR HQJDJHLQGHOD\DQG[HQRSKRELFWDFWLFV Id.
:HUHLWRWKHUZLVH WRZQVDQGWKHLU]RQLQJRIILFLDOVFRXOGGRH[DFWO\ZKDW&ODUNVWRZQKDVGRQH
KHUH GHOD\SURFHHGLQJVPLVDSSO\WKHLU]RQLQJRUGLQDQFHVFUHDWHXQFHUWDLQW\LQWKHPDUNHWSODFH
DQGFDXVHLQWHUHVWHGSDUWLHVWRORVHWKHLUSURVSHFWLYHRUFXUUHQWSURSHUW\LQWHUHVWVbefore H[KDXVWLQJ
WKHLUUHVSHFWLYH]RQLQJDSSHDOV Id.
$%<DOVRHPSKDVL]HGWKDW± DVJXDUDQWHHGE\WKH)LUVW$PHQGPHQWRIWKH86
&RQVWLWXWLRQ DQG $UWLFOH , 6HFWLRQ RI WKH 1HZ <RUN 6WDWH &RQVWLWXWLRQ ± WKH =%$ ZDV
DIILUPDWLYHO\UHTXLUHGWRUHDVRQDEO\DFFRPPRGDWH$%<¶VIUHHH[HUFLVHULJKWVWKURXJKLWVLQWHQGHG
UHOLJLRXVXVHZKLOHPLWLJDWLQJDGYHUVHHIIHFWVRQVXUURXQGLQJFRPPXQLW\WRWKHJUHDWHVWH[WHQWSRVVLEOH´ Richmond v. City of New Rochelle Bd. of Appeals on Zoning$'G± G'HS¶W DIILUPLQJJUDQWRIDUHD YDULDQFHDQGKROGLQJWKDW]RQLQJERDUGPXVWPDNH³HYHU\HIIRUWWRDFFRPPRGDWH>D@UHOLJLRXVXVH´ Harrison Orthodox Minyan, Inc. v. Town Bd. of Harrison $'G± G'HS¶W DWRZQERDUG¶V XQTXDOLILHGGHQLDORIDVSHFLDOH[FHSWLRQXVHSHUPLWZDV³DUELWUDU\FDSULFLRXVDQGDQDEXVHRIGLVFUHWLRQ´ZKHUHLW GLGQRWPDNHDQ\DWWHPSWVWRDFFRPPRGDWHUHOLJLRXVXVH Jewish Reconstructionist Synagogue of the N. Shore, Inc. v. Levitan$'G G'HS¶W aff’d1<G ³IDFLOLWLHVIRUUHOLJLRXVRUHGXFDWLRQDO XVHVDUHE\WKHLUYHU\QDWXUHFOHDUO\LQIXUWKHUDQFHRIWKHSXEOLFPRUDOVDQGJHQHUDOZHOIDUH WKDWGLIIHUHQW FRQVLGHUDWLRQVDSSO\WRWKHP DQGWKDWFRQVLGHUDWLRQVZKLFKPLJKWSURSHUO\FRQWUROFRPPHUFLDOVWUXFWXUHVPD\QRW FRQWURORUHYHQDSSO\WRUHOLJLRXVVWUXFWXUHV´ FLWDWLRQV DQGLQWHUQDOTXRWDWLRQV RPLWWHG
10 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 12 of NYSCEF: RECEIVED 21 01/17/2020
RSHUDWLRQRID-HZLVKVFKRRORQWKH3URSHUW\ Id. $%<DOVRUHPLQGHGWKH=%$WKDWLILWSODFHV
$%< RQ XQHTXDO WHUPV ZLWK RWKHU DSSOLFDQWV DQGRU VXEVWDQWLDOO\ EXUGHQV $%<¶V UHOLJLRXV
H[HUFLVHLWZRXOGVXEMHFWWKH7RZQWRSRWHQWLDOYLRODWLRQVRIERWKWKH)LUVW$PHQGPHQWDQGWKH
5HOLJLRXV/DQG8VHDQG,QVWLWXWLRQDOL]HG3HUVRQV$FW ³5/8,3$´ Id.
$OO WKH ZKLOH WKH DQWL6HPLWLF UDQWV IURP ORFDO UHVLGHQWV DQG &8321 PHPEHUV
FRQWLQXHG XQDEDWHG )RUH[DPSOHRQHUHVLGHQWSRVWHGRQ)DFHERRN
³:H KDYH ODZV DQG WKRVH ODZV SURWHFW WKH SHRSOH IURP WKH ULGLFXORXV VLWXDWLRQWKH\KDYHFUHDWHG7DNHDULGHRUUHVHDUFKKRZPDQ\WLPHVWKHVH VR FDOOHG UHOLJLRXV KDYH EHHQ FDXJKW GRLQJ FULPHV RU YLRODWLQJ ODZV $ERXWWLPHWKLVKDSSHQHGDQGWKHODZDELGLQJFLWL]HQVZLOOQRWVWDQGIRUDQ\ IDOVHODZVXLWRUSUHVVXUHWRKDYHDreligious phony school!!! Go back to Europe or whatever country your from!!! 7KLVLV1DWLYH$PHULFDQODQG DQG WKH GLVUHVSHFW \RX VHH WKHVH VWHUHRW\SHV QRW MXVW +DVLGLF EXW RWKHUV FRPLQJKHUHWRWDNHDGYDQWDJHLWVULGLFXORXVDQGXQDFFHSWDEOH´
([ HPSKDVLVDGGHG
2Q -XQH QRWZLWKVWDQGLQJ WKH 7RZQ¶V DIILUPDWLYH GXW\ WR UHDVRQDEO\
DFFRPPRGDWH UHOLJLRXV ODQG XVH 6XSHUYLVRU +RHKPDQQ WROG WKH ORFDO SUHVV WKDW ³>Z@H ZLOO
FRQWLQXHWRYLJRURXVO\HQIRUFHRXUEXLOGLQJDQG]RQLQJFRGHVLUUHVSHFWLYHRIWKHEDFNJURXQGRI
WKHRZQHU´DQGWKDW$%<³ZDVWUHDWHGMXVWOLNHDQ\RWKHUDSSOLFDQW´
2Q-XQH FRXQVHOIRU$%<VXEPLWWHGDQRWKHUOHWWHUWRWKH=%$DGGUHVVLQJ
WKH=%$¶VFRQWLQXLQJHIIRUWVWRLQRUGLQDWHO\GHOD\$%<¶VDSSHDODQGSUHVFLHQWO\QRWLQJWKDWVXFK
WDFWLFVZRXOG VHUYHWR DOORZDJRYHUQPHQWHQWLW\WRSXUFKDVHWKH3URSHUW\DWDGLVFRXQW ([
$%<¶V OHWWHU UHPLQGHG WKH =%$ WKDW XQGXH GHOD\ in and of itself FDQ HYLQFH LQYLGLRXV
5REHUW %UXP Jewish academy alleges discrimination by Clarkstown in Grace Baptist application 52&./$1':(67&+(67(5 -2851$/ 1(:6 -XQH KWWSV ZZZORKXGFRPVWRU\QHZVORFDOURFNODQGQDQXHW MHZLVKVFKRRODOOHJHVGLVFULPLQDWLRQYV FODUNVWRZQJUDFHEDSWLVWDSSOLFDWLRQ
11 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 13 of NYSCEF: RECEIVED 21 01/17/2020
GLVFULPLQDWLRQ &RXQVHOXUJHGWKH=%$WRFHDVHLWVGHOD\DQGUHYLHZDQGUHVSRQGWR$%<¶V
VXEPLVVLRQDVH[SHGLWLRXVO\DVSRVVLEOH
2Q-XO\ $%<UHFHLYHGDOHWWHUIURP:LOVRQ(OVHU0RVNRZLW](GHOPDQ
'HFNHU//3WKH7RZQ¶VRXWVLGHFRXQVHOLQGLFDWLQJWKDWWKH=%$³ZLOOQRWHQWHUWDLQDQ\DSSHDO
E\ >$%<@ZLWKUHVSHFWWRWKH>3URSHUW\@´SXUSRUWHGO\EHFDXVH³WKHFRQWUDFWIRUWKHVDOHRIWKH
SURSHUW\WR>$%<@KDVEHHQWHUPLQDWHGDQG>$%<¶V@ULJKWWRPDNHDQ\DSSOLFDWLRQWRWKH7RZQ
FRQFHUQLQJWKHSURSHUW\KDVEHHQUHYRNHG´ ([ 7KH 7RZQWRRN WKHOHJDOO\XQVXSSRUWDEOH
SRVLWLRQWKDW$%<¶VDSSHDOZRXOG not even be heardOHWDORQHYRWHG XSRQE\WKH=%$.
2Q $XJXVW $%< ILOHG D 9HULILHG $UWLFOH 3HWLWLRQ DQG 'HFODUDWRU\
-XGJPHQW&RPSODLQWDJDLQVWWKH7RZQWKH%XLOGLQJ'HSDUWPHQWDQGWKH=%$LQWKH6XSUHPH
&RXUWRI1HZ<RUN&RXQW\RI5RFNODQG WKH³$UWLFOH3URFHHGLQJ´ ([ ,QWKH$UWLFOH
3URFHHGLQJ$%<DVNHGWKHFRXUWIRUDQRUGHU FRPSHOOLQJWKH=%$WRKHDU$%<¶VDSSHDORI
WKH%XLOGLQJ'HSDUWPHQW¶VHUURQHRXVGHFLVLRQGHQ\LQJ$%<¶VUHTXHVWIRUDEXLOGLQJSHUPLWDQG
LQWKHDOWHUQDWLYHLWVDSSOLFDWLRQIRUDQDUHDYDULDQFH GLUHFWLQJWKH=%$XSRQWKDWKHDULQJWR
ILQGWKDWDYDULDQFHIURP7RZQ&RGH , LVQRWUHTXLUHGIRUXVHRID³VFKRRORIJHQHUDO
LQVWUXFWLRQ´ RU LQ WKH DOWHUQDWLYH GLUHFWLQJ WKH =%$ WR JUDQW $%<¶V DSSOLFDWLRQ IRU DQ DUHD
YDULDQFH DOWHUQDWLYHO\DQQXOOLQJDQGVHWWLQJDVLGHWKH%XLOGLQJ'HSDUWPHQW¶VGHWHUPLQDWLRQDV
FRQWUDU\WRODZDUELWUDU\DQGFDSULFLRXVLQYDOLGDVDSSOLHGWR$%<DQGLQYLRODWLRQRI$%<¶V
FRQVWLWXWLRQDOULJKWWRWKHIUHHH[HUFLVHRIWKHLUUHOLJLRQ DQG FRPSHOOLQJWKH 7RZQWRSURGXFH
DOO GLVFORVHDEOH UHFRUGV UHVSRQVLYH WR $%<¶V )UHHGRP RI ,QIRUPDWLRQ /DZ ³)2,/´ UHTXHVWV
FRQFHUQLQJWKH7RZQ¶VLQWHUHVWLQWKH3URSHUW\ Id.
Id. see also, e.g.Fortress Bible Church v. Feiner)6XSSG 6'1< aff’d, )G G&LU Westchester Day Sch. v. Vill. of Mamaroneck)6XSSG 6'1< aff’d )G G&LU Israelite Church of God in Jesus Christ, Inc. v. City of Hackensack1R&9 65& :/DW '1-$XJ
12 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 14 of NYSCEF: RECEIVED 21 01/17/2020
2Q6HSWHPEHU WKH7RZQPRYHGWRGLVPLVV$%<¶V$UWLFOH3URFHHGLQJ
2Q 2FWREHU WKH 7RZQ FXOPLQDWHG LWV FDPSDLJQ WR SUHYHQW $%< IURP
SXUFKDVLQJ DQG RSHUDWLQJ DQ 2UWKRGR[-HZLVK VFKRRO RQ WKH 3URSHUW\ 6XSHUYLVRU +RHKPDQQ
VWRRG LQ IURQW RI *%& DQG DQQRXQFHG WKDW WKH 7RZQ ZDV SXUFKDVLQJ WKH 3URSHUW\ IRU LWVHOI ±
QRWDEO\ DQG F\QLFDOO\ IRU WKH YHU\ VDPH ³FRPPHUFLDO´ SXUSRVHWKH 7RZQ DQG LWV FRQVWLWXHQWV
FODLPHGWKH\GLGQRWZDQW$%<WRSXUFKDVHWKH3URSHUW\ 7KH7RZQDSSDUHQWO\VHHNVWRKROG
LWVHOIWRDGLIIHUHQWVWDQGDUGZKHUHE\DFRPPHUFLDOFRPPXQLW\FHQWHUDQGPHHWLQJIDFLOLW\ZLWKD
ODUJH SDUNLQJ ORW LV D ³SHUPLWWHG XVH´ WKDW LV ³FRQVLVWHQW ZLWK´ WKH UHVLGHQWLDO QDWXUH RI WKH
QHLJKERUKRRGEXWDUHOLJLRXVVFKRROLVQRW
2Q 1RYHPEHU $%< DOHUWHG WKH &RXUW WR WKH EODWDQW LQFRQVLVWHQFLHV
EHWZHHQWKH7RZQ¶VSODQQHGSXUFKDVHRIWKH3URSHUW\DQGLWVOLWLJDWLRQSRVLWLRQ ([
2Q 1RYHPEHU LQ DGYDQFH RI WKH 7RZQ %RDUG PHHWLQJ VFKHGXOHG IRU
1RYHPEHU WRDSSURYHWKHSXUFKDVHRIWKH3URSHUW\FRXQVHOIRU$%<VHQWWKH7RZQ¶V
RXWVLGHFRXQVHODOHWWHUSXWWLQJWKH7RZQRQQRWLFHWKDW$%<ZDVSUHSDUHGWRWDNHDOODSSURSULDWH
PHDVXUHVWRYLQGLFDWHLWVFRQVWLWXWLRQDODQGIHGHUDOULJKWVVKRXOGWKH7RZQYRWHWRDXWKRUL]HWKH
SXUFKDVHRIWKH3URSHUW\([ 7RGDWH$%<KDVUHFHLYHGQRUHVSRQVHWRWKDWOHWWHU
2Q1RYHPEHU WKH7RZQ%RDUGDXWKRUL]HGWKHSXUFKDVHRIWKH3URSHUW\
,QGRLQJVRKRZHYHUWKH7RZQ PDGHD WHOOLQJ FRQFHVVLRQ ,QDQDPHQGPHQWWRLWV6(45$
$IILUPDWLRQ LQ 6XSSRUWRI0RWLRQWR'LVPLVV1R 1<6XS&W 5RFNODQG&W\6HS (&)1R 5REHUW %UXP Grace Baptist Church purchase part of Clarkstown’s bid to revitalize Nanuet’s center 52&./$1':(67&+(67(5 -2851$/ 1(:6 2FW KWWSV ZZZORKXGFRPVWRU\QHZVORFDOURFNODQGQDQXHW JUDFHEDSWLVWFKXUFKSXUFKDVHSDUWSODQ UHYLWDOL]HQDQXHWVFHQWHU $IILUPDWLRQLQ5HVSRQVHWR3HWLWLRQHU¶V 1RWLFHRI6XSSOHPHQWDO$XWKRULW\1R 1<6XS&W 5RFNODQG&W\1RY (&) 1R
13 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 15 of NYSCEF: RECEIVED 21 01/17/2020
DSSOLFDWLRQWKH7RZQQRORQJHUUHSUHVHQWHGWKDWWKHSURSRVHGXVHIRUWKH3URSHUW\FRPSOLHV
ZLWKWKH7RZQ&RGH5DWKHUWKDWWKH7RZQQRZFRQWHQGVWKDW DPXQLFLSDOLW\QHHGQRWFRPSO\
ZLWKLWVRZQ]RQLQJUXOHVHYHQLIWKRVHVDPHUXOHVFDQREVWUXFWDQGHYHQWXDOO\VFXSSHUDSULYDWH
WUDQVDFWLRQIRUWKHVDPHODQG
2Q 'HFHPEHU WKH 6XSUHPH &RXUW LVVXHG LWV RSLQLRQ LQ WKH $UWLFOH
3URFHHGLQJ ([ 7KH FRXUW RUGHUHG WKH 7RZQ WR FRPSO\ ZLWK $%<¶V )2,/ UHTXHVW EXW
GLVPLVVHG$%<¶VRWKHUFDXVHVRIDFWLRQ LQWKH $UWLFOH3HWLWLRQ IRUODFNRIVWDQGLQJ Id. $%<
KDVWLPHO\ILOHGQRWLFHRILWVDSSHDO IURP WKHDGYHUVHDVSHFWVRIWKH&RXUW¶VRUGHU ([$%<
LVDOVRSUHSDUHGWRH[SHGLWHSHUIHFWLQJLWVDSSHDOUDWKHUWKDQZDLWWKHHQWLUHVL[PRQWKSHUPLWWHG
SHULRG LQRUGHUWRPLQLPL]HDQ\SUHMXGLFHWR*%&
2Q -DQXDU\ FRXQVHO IRU $%< DJDLQ LQIRUPHG WKH 7RZQ RI WKH OHJDO
FRQVHTXHQFHVRISXUFKDVLQJWKH3URSHUW\ QRWLQJ WKDW$%<LQWHQGVWRVHHNUHGUHVVIRUWKH7RZQ¶V
DQGLWVRIILFLDOV¶YLRODWLRQVLQIHGHUDOFRXUW LQFOXGLQJ FRPSHQVDWRU\ DQGSXQLWLYHGDPDJHVDQG
DWWRUQH\V¶ IHHV ([
$5*80(17
$ 7KLV&RXUW6KRXOG*UDQW,QWHUYHQWLRQ$VRI5LJKW
8QGHU &3/5 D D SDUW\ ³VKDOO EH SHUPLWWHG WR LQWHUYHQH ZKHQ WKH
DFWLRQLQYROYHVWKHGLVSRVLWLRQRUGLVWULEXWLRQRIRUWKHWLWOHRUDFODLPIRUGDPDJHVIRULQMXU\WR
SURSHUW\DQGWKH>SDUW\@PD\EHDIIHFWHGDGYHUVHO\E\WKHMXGJPHQW´
7KLV&RXUWFXUUHQWO\KDVEHIRUHLW*%&¶VDSSOLFDWLRQ IRUDSSURYDOIRUWKHVDOHRIWKH
3URSHUW\WRWKH7RZQ 7KLVLVRIFRXUVHWKHYHU\VDPH3URSHUW\DWWKHKHDUWRI$%<¶VSHQGLQJ
OLWLJDWLRQDJDLQVWWKH7RZQIRULWVGLVFULPLQDWRU\FRQGXFWWKDWOHGWRWKH ORVVRI$%<¶VFRQWUDFWIRU
WKH3URSHUW\ *LYHQ$%<¶V SHQGLQJ OLWLJDWLRQDJDLQVWWKH7RZQDVZHOODVWKHOLNHO\ LUUHYHUVLEOH
14 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 16 of NYSCEF: RECEIVED 21 01/17/2020
GHVWUXFWLRQRI$%<¶VFRQWLQXLQJ LQWHUHVWLQWKH3URSHUW\VKRXOGWKLV&RXUWDSSURYHWKHVDOH $%<
LVVWDWXWRULO\HQWLWOHGWRLQWHUYHQHDVRIULJKW
$%<¶V UHTXHVWHG LQWHUYHQWLRQ LV WLPHO\ $V WKH 6HFRQG 'HSDUWPHQW KDV KHOG
³LQWHUYHQWLRQPD\RFFXUDWDQ\WLPHSURYLGHGWKDWLWGRHVQRWXQGXO\GHOD\WKHDFWLRQRUSUHMXGLFH
H[LVWLQJSDUWLHV´Halstead v. Dolphy$'G G'HS¶W +HUH*%& ILOHGLWV
3HWLWLRQRQ-DQXDU\EXWDV RI-DQXDU\ZRUNLQJFRSLHVRIWKH3HWLWLRQKDGQRW
EHHQGHOLYHUHGWRWKLV&RXUW$%<KDVPRYHGH[SHGLWLRXVO\DQGVHHNVH[SHGLWHGWUHDWPHQWRILWV
LQWHUYHQWLRQ UHTXHVW E\ RUGHU WR VKRZ FDXVH 8QGHU WKHVH XQLTXH FLUFXPVWDQFHV $%<¶V
LQWHUYHQWLRQZLOOQRWXQGXO\GHOD\WKLVSURFHHGLQJ See, e.g. id. UHYHUVLQJWULDOFRXUW¶VGHQLDORI
PRWLRQWRLQWHUYHQHKROGLQJWKDWLQWHUYHQWLRQZDVWLPHO\HYHQWKRXJKVRXJKWPRUHWKDQIRXU\HDUV
DIWHUFRPPHQFHPHQWRIWKHDFWLRQ Jeffer v. Jeffer1R :/ DW 6XS
&W .LQJV&W\ 6HSW PRWLRQWRLQWHUYHQHPDGHWHQ PRQWKVDIWHU$PHQGHG&RPSODLQW
ILOHGFRQVLGHUHG³WLPHO\´HYHQWKRXJKLQWHUYHQRUVKDGEHHQDZDUHRIDFWLRQIRUDWOHDVW\HDUV
$FFRUGLQJO\ $%< VKRXOG EH SHUPLWWHG WR LQWHUYHQH LQ WKLV DFWLRQ DV RI ULJKW
SXUVXDQWWR&3/5WRVHHNWRSUHYHQWWKH7RZQIURPFDSLWDOL]LQJRQLWVGLVFULPLQDWRU\DQG
XQODZIXOPHWKRGV DW$%<¶VH[SHQVH
% 7KH&RXUW6KRXOG$OVR*UDQW3HUPLVVLYH,QWHUYHQWLRQ
$OWHUQDWLYHO\WKLV&RXUWVKRXOGJUDQWSHUPLVVLYHLQWHUYHQWLRQ WR$%<XQGHU &3/5
ZKLFKSURYLGHV WKDW³>X@SRQWLPHO\PRWLRQDQ\SHUVRQPD\EHSHUPLWWHGWRLQWHUYHQHLQDQ\
DFWLRQZKHQDVWDWXWHRIWKHVWDWHFRQIHUVDULJKWWRLQWHUYHQHLQWKHGLVFUHWLRQRIWKHFRXUWRUZKHQ
WKH SHUVRQ¶V FODLP RU GHIHQVH DQGWKHPDLQDFWLRQKDYHDFRPPRQTXHVWLRQRIODZRUIDFW ,Q
H[HUFLVLQJLWVGLVFUHWLRQWKHFRXUWVKDOOFRQVLGHUZKHWKHUWKHLQWHUYHQWLRQZLOOXQGXO\GHOD\WKH
GHWHUPLQDWLRQRIWKHDFWLRQRUSUHMXGLFHWKHVXEVWDQWLDOULJKWVRIDQ\SDUW\´
15 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 17 of NYSCEF: RECEIVED 21 01/17/2020
*%&¶V3HWLWLRQDQGWKH1HZ<RUN$WWRUQH\*HQHUDO¶V$IILUPDWLRQERWKUHIHUHQFH
$%<DQGQHFHVVDULO\UHFRJQL]HLWDVDQLQWHUHVWHGSDUW\WRWKHVDOHDWLVVXHSee 3HWLWLRQ(&)
1R ³7KHUHZDVDSUHYLRXVDSSOLFDWLRQWRWKH$WWRUQH\*HQHUDODQGWKH&RXUWIRUDSSURYDOWR
VHOO'HPDUHVW$YHDQG +LJKYLHZ$YHWR$WHUHV%DLV<DDNRYDQ(GXFDWHG&RUSRUDWLRQ
´ $IILUPDWLRQRI*DU\%URZQ(&)1R EULQJLQJWRWKLV&RXUW¶VDWWHQWLRQ$%<¶V
RQJRLQJOHJDOGLVSXWHZLWKWKH7RZQFRQFHUQLQJWKH3URSHUW\
$V VHWIRUWKLQGHWDLODERYH$%<KDV FRQVLVWHQWO\ VKRZQLWVFRQWLQXHGLQWHUHVWLQ
WKH3URSHUW\(YHQIROORZLQJWKH7RZQ¶VXQODZIXODFWLRQV $%<FRQWLQXHVWRKDYHDYHU\UHDODQG
VXEVWDQWLDO LQWHUHVW LQ ZKHWKHU WKLV &RXUW DSSURYHV WKLV VDOH WR WKH 7RZQ See, e.g. Matter of
Cavages, Inc. v. Ketter$'G WK'HS¶W ³$WKLUGSDUW\ZLOOJHQHUDOO\EH
SHUPLWWHGWRLQWHUYHQHZKHUHKHKDVDQDFWXDODQGXOWLPDWHLQWHUHVWLQWKHUHVXOWRIWKHOLWLJDWLRQ´
:KLOH$%<YLJRURXVO\GLVSXWHV WKH 6XSUHPH&RXUW¶VWKUHVKROGGHWHUPLQDWLRQWKDW
$%< ODFNV VWDQGLQJ ZKLFK ZLOO EH WKH VXEMHFW RI $%<¶V IRUWKFRPLQJ DSSHDO WR WKH 6HFRQG
'HSDUWPHQWLQWHUYHQWLRQ LQWKLVPDWWHULVnot FRQWLQJHQWRQLWVVWDQGLQJWRSURFHHGZLWKLWV$UWLFOH
3URFHHGLQJ ,QGHHG ³>W@KH EDVHV IRU SHUPLVVLYH LQWHUYHQWLRQ DUH EURDGHU WKDQ WKH\ DUH IRU
VWDQGLQJWRRULJLQDWHWKHSURFHHGLQJ´ Ball v. Town of Ballston$'G G'HS¶W
ILQGLQJWKDWHYHQWKRXJKGHYHORSHUVKDGQRVWDQGLQJWREULQJDQDFWLRQDJDLQVWWKHWRZQ
WKHLUSURSHUW\LQWHUHVWVZRXOGKDYHEHHQLPSDFWHGKDGWKHSHWLWLRQHUVXFFHHGHGDQGZHUHWKHUHIRUH
DQ³LQWHUHVWHGSHUVRQ´IRUSXUSRVHVRILQWHUYHQLQJ +HUH IRUDOORIWKHUHDVRQVVHWIRUWKsupra
$%< LVDQ³LQWHUHVWHGSHUVRQ´ZLWKDNHHQDQGFRQWLQXLQJ LQWHUHVWLQWKH3URSHUW\
0RUHRYHU$%<¶VLQWHUYHQWLRQZLOOQRWXQGXO\GHOD\WKLVDFWLRQRUSUHMXGLFHDQ\
SDUW\¶VULJKWV JLYHQWKDWWKHXQGHUO\LQJTXHVWLRQLQ$%<¶VSHQGLQJDSSHDOJRHVWRWKHKHDUWRIWKLV
&RXUW¶VUHYLHZ ZKHWKHUWKH7RZQLV LQDSRVLWLRQ WRHQWHULQWRWKLVWUDQVDFWLRQDWDOO
16 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 18 of NYSCEF: RECEIVED 21 01/17/2020
)RUWKHIRUHJRLQJUHDVRQV$%<VKRXOGEHSHUPLWWHGWRLQWHUYHQHLQWKLVPDWWHUDV
DGLVFUHWLRQDU\PDWWHUXQGHU &3/5
& 7KLV &RXUW 6KRXOG *UDQW D 6WD\ RI 3URFHHGLQJV 3HQGLQJ $%<¶V $SSHDO RI &RXQWV2QH± 7KUHHRI ,WV$UWLFOH3URFHHGLQJ
3XUVXDQWWR&3/5³>H@[FHSWZKHUHRWKHUZLVHSUHVFULEHGE\ODZWKHFRXUW
LQZKLFKDQDFWLRQLVSHQGLQJPD\JUDQWDVWD\RISURFHHGLQJVLQDSURSHUFDVHXSRQVXFKWHUPV
DVPD\EHMXVW´,QGHHG³DFRXUWKDVEURDGGLVFUHWLRQWRJUDQWDVWD\LQRUGHUWRDYRLGWKHULVNRI
LQFRQVLVWHQWDGMXGLFDWLRQVDSSOLFDWLRQRISURRIDQGSRWHQWLDOZDVWHRIMXGLFLDOUHVRXUFHV´In re
Tenenbaum$'G G'HS¶W TXRWLQJZonghetti v. Jeromack$'G
G'HS¶W *URXQGVIRURUGHULQJDVWD\LQFOXGH³IXUWKHU>LQJ@WKHLQWHUHVWRIMXVWLFH
E\ SUHYHQWLQJ LQHTXLWDEOH UHVXOWV DQG SURPRW>LQJ@ RUGHUO\ SURFHGXUH E\ IXUWKHULQJ WKH JRDOV RI
FRPLW\DQGXQLIRUPLW\´Concord Assoc., L.P. v. EPT Concord, LLC$'G G
'HS¶W FLWLQJNat’l Mgt. Corp. v. Adolfi$'G G'HS¶W
0RUHRYHU³>Z@KHUHGHWHUPLQDWLRQRIDUHODWHGSHQGLQJSURFHHGLQJPD\GLVSRVHRI
RUOLPLWLVVXHVLQYROYHGLQDSHQGLQJDFWLRQDVWD\LVSURSHU´ McCarthy v. Kerrigan 0LVFG
6XS&W/DZUHQFH&RXQW\ TXRWLQJSSA Holdings, LLC v. Kaplan$'G
VW'HS¶W aff’d as modified$'G G'HS¶W ,QWKHSURSHUW\
FRQWH[WDVWD\LVZDUUDQWHGZKHUHDSHQGLQJ VLPXOWDQHRXVDFWLRQZRXOGQHFHVVDULO\DIIHFWULJKWV
DVVRFLDWHGZLWKWKHSURSHUW\DWLVVXH See, e.g. Swartz v. Swartz$'G G'HS¶W
XSKROGLQJ6XSUHPH&RXUW¶VVWD\RIDQDFFRXQWLQJPDOSUDFWLFHDFWLRQZKHUHDGHWHUPLQDWLRQ
LQDVHSDUDWHO\SHQGLQJPDWULPRQLDODFWLRQZRXOGDIIHFWSODLQWLII¶VULJKWVLQWKHDVVHWVDWLVVXH
+HUHWKH6HFRQG 'HSDUWPHQW¶VGHWHUPLQDWLRQRI$%<¶VDSSHDOPD\VLJQLILFDQWO\
DOWHUWKHDQDO\VLVRIZKHWKHUWKH7RZQ¶VFRQWUDFWWRSXUFKDVHWKH3URSHUW\LV³IDLUDQGUHDVRQDEOH´
SXUVXDQWWR1<13&/ G ,QHYDOXDWLQJDWUDQVDFWLRQXQGHU1<13&/QXPHURXV
17 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 19 of NYSCEF: RECEIVED 21 01/17/2020
1HZ<RUNFRXUWVKDYHGHWHUPLQHGWKHIDLUQHVVDQGUHDVRQDELOLW\RIDSXUFKDVHSULFHEDVHGRQKRZ
LWFRPSDUHVWRRWKHURIIHUV See, e.g. In re HHH Choices Health Plan, LLC%5
%DQNU 6'1< ³>7@KHRUGLQDU\GHWHUPLQDWLRQRIZKDWLVIDLUDQGHTXLWDEOHXQGHUWKH
VWDWHFRXUWGHFLVLRQVLVIDLUPDUNHWYDOXHDQGbest price:KHWKHUDGHDOLVIDLUDQGHTXLWDEOHWRD
FRUSRUDWLRQKDVWRLQFOXGHFRQVLGHUDWLRQRIhow it compares to other offers>@´ HPSKDVLVDGGHG
In re Sculpture Ctr., Inc.1R:/ DW 6XS&W 1< &W\ ³$
EXLOGLQJ¶V IDLU PDUNHW YDOXH IRU 13&/ SXUSRVHV LV FDOFXODWHG DW WKH WLPH RI VDOH DQG
fundamentally is predicated on what a willing buyer is prepared to pay to a willing seller who is
not under a compulsion to sell´ HPSKDVLVDGGHG
+HUH$%< KDVVXEPLWWHGVZRUQDIILGDYLWVDWWHVWLQJWKDWLWLVUHDG\ZLOOLQJDQG
DEOH WR UHHQJDJH ZLWK *%& WR SXUFKDVH WKH 3URSHUW\ LQFOXGLQJ WKH SDUVRQDJH ORFDWHG DW
'HPDUHVW$YHQXH IRU LWV DSSUDLVHGYDOXH± ZKLFK QRWDEO\ LVKLJKHUWKDQ WKH7RZQ¶VFXUUHQWRIIHU
SULFH ± LI RQO\ WKH 7RZQ ZRXOG VWDQG GRZQ IURP LWV GLVFULPLQDWRU\ FRQGXFW DQG SURYLGH WKH
DSSURSULDWH SHUPLWVDVLWZDVOHJDOO\UHTXLUHGWRGR D\HDUDJR See )LQN$II ³$%<LVUHDG\
ZLOOLQJDQGDEOHWRSXUFKDVHWKHHQWLUHSURSHUW\DWLWVDSSUDLVHGYDOXHRIPLOOLRQ
$%<KDVEHHQZRUNLQJFORVHO\ZLWK'DYLG7HLOHUDVHQLRUXQGHUZULWHU DW$OOLDQFH
3ULYDWH&DSLWDODFRPPHUFLDOUHDOHVWDWHPRUWJDJHEURNHUDJHILUPEDVHGLQ%URRNO\Q1<WKDW
SURYLGHVEURNHUDJHVHUYLFHVWRWKHUHDOHVWDWHLQGXVWU\LQFOXGLQJQRWIRUSURILWVSee $IIRI'DYLG
7HLOHU 0U7HLOHUKDVFRQILUPHGWKDW ³>L@QRUGHUWKDW$%<EHDEOHWR>SXUFKDVHWKHSURSHUW\@
DQG VXEMHFWWR $%< REWDLQLQJ WKH QHFHVVDU\ EXLOGLQJ SHUPLWV IURP WKH 7RZQ $OOLDQFH 3ULYDWH
&DSLWDOLVUHDG\ZLOOLQJDQGDEOHWRDUUDQJH EDQNILQDQFLQJWR$%<WRIXQGWKHDFTXLVLWLRQRIWKH
3URSHUW\´ Id. 0U7HLOHULV³DZDUHRIVXIILFLHQWILQDQFLQJVRXUFHVWKDWZRXOGSHUPLW$%<WR
SXUFKDVHWKH3URSHUW\DWWKHDSSUDLVDOYDOXH´Id.
18 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 20 of NYSCEF: RECEIVED 21 01/17/2020
7KLV &RXUWLVFKDUJHGZLWKGHWHUPLQLQJ IRUSXUSRVHVRI13&/ ZKHWKHUWKH
7RZQ¶V SODQQHG SXUFKDVH RI WKH 3URSHUW\ LV IDLU DQG UHDVRQDEOH &ULWLFDO WR WKLV LQTXLU\ LV WKH
DYDLODELOLW\WR*%&RIDKLJKHURIIHUDVZHOODV WKH7RZQ¶VXQODZIXOFRQGXFW LQWKHOHDGXSWRWKLV
WUDQVDFWLRQ $%<VKRXOGEHSHUPLWWHGWRLQWHUYHQHIRUWKHSXUSRVHRIEULQJLQJERWKRIWKHVH SRLQWV
WRWKH&RXUW¶VDWWHQWLRQ
%XWHYHQPRUHFULWLFDOO\DOLPLWHGVWD\RIWKHVHSURFHHGLQJVSHQGLQJWKHRXWFRPH
RI$%<¶VDSSHDOWRWKH6HFRQG'HSDUWPHQWLVDSSURSULDWH6KRXOGWKH6HFRQG'HSDUWPHQWUHYHUVH
6XSUHPH&RXUW¶VHUURQHRXVGHFLVLRQDVWR$%<¶VVWDQGLQJWRSXUVXHWKUHHFRXQWVRILWV$UWLFOH
3URFHHGLQJWKH7RZQZLOOEHIRUHFORVHGIURPLWVFXUUHQWHIIRUWVWRXVXUSWKH3URSHUW\ ,QWKHVH
XQLTXHFLUFXPVWDQFHV± ZKHUHWKH7RZQKDVPLVXVHGLWVORFDOODZVDQGVRXJKWWRLQVXODWHLWVHOI
IURPDQ\OHJDOFKDOOHQJHWKHUHWR± DVWD\LVZDUUDQWHGWRDOORZ$%<WRYLQGLFDWHLWVRULJLQDOLQWHUHVW
LQWKH3URSHUW\
)LQDOO\DOLPLWHGVWD\RIWKHVHSURFHHGLQJVZRXOGDOVRKHOSSURWHFW*%&¶VLQWHUHVW
13&/ ³LV GHVLJQHG WR SURWHFW WKH PHPEHUV RI D QRWIRUSURILW FRUSRUDWLRQ IURP XQZLVH
EDUJDLQVDQGWKHZURQJIXOXVHRIWKHFRUSRUDWLRQ¶VSURSHUW\DQGWRDVVXUHERWKWKHSXEOLF¶VLQWHUHVW
LQ WKH SURSHU GLVWULEXWLRQ RI WKH FRUSRUDWLRQ¶V DVVHWV DQG WKH VDWLVIDFWLRQ RI WKH RIILFHUV¶ DQG
GLUHFWRUV¶ILGXFLDU\REOLJDWLRQ´ 0F.LQQH\¶V1<13&/ %\JUDQWLQJWKLVVWD\WKH&RXUW
ZLOODXWKRUL]HWKHDSSURSULDWHWLPHQHHGHGWRWKURXJKGHWHUPLQDWLRQRI$%<¶V$UWLFOH3HWLWLRQ
HQVXUHWKDWWKH3URSHUW\KDVEHHQSURSHUO\VROGDWDQDSSURSULDWHSULFHDQGWRDEX\HUWKDWKDVQRW
HQJDJHG LQ XQODZIXO PHDQV WR SRVLWLRQ LWVHOI IRU VXFK SXUFKDVH ,QGHHG ZLWKRXW WKH LPSURSHU
REVWDFOHVSXWLQSODFHE\WKH7RZQWKHUHFRXOGEHDIDUODUJHUSRRORIEX\HUVIRUWKLVSURSHUW\
ZKLFKZLOORQO\LQXUHWRWKHEHQHILWRI*%&7KXVDOLPLWHGVWD\ZRXOGIXOILOOWKHXQGHUO\LQJ
LQWHQWEHKLQG13&/DQGSURWHFW*%&IURPDVDOHSURFHVVWKDWLVFRQWUDU\WRLWVEHVWLQWHUHVWV
19 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 21 of NYSCEF: RECEIVED 21 01/17/2020
&21&/86,21
%DVHGRQWKHIDFWVDVVWDWHGDERYH$%<UHVSHFWIXOO\UHTXHVWVWKDWWKH&RXUWVWD\
WKLV SURFHHGLQJ XQWLO WKH 6HFRQG 'HSDUWPHQW KDV KHDUG DQG GHWHUPLQHG $%<¶V DSSHDO IURP
6XSUHPH&RXUW¶V2UGHURI'HFHPEHU
'DWHG -DQXDU\ 5HVSHFWIXOO\VXEPLWWHG
VYehudah L. Buchweitz <HKXGDK/%XFKZHLW] 5REHUW*6XJDUPDQ 'DYLG<RONXW .DHOD'DKDQ 0LFKDHO(1DJHOEHUJ :(,/*276+$/ 0$1*(6//3 )LIWK$YHQXH 1HZ<RUN1HZ<RUN \HKXGDKEXFKZHLW]#ZHLOFRP UREHUWVXJDUPDQ#ZHLOFRP GDYLG\RONXW#ZHLOFRP NDHODGDKDQ#ZHLOFRP PLFKDHOQDJHOEHUJ#ZHLOFRP
Counsel for ABY
,5$0(0$18(/3& ,UD0(PDQXHO $P\0HOH /DXUHO5RDG 1HZ&LW\1< LUD#HPDQXHOODZFRP DP\#DP\PHOHODZFRP
Of Counsel
20 of 20 | 2020-02-18 | [
"Case 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 1 of 21 EXHIBIT EEE FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 2 of 21 RECEIVED NYSCEF: 01/17/2020 6835(0(\u0003&2857\u00032)\u00037+(\u000367$7(\u00032)\u00031(:\u0003<25.\u0003 &2817<\u00032)\u000352&./$1' \u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010[ ,Q\u0003WKH\u00030DWWHU\u0003RI\u0003WKH\u0003$SSOLFDWLRQ\u0003RI *UDFH\u0003%DSWLVW\u0003&KXUFK\u0003RI\u00031DQXHW 25$/\u0003$5*80(17\u00035(48(67(' )RU\u0003$SSURYDO\u0003WR\u00036HOO\u00035HDO\u00033URSHUW\\ 3XUVXDQW\u0003WR\u00031RW\u0010IRU\u00103URILW\u0003&RUSRUDWLRQV\u0003/DZ \u0018\u0014\u0013\u0010\u0018\u0014\u0014\u0003DQG\u00035HOLJLRXV\u0003&RUSRUDWLRQV\u0003/DZ\u0003\u0014\u0015 ,QGH[\u00031R\u0011\u0003\u0013\u0016\u0013\u0015\u0015\u0015\u0012\u0015\u0013\u0015\u0013 0(025$1'80\u0003,1\u00036833257\u0003 2)\u0003$%<¶6\u0003$33/,&$7,21\u0003 )25\u0003,17(59(17,21\u0003$1'\u0003$\u0003 67$<\u00032)\u0003352&((',1*6\u0003 \u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010\u0010[ $WHUHV\u0003%DLV\u0003<DDNRY\u0003$FDGHP\\\u0003RI\u00035RFNODQG\u0003 ³$%<´ \u000f\u0003E\\\u0003DQG\u0003WKURXJK\u0003LWV\u0003XQGHUVLJQHG\u0003 FRXQVHO\u000f\u0003UHVSHFWIXOO\\\u0003PRYHV\u0003WR\u0003LQWHUYHQH\u0003SXUVXDQW\u0003WR\u0003&3/5\u0003\u0014\u0013\u0014\u0015\u0003DQG\u0003\u0014\u0013\u0014\u0016\u000f\u0003DV\u0003ZHOO\u0003DV\u0003IRU\u0003DQ\u0003 RUGHU\u0003XQGHU\u0003&3/5\u0003\u0015\u0015\u0013\u0014\u0003WR\u0003VWD\\\u0003SURFHHGLQJV\u0003LQ\u0003WKH\u0003DERYH\u0010FDSWLRQHG\u0003PDWWHU\u0003FRQFHUQLQJ WKH\u0003*UDFH\u0003 %DSWLVW\u0003&KXUFK\u0003RI\u00031DQXHW¶V\u0003 ³*%&´ \u0003YHULILHG\u0003SHWLWLRQ\u0003IRU\u0003DSSURYDO\u0003RI\u0003WKH\u0003VDOH\u0003RI\u0003UHDO\u0003SURSHUW\\\u0003 ORFDWHG\u0003DW\u0003\u0015\u0013\u0003'HPDUHVW\u0003$YHQXH\u000f\u0003\u0015\u0015\u0003'HPDUHVW\u0003$YHQXH\u000f\u0003\u0015\u0017\u0003'HPDUHVW\u0003$YHQXH\u000f\u0003\u0015\u0019\u0003'HPDUHVW\u0003 $YHQXH\u000f\u0003DQG\u0003 \u0003+LJKYLHZ\u0003$YHQXH\u000f\u00031DQXHW\u000f\u00031HZ\u0003<RUN\u0003 WKH\u0003³3URSHUW\\´ \u0003WR\u0003WKH\u00037RZQ\u0003RI\u0003 &ODUNVWRZQ\u0003 WKH\u0003³7RZQ´ \u0011 ,1752'8&7,21\u0003$1'\u0003)$&78$/\u0003%$&. *5281' \u0014\u0011 $%<\u0003 VHHNV\u0003 D\u0003 OLPLWHG\u0003 VWD\\\u0003 RI\u0003 WKHVH\u0003 SURFHHGLQJV\u0003 SHQGLQJ\u0003 DSSHDO\u0003 RI\u0003 LWV\u0003 $UWLFOH\u0003 \u001a\u001b 3HWLWLRQ\u000f\u0003ZKLFK DOOHJHV\u0003WKDW\u0003WKH\u00037RZQ¶V\u0003GLVFULPLQDWRU\\\u0003DQG\u0003XQODZIXO\u0003FRQGXFW\u0003HYLVFHUDWHG\u0003$%<¶V\u0003 YDOLG\u0003DJUHHPHQW\u0003WR\u0003SXUFKDVH\u0003WKH\u00033URSHUW\\\u0003DW\u0003LVVXH\u0011\u0003\u0003$V\u0003$%<\u0003VRXJKW\u0003WR\u0003YLQGLFDWH\u0003LWV\u0003ULJKWV\u0003WKURXJK\u0003 WKH\u0003SURSHU\u0003OHJDO\u0003SURFHVVHV\u000f\u0003WKH 7RZQ\u0003VZRRSHG\u0003LQ\u0003WR\u0003SXUFKDVH\u0003WKH\u00033URSHUW\\\u0003DQG\u0003HOLPLQDWH\u0003DQ\\\u0003FKDQFH\u0003 DW\u0003GXH\u0003SURFHVV\u0003WR\u0003KDYH\u0003$%<¶V\u0003FDVH\u0003KHDUG\u0003DQG\u0003VHHN\u0003DSSURSULDWH\u0003UHOLHI\u0011\u0003\u0003:KLOH\u0003$%<\u0003LV\u0003UHOXFWDQW\u0003WR\u0003 LQWHUYHQH\u0003 LQ\u0003 WKLV\u0003 PDWWHU\u0003 LQ\u0003 GHIHUHQFH WR\u0003 *%&\u000f\u0003 LW\u0003 FDQQRW\u0003 ORRN\u0003 WKH\u0003 RWKHU\u0003 ZD\\\u0003 JLYHQ\u0003 WKH\u0003 7RZQ¶V \u0014\u0003 1 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO.",
"19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 3 of 21 RECEIVED NYSCEF: 01/17/2020 PDQLIHVWO\\\u0003XQMXVW\u0003DFWLRQV\u0011 ,QGHHG\u000f\u0003D\u0003VWD\\\u0003XOWLPDWHO\\\u0003ZLOO LQXUH\u0003WR\u0003WKH\u0003EHQHILW\u0003RI\u0003*%&\u0003EHFDXVH\u000f\u0003DV\u0003 ZH\u0003H[SODLQ\u0003EHORZ\u000f\u0003$%<\u0003LV\u0003SUHSDUHG\u0003WR\u0003SD\\\u0003PRUH\u0003WKDQ\u0003WKH\u00037RZQ LI\u0003RQO\\\u0003$%<\u0003FDQ\u0003ILQDOO\\\u0003REWDLQ\u0003WKH\u0003 SHUPLWV\u0003LW\u0003ODZIXOO\\\u0003DSSOLHG\u0003IRU\u0003LQ\u0003WKH\u0003ILUVW\u0003SODFH\u0011\u0003\u0003,Q\u0003WKDW\u0003HYHQW\u000f PRUHRYHU\u000f *%&\u0003ZLOO\u0003KDYH\u0003D\u0003QHZ\u0003 PDUNHW\u0003 RI\u0003 EX\\HUV\u0003 LQVWHDG\u0003 RI\u0003 D FRUQHUHG\u0003 PDUNHW\u0003 WKDW\u0003 WKH\u0003 7RZQ\u0003 FUHDWHG\u0003 WKURXJK\u0003 LWV\u0003 PLVXVH\u0003 RI\u0003 LWV\u0003 ]RQLQJ\u0003SRZHUV\u0011\u0003\u0003$W\u0003ERWWRP\u000f\u0003$%<\u0003PHUHO\\\u0003DVNV\u0003WKLV\u0003&RXUW\u0003WR\u0003GHOD\\\u0003WKH\u0003VDOH\u0003RI\u0003WKH\u00033URSHUW\\\u0003XQWLO\u0003LWV\u0003 DSSHDO\u0003LV\u0003KHDUG\u0003DQG\u0003GHFLGHG\u0003E\\ WKH\u00036HFRQG\u0003'HSDUWPHQW\u0011 \u0015\u0011 $%< LV\u0003D\u00031HZ\u0003<RUN\u00036WDWH\u0003FKDUWHUHG\u0003HGXFDWLRQ\u0003FRUSRUDWLRQ\u0003SURYLGLQJ\u0003ERWK\u0003VHFXODU\u0003 DQG\u00032UWKRGR[\u0003-HZLVK\u0003UHOLJLRXV\u0003LQVWUXFWLRQ\u0003WR\u0003JLUOV\u0003LQ\u0003JUDGHV\u0003SUH\u0010.\u0003WKURXJK\u0003\u0014\u0015\u0003VLQFH\u0003\u0015\u0013\u0013\u0013\u0011 See $II\u0011 RI\u00035DEEL\u0003$DURQ\u0003)LQN\u000f\u0003 \u0016\u0011 3UHYLRXVO\\\u000f\u0003$%<\u0003ZDV\u0003ORFDWHG\u0003DW\u0003\u0015\u0016\u0019\u0003&KHUU\\\u0003/DQH\u0003LQ\u0003WKH\u00039LOODJH\u0003RI\u0003 $LUPRQW\u0011\u0003 $%<\u0003FXUUHQWO\\\u0003RFFXSLHV\u0003WHPSRUDU\\\u0003TXDUWHUV\u0003LQ\u0003WKH\u00039LOODJH\u0003RI\u00031HZ\u0003+HPSVWHDG\u0003 WKH\u0003³1HZ\u0003 +HPSVWHDG\u00033URSHUW\\´ \u0011 Id. 7KRVH\u0003TXDUWHUV\u0003DUH\u0003PDGH\u0003XS\u0003RI\u0003WZR\u0003PRGXODU\u0003EXLOGLQJV\u0011 Id. $%<¶V\u0003 SHUPLW\u0003WR\u0003UHPDLQ\u0003RQ\u0003WKH\u00031HZ\u0003+HPSVWHDG\u00033URSHUW\\\u000f\u0003KDYLQJ\u0003DOUHDG\\\u0003EHHQ\u0003H[WHQGHG\u000f\u0003H[SLUHV\u0003DW\u0003WKH\u0003 FRQFOXVLRQ\u0003RI\u0003WKH\u0003\u0015\u0013\u0014 \u0010\u0015\u0013\u0003VFKRRO\u0003\\HDU\u000f\u0003DW\u0003ZKLFK\u0003WLPH\u0003WKH\u0003PRGXODU\u0003EXLOGLQJV\u0003PXVW\u0003EH\u0003UHPRYHG\u0011 Id. 7KH\u0003SHUPLWV\u0003FDQQRW\u0003EH\u0003UHQHZHG\u000f\u0003DQG\u0003$%<\u0003KDV\u0003SXW\u0003WKH\u00031HZ\u0003+HPSVWHDG\u00033URSHUW\\\u0003XS\u0003IRU\u0003VDOH\u0011 \u0016\u0011 2Q\u0003 2FWREHU\u0003 \u0014\u001a\u000f\u0003 \u0015\u0013\u0014\u001b\u000f\u0003 $%<\u0003 HQWHUHG\u0003 LQWR\u0003 D\u0003 FRQWUDFW\u0003 ZLWK\u0003 *%&\u0003 WR\u0003 SXUFKDVH\u0003 WKH\u0003 3URSHUW\\ H[FHSW\u0003IRU\u0003WKH\u0003SDUVRQDJH\u0003ORFDWHG\u0003DW\u0003\u0015\u0013\u0003'HPDUHVW\u0003$YHQXH \u0011 Id. \u0017\u0011 8SRQ\u0003HQWHULQJ\u0003LQWR\u0003 WKH\u0003 FRQWUDFW\u0003 ZLWK\u0003 *%&\u000f\u0003 $%<\u0003 DSSOLHG\u0003 WR\u0003 WKH\u0003 5RFNODQG\u0003 (FRQRPLF\u0003 $VVLVWDQFH\u0003 &RUSRUDWLRQ\u0003 ³5($&´ ²ZKLFK\u0003 LV\u0003 DGPLQLVWHUHG\u0003 E\\\u0003 WKH\u0003 5RFNODQG\u0003 &RXQW\\\u0003 ,QGXVWULDO\u0003 'HYHORSPHQW\u0003 $JHQF\\\u0003 ³,'$´ ²IRU\u0003SHUPLVVLRQ\u0003WR\u0003UHFHLYH\u0003WD[\u0010H[HPSW\u0003ERQGV\u0011\u0003\u0003Id. \u0018\u0011 $%<\u0003KDG VXFFHVVIXOO\\\u0003QDYLJDWHG\u0003 WKH\u0003,'$\u0003SURFHVV\u0003LQ\u0003\u0015\u0013\u0014\u0019\u000f\u0003ZKHQ\u0003LW\u0003REWDLQHG\u0003\u0007\u001b PLOOLRQ\u0003LQ\u0003WD[\u0010H[HPSW\u0003ERQGV\u0003WR\u0003IXQG\u0003WKH\u0003FRQVWUXFWLRQ\u0003 RI\u0003D\u0003VFKRRO\u0003EXLOGLQJ\u0003RQ\u0003WKH\u00031HZ\u0003+HPSVWHDG\u00033URSHUW\\\u000f\u0003WKRXJK\u0003$%<\u0003XOWLPDWHO\\\u0003GLG\u0003QRW\u0003JR\u0003WKURXJK\u0003 ZLWK\u0003 WKH\u0003 FRQVWUXFWLRQ\u0011\u0003 \u0003 Id.",
"7KH\u0003 5($&\u0003 VFKHGXOHG\u0003 D\u0003 SXEOLF\u0003 KHDULQJ\u0003 IRU\u0003 -DQXDU\\\u0003 \u0014\u0018\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 DQG\u000f\u0003 SHQGLQJ\u0003WKDW\u0003KHDULQJ\u000f\u0003YRWHG\u0003WR\u0003WUDQVIHU\u0003WKDW\u0003HDUOLHU\u0003DSSURYDO\u0003WR\u0003$%<¶V\u0003SXUFKDVH RI\u0003WKH\u00033URSHUW\\\u0011 Id. \u0015 2 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 4 of 21 RECEIVED NYSCEF: 01/17/2020 \u0003\u0019\u000f\u0003\u001b\u0011 $%<\u0003DOVR\u0003VHFXUHG\u0003D\u0003/HWWHU\u0003RI\u0003,QWHQW\u0003IURP\u0003,QYHVWRUV\u0003%DQN\u0003H[SUHVVLQJ\u0003WKH\u0003EDQN¶V\u0003LQWHUHVW\u0003LQ\u0003 SURYLGLQJ\u0003$%<\u0003ILQDQFLQJ\u0003RI\u0003XS\u0003WR\u0003\u0007\u0018\u0003PLOOLRQ\u0003IRU\u0003WKH\u0003SXUFKDVH\u0003RI\u0003WKH\u00033URSHUW\\\u0011 Id. \u0003\u001a\u0011 \u0017\u0011 1HZV\u0003RI\u0003$%<¶V\u0003LQWHUHVW\u0003LQ\u0003WKH\u00033URSHUW\\\u0003GLG\u0003QRW\u0003VLW\u0003ZHOO\u0003ZLWK\u0003YDULRXV YRFDO\u0003PHPEHUV\u0003 RI\u0003 WKH\u0003 1DQXHW\u0003 FRPPXQLW\\\u000f\u0003 FHUWDLQ\u0003 &ODUNVWRZQ\u0003 UHVLGHQWV\u000f\u0003 DQG ORFDO\u0003 SROLWLFDO\u0003 ILJXUHV\u000f\u0003 ZKR\u0003 FDOOHG\u0003 $%<¶V\u0003PRYH\u0003WR\u00031DQXHW\u0003D\u0003³hostile invasion\u0011´ See $II\u0011\u0003RI\u0003<HKXGDK\u0003/\u0011\u0003%XFKZHLW]\u000f\u0003 \u0015\u0010\u0016 ([V\u0011\u0003\u0014\u0010 \u0015 \u0011 \u0014 :KLOH\u0003VRPH\u0003UHVLGHQWV\u0003FDUHIXOO\\\u0003FRXFKHG WKHLU\u0003REMHFWLRQV\u0003LQ\u0003WHUPV\u0003RI\u0003³LQFUHDVHG\u0003WUDIILF´\u0003 DQ XQVXSSRUWHG\u0003 FRQFHUQ\u0003 JLYHQ\u0003 $%<¶V\u0003 VL]H\u0003 DQG\u0003LWV\u0003RIIHU\u0003 WR\u0003 ZRUN\u0003 ZLWK\u0003 WKH\u00037RZQ\u0003 WR\u0003 DOWHU\u0003 LWV\u0003 VFKRRO\u0003 KRXUV \u000f\u0003RWKHUV\u0003EDUHO\\\u0003FRQWDLQHG WKHLU\u0003KRVWLOLW\\\u000f\u0003VKRXWLQJ\u0003DW\u0003UDXFRXV\u0003SXEOLF\u0003PHHWLQJV\u0003³go away, we don’t want you, go back to Ramapo\u0011´ \u0015 *%&¶V\u0003SDVWRU\u000f\u00035HY\u0011\u0003:LOOLDP\u0003)UHQFK\u000f\u0003ZDV DOVR SXEOLFO\\\u0003 FULWLFL]HG\u0003IRU\u0003DJUHHLQJ WR\u0003VHOO\u0003WKH\u00033URSHUW\\\u0003WR\u0003DQ\u00032UWKRGR[\u0003-HZLVK\u0003LQVWLWXWLRQ\u0011 \u0018\u0011 $V\u0003GHWDLOHG EHORZ\u000f\u0003$%<\u0003HQGXUHG\u0003D\u0003ILUHVWRUP\u0003RI\u0003ORFDO\u0003RSSRVLWLRQ\u0003DQG\u0003GLVFULPLQDWLRQ\u0003 IURP\u0003 WKH\u0003 PRPHQW\u0003 QHZV\u0003 RI\u0003 LWV\u0003 SURSRVHG\u0003 SXUFKDVH\u0003 RI\u0003 WKH\u0003 3URSHUW\\\u0003 VXUIDFHG\u0011\u0003 \u0003 )RU\u0003 H[DPSOH\u000f\u0003 DW\u0003 D\u0003 1RYHPEHU\u0003\u0015\u001a\u000f\u0003\u0015\u0013\u0014\u001b\u00037RZQ %RDUG\u00030HHWLQJ\u000f\u00036XSHUYLVRU\u0003*HRUJH\u0003+RHKPDQQ\u0003VWDWHG\u0003WKDW\u0003ZKLOH\u0003³>W@KH\u0003 7RZQ\u0003FDQQRW\u0003LQWHUIHUH\u0003ZLWK\u0003D\u0003SULYDWH\u0003SURSHUW\\\u0003PDWWHU\u0003EHWZHHQ\u0003WZR\u0003SDUWLHV\u000f´\u0003WKH\u0003³7RZQ\u0003ZLOO\u0003VWURQJO\\\u0003 HQIRUFH\u0003RXU\u0003]RQLQJ\u0003ODZV\u0003DQG\u0003RXU\u0003EXLOGLQJ\u0003FRGH\u0003ZLWKLQ\u0003WKH\u0003HQWLUH\u00037RZQ\u0003RI\u0003&ODUNVWRZQ\u0011´ ([\u0011 \u0016\u0011 6XSHUYLVRU\u0003+RHKPDQQ\u0003DGGHG\u0003WKDW\u0003$%<¶V\u0003SXUFKDVH\u0003ZRXOG\u0003³127\u0003RFFXU\u0003LQ\u0003WKH\u00037RZQ\u0003RI\u0003&ODUNVWRZQ\u0003 ZLWKRXW\u0003$//\u0003DSSURYDOV\u000f´ DQG\u0003WKDW\u0003LQ\u0003HQIRUFLQJ\u0003LWV\u0003]RQLQJ\u0003FRGH\u000f\u0003WKH\u00037RZQ\u0003ZRXOG\u0003³LVVXH\u0003VHDUFK\u0003 ZDUUDQWV\u0003LI\u0003QHFHVVDU\\´\u0003 HPSKDVLV\u0003DGGHG \u0011\u0003 Id. 3XEOLF\u0003FRPPHQWV\u0003RI\u00037RZQ UHVLGHQWV DW\u0003WKLV\u0003VDPH\u0003 PHHWLQJ LQFOXGHG\u0003LQDSSURSULDWH\u0003TXHVWLRQV\u0003DERXW\u0003KRZ\u0003$%<¶V\u0003GHDQ\u000f\u00035DEEL\u0003$DURQ\u0003)LQN\u000f ZDV\u0003JHWWLQJ\u0003 WKH\u0003PRQH\\\u0003IRU\u0003WKH\u00033URSHUW\\\u0003DQG\u0003UKHWRULFDO\u0003TXHVWLRQV\u0003DERXW\u0003ZKDW\u0003KDSSHQV\u0003³>L@I\u0003WKLV\u0003*RG\u0010DZIXO\u0003GHDO\u0003 GRHV\u0003JR\u0003WKURXJK\u0011´ Id.",
"7KHUH\u0003ZHUH DOVR ad hominem VWDWHPHQWV\u0003DERXW\u0003QRW\u0003ZDQWLQJ\u0003³1DQXHW\u0003WR\u0003WXUQ\u0003 \u0014 $OO\u0003H[KLELW\u0003UHIHUHQFHV\u0003KHUHLQ\u0003DUH\u0003WR\u0003WKH\u0003%XFKZHLW]\u0003$IILUPDWLRQ\u0011 \u0015 <:1\u0003 <HVKLYD\u0003 :RUOG\u0003 1HZV \u000f\u0003 Clarkstown Residents Attack Rabbi Over School Project 1RY\u0011\u0003 \u0015 \u000f\u0003 \u0015\u0013\u0014\u001b \u000f\u0003 KWWSV \u0012\u0012ZZZ\u0011\\RXWXEH\u0011FRP\u0012ZDWFK\"Y =%\u00194J )*+2\u001b\u000f\u0003DW\u0003\u0015 \u0016\u0017\u0011 \u0016 3 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 5 of 21 RECEIVED NYSCEF: 01/17/2020 LQWR\u00035DPDSR\u000f´\u0003FDOOV\u0003IRU\u0003WKH\u00037RZQ\u0003WR\u0003³KDYH\u0003ZRUNHG\u0003KDUGHU´\u0003WR\u0003SXUFKDVH\u0003WKH\u00033URSHUW\\\u0011 Id. \u0019\u0011 7KH\u0003 ORFDO\u0003 RSSRVLWLRQ\u0003 DOVR\u0003 IRUPHG\u0003 D\u0003 FLWL]HQV¶\u0003 JURXS\u0003 FDOOHG\u0003 ³&LWL]HQV\u0003 8QLWHG\u0003 WR\u0003 3URWHFW\u00032XU\u00031HLJKERUKRRG\u000f´\u0003RU\u0003³&8321\u0003RI\u0003*UHDWHU\u00031DQXHW´\u0003 ³&8321´ \u000f\u0003IRU\u0003WKH\u0003H[SUHVV\u0003SXUSRVH\u0003 RI\u0003SUHYHQWLQJ\u0003$%<\u0003IURP\u0003RSHUDWLQJ\u0003DQ\u00032UWKRGR[\u0003-HZLVK\u0003VFKRRO\u0003LQ\u0003WKH\u00037RZQ\u0011\u0003\u0003&8321\u0003LV\u0003D\u0003ORFDO\u0003 FKDSWHU\u0003RI\u0003&8321\u0003RI\u00035RFNODQG\u000f\u0003DQ\u0003RUJDQL]DWLRQ\u0003QRWRULRXV\u0003IRU\u0003LWV\u0003DQWL\u00106HPLWLF\u0003DJHQGD\u0003WR\u0003SUHYHQW\u0003 2UWKRGR[\u0003-HZV\u0003IURP\u0003PRYLQJ\u0003LQWR\u0003FRPPXQLWLHV\u0003WKURXJKRXW\u00035RFNODQG\u0003&RXQW\\\u0003XQGHU\u0003WKH\u0003IDoDGH\u0003RI\u0003 ³RYHUGHYHORSPHQW´\u0003DQG\u0003SUHVHUYLQJ\u0003WKH\u0003³FKDUDFWHU´\u0003RI\u0003WKH\u0003FRPPXQLW\\\u0011\u0003\u0003 \u001a\u0011 2Q\u0003 'HFHPEHU\u0003 \u0014\u0015\u000f\u0003 \u0015\u0013\u0014\u001b\u000f\u0003 &8321\u0003 DOVR\u0003 VWDUWHG\u0003 D\u0003 ³*R)XQG0H´\u0003 FDPSDLJQ\u0011 ,W\u0003 KDV\u0003 UDLVHG\u0003 D\u0003 WRWDO\u0003 RI\u0003 \u0007\u0014\u0016\u000f\u0016\u0017\u0013\u0003 DV\u0003 RI\u0003 -DQXDU\\\u0003 \u0014\u001a\u000f\u0003 \u0015\u0013\u0015\u0013\u0011 ([\u0011\u0003 \u0017\u0011\u0003 \u0003 &8321¶V\u0003 YHU\\\u0003 SXUSRVH\u000f\u0003 DV\u0003 SHU\u0003 LWV\u0003 IXQGUDLVLQJ\u0003SDJH\u000f\u0003ZKLFK\u0003LW\u0003KDV\u0003VLQFH\u0003XSGDWHG\u0003LQ\u0003DQ\u0003DSSDUHQW\u0003DWWHPSW\u0003WR\u0003ZKLWHZDVK\u0003LWV\u0003XQGHUO\\LQJ\u0003 PLVVLRQ\u000f\u0003ZDV\u0003DQG\u0003LV\u0003WR\u0003SUHYHQW\u0003$%<¶V\u0003SXUFKDVH\u0003RI\u0003WKH\u00033URSHUW\\ \u0003³1DQXHW\u0003KDV\u0003EHFRPH\u0003XQLWHG\u0003LQ\u0003LWV\u0003 HIIRUWV\u0003WR\u0003HQVXUH\u0003WKDW\u0003WKH\u0003VDOH\u0003RI\u0003WKH\u0003*UDFH\u0003%DSWLVW\u0003&KXUFK\u0003LV\u0003RQH\u0003WKDW\u0003PDNHV\u0003VHQVH\u0003IRU\u0003WKH\u0003WRZQ\u000f\u0003LWV\u0003 UHVLGHQWV\u000f\u0003DQG\u0003WKHLU\u0003FKLOGUHQ¶V\u0003IXWXUH\u0011´\u0003 ([\u0011\u0003\u0017\u0003WR\u0003([\u0011\u0003\u001a\u0011 ,QGHHG\u000f\u0003XSRQ\u0003LWV\u0003HVWDEOLVKPHQW\u000f\u0003&8321\u0003 FUHDWHG\u0003 D\u0003 SHWLWLRQ\u0003 RQ\u0003 &KDQJH\u0011RUJ\u0003 HQWLWOHG\u000f\u0003 ³3HWLWLRQ\u0003 DJDLQVW\u0003 *UDFH\u0003 %DSWLVW\u0003 &KXUFK\u0003 EHFRPLQJ\u0003 D\u0003 VFKRRO\u0011´ $V\u0003RI\u0003'HFHPEHU\u0003\u0015\u0017\u000f\u0003\u0015\u0013\u0014 \u000f\u0003WKH\u0003SHWLWLRQ\u0003KDV\u0003EHHQ\u0003VLJQHG\u0003E\\\u0003\u0017\u000f\u001b\u0015\u0016\u0003SHRSOH\u0011 ([\u0011\u0003\u0018\u0011 \u001b\u0011 2Q\u0003RU\u0003DERXW\u0003'HFHPEHU\u0003\u0014\u001b\u000f\u0003\u0015\u0013\u0014\u001b\u0003± DPLG\u0003WKLV KHDWHG\u0003SXEOLF\u0003RSSRVLWLRQ\u0003WR\u0003WKH\u0003VDOH\u0003RI\u0003 WKH\u00033URSHUW\\\u0003WR\u0003$%<\u0003± WKH\u00035($&\u0003FDQFHOHG\u0003WKH\u0003SXEOLF\u0003KHDULQJ\u0011\u0003\u0003,'$¶V\u0003H[HFXWLYH\u0003GLUHFWRU\u0003H[SODLQHG\u0003 WKDW\u0003KROGLQJ\u0003D\u0003KHDULQJ\u0003EHIRUH\u0003$%<\u0003KDG\u0003UHFHLYHG\u0003SUHOLPLQDU\\\u0003SHUPLWV\u0003RU\u0003DSSURYDOV\u0003IURP\u0003WKH\u00037RZQ\u0003 ZRXOG\u0003EH\u0003³SXWWLQJ\u0003WKH\u0003FDUW\u0003EHIRUH\u0003WKH\u0003KRUVH\u0011´\u0016 :KLOH VXFK\u0003PHHWLQJV\u0003DUH\u0003W\\SLFDOO\\\u0003VSDUVHO\\\u0003DWWHQGHG\u000f\u0003 WKH\u00035($&\u0003NQHZ WKDW\u0003$%<¶V\u0003KHDULQJ\u0003ZDV\u0003OLNHO\\\u0003WR\u0003DWWUDFW\u0003KXQGUHGV\u0011 Id. \u0011 'HVSLWH\u0003 WKH\u0003 KRVWLOH\u0003 FOLPDWH\u000f\u0003 $%<\u0003 SHUVLVWHG\u0011\u0003 \u0003 2Q\u0003 'HFHPEHU\u0003 \u0015\u0019\u000f\u0003 \u0015\u0013\u0014\u001b\u000f\u0003 LQ\u0003 \u0016 5REHUW\u0003%UXP\u000f\u0003Nanuet church $5M sale: Hearing shelved amid lack of approvals\u000f\u000352&./$1'\u0012:(67&+(67(5\u0003 -2851$/\u00031(:6 'HF\u0011\u0003\u0014\u001b\u000f\u0003\u0015\u0013\u0014\u001b \u000f\u0003KWWSV \u0012\u0012ZZZ\u0011ORKXG\u0011FRP\u0012VWRU\\\u0012QHZV\u0012ORFDO\u0012URFNODQG\u0012QDQXHW\u0012\u0015\u0013\u0014\u001b\u0012\u0014\u0015\u0012\u0014\u001b\u0012QDQXHW\u0010 FKXUFK\u0010VDOH\u0010KHDULQJ\u0010VKHOYHG\u0012\u0015\u0016\u0016\u001a\u0017\u0013\u0018\u0013\u0013\u0015\u0011 \u0017 4 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO.",
"030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 6 of 21 RECEIVED NYSCEF: 01/17/2020 FRQIRUPDQFH\u0003 ZLWK\u0003 WKH\u0003 SURFHGXUHV\u0003 RI\u0003 WKH\u0003 7RZQ¶V\u0003 %XLOGLQJ\u0003 'HSDUWPHQW\u000f\u0003 $%<\u0003 VXEPLWWHG\u0003 DQ\u0003 DSSOLFDWLRQ\u0003WR\u0003WKH\u0003%XLOGLQJ\u0003'HSDUWPHQW\u0003IRU\u0003D\u0003SHUPLW\u0003WR\u0003PDNH\u0003VRPH\u0003QHHGHG\u0003LPSURYHPHQWV\u0003WR\u0003WKH\u0003 EXLOGLQJV\u0003 WKH\u0003³%XLOGLQJ\u00033HUPLW\u0003$SSOLFDWLRQ´ \u0011\u0003 \u0014\u0013\u0011 2Q\u0003-DQXDU\\\u0003\u0014\u0013\u000f\u0003\u0015\u0013\u0014 \u000f\u0003&8321 KHOG\u0003D\u0003PHHWLQJ\u0003DW\u0003D\u0003VFKRRO\u0003RSHUDWHG\u0003E\\\u0003WKH\u00031DQXHW\u0003 8QLRQ\u0003 )UHH\u0003 6FKRRO\u0003 'LVWULFW\u000f\u0003 DW\u0003 ZKLFK\u0003 6XSHUYLVRU\u0003 +RHKPDQQ\u0003 ERWK\u0003 DWWHQGHG\u0003 DQG\u0003 RIIHUHG\u0003 FORVLQJ\u0003 UHPDUNV\u0011\u0003 \u0003 $W\u0003 WKLV\u0003 PHHWLQJ\u000f\u0003 &8321¶V\u0003 FRXQVHO\u0003 HQJDJHG\u0003 LQ\u0003 DQ\u0003 LQ\u0010GHSWK\u0003 WUDLQLQJ\u0003 VHVVLRQ\u0003 DGYLVLQJ\u0003 &8321\u0003PHPEHUV\u0003DQG\u00037RZQ\u0003UHSUHVHQWDWLYHV\u0003± LQFOXGLQJ\u00036XSHUYLVRU\u0003+RHKPDQQ\u0003± RQ KRZ\u0003WR\u0003DSSHDU\u0003 ³IDFLDOO\\\u0003 QHXWUDO´²LQ\u0003 RWKHU\u0003 ZRUGV\u000f\u0003 KRZ\u0003 WR\u0003 PDVN\u0003 WKH\u0003 RUJDQL]DWLRQ¶V\u0003 XQGHUO\\LQJ\u0003 GLVFULPLQDWRU\\\u0003 PRWLYHV\u0011\u0003\u0003&RXQVHO\u0003IRU\u0003&8321\u0003H[KRUWHG LWV\u0003PHPEHUV\u000f\u0003IRU\u0003H[DPSOH\u000f WKDW\u0003WKH\\\u0003KDG\u0003³DGYHUVDULHV\u000f´\u0003QRW\u0003 ³HQHPLHV\u000f´\u0003DQG\u0003WKDW\u0003WKH\\\u0003VKRXOG\u0003QRW\u0003RSHUDWH\u0003RQ\u0003WKH\u0003EDVLV\u0003RI\u0003³KDWH\u0011´\u0003\u0003%XW\u000f\u0003KH\u0003WROG\u0003WKH\u0003FURZG\u000f\u0003³RI\u0003\\RX\u0003 FDQ¶W\u0003JHW\u0003WKDW\u0003KDWH\u0003RXW\u0003RI\u0003\\RXU\u0003KHDUW\u000f\u0003WKHQ\u0003SOHDVH\u0003NHHS\u0003\\RXU\u0003PRXWK\u0003VKXW\u0011´ \u0017 2Q\u0003LQIRUPDWLRQ\u0003DQG\u0003 EHOLHI\u000f\u0003FRXQVHO\u0003DGYLVHG\u0003WKH\u0003DWWHQGHHV\u0003WR\u0003IRFXV\u0003WKHLU\u0003FRPSODLQWV RQ\u0003LQQRFXRXV\u0003WRSLFV\u0003OLNH\u0003WUDIILF\u0003DQG\u0003 DYRLG\u0003RYHUW\u0003FRPSODLQWV\u0003WKDW\u0003LW\u0003ZDV\u00032UWKRGR[\u0003-HZV\u0003WKDW\u0003ZDQWHG\u0003WR\u0003SXUFKDVH\u0003DQG\u0003RSHUDWH\u0003WKH\u00033URSHUW\\\u0011\u0003 \u0014\u0014\u0011 7KH\u0003 QH[W\u0003 GD\\\u000f\u0003 LQ\u0003 D\u0003 SRVW\u0003 RQ\u0003 LWV\u0003 RIILFLDO\u0003 )DFHERRN\u0003 SDJH\u000f\u0003 WKH\u0003 5RFNODQG\u0003 &RXQW\\\u0003 FRPPLWWHH\u0003 RI\u0003 D\u0003 PDMRU\u0003 SROLWLFDO\u0003 SDUW\\\u0003 VXPPDUL]HG\u0003 WKH\u0003 &8321 PHHWLQJ\u0003 DV\u0003 D\u0003 ³UHVSHFWIXO\u0003 DQG\u0003 SURIHVVLRQDO\u0003\u0015\u0003KRXU\u0003SUHVHQWDWLRQ\u0003WKDW\u0003IRFXVHG\u0003RQ\u0003KRZ\u0003WKH\u0003FRPPXQLW\\\u0003FDQ\u0003SURWHFW\u0003WKHPVHOYHV\u0003IURP\u0003 D hostile invasion\u0011´\u0003\u0003See ([\u0011\u0003\u0014\u0003 HPSKDVLV\u0003DGGHG \u0011\u0003\u0003$V\u0003LI\u0003WKDW\u0003[HQRSKRELF\u0003VPHDU QHHGHG\u0003HODERUDWLRQ\u000f\u0003 D\u0003FRPPHQWHU\u0003GRXEOHG\u0003GRZQ\u0003RQ\u0003WKH\u0003KDWUHG /HW¶V\u0003DOO\u0003EH\u0003KRQHVW\u0003DQG\u0003YHUEDO\u0003DERXW\u0003WKH\u0003WHUP\u0003³KRVWLOH\u0003LQYDVLRQ\u0011´ :KLFK\u0003LV\u0003 PD\\EH\u0003D\u0003ELW\u0003KDUVK\u000f\u0003EXW\u0003QRW\u0003E\\\u0003DORW\u0011 \u0003&DQ\u0003ZH\u0003DOO\u0003VD\\\u0003WKLV\u0003RXW\u0003ORXG\u0003WRJHWKHU\"\u0003 7KH\u0003UHVLGHQWV\u0003RI\u00031DQXHW\u0003DQG\u00032UDQJHWRZQ\u0003GR\u0003QRW\u0003ZDQW\u0003WR\u0003VHH\u0003RXU\u0003WRZQV\u000f\u0003RQHV\u0003 ZH SD\\\u0003KLJK\u0003WD[HV\u0003WR\u0003OLYH\u0003LQ\u0003IRU\u0003ZRQGHUIXO\u0003VFKRROV\u000f\u0003SDUNV\u000f\u0003OLEUDULHV\u000f\u0003HWF\u000f\u0003RQHV\u0003 WKDW\u0003ZH\u0003KDYH\u0003DOO\u0003SDLG\u0003IRU\u0003KRPHV\u0003LQ\u0003RQH\u0003RI\u0003WKH\u0003FRVWOLHVW\u0003SODFHV\u0003LQ\u0003WKH\u0003QDWLRQ\u000f\u0003 RYHU\u0003FRPH\u0003ZLWK\u0003<HVKLYDV\u000f\u0003DQG\u0003WKH\u0003SULYDWH\u0003KRPHV\u0003WKDW\u0003DUH\u0003QRW\u0003WD[HG\u0003EHFDXVH\u0003 WKH\\\u0003DUH\u0003DOO\u0003\\HVKLYDV\u000f\u0003QRW UHVSRQVLEOH\u0003IRU\u0003WD[HV\u000f\u0003EXW\u0003ZH\u0003SD\\\u0003IRU\u0003WKHLU\u0003EXVVLQJ\u0003 \u0017 &ODUNVWRZQ\u0003± :KDW\u00037KH\\\u0003'RQ¶W\u0003:DQW <RX\u0003WR\u0003.QRZ\u000f\u0003CUPON’s Attorney Steven Mogel Discusses Possible Litigation\u000f\u0003 )$&(%22.",
"-DQ\u0011\u0003\u0014\u0013\u000f\u0003\u0015\u0013\u0014 \u000f\u0003KWWSV \u0012\u0012ZZZ\u0011IDFHERRN\u0011FRP\u0012&7:7':<7.\u0012YLGHRV\u0012\u0015\u0015\u0015\u0015\u0016\u0015\u0019\u0015\u0013\u001b\u0013\u001b\u0019\u0014\u001a\u0017\u000f\u0003DW\u0003\u0016 \u0014\u0013\u0011 \u0018 5 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 7 of 21 RECEIVED NYSCEF: 01/17/2020 DQG\u0003PRUH\u000f\u0003IRU\u0003+DVLGLFV\u0003WR\u0003LQILOWUDWH\u0003RXU\u0003ORFDO\u0003JRYHUQPHQWV DW\u0003WKH\u0003WRZQ\u000f\u0003 FRXQW\\\u0003OHYHOV\u000f\u0003DV\u0003ZHOO\u0003DV\u0003EHFRPLQJ\u0003LQYROYHG\u0003ZLWK\u0003RXU\u0003ORFDO\u0003SXEOLF\u0003VFKRRO\u0003 GLVWULFWV\u000f\u0003DQG\u0003VHHLQJ\u0003ZKDW\u0003ZH\u0003KDYH\u0003DOO\u0003ZRUNHG\u0003VR\u0003KDUG\u0003IRU\u000f FRQWLQXH\u0003WR\u0003GR\u0003VR\u000f\u0003 JR\u0003GRZQ\u0003WKH\u0003GUDLQ\u0003WR\u0003WKH\u0003WXQH\u0003RI\u0003WKH\u0003UDSLQJ\u0003RI\u0003RXU\u0003VFKRRO\u0003EXGJHWV DQG\u0003 WKH\u0003ODUJH\u0003GHFUHDVH\u0003LQ\u0003SURSHUW\\\u0003YDOXHV\u000f\u0003DV\u0003ZH\u0003KDYH\u0003DOO\u0003VHHQ\u0003KDSSHQ\u0003LQ\u00035DPDSR\u0011\u0003 7KH\u0003SHRSOH\u0003WKDW\u0003VXIIHU\u0003ZKHQ\u0003WKH\u0003KDVLGLFV\u0003FRPH\u0003LQWR\u0003RXU\u0003FRPPXQLW\\ DUH\u0003 VWXGHQWV\u0003DQG\u0003DOO\u0003RI\u0003WKHLU\u0003H[WUD\u0003FXUULFXODU\u0003SURJUDPV\u000f\u0003QRW\u0003WR\u0003PHQWLRQ\u0003WKH\u0003IDFW\u0003 WKDW\u0003 WKH\u0003 WHDFKHUV\u0003 VDODULHV\u0003 JR\u0003 GRZQ\u0003 FRQVLGHUDEO\\\u000f\u0003 VR\u0003 ZH\u0003 ZRQW\u0003 JHW\u0003 WKH\u0003 EHVW\u0003 DQ\\PRUH\u000f\u0003EXW\u0003DOVR\u0003WKH\u0003IRONV\u0003WKDW\u0003ORRN\u0003IRUZDUG\u0003WR\u0003UHWLULQJ\u0003KHUH\u0003ZLWK\u0003HTXLW\\\u0003LQ\u0003 WKHLU\u0003KRPHV\u000f\u0003DV\u0003RSSRVHG\u0003WR\u0003RZLQJ\u0003PRQH\\\u0003DW\u0003UHWLUHPHQW\u0003WLPH\u0003GXH\u0003WR\u0003D\u0003GUDVWLF\u0003 GHFUHDVH\u0003LQ\u0003SURSHUW\\\u0003YDOXHV\u0011\u00036R\u0003WKHUH\u0003\\RX\u0003JR\u0011\u0003\u0011\u0003\u0011\u0003\u0011\u00031DQXHW\u0003DQG\u00032UDQJHWRZQ\u0003 UHVLGHQWV\u0003 GR\u0003 QRW\u0003 ZDQW\u0003 +DVLGLF\u0003 FRPPXQLWLHV\u0003 KHUH\u0011 ,¶P\u0003 FOHDUO\\\u0003 QRW\u0003 VSHDNLQJ\u0003IRU\u0003DOO\u000f\u0003EXW\u0003,\u0003DP\u0003VXUH\u0003D\u0003ODUJH\u0003PDMRULW\\\u0011 ([\u0011\u0003\u0015\u0003 HPSKDVLV\u0003DGGHG \u0011\u00037KH\u0003SRVW\u0003DQG\u0003UHVSRQVH\u0003UHPDLQ\u0003RQ\u0003WKH\u0003)DFHERRN\u0003SDJH\u0011\u0003 \u0014\u0015\u0011 7KDW\u0003YHU\\\u0003VDPH\u0003GD\\\u000f\u0003WKH\u00037RZQ¶V\u0003%XLOGLQJ\u0003,QVSHFWRU\u0003GHQLHG\u0003$%<¶V\u0003%XLOGLQJ\u00033HUPLW\u0003 $SSOLFDWLRQ\u0003 WKH\u0003³'HQLDO\u0003/HWWHU´ \u0011 See ([\u0011\u0003\u0019\u0011 +H\u0003VXPPDULO\\\u0003FRQFOXGHG\u0003WKDW\u0003EHFDXVH WKH\u0003%XLOGLQJ\u0003 'HSDUWPHQW\u0003KDG\u0003QR\u0003UHFRUGV\u0003RI\u0003D\u00031HZ\u0003<RUN\u00036WDWH\u0003)LUH\u0003,QVSHFWLRQ\u0003RQ\u0003WKH\u00033URSHUW\\\u0003VLQFH\u0003\u0014 \u0013\u000f\u0003*%&¶V\u0003 VFKRRO\u0003XVH\u0003DW\u0003WKH\u00033URSHUW\\\u0003KDG\u0003FHDVHG\u0003XQGHU\u0003&ODUNVWRZQ\u00037RZQ\u0003&RGH\u0003VHFWLRQ\u0003\u0015 \u0013\u0010\u0015 & \u0011 Id. $QG\u000f\u0003 EHFDXVH\u0003WKH\u0003%XLOGLQJ\u0003,QVSHFWRU\u0003LQWHUSUHWHG\u0003&ODUNVWRZQ\u00037RZQ\u0003&RGH\u0003VHFWLRQ\u0003\u0015 \u0013\u0010\u0015\u0013\u0011, \u001a \u0003WR\u0003FUHDWH\u0003 QHZ\u0003XVH\u0003UHTXLUHPHQWV ± D\u0003GHWHUPLQDWLRQ\u0003WKDW\u0003LV\u0003ZKROO\\\u0003HUURQHRXV\u0003DQG\u0003FRQWUDU\\\u0003WR\u0003DSSOLFDEOH\u0003ODZ\u0003± KH\u0003FRQFOXGHG\u0003WKDW\u0003³>D@\u0003YDULDQFH\u0003IURP\u0003WKH\u0003>=%$@\u0003ZRXOG\u0003EH\u0003UHTXLUHG\u0003IRU\u0003WKH\u0003XVH\u0003RI\u0003WKH\u0003VFKRRO\u0003RI\u0003 JHQHUDO\u0003LQVWUXFWLRQ\u0011´\u0003 Id. +RZHYHU\u000f\u0003WKH\u0003UHFRUG\u0003ZDV\u0003FOHDU\u0003WKDW\u0003*%&\u0003KDG\u0003RSHUDWHG D\u0003VFKRRO\u0003RQ\u0003WKH\u0003 3URSHUW\\\u0003FRQWLQXRXVO\\\u0003VLQFH\u0003\u0014 \u0013\u0011\u0003\u0003See ([\u0011\u0003\u0014\u0003WR\u0003([\u0011\u0003\u001a\u0011\u0003\u00031RWDEO\\\u000f WKH\u00037RZQ\u0003KDV\u0003HIIHFWLYHO\\\u0003FRQFHGHG\u0003 LWV\u0003XQODZIXO\u0003PLVDSSOLFDWLRQ\u0003RI\u0003WKH\u0003ODZ\u000f\u0003HYLGHQFHG\u0003E\\\u0003LWV VXEVHTXHQW\u0003DWWHPSW\u0003 DQG\u0003IDLOXUH \u0003WR\u0003DPHQG\u0003 LWV\u0003]RQLQJ\u0003FRGH\u0003WR\u0003DOLJQ\u0003ZLWK\u0003LWV\u0003GHVLUHG PLVDSSOLFDWLRQ\u0011 \u0014\u0016\u0011 6SHFLILFDOO\\\u000f\u0003LQ\u0003KLV\u0003'HQLDO\u0003/HWWHU\u000f\u0003WKH\u0003%XLOGLQJ\u0003,QVSHFWRU\u0003VWDWHG $\u0003 YDULDQFH\u0003 IURP\u0003 WKH\u0003 &ODUNVWRZQ\u0003 =RQLQJ\u0003 %RDUG\u0003 RI\u0003 $SSHDOV\u0003 ZRXOG\u0003 EH\u0003 UHTXLUHG\u0003IRU\u0003WKH\u0003XVH\u0003RI\u0003WKH\u0003VFKRRO\u0003RI\u0003JHQHUDO\u0003LQVWUXFWLRQ\u0011\u00032XU\u0003UHFRUGV\u0003VKRZ\u0003 WKH\u0003 ODVW\u0003 UHTXLUHG\u0003 1<\u0003 6WDWH\u0003 )LUH 6DIHW\\\u0003 LQVSHFWLRQ\u0003 IRU\u0003 D\u0003 VFKRRO\u0003 RI\u0003 JHQHUDO\u0003 LQVWUXFWLRQ\u0003 RQ\u0003 WKLV\u0003 SURSHUW\\\u0003 ZDV\u0003 FRQGXFWHG\u0003 RQ\u0003 'HFHPEHU\u0003 \u0014\u0014\u000f\u0003 \u0014 \u0013\u0011\u0003 &ODUNVWRZQ\u0003 7RZQ\u0003 &RGH\u0003 VHFWLRQ\u0003 \u0015 \u0013\u0010\u0015 &\u0003 QRQ\u0010FRQIRUPLQJ\u0003 XVH \u0003 ³'LVFRQWLQXDQFH\u0003RI\u0003XVH\u0011\u0003,I\u0003DFWLYH\u0003DQG\u0003FRQWLQXRXV\u0003RSHUDWLRQV\u0003DUH\u0003QRW\u0003FDUULHG\u0003 \u0019 6 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO.",
"030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 8 of 21 RECEIVED NYSCEF: 01/17/2020 RQ\u0003ZLWK\u0003UHVSHFW\u0003WR\u0003D\u0003QRQFRQIRUPLQJ\u0003XVH\u0003GXULQJ\u0003D\u0003FRQWLQXRXV\u0003SHULRG\u0003RI\u0003RQH\u0003 \\HDU\u000f\u0003WKH\u0003EXLOGLQJ\u0003RU\u0003ODQG\u0003ZKHUH\u0003VXFK\u0003QRQFRQIRUPLQJ\u0003XVH\u0003SUHYLRXVO\\\u0003H[LVWHG\u0003 VKDOO\u0003 WKHUHDIWHU\u0003 EH\u0003 RFFXSLHG\u0003 DQG\u0003 XVHG\u0003 RQO\\\u0003 IRU\u0003 D\u0003 FRQIRUPLQJ\u0003 XVH\u0011´\u0003 &ODUNVWRZQ\u00037RZQ\u0003&RGH\u0003VHFWLRQ\u0003\u0015 \u0013\u0010\u0015\u0013, \u001a \u0003DGGLWLRQDO\u0003UHJXODWLRQV\u000f\u0003$OO\u0003XVHV\u0003 RWKHU\u0003WKDQ\u0003VLQJOH\u0003IDPLO\\\u0003UHVLGHQFHV\u0003VKDOO\u0003KDYH\u0003PLQLPXP\u0003IURQWDJH\u0003RI\u0003\u0014\u0013\u0013\u0003IHHW\u0003 DQG\u0003DFFHVV\u0003WR\u0003HLWKHU\u0003D\u0003VWDWH\u0003RU\u0003FRXQW\\\u0003PDMRU\u0003RU\u0003VHFRQGDU\\\u0003URDG\u0003DV\u0003FODVVLILHG\u0003 RQ\u0003WKH\u00037RZQ\u00032IILFLDO\u00030DS\u0011 ([\u0011\u0003\u0019\u0011 \u0014\u0017\u0011 )ROORZLQJ\u0003WKH\u0003GHQLDO\u0003RI\u0003LWV %XLOGLQJ\u00033HUPLW\u0003$SSOLFDWLRQ\u000f\u0003$%<\u0003VXEPLWWHG\u0003D WLPHO\\ DSSHDO\u0003WR\u0003WKH\u0003&ODUNVWRZQ\u0003=RQLQJ\u0003%RDUG\u0003RI\u0003$SSHDOV\u0003 WKH\u0003³=%$´ RQ\u00030DUFK\u0003\u001b\u000f\u0003\u0015\u0013\u0014 \u0011 See ([\u0011\u0003\u001a\u0011 $%<¶V\u0003DSSHDO\u0003FRQWHQGHG WKDW\u0003WKH\u0003%XLOGLQJ\u0003,QVSHFWRU¶V\u0003DSSOLFDWLRQ\u0003RI\u0003LWV\u0003]RQLQJ\u0003FRGH\u0003WR\u0003$%<\u0003ZDV\u0003 ZKROO\\\u0003LPSURSHU\u0003DQG\u0003FRQWUDU\\\u0003WR\u0003DSSOLFDEOH\u0003ODZ\u0011\u0003\u0003Id. $%< DOWHUQDWLYHO\\\u0003VRXJKW\u0003DQ\u0003DUHD\u0003YDULDQFH IURP\u0003 WKH\u0003 UHTXLUHPHQWV\u0003 RI\u0003 6HFWLRQ\u0003 \u0015 \u0013\u0010\u0015\u0013, \u001a \u000f\u0003 DOORZLQJ\u0003 WKH\u0003XVH\u0003 RI\u0003 WKH\u0003 3URSHUW\\\u0003 DV\u0003 D\u0003 VFKRRO\u0003 DQG\u0003 KRXVH\u0003RI\u0003ZRUVKLS\u0003ZLWKRXW\u0003KDYLQJ\u0003IURQWDJH\u0003RQ\u000f\u0003DQG\u0003DFFHVV\u0003WR\u000f\u0003D\u0003³D\u0003VWDWH\u0003RU\u0003FRXQW\\\u0003PDMRU\u0003RU\u0003VHFRQGDU\\\u0003 URDG\u0011´\u0003\u0003Id.",
"$%<\u0003PDGH\u0003FOHDU\u0003WKDW\u0003LW\u0003KDG QR\u0003SODQV\u0003WR\u0003HUHFW\u0003QHZ\u0003EXLOGLQJV\u000f\u0003DGG\u0003RQ\u0003WR\u0003WKH\u0003H[LVWLQJ\u0003 EXLOGLQJV\u000f\u0003RU\u0003GHPROLVK\u0003WKH\u0003H[LVWLQJ\u0003EXLOGLQJV\u0011 Id. ,W\u0003DOVR\u0003KDG QR\u0003SODQV\u0003WR\u0003DOWHU\u0003WKH\u0003H[LVWLQJ\u0003SDUNLQJ\u0003 DUHD\u0003RU\u0003VWUHHW\u0003JULG\u0011 $%<\u0003H[SODLQHG\u0003WKDW\u0003RWKHU\u0003WKDQ\u0003D\u0003IHZ\u0003FRVPHWLF\u0003FKDQJHV\u0003DQG\u0003WKH\u0003UHPRYDO\u0003RI\u0003QRQ\u0010 -HZLVK\u0003UHOLJLRXV\u0003V\\PEROV\u000f\u0003LW\u0003ZLVKHG\u0003RQO\\\u0003WR\u0003PRGLI\\\u0003WKH\u0003LQWHULRU\u0003WR\u0003PHHW\u0003LWV\u0003HGXFDWLRQDO\u0003QHHGV\u0011\u0003 Id. 7KH\u0003only FKDQJH\u0003WR\u0003WKH\u0003QHLJKERUKRRG\u0003ZRXOG\u0003EH\u0003WKH\u0003XVH\u0003RI\u0003D\u0003VFKRRO\u0003EXLOGLQJ\u0003DQG\u0003LWV\u0003DFFRPSDQ\\LQJ\u0003 VDQFWXDULHV\u0003E\\\u0003D\u0003-HZLVK\u0003HQWLW\\\u000f\u0003UDWKHU\u0003WKDQ\u0003D\u0003&KULVWLDQ\u0003RQH\u0011 Id. \u0014\u0018\u0011 0HUH\u0003GD\\V\u0003DIWHU $%<¶V\u0003DSSHDO\u000f\u0003LW\u0003IDFHG\u0003DGGLWLRQDO\u0003GLVFULPLQDWRU\\\u0003EDFNODVK\u0011\u0003 &HUWDLQ\u0003 UHVLGHQWV\u0003± ZKR\u000f\u0003XSRQ\u0003LQIRUPDWLRQ\u0003DQG\u0003EHOLHI\u000f\u0003ZHUH\u0003&8321\u0003PHPEHUV\u0003± WRRN\u0003WR\u0003VRFLDO\u0003PHGLD\u0003WR\u0003 YRLFH\u0003WKHLU\u0003KDWUHG x ³They are nothing but parasites! 7KH\\\u0003GRQ¶W\u0003ZDQW\u0003WR\u0003IROORZ\u0003WKH\u0003UXOHV\u000f\u0003they are disgusting! 8QIRUWXQDWHO\\\u0003 ZKDW\u0003 >@\u0003 VDLG\u0003 ZDV\u0003 SUHWW\\\u0003 FORVH\u0003 WR\u0003 ZKDW\u0003 ZLOO\u0003 KDSSHQ\u0004\u00037KH\\\u0003ZLOO\u0003KLUH\u0003ODZ\\HUV\u0003IRU\u0003WKH\u0003cult DQG\u0003WLUHOHVVO\\\u0003GUDJ\u0003LW\u0003WKURXJK\u0003WKH\u0003 FRXUWV\u0003 XQWLO\u0003 WKH\\\u0003 JHW\u0003 WKH\u0003 GHVLUHG\u0003 UHVXOWV\u0004\u0003 \u0006PRQVH\\FRZER\\V\u0003 \u0006SDUDVLWHV\u0003 \u0006KRSHWKH\\DOOJHWPHDVOHV\u0011´\u0003 HPSKDVLV\u0003DGGHG x ³<RX\u0003EHWWHU\u0003EHIRUH\u0003WKH>\\@\u0003infest 3HDUO\u00035LYHU\u0004\u0003*RRG\u0003OXFN\u0004´\u0003 HPSKDVLV\u0003DGGHG \u001a 7 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 Case NYSCEF DOC. NO. 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 9 of 21 RECEIVED NYSCEF: 01/17/2020 x ³,\u0003ZDV\u0003ZDLWLQJ\u0003IRU\u0003WKLV\u0011\u0003:KDW\u00035RFNODQG\u0003&RXQW\\\u0003QHHGV\u0003LV\u0003DQ\u0003DZHVRPH\u0003ODZ\\HU\u0003 WR\u0003DUJXH\u0003EHIRUH\u0003WKH\u00036XSUHPH\u0003&RXUW\u0003WKDW\u00035/8,3$\u0003LV\u0003XQFRQVWLWXWLRQDO\u0011\u0003$QG\u0003 ZH\u0003QHHG\u0003WKDW\u0003ODZ\\HU\u0003QRZ\u0011´ x ³2I\u0003FRXUVH\u0003WKH\\\u0003DUH\u0003DSSHDOLQJ\u0011\u00032I\u0003FRXUVH\u0003WKH\\\u0003EODPH\u0003WKH\u00031DQXHW\u0003FRPPXQLW\\\u0011\u0003 2I\u0003FRXUVH\u0003WKH\\ KLUHG\u00035/8,3$\u0003ODZ\\HUV\u0011\u00031DQXHW\u0003ZHOFRPH\u0003WR\u0003WKH\u0003JDPH\u000f\u0003\\RX\u0003 ZLOO\u0003EH\u0003ODEHOHG\u0003DQWL\u00106HPLWLF\u0011\u0003<RX\u0003ZLOO\u0003DOO\u0003EH\u0003KDUDVVHG\u0003DQG\u0003LQWLPLGDWHG\u0003RQ\u0003 VRFLDO\u0003PHGLD\u000f\u0003DW\u0003\\RXU\u0003ZRUN\u0003SODFH\u000f\u0003DQG\u0003DW\u0003SXEOLF\u0003IRUXPV\u0003\u0011\u0003\u0011\u0003\u0011\u0003\u0011´ ([\u0011\u0003\u001b HPSKDVLV DGGHG \u0011 \u0014\u0019\u0011 2Q\u0003 0DUFK\u0003 \u0014 \u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 HYHQ\u0003 WKRXJK\u0003 $%<¶V DSSHDO\u0003 LQFOXGHG\u0003 DOO\u0003 HOHPHQWV\u0003 DQG\u0003 GRFXPHQWV\u0003UHTXLUHG\u0003E\\\u0003WKH\u00037RZQ\u0003&RGH\u0003DQG\u0003WKH\u0003=%$¶V\u0003RZQ\u0003SXEOLVKHG\u0003UXOHV\u000f\u0003WKH\u0003=%$\u0003LQH[SOLFDEO\\\u0003 GHFOLQHG\u0003WR\u0003even schedule a hearing\u0011\u0003\u0003,QVWHDG\u000f\u0003LW SODFHG\u0003RQ\u0003$%<\u0003WKH\u0003DGGLWLRQDO\u0003EXUGHQ\u0003RI\u0003VXEPLWWLQJ\u0003 D\u0003VXUYH\\\u0003RI\u0003WKH\u00033URSHUW\\\u0003 D UHTXLUHPHQW\u0003WKDW\u0003ZDV\u0003XQQHFHVVDU\\\u000f\u0003EXW ZLWK\u0003ZKLFK $%<\u0003FRPSOLHG\u0003DW\u0003 JUHDW\u0003H[SHQVH \u0011\u0003\u0003See ([V\u0011\u0003 \u0010\u0014\u0013\u0011 \u0014\u001a\u0011 $V\u0003 D\u0003 GLUHFW\u0003 UHVXOW\u0003 RI\u0003 WKH\u0003 %XLOGLQJ\u0003 ,QVSHFWRU¶V GHQLDO\u0003 RI\u0003 $%<¶V\u0003 %XLOGLQJ\u0003 3HUPLW\u0003 $SSOLFDWLRQ\u0003DQG\u0003WKH\u0003=%$¶V\u0003XQGXH\u0003GHOD\\\u0003LQ VFKHGXOLQJ D\u0003KHDULQJ\u000f ,QYHVWRUV\u0003%DQN\u0003UHYRNHG\u0003LWV\u0003/HWWHU\u0003 RI\u0003,QWHQW\u0003WR\u0003SURYLGH\u0003$%<\u0003ZLWK\u0003ILQDQFLQJ\u0003WR\u0003SXUFKDVH\u0003WKH\u00033URSHUW\\\u0011\u0003\u0003See )LQN\u0003$II\u0011\u0003 \u0014\u0015\u0011 $%<\u0003ZDV\u0003 XQDEOH\u0003WR\u0003REWDLQ\u0003DOWHUQDWLYH\u0003PHDQV\u0003 RI\u0003ILQDQFLQJ\u0003WKH\u0003DFTXLVLWLRQ\u0003RI\u0003WKH\u00033URSHUW\\ EHFDXVH\u0003OHQGHUV\u0003 IHDUHG\u0003WKDW\u0003$%<\u0003ZRXOG\u0003QRW\u0003EH\u0003DEOH\u0003WR\u0003RYHUFRPH\u0003WKH\u00037RZQ¶V\u0003PDQLIHVW\u0003KRVWLOLW\\ DQG\u0003FOHDU\u0003LQWHUHVW\u0003LQ\u0003 SUHYHQWLQJ\u0003DQ\u00032UWKRGR[\u0010-HZLVK\u0003VFKRRO\u0003IURP\u0003³LQYDGLQJ´\u0003WKHLU\u00037RZQ\u0011\u0003\u0003$V\u0003D\u0003UHVXOW\u000f\u0003$%<\u0003ZDV\u0003XQDEOH\u0003 WR\u0003FORVH\u0003E\\\u0003WKH\u0003WLPH\u0003RI\u0003WKH\u0003HVVHQFH\u0003GDWH\u0003VHW\u0003E\\ *%&\u0003DQG\u0003WKH\u0003FRQWUDFW\u0003ZDV\u0003WHUPLQDWHG\u0011 \u0018 \u0014\u001b\u0011 2Q\u00030D\\\u0003\u0014\u0019\u000f\u0003\u0015\u0013\u0014 \u000f\u0003*%&\u0003ILOHG\u0003D\u0003OHWWHU\u0003ZLWK\u0003WKH\u0003=%$\u0003³UHYRN>LQJ@\u0003DQ\\\u0003FRQVHQW\u0003WR\u0003ODQG\u0003 XVH\u0003 DSSOLFDWLRQV´\u0003 UHODWLQJ\u0003 WR\u0003 WKH\u0003 3URSHUW\\\u0011\u0003 See ([\u0011\u0003 \u0014\u0015\u0011 7KDW\u0003 VDPH\u0003 GD\\\u000f\u0003 6XSHUYLVRU\u0003 +RHKPDQQ\u0003 \u0018 2Q\u00030D\\\u0003\u0014\u0019\u000f\u0003\u0015\u0013\u0014 \u000f\u0003$%<\u0003UHFHLYHG\u0003D\u0003OHWWHU\u0003IURP\u0003*%&\u0003WHUPLQDWLQJ\u0003WKH\u0003FRQWUDFW\u0011\u0003 See )LQN\u0003$II\u0011 \u0014\u0016 \u0003see also ([\u0011\u0003\u0014\u0014\u0011\u0003 &RQWUDU\\ WR WKH\u00033HWLWLRQ\u000f\u0003DW\u0003QR\u0003SRLQW\u0003GLG\u0003$%<\u0003VHHN\u0003WR\u0003WHUPLQDWH\u0003RU\u0003FDQFHO\u0003WKH\u0003FRQWUDFW\u0003ZLWK\u0003*%&\u000f\u0003QHLWKHU\u0003RQ\u0003LWV\u0003RZQ\u0003 DFFRUG\u0003RU\u0003WKURXJK\u0003LWV\u0003FRXQVHO\u0011\u0003 See )LQN\u0003$II\u0011 \u0014\u0016\u0003 ³$W\u0003QR\u0003SRLQW\u0003GLG\u0003,\u0003FDQFHO\u0003WKH\u0003FRQWUDFW\u000f\u0003RU\u0003GLUHFW\u0003RU\u0003DXWKRUL]H\u0003DQ\\\u0003 DJHQW\u0003RI\u0003PLQH\u0003RU\u0003$%<¶V\u0003WR\u0003FDQFHO\u0003WKH\u0003FRQWUDFW´ \u0011\u0003\u0003 \u001b 8 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC.",
"NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 10 of NYSCEF: RECEIVED 21 01/17/2020 SXEOLFO\\\u0003VWDWHG WKDW\u0003³WKH\u0003>7@RZQ\u0003KDV\u0003LQWHUHVW\u0003LQ\u0003WKH\u0003SURSHUW\\\u0003DQG\u0003ZLOO\u0003HYDOXDWH\u0003LWV\u0003RSWLRQV\u0003LQ\u0003WKH\u0003 FRPLQJ\u0003ZHHNV\u0011´ \u0019 \u0014 \u0011 2Q\u0003-XQH\u0003\u0017\u000f\u0003\u0015\u0013\u0014 \u000f\u00036XSHUYLVRU\u0003+RHKPDQQ\u0003OHIW\u0003QR\u0003GRXEW\u0003DERXW\u0003WKH\u00037RZQ¶V\u0003LQWHQWLRQV \u0003 ³,\u0003DP\u0003H[FLWHG\u0003DERXW\u0003WKH\u0003SURVSHFWV\u0003IRU\u0003WKH\u0003DFTXLVLWLRQ\u0003RI\u0003*UDFH\u0003%DSWLVW\u0003&KXUFK\u0011\u0003\u0011\u0003\u0011\u0003\u0011\u0003$OO\u0003RSWLRQV\u0003DUH\u0003 RQ\u0003WKH\u0003WDEOH\u0003DQG\u0003,\u0003ORRN\u0003IRUZDUG\u0003WR\u0003WKH\u0003LQYROYHPHQW\u0003RI\u0003WKH\u0003VFKRRO\u0003GLVWULFW\u0003DQG\u0003SRWHQWLDOO\\\u0003WKH\u0003SULYDWH\u0003 VHFWRU\u0003WR\u0003FUHDWH\u0003VRPHWKLQJ\u0003XQLTXH\u0003IRU\u0003WKH\u0003EHQHILW\u0003RI\u0003DOO\u0003UHVLGHQWV\u0011´ \u001a \u0015\u0013\u0011 $OVR\u0003 RQ\u0003 -XQH\u0003 \u0019\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 $%<\u0003 ILOHG\u0003 D\u0003 OHWWHU\u0003 ZLWK\u0003 WKH\u0003 =%$\u0003 REMHFWLQJ\u0003 WR\u0003 *%&¶V\u0003 ZLWKGUDZDO\u0003RI\u0003FRQVHQW\u0003DQG\u0003XUJLQJ\u0003WKH\u0003=%$\u0003WR\u0003VFKHGXOH\u0003D\u0003KHDULQJ\u0011 ([\u0011\u0003\u0014\u0016\u0011 $%<\u0003DUWLFXODWHG\u0003LQ\u0003LWV\u0003 OHWWHU WKDW\u0003WKH\u00037RZQ¶V\u0003LQWHUIHUHQFH\u0003ZDV\u0003WKH\u0003GLUHFW\u0003FDXVH\u0003RI\u0003$%<\u0003ORVLQJ\u0003LWV\u0003ILQDQFLQJ\u0003UHVRXUFHV\u0011 Id. $%<\u0003DWWDFKHG\u0003D\u0003VSHFLDO\u0003PHPRUDQGXP\u0003RI\u0003ODZ\u0003FRQFHUQLQJ\u0003UHOLJLRXV\u0003GLVFULPLQDWLRQ\u0003IURP\u0003LWV\u0003pro bono DWWRUQH\\V\u000f\u0003ZKLFK\u0003IRFXVHG\u0003XSRQ\u0003KRZ\u0003WKH\u0003%XLOGLQJ\u0003,QVSHFWRU¶V\u0003GHQLDO\u0003RI\u0003D\u0003EXLOGLQJ\u0003SHUPLW\u0003LQIULQJHG\u0003 XSRQ\u0003$%<¶V\u0003UHOLJLRXV\u0003OLEHUWLHV\u000f ZDV\u0003ULIH\u0003ZLWK\u0003LQYLGLRXV\u0003GLVFULPLQDWLRQ\u000f\u0003DQG\u0003UDQ\u0003FRQWUDU\\\u0003WR\u00036HFRQG\u0003 'HSDUWPHQW\u0003ODZ\u0003UHTXLULQJ\u0003PXQLFLSDOLWLHV\u0003DQG\u0003]RQLQJ\u0003DXWKRULWLHV\u0003WR\u0003UHDVRQDEO\\\u0003DFFRPPRGDWH\u0003WKH\u0003 IUHH\u0003H[HUFLVH\u0003RI\u0003UHOLJLRQ\u000f\u0003ZKLFK\u0003LV\u0003LQKHUHQWO\\\u0003EHQHILFLDO\u0011\u001b \u0019 5REHUW\u0003 %UXP\u000f\u0003 Nanuet: Grace Baptist Church terminates sale to Ateres Bais Yaacov\u000f\u0003 52&./$1'\u0012:(67&+(67(5\u0003 -2851$/\u00031(:6\u0003 0D\\ \u0014\u0019\u000f \u0015\u0013\u0014 \u000f KWWSV \u0012\u0012ZZZ\u0011ORKXG\u0011FRP\u0012VWRU\\\u0012QHZV\u0012ORFDO\u0012URFNODQG\u0012QDQXHW\u0012\u0015\u0013\u0014 \u0012\u0013\u0018\u0012\u0014\u0019\u0012JUDFH\u0010EDSWLVW\u0010 FKXUFK\u0010WHUPLQDWHV\u0010VDOH\u0010\\HVKLYD\u0010QDQXHW\u0012\u0016\u0019\u0019\u0018\u0014\u0015\u001a\u0013\u0013\u0015\u0011 \u001a 5REHUW\u0003%UXP\u000f\u0003Nanuet: Town, school district exploring Grace Baptist Church purchase\u000f\u000352&./$1'\u0012:(67&+(67(5\u0003 -2851$/\u0003 1(:6 -XQH\u0003 \u0017\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 KWWSV \u0012\u0012ZZZ\u0011ORKXG\u0011FRP\u0012VWRU\\\u0012QHZV\u0012ORFDO\u0012URFNODQG\u0012QDQXHW\u0012\u0015\u0013\u0014 \u0012\u0013\u0019\u0012\u0013\u0017\u0012QDQXHW\u0010WRZQ\u0010 VFKRRO\u0010GLVWULFW\u0010H[SORULQJ\u0010JUDFH\u0010EDSWLVW\u0010FKXUFK\u0010SXUFKDVH\u0012\u0014\u0016\u0017\u0015 \u0019\u0014\u0013\u0013\u0014\u0011 \u001b Id. \u0003see, e.g.\u000f\u0003East End Eruv Ass’n, Inc. v. Town of Southampton\u000f\u00031R\u0011\u0003\u0014\u0017\u0010\u0015\u0014\u0014\u0015\u0017\u000f\u0003\u0015\u0013\u0014\u0018\u0003:/\u0003\u0017\u0014\u0019\u0013\u0017\u0019\u0014\u000f\u0003DW\u0003 \u0019\u0003 1\u0011<\u0011\u0003 6XS\u0011\u0003&W\u0011\u000f 6XIIRON\u0003&W\\\u0011\u0003-XQH\u0003\u0016\u0013\u000f\u0003\u0015\u0013\u0014\u0018 \u0003 FRQFOXGLQJ\u0003WKDW\u0003³JUHDWHU\u0003IOH[LELOLW\\\u0003LV\u0003UHTXLUHG\u0003LQ\u0003HYDOXDWLQJ\u0003DQ\u0003DSSOLFDWLRQ\u0003IRU\u0003 D\u0003UHOLJLRXV\u0003XVH´\u0003DQG\u0003WKDW\u0003]RQLQJ\u0003ERDUGV\u0003KDYH\u0003³DQ\u0003DIILUPDWLYH\u0003GXW\\\u0003\u0011\u0003\u0011\u0003\u0011\u0003WR\u0003VXJJHVW\u0003PHDVXUHV WR\u0003DFFRPPRGDWH\u0003WKH\u0003 SODQQHG\u0003UHOLJLRXV\u0003XVH\u0003 FLWDWLRQ\u0003RPLWWHG \u0003Smith v. Cmty. Bd. No.",
"14\u000f\u0003\u0014\u0015\u001b\u00030LVF\u0011\u0003\u0015G\u0003 \u0017\u0017\u000f\u0003 \u0017 \u0003 1\u0011<\u0011\u00036XS\u0011\u0003&W\u0011\u000f 4XHHQV\u0003 &W\\\u0011\u0003\u0014 \u001b\u0018 \u000f\u0003aff’d\u000f\u0003\u0014\u0016\u0016\u0003$\u0011'\u0011\u0015G\u0003\u001a \u0003 \u0015G\u0003'HS¶W\u0003\u0014 \u001b\u001a \u0003 FRQFOXGLQJ\u0003WKDW\u0003³1HZ\u0003<RUN\u0003FRXUWV\u0003KDYH\u0003ORQJ\u0003UHFRJQL]HG\u0003WKH\u0003 SULQFLSOH\u0003RI\u0003DFFRPPRGDWLRQ´\u0003DQG\u0003³KDYH\u0003UHSHDWHGO\\\u0003KHOG\u0003WKDW\u0003E\\\u0003WKHLU\u0003YHU\\\u0003QDWXUH\u0003UHOLJLRXV\u0003LQVWLWXWLRQV\u0003DUH\u0003EHQHILFLDO\u0003 WR\u0003WKH\u0003SXEOLF\u0003ZHOIDUH\u0003DQG\u0003FRQVHTXHQWO\\\u0003SURSRVHG\u0003UHOLJLRXV\u0003XVHV\u0003VKRXOG\u0003EH\u0003DFFRPPRGDWHG´ \u0003see also Westchester Reform Temple v. Brown\u000f\u0003\u0015\u0015\u00031\u0011<\u0011\u0015G\u0003\u0017\u001b\u001b\u000f\u0003\u0017 \u0015\u0010 \u001a\u0003 \u0014 \u0019\u001b \u0003 UHYHUVLQJ\u00033ODQQLQJ\u0003&RPPLVVLRQ¶V\u0003UHMHFWLRQ\u0003RI\u0003 V\\QDJRJXH¶V\u0003H[SDQVLRQ\u0003SODQ\u000f\u0003FRQFOXGLQJ\u0003WKDW\u0003³XQGHU\u0003WKH\u0003JXLVH\u0003RI\u0003UHDVRQDEOH\u0003UHJXODWLRQ\u000f\u0003>WKH\u00033ODQQLQJ\u0003&RPPLVVLRQ@\u000f\u0003 KDV\u0003XQFRQVWLWXWLRQDOO\\\u0003DEULGJHG\u0003UHOLJLRXV\u0003IUHHGRP´ \u0003St. Thomas Malankara Orthodox Church, Inc., Long Island v. Bd. of Appeals, Town of Hempstead\u000f\u0003\u0015\u0016\u0003$\u0011'\u0011\u0016G\u0003\u0019\u0019\u0019\u000f\u0003\u0019\u0019\u0019±\u0019\u001a\u0003 \u0015G\u0003'HS¶W\u0003\u0015\u0013\u0013\u0018 \u0003 ]RQLQJ\u0003ERDUG¶V\u0003GHQLDO\u0003RI\u0003FKXUFK¶V\u0003 DSSOLFDWLRQ\u0003WR\u0003ZDLYH\u0003FHUWDLQ\u0003RII\u0010VWUHHW\u0003SDUNLQJ\u0003UHTXLUHPHQWV\u0003ZDV\u0003³DUELWUDU\\\u000f\u0003FDSULFLRXV\u0003DQG\u0003DQ\u0003DEXVH\u0003RI\u0003GLVFUHWLRQ\u0003DQG\u0003 ZDV\u0003SURSHUO\\\u0003DQQXOOHG´\u0003EHFDXVH\u0003ERDUG\u0003ZDV\u0003UHTXLUHG\u0003WR\u0003UHFRPPHQG\u0003RWKHU\u0003DOWHUQDWLYHV\u0003WR\u0003³DFFRPPRGDWH\u0003SURSRVHG\u0003 9 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 11 of NYSCEF: RECEIVED 21 01/17/2020 \u0015\u0014\u0011 $%<\u0003 HPSKDVL]HG\u0003 WKDW\u0003 WKH\u0003 =%$\u0003 ZDV\u0003 VWLOO\u0003 ODZIXOO\\\u0003 REOLJDWHG\u0003 WR\u0003 FRQWLQXH WR\u0003 KHDU\u0003 $%<¶V\u0003DSSHDO\u0003EHFDXVH\u0003GHFODUDWRU\\\u0003UHOLHI\u0003RQ\u0003WKH\u0003PLVDSSOLFDWLRQ\u0003RI\u00037RZQ\u0003&RGH\u0003VHFWLRQV\u0003\u0015 \u0013\u0010\u0015 & \u0003 DQG\u0003 \u0015 \u0013\u0010\u0015\u0013\u0011, \u001a \u0003 DQG\u0012RU\u0003 D JUDQW\u0003 RI\u0003 DQ\u0003 DUHD\u0003 YDULDQFH\u0003 ZRXOG\u0003 QHFHVVDULO\\\u0003 ELQG\u0003 WKRVH\u0003 LQWHUHVWHG\u0003 LQ\u0003 SXUFKDVLQJ\u0003WKH\u00033URSHUW\\ LQ\u0003WKH\u0003IXWXUH\u0003 ZKHWKHU\u0003WKDW\u0003EH\u0003$%<\u0003RU\u0003RWKHUZLVH \u0003DQG\u0003ZRXOG\u0003DOVR\u0003DIIHFW\u0003 RWKHU\u0003 SURSHUWLHV\u0003 WR\u0003 ZKLFK\u0003 WKHVH\u0003 VHFWLRQV\u0003 RI\u0003 WKH\u0003 7RZQ\u0003 &RGH\u0003 KDYH\u0003 EHHQ\u0003 RU\u0003 ZLOO\u0003 EH\u0003 VLPLODUO\\\u0003 PLVDSSOLHG\u0011 ([\u0011\u0003\u0014\u0016\u0011 $%<\u0003QRWHG\u0003WKDW\u0003WKLV\u0003ZDV\u0003HVSHFLDOO\\\u0003WUXH\u0003EHFDXVH\u0003WKH\u00037RZQ¶V\u0003RZQ\u0003DFWLRQV\u0003 FRQYHQLHQWO\\\u0003OHIW\u0003itself DV\u0003RQH\u0003RI\u0003WKH\u0003IHZ\u000f\u0003LI\u0003QRW\u0003WKH\u0003RQO\\\u000f\u0003YLDEOH SXUFKDVHUV\u0003RI\u0003WKH\u00033URSHUW\\\u0011 Id. \u0015\u0015\u0011 $%<\u0003IXUWKHU\u0003FRQWHQGHG\u0003WKDW\u0003LWV\u0003DSSHDO\u0003DQG\u0003DSSOLFDWLRQ\u0003IRU\u0003DQ\u0003DUHD\u0003YDULDQFH\u0003ZDV\u0003QRW\u0003 PRRW\u0003EHFDXVH\u0003WKH\u0003QDWXUH\u0003RI\u0003WKH\u0003DFWLRQ\u0003LV\u0003FDSDEOH\u0003RI\u0003UHSHWLWLRQ\u0003\\HW\u0003HYDGLQJ\u0003UHYLHZ\u0011 Id. $%<\u0003DUJXHG\u0003 WKDW\u0003 SXEOLF\u0003SROLF\\\u0003VKRXOG\u0003QRW\u0003LQFHQWLYL]H\u0003WRZQV\u0003WR\u0003 HQJDJH\u0003LQ\u0003GHOD\\\u0003DQG\u0003[HQRSKRELF\u0003WDFWLFV\u0011\u0003 Id.",
":HUH\u0003LW\u0003RWKHUZLVH\u000f WRZQV\u0003DQG\u0003WKHLU\u0003]RQLQJ\u0003RIILFLDOV\u0003FRXOG\u0003GR\u0003H[DFWO\\\u0003ZKDW\u0003&ODUNVWRZQ\u0003KDV\u0003GRQH\u0003 KHUH \u0003GHOD\\\u0003SURFHHGLQJV\u000f\u0003PLVDSSO\\\u0003WKHLU\u0003]RQLQJ\u0003RUGLQDQFHV\u000f\u0003FUHDWH\u0003XQFHUWDLQW\\\u0003LQ\u0003WKH\u0003PDUNHWSODFH\u000f\u0003 DQG\u0003FDXVH\u0003LQWHUHVWHG\u0003SDUWLHV\u0003WR\u0003ORVH\u0003WKHLU\u0003SURVSHFWLYH\u0003RU\u0003FXUUHQW\u0003SURSHUW\\\u0003LQWHUHVWV\u0003before H[KDXVWLQJ\u0003 WKHLU\u0003UHVSHFWLYH\u0003]RQLQJ\u0003DSSHDOV\u0011\u0003 Id. \u0015\u0016\u0011 $%<\u0003DOVR\u0003HPSKDVL]HG\u0003WKDW\u0003± DV\u0003JXDUDQWHHG\u0003E\\\u0003WKH\u0003)LUVW\u0003$PHQGPHQW\u0003RI\u0003WKH\u00038\u00116\u0011 &RQVWLWXWLRQ\u0003 DQG\u0003 $UWLFOH\u0003 ,\u000f\u0003 6HFWLRQ\u0003 \u0016\u0003 RI\u0003 WKH\u0003 1HZ\u0003 <RUN\u0003 6WDWH\u0003 &RQVWLWXWLRQ\u0003 ± WKH\u0003 =%$\u0003 ZDV\u0003 DIILUPDWLYHO\\\u0003UHTXLUHG\u0003WR\u0003UHDVRQDEO\\\u0003DFFRPPRGDWH\u0003$%<¶V\u0003IUHH\u0003H[HUFLVH\u0003ULJKWV\u0003WKURXJK\u0003LWV\u0003LQWHQGHG\u0003 UHOLJLRXV\u0003XVH\u0003ZKLOH\u0003PLWLJDWLQJ\u0003DGYHUVH\u0003HIIHFWV\u0003RQ\u0003VXUURXQGLQJ\u0003FRPPXQLW\\\u0003WR\u0003WKH\u0003JUHDWHVW\u0003H[WHQW\u0003SRVVLEOH´ \u0003Richmond v. City of New Rochelle Bd. of Appeals on Zoning\u000f\u0003\u0015\u0017\u0003$\u0011'\u0011\u0016G\u0003\u001a\u001b\u0015\u000f\u0003\u001a\u001b\u0015±\u001b\u0016\u0003 \u0015G\u0003'HS¶W\u0003\u0015\u0013\u0013\u0018 \u0003 DIILUPLQJ\u0003JUDQW\u0003RI\u0003DUHD\u0003 YDULDQFH\u000f\u0003DQG\u0003KROGLQJ\u0003WKDW\u0003]RQLQJ\u0003ERDUG\u0003PXVW\u0003PDNH\u0003³HYHU\\\u0003HIIRUW\u0003WR\u0003DFFRPPRGDWH\u0003>D@\u0003UHOLJLRXV\u0003XVH´\u0003 \u0003Harrison Orthodox Minyan, Inc. v. Town Bd. of Harrison\u000f\u0003\u0014\u0018 \u0003$\u0011'\u0011\u0015G\u0003\u0018\u001a\u0015\u000f\u0003\u0018\u001a\u0015±\u001a\u0016\u0003 \u0015G\u0003'HS¶W\u0003\u0014 \u0013 \u0003 D\u0003WRZQ\u0003ERDUG¶V\u0003 XQTXDOLILHG\u0003GHQLDO\u0003RI\u0003D\u0003VSHFLDO\u0003H[FHSWLRQ\u0003XVH\u0003SHUPLW\u0003ZDV\u0003³DUELWUDU\\\u000f\u0003FDSULFLRXV\u000f\u0003DQG\u0003DQ\u0003DEXVH\u0003RI\u0003GLVFUHWLRQ´\u0003ZKHUH\u0003LW\u0003 GLG\u0003QRW\u0003PDNH\u0003DQ\\\u0003DWWHPSWV\u0003WR\u0003DFFRPPRGDWH\u0003UHOLJLRXV\u0003XVH \u0003Jewish Reconstructionist Synagogue of the N. Shore, Inc. v. Levitan\u000f\u0003\u0017\u0014\u0003$\u0011'\u0011\u0015G\u0003\u0018\u0016\u001a\u000f\u0003\u0018\u0016\u001b\u0003 \u0015G\u0003'HS¶W\u0003\u0014 \u001a\u0016 \u000f\u0003aff’d\u000f\u0003\u0016\u0017\u00031\u0011<\u0011\u0015G\u0003\u001b\u0015\u001a\u0003 \u0014 \u001a\u0017 \u0003 ³IDFLOLWLHV\u0003IRU\u0003UHOLJLRXV\u0003RU\u0003HGXFDWLRQDO\u0003 XVHV\u0003DUH\u000f\u0003E\\\u0003WKHLU\u0003YHU\\\u0003QDWXUH\u000f\u0003FOHDUO\\\u0003LQ\u0003IXUWKHUDQFH\u0003RI\u0003WKH\u0003SXEOLF\u0003PRUDOV\u0003DQG\u0003JHQHUDO\u0003ZHOIDUH \u0003WKDW\u0003GLIIHUHQW\u0003 FRQVLGHUDWLRQV\u0003DSSO\\\u0003WR\u0003WKHP \u0003DQG\u0003WKDW\u0003FRQVLGHUDWLRQV\u0003ZKLFK\u0003PLJKW\u0003SURSHUO\\\u0003FRQWURO\u0003FRPPHUFLDO\u0003VWUXFWXUHV\u0003PD\\\u0003QRW\u0003 FRQWURO\u0003RU\u0003HYHQ\u0003DSSO\\\u0003WR\u0003UHOLJLRXV\u0003VWUXFWXUHV´\u0003 FLWDWLRQV DQG\u0003LQWHUQDO\u0003TXRWDWLRQV RPLWWHG \u0011 \u0014\u0013 10 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 12 of NYSCEF: RECEIVED 21 01/17/2020 RSHUDWLRQ\u0003RI\u0003D\u0003-HZLVK\u0003VFKRRO\u0003RQ\u0003WKH\u00033URSHUW\\\u0011 Id. $%<\u0003DOVR\u0003UHPLQGHG\u0003WKH\u0003=%$\u0003WKDW\u0003LI\u0003LW\u0003SODFHV\u0003 $%<\u0003 RQ\u0003 XQHTXDO\u0003 WHUPV\u0003 ZLWK\u0003 RWKHU\u0003 DSSOLFDQWV\u0003 DQG\u0012RU\u0003 VXEVWDQWLDOO\\\u0003 EXUGHQV\u0003 $%<¶V\u0003 UHOLJLRXV\u0003 H[HUFLVH\u000f\u0003LW\u0003ZRXOG\u0003VXEMHFW\u0003WKH\u00037RZQ\u0003WR\u0003SRWHQWLDO\u0003YLRODWLRQV\u0003RI\u0003ERWK\u0003WKH\u0003)LUVW\u0003$PHQGPHQW\u0003DQG\u0003WKH\u0003 5HOLJLRXV\u0003/DQG\u00038VH\u0003DQG\u0003,QVWLWXWLRQDOL]HG\u00033HUVRQV\u0003$FW\u0003 ³5/8,3$´ \u0011 Id. \u0015\u0017\u0011 $OO\u0003 WKH\u0003 ZKLOH\u000f WKH\u0003 DQWL\u00106HPLWLF\u0003 UDQWV\u0003 IURP\u0003 ORFDO\u0003 UHVLGHQWV DQG\u0003 &8321\u0003 PHPEHUV FRQWLQXHG XQDEDWHG\u0011 )RU\u0003H[DPSOH\u000f\u0003RQH\u0003UHVLGHQW\u0003SRVWHG\u0003RQ\u0003)DFHERRN ³:H\u0003 KDYH\u0003 ODZV\u0003 DQG\u0003 WKRVH\u0003 ODZV\u0003 SURWHFW\u0003 WKH\u0003 SHRSOH\u0003 IURP\u0003 WKH\u0003 ULGLFXORXV\u0003 VLWXDWLRQ\u0003WKH\\\u0003KDYH\u0003FUHDWHG\u0004\u0004\u0004\u0004\u00037DNH\u0003D\u0003ULGH\u0003RU\u0003UHVHDUFK\u0003KRZ\u0003PDQ\\\u0003WLPHV\u0003WKHVH\u0003 VR\u0003 FDOOHG\u0003 UHOLJLRXV\u0003 KDYH\u0003 EHHQ\u0003 FDXJKW\u0003 GRLQJ\u0003 FULPHV\u0003 RU\u0003 YLRODWLQJ\u0003 ODZV\u0004\u0004\u0004\u0004\u0003 $ERXW\u0003WLPH\u0003WKLV\u0003KDSSHQHG\u0003DQG\u0003WKH\u0003ODZ\u0003DELGLQJ\u0003FLWL]HQV\u0003ZLOO\u0003QRW\u0003VWDQG\u0003IRU\u0003DQ\\\u0003 IDOVH\u0003ODZVXLW\u0003RU\u0003SUHVVXUH\u0003WR\u0003KDYH\u0003D\u0003religious phony school!!!",
"Go back to Europe or whatever country your from!!! 7KLV\u0003LV\u00031DWLYH\u0003$PHULFDQ\u0003ODQG\u0003 DQG\u0003 WKH\u0003 GLVUHVSHFW\u0003 \\RX\u0003 VHH\u0003 WKHVH\u0003 VWHUHRW\\SHV\u0003 QRW\u0003 MXVW\u0003 +DVLGLF\u0003 EXW\u0003 RWKHUV\u0003 FRPLQJ\u0003KHUH\u0003WR\u0003WDNH\u0003DGYDQWDJH\u0003LWV\u0003ULGLFXORXV\u0003DQG\u0003XQDFFHSWDEOH\u0004\u0004\u0004\u0004´ ([\u0011\u0003\u0015\u0015 HPSKDVLV\u0003DGGHG \u0011 \u0015\u0018\u0011 2Q\u0003 -XQH\u0003 \u001a\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 QRWZLWKVWDQGLQJ\u0003 WKH\u0003 7RZQ¶V\u0003 DIILUPDWLYH\u0003 GXW\\ WR\u0003 UHDVRQDEO\\\u0003 DFFRPPRGDWH\u0003 UHOLJLRXV\u0003 ODQG\u0003 XVH\u000f\u0003 6XSHUYLVRU\u0003 +RHKPDQQ\u0003 WROG\u0003 WKH\u0003 ORFDO\u0003 SUHVV\u0003 WKDW\u0003 ³>Z@H\u0003 ZLOO\u0003 FRQWLQXH\u0003WR\u0003YLJRURXVO\\\u0003HQIRUFH\u0003RXU\u0003EXLOGLQJ\u0003DQG\u0003]RQLQJ\u0003FRGHV\u0003LUUHVSHFWLYH\u0003RI\u0003WKH\u0003EDFNJURXQG\u0003RI\u0003 WKH\u0003RZQHU\u000f´\u0003DQG\u0003WKDW\u0003$%<\u0003³ZDV\u0003WUHDWHG\u0003MXVW\u0003OLNH\u0003DQ\\\u0003RWKHU\u0003DSSOLFDQW\u0011´ \u0015\u0019\u0011 2Q\u0003-XQH\u0003\u0015\u0017\u000f\u0003\u0015\u0013\u0014 \u000f\u0003FRXQVHO\u0003IRU\u0003$%<\u0003VXEPLWWHG\u0003DQRWKHU\u0003OHWWHU\u0003WR\u0003WKH\u0003=%$\u0003DGGUHVVLQJ\u0003 WKH\u0003=%$¶V\u0003FRQWLQXLQJ\u0003HIIRUWV\u0003WR\u0003LQRUGLQDWHO\\\u0003GHOD\\\u0003$%<¶V\u0003DSSHDO\u000f\u0003DQG\u0003SUHVFLHQWO\\\u0003QRWLQJ\u0003WKDW\u0003VXFK\u0003 WDFWLFV\u0003ZRXOG VHUYH\u0003WR DOORZ\u0003D\u0003JRYHUQPHQW\u0003HQWLW\\\u0003WR\u0003SXUFKDVH\u0003WKH\u00033URSHUW\\\u0003DW\u0003D\u0003GLVFRXQW\u0011 ([\u0011\u0003\u0014\u0017\u0011 $%<¶V\u0003 OHWWHU\u0003 UHPLQGHG\u0003 WKH\u0003 =%$\u0003 WKDW\u0003 XQGXH\u0003 GHOD\\\u000f\u0003 in and of itself\u000f\u0003 FDQ\u0003 HYLQFH LQYLGLRXV\u0003 5REHUW\u0003 %UXP\u000f\u0003 Jewish academy alleges discrimination by Clarkstown in Grace Baptist application\u000f\u0003 52&./$1'\u0012:(67&+(67(5\u0003 -2851$/\u0003 1(:6 -XQH\u0003 \u001a\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 KWWSV \u0012\u0012ZZZ\u0011ORKXG\u0011FRP\u0012VWRU\\\u0012QHZV\u0012ORFDO\u0012URFNODQG\u0012QDQXHW\u0012\u0015\u0013\u0014 \u0012\u0013\u0019\u0012\u0013\u001a\u0012MHZLVK\u0010VFKRRO\u0010DOOHJHV\u0010GLVFULPLQDWLRQ\u0010YV\u0010 FODUNVWRZQ\u0010JUDFH\u0010EDSWLVW\u0010DSSOLFDWLRQ\u0012\u0014\u0016\u001a\u0013\u0017\u0014\u0016\u0013\u0013\u0014 \u0014\u0014 11 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 13 of NYSCEF: RECEIVED 21 01/17/2020 GLVFULPLQDWLRQ\u0011 \u0014\u0013 &RXQVHO\u0003XUJHG\u0003WKH\u0003=%$\u0003WR\u0003FHDVH\u0003LWV\u0003GHOD\\\u000f\u0003DQG\u0003UHYLHZ\u0003DQG\u0003UHVSRQG\u0003WR\u0003$%<¶V\u0003 VXEPLVVLRQ\u0003DV\u0003H[SHGLWLRXVO\\\u0003DV\u0003SRVVLEOH\u0011\u0003 \u0015\u001a\u0011 2Q\u0003-XO\\\u0003 \u000f\u0003\u0015\u0013\u0014 \u000f\u0003$%<\u0003UHFHLYHG\u0003D\u0003OHWWHU\u0003IURP\u0003:LOVRQ\u0003(OVHU\u00030RVNRZLW]\u0003(GHOPDQ\u0003 \u0003 'HFNHU\u0003//3\u000f\u0003WKH\u00037RZQ¶V\u0003RXWVLGH\u0003FRXQVHO\u000f\u0003LQGLFDWLQJ\u0003WKDW\u0003WKH\u0003=%$\u0003³ZLOO\u0003QRW\u0003HQWHUWDLQ\u0003DQ\\\u0003DSSHDO\u0003 E\\ >$%<@\u0003ZLWK\u0003UHVSHFW\u0003WR\u0003WKH\u0003>3URSHUW\\@\u000f´\u0003SXUSRUWHGO\\\u0003EHFDXVH\u0003³WKH\u0003FRQWUDFW\u0003IRU\u0003WKH\u0003VDOH\u0003RI\u0003WKH\u0003 SURSHUW\\\u0003WR\u0003>$%<@\u0003KDV\u0003EHHQ\u0003WHUPLQDWHG\u0003DQG\u0003>$%<¶V@\u0003ULJKW\u0003WR\u0003PDNH\u0003DQ\\\u0003DSSOLFDWLRQ\u0003WR\u0003WKH\u00037RZQ\u0003 FRQFHUQLQJ\u0003WKH\u0003SURSHUW\\\u0003KDV\u0003EHHQ\u0003UHYRNHG\u0011´ ([\u0011\u0003\u0014\u0018\u0011 7KH 7RZQ\u0003WRRN WKH\u0003OHJDOO\\\u0003XQVXSSRUWDEOH\u0003 SRVLWLRQ\u0003WKDW\u0003$%<¶V\u0003DSSHDO\u0003ZRXOG not even be heard\u000f\u0003OHW\u0003DORQH\u0003YRWHG XSRQ\u0003E\\\u0003WKH\u0003=%$. \u0015\u001b\u0011 2Q\u0003 $XJXVW\u0003 \u001b\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 $%<\u0003 ILOHG\u0003 D\u0003 9HULILHG\u0003 $UWLFOH\u0003 \u001a\u001b\u0003 3HWLWLRQ\u0003 DQG\u0003 'HFODUDWRU\\\u0003 -XGJPHQW\u0003&RPSODLQW\u0003DJDLQVW\u0003WKH\u00037RZQ\u000f\u0003WKH\u0003%XLOGLQJ\u0003'HSDUWPHQW\u000f\u0003DQG\u0003WKH\u0003=%$\u0003LQ\u0003WKH\u00036XSUHPH\u0003 &RXUW\u0003RI\u00031HZ\u0003<RUN\u000f\u0003&RXQW\\\u0003RI\u00035RFNODQG\u0003 WKH\u0003³$UWLFOH\u0003\u001a\u001b\u00033URFHHGLQJ´ \u0011\u0003\u0003([\u0011\u0003\u0014\u0019\u0011 ,Q\u0003WKH\u0003$UWLFOH\u0003\u001a\u001b\u0003 3URFHHGLQJ\u000f\u0003$%<\u0003DVNHG\u0003WKH\u0003FRXUW\u0003IRU\u0003DQ\u0003RUGHU\u0003 \u0014 \u0003FRPSHOOLQJ\u0003WKH\u0003=%$\u0003WR\u0003KHDU\u0003$%<¶V\u0003DSSHDO\u0003RI\u0003 WKH\u0003%XLOGLQJ\u0003'HSDUWPHQW¶V\u0003HUURQHRXV\u0003GHFLVLRQ\u0003GHQ\\LQJ\u0003$%<¶V\u0003UHTXHVW\u0003IRU\u0003D\u0003EXLOGLQJ\u0003SHUPLW\u0003DQG\u000f\u0003 LQ\u0003WKH\u0003DOWHUQDWLYH\u000f\u0003LWV\u0003DSSOLFDWLRQ\u0003IRU\u0003DQ\u0003DUHD\u0003YDULDQFH \u0003 \u0015 \u0003GLUHFWLQJ\u0003WKH\u0003=%$\u000f\u0003XSRQ\u0003WKDW\u0003KHDULQJ\u000f\u0003WR\u0003 ILQG\u0003WKDW\u0003D\u0003YDULDQFH\u0003IURP\u00037RZQ\u0003&RGH\u0003\u0003\u0015 \u0013\u0010\u0015\u0013\u0011, \u001a \u0003LV\u0003QRW\u0003UHTXLUHG\u0003IRU\u0003XVH\u0003RI\u0003D\u0003³VFKRRO\u0003RI\u0003JHQHUDO\u0003 LQVWUXFWLRQ´\u0003 RU\u000f\u0003 LQ\u0003 WKH\u0003 DOWHUQDWLYH\u000f\u0003 GLUHFWLQJ\u0003 WKH\u0003 =%$\u0003 WR\u0003 JUDQW\u0003 $%<¶V\u0003 DSSOLFDWLRQ\u0003 IRU\u0003 DQ\u0003 DUHD\u0003 YDULDQFH \u0003 \u0016 \u0003DOWHUQDWLYHO\\\u000f\u0003DQQXOOLQJ\u0003DQG\u0003VHWWLQJ\u0003DVLGH\u0003WKH\u0003%XLOGLQJ\u0003'HSDUWPHQW¶V\u0003GHWHUPLQDWLRQ\u0003DV\u0003 FRQWUDU\\\u0003WR\u0003ODZ\u000f\u0003DUELWUDU\\\u0003DQG\u0003FDSULFLRXV\u000f\u0003LQYDOLG\u0003DV\u0003DSSOLHG\u0003WR\u0003$%<\u000f\u0003DQG\u0003LQ\u0003YLRODWLRQ\u0003RI\u0003$%<¶V\u0003 FRQVWLWXWLRQDO\u0003ULJKW\u0003WR\u0003WKH\u0003IUHH\u0003H[HUFLVH\u0003RI\u0003WKHLU\u0003UHOLJLRQ \u0003DQG\u0003 \u0017 \u0003FRPSHOOLQJ\u0003WKH 7RZQ\u0003WR\u0003SURGXFH\u0003 DOO\u0003 GLVFORVHDEOH\u0003 UHFRUGV\u0003 UHVSRQVLYH\u0003 WR\u0003 $%<¶V\u0003 )UHHGRP\u0003 RI\u0003 ,QIRUPDWLRQ\u0003 /DZ\u0003 ³)2,/´ \u0003 UHTXHVWV\u0003 FRQFHUQLQJ\u0003WKH\u00037RZQ¶V\u0003LQWHUHVW\u0003LQ\u0003WKH\u00033URSHUW\\\u0011\u0003 Id. \u0014\u0013 Id.",
"\u0003see also, e.g.\u000f\u0003Fortress Bible Church v. Feiner\u000f\u0003\u001a\u0016\u0017\u0003)\u0011\u00036XSS\u0011\u0003\u0015G\u0003\u0017\u0013 \u000f\u0003\u0018\u0013\u0016\u0003 6\u0011'\u00111\u0011<\u0011\u0003\u0015\u0013\u0014\u0013 \u000f\u0003aff’d, \u0019 \u0017\u0003)\u0011\u0016G\u0003\u0015\u0013\u001b\u0003 \u0015G\u0003&LU\u0011\u0003\u0015\u0013\u0014\u0015 \u0003Westchester Day Sch. v. Vill. of Mamaroneck\u000f\u0003\u0017\u0014\u001a\u0003)\u0011\u00036XSS\u0011\u0003\u0015G\u0003\u0017\u001a\u001a\u000f\u0003\u0018\u0017 \u0003 6\u0011'\u00111\u0011<\u0011\u0003\u0015\u0013\u0013\u0019 \u000f\u0003aff’d\u000f\u0003\u0018\u0013\u0017\u0003 )\u0011\u0016G\u0003\u0016\u0016\u001b\u0003 \u0015G\u0003&LU\u0011\u0003\u0015\u0013\u0013\u001a \u0003Israelite Church of God in Jesus Christ, Inc. v. City of Hackensack\u000f\u00031R\u0011\u0003\u0014\u0014\u0010&9\u0010\u0018 \u0019\u0013\u000365&\u000f\u0003 \u0015\u0013\u0014\u0015\u0003:/\u0003\u0016\u0015\u001b\u0017\u0013\u0018\u0017\u000f\u0003DW\u0003 \u0015\u0003 '\u00111\u0011-\u0011\u0003$XJ\u0011\u0003\u0014\u0013\u000f\u0003\u0015\u0013\u0014\u0015 \u0011 \u0014\u0015 12 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 14 of NYSCEF: RECEIVED 21 01/17/2020 \u0015 \u0011 2Q\u00036HSWHPEHU\u0003\u0019\u000f\u0003\u0015\u0013\u0014 \u000f\u0003WKH\u00037RZQ\u0003PRYHG\u0003WR\u0003GLVPLVV\u0003$%<¶V\u0003$UWLFOH\u0003\u001a\u001b\u00033URFHHGLQJ\u0011 \u0014\u0014 \u0016\u0013\u0011 2Q\u0003 2FWREHU\u0003 \u0016\u000f\u0003 \u0015\u0013\u0014 \u000f WKH\u0003 7RZQ\u000f\u0003 FXOPLQDWHG\u0003 LWV\u0003 FDPSDLJQ\u0003 WR\u0003 SUHYHQW\u0003 $%< IURP SXUFKDVLQJ\u0003 DQG\u0003 RSHUDWLQJ DQ\u0003 2UWKRGR[\u0010-HZLVK\u0003 VFKRRO\u0003 RQ\u0003 WKH\u0003 3URSHUW\\\u0011\u0003 \u0003 6XSHUYLVRU\u0003 +RHKPDQQ\u0003 VWRRG\u0003 LQ\u0003 IURQW\u0003 RI\u0003 *%&\u0003 DQG\u0003 DQQRXQFHG WKDW WKH\u0003 7RZQ\u0003 ZDV\u0003 SXUFKDVLQJ WKH\u0003 3URSHUW\\\u0003 IRU\u0003 LWVHOI\u0003 ± QRWDEO\\\u000f\u0003 DQG\u0003 F\\QLFDOO\\\u000f\u0003 IRU\u0003 WKH\u0003 YHU\\\u0003 VDPH\u0003 ³FRPPHUFLDO´\u0003 SXUSRVH\u0003WKH\u0003 7RZQ\u0003 DQG\u0003 LWV\u0003 FRQVWLWXHQWV\u0003 FODLPHG\u0003WKH\\\u0003GLG\u0003QRW\u0003ZDQW\u0003$%<\u0003WR\u0003SXUFKDVH\u0003WKH\u00033URSHUW\\\u0011\u0014\u0015 7KH\u00037RZQ\u0003DSSDUHQWO\\\u0003VHHNV\u0003WR\u0003KROG\u0003 LWVHOI\u0003WR\u0003D\u0003GLIIHUHQW\u0003VWDQGDUG\u000f\u0003ZKHUHE\\\u0003D\u0003FRPPHUFLDO\u0003FRPPXQLW\\\u0003FHQWHU\u0003DQG\u0003PHHWLQJ\u0003IDFLOLW\\\u0003ZLWK\u0003D\u0003 ODUJH\u0003 SDUNLQJ\u0003 ORW\u0003 LV\u0003 D\u0003 ³SHUPLWWHG\u0003 XVH´\u0003 WKDW\u0003 LV\u0003 ³FRQVLVWHQW\u0003 ZLWK´\u0003 WKH\u0003 UHVLGHQWLDO\u0003 QDWXUH\u0003 RI\u0003 WKH\u0003 QHLJKERUKRRG\u000f\u0003EXW\u0003D\u0003UHOLJLRXV\u0003VFKRRO\u0003LV\u0003QRW\u0011 \u0016\u0014\u0011 2Q\u0003 1RYHPEHU\u0003 \u0018\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 $%<\u0003 DOHUWHG\u0003 WKH\u0003 &RXUW\u0003 WR\u0003 WKH\u0003 EODWDQW\u0003 LQFRQVLVWHQFLHV\u0003 EHWZHHQ\u0003WKH\u00037RZQ¶V\u0003SODQQHG\u0003SXUFKDVH\u0003RI\u0003WKH\u00033URSHUW\\\u000f\u0003DQG\u0003LWV\u0003OLWLJDWLRQ\u0003SRVLWLRQ\u0011 ([\u0011\u0003\u0014\u001a\u0011 \u0016\u0015\u0011 2Q\u0003 1RYHPEHU\u0003 \u0019\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 LQ\u0003 DGYDQFH\u0003 RI\u0003 WKH\u0003 7RZQ\u0003 %RDUG\u0003 PHHWLQJ\u0003 VFKHGXOHG\u0003 IRU\u0003 1RYHPEHU\u0003 \u001a\u000f\u0003\u0015\u0013\u0014 \u0003WR\u0003DSSURYH\u0003WKH\u0003SXUFKDVH\u0003RI\u0003WKH\u00033URSHUW\\\u000f\u0003FRXQVHO\u0003IRU\u0003$%<\u0003VHQW\u0003WKH\u00037RZQ¶V\u0003 RXWVLGH\u0003FRXQVHO\u0003D\u0003OHWWHU\u0003SXWWLQJ\u0003WKH\u00037RZQ\u0003RQ\u0003QRWLFH\u0003WKDW\u0003$%<\u0003ZDV\u0003SUHSDUHG\u0003WR\u0003WDNH\u0003DOO\u0003DSSURSULDWH\u0003 PHDVXUHV\u0003WR\u0003YLQGLFDWH\u0003LWV\u0003FRQVWLWXWLRQDO\u0003DQG\u0003IHGHUDO\u0003ULJKWV\u0003VKRXOG\u0003WKH\u00037RZQ\u0003YRWH\u0003WR\u0003DXWKRUL]H\u0003WKH\u0003 SXUFKDVH\u0003RI\u0003WKH\u00033URSHUW\\\u0011\u0003\u0003([\u0011\u0003\u0014\u001b\u0011 7R\u0003GDWH\u000f\u0003$%<\u0003KDV\u0003UHFHLYHG\u0003QR\u0003UHVSRQVH\u0003WR\u0003WKDW\u0003OHWWHU\u0011 \u0016\u0016\u0011 2Q\u00031RYHPEHU\u0003\u001a\u000f\u0003\u0015\u0013\u0014 \u000f\u0003WKH\u00037RZQ\u0003%RDUG\u0003DXWKRUL]HG\u0003WKH\u0003SXUFKDVH\u0003RI\u0003WKH\u00033URSHUW\\\u0011\u0003\u0003 ,Q\u0003GRLQJ\u0003VR\u000f\u0003KRZHYHU\u000f\u0003WKH\u00037RZQ PDGH\u0003D WHOOLQJ FRQFHVVLRQ\u0011\u0014\u0016 ,Q\u0003DQ\u0003DPHQGPHQW\u0003WR\u0003LWV\u00036(45$\u0003 \u0014\u0014 $IILUPDWLRQ LQ 6XSSRUW\u0003RI\u00030RWLRQ\u0003WR\u0003'LVPLVV\u000f\u00031R\u0011\u0003\u0013\u0016\u0017\u0018\u0014\u0017\u0012\u0015\u0013\u0014 1\u0011<\u0011\u00036XS\u0011\u0003&W\u0011\u000f 5RFNODQG\u0003&W\\\u0011\u000f\u00036HS\u0011\u0003\u0019\u000f\u0003\u0015\u0013\u0014 \u0003 (&)\u00031R\u0011\u0003\u0015 \u0011 \u0014\u0015 5REHUW\u0003 %UXP\u000f\u0003 Grace Baptist Church purchase part of Clarkstown’s bid to revitalize Nanuet’s center\u000f\u0003 52&./$1'\u0012:(67&+(67(5\u0003 -2851$/\u0003 1(:6 2FW\u0011\u0003 \u0016\u000f \u0015\u0013\u0014 \u000f\u0003 KWWSV \u0012\u0012ZZZ\u0011ORKXG\u0011FRP\u0012VWRU\\\u0012QHZV\u0012ORFDO\u0012URFNODQG\u0012QDQXHW\u0012\u0015\u0013\u0014 \u0012\u0014\u0013\u0012\u0013\u0016\u0012JUDFH\u0010EDSWLVW\u0010FKXUFK\u0010SXUFKDVH\u0010SDUW\u0010SODQ\u0010 UHYLWDOL]H\u0010QDQXHWV\u0010FHQWHU\u0012\u0016\u001b\u0017\u0019\u0019\u0019\u0017\u0013\u0013\u0015\u0012\u0011 \u0014\u0016 $IILUPDWLRQ\u0003LQ\u00035HVSRQVH\u0003WR\u00033HWLWLRQHU¶V 1RWLFH\u0003RI\u00036XSSOHPHQWDO\u0003$XWKRULW\\\u000f\u00031R\u0011\u0003\u0013\u0016\u0017\u0018\u0014\u0017\u0012\u0015\u0013\u0014 1\u0011<\u0011\u00036XS\u0011\u0003&W\u0011\u000f\u0003 5RFNODQG\u0003&W\\\u0011\u00031RY\u0011\u0003\u001b\u000f\u0003\u0015\u0013\u0014 \u0003 (&) 1R\u0011\u0003\u0017\u0017 \u0011\u0003 \u0014\u0016 13 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC.",
"NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 15 of NYSCEF: RECEIVED 21 01/17/2020 DSSOLFDWLRQ\u000f\u0003WKH\u00037RZQ\u0003QR\u0003ORQJHU\u0003UHSUHVHQWH\u0017\u0017\u0011G\u0003WKDW\u0003WKH\u0003SURSRVHG\u0003XVH\u0003IRU\u0003WKH\u00033URSHUW\\\u0003FRPSOLHV\u0003 ZLWK\u0003WKH\u00037RZQ\u0003&RGH\u0011\u0003\u00035DWKHU\u000f\u0003WKDW\u0003WKH\u00037RZQ\u0003QRZ\u0003FRQWHQGV\u0003WKDW D\u0003PXQLFLSDOLW\\\u0003QHHG\u0003QRW\u0003FRPSO\\\u0003 ZLWK\u0003LWV\u0003RZQ\u0003]RQLQJ\u0003UXOHV\u000f\u0003HYHQ\u0003LI\u0003WKRVH\u0003VDPH\u0003UXOHV\u0003FDQ\u0003REVWUXFW\u0003DQG\u0003HYHQWXDOO\\\u0003VFXSSHU\u0003D\u0003SULYDWH\u0003 WUDQVDFWLRQ\u0003IRU\u0003WKH\u0003VDPH\u0003ODQG\u0011 \u0016\u0017\u0011 2Q\u0003 'HFHPEHU\u0003 \u0015\u0016\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 WKH\u0003 6XSUHPH\u0003 &RXUW\u0003 LVVXHG\u0003 LWV\u0003 RSLQLRQ\u0003 LQ\u0003 WKH\u0003 $UWLFOH\u0003 \u001a\u001b\u0003 3URFHHGLQJ\u0011\u0003 \u0003 ([\u0011\u0003 \u0014 \u0011 7KH\u0003 FRXUW\u0003 RUGHUHG\u0003 WKH\u0003 7RZQ\u0003 WR\u0003 FRPSO\\\u0003 ZLWK\u0003 $%<¶V\u0003 )2,/\u0003 UHTXHVW\u000f\u0003 EXW\u0003 GLVPLVVHG\u0003$%<¶V\u0003RWKHU\u0003FDXVHV\u0003RI\u0003DFWLRQ LQ\u0003WKH $UWLFOH\u0003\u001a\u001b\u00033HWLWLRQ IRU\u0003ODFN\u0003RI\u0003VWDQGLQJ\u0011\u0003 Id. $%<\u0003 KDV\u0003WLPHO\\\u0003ILOHG\u0003QRWLFH\u0003RI\u0003LWV\u0003DSSHDO IURP WKH\u0003DGYHUVH\u0003DVSHFWV\u0003RI\u0003WKH\u0003&RXUW¶V\u0003RUGHU\u0011 ([\u0011\u0003\u0015\u0013\u0011\u0003\u0003$%< LV\u0003DOVR\u0003SUHSDUHG\u0003WR\u0003H[SHGLWH\u0003SHUIHFWLQJ\u0003LWV\u0003DSSHDO\u0003UDWKHU\u0003WKDQ\u0003ZDLW\u0003WKH\u0003HQWLUH\u0003VL[\u0010PRQWK\u0003SHUPLWWHG\u0003 SHULRG LQ\u0003RUGHU\u0003WR\u0003PLQLPL]H\u0003DQ\\\u0003SUHMXGLFH\u0003WR\u0003*%&\u0011 \u0016\u0018\u0011 2Q\u0003 -DQXDU\\\u0003 \u0014\u0017\u000f\u0003 \u0015\u0013\u0014 \u000f\u0003 FRXQVHO\u0003 IRU\u0003 $%<\u0003 DJDLQ\u0003 LQIRUPHG WKH\u0003 7RZQ\u0003 RI\u0003 WKH\u0003 OHJDO FRQVHTXHQFHV\u0003RI\u0003SXUFKDVLQJ\u0003WKH\u00033URSHUW\\\u000f QRWLQJ WKDW\u0003$%<\u0003LQWHQGV\u0003WR\u0003VHHN\u0003UHGUHVV\u0003IRU\u0003WKH\u00037RZQ¶V\u0003 DQG\u0003LWV\u0003RIILFLDOV¶\u0003YLRODWLRQV\u0003LQ\u0003IHGHUDO\u0003FRXUW\u000f LQFOXGLQJ FRPSHQVDWRU\\ DQG\u000f\u0003SXQLWLYH\u0003GDPDJHV\u0003DQG\u0003 DWWRUQH\\V¶ IHHV\u0011 ([\u0011\u0003\u0015\u0014\u0011 $5*80(17 $\u0011 7KLV\u0003&RXUW\u00036KRXOG\u0003*UDQW\u0003,QWHUYHQWLRQ\u0003$V\u0003RI\u00035LJKW\u0011 \u0016\u0019\u0011 8QGHU\u0003 &3/5\u0003 \u0014\u0013\u0014\u0015 D \u0016 \u000f\u0003 D\u0003 SDUW\\\u0003 ³VKDOO\u0003 EH\u0003 SHUPLWWHG\u0003 WR\u0003 LQWHUYHQH\u0003 \u0011\u0003 \u0011\u0003 \u0011\u0003 ZKHQ\u0003 WKH\u0003 DFWLRQ\u0003LQYROYHV\u0003WKH\u0003GLVSRVLWLRQ\u0003RU\u0003GLVWULEXWLRQ\u0003RI\u000f\u0003RU\u0003WKH\u0003WLWOH\u0003RU\u0003D\u0003FODLP\u0003IRU\u0003GDPDJHV\u0003IRU\u0003LQMXU\\\u0003WR\u000f\u0003 SURSHUW\\\u0003DQG\u0003WKH\u0003>SDUW\\@\u0003PD\\\u0003EH\u0003DIIHFWHG\u0003DGYHUVHO\\\u0003E\\\u0003WKH\u0003MXGJPHQW\u0011´ \u0016\u001a\u0011 7KLV\u0003&RXUW\u0003FXUUHQWO\\\u0003KDV\u0003EHIRUH\u0003LW\u0003*%&¶V\u0003DSSOLFDWLRQ IRU\u0003DSSURYDO\u0003IRU\u0003WKH\u0003VDOH\u0003RI\u0003WKH\u0003 3URSHUW\\\u0003WR\u0003WKH\u00037RZQ\u0011 7KLV\u0003LV\u000f\u0003RI\u0003FRXUVH\u000f\u0003WKH\u0003YHU\\\u0003VDPH\u00033URSHUW\\\u0003DW\u0003WKH\u0003KHDUW\u0003RI\u0003$%<¶V\u0003SHQGLQJ OLWLJDWLRQ\u0003DJDLQVW\u0003WKH\u00037RZQ\u0003IRU\u0003LWV\u0003GLVFULPLQDWRU\\\u0003FRQGXFW\u0003WKDW\u0003OHG\u0003WR\u0003WKH ORVV\u0003RI\u0003$%<¶V\u0003FRQWUDFW\u0003IRU\u0003 WKH\u00033URSHUW\\\u0011 *LYHQ\u0003$%<¶V SHQGLQJ OLWLJDWLRQ\u0003DJDLQVW\u0003WKH\u00037RZQ\u000f\u0003DV\u0003ZHOO\u0003DV\u0003WKH\u0003OLNHO\\ LUUHYHUVLEOH\u0003 \u0014\u0017 14 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 16 of NYSCEF: RECEIVED 21 01/17/2020 GHVWUXFWLRQ\u0003RI\u0003$%<¶V\u0003FRQWLQXLQJ LQWHUHVW\u0003LQ\u0003WKH\u00033URSHUW\\\u0003VKRXOG\u0003WKLV\u0003&RXUW\u0003DSSURYH\u0003WKH\u0003VDOH\u000f $%< LV\u0003VWDWXWRULO\\\u0003HQWLWOHG\u0003WR\u0003LQWHUYHQH\u0003DV\u0003RI\u0003ULJKW\u0011 \u0016\u001b\u0011 $%<¶V\u0003 UHTXHVWHG LQWHUYHQWLRQ\u0003 LV\u0003 WLPHO\\\u0011 $V\u0003 WKH\u0003 6HFRQG\u0003 'HSDUWPHQW\u0003 KDV\u0003 KHOG\u000f\u0003 ³LQWHUYHQWLRQ\u0003PD\\\u0003RFFXU\u0003DW\u0003DQ\\\u0003WLPH\u000f\u0003SURYLGHG\u0003WKDW\u0003LW\u0003GRHV\u0003QRW\u0003XQGXO\\\u0003GHOD\\\u0003WKH\u0003DFWLRQ\u0003RU\u0003SUHMXGLFH\u0003 H[LVWLQJ\u0003SDUWLHV\u0011´\u0003\u0003Halstead v. Dolphy\u000f\u0003\u001a\u0013\u0003$\u0011'\u0011\u0016G\u0003\u0019\u0016 \u000f\u0003\u0019\u0017\u0013\u0003 \u0015G\u0003'HS¶W\u0003\u0015\u0013\u0014\u0013 \u0011\u0003\u0003+HUH\u000f\u0003*%& ILOHG\u0003LWV\u0003 3HWLWLRQ\u0003RQ\u0003-DQXDU\\\u0003\u0014\u0013\u000f\u0003\u0015\u0013\u0015\u0013\u000f\u0003EXW\u0003DV RI\u0003-DQXDU\\\u0003\u0014\u0017\u000f\u0003\u0015\u0013\u0015\u0013\u000f\u0003ZRUNLQJ\u0003FRSLHV\u0003RI\u0003WKH\u00033HWLWLRQ\u0003KDG\u0003QRW\u0003 EHHQ\u0003GHOLYHUHG\u0003WR\u0003WKLV\u0003&RXUW\u0011\u0003\u0003$%<\u0003KDV\u0003PRYHG\u0003H[SHGLWLRXVO\\\u000f\u0003DQG\u0003VHHNV\u0003H[SHGLWHG\u0003WUHDWPHQW\u0003RI\u0003LWV\u0003 LQWHUYHQWLRQ\u0003 UHTXHVW\u0003 E\\\u0003 RUGHU\u0003 WR\u0003 VKRZ\u0003 FDXVH\u0011\u0003 \u0003 8QGHU\u0003 WKHVH\u0003 XQLTXH\u0003 FLUFXPVWDQFHV\u000f\u0003 $%<¶V\u0003 LQWHUYHQWLRQ\u0003ZLOO\u0003QRW\u0003XQGXO\\\u0003GHOD\\\u0003WKLV\u0003SURFHHGLQJ\u0011 See, e.g.\u000f id.",
"UHYHUVLQJ\u0003WULDO\u0003FRXUW¶V\u0003GHQLDO\u0003RI\u0003 PRWLRQ\u0003WR\u0003LQWHUYHQH\u000f\u0003KROGLQJ\u0003WKDW\u0003LQWHUYHQWLRQ\u0003ZDV\u0003WLPHO\\\u0003HYHQ\u0003WKRXJK\u0003VRXJKW\u0003PRUH\u0003WKDQ\u0003IRXU\u0003\\HDUV\u0003 DIWHU\u0003FRPPHQFHPHQW\u0003RI\u0003WKH\u0003DFWLRQ \u0003Jeffer v. Jeffer\u000f\u00031R\u0011\u0003\u0014\u001a\u0019\u0017 \u0012\u0013\u0017\u000f\u0003\u0015\u0013\u0014\u0013\u0003:/\u0003\u0016\u0019\u0018\u0015 \u001b\u0014\u000f DW\u0003 \u0016\u0003 6XS\u0011\u0003 &W\u0011\u000f .LQJV\u0003&W\\\u0011\u000f 6HSW\u0011\u0003\u0015\u0014\u000f\u0003\u0015\u0013\u0014\u0013 \u0003 PRWLRQ\u0003WR\u0003LQWHUYHQH\u0003PDGH\u0003WHQ PRQWKV\u0003DIWHU\u0003$PHQGHG\u0003&RPSODLQW\u0003 ILOHG\u0003FRQVLGHUHG\u0003³WLPHO\\\u000f´\u0003HYHQ\u0003WKRXJK\u0003LQWHUYHQRUV\u0003KDG\u0003EHHQ\u0003DZDUH\u0003RI\u0003DFWLRQ\u0003IRU\u0003DW\u0003OHDVW\u0003\u0018\u0003\\HDUV \u0011 \u0016 \u0011 $FFRUGLQJO\\\u000f\u0003 $%< VKRXOG\u0003 EH\u0003 SHUPLWWHG WR\u0003 LQWHUYHQH\u0003 LQ\u0003 WKLV\u0003 DFWLRQ\u0003 DV\u0003 RI\u0003 ULJKW\u000f\u0003 SXUVXDQW\u0003WR\u0003&3/5\u0003\u0014\u0013\u0014\u0015\u000f\u0003WR\u0003VHHN\u0003WR\u0003SUHYHQW\u0003WKH\u00037RZQ\u0003IURP\u0003FDSLWDOL]LQJ\u0003RQ\u0003LWV\u0003GLVFULPLQDWRU\\\u0003DQG\u0003 XQODZIXO\u0003PHWKRGV DW\u0003$%<¶V\u0003H[SHQVH\u0011 %\u0011 7KH\u0003&RXUW\u00036KRXOG\u0003$OVR\u0003*UDQW\u00033HUPLVVLYH\u0003,QWHUYHQWLRQ\u0011 \u0017\u0013\u0011 $OWHUQDWLYHO\\\u000f\u0003WKLV\u0003&RXUW\u0003VKRXOG\u0003JUDQW\u0003SHUPLVVLYH\u0003LQWHUYHQWLRQ WR\u0003$%<\u0003XQGHU\u0003 &3/5\u0003 \u0014\u0013\u0014\u0016\u000f\u0003ZKLFK\u0003SURYLGHV WKDW\u0003³>X@SRQ\u0003WLPHO\\\u0003PRWLRQ\u000f\u0003DQ\\\u0003SHUVRQ\u0003PD\\\u0003EH\u0003SHUPLWWHG\u0003WR\u0003LQWHUYHQH\u0003LQ\u0003DQ\\\u0003 DFWLRQ\u0003ZKHQ\u0003D\u0003VWDWXWH\u0003RI\u0003WKH\u0003VWDWH\u0003FRQIHUV\u0003D\u0003ULJKW\u0003WR\u0003LQWHUYHQH\u0003LQ\u0003WKH\u0003GLVFUHWLRQ\u0003RI\u0003WKH\u0003FRXUW\u000f\u0003RU\u0003ZKHQ\u0003 WKH SHUVRQ¶V\u0003 FODLP\u0003 RU\u0003 GHIHQVH\u0003 DQG\u0003WKH\u0003PDLQ\u0003DFWLRQ\u0003KDYH\u0003D\u0003FRPPRQ\u0003TXHVWLRQ\u0003RI\u0003ODZ\u0003RU\u0003IDFW\u0011 ,Q\u0003 H[HUFLVLQJ\u0003LWV\u0003GLVFUHWLRQ\u0003WKH\u0003FRXUW\u0003VKDOO\u0003FRQVLGHU\u0003ZKHWKHU\u0003WKH\u0003LQWHUYHQWLRQ\u0003ZLOO\u0003XQGXO\\\u0003GHOD\\\u0003WKH\u0003 GHWHUPLQDWLRQ\u0003RI\u0003WKH\u0003DFWLRQ\u0003RU\u0003SUHMXGLFH\u0003WKH\u0003VXEVWDQWLDO\u0003ULJKWV\u0003RI\u0003DQ\\\u0003SDUW\\\u0011´\u0003 \u0014\u0018 15 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 17 of NYSCEF: RECEIVED 21 01/17/2020 \u0017\u0014\u0011 *%&¶V\u00033HWLWLRQ\u0003DQG\u0003WKH\u00031HZ\u0003<RUN\u0003$WWRUQH\\\u0003*HQHUDO¶V\u0003$IILUPDWLRQ\u0003ERWK\u0003UHIHUHQFH\u0003 $%<\u0003DQG\u0003QHFHVVDULO\\\u0003UHFRJQL]H\u0003LW\u0003DV\u0003DQ\u0003LQWHUHVWHG\u0003SDUW\\\u0003WR\u0003WKH\u0003VDOH\u0003DW\u0003LVVXH\u0011\u0003\u0003See 3HWLWLRQ\u0003\u0003\u0015\u0016\u000f\u0003(&)\u0003 1R\u0011\u0003\u0014 ³7KHUH\u0003ZDV\u0003D\u0003SUHYLRXV\u0003DSSOLFDWLRQ\u0003WR\u0003WKH\u0003$WWRUQH\\\u0003*HQHUDO\u0003DQG\u0003WKH\u0003&RXUW\u0003IRU\u0003DSSURYDO\u0003WR\u0003 VHOO\u0003\u0015\u0015\u0010\u0015\u0019\u0003'HPDUHVW\u0003$YH\u0011\u0003DQG\u0003 \u0003+LJKYLHZ\u0003$YH\u0011\u0003WR\u0003$WHUHV\u0003%DLV\u0003<DDNRY\u000f\u0003DQ\u0003(GXFDWHG\u0003&RUSRUDWLRQ\u0011\u0003 \u0011\u0003\u0011\u0003\u0011´ \u0003$IILUPDWLRQ\u0003RI\u0003*DU\\\u0003%URZQ\u0003\u0003\u0018\u0010\u0014\u0017\u000f\u0003(&)\u00031R\u0011\u0003\u0014\u001a EULQJLQJ\u0003WR\u0003WKLV\u0003&RXUW¶V\u0003DWWHQWLRQ\u0003$%<¶V\u0003 RQJRLQJ\u0003OHJDO\u0003GLVSXWH\u0003ZLWK\u0003WKH\u00037RZQ\u0003FRQFHUQLQJ\u0003WKH\u00033URSHUW\\ \u0011 \u0017\u0015\u0011 $V VHW\u0003IRUWK\u0003LQ\u0003GHWDLO\u0003DERYH\u000f\u0003$%<\u0003KDV FRQVLVWHQWO\\ VKRZQ\u0003LWV\u0003FRQWLQXHG\u0003LQWHUHVW\u0003LQ\u0003 WKH\u00033URSHUW\\\u0011\u0003\u0003(YHQ\u0003IROORZLQJ\u0003WKH\u00037RZQ¶V\u0003XQODZIXO\u0003DFWLRQV\u000f $%<\u0003FRQWLQXHV\u0003WR\u0003KDYH\u0003D\u0003YHU\\\u0003UHDO\u0003DQG\u0003 VXEVWDQWLDO\u0003 LQWHUHVW\u0003 LQ\u0003 ZKHWKHU\u0003 WKLV\u0003 &RXUW\u0003 DSSURYHV\u0003 WKLV\u0003 VDOH WR\u0003 WKH\u0003 7RZQ\u0011\u0003 \u0003 See, e.g.\u000f Matter of Cavages, Inc. v. Ketter\u000f\u0003\u0018\u0019\u0003$\u0011'\u0011\u0015G\u0003\u001a\u0016\u0013\u000f\u0003\u001a\u0016\u0014\u0003 \u0017WK\u0003'HS¶W\u0003\u0014 \u001a\u001a \u0003 ³$\u0003WKLUG\u0003SDUW\\\u0003ZLOO\u0003JHQHUDOO\\\u0003EH\u0003 SHUPLWWHG\u0003WR\u0003LQWHUYHQH\u0003ZKHUH\u0003KH\u0003KDV\u0003DQ\u0003DFWXDO\u0003DQG\u0003XOWLPDWH\u0003LQWHUHVW\u0003LQ\u0003WKH\u0003UHVXOW\u0003RI\u0003WKH\u0003OLWLJDWLRQ\u0011´ \u0011 \u0017\u0016\u0011 :KLOH\u0003$%<\u0003YLJRURXVO\\\u0003GLVSXWHV WKH 6XSUHPH\u0003&RXUW¶V\u0003WKUHVKROG\u0003GHWHUPLQDWLRQ\u0003WKDW\u0003 $%<\u0003 ODFNV\u0003 VWDQGLQJ\u000f\u0003 ZKLFK\u0003 ZLOO\u0003 EH\u0003 WKH\u0003 VXEMHFW\u0003 RI\u0003 $%<¶V\u0003 IRUWKFRPLQJ\u0003 DSSHDO\u0003 WR\u0003 WKH\u0003 6HFRQG\u0003 'HSDUWPHQW\u000f\u0003LQWHUYHQWLRQ LQ\u0003WKLV\u0003PDWWHU\u0003LV\u0003not FRQWLQJHQW\u0003RQ\u0003LWV\u0003VWDQGLQJ\u0003WR\u0003SURFHHG\u0003ZLWK\u0003LWV\u0003$UWLFOH\u0003 \u001a\u001b 3URFHHGLQJ\u0011\u0003 \u0003 ,QGHHG\u000f\u0003 ³>W@KH\u0003 EDVHV\u0003 IRU\u0003 SHUPLVVLYH\u0003 LQWHUYHQWLRQ\u0003 DUH\u0003 EURDGHU\u0003 WKDQ\u0003 WKH\\\u0003 DUH\u0003 IRU\u0003 VWDQGLQJ\u0003WR\u0003RULJLQDWH\u0003WKH\u0003SURFHHGLQJ\u0011´\u0003 Ball v. Town of Ballston\u000f\u0003\u0014\u001a\u0016\u0003$\u0011'\u0011\u0016G\u0003\u0014\u0016\u0013\u0017\u000f\u0003\u0014\u0016\u0013\u0019\u0003 \u0016G\u0003'HS¶W\u0003 \u0015\u0013\u0014 \u0003 ILQGLQJ\u0003WKDW\u0003HYHQ\u0003WKRXJK\u0003GHYHORSHUV\u0003KDG\u0003QR\u0003VWDQGLQJ\u0003WR\u0003EULQJ\u0003DQ\u0003DFWLRQ\u0003DJDLQVW\u0003WKH\u0003WRZQ\u000f\u0003 WKHLU\u0003SURSHUW\\\u0003LQWHUHVWV\u0003ZRXOG\u0003KDYH\u0003EHHQ\u0003LPSDFWHG\u0003KDG\u0003WKH\u0003SHWLWLRQHU\u0003VXFFHHGHG\u000f\u0003DQG\u0003ZHUH\u0003WKHUHIRUH\u0003 DQ\u0003³LQWHUHVWHG\u0003SHUVRQ´\u0003IRU\u0003SXUSRVHV\u0003RI\u0003LQWHUYHQLQJ \u0011\u0003\u0003+HUH\u000f IRU\u0003DOO\u0003RI\u0003WKH\u0003UHDVRQV\u0003VHW\u0003IRUWK\u0003supra\u000f $%< LV\u0003DQ\u0003³LQWHUHVWHG\u0003SHUVRQ´\u0003ZLWK\u0003D\u0003NHHQ\u0003DQG\u0003FRQWLQXLQJ LQWHUHVW\u0003LQ\u0003WKH\u00033URSHUW\\\u0011\u0003\u0003 \u0017\u0017\u0011 0RUHRYHU\u000f\u0003$%<¶V\u0003LQWHUYHQWLRQ\u0003ZLOO\u0003QRW\u0003XQGXO\\\u0003GHOD\\\u0003WKLV\u0003DFWLRQ\u0003RU\u0003SUHMXGLFH\u0003DQ\\\u0003 SDUW\\¶V\u0003ULJKWV JLYHQ\u0003WKDW\u0003WKH\u0003XQGHUO\\LQJ\u0003TXHVWLRQ\u0003LQ\u0003$%<¶V\u0003SHQGLQJ\u0003DSSHDO\u0003JRHV\u0003WR\u0003WKH\u0003KHDUW\u0003RI\u0003WKLV\u0003 &RXUW¶V\u0003UHYLHZ \u0003ZKHWKHU\u0003WKH\u00037RZQ\u0003LV LQ\u0003D\u0003SRVLWLRQ WR\u0003HQWHU\u0003LQWR\u0003WKLV\u0003WUDQVDFWLRQ\u0003DW\u0003DOO\u0011 \u0014\u0019 16 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO.",
"030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 18 of NYSCEF: RECEIVED 21 01/17/2020 \u0017\u0018\u0011 )RU\u0003WKH\u0003IRUHJRLQJ\u0003UHDVRQV\u000f\u0003$%<\u0003VKRXOG\u0003EH\u0003SHUPLWWHG\u0003WR\u0003LQWHUYHQH\u0003LQ\u0003WKLV\u0003PDWWHU\u0003DV D\u0003GLVFUHWLRQDU\\\u0003PDWWHU\u0003XQGHU &3/5\u0003\u0003\u0014\u0013\u0014\u0016\u0011\u0003 &\u0011 7KLV\u0003 &RXUW\u0003 6KRXOG\u0003 *UDQW\u0003 D\u0003 6WD\\\u0003 RI\u0003 3URFHHGLQJV\u0003 3HQGLQJ\u0003 $%<¶V\u0003 $SSHDO\u0003 RI &RXQWV\u00032QH\u0003± 7KUHH\u0003RI ,WV\u0003$UWLFOH\u0003\u001a\u001b\u00033URFHHGLQJ\u0011 \u0017\u0019\u0011 3XUVXDQW\u0003WR\u0003&3/5\u0003\u0003\u0015\u0015\u0013\u0014\u000f\u0003³>H@[FHSW\u0003ZKHUH\u0003RWKHUZLVH\u0003SUHVFULEHG\u0003E\\\u0003ODZ\u000f\u0003WKH\u0003FRXUW LQ\u0003ZKLFK\u0003DQ\u0003DFWLRQ\u0003LV\u0003SHQGLQJ\u0003PD\\\u0003JUDQW\u0003D\u0003VWD\\\u0003RI\u0003SURFHHGLQJV\u0003LQ\u0003D\u0003SURSHU\u0003FDVH\u000f\u0003XSRQ\u0003VXFK\u0003WHUPV\u0003 DV\u0003PD\\\u0003EH\u0003MXVW\u0011´\u0003\u0003,QGHHG\u000f\u0003³D\u0003FRXUW\u0003KDV\u0003EURDG\u0003GLVFUHWLRQ\u0003WR\u0003JUDQW\u0003D\u0003VWD\\\u0003LQ\u0003RUGHU\u0003WR\u0003DYRLG\u0003WKH\u0003ULVN\u0003RI\u0003 LQFRQVLVWHQW\u0003DGMXGLFDWLRQV\u000f\u0003DSSOLFDWLRQ\u0003RI\u0003SURRI\u0003DQG\u0003SRWHQWLDO\u0003ZDVWH\u0003RI\u0003MXGLFLDO\u0003UHVRXUFHV\u0011´\u0003\u0003In re Tenenbaum\u000f\u0003\u001b\u0014\u0003$\u0011'\u0011\u0016G\u0003\u001a\u0016\u001b\u000f\u0003\u001a\u0016 \u0003 \u0015G\u0003'HS¶W\u0003\u0015\u0013\u0014\u0014 \u0003 TXRWLQJ\u0003Zonghetti v. Jeromack\u000f\u0003\u0014\u0018\u0013\u0003$\u0011'\u0011\u0015G \u0018\u0019\u0014\u000f\u0003\u0018\u0019\u0016\u0003 \u0015G\u0003'HS¶W\u0003\u0014 \u001b \u0011\u0003\u0003*URXQGV\u0003IRU\u0003RUGHULQJ\u0003D\u0003VWD\\\u0003LQFOXGH\u0003³IXUWKHU>LQJ@\u0003WKH\u0003LQWHUHVW\u0003RI\u0003MXVWLFH\u0003 E\\\u0003 SUHYHQWLQJ\u0003 LQHTXLWDEOH\u0003 UHVXOWV\u0003 DQG\u0003 SURPRW>LQJ@\u0003 RUGHUO\\\u0003 SURFHGXUH\u0003 E\\\u0003 IXUWKHULQJ\u0003 WKH\u0003 JRDOV\u0003 RI\u0003 FRPLW\\\u0003DQG\u0003XQLIRUPLW\\\u0011´\u0003\u0003Concord Assoc., L.P. v. EPT Concord, LLC\u000f\u0003\u0014\u0013\u0014\u0003$\u0011'\u0011\u0016G\u0003\u0014\u0018\u001a\u0017\u000f\u0003\u0014\u0018\u001a\u0018\u0003 \u0016G\u0003 'HS¶W\u0003\u0015\u0013\u0014\u0015 \u0003 FLWLQJ\u0003Nat’l Mgt. Corp. v. Adolfi\u000f\u0003\u0015\u001a\u001a\u0003$\u0011'\u0011\u0015G\u0003\u0018\u0018\u0016\u000f\u0003\u0018\u0018\u0018\u0003 \u0015G\u0003'HS¶W\u0003\u0015\u0013\u0013\u0013 \u0011\u0003 \u0017\u001a\u0011 0RUHRYHU\u000f\u0003³>Z@KHUH\u0003GHWHUPLQDWLRQ\u0003RI\u0003D\u0003UHODWHG\u000f\u0003SHQGLQJ\u0003SURFHHGLQJ\u0003PD\\\u0003GLVSRVH\u0003RI RU\u0003OLPLW\u0003LVVXHV\u0003LQYROYHG\u0003LQ\u0003D\u0003SHQGLQJ\u0003DFWLRQ\u000f\u0003D\u0003VWD\\\u0003LV\u0003SURSHU\u0011´\u0003 McCarthy v. Kerrigan\u000f\u0003\u0018 \u00030LVF\u0011\u0016G\u0003 \u001b\u001a\u0015\u000f\u0003\u001b\u001b\u0018\u0003 6XS\u0011\u0003&W\u0011\u000f\u0003/DZUHQFH\u0003&RXQW\\\u0003\u0015\u0013\u0014\u001b \u0003 TXRWLQJ\u0003SSA Holdings, LLC v. Kaplan\u000f\u0003\u0014\u0015\u0013\u0003$\u0011'\u0011\u0016G\u0003 \u0014\u0014\u0014\u0014\u000f\u0003\u0014\u0014\u0014\u0014 \u0014VW\u0003'HS¶W\u0003\u0015\u0013\u0014\u0017 \u000f aff’d as modified\u000f\u0003\u0014\u001a\u001b\u0003$\u0011'\u0011\u0016G\u0003\u0014\u0016\u0017\u0015\u0003 \u0016G\u0003'HS¶W\u0003\u0015\u0013\u0014 \u0011\u0003\u0003,Q\u0003WKH\u0003SURSHUW\\\u0003 FRQWH[W\u000f\u0003D\u0003VWD\\\u0003LV\u0003ZDUUDQWHG\u0003ZKHUH\u0003D\u0003SHQGLQJ\u000f VLPXOWDQHRXV\u0003DFWLRQ\u0003ZRXOG\u0003QHFHVVDULO\\\u0003DIIHFW\u0003ULJKWV\u0003 DVVRFLDWHG\u0003ZLWK\u0003WKH\u0003SURSHUW\\\u0003DW\u0003LVVXH\u0011\u0003 See, e.g.\u000f Swartz v. Swartz\u000f\u0003\u0014\u0017\u0018\u0003$\u0011'\u0011\u0016G\u0003\u001b\u0014\u001b\u000f\u0003\u001b\u0016\u0013\u0003 \u0015G\u0003'HS¶W\u0003 \u0015\u0013\u0014\u0019 \u0003 XSKROGLQJ\u00036XSUHPH\u0003&RXUW¶V\u0003VWD\\\u0003RI\u0003DQ\u0003DFFRXQWLQJ\u0003PDOSUDFWLFH\u0003DFWLRQ\u0003ZKHUH\u0003D\u0003GHWHUPLQDWLRQ\u0003 LQ\u0003D\u0003VHSDUDWHO\\\u0003SHQGLQJ\u0003PDWULPRQLDO\u0003DFWLRQ\u0003ZRXOG\u0003DIIHFW\u0003SODLQWLII¶V\u0003ULJKWV\u0003LQ\u0003WKH\u0003DVVHWV\u0003DW\u0003LVVXH \u0011 \u0017\u001b\u0011 +HUH\u000f\u0003WKH\u00036HFRQG 'HSDUWPHQW¶V\u0003GHWHUPLQDWLRQ\u0003RI\u0003$%<¶V\u0003DSSHDO\u0003PD\\\u0003VLJQLILFDQWO\\ DOWHU\u0003WKH\u0003DQDO\\VLV\u0003RI\u0003ZKHWKHU\u0003WKH\u00037RZQ¶V\u0003FRQWUDFW\u0003WR\u0003SXUFKDVH\u0003WKH\u00033URSHUW\\\u0003LV\u0003³IDLU\u0003DQG\u0003UHDVRQDEOH´\u0003 SXUVXDQW\u0003WR\u00031\u0011<\u0011\u000313&/\u0003\u0003\u0018\u0014\u0014 G \u0011\u0003\u0003,Q\u0003HYDOXDWLQJ\u0003D\u0003WUDQVDFWLRQ\u0003XQGHU\u00031\u0011<\u0011\u000313&/\u0003\u0003\u0018\u0014\u0014\u000f\u0003QXPHURXV\u0003 \u0014\u001a 17 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 19 of NYSCEF: RECEIVED 21 01/17/2020 1HZ\u0003<RUN\u0003FRXUWV\u0003KDYH\u0003GHWHUPLQHG\u0003WKH\u0003IDLUQHVV\u0003DQG\u0003UHDVRQDELOLW\\\u0003RI\u0003D\u0003SXUFKDVH\u0003SULFH\u0003EDVHG\u0003RQ\u0003KRZ\u0003 LW\u0003FRPSDUHV\u0003WR\u0003RWKHU\u0003RIIHUV\u0011\u0003 See, e.g.\u000f In re HHH Choices Health Plan, LLC\u000f\u0003\u0018\u0018\u0017\u0003%\u00115\u0011\u0003\u0019 \u001a\u000f\u0003\u001a\u0013\u0016\u0003 %DQNU\u0011\u0003 6\u0011'\u00111\u0011<\u0011\u0003\u0015\u0013\u0014\u0019 \u0003 ³>7@KH\u0003RUGLQDU\\\u0003GHWHUPLQDWLRQ\u0003RI\u0003ZKDW\u0003LV\u0003IDLU\u0003DQG\u0003HTXLWDEOH\u0003XQGHU\u0003WKH\u0003 VWDWH\u0003FRXUW\u0003GHFLVLRQV\u0003LV\u0003IDLU\u0003PDUNHW\u0003YDOXH\u0003DQG\u0003best price\u0011\u0003:KHWKHU\u0003D\u0003GHDO\u0003LV\u0003IDLU\u0003DQG\u0003HTXLWDEOH\u0003WR\u0003D\u0003 FRUSRUDWLRQ\u0003KDV\u0003WR\u0003LQFOXGH\u0003FRQVLGHUDWLRQ\u0003RI\u0003how it compares to other offers>\u0011@´ HPSKDVLV\u0003DGGHG \u0003 In re Sculpture Ctr., Inc.\u000f\u00031R\u0011\u0003\u0014\u0014\u0016\u001a\u001a\u0016\u0012\u0013\u0014\u000f\u0003\u0015\u0013\u0013\u0014\u0003:/\u0003\u0014\u0018\u0019\u001b\u001a\u0016 \u000f\u0003DW\u0003 \u0015\u0003 6XS\u0011\u0003&W\u0011\u000f 1\u0011<\u0011 &W\\\u0011\u0003\u0015\u0013\u0013\u0014 \u0003 ³$\u0003 EXLOGLQJ¶V\u0003 IDLU\u0003 PDUNHW\u0003 YDOXH\u000f\u0003 IRU\u0003 13&/\u0003 \u0018\u0014\u0014 SXUSRVHV\u000f\u0003 LV\u0003 FDOFXODWHG\u0003 DW\u0003 WKH\u0003 WLPH\u0003 RI\u0003 VDOH\u0003 DQG\u0003 fundamentally is predicated on what a willing buyer is prepared to pay to a willing seller who is not under a compulsion to sell´ \u0003 HPSKDVLV\u0003DGGHG \u0011 \u0017 \u0011 +HUH\u000f\u0003$%< KDV\u0003VXEPLWWHG\u0003VZRUQ\u0003DIILGDYLWV\u0003DWWHVWLQJ\u0003WKDW\u0003LW\u0003LV\u0003UHDG\\\u000f\u0003ZLOOLQJ\u000f\u0003DQG\u0003 DEOH\u0003 WR\u0003 UHHQJDJH\u0003 ZLWK\u0003 *%&\u0003 WR\u0003 SXUFKDVH\u0003 WKH\u0003 3URSHUW\\\u0003 LQFOXGLQJ\u0003 WKH\u0003 SDUVRQDJH\u0003 ORFDWHG\u0003 DW\u0003 \u0015\u0013\u0003 'HPDUHVW\u0003$YHQXH \u0003IRU LWV DSSUDLVHG\u0003YDOXH\u0003± ZKLFK\u000f QRWDEO\\\u000f LV\u0003KLJKHU\u0003WKDQ WKH\u00037RZQ¶V\u0003FXUUHQW\u0003RIIHU\u0003 SULFH\u0003 ± LI\u0003 RQO\\\u0003 WKH\u0003 7RZQ\u0003 ZRXOG\u0003 VWDQG\u0003 GRZQ\u0003 IURP\u0003 LWV\u0003 GLVFULPLQDWRU\\\u0003 FRQGXFW\u000f\u0003 DQG\u0003 SURYLGH\u0003 WKH\u0003 DSSURSULDWH SHUPLWV\u000f\u0003DV\u0003LW\u0003ZDV\u0003OHJDOO\\\u0003UHTXLUHG\u0003WR\u0003GR D\u0003\\HDU\u0003DJR\u0011 See )LQN\u0003$II\u0011 \u0014\u0019 ³$%<\u0003LV\u0003UHDG\\\u000f\u0003 ZLOOLQJ\u000f\u0003DQG\u0003DEOH\u0003WR\u0003SXUFKDVH\u0003WKH\u0003HQWLUH\u0003SURSHUW\\\u0003DW\u0003LWV\u0003DSSUDLVHG\u0003YDOXH\u0003RI\u0003\u0007\u0017\u0011\u0019\u0018\u0003PLOOLRQ \u0011 \u0018\u0013\u0011 $%<\u0003KDV\u0003EHHQ\u0003ZRUNLQJ\u0003FORVHO\\\u0003ZLWK\u0003'DYLG\u00037HLOHU\u000f\u0003D\u0003VHQLRU\u0003XQGHUZULWHU DW\u0003$OOLDQFH\u0003 3ULYDWH\u0003&DSLWDO\u000f\u0003D\u0003FRPPHUFLDO\u0003UHDO\u0003HVWDWH\u0003PRUWJDJH\u0003EURNHUDJH\u0003ILUP\u0003EDVHG\u0003LQ\u0003%URRNO\\Q\u000f\u00031<\u000f\u0003WKDW\u0003 SURYLGHV\u0003EURNHUDJH\u0003VHUYLFHV\u0003WR\u0003WKH\u0003UHDO\u0003HVWDWH\u0003LQGXVWU\\\u000f\u0003LQFOXGLQJ\u0003QRW\u0010IRU\u0010SURILWV\u0011\u0003\u0003See $II\u0011\u0003RI\u0003'DYLG\u0003 7HLOHU\u0003 \u0014\u0011\u0003\u00030U\u0011\u00037HLOHU\u0003KDV\u0003FRQILUPHG\u0003WKDW ³>L@Q\u0003RUGHU\u0003WKDW\u0003$%<\u0003EH\u0003DEOH\u0003WR\u0003>SXUFKDVH\u0003WKH\u0003SURSHUW\\@\u000f\u0003 DQG\u0003 VXEMHFW\u0003WR\u0003 $%<\u0003 REWDLQLQJ\u0003 WKH\u0003 QHFHVVDU\\\u0003 EXLOGLQJ\u0003 SHUPLWV\u0003 IURP\u0003 WKH\u0003 7RZQ\u000f\u0003 $OOLDQFH\u0003 3ULYDWH\u0003 &DSLWDO\u0003LV\u0003UHDG\\\u000f\u0003ZLOOLQJ\u000f\u0003DQG\u0003DEOH\u0003WR\u0003DUUDQJH EDQN\u0003ILQDQFLQJ\u0003WR\u0003$%<\u0003WR\u0003IXQG\u0003WKH\u0003DFTXLVLWLRQ\u0003RI\u0003WKH\u0003 3URSHUW\\\u0011´ Id.",
" \u0018\u0011\u0003\u00030U\u0011\u00037HLOHU\u0003LV\u0003³DZDUH\u0003RI\u0003VXIILFLHQW\u0003ILQDQFLQJ\u0003VRXUFHV\u0003WKDW\u0003ZRXOG\u0003SHUPLW\u0003$%<\u0003WR\u0003 SXUFKDVH\u0003WKH\u00033URSHUW\\\u0003DW\u0003WKH\u0003DSSUDLVDO\u0003YDOXH\u0011´\u0003\u0003Id. \u0014\u001b 18 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC. NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 20 of NYSCEF: RECEIVED 21 01/17/2020 \u0018\u0014\u0011 7KLV &RXUW\u0003LV\u0003FKDUJHG\u0003ZLWK\u0003GHWHUPLQLQJ\u000f IRU\u0003SXUSRVHV\u0003RI\u000313&/\u0003\u0018\u0014\u0014\u000f ZKHWKHU\u0003WKH\u0003 7RZQ¶V\u0003 SODQQHG\u0003 SXUFKDVH\u0003 RI\u0003 WKH\u0003 3URSHUW\\ LV\u0003 IDLU\u0003 DQG\u0003 UHDVRQDEOH\u0011 &ULWLFDO\u0003 WR\u0003 WKLV\u0003 LQTXLU\\\u0003 LV WKH\u0003 DYDLODELOLW\\\u0003WR\u0003*%&\u0003RI\u0003D\u0003KLJKHU\u0003RIIHU\u000f\u0003DV\u0003ZHOO\u0003DV WKH\u00037RZQ¶V\u0003XQODZIXO\u0003FRQGXFW LQ\u0003WKH\u0003OHDG\u0010XS\u0003WR\u0003WKLV\u0003 WUDQVDFWLRQ\u0011 $%<\u0003VKRXOG\u0003EH\u0003SHUPLWWHG\u0003WR\u0003LQWHUYHQH\u0003IRU\u0003WKH\u0003SXUSRVH\u0003RI\u0003EULQJLQJ\u0003ERWK\u0003RI\u0003WKHVH SRLQWV\u0003 WR\u0003WKH\u0003&RXUW¶V\u0003DWWHQWLRQ\u0011\u0003\u0003 \u0018\u0015\u0011 %XW\u0003HYHQ\u0003PRUH\u0003FULWLFDOO\\\u000f\u0003D\u0003OLPLWHG\u0003VWD\\\u0003RI\u0003WKHVH\u0003SURFHHGLQJV\u0003SHQGLQJ\u0003WKH\u0003RXWFRPH\u0003 RI\u0003$%<¶V\u0003DSSHDO\u0003WR\u0003WKH\u00036HFRQG\u0003'HSDUWPHQW\u0003LV\u0003DSSURSULDWH\u0011\u0003\u00036KRXOG\u0003WKH\u00036HFRQG\u0003'HSDUWPHQW\u0003UHYHUVH\u0003 6XSUHPH\u0003&RXUW¶V\u0003HUURQHRXV\u0003GHFLVLRQ\u0003DV\u0003WR\u0003$%<¶V\u0003VWDQGLQJ\u0003WR\u0003SXUVXH\u0003WKUHH\u0003FRXQWV\u0003RI\u0003LWV\u0003$UWLFOH\u0003\u001a\u001b\u0003 3URFHHGLQJ\u000f\u0003WKH\u00037RZQ\u0003ZLOO\u0003EH\u0003IRUHFORVHG\u0003IURP\u0003LWV\u0003FXUUHQW\u0003HIIRUWV\u0003WR\u0003XVXUS\u0003WKH\u00033URSHUW\\\u0011 ,Q\u0003WKHVH\u0003 XQLTXH\u0003FLUFXPVWDQFHV\u0003± ZKHUH\u0003WKH\u00037RZQ\u0003KDV\u0003PLVXVHG\u0003LWV\u0003ORFDO\u0003ODZV\u0003DQG\u0003VRXJKW\u0003WR\u0003LQVXODWH\u0003LWVHOI\u0003 IURP\u0003DQ\\\u0003OHJDO\u0003FKDOOHQJH\u0003WKHUHWR\u0003± D\u0003VWD\\\u0003LV\u0003ZDUUDQWHG\u0003WR\u0003DOORZ\u0003$%<\u0003WR\u0003YLQGLFDWH\u0003LWV\u0003RULJLQDO\u0003LQWHUHVW\u0003 LQ\u0003WKH\u00033URSHUW\\\u0011 \u0018\u0016\u0011 )LQDOO\\\u000f\u0003D\u0003OLPLWHG\u0003VWD\\\u0003RI\u0003WKHVH\u0003SURFHHGLQJV\u0003ZRXOG\u0003DOVR\u0003KHOS\u0003SURWHFW\u0003*%&¶V\u0003LQWHUHVW\u0011\u0003 13&/\u0003 \u0018\u0014\u0013\u0003 ³LV\u0003 GHVLJQHG\u0003 WR\u0003 SURWHFW\u0003 WKH\u0003 PHPEHUV\u0003 RI\u0003 D\u0003 QRW\u0010IRU\u0010SURILW\u0003 FRUSRUDWLRQ\u0003 IURP\u0003 XQZLVH\u0003 EDUJDLQV\u0003DQG\u0003WKH\u0003ZURQJIXO\u0003XVH\u0003RI\u0003WKH\u0003FRUSRUDWLRQ¶V\u0003SURSHUW\\\u000f\u0003DQG\u0003WR\u0003DVVXUH\u0003ERWK\u0003WKH\u0003SXEOLF¶V\u0003LQWHUHVW\u0003 LQ\u0003 WKH\u0003 SURSHU\u0003 GLVWULEXWLRQ\u0003 RI\u0003 WKH\u0003 FRUSRUDWLRQ¶V\u0003 DVVHWV\u0003 DQG\u0003 WKH\u0003 VDWLVIDFWLRQ\u0003 RI\u0003 WKH RIILFHUV¶\u0003 DQG\u0003 GLUHFWRUV¶\u0003ILGXFLDU\\\u0003REOLJDWLRQ\u0011´ 0F.LQQH\\¶V\u00031<\u001013&/\u0003 \u0018\u0014\u0013\u0011 %\\\u0003JUDQWLQJ\u0003WKLV\u0003VWD\\\u000f\u0003WKH\u0003&RXUW\u0003 ZLOO\u0003DXWKRUL]H\u0003WKH\u0003DSSURSULDWH\u0003WLPH\u0003QHHGHG\u0003WR\u000f\u0003WKURXJK\u0003GHWHUPLQDWLRQ\u0003RI\u0003$%<¶V\u0003$UWLFOH\u0003\u001a\u001b\u00033HWLWLRQ\u000f\u0003 HQVXUH\u0003WKDW\u0003WKH\u00033URSHUW\\\u0003KDV\u0003EHHQ\u0003SURSHUO\\\u0003VROG\u000f\u0003DW\u0003DQ\u0003DSSURSULDWH\u0003SULFH\u000f\u0003DQG\u0003WR\u0003D\u0003EX\\HU\u0003WKDW\u0003KDV\u0003QRW\u0003 HQJDJHG\u0003 LQ\u0003 XQODZIXO\u0003 PHDQV\u0003 WR\u0003 SRVLWLRQ\u0003 LWVHOI\u0003 IRU\u0003 VXFK\u0003 SXUFKDVH\u0011 ,QGHHG\u000f\u0003 ZLWKRXW\u0003 WKH\u0003 LPSURSHU\u0003 REVWDFOHV\u0003SXW\u0003LQ\u0003SODFH\u0003E\\\u0003WKH\u00037RZQ\u000f\u0003WKHUH\u0003FRXOG\u0003EH\u0003D\u0003IDU\u0003ODUJHU\u0003SRRO\u0003RI\u0003EX\\HUV\u0003IRU\u0003WKLV\u0003SURSHUW\\\u000f\u0003 ZKLFK\u0003ZLOO\u0003RQO\\\u0003LQXUH\u0003WR\u0003WKH\u0003EHQHILW\u0003RI\u0003*%&\u0011\u0003\u00037KXV\u000f\u0003D\u0003OLPLWHG\u0003VWD\\\u0003ZRXOG\u0003IXOILOO\u0003WKH\u0003XQGHUO\\LQJ\u0003 LQWHQW\u0003EHKLQG\u000313&/\u0003\u0018\u0014\u0013\u000f\u0003DQG\u0003SURWHFW\u0003*%&\u0003IURP\u0003D\u0003VDOH\u0003SURFHVV\u0003WKDW\u0003LV\u0003FRQWUDU\\\u0003WR\u0003LWV\u0003EHVW\u0003LQWHUHVWV\u0011 \u0014 19 of 20 FILED: ROCKLAND COUNTY CLERK 01/17/2020 03:33 PM INDEX NO. 030222/2020 NYSCEF DOC.",
"NO. Case 19 7:20-cv-01399-NSR Document 1-58 Filed 02/18/20 Page 21 of NYSCEF: RECEIVED 21 01/17/2020 &21&/86,21 \u0018\u0017\u0011 %DVHG\u0003RQ\u0003WKH\u0003IDFWV\u0003DV\u0003VWDWHG\u0003DERYH\u000f\u0003$%<\u0003UHVSHFWIXOO\\\u0003UHTXHVWV\u0003WKDW\u0003WKH\u0003&RXUW\u0003VWD\\ WKLV\u0003 SURFHHGLQJ\u0003 XQWLO\u0003 WKH\u0003 6HFRQG\u0003 'HSDUWPHQW\u0003 KDV\u0003 KHDUG\u0003 DQG\u0003 GHWHUPLQHG\u0003 $%<¶V\u0003 DSSHDO\u0003 IURP\u0003 6XSUHPH\u0003&RXUW¶V\u00032UGHU\u0003RI\u0003'HFHPEHU\u0003\u0015\u0017\u000f\u0003\u0015\u0013\u0014 \u0011\u0003\u0003 'DWHG \u0003-DQXDU\\\u0003\u0014\u001a\u000f\u0003\u0015\u0013\u0015\u0013 5HVSHFWIXOO\\\u0003VXEPLWWHG\u000f \u0012V\u0012\u0003Yehudah L. Buchweitz <HKXGDK\u0003/\u0011\u0003%XFKZHLW]\u0003 5REHUW\u0003*\u0011\u00036XJDUPDQ\u0003 'DYLG\u0003<RONXW\u0003 .DHOD\u0003'DKDQ 0LFKDHO\u0003(\u0011\u00031DJHOEHUJ :(,/\u000f\u0003*276+$/\u0003 \u00030$1*(6\u0003//3 \u001a\u0019\u001a\u0003)LIWK\u0003$YHQXH\u0003 1HZ\u0003<RUN\u000f\u00031HZ\u0003<RUN\u0003\u0014\u0013\u0014\u0018\u0016\u0003 \u0015\u0014\u0015 \u0016\u0014\u0013\u0010\u001b\u0013\u0013\u0013 \\HKXGDK\u0011EXFKZHLW]#ZHLO\u0011FRP UREHUW\u0011VXJDUPDQ#ZHLO\u0011FRP GDYLG\u0011\\RONXW#ZHLO\u0011FRP NDHOD\u0011GDKDQ#ZHLO\u0011FRP PLFKDHO\u0011QDJHOEHUJ#ZHLO\u0011FRP Counsel for ABY ,5$\u00030\u0011\u0003(0$18(/\u000f\u00033\u0011&\u0011 ,UD\u00030\u0011\u0003(PDQXHO $P\\\u00030HOH \u0017\u0003/DXUHO\u00035RDG 1HZ\u0003&LW\\\u000f\u00031<\u0003\u0014\u0013 \u0018\u0019\u0003 \u001b\u0017\u0018 \u0019\u0016\u0017\u0010\u0017\u0014\u0017\u0014 LUD#HPDQXHOODZ\u0011FRP DP\\#DP\\PHOHODZ\u0011FRP Of Counsel \u0015\u0013 20 of 20"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/124484499/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
729 N.W.2d 213 (2007) Sue Ann Marie ANSARI, Plaintiff-Appellant, v. Edward D. GOLD, Patricia Erhart Nessel, and Butzel Long, P.C., Defendants-Appellees. Docket No. 131161. COA No. 263920. Supreme Court of Michigan. April 6, 2007. On order of the Court, the application for leave to appeal the February 14, 2006 judgment of the Court of Appeals is considered, and it is DENIED, because we are not persuaded that the question presented should be reviewed by this Court. In this case, plaintiff seeks a stay of proceedings until final disposition of pending federal litigation, wherein plaintiff's counsel initiated a lawsuit challenging the constitutionality of the Michigan Supreme Court recusal rule. See Fieger v. Ferry, 471 F.3d 637 (C.A.6, 2006). In the recent past, plaintiff's counsel has filed numerous motions for the recusal of one or more Michigan Supreme Court Justices, either in his capacity as a party or as an attorney on behalf of his clients. Each of the prior motions for recusal has involved various allegations of claimed bias, principally stemming from Michigan Supreme Court judicial campaigns. All of the previous motions for recusal have been denied. Graves v. Warner Bros., 469 Mich. 853, 669 N.W.2d 552 (2003); Gilbert v. DaimlerChrysler Corp., 469 Mich. 883, 669 N.W.2d 265 (2003); Harter v. Grand Aerie Fraternal Order of Eagles, ___ Mich. ___, 693 N.W.2d 381 (2005); Grievance Administrator v. Fieger, 472 Mich. 1244, 696 N.W.2d 703 (2005); McDowell v. *214 City of Detroit, 474 Mich. 999, 708 N.W.2d 104 (2006); Stamplis v. St. John Health Sys., 474 Mich. 1017, 708 N.W.2d 377 (2006); Heikkila v. North Star Trucking, Inc., 474 Mich. 1080, 712 N.W.2d 153 (2006); and Lewis v. St. John Hosp., 474 Mich. 1089, 711 N.W.2d 351 (2006). The pending motion to stay this case asserts no new basis for recusal. Rather, the motion is predicated entirely on allegations made in the previous eight motions that have been considered and denied. As we have each done in connection with these past motions, and as Justices must do in connection with every motion for disqualification, we have each looked into our consciences in this case and concluded that we are able to accord fair, impartial and equal treatment to plaintiff's counsel and his clients. Further, the motion is predicated on the erroneous notion that disqualification of a Justice of the Michigan Supreme Court is governed by the disqualification procedure set forth in MCR 2.003. On the contrary, this procedure has never been held applicable to disqualification of Justices. See, e.g., Adair v. State of Michigan, 474 Mich. 1027, 1043, 709 N.W.2d 567 (2006) (statement of Cavanagh, J.), 1029 n. 2, (statement of Taylor, C.J., and Markman, J.); In re J.K., 468 Mich. 202, 220, 661 N.W.2d 216 (2003) (statement of Weaver, J.). Throughout its history, the disqualification procedure followed in the Michigan Supreme Court is similar to the one followed in the United States Supreme Court. See Statement of Recusal Policy, United States Supreme Court, November 1, 1993; Laird v. Tatum, 409 U.S. 824, 833, 837, 93 S.Ct. 7, 34 L.Ed.2d 50 (1972); Jewell Ridge Coal Corp. v. Local 6167, 325 U.S. 897, 65 S.Ct. 1550, 89 L.Ed. 2007 (1945) (Jackson, J., concurring). There being no new asserted basis that would warrant a stay of proceedings, the motion is DENIED. MICHAEL F. CAVANAGH, J., would grant the motion for stay. MARILYN J. KELLY, J., would grant the application for leave to appeal and grant the motion for stay. WEAVER, J., dissents and states as follows: I dissent from the participation of the majority of four, Chief Justice Taylor and Justices Corrigan, Young, and Markman in this case, where Mr. Geoffrey N. Fieger's law firm represents the plaintiff. For my reasons in detail, see my dissent in Grievance Administrator v. Fieger, 476 Mich. 231, 328-347, 719 N.W.2d 123 (2006) (Weaver J., dissenting), and my dissent to the denial of the motion for stay in Grievance Administrator v. Fieger, 477 Mich. 1228, 1231-1271, ___ N.W.2d ___ (2006) (Weaver J., dissenting). I also dissent from the order denying plaintiff's motion for stay of proceedings pending Mr. Fieger's lawsuit in the United States District Court for the Eastern District of Michigan concerning Michigan's disqualification rules governing Supreme Court justices. See Fieger v. Ferry, 471 F.3d 637 (C.A.6, 2006). I would grant the motion to stay. Furthermore, although MCR 2.003 is inadequate and in need of reform, which reform I have urged,[1] without success for almost 4 years, this Court to undertake action and achieve, the disqualification of justices is governed by the disqualification *215 procedure contained in MCR 2.003. Although the majority of four asserts the contrary, the past four years have exposed inconsistencies in the standards that individual justices apply to themselves when making their decision to participate, or not to participate, in a case. At times the justices have applied the court rule governing the disqualification of judges, MCR 2.003, to themselves, and at times they have not. For example, in Adair v. Michigan, 474 Mich. 1027, 1043, 709 N.W.2d 567 (2006), Chief Justice Taylor and Justice Markman stated that "[p]ursuant to MCR 2.003(B)(6), we would each disqualify ourselves if our respective spouses were participating as lawyers in this case, or if any of the other requirements of this court rule were not satisfied." Justice Young concurred fully in this legal analysis. Id. at 1053, 709 N.W.2d 567. Similarly, in Grosse Pointe Park v. Michigan Municipal Liability & Prop. Pool, 473 Mich. 188, 702 N.W.2d 106 (2005), then-Chief Justice Corrigan used the remittal of disqualification process of MCR 2.003(D). At other times, however, the same justices have not followed the provisions of MCR 2.003. For example, in Gilbert v. DaimlerChrysler Corp., 469 Mich. 883, 889, 669 N.W.2d 265 (2003), then-Chief Justice Corrigan and Justices Taylor, Young, and Markman denied a motion for reconsideration of the Court's order denying the motion for disqualification and did not refer the motion to the State Court Administrator for the motion to be assigned to another judge for review de novo, as would be proper under MCR 2.003(C)(3). Assertions that justices can continue to look into their consciences and conclude they are able to accord fair, impartial, and equal treatment to parties' counsel and clients without any independent check on justices' decisions are incorrect. This method is insufficient and inadequate to meet the due process rights of parties and their counsel. Further, while it appears to continue to be for some justices a "tradition" of this Court for a justice who disqualifies himself or herself from a case to not give written reasons, and to sometimes apply MCR 2.003 to himself or herself, and to sometimes not, it is a "tradition of secrecy" and inadequacy that must for all justices end now. An impartial judiciary is "ill served by casting a cloak of secrecy around the operations of the courts. . . . "[2] NOTES [1] Since May 2003, I have repeatedly called for this Court to recognize, publish for public comment, place on a public hearing agenda, and address the need to have clear, fair, orderly, and public procedures concerning the participation or disqualification of justices. See, e.g., statements of Weaver, J., in In re J.K., 468 Mich. 202, 661 N.W.2d 216 (2003); Gilbert v. DaimlerChrysler Corp., 469 Mich. 883, 669 N.W.2d 265 (2003); Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 472 Mich. 91, 693 N.W.2d 358 (2005); McDowell v. Detroit, 474 Mich. 999, 708 N.W.2d 104 (2006); Stamplis v. St. John Health Sys., 474 Mich. 1017, 708 N.W.2d 377 (2006); Heikkila v. North Star Trucking, Inc., 474 Mich. 1080, 712 N.W.2d 153 (2006); Lewis v. St John Hosp., 474 Mich. 1089, 711 N.W.2d 351 (2006); Adair v. Michigan, 474 Mich. 1027, 709 N.W.2d 567 (2006); Grievance Administrator v. Fieger, 476 Mich. 231, 719 N.W.2d 123 (2006); Grievance Administrator v. Fieger, 477 Mich. 1228, ___ N.W.2d ___ (2006); People v. Parsons, ___ Mich. ___, 728 N.W.2d 62 (2007); Ruiz v. Clara's Parlor, ___ Mich. ___, 728 N.W.2d 855 (2007); and Neal v. Dep't of Corrections, 477 Mich. ___, 728 N.W.2d 857 (2007). [2] Scott v. Flowers, 910 F.2d 201, 213 (C.A.5, 1990). | 03-01-2013 | [
"729 N.W.2d 213 (2007) Sue Ann Marie ANSARI, Plaintiff-Appellant, v. Edward D. GOLD, Patricia Erhart Nessel, and Butzel Long, P.C., Defendants-Appellees. Docket No. 131161. COA No. 263920. Supreme Court of Michigan. April 6, 2007. On order of the Court, the application for leave to appeal the February 14, 2006 judgment of the Court of Appeals is considered, and it is DENIED, because we are not persuaded that the question presented should be reviewed by this Court. In this case, plaintiff seeks a stay of proceedings until final disposition of pending federal litigation, wherein plaintiff's counsel initiated a lawsuit challenging the constitutionality of the Michigan Supreme Court recusal rule. See Fieger v. Ferry, 471 F.3d 637 (C.A.6, 2006). In the recent past, plaintiff's counsel has filed numerous motions for the recusal of one or more Michigan Supreme Court Justices, either in his capacity as a party or as an attorney on behalf of his clients.",
"Each of the prior motions for recusal has involved various allegations of claimed bias, principally stemming from Michigan Supreme Court judicial campaigns. All of the previous motions for recusal have been denied. Graves v. Warner Bros., 469 Mich. 853, 669 N.W.2d 552 (2003); Gilbert v. DaimlerChrysler Corp., 469 Mich. 883, 669 N.W.2d 265 (2003); Harter v. Grand Aerie Fraternal Order of Eagles, ___ Mich. ___, 693 N.W.2d 381 (2005); Grievance Administrator v. Fieger, 472 Mich. 1244, 696 N.W.2d 703 (2005); McDowell v. *214 City of Detroit, 474 Mich. 999, 708 N.W.2d 104 (2006); Stamplis v. St. John Health Sys., 474 Mich. 1017, 708 N.W.2d 377 (2006); Heikkila v. North Star Trucking, Inc., 474 Mich. 1080, 712 N.W.2d 153 (2006); and Lewis v. St. John Hosp., 474 Mich. 1089, 711 N.W.2d 351 (2006).",
"The pending motion to stay this case asserts no new basis for recusal. Rather, the motion is predicated entirely on allegations made in the previous eight motions that have been considered and denied. As we have each done in connection with these past motions, and as Justices must do in connection with every motion for disqualification, we have each looked into our consciences in this case and concluded that we are able to accord fair, impartial and equal treatment to plaintiff's counsel and his clients. Further, the motion is predicated on the erroneous notion that disqualification of a Justice of the Michigan Supreme Court is governed by the disqualification procedure set forth in MCR 2.003. On the contrary, this procedure has never been held applicable to disqualification of Justices.",
"See, e.g., Adair v. State of Michigan, 474 Mich. 1027, 1043, 709 N.W.2d 567 (2006) (statement of Cavanagh, J. ), 1029 n. 2, (statement of Taylor, C.J., and Markman, J. ); In re J.K., 468 Mich. 202, 220, 661 N.W.2d 216 (2003) (statement of Weaver, J.). Throughout its history, the disqualification procedure followed in the Michigan Supreme Court is similar to the one followed in the United States Supreme Court. See Statement of Recusal Policy, United States Supreme Court, November 1, 1993; Laird v. Tatum, 409 U.S. 824, 833, 837, 93 S.Ct. 7, 34 L.Ed.2d 50 (1972); Jewell Ridge Coal Corp. v. Local 6167, 325 U.S. 897, 65 S.Ct. 1550, 89 L.Ed. 2007 (1945) (Jackson, J., concurring). There being no new asserted basis that would warrant a stay of proceedings, the motion is DENIED. MICHAEL F. CAVANAGH, J., would grant the motion for stay.",
"MARILYN J. KELLY, J., would grant the application for leave to appeal and grant the motion for stay. WEAVER, J., dissents and states as follows: I dissent from the participation of the majority of four, Chief Justice Taylor and Justices Corrigan, Young, and Markman in this case, where Mr. Geoffrey N. Fieger's law firm represents the plaintiff. For my reasons in detail, see my dissent in Grievance Administrator v. Fieger, 476 Mich. 231, 328-347, 719 N.W.2d 123 (2006) (Weaver J., dissenting), and my dissent to the denial of the motion for stay in Grievance Administrator v. Fieger, 477 Mich. 1228, 1231-1271, ___ N.W.2d ___ (2006) (Weaver J., dissenting). I also dissent from the order denying plaintiff's motion for stay of proceedings pending Mr. Fieger's lawsuit in the United States District Court for the Eastern District of Michigan concerning Michigan's disqualification rules governing Supreme Court justices.",
"See Fieger v. Ferry, 471 F.3d 637 (C.A.6, 2006). I would grant the motion to stay. Furthermore, although MCR 2.003 is inadequate and in need of reform, which reform I have urged,[1] without success for almost 4 years, this Court to undertake action and achieve, the disqualification of justices is governed by the disqualification *215 procedure contained in MCR 2.003. Although the majority of four asserts the contrary, the past four years have exposed inconsistencies in the standards that individual justices apply to themselves when making their decision to participate, or not to participate, in a case. At times the justices have applied the court rule governing the disqualification of judges, MCR 2.003, to themselves, and at times they have not.",
"For example, in Adair v. Michigan, 474 Mich. 1027, 1043, 709 N.W.2d 567 (2006), Chief Justice Taylor and Justice Markman stated that \"[p]ursuant to MCR 2.003(B)(6), we would each disqualify ourselves if our respective spouses were participating as lawyers in this case, or if any of the other requirements of this court rule were not satisfied.\" Justice Young concurred fully in this legal analysis. Id. at 1053, 709 N.W.2d 567. Similarly, in Grosse Pointe Park v. Michigan Municipal Liability & Prop. Pool, 473 Mich. 188, 702 N.W.2d 106 (2005), then-Chief Justice Corrigan used the remittal of disqualification process of MCR 2.003(D).",
"At other times, however, the same justices have not followed the provisions of MCR 2.003. For example, in Gilbert v. DaimlerChrysler Corp., 469 Mich. 883, 889, 669 N.W.2d 265 (2003), then-Chief Justice Corrigan and Justices Taylor, Young, and Markman denied a motion for reconsideration of the Court's order denying the motion for disqualification and did not refer the motion to the State Court Administrator for the motion to be assigned to another judge for review de novo, as would be proper under MCR 2.003(C)(3). Assertions that justices can continue to look into their consciences and conclude they are able to accord fair, impartial, and equal treatment to parties' counsel and clients without any independent check on justices' decisions are incorrect. This method is insufficient and inadequate to meet the due process rights of parties and their counsel.",
"Further, while it appears to continue to be for some justices a \"tradition\" of this Court for a justice who disqualifies himself or herself from a case to not give written reasons, and to sometimes apply MCR 2.003 to himself or herself, and to sometimes not, it is a \"tradition of secrecy\" and inadequacy that must for all justices end now. An impartial judiciary is \"ill served by casting a cloak of secrecy around the operations of the courts. . . . \"[2] NOTES [1] Since May 2003, I have repeatedly called for this Court to recognize, publish for public comment, place on a public hearing agenda, and address the need to have clear, fair, orderly, and public procedures concerning the participation or disqualification of justices.",
"See, e.g., statements of Weaver, J., in In re J.K., 468 Mich. 202, 661 N.W.2d 216 (2003); Gilbert v. DaimlerChrysler Corp., 469 Mich. 883, 669 N.W.2d 265 (2003); Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 472 Mich. 91, 693 N.W.2d 358 (2005); McDowell v. Detroit, 474 Mich. 999, 708 N.W.2d 104 (2006); Stamplis v. St. John Health Sys., 474 Mich. 1017, 708 N.W.2d 377 (2006); Heikkila v. North Star Trucking, Inc., 474 Mich. 1080, 712 N.W.2d 153 (2006); Lewis v. St John Hosp., 474 Mich. 1089, 711 N.W.2d 351 (2006); Adair v. Michigan, 474 Mich. 1027, 709 N.W.2d 567 (2006); Grievance Administrator v. Fieger, 476 Mich. 231, 719 N.W.2d 123 (2006); Grievance Administrator v. Fieger, 477 Mich. 1228, ___ N.W.2d ___ (2006); People v. Parsons, ___ Mich. ___, 728 N.W.2d 62 (2007); Ruiz v. Clara's Parlor, ___ Mich. ___, 728 N.W.2d 855 (2007); and Neal v. Dep't of Corrections, 477 Mich. ___, 728 N.W.2d 857 (2007).",
"[2] Scott v. Flowers, 910 F.2d 201, 213 (C.A.5, 1990)."
]
| https://www.courtlistener.com/api/rest/v3/opinions/843279/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
DWTI : VelocityShares 3x Inverse Crude Oil ETNs Linked to the S&P GSCI ® Crude Oil Index ER Note Information Issuer Information Exchange Ticker DWTI Issuer Credit Suisse AG Exposure 3x Inverse Reset Period Daily Index Information Indicative Value Ticker DWTI.IV Index - S&P GSCI ® Crude Oil Index ER Inception Date 02/07/2012 Bloomberg Index Ticker SPGSCLP Maturity Date* 02/09/2032 CUSIP 22542D548 Primary Exchange NYSE Arca Investor Fee ** 1.35% *Subject to the Issuers option to extend the maturity for up to two additional five year periods. **On any Index Business Day, the Daily Investor Fee is equal to the product of (1) the Closing Indicative Value on the immediately preceding Index Business Day times (2)(a) 0.0135 times (b) 1/365 times (c) d , where d is the number of calendar days from and including the immediately prior Index Business Day to but excluding the date of determination. The Daily Investor Fee is deemed to be zero on any day that is not an Index Business Day. The VelocityShares 3x Inverse Crude Oil ETNs linked to the S&P GSCI ® Crude Oil Index ER (the ETNs) are senior, unsecured obligations of Credit Suisse AG (Credit Suisse) acting through its Nassau branch. The ETNs seek to provide inverse exposure to three times (3x) the daily performance of the S&P | [
"DWTI : VelocityShares 3x Inverse Crude Oil ETNs Linked to the S&P GSCI ® Crude Oil Index ER Note Information Issuer Information Exchange Ticker DWTI Issuer Credit Suisse AG Exposure 3x Inverse Reset Period Daily Index Information Indicative Value Ticker DWTI.IV Index - S&P GSCI ® Crude Oil Index ER Inception Date 02/07/2012 Bloomberg Index Ticker SPGSCLP Maturity Date* 02/09/2032 CUSIP 22542D548 Primary Exchange NYSE Arca Investor Fee ** 1.35% *Subject to the Issuers option to extend the maturity for up to two additional five year periods. **On any Index Business Day, the Daily Investor Fee is equal to the product of (1) the Closing Indicative Value on the immediately preceding Index Business Day times (2)(a) 0.0135 times (b) 1/365 times (c) d , where d is the number of calendar days from and including the immediately prior Index Business Day to but excluding the date of determination.",
"The Daily Investor Fee is deemed to be zero on any day that is not an Index Business Day. The VelocityShares 3x Inverse Crude Oil ETNs linked to the S&P GSCI ® Crude Oil Index ER (the ETNs) are senior, unsecured obligations of Credit Suisse AG (Credit Suisse) acting through its Nassau branch. The ETNs seek to provide inverse exposure to three times (3x) the daily performance of the S&P"
]
| https://applica-public.s3-eu-west-1.amazonaws.com/contract-discovery/edgar.txt.xz | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
WADDILL, District Judge (after stating the facts as above). The pleadings in this case present two questions for the consideration of the court: First. Whether a general assignment for the benefit of creditors constitutes an act of bankruptcy; and, second, if an act of bankruptcy, what effect the action of the state court appointing a receiver to administer the trust under the deed of assignment should have in the administration of the trust estate,—that is to say, whether the state or bankrupt court should, after the adjudication of bankruptcy, administer the trust estate. *238The present bankrupt law (section 3) specifies five acts of bankruptcy, viz.: “(1) Conveyed, transferred, concealed, of removed; or permitted to be concealed or removed, any part of liis property with intent to hinder, delay or defraud his creditors, or any of them; or (2) transferred, while insolvent, any portion cf. his property to one or more of his creditors with intent to prefer such creditors over his other creditors; or (3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings, and not having at least five days before a sale or final disposition of any property affected by such preference vacated or discharged such preference; or (4) made a general assignment for the benefit of his creditors; or (5) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground.” And the law particularly provides, in involuntary bankruptcy cases, for contesting the first, second, and third grounds of bankruptcy by allowing the bankrupt to disprove his alleged insolvency, and the burden to prove solvency is placed upon him. No provision seems to be made for contesting the fourth and fifth grounds of bankruptcy, for the manifest reason,- it would appear, that the question of insolvency is not one open for dispute where the bankrupt, either in writing admits his inability to pay his debts and consents to be adjudged a bankrupt, or makes a general assignment for the benefit of his creditors. The general assignment itself is inconsistent with solvency, and the answer to the contention that one may assign, and still be solvent, is that to determine that fact involves the administration of the trust, which the law has chosen to impose upon courts of bankruptcy at the instance of creditors, and not upon the bankrupt himself, through agencies chosen by him. To allow the bankrupt to make an assignment, and a creditor secured in the assignment to submit the administration of the trust arising under it to a state court, to defeat the jurisdiction of the bankrupt court, would, in effect, destroy the bankrupt law. Under the law itself, it is quite clear that a general assignment of one’s estate and effects to trustees constitutes an act of bankruptcy, and the current of authority, both English and American, is to the same effect. A general assignment of an insolvent debtor to an assignee or trustee of his own choosing is itself an act of bankruptcy and voidable, because it defeats the rights of creditors to the choice of a trustee, and the trustee,. under such assignment, can hold nothing as against the trustee in bankruptcy, where proceedings are taken to avoid the assignment. Under the act of 1867, the supreme court of the United States in Boese v. King, 108 U. S. 385, 2 Sup. Ct. 769, in considering this question, said: “It is equally clear, we think, that the assignment by Locke of his entire property, to be disposed of as prescribed by the statute of New Jersey, and therefore independently of the bankrupt court, constituted itself an act of bankruptcy, for which, upon the petition of a creditor filed within the proper time, Locke could have been adjudged a bankrupt, and the property wrested from his assignee for administration in the bankruptcy court.” In re Burt 1 Dill. 439, 440, Fed. Cas. No. 2,210; Hobson v. Alarkson, Fed. Cas. No. 6,555; In re Smith, Id. 12,974; Black, Bankr. p. 20, and cases there cited; Bump, Bankr. (11th Ed.) p. 252, and cases there cited. Coming to the consideration of what action should be taken by this court, where the state court has entered upon the administration of the *239trust estate by reason of the general assignment of the bankrupt, while every reasonable effort should be exerted to avoid even an apparent conflict of jurisdiction between state and federal courts, this case is apparently free from difficulty, as it will not be seriously maintained that the act of bankruptcy itself can be made the basis of dispossessing the bankrupt court of its jurisdiction. The constitution of the United States authorizes congress, in it$ wisdom, to enact bankruptcy legislation, and when such action is taken it is the supreme law of Che land on the subject, tinder the recent act, the district courts of the United States alone are made courts of bankruptcy within the states, and are vested with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings. There are many matters in which the state and federal courts can proceed in harmony under the bankruptcy act, and which the bankrupt court should leave to the determination of the state court, and, as far as possible, it will be the policy of this court to do so; but, in a ease like the present one, I do not see how the two courts can proceed harmoniously. The litigation in each court involves the administration of the entire estate of the bankrupt; one court or the other must proceed. If the assignment is in itself an act of bankruptcy, and the makers thereof have been adjudged bankrupts, then this court has to proceed, and therefore must be possessed of the bankrupt’s estate; for otherwise the anomalous condition would exist of one court dealing with the bankrupt and his creditors, and another court administering his estal.e. The power of the bankrupt court in the premises is plenary, and under section 711, Rev. St. U. S., its jurisdiction in bankruptcy cases is superior to, and not concurrent with, the state courts. And by section 720, Id., and section 11 of the bankruptcy law, it is specially authorized to issue injunctions against the parties and stay proceedings in state courts when necessary for the exercise of its jurisdiction. Indeed, in these cases the question is more one of discretion than jurisdiction. Authorities to support this view are abundant. In re Clark, 9 Blatchf. 372, Fed. Cas. No. 2,801; In re Merchants’ Ins. Co., 3 Biss. 162, Fed. Cas. No. 9,441; In re Miller, 6 Biss, 30, Fed. Cas. No. 9,551; Watson v. Bank, 2 Hughes, 200, Fed. Cas. No. 17,279; In re Whipple, 6 Biss. 516, Fed. Cas. No. 17,512; Black, Bankr. pp. 10, 20; Ex parte Christy, 3 How. 292. My conclusion is that the assignment constitutes an act of bankruptcy, and that the parties should be enjoined from further proceeding in the state court. As an appeal is desired in this case, a decree may be entered adjudicating the bankruptcy, and enjoining any disposition of the fund in the state court; but, under the circumstances of this case, the present administration of the estate in the state court will not be interrupted pending the appeal, which can be quickly taken and disposed of. | 11-26-2022 | [
"WADDILL, District Judge (after stating the facts as above). The pleadings in this case present two questions for the consideration of the court: First. Whether a general assignment for the benefit of creditors constitutes an act of bankruptcy; and, second, if an act of bankruptcy, what effect the action of the state court appointing a receiver to administer the trust under the deed of assignment should have in the administration of the trust estate,—that is to say, whether the state or bankrupt court should, after the adjudication of bankruptcy, administer the trust estate.",
"*238The present bankrupt law (section 3) specifies five acts of bankruptcy, viz. : “(1) Conveyed, transferred, concealed, of removed; or permitted to be concealed or removed, any part of liis property with intent to hinder, delay or defraud his creditors, or any of them; or (2) transferred, while insolvent, any portion cf. his property to one or more of his creditors with intent to prefer such creditors over his other creditors; or (3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings, and not having at least five days before a sale or final disposition of any property affected by such preference vacated or discharged such preference; or (4) made a general assignment for the benefit of his creditors; or (5) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground.” And the law particularly provides, in involuntary bankruptcy cases, for contesting the first, second, and third grounds of bankruptcy by allowing the bankrupt to disprove his alleged insolvency, and the burden to prove solvency is placed upon him. No provision seems to be made for contesting the fourth and fifth grounds of bankruptcy, for the manifest reason,- it would appear, that the question of insolvency is not one open for dispute where the bankrupt, either in writing admits his inability to pay his debts and consents to be adjudged a bankrupt, or makes a general assignment for the benefit of his creditors.",
"The general assignment itself is inconsistent with solvency, and the answer to the contention that one may assign, and still be solvent, is that to determine that fact involves the administration of the trust, which the law has chosen to impose upon courts of bankruptcy at the instance of creditors, and not upon the bankrupt himself, through agencies chosen by him. To allow the bankrupt to make an assignment, and a creditor secured in the assignment to submit the administration of the trust arising under it to a state court, to defeat the jurisdiction of the bankrupt court, would, in effect, destroy the bankrupt law. Under the law itself, it is quite clear that a general assignment of one’s estate and effects to trustees constitutes an act of bankruptcy, and the current of authority, both English and American, is to the same effect. A general assignment of an insolvent debtor to an assignee or trustee of his own choosing is itself an act of bankruptcy and voidable, because it defeats the rights of creditors to the choice of a trustee, and the trustee,.",
"under such assignment, can hold nothing as against the trustee in bankruptcy, where proceedings are taken to avoid the assignment. Under the act of 1867, the supreme court of the United States in Boese v. King, 108 U. S. 385, 2 Sup. Ct. 769, in considering this question, said: “It is equally clear, we think, that the assignment by Locke of his entire property, to be disposed of as prescribed by the statute of New Jersey, and therefore independently of the bankrupt court, constituted itself an act of bankruptcy, for which, upon the petition of a creditor filed within the proper time, Locke could have been adjudged a bankrupt, and the property wrested from his assignee for administration in the bankruptcy court.” In re Burt 1 Dill.",
"439, 440, Fed. Cas. No. 2,210; Hobson v. Alarkson, Fed. Cas. No. 6,555; In re Smith, Id. 12,974; Black, Bankr. p. 20, and cases there cited; Bump, Bankr. (11th Ed.) p. 252, and cases there cited. Coming to the consideration of what action should be taken by this court, where the state court has entered upon the administration of the *239trust estate by reason of the general assignment of the bankrupt, while every reasonable effort should be exerted to avoid even an apparent conflict of jurisdiction between state and federal courts, this case is apparently free from difficulty, as it will not be seriously maintained that the act of bankruptcy itself can be made the basis of dispossessing the bankrupt court of its jurisdiction. The constitution of the United States authorizes congress, in it$ wisdom, to enact bankruptcy legislation, and when such action is taken it is the supreme law of Che land on the subject, tinder the recent act, the district courts of the United States alone are made courts of bankruptcy within the states, and are vested with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings. There are many matters in which the state and federal courts can proceed in harmony under the bankruptcy act, and which the bankrupt court should leave to the determination of the state court, and, as far as possible, it will be the policy of this court to do so; but, in a ease like the present one, I do not see how the two courts can proceed harmoniously.",
"The litigation in each court involves the administration of the entire estate of the bankrupt; one court or the other must proceed. If the assignment is in itself an act of bankruptcy, and the makers thereof have been adjudged bankrupts, then this court has to proceed, and therefore must be possessed of the bankrupt’s estate; for otherwise the anomalous condition would exist of one court dealing with the bankrupt and his creditors, and another court administering his estal.e. The power of the bankrupt court in the premises is plenary, and under section 711, Rev. St. U. S., its jurisdiction in bankruptcy cases is superior to, and not concurrent with, the state courts. And by section 720, Id., and section 11 of the bankruptcy law, it is specially authorized to issue injunctions against the parties and stay proceedings in state courts when necessary for the exercise of its jurisdiction. Indeed, in these cases the question is more one of discretion than jurisdiction.",
"Authorities to support this view are abundant. In re Clark, 9 Blatchf. 372, Fed. Cas. No. 2,801; In re Merchants’ Ins. Co., 3 Biss. 162, Fed. Cas. No. 9,441; In re Miller, 6 Biss, 30, Fed. Cas. No. 9,551; Watson v. Bank, 2 Hughes, 200, Fed. Cas. No. 17,279; In re Whipple, 6 Biss. 516, Fed. Cas. No. 17,512; Black, Bankr.",
"pp. 10, 20; Ex parte Christy, 3 How. 292. My conclusion is that the assignment constitutes an act of bankruptcy, and that the parties should be enjoined from further proceeding in the state court. As an appeal is desired in this case, a decree may be entered adjudicating the bankruptcy, and enjoining any disposition of the fund in the state court; but, under the circumstances of this case, the present administration of the estate in the state court will not be interrupted pending the appeal, which can be quickly taken and disposed of."
]
| https://www.courtlistener.com/api/rest/v3/opinions/8863927/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Status of Claims The Office Action is in response to the amendment filed 11/19/2021. Claims 1-14, 16-17, and 19-20 are presently pending and are presented for examination.
Response to Arguments Applicant’s arguments, see page 7, filed 11/19/2021, with respect to the objection to claims 13 and 19 have been fully considered and are persuasive. The amendments to the claims have overcome the objection. The objection to claims 13 and 19 has been withdrawn. Applicant’s arguments, see page 7, filed 11/19/2021, with respect to the interpretation of claim(s) 1 and 17 under 35 U.S.C. § 112(f) have been fully considered and are persuasive. The amendments to the claims have overcome the claim interpretation. The claim interpretation of claims 1 and 17 under 35 U.S.C. § 112(f) has been withdrawn. Applicant’s arguments, see pages 7-10, filed 11/19/2021, with respect to the rejection(s) of claim(s) 1-14, 16-17, and 19-20 under 35 U.S.C. § 103 in view of Steltz et al. US 20170234961 A1 (“Steltz”) in combination with Abbot et al. US 20170122546 A1 (“Abbott”) have been fully considered and are persuasive. Therefore, the rejection has been withdrawn. However, upon further consideration, a new ground(s) of rejection is made in view of Steltz et al. US 20170234961 A1 (“Steltz”) in view of Abbot et al. US 20170122546 A1 (“Abbott”) and Dong et al. US 20130196684 A1 (“Dong”).
Claim Objections Claim 1 objected to because of the following informalities: claim reads “wherein the processor…identifying at least one object or area from the image or video” in lines 6-9. Claim should read “wherein the processor…identifies at least one object or area from the image or video” instead. Appropriate correction is required. Claim 17 objected to because of the following informalities: claim reads “a control device, wherein the control device includes a processor and a third communication module that: …identifying at least one object or area from the image or video” in lines 5-11. Claim should read “a control device, wherein the control device includes a processor and a third communication module that: …identifies at least one object or area from the image or video” instead. Appropriate correction is required.
Claim Rejections - 35 USC § 103 Claims 1-3, 6-7, and 12-14 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al. US 20170234961 A1 (“Steltz”) in view of Abbot et al. US 20170122546 A1 (“Abbott”), Dong et al. US 20130196684 A1 (“Dong”), and Smith et al. US 20160026185 A1 (“Smith”). Regarding Claim 1. Steltz teaches a digital fencing system, comprising: a first beacon comprising a first communication module; a second beacon comprising a second communication module (Steltz teaches an absolute position system which includes a number of beacons that are shown in FIG. 1B, where a single robot responds to multiple beacons. FIG. 4 shows a detailed view of the beacons, in which a controller at numeral 404 controls a communications system at 406 to emit a broadcast to the robot, which the robot can receive via an antenna module [paragraph 59], so each beacon (of which there can be two or more) comprises a communication module); and a control device (Steltz teaches a user device in FIG. 5 at numeral 510, which can be part of a network of devices that may include the beacons and a server [paragraph 12]. FIG. 5 shows that the robot can be part of this network as well. The user device acts as a controller where one or more commands, instructional data, etc. may be exchanged between a computing device such as the user device and the robot, along with the other parts of the network [paragraph 81]), wherein the control device includes a processor and a third communication module (FIGS. 3 and 5 shows a controller connected to a communications system at 304 which includes an antenna module [paragraph 57]), wherein the processor: obtains first information from the first beacon, wherein the first information is related to a wireless signal transmitted by a mobile entity and received by the first beacon; obtains second information from the second beacon, wherein the second information is related to the wireless signal transmitted by the mobile entity and received by the second beacon (Steltz teaches that the beacons (of which there can be more than one in FIG. 1B) can transmit information pertaining to the operations of the robot to either the user device at numeral 510, or a user interface on the robot itself at numeral 545 of FIG. 5 [paragraph 96]. For example, the user interface can receive information confirming the pairing between the robot and a beacon. Pairing is the establishing of a relationship between beacons and a robot so that the robot recognizes, for navigation and localization, signals from the paired beacons only, and not signals from other beacons to which the robot is not paired. During a pairing operation, the communications system of the robot and the communications system of the beacon can communicate with one another [paragraph 64], which means that the pairing operation involves a signal transmitted by the mobile entity and received by the beacon(s), and the pairing information sent to the user device are related to the signal sent by the robot. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals from its paired beacons to identify the boundary as the robot navigates around the lawn automatically [paragraph 47]. In FIG. 1B, it is shown that multiple beacons can be paired with the same robot, and so the user interface can receive first information from a first beacon regarding pairing with the robot, and also receive second information from a second beacon regarding pairing with the robot); determines a location of the mobile entity based at least in part on the first and second information relative to a permitted area; and transmit, via the third communication module, a control message to the mobile entity to control a movement of the mobile entity based on the determined location of the mobile entity relative to the determined permitted area (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons, meaning that the location of the mobile entity is determined based on at least the first information and the second information. The control signal is transmitted via the communications system (received by the robot via the antenna module attached to the communications system). The third communication module disposed on the robot is not transmitting the control message, but the control message is transmitted to the mobile entity from a user device as shown in FIG. 5 via the communication module, which reads on the claim language as it is written. Alternatively, the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. This user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own). Steltz does not teach: The beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the processor obtains, via the third communication module, an image or video, from at least one of the first camera or second camera. However, Abbott teaches: The beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]); and the processor obtains, via a third communication module, an image or video, from at least one of the first camera or second camera (The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the processor obtains, via the third communication module, an image or video, from at least one of the first camera or second camera as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Steltz also does not teach: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon. However, Dong teaches: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon (Dong teaches a computer implemented method for generating an indoor radio map, wherein an indoor environment is configured to be provided with wireless sensor nodes and at least one mobile node, wherein the mobile node can move in the indoor environment and perform wireless signal transmission with the wireless sensor nodes, the method comprising: measuring the wireless signal strengths transmitted between the wireless sensor nodes and the mobile node at different indoor positions; performing a smoothing process on the wireless signal strengths measured by the mobile node in at least one position; and generating an indoor radio map according to the smoothed wireless signal strengths; wherein at least one of the steps is carried out by a processor device [Claim 1]. The mobile node can be formed as a separate apparatus, and can be designed as a robot to sample signal strength at various indoor positions [paragraph 42]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and the second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon as taught by Dong so that the beacons can use the signal strength of signals sent by the robot to improve the mapping information and robot position data. Steltz also does not teach: The control device identifies at least one object or area from the image or video; and determines a permitted area based at least in part on the identified at least one object or area. However, Smith teaches: The control device identifies at least one object or area from the image or video; and determines a permitted area based at least in part on the identified at least one object or area (Smith teaches a method of determining a location of an autonomous mobile work device, the method comprising providing a first variable reflectivity base station, and a second variable reflectivity base station; providing a location of the first variable reflectivity base station and a location of the second variable reflectivity base station to the autonomous mobile work device; changing a reflectivity state of the first variable reflectivity base station; calculating a first distance between said first variable reflectivity base station and the autonomous mobile work system; changing the reflectivity state of the second variable reflectivity base station; calculating a second distance between the second variable reflectivity base station and the autonomous mobile work system; and calculating the location of the autonomous mobile work system based on the first and second calculated distances [Claim 17]. In one embodiment, a wireless communication link may be eliminated and replaced with variable reflectors on the autonomous work station, a variable reflector on the base station (or stations), and one or more cameras on each of the reflective base station and mobile work system, respectively [paragraph 88]. Smith also teaches that any included visual system can have dual use for location of obstacles, obstacle avoidance, or identification of moving objects [paragraph 54], and logically, this could include identifying the mobile work device. Additionally, the mobile work device might be a robotic lawn mower [paragraph 55]. Smith also teaches that radar sensors continually read the mobile robot position based upon feedback from the microcontroller calculations, allowing for estimation of the position of the mobile robot [paragraph 260], and the system can have cameras external to the robot wherein the camera can validate the results of the radar sensors to verify the distance from the cameras to the mobile robot [paragraph 262], and these external cameras can be mounted on the base stations [paragraph 88], allowing each station to process a video or image of the mobile robot and an area within the video or image to determine the location of the mobile robot relative to both of the base stations and the work area). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the control device identifies at least one object or area from the image or video; and determines a permitted area based at least in part on the identified at least one object or area as taught by Smith so that the system can use visual identification of the robot as a failsafe to ensure the robot is located within the bounded work area. Regarding Claim 2. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the control message to the mobile entity is transmitted from the third communication module to the mobile entity via the first communication module of the first beacon (the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own. Steltz also teaches that the robot may communicate with a server, and various types of information can be transmitted and exchanged among devices, including the robot, the server, the beacons, and other computing devices. The robot can communicate with an Internet of Things to halt robot operations if an individual, such as a child, is in the vicinity, and the robot can even receive and transmit radio frequency signals to communicate with other robots [paragraph 81]. In FIG. 5, the user device is shown able to communicate with the server, which means that signals from the user device at 510 can be received by the beacons from the server and then delivered to the robot). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 3. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the first information indicates a power level of the wireless signal at transmission by the mobile entity. However, Dong teaches: wherein the first information indicates a power level of the wireless signal at transmission by the mobile entity (Dong teaches a computer implemented method for generating an indoor radio map, wherein an indoor environment is configured to be provided with wireless sensor nodes and at least one mobile node, wherein the mobile node can move in the indoor environment and perform wireless signal transmission with the wireless sensor nodes, the method comprising: measuring the wireless signal strengths transmitted between the wireless sensor nodes and the mobile node at different indoor positions; performing a smoothing process on the wireless signal strengths measured by the mobile node in at least one position; and generating an indoor radio map according to the smoothed wireless signal strengths; wherein at least one of the steps is carried out by a processor device [Claim 1]. The mobile node can be formed as a separate apparatus, and can be designed as a robot to sample signal strength at various indoor positions [paragraph 42]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the first information indicates a power level of the wireless signal at transmission by the mobile entity as taught by Dong so that the beacons can use the signal strength of signals sent by the robot to improve the mapping information and robot position data. Regarding Claim 6. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein a boundary of the permitted area is defined based on distances from the first beacon and the second beacon (Steltz teaches that the robot shown in FIG. 1A uses beacons to identify the boundary of a lawn [paragraph 48]. Together with the beacon signals, the information allows the robot to navigate around the lawn automatically, while not crossing the lawn boundary. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals form its paired beacons to identify the boundary as the robot navigates the lawn automatically [paragraph 47]. Additionally, a communications system can be controlled to transmit a message that the controller of the robot can use to determine a distance between the robot and the beacon [paragraph 59]. During navigation and lawn mowing operations of the robot, the beacon can emit wireless signals that the robot receives and uses to localize itself within the environment). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 7. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the mobile entity is a robotic lawn mower and wherein the first beacon and the second beacon are outdoor beacons (Steltz teaches that the system they have designed is intended to work with a mobile lawn-mowing robot [paragraph 3]. In FIGS. 1A and 1B, the beacons are shown to be outdoor beacons positioned on a lawn). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 12. Steltz teaches a non-transitory computer-readable medium of a controller, wherein the non- transitory computer-readable medium contains instructions executable by a processor (Steltz teaches a user device in FIG. 5 at numeral 510, which can be part of a network of devices that may include the beacons and a server [paragraph 12]. FIG. 5 shows that the robot can be part of this network as well. The user device acts as a controller where one or more commands, instructional data, etc. may be exchanged between a computing device such as the user device and the robot, along with the other parts of the network [paragraph 81]. The robots described by Stelts can be controlled, at least in part, using one or more computer program products, such as one or more non-transitory machine-readable media [paragraph 25]. The mobile lawn mowing robots, or operational aspects thereof, described herein can be implemented as part of a system or method that can include one or more processing devices and memory to store executable instructions to implement various operations. A memory unit is even shown in FIG. 5 to be included in the robot along with the user interface, which means that a non-transitory computer-readable medium or media can be incorporated with the robot controller and contain instructions executable by the controller at numeral 226, which can be a processor [paragraph 57]), the instructions comprising: receiving first information from a first beacon, wherein the first information is related to a wireless signal transmitted by a mobile entity and received by the first beacon; receiving second information from a second beacon, wherein the second information is related to the wireless signal transmitted by the mobile entity and received by the second beacon (Steltz teaches that the beacons (of which there can be more than one in FIG. 1B) can transmit information pertaining to the operations of the robot to either the user device at numeral 510, or a user interface on the robot itself at numeral 545 of FIG. 5 [paragraph 96]. For example, the user interface can receive information confirming the pairing between the robot and a beacon. Pairing is the establishing of a relationship between beacons and a robot so that the robot recognizes, for navigation and localization, signals from the paired beacons only, and not signals from other beacons to which the robot is not paired. During a pairing operation, the communications system of the robot and the communications system of the beacon can communicate with one another [paragraph 64], which means that the pairing operation involves a signal transmitted by the mobile entity and received by the beacon(s), and the pairing information sent to the user device are related to the signal sent by the robot. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals from its paired beacons to identify the boundary as the robot navigates around the lawn automatically [paragraph 47]. In FIG. 1B, it is shown that multiple beacons can be paired with the same robot, and so the user interface can receive first information from a first beacon regarding pairing with the robot, and also receive second information from a second beacon regarding pairing with the robot); determining a location of the mobile entity based at least in part on the first and second information relative to the permitted area; transmitting, via a communication module, a control message to the mobile entity to control a movement of the mobile entity based on the determined location of the mobile entity relative to the determined permitted area (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons, meaning that the location of the mobile entity is determined based on at least the first information and the second information. The control signal is transmitted via the communications system (received by the robot via the antenna module attached to the communications system). The third communication module disposed on the robot is not transmitting the control message, but the control message is transmitted to the mobile entity from a user device as shown in FIG. 5 via the communication module, which reads on the claim language as it is written. Alternatively, the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. This user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own). Steltz does not teach: The beacons are light fixtures, and the instructions comprise: receiving, an image or video, from at least one of a first camera associated with a first light fixture or second camera associated with a second light fixture; However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]), and the instructions comprise: receiving, an image or video, from at least one of a first camera associated with a first light fixture or second camera associated with a second light fixture (The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]); It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures, and the instructions comprise: receiving, an image or video, from at least one of a first camera associated with a first light fixture or second camera associated with a second light fixture as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Steltz also does not teach: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon. However, Dong teaches: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon (Dong teaches a computer implemented method for generating an indoor radio map, wherein an indoor environment is configured to be provided with wireless sensor nodes and at least one mobile node, wherein the mobile node can move in the indoor environment and perform wireless signal transmission with the wireless sensor nodes, the method comprising: measuring the wireless signal strengths transmitted between the wireless sensor nodes and the mobile node at different indoor positions; performing a smoothing process on the wireless signal strengths measured by the mobile node in at least one position; and generating an indoor radio map according to the smoothed wireless signal strengths; wherein at least one of the steps is carried out by a processor device [Claim 1]. The mobile node can be formed as a separate apparatus, and can be designed as a robot to sample signal strength at various indoor positions [paragraph 42]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and the second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon as taught by Dong so that the beacons can use the signal strength of signals sent by the robot to improve the mapping information and robot position data. Steltz also does not teach: identifying at least one object or area from the image or video; determining a permitted area based at least in part on the identified at least one object or area. However, Smith teaches: identifying at least one object or area from the image or video; determining a permitted area based at least in part on the identified at least one object or area (Smith teaches a method of determining a location of an autonomous mobile work device, the method comprising providing a first variable reflectivity base station, and a second variable reflectivity base station; providing a location of the first variable reflectivity base station and a location of the second variable reflectivity base station to the autonomous mobile work device; changing a reflectivity state of the first variable reflectivity base station; calculating a first distance between said first variable reflectivity base station and the autonomous mobile work system; changing the reflectivity state of the second variable reflectivity base station; calculating a second distance between the second variable reflectivity base station and the autonomous mobile work system; and calculating the location of the autonomous mobile work system based on the first and second calculated distances [Claim 17]. In one embodiment, a wireless communication link may be eliminated and replaced with variable reflectors on the autonomous work station, a variable reflector on the base station (or stations), and one or more cameras on each of the reflective base station and mobile work system, respectively [paragraph 88]. Smith also teaches that any included visual system can have dual use for location of obstacles, obstacle avoidance, or identification of moving objects [paragraph 54], and logically, this could include identifying the mobile work device. Additionally, the mobile work device might be a robotic lawn mower [paragraph 55]. Smith also teaches that radar sensors continually read the mobile robot position based upon feedback from the microcontroller calculations, allowing for estimation of the position of the mobile robot [paragraph 260], and the system can have cameras external to the robot wherein the camera can validate the results of the radar sensors to verify the distance from the cameras to the mobile robot [paragraph 262], and these external cameras can be mounted on the base stations [paragraph 88], allowing each station to process a video or image of the mobile robot and an area within the video or image to determine the location of the mobile robot relative to both of the base stations and the work area). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with identifying at least one object or area from the image or video; determining a permitted area based at least in part on the identified at least one object or area as taught by Smith so that the system can use visual identification of the robot as a failsafe to ensure the robot is located within the bounded work area. Regarding Claim 13. Steltz in combination with Abbott, Dong, and Smith teaches the non-transitory computer-readable medium of Claim 12. Steltz also teaches: wherein the control message to the mobile entity is transmitted from the third communication module to the mobile entity via the first beacon (the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own. Steltz also teaches that the robot may communicate with a server, and various types of information can be transmitted and exchanged among devices, including the robot, the server, the beacons, and other computing devices. The robot can communicate with an Internet of Things to halt robot operations if an individual, such as a child, is in the vicinity, and the robot can even receive and transmit radio frequency signals to communicate with other robots [paragraph 81]. In FIG. 5, the user device is shown able to communicate with the server, which means that signals from the user device at 510 can be received by the beacons from the server and then delivered to the robot). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 14. Steltz in combination with Abbott, Dong, and Smith teaches the non-transitory computer-readable medium of Claim 12. Steltz also teaches: wherein a boundary of the permitted area is defined based on distances from the first beacon and the second beacon (Steltz teaches that the robot shown in FIG. 1A uses beacons to identify the boundary of a lawn [paragraph 48]. Together with the beacon signals, the information allows the robot to navigate around the lawn automatically, while not crossing the lawn boundary. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals form its paired beacons to identify the boundary as the robot navigates the lawn automatically [paragraph 47]. Additionally, a communications system can be controlled to transmit a message that the controller of the robot can use to determine a distance between the robot and the beacon [paragraph 59]. During navigation and lawn mowing operations of the robot, the beacon can emit wireless signals that the robot receives and uses to localize itself within the environment). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot.
Claims 4-5, 8, and 16 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al. US 20170234961 A1 (“Steltz”), Abbot et al. US 20170122546 A1 (“Abbott”), Dong et al. US 20130196684 A1 (“Dong”), and Smith et al. US 20160026185 A1 (“Smith”) as applied to claim 1 above, and further in view of Ko et al. US 20180372832 A1 (“Ko”). Regarding Claim 4. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Steltz shows three antennas in FIG. 8 arranged around the ranging antenna at 802 that receive wireless communications. The antennas are capable of implementing techniques such as time difference of arrival (TDOA) and phase difference of arrival (PDOA) [paragraph 77], which means that the antennas of the robot can identify a first time of arrival from the information from a first beacon, and a second time of arrival from the information from a second beacon. Additionally, the robot can include a user interface that receives data from the robot controller to display information pertaining to the operations of the robot [paragraph 96]. This user interface can be used in addition or as an alternative to using a user device, and can act as the controller configured to receive the first and second information. This means that the controller receiving the first and second information from the beacons also receives in the first and second information a time of arrival for each set of information). In addition and in the alternative, Ko teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Ko teaches that a well-known positioning method includes a method using a time difference of arrival (TDOA) based on a time of arrival and a trigonometric equation, a time of arrival (TOA) obtained by calculating time taken for a radio wave to arrive (which necessarily means that the system can determine the time the radio wave was transmitted and subtract it from the time of arrival), and angle of arrival (AOA) using a transmitted signal angle, and received signal strength indication (RSSI), and a Wi-Fi positioning scheme using a radio AP [paragraph 4]. Ko teaches that a processor at numeral 70 may calculate the distance information of the external communication device based on a time difference between a received signal received by a first antenna and the transmit signal S2 in response to the transmit signal at S2 of FIG. 12 [paragraph 233]. This means that the method of positioning taught by Ko involves calculating the time for a signal to arrive, and can also determine the time of transmission of the signal in response to the signal. This process is accomplished by the provision of a communication device including a first to third antennas spaced apart from each other by different distances [paragraph 7]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal as taught by Ko, which expressly teaches that this method is well-known, so as to improve the robot’s estimation of its location in an environment. Steltz does not teach: The antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon. However, Steltz does teach that the beacon communications system can use a wireless transceiver to receive wireless signals emitted into the environment by the robot [paragraph 58]. The robot can use the antenna module to send status information and receive information from one or more beacons regarding beacon status [paragraph 81]. The robot uses signals from the beacons to estimate its position in relation to the paired beacons [paragraph 47]. Having the beacons include a set of antennas similar to the antennas on the robot that can determine time difference of arrival of signals and then send data regarding the time difference to the robot would have the obvious benefit of improving the robot’s position estimation. It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon so as to improve the robot’s estimation of its location in an environment. Steltz also does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 5. Steltz in combination with Abbott, Dong, Smith, and Ko teaches the digital fencing system of Claim 4. Steltz does not teach: wherein the first information indicates a time of transmission of the wireless signal by the mobile entity. However, Ko teaches: wherein the first information indicates a time of transmission of the wireless signal by the mobile entity (Ko teaches that a well-known positioning method includes a method using a time difference of arrival (TDOA) based on a time of arrival and a trigonometric equation, a time of arrival (TOA) obtained by calculating time taken for a radio wave to arrive (which necessarily means that the system can determine the time the radio wave was transmitted and subtract it from the time of arrival), and angle of arrival (AOA) using a transmitted signal angle, and received signal strength indication (RSSI), and a Wi-Fi positioning scheme using a radio AP [paragraph 4]. Ko teaches that a processor at numeral 70 may calculate the distance information of the external communication device based on a time difference between a received signal received by a first antenna and the transmit signal S2 in response to the transmit signal at S2 of FIG. 12 [paragraph 233]. This means that the method of positioning taught by Ko involves calculating the time for a signal to arrive, and can also determine the time of transmission of the signal in response to the signal. This process is accomplished by the provision of a communication device including a first to third antennas spaced apart from each other by different distances [paragraph 7]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the first information indicates a time of transmission of the wireless signal by the mobile entity as taught by Ko, which expressly teaches that this method is well-known, so as to improve the robot’s estimation of its location in an environment. Regarding Claim 8. Steltz in combination with Abbott, Dong, Smith, and Ko teaches the digital fencing system of Claim 1. Steltz does not teach: wherein the mobile entity is a robotic vacuum cleaner and wherein the first beacon and the second beacon are indoor lighting fixtures. However, Ko teaches: wherein the mobile entity is a robotic vacuum cleaner and wherein the first beacon and the second beacon are indoor lighting fixtures (Ko teaches a robot cleaner in FIG. 4 [paragraph 77]. The robot is designed to work with a plurality of transmitting apparatuses shown in FIG. 4 to be indoor transmitters). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the mobile entity is a robotic vacuum cleaner and wherein the first beacon and the second beacon are indoor lighting fixtures as taught by Ko so that the fencing system can work indoors with robotic vacuum cleaners as well as lawn mowers. Steltz also does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 16. Steltz in combination with Abbott, Dong, and Smith teaches the non-transitory computer-readable medium of Claim 12. Steltz also teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Steltz shows three antennas in FIG. 8 arranged around the ranging antenna at 802 that receive wireless communications. The antennas are capable of implementing techniques such as time difference of arrival (TDOA) and phase difference of arrival (PDOA) [paragraph 77], which means that the antennas of the robot can identify a first time of arrival from the information from a first beacon, and a second time of arrival from the information from a second beacon. Additionally, the robot can include a user interface that receives data from the robot controller to display information pertaining to the operations of the robot [paragraph 96]. This user interface can be used in addition or as an alternative to using a user device, and can act as the controller configured to receive the first and second information. This means that the controller receiving the first and second information from the beacons also receives in the first and second information a time of arrival for each set of information). In addition and in the alternative, Ko teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Ko teaches that a well-known positioning method includes a method using a time difference of arrival (TDOA) based on a time of arrival and a trigonometric equation, a time of arrival (TOA) obtained by calculating time taken for a radio wave to arrive (which necessarily means that the system can determine the time the radio wave was transmitted and subtract it from the time of arrival), and angle of arrival (AOA) using a transmitted signal angle, and received signal strength indication (RSSI), and a Wi-Fi positioning scheme using a radio AP [paragraph 4]. Ko teaches that a processor at numeral 70 may calculate the distance information of the external communication device based on a time difference between a received signal received by a first antenna and the transmit signal S2 in response to the transmit signal at S2 of FIG. 12 [paragraph 233]. This means that the method of positioning taught by Ko involves calculating the time for a signal to arrive, and can also determine the time of transmission of the signal in response to the signal. This process is accomplished by the provision of a communication device including a first to third antennas spaced apart from each other by different distances [paragraph 7]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal as taught by Ko, which expressly teaches that this method is well-known, so as to improve the robot’s estimation of its location in an environment. Steltz does not teach: The antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon. However, Steltz does teach that the beacon communications system can use a wireless transceiver to receive wireless signals emitted into the environment by the robot [paragraph 58]. The robot can use the antenna module to send status information and receive information from one or more beacons regarding beacon status [paragraph 81]. The robot uses signals from the beacons to estimate its position in relation to the paired beacons [paragraph 47]. Having the beacons include a set of antennas similar to the antennas on the robot that can determine time difference of arrival of signals and then send data regarding the time difference to the robot would have the obvious benefit of improving the robot’s position estimation. It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon so as to improve the robot’s estimation of its location in an environment. Steltz also does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot.
Claims 9-11 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al. US 20170234961 A1 (“Steltz”), Abbot et al. US 20170122546 A1 (“Abbott”), Dong et al. US 20130196684 A1 (“Dong”), and Smith et al. US 20160026185 A1 (“Smith”) as applied to claim 1 above, and further in view of Letsky US 20100324731 A1 (“Letsky”). Regarding Claim 9. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz does not teach: wherein the control message includes an instruction to the mobile entity to power off. However, Letsky teaches: wherein the control message includes an instruction to the mobile entity to power off (Letsky teaches an autonomous robot with a control system that prevents the robot from leaving a defined bounded area [paragraph 63]. The robot may be equipped with an emergency shut-off in order to avoid potential harm. The emergency shut-off will automatically shut down the autonomous robot if it happens to travel outside of the defined bounded area [paragraph 68]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the control message includes an instruction to the mobile entity to power off as taught by Letsky to prevent potential harm in an emergency situation where the lawn mower functions need to be stopped. Regarding Claim 10. Steltz in combination with Abbott, Dong, Smith, and Letsky teaches the digital fencing system of Claim 9. Steltz also teaches: wherein the control device transmits, via the third communication module, the control message to the mobile entity (the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69]). Steltz does not teach: wherein the control device transmits the control message to the mobile entity in response to determining that the mobile entity is outside the permitted area. However, Letsky teaches: wherein the control device transmits the control message to the mobile entity in response to determining that the mobile entity is outside the permitted area (Letsky teaches an autonomous robot with a control system that prevents the robot from leaving a defined bounded area [paragraph 63]. The robot may be equipped with an emergency shut-off in order to avoid potential harm. The emergency shut-off will automatically shut down the autonomous robot if it happens to travel outside of the defined bounded area [paragraph 68]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the control device transmits the control message to the mobile entity in response to determining that the mobile entity is outside the permitted area as taught by Letsky to prevent potential harm caused by the lawn mower continuing to move after leaving the boundary area. Regarding Claim 11. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the control device transmits, via the third communication module, multiple control messages (the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69]). Steltz does not teach: wherein the control device stops transmitting control messages to the mobile entity in response to determining that the mobile entity is in the permitted area. However, Letsky teaches: wherein the control device stops transmitting control messages to the mobile entity in response to determining that the mobile entity is in the permitted area (Letsky teaches that, in the event that the robot was traveling outside of the defined perimeter or having other “location awareness” difficulties, the robot control system would also be programmed with a “reset” feature that could be activated automatically by the autonomous robot or user [paragraph 67]. In such a situation, the user would return the autonomous robot to the point and activate the reset feature. This “reset” would automatically reset the perceived location of the autonomous robot to a point of origin without erasing the defined perimeter or exclusion areas. This means that the current control messages is stopped when the robot leaves the area and, when the user returns the autonomous robot to the boundary area, the robot can start its program again. This could even be combined with the emergency shut-off signal that shuts down the robot if it happens to travel outside of the bounded area [paragraph 68] so that the shut-off resets when the robot is brought back into the bounded area). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the control device stops transmitting control messages to the mobile entity in response to determining that the mobile entity is in the permitted area as taught by Letsky so that the robot does not receive shut-off signals while it is working in the designated area.
Claims 17 and 19-20 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al. US 20170234961 A1 (“Steltz”) and Abbot et al. US 20170122546 A1 (“Abbott”) as applied to claim 1 above, and further in view of Smith et al. US 20160026185 A1 (“Smith”). Regarding Claim 17. Steltz teaches a digital fencing system, comprising: a first beacon comprising a first communication module; a second beacon comprising a second communication module (Steltz teaches an absolute position system which includes a number of beacons that are shown in FIG. 1B, where a single robot responds to multiple beacons. FIG. 4 shows a detailed view of the beacons, in which a controller at numeral 404 controls a communications system at 406 to emit a broadcast to the robot, which the robot can receive via an antenna module [paragraph 59], so each beacon (of which there can be two or more) comprises a communication module); and a control device, wherein the control device includes a processor and a third communication module (the user device at 510 can communicate with the user device on the robot and the server [FIG. 5], and therefore has a communication module of its own. This user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own) that: obtains, via the third communication module, a first information from the first beacon; obtains, via the third communication module, a second information from the second beacon (Steltz teaches that the beacons (of which there can be more than one in FIG. 1B) can transmit information pertaining to the operations of the robot to either the user device at numeral 510, or a user interface on the robot itself at numeral 545 of FIG. 5 [paragraph 96]. For example, the user interface can receive information confirming the pairing between the robot and a beacon. Pairing is the establishing of a relationship between beacons and a robot so that the robot recognizes, for navigation and localization, signals from the paired beacons only, and not signals from other beacons to which the robot is not paired. During a pairing operation, the communications system of the robot and the communications system of the beacon can communicate with one another [paragraph 64], which means that the pairing operation involves a signal transmitted by the mobile entity and received by the beacon(s), and the pairing information sent to the user device are related to the signal sent by the robot. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals from its paired beacons to identify the boundary as the robot navigates around the lawn automatically [paragraph 47]. In FIG. 1B, it is shown that multiple beacons can be paired with the same robot, and so the user interface can receive first information from a first beacon regarding pairing with the robot, and also receive second information from a second beacon regarding pairing with the robot); determining a location of the mobile entity relative to the permitted area; and transmit a control message to a mobile entity to control a movement of the mobile entity based on a location of the mobile entity relative to a permitted area (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons, meaning that the location of the mobile entity is determined based on at least the first information and the second information). Steltz does not teach: the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the control device obtains, via the third communication module, a first video or image from the first lighting fixture; obtains, via the third communication module, a second video or image from the second lighting fixture. However, Abbott teaches: the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]); and the control device obtains, via the third communication module, a first video or image from the first lighting fixture; obtains, via the third communication module, a second video or image from the second lighting fixture (The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the control device obtains, via the third communication module, a first video or image from the first lighting fixture; obtains, via the third communication module, a second video or image from the second lighting fixture as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Steltz also does not teach: identifying at least one object or area from the first video or image and/or second video or image; determining a permitted area based at least in part on the identified at least one object or area; identifying at least one mobile entity from the first video or image and/or second video or image. However, Smith teaches: identifying at least one object or area from the first video or image and/or second video or image; determining a permitted area based at least in part on the identified at least one object or area; and identifying at least one mobile entity from the first video or image and/or second video or image (Smith teaches a method of determining a location of an autonomous mobile work device, the method comprising providing a first variable reflectivity base station, and a second variable reflectivity base station; providing a location of the first variable reflectivity base station and a location of the second variable reflectivity base station to the autonomous mobile work device; changing a reflectivity state of the first variable reflectivity base station; calculating a first distance between said first variable reflectivity base station and the autonomous mobile work system; changing the reflectivity state of the second variable reflectivity base station; calculating a second distance between the second variable reflectivity base station and the autonomous mobile work system; and calculating the location of the autonomous mobile work system based on the first and second calculated distances [Claim 17]. In one embodiment, a wireless communication link may be eliminated and replaced with variable reflectors on the autonomous work station, a variable reflector on the base station (or stations), and one or more cameras on each of the reflective base station and mobile work system, respectively [paragraph 88]. Smith also teaches that any included visual system can have dual use for location of obstacles, obstacle avoidance, or identification of moving objects [paragraph 54], and logically, this could include identifying the mobile work device. Additionally, the mobile work device might be a robotic lawn mower [paragraph 55]. Smith also teaches that radar sensors continually read the mobile robot position based upon feedback from the microcontroller calculations, allowing for estimation of the position of the mobile robot [paragraph 260], and the system can have cameras external to the robot wherein the camera can validate the results of the radar sensors to verify the distance from the cameras to the mobile robot [paragraph 262], and these external cameras can be mounted on the base stations [paragraph 88], allowing each station to process a video or image of the mobile robot and an area within the video or image to determine the location of the mobile robot relative to both of the base stations and the work area). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with identifying at least one object or area from the first video or image and/or second video or image; determining a permitted area based at least in part on the identified at least one object or area; identifying at least one mobile entity from the first video or image and/or second video or image as taught by Smith so that the system can use visual identification of the robot as a failsafe to ensure the robot is located within the bounded work area. Regarding Claim 19. Steltz in combination with Abbott and Smith teaches the digital fencing system of Claim 17. Steltz also teaches: wherein the control device includes or obtains information indicating whether the mobile entity is allowed to be in the permitted area (Steltz teaches that the robot uses beacons to identify the boundary of its lawn [paragraph 48], and stores this information in the memory of the robot. The beacon signals and stored information allows the robot to navigate around the lawn automatically, while not crossing the lawn boundary, meaning that the robot control device has information indicating where the robot is permitted to travel). Regarding Claim 20. Steltz in combination with Abbott and Smith teaches the digital fencing system of Claim 17. Steltz also teaches: wherein the control device, via the third communication module, transmits the control message to the mobile entity via the first communication module of the first beacon (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons. The user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, which reads on the control device transmitting control messages to the robot via the beacons). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot.
Conclusion THIS ACTION IS MADE FINAL. Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the mailing date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to AARON G CAIN whose telephone number is (571)272-7009. The examiner can normally be reached Monday: 7:30am - 4:30pm EST to Friday 7:30pm - 4:30am. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Khoi Tran can be reached on (517)272-6919. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center. Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
/A.G.C./Examiner, Art Unit 3664 /KHOI H TRAN/Supervisory Patent Examiner, Art Unit 3664 | 2022-01-23T10:27:59 | [
"Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Status of Claims The Office Action is in response to the amendment filed 11/19/2021. Claims 1-14, 16-17, and 19-20 are presently pending and are presented for examination. Response to Arguments Applicant’s arguments, see page 7, filed 11/19/2021, with respect to the objection to claims 13 and 19 have been fully considered and are persuasive. The amendments to the claims have overcome the objection. The objection to claims 13 and 19 has been withdrawn. Applicant’s arguments, see page 7, filed 11/19/2021, with respect to the interpretation of claim(s) 1 and 17 under 35 U.S.C.",
"§ 112(f) have been fully considered and are persuasive. The amendments to the claims have overcome the claim interpretation. The claim interpretation of claims 1 and 17 under 35 U.S.C. § 112(f) has been withdrawn. Applicant’s arguments, see pages 7-10, filed 11/19/2021, with respect to the rejection(s) of claim(s) 1-14, 16-17, and 19-20 under 35 U.S.C. § 103 in view of Steltz et al. US 20170234961 A1 (“Steltz”) in combination with Abbot et al. US 20170122546 A1 (“Abbott”) have been fully considered and are persuasive. Therefore, the rejection has been withdrawn.",
"However, upon further consideration, a new ground(s) of rejection is made in view of Steltz et al. US 20170234961 A1 (“Steltz”) in view of Abbot et al. US 20170122546 A1 (“Abbott”) and Dong et al. US 20130196684 A1 (“Dong”). Claim Objections Claim 1 objected to because of the following informalities: claim reads “wherein the processor…identifying at least one object or area from the image or video” in lines 6-9. Claim should read “wherein the processor…identifies at least one object or area from the image or video” instead. Appropriate correction is required. Claim 17 objected to because of the following informalities: claim reads “a control device, wherein the control device includes a processor and a third communication module that: …identifying at least one object or area from the image or video” in lines 5-11. Claim should read “a control device, wherein the control device includes a processor and a third communication module that: …identifies at least one object or area from the image or video” instead. Appropriate correction is required.",
"Claim Rejections - 35 USC § 103 Claims 1-3, 6-7, and 12-14 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al. US 20170234961 A1 (“Steltz”) in view of Abbot et al. US 20170122546 A1 (“Abbott”), Dong et al. US 20130196684 A1 (“Dong”), and Smith et al. US 20160026185 A1 (“Smith”). Regarding Claim 1. Steltz teaches a digital fencing system, comprising: a first beacon comprising a first communication module; a second beacon comprising a second communication module (Steltz teaches an absolute position system which includes a number of beacons that are shown in FIG. 1B, where a single robot responds to multiple beacons. FIG. 4 shows a detailed view of the beacons, in which a controller at numeral 404 controls a communications system at 406 to emit a broadcast to the robot, which the robot can receive via an antenna module [paragraph 59], so each beacon (of which there can be two or more) comprises a communication module); and a control device (Steltz teaches a user device in FIG.",
"5 at numeral 510, which can be part of a network of devices that may include the beacons and a server [paragraph 12]. FIG. 5 shows that the robot can be part of this network as well. The user device acts as a controller where one or more commands, instructional data, etc. may be exchanged between a computing device such as the user device and the robot, along with the other parts of the network [paragraph 81]), wherein the control device includes a processor and a third communication module (FIGS. 3 and 5 shows a controller connected to a communications system at 304 which includes an antenna module [paragraph 57]), wherein the processor: obtains first information from the first beacon, wherein the first information is related to a wireless signal transmitted by a mobile entity and received by the first beacon; obtains second information from the second beacon, wherein the second information is related to the wireless signal transmitted by the mobile entity and received by the second beacon (Steltz teaches that the beacons (of which there can be more than one in FIG.",
"1B) can transmit information pertaining to the operations of the robot to either the user device at numeral 510, or a user interface on the robot itself at numeral 545 of FIG. 5 [paragraph 96]. For example, the user interface can receive information confirming the pairing between the robot and a beacon. Pairing is the establishing of a relationship between beacons and a robot so that the robot recognizes, for navigation and localization, signals from the paired beacons only, and not signals from other beacons to which the robot is not paired. During a pairing operation, the communications system of the robot and the communications system of the beacon can communicate with one another [paragraph 64], which means that the pairing operation involves a signal transmitted by the mobile entity and received by the beacon(s), and the pairing information sent to the user device are related to the signal sent by the robot. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals from its paired beacons to identify the boundary as the robot navigates around the lawn automatically [paragraph 47]. In FIG.",
"1B, it is shown that multiple beacons can be paired with the same robot, and so the user interface can receive first information from a first beacon regarding pairing with the robot, and also receive second information from a second beacon regarding pairing with the robot); determines a location of the mobile entity based at least in part on the first and second information relative to a permitted area; and transmit, via the third communication module, a control message to the mobile entity to control a movement of the mobile entity based on the determined location of the mobile entity relative to the determined permitted area (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons, meaning that the location of the mobile entity is determined based on at least the first information and the second information.",
"The control signal is transmitted via the communications system (received by the robot via the antenna module attached to the communications system). The third communication module disposed on the robot is not transmitting the control message, but the control message is transmitted to the mobile entity from a user device as shown in FIG. 5 via the communication module, which reads on the claim language as it is written. Alternatively, the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. This user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG.",
"5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own). Steltz does not teach: The beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the processor obtains, via the third communication module, an image or video, from at least one of the first camera or second camera. However, Abbott teaches: The beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]); and the processor obtains, via a third communication module, an image or video, from at least one of the first camera or second camera (The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122.",
"The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]).",
"It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the processor obtains, via the third communication module, an image or video, from at least one of the first camera or second camera as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Steltz also does not teach: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon.",
"However, Dong teaches: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon (Dong teaches a computer implemented method for generating an indoor radio map, wherein an indoor environment is configured to be provided with wireless sensor nodes and at least one mobile node, wherein the mobile node can move in the indoor environment and perform wireless signal transmission with the wireless sensor nodes, the method comprising: measuring the wireless signal strengths transmitted between the wireless sensor nodes and the mobile node at different indoor positions; performing a smoothing process on the wireless signal strengths measured by the mobile node in at least one position; and generating an indoor radio map according to the smoothed wireless signal strengths; wherein at least one of the steps is carried out by a processor device [Claim 1]. The mobile node can be formed as a separate apparatus, and can be designed as a robot to sample signal strength at various indoor positions [paragraph 42]).",
"It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and the second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon as taught by Dong so that the beacons can use the signal strength of signals sent by the robot to improve the mapping information and robot position data.",
"Steltz also does not teach: The control device identifies at least one object or area from the image or video; and determines a permitted area based at least in part on the identified at least one object or area. However, Smith teaches: The control device identifies at least one object or area from the image or video; and determines a permitted area based at least in part on the identified at least one object or area (Smith teaches a method of determining a location of an autonomous mobile work device, the method comprising providing a first variable reflectivity base station, and a second variable reflectivity base station; providing a location of the first variable reflectivity base station and a location of the second variable reflectivity base station to the autonomous mobile work device; changing a reflectivity state of the first variable reflectivity base station; calculating a first distance between said first variable reflectivity base station and the autonomous mobile work system; changing the reflectivity state of the second variable reflectivity base station; calculating a second distance between the second variable reflectivity base station and the autonomous mobile work system; and calculating the location of the autonomous mobile work system based on the first and second calculated distances [Claim 17]. In one embodiment, a wireless communication link may be eliminated and replaced with variable reflectors on the autonomous work station, a variable reflector on the base station (or stations), and one or more cameras on each of the reflective base station and mobile work system, respectively [paragraph 88].",
"Smith also teaches that any included visual system can have dual use for location of obstacles, obstacle avoidance, or identification of moving objects [paragraph 54], and logically, this could include identifying the mobile work device. Additionally, the mobile work device might be a robotic lawn mower [paragraph 55]. Smith also teaches that radar sensors continually read the mobile robot position based upon feedback from the microcontroller calculations, allowing for estimation of the position of the mobile robot [paragraph 260], and the system can have cameras external to the robot wherein the camera can validate the results of the radar sensors to verify the distance from the cameras to the mobile robot [paragraph 262], and these external cameras can be mounted on the base stations [paragraph 88], allowing each station to process a video or image of the mobile robot and an area within the video or image to determine the location of the mobile robot relative to both of the base stations and the work area). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the control device identifies at least one object or area from the image or video; and determines a permitted area based at least in part on the identified at least one object or area as taught by Smith so that the system can use visual identification of the robot as a failsafe to ensure the robot is located within the bounded work area.",
"Regarding Claim 2. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the control message to the mobile entity is transmitted from the third communication module to the mobile entity via the first communication module of the first beacon (the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own.",
"In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own. Steltz also teaches that the robot may communicate with a server, and various types of information can be transmitted and exchanged among devices, including the robot, the server, the beacons, and other computing devices. The robot can communicate with an Internet of Things to halt robot operations if an individual, such as a child, is in the vicinity, and the robot can even receive and transmit radio frequency signals to communicate with other robots [paragraph 81]. In FIG. 5, the user device is shown able to communicate with the server, which means that signals from the user device at 510 can be received by the beacons from the server and then delivered to the robot). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG.",
"7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29].",
"According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 3. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the first information indicates a power level of the wireless signal at transmission by the mobile entity.",
"However, Dong teaches: wherein the first information indicates a power level of the wireless signal at transmission by the mobile entity (Dong teaches a computer implemented method for generating an indoor radio map, wherein an indoor environment is configured to be provided with wireless sensor nodes and at least one mobile node, wherein the mobile node can move in the indoor environment and perform wireless signal transmission with the wireless sensor nodes, the method comprising: measuring the wireless signal strengths transmitted between the wireless sensor nodes and the mobile node at different indoor positions; performing a smoothing process on the wireless signal strengths measured by the mobile node in at least one position; and generating an indoor radio map according to the smoothed wireless signal strengths; wherein at least one of the steps is carried out by a processor device [Claim 1]. The mobile node can be formed as a separate apparatus, and can be designed as a robot to sample signal strength at various indoor positions [paragraph 42]).",
"It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the first information indicates a power level of the wireless signal at transmission by the mobile entity as taught by Dong so that the beacons can use the signal strength of signals sent by the robot to improve the mapping information and robot position data. Regarding Claim 6. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein a boundary of the permitted area is defined based on distances from the first beacon and the second beacon (Steltz teaches that the robot shown in FIG.",
"1A uses beacons to identify the boundary of a lawn [paragraph 48]. Together with the beacon signals, the information allows the robot to navigate around the lawn automatically, while not crossing the lawn boundary. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals form its paired beacons to identify the boundary as the robot navigates the lawn automatically [paragraph 47]. Additionally, a communications system can be controlled to transmit a message that the controller of the robot can use to determine a distance between the robot and the beacon [paragraph 59]. During navigation and lawn mowing operations of the robot, the beacon can emit wireless signals that the robot receives and uses to localize itself within the environment). Steltz does not teach: The beacons are light fixtures.",
"However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 7.",
"Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the mobile entity is a robotic lawn mower and wherein the first beacon and the second beacon are outdoor beacons (Steltz teaches that the system they have designed is intended to work with a mobile lawn-mowing robot [paragraph 3]. In FIGS. 1A and 1B, the beacons are shown to be outdoor beacons positioned on a lawn). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78].",
"The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot.",
"Regarding Claim 12. Steltz teaches a non-transitory computer-readable medium of a controller, wherein the non- transitory computer-readable medium contains instructions executable by a processor (Steltz teaches a user device in FIG. 5 at numeral 510, which can be part of a network of devices that may include the beacons and a server [paragraph 12]. FIG. 5 shows that the robot can be part of this network as well. The user device acts as a controller where one or more commands, instructional data, etc. may be exchanged between a computing device such as the user device and the robot, along with the other parts of the network [paragraph 81]. The robots described by Stelts can be controlled, at least in part, using one or more computer program products, such as one or more non-transitory machine-readable media [paragraph 25]. The mobile lawn mowing robots, or operational aspects thereof, described herein can be implemented as part of a system or method that can include one or more processing devices and memory to store executable instructions to implement various operations.",
"A memory unit is even shown in FIG. 5 to be included in the robot along with the user interface, which means that a non-transitory computer-readable medium or media can be incorporated with the robot controller and contain instructions executable by the controller at numeral 226, which can be a processor [paragraph 57]), the instructions comprising: receiving first information from a first beacon, wherein the first information is related to a wireless signal transmitted by a mobile entity and received by the first beacon; receiving second information from a second beacon, wherein the second information is related to the wireless signal transmitted by the mobile entity and received by the second beacon (Steltz teaches that the beacons (of which there can be more than one in FIG. 1B) can transmit information pertaining to the operations of the robot to either the user device at numeral 510, or a user interface on the robot itself at numeral 545 of FIG. 5 [paragraph 96]. For example, the user interface can receive information confirming the pairing between the robot and a beacon. Pairing is the establishing of a relationship between beacons and a robot so that the robot recognizes, for navigation and localization, signals from the paired beacons only, and not signals from other beacons to which the robot is not paired.",
"During a pairing operation, the communications system of the robot and the communications system of the beacon can communicate with one another [paragraph 64], which means that the pairing operation involves a signal transmitted by the mobile entity and received by the beacon(s), and the pairing information sent to the user device are related to the signal sent by the robot. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals from its paired beacons to identify the boundary as the robot navigates around the lawn automatically [paragraph 47].",
"In FIG. 1B, it is shown that multiple beacons can be paired with the same robot, and so the user interface can receive first information from a first beacon regarding pairing with the robot, and also receive second information from a second beacon regarding pairing with the robot); determining a location of the mobile entity based at least in part on the first and second information relative to the permitted area; transmitting, via a communication module, a control message to the mobile entity to control a movement of the mobile entity based on the determined location of the mobile entity relative to the determined permitted area (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons, meaning that the location of the mobile entity is determined based on at least the first information and the second information.",
"The control signal is transmitted via the communications system (received by the robot via the antenna module attached to the communications system). The third communication module disposed on the robot is not transmitting the control message, but the control message is transmitted to the mobile entity from a user device as shown in FIG. 5 via the communication module, which reads on the claim language as it is written. Alternatively, the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own.",
"This user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own). Steltz does not teach: The beacons are light fixtures, and the instructions comprise: receiving, an image or video, from at least one of a first camera associated with a first light fixture or second camera associated with a second light fixture; However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG.",
"7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]), and the instructions comprise: receiving, an image or video, from at least one of a first camera associated with a first light fixture or second camera associated with a second light fixture (The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29].",
"According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]); It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures, and the instructions comprise: receiving, an image or video, from at least one of a first camera associated with a first light fixture or second camera associated with a second light fixture as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Steltz also does not teach: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon. However, Dong teaches: The first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and The second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon (Dong teaches a computer implemented method for generating an indoor radio map, wherein an indoor environment is configured to be provided with wireless sensor nodes and at least one mobile node, wherein the mobile node can move in the indoor environment and perform wireless signal transmission with the wireless sensor nodes, the method comprising: measuring the wireless signal strengths transmitted between the wireless sensor nodes and the mobile node at different indoor positions; performing a smoothing process on the wireless signal strengths measured by the mobile node in at least one position; and generating an indoor radio map according to the smoothed wireless signal strengths; wherein at least one of the steps is carried out by a processor device [Claim 1].",
"The mobile node can be formed as a separate apparatus, and can be designed as a robot to sample signal strength at various indoor positions [paragraph 42]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the first information includes an indication of a first power level of the wireless signal at a reception of the wireless signal by the first beacon; and the second information includes an indication a second power level of the wireless signal at a reception of the wireless signal by the second beacon as taught by Dong so that the beacons can use the signal strength of signals sent by the robot to improve the mapping information and robot position data. Steltz also does not teach: identifying at least one object or area from the image or video; determining a permitted area based at least in part on the identified at least one object or area.",
"However, Smith teaches: identifying at least one object or area from the image or video; determining a permitted area based at least in part on the identified at least one object or area (Smith teaches a method of determining a location of an autonomous mobile work device, the method comprising providing a first variable reflectivity base station, and a second variable reflectivity base station; providing a location of the first variable reflectivity base station and a location of the second variable reflectivity base station to the autonomous mobile work device; changing a reflectivity state of the first variable reflectivity base station; calculating a first distance between said first variable reflectivity base station and the autonomous mobile work system; changing the reflectivity state of the second variable reflectivity base station; calculating a second distance between the second variable reflectivity base station and the autonomous mobile work system; and calculating the location of the autonomous mobile work system based on the first and second calculated distances [Claim 17]. In one embodiment, a wireless communication link may be eliminated and replaced with variable reflectors on the autonomous work station, a variable reflector on the base station (or stations), and one or more cameras on each of the reflective base station and mobile work system, respectively [paragraph 88].",
"Smith also teaches that any included visual system can have dual use for location of obstacles, obstacle avoidance, or identification of moving objects [paragraph 54], and logically, this could include identifying the mobile work device. Additionally, the mobile work device might be a robotic lawn mower [paragraph 55]. Smith also teaches that radar sensors continually read the mobile robot position based upon feedback from the microcontroller calculations, allowing for estimation of the position of the mobile robot [paragraph 260], and the system can have cameras external to the robot wherein the camera can validate the results of the radar sensors to verify the distance from the cameras to the mobile robot [paragraph 262], and these external cameras can be mounted on the base stations [paragraph 88], allowing each station to process a video or image of the mobile robot and an area within the video or image to determine the location of the mobile robot relative to both of the base stations and the work area). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with identifying at least one object or area from the image or video; determining a permitted area based at least in part on the identified at least one object or area as taught by Smith so that the system can use visual identification of the robot as a failsafe to ensure the robot is located within the bounded work area.",
"Regarding Claim 13. Steltz in combination with Abbott, Dong, and Smith teaches the non-transitory computer-readable medium of Claim 12. Steltz also teaches: wherein the control message to the mobile entity is transmitted from the third communication module to the mobile entity via the first beacon (the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own.",
"Steltz also teaches that the robot may communicate with a server, and various types of information can be transmitted and exchanged among devices, including the robot, the server, the beacons, and other computing devices. The robot can communicate with an Internet of Things to halt robot operations if an individual, such as a child, is in the vicinity, and the robot can even receive and transmit radio frequency signals to communicate with other robots [paragraph 81]. In FIG. 5, the user device is shown able to communicate with the server, which means that signals from the user device at 510 can be received by the beacons from the server and then delivered to the robot).",
"Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot.",
"Regarding Claim 14. Steltz in combination with Abbott, Dong, and Smith teaches the non-transitory computer-readable medium of Claim 12. Steltz also teaches: wherein a boundary of the permitted area is defined based on distances from the first beacon and the second beacon (Steltz teaches that the robot shown in FIG. 1A uses beacons to identify the boundary of a lawn [paragraph 48]. Together with the beacon signals, the information allows the robot to navigate around the lawn automatically, while not crossing the lawn boundary. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals form its paired beacons to identify the boundary as the robot navigates the lawn automatically [paragraph 47].",
"Additionally, a communications system can be controlled to transmit a message that the controller of the robot can use to determine a distance between the robot and the beacon [paragraph 59]. During navigation and lawn mowing operations of the robot, the beacon can emit wireless signals that the robot receives and uses to localize itself within the environment). Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22].",
"In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Claims 4-5, 8, and 16 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al. US 20170234961 A1 (“Steltz”), Abbot et al. US 20170122546 A1 (“Abbott”), Dong et al. US 20130196684 A1 (“Dong”), and Smith et al.",
"US 20160026185 A1 (“Smith”) as applied to claim 1 above, and further in view of Ko et al. US 20180372832 A1 (“Ko”). Regarding Claim 4. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Steltz shows three antennas in FIG. 8 arranged around the ranging antenna at 802 that receive wireless communications. The antennas are capable of implementing techniques such as time difference of arrival (TDOA) and phase difference of arrival (PDOA) [paragraph 77], which means that the antennas of the robot can identify a first time of arrival from the information from a first beacon, and a second time of arrival from the information from a second beacon. Additionally, the robot can include a user interface that receives data from the robot controller to display information pertaining to the operations of the robot [paragraph 96]. This user interface can be used in addition or as an alternative to using a user device, and can act as the controller configured to receive the first and second information.",
"This means that the controller receiving the first and second information from the beacons also receives in the first and second information a time of arrival for each set of information). In addition and in the alternative, Ko teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Ko teaches that a well-known positioning method includes a method using a time difference of arrival (TDOA) based on a time of arrival and a trigonometric equation, a time of arrival (TOA) obtained by calculating time taken for a radio wave to arrive (which necessarily means that the system can determine the time the radio wave was transmitted and subtract it from the time of arrival), and angle of arrival (AOA) using a transmitted signal angle, and received signal strength indication (RSSI), and a Wi-Fi positioning scheme using a radio AP [paragraph 4].",
"Ko teaches that a processor at numeral 70 may calculate the distance information of the external communication device based on a time difference between a received signal received by a first antenna and the transmit signal S2 in response to the transmit signal at S2 of FIG. 12 [paragraph 233]. This means that the method of positioning taught by Ko involves calculating the time for a signal to arrive, and can also determine the time of transmission of the signal in response to the signal.",
"This process is accomplished by the provision of a communication device including a first to third antennas spaced apart from each other by different distances [paragraph 7]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal as taught by Ko, which expressly teaches that this method is well-known, so as to improve the robot’s estimation of its location in an environment.",
"Steltz does not teach: The antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon. However, Steltz does teach that the beacon communications system can use a wireless transceiver to receive wireless signals emitted into the environment by the robot [paragraph 58]. The robot can use the antenna module to send status information and receive information from one or more beacons regarding beacon status [paragraph 81]. The robot uses signals from the beacons to estimate its position in relation to the paired beacons [paragraph 47]. Having the beacons include a set of antennas similar to the antennas on the robot that can determine time difference of arrival of signals and then send data regarding the time difference to the robot would have the obvious benefit of improving the robot’s position estimation.",
"It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon so as to improve the robot’s estimation of its location in an environment. Steltz also does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole.",
"The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 5.",
"Steltz in combination with Abbott, Dong, Smith, and Ko teaches the digital fencing system of Claim 4. Steltz does not teach: wherein the first information indicates a time of transmission of the wireless signal by the mobile entity. However, Ko teaches: wherein the first information indicates a time of transmission of the wireless signal by the mobile entity (Ko teaches that a well-known positioning method includes a method using a time difference of arrival (TDOA) based on a time of arrival and a trigonometric equation, a time of arrival (TOA) obtained by calculating time taken for a radio wave to arrive (which necessarily means that the system can determine the time the radio wave was transmitted and subtract it from the time of arrival), and angle of arrival (AOA) using a transmitted signal angle, and received signal strength indication (RSSI), and a Wi-Fi positioning scheme using a radio AP [paragraph 4].",
"Ko teaches that a processor at numeral 70 may calculate the distance information of the external communication device based on a time difference between a received signal received by a first antenna and the transmit signal S2 in response to the transmit signal at S2 of FIG. 12 [paragraph 233]. This means that the method of positioning taught by Ko involves calculating the time for a signal to arrive, and can also determine the time of transmission of the signal in response to the signal. This process is accomplished by the provision of a communication device including a first to third antennas spaced apart from each other by different distances [paragraph 7]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the first information indicates a time of transmission of the wireless signal by the mobile entity as taught by Ko, which expressly teaches that this method is well-known, so as to improve the robot’s estimation of its location in an environment. Regarding Claim 8.",
"Steltz in combination with Abbott, Dong, Smith, and Ko teaches the digital fencing system of Claim 1. Steltz does not teach: wherein the mobile entity is a robotic vacuum cleaner and wherein the first beacon and the second beacon are indoor lighting fixtures. However, Ko teaches: wherein the mobile entity is a robotic vacuum cleaner and wherein the first beacon and the second beacon are indoor lighting fixtures (Ko teaches a robot cleaner in FIG. 4 [paragraph 77]. The robot is designed to work with a plurality of transmitting apparatuses shown in FIG. 4 to be indoor transmitters). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the mobile entity is a robotic vacuum cleaner and wherein the first beacon and the second beacon are indoor lighting fixtures as taught by Ko so that the fencing system can work indoors with robotic vacuum cleaners as well as lawn mowers.",
"Steltz also does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29].",
"According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Regarding Claim 16. Steltz in combination with Abbott, Dong, and Smith teaches the non-transitory computer-readable medium of Claim 12.",
"Steltz also teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Steltz shows three antennas in FIG. 8 arranged around the ranging antenna at 802 that receive wireless communications. The antennas are capable of implementing techniques such as time difference of arrival (TDOA) and phase difference of arrival (PDOA) [paragraph 77], which means that the antennas of the robot can identify a first time of arrival from the information from a first beacon, and a second time of arrival from the information from a second beacon. Additionally, the robot can include a user interface that receives data from the robot controller to display information pertaining to the operations of the robot [paragraph 96]. This user interface can be used in addition or as an alternative to using a user device, and can act as the controller configured to receive the first and second information. This means that the controller receiving the first and second information from the beacons also receives in the first and second information a time of arrival for each set of information).",
"In addition and in the alternative, Ko teaches: wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal (Ko teaches that a well-known positioning method includes a method using a time difference of arrival (TDOA) based on a time of arrival and a trigonometric equation, a time of arrival (TOA) obtained by calculating time taken for a radio wave to arrive (which necessarily means that the system can determine the time the radio wave was transmitted and subtract it from the time of arrival), and angle of arrival (AOA) using a transmitted signal angle, and received signal strength indication (RSSI), and a Wi-Fi positioning scheme using a radio AP [paragraph 4]. Ko teaches that a processor at numeral 70 may calculate the distance information of the external communication device based on a time difference between a received signal received by a first antenna and the transmit signal S2 in response to the transmit signal at S2 of FIG. 12 [paragraph 233].",
"This means that the method of positioning taught by Ko involves calculating the time for a signal to arrive, and can also determine the time of transmission of the signal in response to the signal. This process is accomplished by the provision of a communication device including a first to third antennas spaced apart from each other by different distances [paragraph 7]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein an antenna assembly indicates a first time of arrival of a first wireless signal and a second time of arrival of a second wireless signal as taught by Ko, which expressly teaches that this method is well-known, so as to improve the robot’s estimation of its location in an environment. Steltz does not teach: The antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon.",
"However, Steltz does teach that the beacon communications system can use a wireless transceiver to receive wireless signals emitted into the environment by the robot [paragraph 58]. The robot can use the antenna module to send status information and receive information from one or more beacons regarding beacon status [paragraph 81]. The robot uses signals from the beacons to estimate its position in relation to the paired beacons [paragraph 47]. Having the beacons include a set of antennas similar to the antennas on the robot that can determine time difference of arrival of signals and then send data regarding the time difference to the robot would have the obvious benefit of improving the robot’s position estimation. It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the antenna assembly is located on the first beacon and second beacon, and the first information indicates the first time of arrival of the wireless signal at the first beacon, and wherein the second information indicates a second time of arrival of the wireless signal at the second beacon so as to improve the robot’s estimation of its location in an environment.",
"Steltz also does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22].",
"In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Claims 9-11 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al.",
"US 20170234961 A1 (“Steltz”), Abbot et al. US 20170122546 A1 (“Abbott”), Dong et al. US 20130196684 A1 (“Dong”), and Smith et al. US 20160026185 A1 (“Smith”) as applied to claim 1 above, and further in view of Letsky US 20100324731 A1 (“Letsky”). Regarding Claim 9. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz does not teach: wherein the control message includes an instruction to the mobile entity to power off.",
"However, Letsky teaches: wherein the control message includes an instruction to the mobile entity to power off (Letsky teaches an autonomous robot with a control system that prevents the robot from leaving a defined bounded area [paragraph 63]. The robot may be equipped with an emergency shut-off in order to avoid potential harm. The emergency shut-off will automatically shut down the autonomous robot if it happens to travel outside of the defined bounded area [paragraph 68]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the control message includes an instruction to the mobile entity to power off as taught by Letsky to prevent potential harm in an emergency situation where the lawn mower functions need to be stopped. Regarding Claim 10. Steltz in combination with Abbott, Dong, Smith, and Letsky teaches the digital fencing system of Claim 9. Steltz also teaches: wherein the control device transmits, via the third communication module, the control message to the mobile entity (the user device at 510 can communicate with the user device and the server [FIG.",
"5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69]). Steltz does not teach: wherein the control device transmits the control message to the mobile entity in response to determining that the mobile entity is outside the permitted area. However, Letsky teaches: wherein the control device transmits the control message to the mobile entity in response to determining that the mobile entity is outside the permitted area (Letsky teaches an autonomous robot with a control system that prevents the robot from leaving a defined bounded area [paragraph 63]. The robot may be equipped with an emergency shut-off in order to avoid potential harm. The emergency shut-off will automatically shut down the autonomous robot if it happens to travel outside of the defined bounded area [paragraph 68]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the control device transmits the control message to the mobile entity in response to determining that the mobile entity is outside the permitted area as taught by Letsky to prevent potential harm caused by the lawn mower continuing to move after leaving the boundary area.",
"Regarding Claim 11. Steltz in combination with Abbott, Dong, and Smith teaches the digital fencing system of Claim 1. Steltz also teaches: wherein the control device transmits, via the third communication module, multiple control messages (the user device at 510 can communicate with the user device and the server [FIG. 5], and therefore has a communication module of its own. The user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69]).",
"Steltz does not teach: wherein the control device stops transmitting control messages to the mobile entity in response to determining that the mobile entity is in the permitted area. However, Letsky teaches: wherein the control device stops transmitting control messages to the mobile entity in response to determining that the mobile entity is in the permitted area (Letsky teaches that, in the event that the robot was traveling outside of the defined perimeter or having other “location awareness” difficulties, the robot control system would also be programmed with a “reset” feature that could be activated automatically by the autonomous robot or user [paragraph 67].",
"In such a situation, the user would return the autonomous robot to the point and activate the reset feature. This “reset” would automatically reset the perceived location of the autonomous robot to a point of origin without erasing the defined perimeter or exclusion areas. This means that the current control messages is stopped when the robot leaves the area and, when the user returns the autonomous robot to the boundary area, the robot can start its program again. This could even be combined with the emergency shut-off signal that shuts down the robot if it happens to travel outside of the bounded area [paragraph 68] so that the shut-off resets when the robot is brought back into the bounded area). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with wherein the control device stops transmitting control messages to the mobile entity in response to determining that the mobile entity is in the permitted area as taught by Letsky so that the robot does not receive shut-off signals while it is working in the designated area. Claims 17 and 19-20 are rejected under 35 U.S.C. 103 as being unpatentable over Steltz et al.",
"US 20170234961 A1 (“Steltz”) and Abbot et al. US 20170122546 A1 (“Abbott”) as applied to claim 1 above, and further in view of Smith et al. US 20160026185 A1 (“Smith”). Regarding Claim 17. Steltz teaches a digital fencing system, comprising: a first beacon comprising a first communication module; a second beacon comprising a second communication module (Steltz teaches an absolute position system which includes a number of beacons that are shown in FIG. 1B, where a single robot responds to multiple beacons. FIG. 4 shows a detailed view of the beacons, in which a controller at numeral 404 controls a communications system at 406 to emit a broadcast to the robot, which the robot can receive via an antenna module [paragraph 59], so each beacon (of which there can be two or more) comprises a communication module); and a control device, wherein the control device includes a processor and a third communication module (the user device at 510 can communicate with the user device on the robot and the server [FIG. 5], and therefore has a communication module of its own.",
"This user can additionally use the user device to view information and enter information pertaining to the operations of the robot, allowing the user to send control messages to the mobile entity, and use the device to respond to errors and requests transmitted to the device by the robot communication system [paragraph 69], which indicates that the user device must have a processor of its own. In at least one embodiment, Steltz refers to the user device at 510 of FIG. 5 as a computing device [paragraph 81], further confirming that the user device has a processor of its own) that: obtains, via the third communication module, a first information from the first beacon; obtains, via the third communication module, a second information from the second beacon (Steltz teaches that the beacons (of which there can be more than one in FIG.",
"1B) can transmit information pertaining to the operations of the robot to either the user device at numeral 510, or a user interface on the robot itself at numeral 545 of FIG. 5 [paragraph 96]. For example, the user interface can receive information confirming the pairing between the robot and a beacon. Pairing is the establishing of a relationship between beacons and a robot so that the robot recognizes, for navigation and localization, signals from the paired beacons only, and not signals from other beacons to which the robot is not paired. During a pairing operation, the communications system of the robot and the communications system of the beacon can communicate with one another [paragraph 64], which means that the pairing operation involves a signal transmitted by the mobile entity and received by the beacon(s), and the pairing information sent to the user device are related to the signal sent by the robot. After the user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, the robot can use the signals from its paired beacons to identify the boundary as the robot navigates around the lawn automatically [paragraph 47].",
"In FIG. 1B, it is shown that multiple beacons can be paired with the same robot, and so the user interface can receive first information from a first beacon regarding pairing with the robot, and also receive second information from a second beacon regarding pairing with the robot); determining a location of the mobile entity relative to the permitted area; and transmit a control message to a mobile entity to control a movement of the mobile entity based on a location of the mobile entity relative to a permitted area (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons, meaning that the location of the mobile entity is determined based on at least the first information and the second information). Steltz does not teach: the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the control device obtains, via the third communication module, a first video or image from the first lighting fixture; obtains, via the third communication module, a second video or image from the second lighting fixture.",
"However, Abbott teaches: the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]); and the control device obtains, via the third communication module, a first video or image from the first lighting fixture; obtains, via the third communication module, a second video or image from the second lighting fixture (The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22].",
"In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures, the first light fixture comprising a first camera; the second light fixture comprising a second camera; and the control device obtains, via the third communication module, a first video or image from the first lighting fixture; obtains, via the third communication module, a second video or image from the second lighting fixture as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot. Steltz also does not teach: identifying at least one object or area from the first video or image and/or second video or image; determining a permitted area based at least in part on the identified at least one object or area; identifying at least one mobile entity from the first video or image and/or second video or image.",
"However, Smith teaches: identifying at least one object or area from the first video or image and/or second video or image; determining a permitted area based at least in part on the identified at least one object or area; and identifying at least one mobile entity from the first video or image and/or second video or image (Smith teaches a method of determining a location of an autonomous mobile work device, the method comprising providing a first variable reflectivity base station, and a second variable reflectivity base station; providing a location of the first variable reflectivity base station and a location of the second variable reflectivity base station to the autonomous mobile work device; changing a reflectivity state of the first variable reflectivity base station; calculating a first distance between said first variable reflectivity base station and the autonomous mobile work system; changing the reflectivity state of the second variable reflectivity base station; calculating a second distance between the second variable reflectivity base station and the autonomous mobile work system; and calculating the location of the autonomous mobile work system based on the first and second calculated distances [Claim 17]. In one embodiment, a wireless communication link may be eliminated and replaced with variable reflectors on the autonomous work station, a variable reflector on the base station (or stations), and one or more cameras on each of the reflective base station and mobile work system, respectively [paragraph 88].",
"Smith also teaches that any included visual system can have dual use for location of obstacles, obstacle avoidance, or identification of moving objects [paragraph 54], and logically, this could include identifying the mobile work device. Additionally, the mobile work device might be a robotic lawn mower [paragraph 55]. Smith also teaches that radar sensors continually read the mobile robot position based upon feedback from the microcontroller calculations, allowing for estimation of the position of the mobile robot [paragraph 260], and the system can have cameras external to the robot wherein the camera can validate the results of the radar sensors to verify the distance from the cameras to the mobile robot [paragraph 262], and these external cameras can be mounted on the base stations [paragraph 88], allowing each station to process a video or image of the mobile robot and an area within the video or image to determine the location of the mobile robot relative to both of the base stations and the work area).",
"It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with identifying at least one object or area from the first video or image and/or second video or image; determining a permitted area based at least in part on the identified at least one object or area; identifying at least one mobile entity from the first video or image and/or second video or image as taught by Smith so that the system can use visual identification of the robot as a failsafe to ensure the robot is located within the bounded work area. Regarding Claim 19. Steltz in combination with Abbott and Smith teaches the digital fencing system of Claim 17. Steltz also teaches: wherein the control device includes or obtains information indicating whether the mobile entity is allowed to be in the permitted area (Steltz teaches that the robot uses beacons to identify the boundary of its lawn [paragraph 48], and stores this information in the memory of the robot. The beacon signals and stored information allows the robot to navigate around the lawn automatically, while not crossing the lawn boundary, meaning that the robot control device has information indicating where the robot is permitted to travel).",
"Regarding Claim 20. Steltz in combination with Abbott and Smith teaches the digital fencing system of Claim 17. Steltz also teaches: wherein the control device, via the third communication module, transmits the control message to the mobile entity via the first communication module of the first beacon (Steltz teaches that the user interface can be used to control operations of the robot [paragraph 96]. The user can interact with the user interface or user device to control the operations of the robot such as pairing, navigation, and mowing operation, and in some implementations, the user interface includes a stop button [paragraph 69], which means that the user interface/device (controller) can transmit a control message to the robot (mobile entity) to control a movement of the robot (navigation operations, or just tell the robot to stop), based on a location of the robot with respect to the boundary recognized from the paired beacons as taught in paragraph 47 (permitted area), and the location of the mobile entity is related to the pairing information received from both beacons. The user trains the robot to use signals emitted from its paired beacons to recognize a boundary of its lawn, which reads on the control device transmitting control messages to the robot via the beacons).",
"Steltz does not teach: The beacons are light fixtures. However, Abbott teaches: The beacons are light fixtures (Abbott et al. teaches a lighting fixture that can include a camera, among other possible auxiliary features [paragraph 78]. The lighting figure shown in FIG. 7 includes a camera at numeral 176 in or on the pole. The camera can be configured to capture still images and/or video [paragraph 88]. The camera can be configured to transmit the captured still images and/or video to a remote controller via a communication module at numeral 122. The camera may thus provide enhanced public safety and security features for the lighting fixture. The lighting fixture has an integrated communications network [paragraph 22]. In particular, the lighting fixture may include one or more antennas that are configured to communicate with a user equipment device, such as a cell phone, tablet, personal computer, or other devices [paragraph 29]. According to additional or alternative aspects, the lighting fixture can include additional features that allow the lighting fixture to function as an integrated aggregation point to provide various city and/or commercial services including location beacons [paragraph 23]). It would have been obvious to one of ordinary skill in the art at the time of invention to modify the system of Steltz with the beacons are light fixtures as taught by Abbott so that the system can use non-visible light to communicate between the beacons and the robot.",
"Conclusion THIS ACTION IS MADE FINAL. Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the mailing date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to AARON G CAIN whose telephone number is (571)272-7009.",
"The examiner can normally be reached Monday: 7:30am - 4:30pm EST to Friday 7:30pm - 4:30am. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Khoi Tran can be reached on (517)272-6919. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center. Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov.",
"Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. /A.G.C./Examiner, Art Unit 3664 /KHOI H TRAN/Supervisory Patent Examiner, Art Unit 3664"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2022-01-30.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
EXHIBIT 31-1 CERTIFICATIONS I, Wilfred N. Cooper, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of WNC Housing Tax Credit Fund VI, L.P., Series 9; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2015 /s/Wilfred N. Cooper, Jr. President and Chief Executive Officer of WNC & Associates, Inc. | [
"EXHIBIT 31-1 CERTIFICATIONS I, Wilfred N. Cooper, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of WNC Housing Tax Credit Fund VI, L.P., Series 9; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.",
"The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5.",
"The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2015 /s/Wilfred N. Cooper, Jr. President and Chief Executive Officer of WNC & Associates, Inc."
]
| https://applica-public.s3-eu-west-1.amazonaws.com/contract-discovery/edgar.txt.xz | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
556 P.2d 1340 (1976) 276 Or. 657 Phillip TUPPER, Respondent-Cross-Petitioner, v. FAIRVIEW HOSPITAL AND TRAINING CENTER, Mental Health Division, et al., Petitioners. Supreme Court of Oregon, In Banc. Argued and Submitted June 7, 1976. Decided November 18, 1976. *1341 W. Michael Gillette, Solicitor General, Salem, argued the cause for petitioners. Also on the briefs were Lee Johnson, Atty. Gen., and John W. Burgess, Asst. Atty. Gen., Salem. Henry H. Drummonds, of Kulongoski, Heid, Durham & Drummonds, Eugene, argued the cause and filed briefs for respondent/cross-petitioner. HOWELL, Justice. This case is before us on review from a decision of the Court of Appeals, 22 Or. App. 523, 540 P.2d 401 (1975) which upheld the action of the Public Employe Relations Board (PERB) in affirming Tupper's dismissal from public employment by Fairview Hospital and Training Center. The Court of Appeals held that the hospital's pretermination proceedings were constitutionally inadequate, but affirmed Tupper's dismissal on the basis of the post-termination hearing conducted by PERB. The Court of Appeals also held that Tupper was entitled to an award of "lost wages and other benefits" for the time between his dismissal and the post-termination hearing, but refused to grant that relief in this proceeding on the grounds that PERB lacked the legislative authority to make such an award. Both Tupper and Fairview Hospital petitioned this court for review of that decision. We granted these petitions, as well as those in the companion case, Hammer v. Oregon State Penitentiary, 23 Or. App. 743, 543 P.2d 1094 (1975), in order to consider what types of pretermination and post-termination procedures are constitutionally required when a public agency seeks to dismiss a classified employee. Prior to his dismissal, Tupper had been employed for approximately six years at Fairview Hospital, a state institution for the mentally deficient which is operated by the Mental Health Division of the Department of Human Resources. As a psychiatric aide, Tupper's duties included the supervision and training of the "residents" living in one of several small, dormitory-like "cottages." His responsibilities included preparing and maintaining a "program book" in which the progress made by his residents in various training programs was recorded. The record indicates that these program records were essential to the successful operation and continued funding of these programs. On April 22, 1974, Tupper's supervisor discovered that Tupper had lost his program book. Tupper agreed to reassemble these records by May 1. When Tupper failed to complete the work by this deadline, he was given until the 24th of May to finish. However, no further progress was made by that date. After four more weeks of remonstrating, Tupper's supervisor sent him a written warning informing him that if the work was not completed by July 10, "this will be considered insubordination and disciplinary action will follow." *1342 When July 10 arrived, Tupper had made additional progress, but some of the records still remained incomplete. On July 15, Tupper was suspended for the day and presented with another memo advising him that "further disciplinary measures" would be taken unless the records were completed by the following day. On July 17, more progress had been made, but the work remained unfinished. Tupper was again suspended for the day and ordered to complete the job by the 18th. However, Tupper's program book remained unchanged on the 18th. On July 23, 1974, after reviewing Tupper's situation with his supervisors, the director of the psychiatric aide staff recommended a dismissal. The following day, without first notifying Tupper of the contemplated dismissal and affording him an opportunity to be heard the superintendent of Fairview suspended Tupper without pay and dismissed him effective August 2, 1974. A letter was then sent to Tupper informing him of this action and detailing the facts relied upon in support of the dismissal. After his dismissal, Tupper sought a hearing before PERB. The hearing was conducted on December 5, 1974, before a hearings examiner. On January 14, 1975, the hearings examiner issued his "Proposed Findings of Fact, Conclusion of Law, and Order," which recommended affirming Tupper's dismissal. Tupper then filed his objections to the proposed order, and, on March 21, 1975, the board issued a final order which essentially adopted the proposals of the hearings examiner and upheld the dismissal. Tupper then sought judicial review of this order in the Court of Appeals. While the Court of Appeals concluded that the hospital violated Tupper's rights to procedural due process by failing to notify him of his proposed dismissal and offering him an opportunity to be heard, the court also determined that the subsequent PERB hearing supplied the due process previously lacking and held that Tupper was entitled only to an award of back wages for the period between the date of his dismissal and the date of the hearing. In its petition for review of that decision, Fairview contends that a pretermination hearing is not constitutionally required in every case and that the post-termination hearing conducted by PERB, together with the repeated encouragements, conferences, demands, warnings, etc., was sufficient to satisfy due process requirements in the present situation. Tupper's petition essentially takes the position that the Court of Appeals was correct in deciding that the hospital violated his due process rights by dismissing him without notice and without an opportunity to be heard, but he contends that the subsequent PERB hearing was not sufficient to remedy this violation. He argues that the PERB hearing is not a de novo proceeding and that a review hearing which accords weight to a procedurally defective initial decision merely perpetuates the original denial of due process. Tupper also argues that even if the Court of Appeals correctly decided that the post-termination hearing was constitutionally adequate, he is then entitled to an award of back pay not merely from August 2, 1974 to December 5, 1974, the date of the hearing, but to March 21, 1975, the date of the board's final decision. Because of our disposition of this case, we will discuss only the first two of these issues. The fourteenth amendment to the United States Constitution imposes procedural due process constraints on governmental actions which deprive individuals of significant liberty or property interests. Fairview does not dispute the fact that Tupper had a constitutionally significant "property interest" in his continued employment, and we find that he clearly did. See ORS 240.560; Papadopoulos v. Bd. of Higher Ed., 14 Or. App. 130, 511 P.2d 854, S.Ct. rev. denied (1973), cert. denied 417 U.S. 919 (1974). See also Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974); Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 *1343 (1972); Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Compare Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976). Governmental deprivation of such a property interest must be accompanied by at least minimal procedural protections including some form of notice of the contemplated action and some sort of opportunity to be heard if that action is contested. Arnett v. Kennedy, supra. See also Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974). The particular form of the notice and hearing required, however, will vary from case to case depending upon the particular circumstances and interests involved. Mathews v. Eldridge, supra; Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972); Cafeteria & Restaurant Workers Local 473 v. McElroy, 367 U.S. 886, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961.) In this case, the dispute centers upon what process is due prior to the initial dismissal and pending subsequent review. The determination of this issue requires an analysis of several factors. As most recently stated by the United States Supreme Court: "* * * identification of the specific dictates of due process generally requires consideration of three distinct factors: first, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail." Mathews v. Eldridge, supra, 96 S.Ct. at 903. See also Friendly, Some Kind of Hearing, 123 U.Pa.L.Rev. 1267, 1278 (1975). The factors which must be weighed in this case are similar to those considered by the United States Supreme Court in Arnett v. Kennedy, supra. In Arnett the court sustained the validity of the federal pretermination procedures for dismissing an employee for cause. These procedures included notice of the action contemplated, a copy of the charge, reasonable time for filing a written response and supporting affidavits, and an opportunity for an oral appearance upon request. Then, following the dismissal, a full evidentiary hearing was provided. In upholding this procedural scheme, Justice Powell balanced the interest of the individual employee in continued public employment pending an evidentiary hearing against the government's interest in the expeditious removal of an unsatisfactory employee.[1] Powell noted that the procedures in Arnett "minimize[d] the risk of error in the initial removal decision and provide[d] for compensation for the affected employee should that decision eventually prove wrongful." 416 U.S. at 170, 94 S.Ct. at 1652. He then concluded that a full evidentiary hearing need not be provided prior to the employee's dismissal and that the procedures employed in Arnett provided "a *1344 reasonable accommodation of the competing interests." Id. at 171, 94 S.Ct. at 1652.[2] The corresponding interests of the employee and the government in this case are similar to those in Arnett. The scope of the post-termination hearings is also similar. However, in contrast to the rather extensive pretermination procedures existing in Arnett, under the termination system utilized in this case virtually no procedural safeguards were employed prior to the actual dismissal. Although Tupper was repeatedly counseled and warned that "further disciplinary measures" might be taken, he apparently was never notified that termination was being considered and was never given an opportunity to defend himself before the officials who decided that he should be dismissed. Due to the absence of these important procedural safeguards, the risk of an erroneous deprivation of the employee's interest in continued employment pending a full evidentiary hearing was substantially greater in this case than it was in Arnett. Moreover, even the relatively extensive pretermination procedures involved in the Arnett decision were found to be constitutionally adequate by only a fairly narrow margin.[3] Therefore, on the basis of Arnett v. Kennedy, supra, and in view of the competing interests involved in these cases, we conclude that in addition to his full post-termination hearing Tupper was entitled to the following procedural safeguards prior to his dismissal. First, he should have been notified of the charges against him. Second, he should have been informed of the kinds of sanctions being considered. Third, he should have been given at least an informal opportunity to refute the charges either orally or in writing before someone who was authorized either to make the final decision or to recommend what final decision should be made.[4] Since none of these safeguards were provided, we find that the procedures employed did not comply with the due process clause of the fourteenth amendment and that Tupper's dismissal on August 2, 1974, was invalid. Because his dismissal was invalid, we conclude that Tupper is entitled to an award of back wages and other benefits and that he should continue to receive these amounts until he has been *1345 properly terminated.[5] In determining these amounts, the Board should offset any compensation and other benefits Tupper has received since his original termination. Reversed and remanded to the Court of Appeals with directions to order the Public Employe Relations Board to issue an order awarding back wages and other benefits until such time as a valid termination has occurred. O'CONNELL, Justice (specially concurring). The pivotal question raised by the state's petition for review and Tupper's cross-petition for review is the validity of the procedures for termination under ORS 240.555, 240.560 and Personnel Rule 81-100, tested by the constitutional requirements of due process. More specifically, the question is whether a pre-termination hearing is required to satisfy due process requirements.[1] Both this case and the companion case, Hammer v. Oregon State Penitentiary, Or. App., 556 P.2d 1348, decided this day, were briefed and argued solely with reference to the due process clause of Fourteenth Amendment. Within that framework it seems probable from Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974), that a post-termination hearing is sufficient to satisfy the federal requirement of due process, at least if certain safeguards such as notice of the charges and an opportunity to respond precede the dismissal. Neither the petitioner nor respondent have sought to determine whether the Oregon Constitution goes beyond this interpretation of the federal constitution, guaranteeing a greater protection in a procedural way to an employee with entitlement. It is important that this inquiry be made because if there is an applicable provision in our constitution which can be construed as requiring a pre-termination hearing, any discussion of the Fourteenth Amendment and its interpretation in the Arnett case is, of course irrelevant.[2] Since the applicability of the Oregon Constitution was not raised by counsel, the preliminary question is whether this court can raise it sua sponte. This is not the situation, frequently presented, where a constitutional question is not raised at the trial stage and is raised for the first time by counsel on appeal. In the present case it is assumed that a constitutional question of procedural due process under the federal constitution is properly presented; the question is whether this court should, on its own motion, consider the related question of the applicability of Art. I, § 10 of the Oregon Constitution. Since the matter is of substantial public concern, it is our duty to consider it.[3] *1346 Art. I, § 10 provides: "No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation." It has been strongly argued by Professor Hans Linde that the guarantees in Art. I, § 10 are not the precise equivalents of the guarantees found in the Fourteenth Amendment.[4] Assuming, without deciding, that this is so, it seems clear that the two constitutional provisions are the same insofar as each would prohibit the deprivation of the interests specified in the respective provisions of the federal and Oregon constitutions without fair procedures generally associated with the term "due process." In the present case the interest of Tupper is denominated an "entitlement." Comparable interests of public employees have been classified as "property" interests.[5] The inquiry is, therefore, whether the guarantee of Art. I, § 10, of the Oregon Constitution, which prohibits injury to person, property or reputation without due course of law, and guarantees the complete administration of justice, is satisfied by anything short of a pre-termination hearing. In addition to being a "property" interest, job tenure is also a *1347 "reputation" interest. The stigma which an employee suffers upon being discharged from his job, even if only temporarily, can be regarded as an injury to his "reputation," thus qualifying as a protected interest under under Art. I, § 10.[6] Beginning, then, with the recognition of a constitutionally protected interest in the petitioner, the court is faced with the question posed above is a pre-termination hearing necessary to meet the minimum standards of due process? In answering this question, it must be recognized that the procedural requisites for a due process hearing vary depending upon the importance of the interests involved. On one hand are the interests of the government in expeditiously removing an unsatisfactory employee; on the other hand are the interests of the employee in retaining his job. In the Arnett case Justice Powell, in a specially concurring opinion, concluded that the interest of the government as employer outweighed the interest of the employee in balancing the need for a pre-termination hearing. He stated: "* * * Prolonged retention of a disruptive or otherwise unsatisfactory employee can adversely affect discipline and morale in the work place, foster disharmony, and ultimately impair the efficiency of an office or agency." He added that "* * * [A] requirement of a prior evidentiary hearing would impose additional administrative costs, create delay, and deter warranted discharges." 416 U.S. at 168, 94 S.Ct. at 1651, 40 L.Ed.2d at 41. It is difficult to understand how Mr. Justice Powell could have recited the foregoing as the reasons for his conclusion in the face of the very thorough study of Professor Merrill marshalling facts which point to a contrary conclusion.[7] As to "additional administrative costs," "delay" and the alleged deterrence of warranted discharges, Merrill points out that "The data * * * show that in 1970 agencies that provided hearings in advance generally processed cases faster than those that made a hearing available only on appeal." He adds that "available data clearly do not show that conducting the hearing afterwards helps shorten the process." The contention that the retention of an unsatisfactory employee pending a hearing might be disruptive loses most of its force when it is revealed that the law and regulations existing at the time Arnett was decided required that an employee be given at least thirty days' notice of a proposed adverse action so that, as pointed out by Merrill, "agency personnel even now must function for at least a month with the threatened employee in their midst."[8]*1348 There is no reason to assume that a hearing could not be scheduled and held within that thirty-day period.[9] There are other data and factors which could be recited to prove that it is not necessary in the interest of office efficiency to postpone the termination hearing.[10] In fact, a pre-termination hearing should enhance efficiency by giving the agency an incentive to expedite disposition of the matter, allowing it to get on with its primary functions.[11] The conclusion is, then, that the government as employer has no interests which outweigh those of the employee calling for the postponement of the hearing until after termination has been effected. There being no identifiable governmental interests deserving special protection, the hearing requirements necessary to satisfy due process are the same in preserving the interests of an employee whose job is threatened as they are where an owner's property is sought to be taken or where a person's liberty is at stake.[12] I am satisfied that due process requires a prior hearing before property can be taken.[13] On the same facts, I would regard Art. I, § 10 as requiring the same pre-taking procedure. Since I regard an entitlement as a species of property within the meaning of Art. I, § 10, an employee having such an interest is entitled to have a hearing before that interest is taken from him. NOTES [1] Several separate opinions were filed in Arnett, none of which commanded the support of a majority of the court at the time. However, both the United States Supreme Court and the lower federal courts have since been following the reasoning of the opinion written by Justice Powell in that case, and we have determined to do so as well. See, e.g., Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); Boehning v. Indiana State Emp. Ass'n, Inc., 423 U.S. 6, 96 S.Ct. 168, 46 L.Ed.2d 148 (1975); Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975); Frost v. Weinberger, 515 F.2d 57 (2d Cir.1975); Rolles v. Civil Ser. Comm., 168 U.S.App.D.C. 79, 512 F.2d 1319 (1975); Eley v. Morris, 390 F. Supp. 913 (N.D.Ga. 1975); Young v. Hutchins, 383 F. Supp. 1167 (MD Fla. 1974). [2] The concurring opinion in this case apparently acknowledges that the due process clause of the federal constitution, as interpreted by the United States Supreme Court in Arnett, does not require a full-scale evidentiary hearing prior to the dismissal of a classified employee. However, that opinion then takes the position that the "due course of law" provision in Article 1, § 10, of the Oregon Constitution should be interpreted to require a full pretermination hearing in such cases. This issue was never raised, briefed or argued by the parties in this case. Moreover, as demonstrated by the cases cited in footnote four of the concurring opinion, the procedural effect of state "due course of law" constitutional provisions is essentially the same as the procedural effect of the due process clause of the fourteenth amendment to the federal constitution. Therefore, in the absence of some compelling public interest in giving Art. 1, § 10, of our constitution a broader interpretation in this situation than that given to the due process clause of the fourteenth amendment by the federal courts, we decline to adopt such a construction. Compare State v. Childs, 252 Or. 91, 99, 447 P.2d 304 (1968) with Deras v. Meyers, 272 Or. 47, 64 n. 17, 535 P.2d 541 (1975). See also Olsen v. State of Oregon, 276 Or. 9, 554 P.2d 139 (1976); Plummer v. Donald M. Drake Co., 212 Or. 430, 320 P.2d 245 (1958). [3] Four of the nine Justices dissented, at least in part. Marshall, Douglas and Brennan dissented on the grounds that a full evidentiary hearing was required prior to the dismissal. White concurred in part and dissented in part on the grounds that the pretermination procedures involved in that case were adequate only if an impartial hearings officer made the termination decision. [4] In the interest of avoiding unnecessary controversy, we feel that whenever possible the employee should receive written notice of the charges, of the proposed sanction, and of his right to an informal hearing. [5] The Court of Appeals seems to have concluded that PERB lacked the necessary authority to order an award of back wages upon a finding that the termination was procedurally invalid. Although there is apparently nothing in the authorizing statute which gives PERB the authority to issue such an order on its own, see ORS 240.560, the constitutional nature of the deprivation involved is enough to require this court to direct that such an award be made. Moreover, ORS 240.563 and 183.482 specifically authorize the reviewing court to reverse or remand the agency's order if it finds "[t]he statute, rule or order to be unconstitutional." ORS 183.482(8) (b). [1] Although the constitutional question might have been avoided by interpreting ORS 240.555 and 240.560 as requiring a pre-termination hearing, Personnel Rule 81-100, adopted pursuant to the authority vested in the Public Employe Relations Board under ORS 240.555(1) to establish termination procedures, provides for a post-termination hearing. [2] See, Linde, Without "Due Process," 49 Or.L.Rev. 125, 133 (1970). [3] Inasmuch as the right to a pre-termination hearing is the principal question involved and since this question of the timing of the hearing would involve a similar policy analysis under both the federal and state constitutions (assuming the latter is applicable), there would be no reason to call for supplemental briefs. [4] Linde, Without "Due Process," 49 Or.L. Rev. 125 (1970). Professor Linde interprets Art. I, § 10 as a "remedies clause" merely guaranteeing a legal remedy for private wrongs derived from Chapter 40 of the Magna Carta ("To no one will we sell, to no one will we deny, or delay right or justice"), and is not a "due process" clause providing guarantees against official deprivations "except by the law of the land" clauses derived from Chapter 39 of the Magna Carta ("NO free man shall be taken or imprisoned or dispossessed, or outlawed, or banished, or in any way destroyed, nor will we go upon him, nor send upon him, except by the legal judgment of his peers or by the law of the land"). When the Magna Carta was re-issued under Henry III, the two clauses were combined under Chapter 29, which eventually was enacted as a statute by Parliament in 1797. Art. I, § 10 and its predecessors say more than Chapter 40 does, and it is possible that the constitutional draftsmen intended to embody the two ideas expressed in Chapter 29 of Magna Carta. In any event, in the states which have provisions similar to Art. I, § 10 the courts, including this court, have regarded the provisions as the equivalent of the due process clause of the Fourteenth Amendment. See, (interpreting Indiana Constitution, Art. I, § 12) Hale v. State, 248 Ind. 630, 230 N.E.2d 432, 435 (1967); Sweet v. State, 233 Ind. 160, 117 N.E.2d 745, 746-47 (1954); Hamm v. Review Board of the Indiana Employment Security Div., 132 Ind. App. 318, 177 N.E.2d 337, 338 (1961); Freeman v. Pierce, 179 Ind. 445, 101 N.E. 478, 479 (1913), and (interpreting Ohio Constitution, Art. I, § 16) Ex Parte Martin, 139 Ohio St. 609, 41 N.E.2d 702, 706 (1942); State ex rel. Smilack v. Bushong, 159 Ohio St. 259, 111 N.E.2d 918, 922 (1953), and (Oregon) State v. Bouse, 199 Or. 676, 686, 264 P.2d 800 (1953). Cf. School Dist. No. 7 v. Weissenfluh, 236 Or. 165, 173, 387 P.2d 567 (1963) and Columbus Packing Co. v. State, 106 Ohio St. 469, 140 N.E. 376, 378 (1922).
Even if Art. I, § 10 is interpreted as not including a substantive due process provision, it does require procedural due process in the sense of requiring a remedy for injuries to person, property or reputation. If an entitlement is "property", the employee is entitled to a "remedy by due course of law" to retain it. That remedy must be provided by the state. It is for us to say whether it is a remedy "by due course of law" if the employee is given a hearing only after he has been discharged. [5] See, e.g., Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974) (the separate opinions reveal a consensus that such an "entitlement" is a property interest); Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972); Comment, 10 Harv.Civil Rights L.Rev. 472, 473 (1975). Cf., Reich, The New Property, 73 Yale L.J. 733 (1964).
The recent cases of Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974) and North Georgia Finishing v. Di-Chem, 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975) have created uncertainty in this area. See opinions of Stewart, J. in Mitchell and North Georgia Finishing. Regardless of the direction finally taken by the U.S. Supreme Court, I believe that plaintiff in the present case has a property interest protected by the justice and remedies clause of the Oregon Constitution. [6] Discharge from a government job often seriously injures the employee's business and professional reputation. There is a widely held impression that it is difficult to fire government workers, and this contributes to the belief that anyone fired by the government is probably unemployable. See, Merrill, Procedures for Adverse Actions Against Federal Employees, 59 Va.L.Rev. 196, 204 (1973); and Due Process and Public Employment in Perspective: Arbitrary Dismissals of non-Civil Service Employees, 19 UCLA L.Rev. 1052, 1065 (1972). Discharge from a job often damages the employee's personal reputation, too, since status in our society is so closely related to an individual's source of livelihood. See, Reich, The New Property, supra note 5. [7] The substance of the report is contained in an article entitled Procedures for Adverse Actions Against Federal Employees, supra note 6. On the basis of Merrill's report, the Administrative Conference of the United States strongly recommended that evidentiary hearings be held prior to discharge. [8] Merrill, supra 59 Va.L.Rev. at 241. [9] "[T]here seems little reason why a hearing could not be held during that 30-day period." Marshall, J., dissenting, 416 U.S. at 225, 94 S.Ct. at 1679. [10] E.g., see Marshall, J.'s dissent in Arnett; Merrill, supra 59 Va.L.Rev. 196 at 238-246; Fear of Firing: Arnett v. Kennedy and the Protection of Federal Career Employees, 10 Harv.Civil Rights L.Rev. 472 (1975). [11] See, 59 Va.L.Rev. at 245. [12] Cf., Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), where it was held that due process requires a prior hearing before property can be taken through the use of state law replevin procedures to repossess chattels; and Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972), where it was held that due process requires a prior hearing before a person can be deprived of liberty through state parole revocation. [13] See, Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 2593, supra note 12; Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969). | 10-30-2013 | [
"556 P.2d 1340 (1976) 276 Or. 657 Phillip TUPPER, Respondent-Cross-Petitioner, v. FAIRVIEW HOSPITAL AND TRAINING CENTER, Mental Health Division, et al., Petitioners. Supreme Court of Oregon, In Banc. Argued and Submitted June 7, 1976. Decided November 18, 1976. *1341 W. Michael Gillette, Solicitor General, Salem, argued the cause for petitioners. Also on the briefs were Lee Johnson, Atty. Gen., and John W. Burgess, Asst. Atty. Gen., Salem. Henry H. Drummonds, of Kulongoski, Heid, Durham & Drummonds, Eugene, argued the cause and filed briefs for respondent/cross-petitioner. HOWELL, Justice. This case is before us on review from a decision of the Court of Appeals, 22 Or. App.",
"523, 540 P.2d 401 (1975) which upheld the action of the Public Employe Relations Board (PERB) in affirming Tupper's dismissal from public employment by Fairview Hospital and Training Center. The Court of Appeals held that the hospital's pretermination proceedings were constitutionally inadequate, but affirmed Tupper's dismissal on the basis of the post-termination hearing conducted by PERB. The Court of Appeals also held that Tupper was entitled to an award of \"lost wages and other benefits\" for the time between his dismissal and the post-termination hearing, but refused to grant that relief in this proceeding on the grounds that PERB lacked the legislative authority to make such an award. Both Tupper and Fairview Hospital petitioned this court for review of that decision.",
"We granted these petitions, as well as those in the companion case, Hammer v. Oregon State Penitentiary, 23 Or. App. 743, 543 P.2d 1094 (1975), in order to consider what types of pretermination and post-termination procedures are constitutionally required when a public agency seeks to dismiss a classified employee. Prior to his dismissal, Tupper had been employed for approximately six years at Fairview Hospital, a state institution for the mentally deficient which is operated by the Mental Health Division of the Department of Human Resources. As a psychiatric aide, Tupper's duties included the supervision and training of the \"residents\" living in one of several small, dormitory-like \"cottages.\" His responsibilities included preparing and maintaining a \"program book\" in which the progress made by his residents in various training programs was recorded. The record indicates that these program records were essential to the successful operation and continued funding of these programs.",
"On April 22, 1974, Tupper's supervisor discovered that Tupper had lost his program book. Tupper agreed to reassemble these records by May 1. When Tupper failed to complete the work by this deadline, he was given until the 24th of May to finish. However, no further progress was made by that date. After four more weeks of remonstrating, Tupper's supervisor sent him a written warning informing him that if the work was not completed by July 10, \"this will be considered insubordination and disciplinary action will follow.\" *1342 When July 10 arrived, Tupper had made additional progress, but some of the records still remained incomplete. On July 15, Tupper was suspended for the day and presented with another memo advising him that \"further disciplinary measures\" would be taken unless the records were completed by the following day. On July 17, more progress had been made, but the work remained unfinished. Tupper was again suspended for the day and ordered to complete the job by the 18th. However, Tupper's program book remained unchanged on the 18th.",
"On July 23, 1974, after reviewing Tupper's situation with his supervisors, the director of the psychiatric aide staff recommended a dismissal. The following day, without first notifying Tupper of the contemplated dismissal and affording him an opportunity to be heard the superintendent of Fairview suspended Tupper without pay and dismissed him effective August 2, 1974. A letter was then sent to Tupper informing him of this action and detailing the facts relied upon in support of the dismissal. After his dismissal, Tupper sought a hearing before PERB. The hearing was conducted on December 5, 1974, before a hearings examiner.",
"On January 14, 1975, the hearings examiner issued his \"Proposed Findings of Fact, Conclusion of Law, and Order,\" which recommended affirming Tupper's dismissal. Tupper then filed his objections to the proposed order, and, on March 21, 1975, the board issued a final order which essentially adopted the proposals of the hearings examiner and upheld the dismissal. Tupper then sought judicial review of this order in the Court of Appeals. While the Court of Appeals concluded that the hospital violated Tupper's rights to procedural due process by failing to notify him of his proposed dismissal and offering him an opportunity to be heard, the court also determined that the subsequent PERB hearing supplied the due process previously lacking and held that Tupper was entitled only to an award of back wages for the period between the date of his dismissal and the date of the hearing. In its petition for review of that decision, Fairview contends that a pretermination hearing is not constitutionally required in every case and that the post-termination hearing conducted by PERB, together with the repeated encouragements, conferences, demands, warnings, etc., was sufficient to satisfy due process requirements in the present situation.",
"Tupper's petition essentially takes the position that the Court of Appeals was correct in deciding that the hospital violated his due process rights by dismissing him without notice and without an opportunity to be heard, but he contends that the subsequent PERB hearing was not sufficient to remedy this violation. He argues that the PERB hearing is not a de novo proceeding and that a review hearing which accords weight to a procedurally defective initial decision merely perpetuates the original denial of due process.",
"Tupper also argues that even if the Court of Appeals correctly decided that the post-termination hearing was constitutionally adequate, he is then entitled to an award of back pay not merely from August 2, 1974 to December 5, 1974, the date of the hearing, but to March 21, 1975, the date of the board's final decision. Because of our disposition of this case, we will discuss only the first two of these issues. The fourteenth amendment to the United States Constitution imposes procedural due process constraints on governmental actions which deprive individuals of significant liberty or property interests. Fairview does not dispute the fact that Tupper had a constitutionally significant \"property interest\" in his continued employment, and we find that he clearly did. See ORS 240.560; Papadopoulos v. Bd. of Higher Ed., 14 Or.",
"App. 130, 511 P.2d 854, S.Ct. rev. denied (1973), cert. denied 417 U.S. 919 (1974). See also Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974); Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 *1343 (1972); Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Compare Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976). Governmental deprivation of such a property interest must be accompanied by at least minimal procedural protections including some form of notice of the contemplated action and some sort of opportunity to be heard if that action is contested.",
"Arnett v. Kennedy, supra. See also Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); Wolff v. McDonnell, 418 U.S. 539, 94 S.Ct. 2963, 41 L.Ed.2d 935 (1974). The particular form of the notice and hearing required, however, will vary from case to case depending upon the particular circumstances and interests involved. Mathews v. Eldridge, supra; Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972); Cafeteria & Restaurant Workers Local 473 v. McElroy, 367 U.S. 886, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961.)",
"In this case, the dispute centers upon what process is due prior to the initial dismissal and pending subsequent review. The determination of this issue requires an analysis of several factors. As most recently stated by the United States Supreme Court: \"* * * identification of the specific dictates of due process generally requires consideration of three distinct factors: first, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.\" Mathews v. Eldridge, supra, 96 S.Ct. at 903. See also Friendly, Some Kind of Hearing, 123 U.Pa.L.Rev. 1267, 1278 (1975). The factors which must be weighed in this case are similar to those considered by the United States Supreme Court in Arnett v. Kennedy, supra. In Arnett the court sustained the validity of the federal pretermination procedures for dismissing an employee for cause.",
"These procedures included notice of the action contemplated, a copy of the charge, reasonable time for filing a written response and supporting affidavits, and an opportunity for an oral appearance upon request. Then, following the dismissal, a full evidentiary hearing was provided. In upholding this procedural scheme, Justice Powell balanced the interest of the individual employee in continued public employment pending an evidentiary hearing against the government's interest in the expeditious removal of an unsatisfactory employee. [1] Powell noted that the procedures in Arnett \"minimize[d] the risk of error in the initial removal decision and provide[d] for compensation for the affected employee should that decision eventually prove wrongful.\" 416 U.S. at 170, 94 S.Ct.",
"at 1652. He then concluded that a full evidentiary hearing need not be provided prior to the employee's dismissal and that the procedures employed in Arnett provided \"a *1344 reasonable accommodation of the competing interests.\" Id. at 171, 94 S.Ct. at 1652. [2] The corresponding interests of the employee and the government in this case are similar to those in Arnett. The scope of the post-termination hearings is also similar. However, in contrast to the rather extensive pretermination procedures existing in Arnett, under the termination system utilized in this case virtually no procedural safeguards were employed prior to the actual dismissal.",
"Although Tupper was repeatedly counseled and warned that \"further disciplinary measures\" might be taken, he apparently was never notified that termination was being considered and was never given an opportunity to defend himself before the officials who decided that he should be dismissed. Due to the absence of these important procedural safeguards, the risk of an erroneous deprivation of the employee's interest in continued employment pending a full evidentiary hearing was substantially greater in this case than it was in Arnett. Moreover, even the relatively extensive pretermination procedures involved in the Arnett decision were found to be constitutionally adequate by only a fairly narrow margin. [3] Therefore, on the basis of Arnett v. Kennedy, supra, and in view of the competing interests involved in these cases, we conclude that in addition to his full post-termination hearing Tupper was entitled to the following procedural safeguards prior to his dismissal.",
"First, he should have been notified of the charges against him. Second, he should have been informed of the kinds of sanctions being considered. Third, he should have been given at least an informal opportunity to refute the charges either orally or in writing before someone who was authorized either to make the final decision or to recommend what final decision should be made. [4] Since none of these safeguards were provided, we find that the procedures employed did not comply with the due process clause of the fourteenth amendment and that Tupper's dismissal on August 2, 1974, was invalid.",
"Because his dismissal was invalid, we conclude that Tupper is entitled to an award of back wages and other benefits and that he should continue to receive these amounts until he has been *1345 properly terminated. [5] In determining these amounts, the Board should offset any compensation and other benefits Tupper has received since his original termination. Reversed and remanded to the Court of Appeals with directions to order the Public Employe Relations Board to issue an order awarding back wages and other benefits until such time as a valid termination has occurred. O'CONNELL, Justice (specially concurring). The pivotal question raised by the state's petition for review and Tupper's cross-petition for review is the validity of the procedures for termination under ORS 240.555, 240.560 and Personnel Rule 81-100, tested by the constitutional requirements of due process.",
"More specifically, the question is whether a pre-termination hearing is required to satisfy due process requirements. [1] Both this case and the companion case, Hammer v. Oregon State Penitentiary, Or. App., 556 P.2d 1348, decided this day, were briefed and argued solely with reference to the due process clause of Fourteenth Amendment. Within that framework it seems probable from Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974), that a post-termination hearing is sufficient to satisfy the federal requirement of due process, at least if certain safeguards such as notice of the charges and an opportunity to respond precede the dismissal. Neither the petitioner nor respondent have sought to determine whether the Oregon Constitution goes beyond this interpretation of the federal constitution, guaranteeing a greater protection in a procedural way to an employee with entitlement.",
"It is important that this inquiry be made because if there is an applicable provision in our constitution which can be construed as requiring a pre-termination hearing, any discussion of the Fourteenth Amendment and its interpretation in the Arnett case is, of course irrelevant. [2] Since the applicability of the Oregon Constitution was not raised by counsel, the preliminary question is whether this court can raise it sua sponte. This is not the situation, frequently presented, where a constitutional question is not raised at the trial stage and is raised for the first time by counsel on appeal. In the present case it is assumed that a constitutional question of procedural due process under the federal constitution is properly presented; the question is whether this court should, on its own motion, consider the related question of the applicability of Art.",
"I, § 10 of the Oregon Constitution. Since the matter is of substantial public concern, it is our duty to consider it. [3] *1346 Art. I, § 10 provides: \"No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation.\" It has been strongly argued by Professor Hans Linde that the guarantees in Art. I, § 10 are not the precise equivalents of the guarantees found in the Fourteenth Amendment. [4] Assuming, without deciding, that this is so, it seems clear that the two constitutional provisions are the same insofar as each would prohibit the deprivation of the interests specified in the respective provisions of the federal and Oregon constitutions without fair procedures generally associated with the term \"due process.\" In the present case the interest of Tupper is denominated an \"entitlement.\" Comparable interests of public employees have been classified as \"property\" interests.",
"[5] The inquiry is, therefore, whether the guarantee of Art. I, § 10, of the Oregon Constitution, which prohibits injury to person, property or reputation without due course of law, and guarantees the complete administration of justice, is satisfied by anything short of a pre-termination hearing. In addition to being a \"property\" interest, job tenure is also a *1347 \"reputation\" interest. The stigma which an employee suffers upon being discharged from his job, even if only temporarily, can be regarded as an injury to his \"reputation,\" thus qualifying as a protected interest under under Art. I, § 10. [6] Beginning, then, with the recognition of a constitutionally protected interest in the petitioner, the court is faced with the question posed above is a pre-termination hearing necessary to meet the minimum standards of due process? In answering this question, it must be recognized that the procedural requisites for a due process hearing vary depending upon the importance of the interests involved. On one hand are the interests of the government in expeditiously removing an unsatisfactory employee; on the other hand are the interests of the employee in retaining his job.",
"In the Arnett case Justice Powell, in a specially concurring opinion, concluded that the interest of the government as employer outweighed the interest of the employee in balancing the need for a pre-termination hearing. He stated: \"* * * Prolonged retention of a disruptive or otherwise unsatisfactory employee can adversely affect discipline and morale in the work place, foster disharmony, and ultimately impair the efficiency of an office or agency.\" He added that \"* * * [A] requirement of a prior evidentiary hearing would impose additional administrative costs, create delay, and deter warranted discharges.\" 416 U.S. at 168, 94 S.Ct. at 1651, 40 L.Ed.2d at 41. It is difficult to understand how Mr. Justice Powell could have recited the foregoing as the reasons for his conclusion in the face of the very thorough study of Professor Merrill marshalling facts which point to a contrary conclusion. [7] As to \"additional administrative costs,\" \"delay\" and the alleged deterrence of warranted discharges, Merrill points out that \"The data * * * show that in 1970 agencies that provided hearings in advance generally processed cases faster than those that made a hearing available only on appeal.\" He adds that \"available data clearly do not show that conducting the hearing afterwards helps shorten the process.\"",
"The contention that the retention of an unsatisfactory employee pending a hearing might be disruptive loses most of its force when it is revealed that the law and regulations existing at the time Arnett was decided required that an employee be given at least thirty days' notice of a proposed adverse action so that, as pointed out by Merrill, \"agency personnel even now must function for at least a month with the threatened employee in their midst. \"[8]*1348 There is no reason to assume that a hearing could not be scheduled and held within that thirty-day period.",
"[9] There are other data and factors which could be recited to prove that it is not necessary in the interest of office efficiency to postpone the termination hearing. [10] In fact, a pre-termination hearing should enhance efficiency by giving the agency an incentive to expedite disposition of the matter, allowing it to get on with its primary functions. [11] The conclusion is, then, that the government as employer has no interests which outweigh those of the employee calling for the postponement of the hearing until after termination has been effected. There being no identifiable governmental interests deserving special protection, the hearing requirements necessary to satisfy due process are the same in preserving the interests of an employee whose job is threatened as they are where an owner's property is sought to be taken or where a person's liberty is at stake.",
"[12] I am satisfied that due process requires a prior hearing before property can be taken. [13] On the same facts, I would regard Art. I, § 10 as requiring the same pre-taking procedure. Since I regard an entitlement as a species of property within the meaning of Art. I, § 10, an employee having such an interest is entitled to have a hearing before that interest is taken from him. NOTES [1] Several separate opinions were filed in Arnett, none of which commanded the support of a majority of the court at the time. However, both the United States Supreme Court and the lower federal courts have since been following the reasoning of the opinion written by Justice Powell in that case, and we have determined to do so as well. See, e.g., Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct.",
"893, 47 L.Ed.2d 18 (1976); Boehning v. Indiana State Emp. Ass'n, Inc., 423 U.S. 6, 96 S.Ct. 168, 46 L.Ed.2d 148 (1975); Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975); Frost v. Weinberger, 515 F.2d 57 (2d Cir.1975); Rolles v. Civil Ser. Comm., 168 U.S.App.D.C. 79, 512 F.2d 1319 (1975); Eley v. Morris, 390 F. Supp. 913 (N.D.Ga. 1975); Young v. Hutchins, 383 F. Supp.",
"1167 (MD Fla. 1974). [2] The concurring opinion in this case apparently acknowledges that the due process clause of the federal constitution, as interpreted by the United States Supreme Court in Arnett, does not require a full-scale evidentiary hearing prior to the dismissal of a classified employee. However, that opinion then takes the position that the \"due course of law\" provision in Article 1, § 10, of the Oregon Constitution should be interpreted to require a full pretermination hearing in such cases. This issue was never raised, briefed or argued by the parties in this case. Moreover, as demonstrated by the cases cited in footnote four of the concurring opinion, the procedural effect of state \"due course of law\" constitutional provisions is essentially the same as the procedural effect of the due process clause of the fourteenth amendment to the federal constitution. Therefore, in the absence of some compelling public interest in giving Art.",
"1, § 10, of our constitution a broader interpretation in this situation than that given to the due process clause of the fourteenth amendment by the federal courts, we decline to adopt such a construction. Compare State v. Childs, 252 Or. 91, 99, 447 P.2d 304 (1968) with Deras v. Meyers, 272 Or. 47, 64 n. 17, 535 P.2d 541 (1975). See also Olsen v. State of Oregon, 276 Or. 9, 554 P.2d 139 (1976); Plummer v. Donald M. Drake Co., 212 Or. 430, 320 P.2d 245 (1958). [3] Four of the nine Justices dissented, at least in part. Marshall, Douglas and Brennan dissented on the grounds that a full evidentiary hearing was required prior to the dismissal.",
"White concurred in part and dissented in part on the grounds that the pretermination procedures involved in that case were adequate only if an impartial hearings officer made the termination decision. [4] In the interest of avoiding unnecessary controversy, we feel that whenever possible the employee should receive written notice of the charges, of the proposed sanction, and of his right to an informal hearing. [5] The Court of Appeals seems to have concluded that PERB lacked the necessary authority to order an award of back wages upon a finding that the termination was procedurally invalid.",
"Although there is apparently nothing in the authorizing statute which gives PERB the authority to issue such an order on its own, see ORS 240.560, the constitutional nature of the deprivation involved is enough to require this court to direct that such an award be made. Moreover, ORS 240.563 and 183.482 specifically authorize the reviewing court to reverse or remand the agency's order if it finds \"[t]he statute, rule or order to be unconstitutional.\" ORS 183.482(8) (b).",
"[1] Although the constitutional question might have been avoided by interpreting ORS 240.555 and 240.560 as requiring a pre-termination hearing, Personnel Rule 81-100, adopted pursuant to the authority vested in the Public Employe Relations Board under ORS 240.555(1) to establish termination procedures, provides for a post-termination hearing. [2] See, Linde, Without \"Due Process,\" 49 Or.L.Rev. 125, 133 (1970). [3] Inasmuch as the right to a pre-termination hearing is the principal question involved and since this question of the timing of the hearing would involve a similar policy analysis under both the federal and state constitutions (assuming the latter is applicable), there would be no reason to call for supplemental briefs.",
"[4] Linde, Without \"Due Process,\" 49 Or.L. Rev. 125 (1970). Professor Linde interprets Art. I, § 10 as a \"remedies clause\" merely guaranteeing a legal remedy for private wrongs derived from Chapter 40 of the Magna Carta (\"To no one will we sell, to no one will we deny, or delay right or justice\"), and is not a \"due process\" clause providing guarantees against official deprivations \"except by the law of the land\" clauses derived from Chapter 39 of the Magna Carta (\"NO free man shall be taken or imprisoned or dispossessed, or outlawed, or banished, or in any way destroyed, nor will we go upon him, nor send upon him, except by the legal judgment of his peers or by the law of the land\"). When the Magna Carta was re-issued under Henry III, the two clauses were combined under Chapter 29, which eventually was enacted as a statute by Parliament in 1797.",
"Art. I, § 10 and its predecessors say more than Chapter 40 does, and it is possible that the constitutional draftsmen intended to embody the two ideas expressed in Chapter 29 of Magna Carta. In any event, in the states which have provisions similar to Art. I, § 10 the courts, including this court, have regarded the provisions as the equivalent of the due process clause of the Fourteenth Amendment. See, (interpreting Indiana Constitution, Art. I, § 12) Hale v. State, 248 Ind. 630, 230 N.E.2d 432, 435 (1967); Sweet v. State, 233 Ind. 160, 117 N.E.2d 745, 746-47 (1954); Hamm v. Review Board of the Indiana Employment Security Div., 132 Ind.",
"App. 318, 177 N.E.2d 337, 338 (1961); Freeman v. Pierce, 179 Ind. 445, 101 N.E. 478, 479 (1913), and (interpreting Ohio Constitution, Art. I, § 16) Ex Parte Martin, 139 Ohio St. 609, 41 N.E.2d 702, 706 (1942); State ex rel. Smilack v. Bushong, 159 Ohio St. 259, 111 N.E.2d 918, 922 (1953), and (Oregon) State v. Bouse, 199 Or. 676, 686, 264 P.2d 800 (1953). Cf. School Dist. No. 7 v. Weissenfluh, 236 Or. 165, 173, 387 P.2d 567 (1963) and Columbus Packing Co. v. State, 106 Ohio St. 469, 140 N.E. 376, 378 (1922).",
"Even if Art. I, § 10 is interpreted as not including a substantive due process provision, it does require procedural due process in the sense of requiring a remedy for injuries to person, property or reputation. If an entitlement is \"property\", the employee is entitled to a \"remedy by due course of law\" to retain it. That remedy must be provided by the state. It is for us to say whether it is a remedy \"by due course of law\" if the employee is given a hearing only after he has been discharged. [5] See, e.g., Arnett v. Kennedy, 416 U.S. 134, 94 S.Ct. 1633, 40 L.Ed.2d 15 (1974) (the separate opinions reveal a consensus that such an \"entitlement\" is a property interest); Perry v. Sindermann, 408 U.S. 593, 92 S.Ct.",
"2694, 33 L.Ed.2d 570 (1972); Comment, 10 Harv.Civil Rights L.Rev. 472, 473 (1975). Cf., Reich, The New Property, 73 Yale L.J. 733 (1964). The recent cases of Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974) and North Georgia Finishing v. Di-Chem, 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1975) have created uncertainty in this area. See opinions of Stewart, J. in Mitchell and North Georgia Finishing.",
"Regardless of the direction finally taken by the U.S. Supreme Court, I believe that plaintiff in the present case has a property interest protected by the justice and remedies clause of the Oregon Constitution. [6] Discharge from a government job often seriously injures the employee's business and professional reputation. There is a widely held impression that it is difficult to fire government workers, and this contributes to the belief that anyone fired by the government is probably unemployable. See, Merrill, Procedures for Adverse Actions Against Federal Employees, 59 Va.L.Rev. 196, 204 (1973); and Due Process and Public Employment in Perspective: Arbitrary Dismissals of non-Civil Service Employees, 19 UCLA L.Rev. 1052, 1065 (1972). Discharge from a job often damages the employee's personal reputation, too, since status in our society is so closely related to an individual's source of livelihood. See, Reich, The New Property, supra note 5.",
"[7] The substance of the report is contained in an article entitled Procedures for Adverse Actions Against Federal Employees, supra note 6. On the basis of Merrill's report, the Administrative Conference of the United States strongly recommended that evidentiary hearings be held prior to discharge. [8] Merrill, supra 59 Va.L.Rev. at 241. [9] \"[T]here seems little reason why a hearing could not be held during that 30-day period.\" Marshall, J., dissenting, 416 U.S. at 225, 94 S.Ct. at 1679. [10] E.g., see Marshall, J. 's dissent in Arnett; Merrill, supra 59 Va.L.Rev.",
"196 at 238-246; Fear of Firing: Arnett v. Kennedy and the Protection of Federal Career Employees, 10 Harv.Civil Rights L.Rev. 472 (1975). [11] See, 59 Va.L.Rev. at 245. [12] Cf., Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), where it was held that due process requires a prior hearing before property can be taken through the use of state law replevin procedures to repossess chattels; and Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972), where it was held that due process requires a prior hearing before a person can be deprived of liberty through state parole revocation. [13] See, Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 2593, supra note 12; Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969)."
]
| https://www.courtlistener.com/api/rest/v3/opinions/1183741/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Citation Nr: 1636338
Decision Date: 09/16/16 Archive Date: 09/27/16
DOCKET NO. 11-14 025 ) DATE
)
)
On appeal from the
Department of Veterans Affairs (VA) Regional Office (RO)
in St. Petersburg, Florida
THE ISSUE
Entitlement to Dependency and Indemnity Compensation (DIC) based on service connection for the cause of death of a veteran.
REPRESENTATION
Appellant represented by: Veterans of Foreign Wars of the United States
ATTORNEY FOR THE BOARD
L. Cramp, Counsel
INTRODUCTION
The appellant is the surviving spouse of a veteran (the Veteran) who died in February 2008. The Veteran had active duty service from March 1966 to July 1969.
This appeal comes before the Board of Veterans' Appeals (Board) from a November 2015 Order of the United States Court of Appeals for Veterans' Claims (Veterans Court). The appeal originated from a June 2008 rating decision of the RO in St. Petersburg, Florida.
In a decision dated in July 2014, the Board denied the same matter that is currently before the Board. The Board's July 2014 decision was appealed to the Veterans Court. In a single-judge decision dated in November 2015, the Veterans Court vacated the Board's July 2014 decision and remanded this matter back to the Board for additional development.
FINDINGS OF FACT
1. The Veteran served in the Republic of Vietnam during the period beginning on January 9, 1962, and ending on May 7, 1975, and is therefore presumed to have been exposed to herbicide agents.
2. Hypopharyngeal squamous cell carcinoma is listed on the death certificate as a contributory cause of death.
3. Hypopharyngeal squamous cell carcinoma originated in the larynx and is therefore an herbicide-presumptive disease.
CONCLUSION OF LAW
The criteria for DIC based on the cause of death of a veteran have been met. 38 U.S.C.A. §§ 1110, 5103, 5103A, 5107 (West 2014); 38 C.F.R. §§ 3.102, 3.159, 3.312 (2015).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
Dependency and Indemnity Compensation benefits are payable to the surviving spouse of a veteran if the veteran died from a service-connected disability. 38 U.S.C.A. § 1310; 38 C.F.R. § 3.5.
In order for service connection for the cause of a veteran's death to be granted, it must be shown that a service-connected disability caused substantially or materially contributed to cause death. A disability may be service-connected if it results from an injury or disease incurred in, or aggravated by, military service. 38 U.S.C.A. § 1110; 38 C.F.R. § 3.303.
The death of a veteran will be considered as having been due to a service-connected disability when the evidence establishes that such disability was either the principal or a contributory cause of death. The issue involved will be determined by exercise of sound judgment, without recourse to speculation, after a careful analysis has been made of all the facts and circumstances surrounding the death of the veteran, including, particularly, autopsy reports. 38 C.F.R. § 3.312(a).
The service-connected disability will be considered as the principal (primary) cause of death when such disability, singly or jointly with some other condition, was the immediate or underlying cause of death or was etiologically related thereto. 38 C.F.R. § 3.312(b).
A contributory cause of death is inherently one not related to the principal cause. In determining whether the service-connected disability contributed to death, it must be shown that it contributed substantially or materially; that it combined to cause death; that it aided or lent assistance to the production of death. It is not sufficient to show that it casually shared in producing death, but rather it must be shown that there was a causal connection. 38 C.F.R. § 3.312(c)(1); see also Gabrielson v. Brown, 7 Vet. App. 36, 39 (1994).
Generally, minor service-connected disabilities, particularly those of a static nature or not materially affecting a vital organ, would not be held to have contributed to death primarily due to unrelated disability. In the same category there would be included service-connected disease or injuries of any evaluation (even though evaluated as 100 percent disabling) but of a quiescent or static nature involving muscular or skeletal functions and not materially affecting other vital body functions. 38 C.F.R. § 3.312(c)(2).
Service-connected diseases or injuries involving active processes affecting vital organs should receive careful consideration as a contributory cause of death, the primary cause being unrelated, from the viewpoint of whether there were resulting debilitating effects and general impairment of health to an extent that would render the person materially less capable of resisting the effects of other disease or injury primarily causing death. 38 C.F.R. § 3.312(c)(3).
At the time of the Veteran's death service connection was only in effect for hearing loss and tinnitus. The death certificate lists neutropenic colitis, polymicrobial sepsis, and hypopharyngeal squamous cell carcinoma as the causes of death. The appellant contends that the Veteran's cancer (hypopharyngeal squamous cell carcinoma) was related to his in-service herbicide exposure in Vietnam.
The Veteran had verified service in the Republic of Vietnam during the period beginning on January 9, 1962, and ending on May 7, 1975; thus, exposure to herbicide agents, including Agent Orange, is acknowledged. See 38 C.F.R. § 3.307(a)(6)(iii) (providing that all veterans who served in the Republic of Vietnam during the period beginning on January 9, 1962, and ending on May 7, 1975, will be presumed to have been exposed to a herbicide agent, unless there is affirmative evidence that such exposure did not occur).
The list of diseases for which service connection is presumed based on exposure to herbicide agents includes respiratory cancers (cancer of the lung, bronchus, larynx, or trachea), see 38 C.F.R. § 3.309(e), but does not include cancers of the oral cavity (including lips and tongue), pharynx (including tonsils), and nasal cavity (including ears and sinuses), see Notice, 79 Fed. Reg. 20308-01 (2012).
The Board denied this claim in a July 2014 decision based on a determination that a preponderance of the evidence was against a relationship between the cause of the Veteran's death and his service. This decision was based substantially on a March 2014, a VA medical opinion which found that the Veteran did not have cancer of the larynx. The rationale was that the Veteran was diagnosed with a cancer of the hypopharynx, "which is part of the pharynx, an anatomically distinct location from the larynx." It was also noted that a laryngoscopy and 2008 imaging studies confirmed that the Veteran's cancerous mass originated in the hypopharynx.
In vacating and remanding this appeal to the Board, the Veterans Court determined that the Board erred in relying on the March 2014 medical opinion. The Veterans Court noted that the March 2014 opinion was based in part on the belief that a laryngoscopy had confirmed findings that the Veteran's cancer originated in the hypopharynx. However, the Veterans Court found that the record reflects that, although the Veteran was scheduled for a laryngoscopy, he died before the test could be administered. The Veterans Court concluded that the March 2014 opinion appears to be based on an inadequate factual predicate. The Veterans Court found that "Remand is warranted for the Board to obtain a new medical opinion that properly addresses the tests that were actually performed."
In May 2016, the Board obtained a specialist's opinion from the Veterans Health Administration (VHA). The specialist opined that, since the tumor appeared to be present and active in the larynx at the time of diagnosis, it is at least as likely as not that this tumor had a laryngeal origin. The specialist reasoned that the arytenoids, aryepiglottic folds, vallecula, and epiglottis, are all parts of the larynx and a sluggish vocal cord is strongly indicative of laryngeal involvement. The piriform sinuses and posterior pharyngeal wall are extralaryngeal. Though the bulk of the tumor seems to have been located there, it cannot be conclusively shown that that coincides with its origin. The two flexible laryngoscopy descriptions, while not contradictory, do not agree in their description of the structures involved. If a sluggish cord were noted, that indicates invasive laryngeal disease. The earlier description of "normal" true vocal cord motion must be carefully considered. The specialist determined that it was unlikely that this developed suddenly between examinations, and was more likely that it went unnoticed in the earlier examination.
After a review of all of the evidence, the Board finds that an approximate balance of the evidence has been attained regarding whether an herbicide-presumptive disease contributed substantially and materially to cause the Veteran's death. With resolution of reasonable doubt in favor of the claim, the Board concludes that the criteria for DIC based on the cause of death of a veteran are met.
Duties to Notify and Assist
As the Board is granting the maximum benefit sought on appeal, the claim is substantiated, and there are no further VCAA duties. Wensch v. Principi, 15 Vet App 362, 367-368 (2001); see also 38 U.S.C.A. § 5103A(a)(2) (Secretary not required to provide assistance "if no reasonable possibility exists that such assistance would aid in substantiating the claim"); VAOPGCPREC 5-2004 (the notice and duty to assist provisions of the VCAA do not apply to claims that could not be substantiated through such notice and assistance).
ORDER
Service connection for the cause of the Veteran's death is granted.
____________________________________________
JONATHAN B. KRAMER
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs | 09-16-2016 | [
"Citation Nr: 1636338 Decision Date: 09/16/16 Archive Date: 09/27/16 DOCKET NO. 11-14 025 ) DATE ) ) On appeal from the Department of Veterans Affairs (VA) Regional Office (RO) in St. Petersburg, Florida THE ISSUE Entitlement to Dependency and Indemnity Compensation (DIC) based on service connection for the cause of death of a veteran. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States ATTORNEY FOR THE BOARD L. Cramp, Counsel INTRODUCTION The appellant is the surviving spouse of a veteran (the Veteran) who died in February 2008. The Veteran had active duty service from March 1966 to July 1969. This appeal comes before the Board of Veterans' Appeals (Board) from a November 2015 Order of the United States Court of Appeals for Veterans' Claims (Veterans Court). The appeal originated from a June 2008 rating decision of the RO in St. Petersburg, Florida.",
"In a decision dated in July 2014, the Board denied the same matter that is currently before the Board. The Board's July 2014 decision was appealed to the Veterans Court. In a single-judge decision dated in November 2015, the Veterans Court vacated the Board's July 2014 decision and remanded this matter back to the Board for additional development. FINDINGS OF FACT 1. The Veteran served in the Republic of Vietnam during the period beginning on January 9, 1962, and ending on May 7, 1975, and is therefore presumed to have been exposed to herbicide agents. 2. Hypopharyngeal squamous cell carcinoma is listed on the death certificate as a contributory cause of death. 3.",
"Hypopharyngeal squamous cell carcinoma originated in the larynx and is therefore an herbicide-presumptive disease. CONCLUSION OF LAW The criteria for DIC based on the cause of death of a veteran have been met. 38 U.S.C.A. §§ 1110, 5103, 5103A, 5107 (West 2014); 38 C.F.R. §§ 3.102, 3.159, 3.312 (2015). REASONS AND BASES FOR FINDINGS AND CONCLUSION Dependency and Indemnity Compensation benefits are payable to the surviving spouse of a veteran if the veteran died from a service-connected disability. 38 U.S.C.A. § 1310; 38 C.F.R. § 3.5. In order for service connection for the cause of a veteran's death to be granted, it must be shown that a service-connected disability caused substantially or materially contributed to cause death. A disability may be service-connected if it results from an injury or disease incurred in, or aggravated by, military service. 38 U.S.C.A.",
"§ 1110; 38 C.F.R. § 3.303. The death of a veteran will be considered as having been due to a service-connected disability when the evidence establishes that such disability was either the principal or a contributory cause of death. The issue involved will be determined by exercise of sound judgment, without recourse to speculation, after a careful analysis has been made of all the facts and circumstances surrounding the death of the veteran, including, particularly, autopsy reports. 38 C.F.R. § 3.312(a). The service-connected disability will be considered as the principal (primary) cause of death when such disability, singly or jointly with some other condition, was the immediate or underlying cause of death or was etiologically related thereto. 38 C.F.R.",
"§ 3.312(b). A contributory cause of death is inherently one not related to the principal cause. In determining whether the service-connected disability contributed to death, it must be shown that it contributed substantially or materially; that it combined to cause death; that it aided or lent assistance to the production of death. It is not sufficient to show that it casually shared in producing death, but rather it must be shown that there was a causal connection. 38 C.F.R. § 3.312(c)(1); see also Gabrielson v. Brown, 7 Vet. App. 36, 39 (1994). Generally, minor service-connected disabilities, particularly those of a static nature or not materially affecting a vital organ, would not be held to have contributed to death primarily due to unrelated disability.",
"In the same category there would be included service-connected disease or injuries of any evaluation (even though evaluated as 100 percent disabling) but of a quiescent or static nature involving muscular or skeletal functions and not materially affecting other vital body functions. 38 C.F.R. § 3.312(c)(2). Service-connected diseases or injuries involving active processes affecting vital organs should receive careful consideration as a contributory cause of death, the primary cause being unrelated, from the viewpoint of whether there were resulting debilitating effects and general impairment of health to an extent that would render the person materially less capable of resisting the effects of other disease or injury primarily causing death.",
"38 C.F.R. § 3.312(c)(3). At the time of the Veteran's death service connection was only in effect for hearing loss and tinnitus. The death certificate lists neutropenic colitis, polymicrobial sepsis, and hypopharyngeal squamous cell carcinoma as the causes of death. The appellant contends that the Veteran's cancer (hypopharyngeal squamous cell carcinoma) was related to his in-service herbicide exposure in Vietnam. The Veteran had verified service in the Republic of Vietnam during the period beginning on January 9, 1962, and ending on May 7, 1975; thus, exposure to herbicide agents, including Agent Orange, is acknowledged. See 38 C.F.R. § 3.307(a)(6)(iii) (providing that all veterans who served in the Republic of Vietnam during the period beginning on January 9, 1962, and ending on May 7, 1975, will be presumed to have been exposed to a herbicide agent, unless there is affirmative evidence that such exposure did not occur). The list of diseases for which service connection is presumed based on exposure to herbicide agents includes respiratory cancers (cancer of the lung, bronchus, larynx, or trachea), see 38 C.F.R. § 3.309(e), but does not include cancers of the oral cavity (including lips and tongue), pharynx (including tonsils), and nasal cavity (including ears and sinuses), see Notice, 79 Fed.",
"Reg. 20308-01 (2012). The Board denied this claim in a July 2014 decision based on a determination that a preponderance of the evidence was against a relationship between the cause of the Veteran's death and his service. This decision was based substantially on a March 2014, a VA medical opinion which found that the Veteran did not have cancer of the larynx. The rationale was that the Veteran was diagnosed with a cancer of the hypopharynx, \"which is part of the pharynx, an anatomically distinct location from the larynx.\" It was also noted that a laryngoscopy and 2008 imaging studies confirmed that the Veteran's cancerous mass originated in the hypopharynx. In vacating and remanding this appeal to the Board, the Veterans Court determined that the Board erred in relying on the March 2014 medical opinion. The Veterans Court noted that the March 2014 opinion was based in part on the belief that a laryngoscopy had confirmed findings that the Veteran's cancer originated in the hypopharynx. However, the Veterans Court found that the record reflects that, although the Veteran was scheduled for a laryngoscopy, he died before the test could be administered.",
"The Veterans Court concluded that the March 2014 opinion appears to be based on an inadequate factual predicate. The Veterans Court found that \"Remand is warranted for the Board to obtain a new medical opinion that properly addresses the tests that were actually performed.\" In May 2016, the Board obtained a specialist's opinion from the Veterans Health Administration (VHA). The specialist opined that, since the tumor appeared to be present and active in the larynx at the time of diagnosis, it is at least as likely as not that this tumor had a laryngeal origin. The specialist reasoned that the arytenoids, aryepiglottic folds, vallecula, and epiglottis, are all parts of the larynx and a sluggish vocal cord is strongly indicative of laryngeal involvement. The piriform sinuses and posterior pharyngeal wall are extralaryngeal.",
"Though the bulk of the tumor seems to have been located there, it cannot be conclusively shown that that coincides with its origin. The two flexible laryngoscopy descriptions, while not contradictory, do not agree in their description of the structures involved. If a sluggish cord were noted, that indicates invasive laryngeal disease. The earlier description of \"normal\" true vocal cord motion must be carefully considered. The specialist determined that it was unlikely that this developed suddenly between examinations, and was more likely that it went unnoticed in the earlier examination. After a review of all of the evidence, the Board finds that an approximate balance of the evidence has been attained regarding whether an herbicide-presumptive disease contributed substantially and materially to cause the Veteran's death. With resolution of reasonable doubt in favor of the claim, the Board concludes that the criteria for DIC based on the cause of death of a veteran are met. Duties to Notify and Assist As the Board is granting the maximum benefit sought on appeal, the claim is substantiated, and there are no further VCAA duties.",
"Wensch v. Principi, 15 Vet App 362, 367-368 (2001); see also 38 U.S.C.A. § 5103A(a)(2) (Secretary not required to provide assistance \"if no reasonable possibility exists that such assistance would aid in substantiating the claim\"); VAOPGCPREC 5-2004 (the notice and duty to assist provisions of the VCAA do not apply to claims that could not be substantiated through such notice and assistance). ORDER Service connection for the cause of the Veteran's death is granted. ____________________________________________ JONATHAN B. KRAMER Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs"
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
617 F.2d 192 80-1 USTC P 9315 Herbert B. CLINE, Jr., and Brisy Cline, John C. Cline andMildred Cline, Petitioners-Appellants,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. Nos. 77-1754, 77-1755. United States Court of Appeals,Sixth Circuit. Argued Jan. 31, 1980.Decided March 25, 1980.
Leon K. Oxley, Frazier & Oxley, Huntington, W. Va., for petitioners- appellants. M. Carr Ferguson, Asst. Atty. Gen., Tax Division, U. S. Dept. of Justice, Washington, D. C., Gilbert E. Andrews, Michael L. Paup, Stuart E. Seigel, Chief Counsel, I. R. S., Michael L. Paup, Gayle P. Miller, Aaron P. Rosenfeld, Washington, D. C., for respondent-appellee. Before LIVELY, BROWN and KENNEDY, Circuit Judges. LIVELY, Circuit Judge.
1 The question in this case is whether certain payments received by the taxpayers in the years 1967-1971 were entitled to be treated as long term capital gains, as reported by them, or as ordinary income as contended by the Commissioner. The facts in the two cases are identical, and the cases were consolidated in the Tax Court and in this court. The decision of the Tax Court is reported at 67 T.C. 889 (1977). The stipulated facts are set forth in detail in the opinion of the Tax Court and will be summarized here.
2 Prior to December 30, 1966 the taxpayers Herbert B. Cline and John C. Cline1 each owned one-third of the outstanding stock of Wolf Creek Colleries Company (Wolf Creek) and both were active in its operation. On February 1, 1966 the taxpayers entered into a contract with Wolf Creek by which they were to be paid, beginning January 1, 1967, seven cents (31/2 cents each) per ton of coal "mined from all leasehold estates of Wolf Creek which shall be acquired by virtue of lease negotiations carried out and accomplished by the Clines on Wolf Creek's behalf, . . . ." The contract contained numerous references to special efforts and valuable services of the Clines, particularly in connection with the procurement of coal leases for Wolf Creek.
3 Between February and December 1966 the taxpayers obtained two desirable coal leases on behalf of Wolf Creek. Effective December 30, 1966 the taxpayers sold all of their stock in Wolf Creek to a newly formed corporation and withdrew from the management of its affairs. Also on December 30, 1966 the taxpayers and Wolf Creek executed an "indenture" by which the taxpayers purported to sell to Wolf Creek all of their interest in "coal leases, and leasehold estates in coal in place, held by Wolf Creek" and identified in the February 1, 1966 contract. The recited consideration for this "sale and conveyance" was an obligation by Wolf Creek to pay to the Clines a "tonnage royalty" of five cents (21/2 cents each) for each ton of coal thereafter loaded or processed through Wolf Creek's loading docks or tippling facilities for sale on the open market. The effect of the December 30, 1966 agreement was to require Wolf Creek to pay the taxpayers five cents per ton for all coal mined or processed by Wolf Creek rather than seven cents per ton for all coal mined by Wolf Creek from leases procured by the Clines.
4 Contending that the December 1 agreement effected a sale of interest in coal acquired by them under the February 1 contract, the taxpayers reported each year's receipts from Wolf Creek as long term capital gains, pursuant to Section 631(c) of the Internal Revenue Code.2 The Commissioner denied capital gains treatment and assessed deficiencies on the basis of computations which treated the payments under the December 30 contract as ordinary income. The taxpayers petitioned the Tax Court for redetermination of the deficiencies asserted by the Commissioner.
5 The majority opinion of the Tax Court found that the transaction evidenced by the December 30 agreement did not constitute a disposal of coal with a retained economic interest as required for Section 631(c) treatment. However, the majority found that the transaction constituted an exchange of the economic interest in coal leases acquired under the February 1 contract for a payment to be measured by the amount of coal handled by Wolf Creek. Reasoning that there had been a sale or exchange of rights acquired under the February 1 contract, the majority concluded that capital gains treatment was required, stating, "It is axiomatic that the royalty interest constitutes a capital asset in the hands of its owners." Nevertheless, since the two leases in which the taxpayers were found to have royalty interests were acquired less than six months before their "sale or exchange" on December 30, the majority opinion found that the payments in question represented short term, rather than long term, capital gains.
6 Judge Tannenwald, joined by three other members of the Tax Court dissented on two bases. First, the dissenters concluded that the "tonnage royalty" payments were nothing more than compensation for services, and therefore were ordinary income. These royalties were merely a substitute for the rights created by the February 1 agreement. The fact that these rights were "property" does not necessarily mean that they were capital assets for the purpose of determining the proper tax treatment of payments derived from them. Further, even if the right to royalty payments under the February 1 agreement were properly treated as capital assets, the dissenters concluded that there was no sale or exchange on December 30, 1966. At most the December 30 agreement constituted a modification of the February 1 agreement by substituting a different measure of payment.
7 For the reasons hereafter set forth we hold that the payments which the taxpayers received pursuant to the December 30 agreement were ordinary income. Though the Internal Revenue Code3 defines "capital asset" as property held by a taxpayer, with certain exceptions, it has long been held that it is not necessary for a property transaction to come within the literal language of the exclusions contained in the definition in order to be denied capital gains treatment. Corn Products Co. v. Commissioner, 350 U.S. 46, 51-52, 76 S.Ct. 20, 23-24, 100 L.Ed. 29 (1955). The Supreme Court has always construed the term "capital assets" narrowly. Id. at 52, 76 S.Ct. at 24.
8 Since "property" and "capital" are not necessarily synonymous, payments received from cancellation of a lease, concededly "property," which were in fact substitutes for rental income were treated by the Supreme Court as ordinary income in Hort v. Commissioner, 313 U.S. 28, 31, 61 S.Ct. 757, 758, 85 L.Ed. 1168 (1941). Similarly, the Court refused to accord capital gains treatment to an award by a claims commission to a company whose assets were temporarily seized by the government during war time. Commissioner v. Gillette Motor Transport, Inc., 364 U.S. 130, 80 S.Ct. 1497, 4 L.Ed.2d 1617 (1960). Noting that the fact the receipts were derived from "property" is not controlling, the Court found that the award was based on the fair rental value of the property during the period of government ownership, and was ordinary income. The Court repeated its earlier admonition on the need to construe the term "capital asset" narrowly. 364 U.S. at 134, 80 S.Ct. at 1500. In Commissioner v. P. G. Lake, Inc., 356 U.S. 260, 78 S.Ct. 691, 2 L.Ed.2d 743 (1950), the Supreme Court held that amounts received by taxpayers as consideration for oil payment rights were ordinary income. The Court found that certain lump sum payments were "essentially a substitute for what would otherwise be received at a future time as ordinary income." 356 U.S. at 265.
9 The essential teaching of the cited Supreme Court decisions is that courts must look to the substance, rather than the form, of transactions to determine whether payments to a taxpayer constitute capital gain or ordinary income. The December 30 agreement in the present case was written to reflect a "sale or conveyance" of rights acquired under the February 1 contract. Nevertheless, the substance of the transaction was nothing more than a change in the basis of payments to be made in the future under the February 1 contract. Since the February 1 contract emphasized that its purpose was to provide compensation to the taxpayers for their valuable services to Wolf Creek, all deferred payments under that agreement would have been taxed as ordinary income, the same as any other payments for personal services or labor. Restating the method and basis of computing future payments had no effect on the tax treatment to be accorded the payments when actually received; they remained payments for services.
10 This court and other courts of appeals have consistently construed the capital gains provisions of the Internal Revenue Code narrowly and have given effect to the substance of transactions. E. g., Omer v. United States, 329 F.2d 393, 395 (6th Cir. 1964); United States v. Frazell, 335 F.2d 487 (5th Cir. 1964), cert. denied, 380 U.S. 961, 85 S.Ct. 1104, 14 L.Ed.2d 152 (1965); Commissioner v. Ferrer, 304 F.2d 125 (2d Cir. 1962). The taxpayers in the present case have relied particularly on this court's decision in Turzillo v. Commissioner, 346 F.2d 884 (6th Cir. 1965). While the taxpayer prevailed in Turzillo, this result was reached after the court examined five contracts between him and his employer and concluded that, in substance, a transaction by which he received payment for relinquishing all rights under the contracts involved property rights "the essential nature of which was not merely to obtain periodic receipts of income for services rendered, but to afford Turzillo an opportunity to acquire an interest in property, which, if itself held, would be a capital asset." 346 F.2d at 889. The guiding principle, as stated by Judge Shackelford Miller, is: "We still must look for what was the money paid." Id.
11 Looking for what the money was paid in the present case produces a clear answer. It was paid for services rendered to Wolf Creek by the Clines in negotiating coal leases for the company. Since the essential nature of the payments was compensation for services, the Commissioner correctly treated the amounts received by the taxpayers as ordinary income.
12 Though we have reached a conclusion which is different from that of the majority of the Tax Court, there is no necessity for a remand. The parties stipulated that if the court should determine that the payments were ordinary income rather than capital gains, "the adjustments made in the notices of deficiency are correct." The decisions of the Tax Court from which these appeals were taken are based on these deficiency notices.
13 The decision of the Tax Court in each case is affirmed.
1 Brisy Cline and Mildred Cline, the respective wives of Herbert B. Cline and John C. Cline, are parties because they filed joint income tax returns with their husbands for the years in suit. References to the taxpayers in this opinion are to the husbands
2 I.R.C. § 631(c), 26 U.S.C. § 631(c), provides in part: (c) Disposal of coal or domestic iron ore with a retained economic interest. In the case of the disposal of coal (including lignite), or iron ore mined in the United States, held for more than 6 months before such disposal, by the owner thereof under any form of contract by virtue of which such owner retains an economic interest in such coal or iron ore, the difference between the amount realized from the disposal of such coal or iron ore and the adjusted depletion basis thereof plus the deductions disallowed for the taxable year under section 272 shall be considered as though it were a gain or loss, as the case may be, on the sale of such coal or iron ore.
3 I.R.C. § 1221, 26 U.S.C. § 1221, contains the following definition: § 1221. Capital asset defined For purposes of this subtitle, the term "capital asset" means property held by the taxpayer (whether or not connected with his trade or business), but does not include (1) stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; (2) property, used in his trade or business, of a character which is subject to the allowance for depreciation provided in section 167, or real property used in his trade or business; (3) a copyright, a literary, musical, or artistic composition, or similar property, held by (A) a taxpayer whose personal efforts created such property, or (B) a taxpayer in whose hands the basis of such property is determined, for the purpose of determining gain from a sale or exchange, in whole or in part by reference to the basis of such property in the hands of the person whose personal efforts created such property; (4) accounts or notes receivable acquired in the ordinary course of trade or business for services rendered or from the sale of property described in paragraph (1); or (5) an obligation of the United States or any of its possessions, or of a State or Territory, or any political subdivision thereof, or of the District of Columbia, issued on or after March 1, 1941, on a discount basis and payable without interest at a fixed maturity date not exceeding one year from the date of issue. | 08-23-2011 | [
"617 F.2d 192 80-1 USTC P 9315 Herbert B. CLINE, Jr., and Brisy Cline, John C. Cline andMildred Cline, Petitioners-Appellants,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. Nos. 77-1754, 77-1755. United States Court of Appeals,Sixth Circuit. Argued Jan. 31, 1980.Decided March 25, 1980. Leon K. Oxley, Frazier & Oxley, Huntington, W. Va., for petitioners- appellants. M. Carr Ferguson, Asst. Atty. Gen., Tax Division, U. S. Dept. of Justice, Washington, D. C., Gilbert E. Andrews, Michael L. Paup, Stuart E. Seigel, Chief Counsel, I. R. S., Michael L. Paup, Gayle P. Miller, Aaron P. Rosenfeld, Washington, D. C., for respondent-appellee.",
"Before LIVELY, BROWN and KENNEDY, Circuit Judges. LIVELY, Circuit Judge. 1 The question in this case is whether certain payments received by the taxpayers in the years 1967-1971 were entitled to be treated as long term capital gains, as reported by them, or as ordinary income as contended by the Commissioner. The facts in the two cases are identical, and the cases were consolidated in the Tax Court and in this court. The decision of the Tax Court is reported at 67 T.C. 889 (1977).",
"The stipulated facts are set forth in detail in the opinion of the Tax Court and will be summarized here. 2 Prior to December 30, 1966 the taxpayers Herbert B. Cline and John C. Cline1 each owned one-third of the outstanding stock of Wolf Creek Colleries Company (Wolf Creek) and both were active in its operation. On February 1, 1966 the taxpayers entered into a contract with Wolf Creek by which they were to be paid, beginning January 1, 1967, seven cents (31/2 cents each) per ton of coal \"mined from all leasehold estates of Wolf Creek which shall be acquired by virtue of lease negotiations carried out and accomplished by the Clines on Wolf Creek's behalf, . . .",
".\" The contract contained numerous references to special efforts and valuable services of the Clines, particularly in connection with the procurement of coal leases for Wolf Creek. 3 Between February and December 1966 the taxpayers obtained two desirable coal leases on behalf of Wolf Creek. Effective December 30, 1966 the taxpayers sold all of their stock in Wolf Creek to a newly formed corporation and withdrew from the management of its affairs. Also on December 30, 1966 the taxpayers and Wolf Creek executed an \"indenture\" by which the taxpayers purported to sell to Wolf Creek all of their interest in \"coal leases, and leasehold estates in coal in place, held by Wolf Creek\" and identified in the February 1, 1966 contract. The recited consideration for this \"sale and conveyance\" was an obligation by Wolf Creek to pay to the Clines a \"tonnage royalty\" of five cents (21/2 cents each) for each ton of coal thereafter loaded or processed through Wolf Creek's loading docks or tippling facilities for sale on the open market. The effect of the December 30, 1966 agreement was to require Wolf Creek to pay the taxpayers five cents per ton for all coal mined or processed by Wolf Creek rather than seven cents per ton for all coal mined by Wolf Creek from leases procured by the Clines.",
"4 Contending that the December 1 agreement effected a sale of interest in coal acquired by them under the February 1 contract, the taxpayers reported each year's receipts from Wolf Creek as long term capital gains, pursuant to Section 631(c) of the Internal Revenue Code.2 The Commissioner denied capital gains treatment and assessed deficiencies on the basis of computations which treated the payments under the December 30 contract as ordinary income. The taxpayers petitioned the Tax Court for redetermination of the deficiencies asserted by the Commissioner. 5 The majority opinion of the Tax Court found that the transaction evidenced by the December 30 agreement did not constitute a disposal of coal with a retained economic interest as required for Section 631(c) treatment.",
"However, the majority found that the transaction constituted an exchange of the economic interest in coal leases acquired under the February 1 contract for a payment to be measured by the amount of coal handled by Wolf Creek. Reasoning that there had been a sale or exchange of rights acquired under the February 1 contract, the majority concluded that capital gains treatment was required, stating, \"It is axiomatic that the royalty interest constitutes a capital asset in the hands of its owners.\" Nevertheless, since the two leases in which the taxpayers were found to have royalty interests were acquired less than six months before their \"sale or exchange\" on December 30, the majority opinion found that the payments in question represented short term, rather than long term, capital gains. 6 Judge Tannenwald, joined by three other members of the Tax Court dissented on two bases. First, the dissenters concluded that the \"tonnage royalty\" payments were nothing more than compensation for services, and therefore were ordinary income. These royalties were merely a substitute for the rights created by the February 1 agreement.",
"The fact that these rights were \"property\" does not necessarily mean that they were capital assets for the purpose of determining the proper tax treatment of payments derived from them. Further, even if the right to royalty payments under the February 1 agreement were properly treated as capital assets, the dissenters concluded that there was no sale or exchange on December 30, 1966. At most the December 30 agreement constituted a modification of the February 1 agreement by substituting a different measure of payment. 7 For the reasons hereafter set forth we hold that the payments which the taxpayers received pursuant to the December 30 agreement were ordinary income. Though the Internal Revenue Code3 defines \"capital asset\" as property held by a taxpayer, with certain exceptions, it has long been held that it is not necessary for a property transaction to come within the literal language of the exclusions contained in the definition in order to be denied capital gains treatment.",
"Corn Products Co. v. Commissioner, 350 U.S. 46, 51-52, 76 S.Ct. 20, 23-24, 100 L.Ed. 29 (1955). The Supreme Court has always construed the term \"capital assets\" narrowly. Id. at 52, 76 S.Ct. at 24. 8 Since \"property\" and \"capital\" are not necessarily synonymous, payments received from cancellation of a lease, concededly \"property,\" which were in fact substitutes for rental income were treated by the Supreme Court as ordinary income in Hort v. Commissioner, 313 U.S. 28, 31, 61 S.Ct. 757, 758, 85 L.Ed. 1168 (1941). Similarly, the Court refused to accord capital gains treatment to an award by a claims commission to a company whose assets were temporarily seized by the government during war time. Commissioner v. Gillette Motor Transport, Inc., 364 U.S. 130, 80 S.Ct. 1497, 4 L.Ed.2d 1617 (1960).",
"Noting that the fact the receipts were derived from \"property\" is not controlling, the Court found that the award was based on the fair rental value of the property during the period of government ownership, and was ordinary income. The Court repeated its earlier admonition on the need to construe the term \"capital asset\" narrowly. 364 U.S. at 134, 80 S.Ct. at 1500. In Commissioner v. P. G. Lake, Inc., 356 U.S. 260, 78 S.Ct. 691, 2 L.Ed.2d 743 (1950), the Supreme Court held that amounts received by taxpayers as consideration for oil payment rights were ordinary income. The Court found that certain lump sum payments were \"essentially a substitute for what would otherwise be received at a future time as ordinary income.\" 356 U.S. at 265. 9 The essential teaching of the cited Supreme Court decisions is that courts must look to the substance, rather than the form, of transactions to determine whether payments to a taxpayer constitute capital gain or ordinary income.",
"The December 30 agreement in the present case was written to reflect a \"sale or conveyance\" of rights acquired under the February 1 contract. Nevertheless, the substance of the transaction was nothing more than a change in the basis of payments to be made in the future under the February 1 contract. Since the February 1 contract emphasized that its purpose was to provide compensation to the taxpayers for their valuable services to Wolf Creek, all deferred payments under that agreement would have been taxed as ordinary income, the same as any other payments for personal services or labor. Restating the method and basis of computing future payments had no effect on the tax treatment to be accorded the payments when actually received; they remained payments for services. 10 This court and other courts of appeals have consistently construed the capital gains provisions of the Internal Revenue Code narrowly and have given effect to the substance of transactions.",
"E. g., Omer v. United States, 329 F.2d 393, 395 (6th Cir. 1964); United States v. Frazell, 335 F.2d 487 (5th Cir. 1964), cert. denied, 380 U.S. 961, 85 S.Ct. 1104, 14 L.Ed.2d 152 (1965); Commissioner v. Ferrer, 304 F.2d 125 (2d Cir. 1962). The taxpayers in the present case have relied particularly on this court's decision in Turzillo v. Commissioner, 346 F.2d 884 (6th Cir.",
"1965). While the taxpayer prevailed in Turzillo, this result was reached after the court examined five contracts between him and his employer and concluded that, in substance, a transaction by which he received payment for relinquishing all rights under the contracts involved property rights \"the essential nature of which was not merely to obtain periodic receipts of income for services rendered, but to afford Turzillo an opportunity to acquire an interest in property, which, if itself held, would be a capital asset.\" 346 F.2d at 889. The guiding principle, as stated by Judge Shackelford Miller, is: \"We still must look for what was the money paid.\" Id. 11 Looking for what the money was paid in the present case produces a clear answer.",
"It was paid for services rendered to Wolf Creek by the Clines in negotiating coal leases for the company. Since the essential nature of the payments was compensation for services, the Commissioner correctly treated the amounts received by the taxpayers as ordinary income. 12 Though we have reached a conclusion which is different from that of the majority of the Tax Court, there is no necessity for a remand. The parties stipulated that if the court should determine that the payments were ordinary income rather than capital gains, \"the adjustments made in the notices of deficiency are correct.\"",
"The decisions of the Tax Court from which these appeals were taken are based on these deficiency notices. 13 The decision of the Tax Court in each case is affirmed. 1 Brisy Cline and Mildred Cline, the respective wives of Herbert B. Cline and John C. Cline, are parties because they filed joint income tax returns with their husbands for the years in suit. References to the taxpayers in this opinion are to the husbands 2 I.R.C. § 631(c), 26 U.S.C. § 631(c), provides in part: (c) Disposal of coal or domestic iron ore with a retained economic interest. In the case of the disposal of coal (including lignite), or iron ore mined in the United States, held for more than 6 months before such disposal, by the owner thereof under any form of contract by virtue of which such owner retains an economic interest in such coal or iron ore, the difference between the amount realized from the disposal of such coal or iron ore and the adjusted depletion basis thereof plus the deductions disallowed for the taxable year under section 272 shall be considered as though it were a gain or loss, as the case may be, on the sale of such coal or iron ore. 3 I.R.C.",
"§ 1221, 26 U.S.C. § 1221, contains the following definition: § 1221. Capital asset defined For purposes of this subtitle, the term \"capital asset\" means property held by the taxpayer (whether or not connected with his trade or business), but does not include (1) stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; (2) property, used in his trade or business, of a character which is subject to the allowance for depreciation provided in section 167, or real property used in his trade or business; (3) a copyright, a literary, musical, or artistic composition, or similar property, held by (A) a taxpayer whose personal efforts created such property, or (B) a taxpayer in whose hands the basis of such property is determined, for the purpose of determining gain from a sale or exchange, in whole or in part by reference to the basis of such property in the hands of the person whose personal efforts created such property; (4) accounts or notes receivable acquired in the ordinary course of trade or business for services rendered or from the sale of property described in paragraph (1); or (5) an obligation of the United States or any of its possessions, or of a State or Territory, or any political subdivision thereof, or of the District of Columbia, issued on or after March 1, 1941, on a discount basis and payable without interest at a fixed maturity date not exceeding one year from the date of issue."
]
| https://www.courtlistener.com/api/rest/v3/opinions/375659/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
GIVAN, Justice. Appellant was originally charged with three counts of First Degree Murder and one count of Assault and Battery with Intent to Kill. In October 1977, pursuant to a plea bargain agreement, appellant entered a plea of guilty to Second Degree Murder. He was sentenced to life imprisonment. Subsequently, appellant filed a petition for post-conviction relief, which was denied in August 1985. Appellant claims the trial court erred in failing to grant him post-conviction relief. He alleges that at the time he entered his plea of guilty he was not advised of the facts that the court was not a party to the plea agreement and that he might receive an increased sentence by reason of the prior convictions. Appellant concedes that the trial court was entitled to look at the entire record to ascertain the nature of his advisements. However, he claims, although the written plea agreement stated that he understood the court was under no obligation to abide by the plea agreement submitted, that he understood the court could take his criminal record into consideration in determining the penalty which he was to receive. He further concedes the plea agreement stated that he understood, even though the prosecuting attorney was to make a recommendation for a life sentence, that the court was not a party to that agreement and was not required to follow the recommendation. He nonetheless claims that he was in a state of depression at the time the plea agreement was entered into. Although his attorney read and explained it to him, and he then signed the agreement, he nevertheless, because of his depression, did not pay any attention to what he was reading or hearing. He therefore claims the trial court should have found that his guilty plea was not entered knowingly and freely. Appellant is in fact correct that the trial court is entitled to look at the entire record in passing on his petition for post-conviction relief. White v. State (1986), Ind., 497 N.E.2d 893. Appellant's allegation of depression and lack of attention at his guilty plea hearing was raised for the first time by his testimony in his post-conviction relief hearing. This allegation directly conflicts with the testimony received at the guilty plea hearing. Thus there was a conflict of evidence presented to the post-conviction court which required the judge to pass upon the credibility of the witness as compared with that of the prior record. McHugh v. State (1984), Ind., 471 N.E.2d 293. This Court will not reverse the post-conviction court unless the evidence is without conflict and leads solely to a contrary conclusion. Wright v. State (1986), Ind., 490 N.E.2d 732. When examining the record as a whole, the evidence clearly supports the decision of the trial court in denying post-conviction relief. The trial court is affirmed. SHEPARD, C.J., and DeBRULER, PIVARNIK and DICKSON, JJ., concur. | 07-24-2022 | [
"GIVAN, Justice. Appellant was originally charged with three counts of First Degree Murder and one count of Assault and Battery with Intent to Kill. In October 1977, pursuant to a plea bargain agreement, appellant entered a plea of guilty to Second Degree Murder. He was sentenced to life imprisonment. Subsequently, appellant filed a petition for post-conviction relief, which was denied in August 1985. Appellant claims the trial court erred in failing to grant him post-conviction relief. He alleges that at the time he entered his plea of guilty he was not advised of the facts that the court was not a party to the plea agreement and that he might receive an increased sentence by reason of the prior convictions. Appellant concedes that the trial court was entitled to look at the entire record to ascertain the nature of his advisements. However, he claims, although the written plea agreement stated that he understood the court was under no obligation to abide by the plea agreement submitted, that he understood the court could take his criminal record into consideration in determining the penalty which he was to receive.",
"He further concedes the plea agreement stated that he understood, even though the prosecuting attorney was to make a recommendation for a life sentence, that the court was not a party to that agreement and was not required to follow the recommendation. He nonetheless claims that he was in a state of depression at the time the plea agreement was entered into. Although his attorney read and explained it to him, and he then signed the agreement, he nevertheless, because of his depression, did not pay any attention to what he was reading or hearing.",
"He therefore claims the trial court should have found that his guilty plea was not entered knowingly and freely. Appellant is in fact correct that the trial court is entitled to look at the entire record in passing on his petition for post-conviction relief. White v. State (1986), Ind., 497 N.E.2d 893. Appellant's allegation of depression and lack of attention at his guilty plea hearing was raised for the first time by his testimony in his post-conviction relief hearing. This allegation directly conflicts with the testimony received at the guilty plea hearing. Thus there was a conflict of evidence presented to the post-conviction court which required the judge to pass upon the credibility of the witness as compared with that of the prior record. McHugh v. State (1984), Ind., 471 N.E.2d 293. This Court will not reverse the post-conviction court unless the evidence is without conflict and leads solely to a contrary conclusion.",
"Wright v. State (1986), Ind., 490 N.E.2d 732. When examining the record as a whole, the evidence clearly supports the decision of the trial court in denying post-conviction relief. The trial court is affirmed. SHEPARD, C.J., and DeBRULER, PIVARNIK and DICKSON, JJ., concur."
]
| https://www.courtlistener.com/api/rest/v3/opinions/7072174/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number: 811-10531 Nicholas Family of Funds, Inc. (Exact Name of Registrant as Specified in Charter) 700 North Water Street, Milwaukee, Wisconsin 53202 (Address of Principal Executive Offices) (Zip Code) Jeffrey T. May, Senior Vice President, Secretary and Treasurer 700 North Water Street Milwaukee, Wisconsin 53202 (Name and Address of Agent for Service) Registrant's Telephone Number, Including Area Code: 414-272-4650 Date of Fiscal Year End: 12/31/2007 Date of Reporting Period: 03/31/2007 Item 1. Schedule of Investments. Schedule of Investments (unaudited) Nicholas Liberty Fund AS OF: 03/31/07 VALUE COMMON STOCKS - 75.18% Consumer Discretionary - Consumer Services 0.20% 2,000 Coinmach Service Corp. - Class A $ 21,220 Consumer Discretionary - Media 12.87% 10,600 EchoStar Communications Corporation * 460,358 16,728 Liberty Global, Inc. - Series C * 512,546 1,531 Liberty Media Holding Corporation Capital Common 169,313 16,328 Radio One, Inc. - Class A * 105,642 10,768 Salem Communications Corporation * 134,600 1,382,459 Consumer Discretionary - Retail 9.56% 5,000 Bed Bath & Beyond Inc. * 200,850 6,000 Family Dollar Stores, Inc. 177,720 6,913 IAC/InterActiveCorp * 260,689 700 Kohl's Corporation * 53,627 14,021 Liberty Media Holding Corporation Interactive 333,980 1,026,866 Energy 9.75% 6,100 Hiland Holdings GP, LP 188,429 6,213 Hiland Partners, LP 358,801 15,000 MV Oil Trust 357,600 3,400 Newfield Exploration Company * 141,814 1,046,644 Financials - Insurance 8.91% 600 Assurant, Inc. 32,178 9,000 National Financial Partners Corporation 422,190 4,500 Nationwide Financial Services, Inc. 242,370 5,020 Travelers Companies, Inc. (The) 259,886 956,624 Health Care - Equipment 1.63% 9,100 DexCom, Inc. * 71,526 2,100 Medtronic, Inc. 103,026 174,552 Health Care - Pharmaceuticals & Biotechnology 1.85% 5,300 Teva Pharmaceutical Industries Ltd. 198,379 Health Care - Services 8.76% 13,600 DaVita, Inc. * 725,152 14,651 Dialysis Corporation of America * 185,042 1,000 United Surgical Partners International, Inc. * 30,810 941,004 Industrials - Commerical Services & Supplies 3.45% 7,200 Cintas Corporation 259,920 1,500 Manpower Inc. 110,655 370,575 Information Technology - Hardware & Equipment 8.45% 3,200 CDW Corporation 196,576 1,000 Daktronics, Inc. 27,440 4,800 FLIR Systems, Inc. * 171,216 2,900 Jabil Circuit, Inc. 62,089 3,700 ScanSource, Inc. * 99,308 8,212 TESSCO Technologies Incorporated * 223,284 9,100 Vishay Intertechnology, Inc. * 127,218 907,131 Information Technology - Software & Services 7.73% 4,200 Fiserv, Inc. * 222,852 9,200 Microsoft Corporation 256,404 2,682 NAVTEQ Corporation * 92,512 8,500 Wright Express Corporation * 257,805 829,573 Telecommunication Services 2.02% 9,500 Asia Satellite Telecommunications Holdings Limited 216,505 TOTAL Common Stocks (COST: $ 6,015,355) 8,071,532 SHORT-TERM INVESTMENTS - 26.42% Commercial Paper - 22.74% $250,000 Fiserv, Inc. 04/03/07, 5.32% 249,963 300,000 Coca-Cola Enterprises Inc. 04/05/07, 5.27% 299,868 200,000 UBS Finance (Delaware) LLC 04/9/07, 5.25% 199,796 346,000 Verizon Communications Inc. 04/9/07, 5.30% 345,643 225,000 Walt Disney Company (The) 04/12/07, 5.25% 224,672 275,000 Prudential Financial, Inc. 04/16/07, 5.27% 274,437 250,000 Time Warner Cable Inc. 04/18/07, 5.33% 249,408 100,000 Kraft Foods Inc. 04/20/07, 5.25% 99,737 250,000 John Deere Capital Corporation 04/24/07, 5.26% 249,196 250,000 General Mills, Inc. 05/04/07, 5.28% 248,827 2,441,547 Variable Rate Security - 3.68% 395,567 Wisconsin Corporate Central Credit Union 04/02/07, 4.99% 395,567 TOTAL Short-term Investments (COST: $ 2,837,114) 2,837,114 TOTAL SECURITY HOLDINGS - 101.60 % 10,908,646 LIABILITIES, NET OF OTHER ASSETS ( - 1.60)% (171,518) TOTAL NET ASSETS $10,737,128 % OF NET ASSETS * NON-INCOME PRODUCING As of March 31, 2007, investment cost for federal tax purposes was $8,857,254 and the tax basis components of unrealized appreciation/depreciation were as follows: Unrealized appreciation $2,264,410 Unrealized depreciation (213,018) Net unrealized appreciation $2,051,392 For information on the Fund's policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund's most recent Semiannual or Annual Report to Shareholders. Item 2. Controls and Procedures. (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Fund's internal controls or in other factors that could significantly affect the Fund's internal controls during the last fiscal quarter. Item 3. Exhibits. Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2(a) under the Act, attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Nicholas Family of Funds, Inc. By: /s/ David O. Nicholas Name: David O. Nicholas Title: Principal Executive Officer Date: 05/29/2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ David O. Nicholas Name: David O. Nicholas Title: Principal Executive Officer Date: 05/29/2007 By: /s/ Jeffrey T. May Name: Jeffrey T. May Title: Principal Financial Officer Date: 05/29/2007 | [
"Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number: 811-10531 Nicholas Family of Funds, Inc. (Exact Name of Registrant as Specified in Charter) 700 North Water Street, Milwaukee, Wisconsin 53202 (Address of Principal Executive Offices) (Zip Code) Jeffrey T. May, Senior Vice President, Secretary and Treasurer 700 North Water Street Milwaukee, Wisconsin 53202 (Name and Address of Agent for Service) Registrant's Telephone Number, Including Area Code: 414-272-4650 Date of Fiscal Year End: 12/31/2007 Date of Reporting Period: 03/31/2007 Item 1. Schedule of Investments.",
"Schedule of Investments (unaudited) Nicholas Liberty Fund AS OF: 03/31/07 VALUE COMMON STOCKS - 75.18% Consumer Discretionary - Consumer Services 0.20% 2,000 Coinmach Service Corp. - Class A $ 21,220 Consumer Discretionary - Media 12.87% 10,600 EchoStar Communications Corporation * 460,358 16,728 Liberty Global, Inc. - Series C * 512,546 1,531 Liberty Media Holding Corporation Capital Common 169,313 16,328 Radio One, Inc. - Class A * 105,642 10,768 Salem Communications Corporation * 134,600 1,382,459 Consumer Discretionary - Retail 9.56% 5,000 Bed Bath & Beyond Inc. * 200,850 6,000 Family Dollar Stores, Inc. 177,720 6,913 IAC/InterActiveCorp * 260,689 700 Kohl's Corporation * 53,627 14,021 Liberty Media Holding Corporation Interactive 333,980 1,026,866 Energy 9.75% 6,100 Hiland Holdings GP, LP 188,429 6,213 Hiland Partners, LP 358,801 15,000 MV Oil Trust 357,600 3,400 Newfield Exploration Company * 141,814 1,046,644 Financials - Insurance 8.91% 600 Assurant, Inc. 32,178 9,000 National Financial Partners Corporation 422,190 4,500 Nationwide Financial Services, Inc. 242,370 5,020 Travelers Companies, Inc. (The) 259,886 956,624 Health Care - Equipment 1.63% 9,100 DexCom, Inc. * 71,526 2,100 Medtronic, Inc. 103,026 174,552 Health Care - Pharmaceuticals & Biotechnology 1.85% 5,300 Teva Pharmaceutical Industries Ltd. 198,379 Health Care - Services 8.76% 13,600 DaVita, Inc. * 725,152 14,651 Dialysis Corporation of America * 185,042 1,000 United Surgical Partners International, Inc. * 30,810 941,004 Industrials - Commerical Services & Supplies 3.45% 7,200 Cintas Corporation 259,920 1,500 Manpower Inc. 110,655 370,575 Information Technology - Hardware & Equipment 8.45% 3,200 CDW Corporation 196,576 1,000 Daktronics, Inc. 27,440 4,800 FLIR Systems, Inc. * 171,216 2,900 Jabil Circuit, Inc. 62,089 3,700 ScanSource, Inc. * 99,308 8,212 TESSCO Technologies Incorporated * 223,284 9,100 Vishay Intertechnology, Inc. * 127,218 907,131 Information Technology - Software & Services 7.73% 4,200 Fiserv, Inc. * 222,852 9,200 Microsoft Corporation 256,404 2,682 NAVTEQ Corporation * 92,512 8,500 Wright Express Corporation * 257,805 829,573 Telecommunication Services 2.02% 9,500 Asia Satellite Telecommunications Holdings Limited 216,505 TOTAL Common Stocks (COST: $ 6,015,355) 8,071,532 SHORT-TERM INVESTMENTS - 26.42% Commercial Paper - 22.74% $250,000 Fiserv, Inc. 04/03/07, 5.32% 249,963 300,000 Coca-Cola Enterprises Inc. 04/05/07, 5.27% 299,868 200,000 UBS Finance (Delaware) LLC 04/9/07, 5.25% 199,796 346,000 Verizon Communications Inc. 04/9/07, 5.30% 345,643 225,000 Walt Disney Company (The) 04/12/07, 5.25% 224,672 275,000 Prudential Financial, Inc. 04/16/07, 5.27% 274,437 250,000 Time Warner Cable Inc. 04/18/07, 5.33% 249,408 100,000 Kraft Foods Inc. 04/20/07, 5.25% 99,737 250,000 John Deere Capital Corporation 04/24/07, 5.26% 249,196 250,000 General Mills, Inc. 05/04/07, 5.28% 248,827 2,441,547 Variable Rate Security - 3.68% 395,567 Wisconsin Corporate Central Credit Union 04/02/07, 4.99% 395,567 TOTAL Short-term Investments (COST: $ 2,837,114) 2,837,114 TOTAL SECURITY HOLDINGS - 101.60 % 10,908,646 LIABILITIES, NET OF OTHER ASSETS ( - 1.60)% (171,518) TOTAL NET ASSETS $10,737,128 % OF NET ASSETS * NON-INCOME PRODUCING As of March 31, 2007, investment cost for federal tax purposes was $8,857,254 and the tax basis components of unrealized appreciation/depreciation were as follows: Unrealized appreciation $2,264,410 Unrealized depreciation (213,018) Net unrealized appreciation $2,051,392 For information on the Fund's policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund's most recent Semiannual or Annual Report to Shareholders.",
"Item 2. Controls and Procedures. (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-Q was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Fund's internal controls or in other factors that could significantly affect the Fund's internal controls during the last fiscal quarter. Item 3.",
"Exhibits. Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2(a) under the Act, attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Nicholas Family of Funds, Inc. By: /s/ David O. Nicholas Name: David O. Nicholas Title: Principal Executive Officer Date: 05/29/2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ David O. Nicholas Name: David O. Nicholas Title: Principal Executive Officer Date: 05/29/2007 By: /s/ Jeffrey T. May Name: Jeffrey T. May Title: Principal Financial Officer Date: 05/29/2007"
]
| https://applica-public.s3-eu-west-1.amazonaws.com/contract-discovery/edgar.txt.xz | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
ÿþC i t a t i o n N r : 1 8 1 0 1 7 7 6
D e c i s i o n D a t e : 0 5 / 1 0 / 1 8 A r c h i v e D a t e : 0 5 / 0 9 / 1 8
D O C K E T N O . 1 5 - 1 1 1 4 3
D A T E : M a y 1 0 , 2 0 1 8
R E M A N D E D I S S U E
T h e c l a i m f o r a c o m p e n s a b l e i n i t i a l r a t i n g f o r h e a r i n g l o s s i s r e m a n d e d .
T h e V e t e r a n h a d a c t i v e s e r v i c e f r o m A u g u s t 1 9 6 0 t o J a n u a r y 1 9 6 3 .
A v i d e o c o n f e r e n c e h e a r i n g b e f o r e t h e u n d e r s i g n e d V e t e r a n s L a w J u d g e w a s h e l d i n F e b r u a r y 2 0 1 7 . T h e h e a r i n g t r a n s c r i p t h a s b e e n a s s o c i a t e d w i t h t h e c l a i m s f i l e .
1 . T h e c l a i m f o r a c o m p e n s a b l e i n i t i a l r a t i n g f o r h e a r i n g l o s s i s r e m a n d e d .
B a s e d o n t h e V e t e r a n s t e s t i m o n y i n F e b r u a r y 2 0 1 7 t h a t h i s h e a r i n g a c u i t y h a s w o r s e n e d s i n c e t h e p r e v i o u s e x a m i n a t i o n i n A u g u s t 2 0 1 2 , t h e B o a r d f i n d s t h e V e t e r a n s h o u l d b e a f f o r d e d a d d i t i o n a l V A e x a m i n a t i o n t o d e t e r m i n e t h e c u r r e n t s e v e r i t y o f t h e h e a r i n g l o s s .
T h e m a t t e r i s R E M A N D E D f o r t h e f o l l o w i n g a c t i o n :
1 . U n d e r t a k e a p p r o p r i a t e d e v e l o p m e n t t o o b t a i n a l l o u t s t a n d i n g t r e a t m e n t r e c o r d s .
2 . A f f o r d t h e V e t e r a n a V A e x a m i n a t i o n t o d e t e r m i n e t h e c u r r e n t s e v e r i t y o f t h e h e a r i n g l o s s . A l l p e r t i n e n t e v i d e n c e o f r e c o r d s h o u l d b e m a d e a v a i l a b l e t o a n d r e v i e w e d b y t h e e x a m i n e r . A n y i n d i c a t e d s t u d i e s s h o u l d b e p e r f o r m e d . E n s u r e t h a t t h e e x a m i n e r p r o v i d e s a l l i n f o r m a t i o n r e q u i r e d f o r r a t i n g p u r p o s e s .
3 . T h e r e a f t e r , r e a d j u d i c a t e t h e V e t e r a n s c l a i m . I f t h e b e n e f i t s o u g h t o n a p p e a l r e m a i n s d e n i e d , t h e V e t e r a n s h o u l d b e p r o v i d e d a s u p p l e m e n t a l s t a t e m e n t o f t h e c a s e ( S S O C ) . T h e S S O C m u s t c o n t a i n n o t i c e o f a l l r e l e v a n t a c t i o n s t a k e n o n t h e c l a i m f o r b e n e f i t s , t o i n c l u d e a s u m m a r y o f t h e e v i d e n c e a n d a p p l i c a b l e l a w a n d r e g u l a t i o n s c o n s i d e r e d p e r t i n e n t t o t h e i s s u e c u r r e n t l y o n a p p e a l . A n a p p r o p r i a t e p e r i o d o f t i m e s h o u l d b e a l l o w e d f o r r e s p o n s e .
T . R E Y N O L D S
V e t e r a n s L a w J u d g e
B o a r d o f V e t e r a n s A p p e a l s
A T T O R N E Y F O R T H E B O A R D N . S n y d e r , C o u n s e l
| [
"ÿþC\u0000i\u0000t\u0000a\u0000t\u0000i\u0000o\u0000n\u0000 \u0000N\u0000r\u0000:\u0000 \u00001\u00008\u00001\u00000\u00001\u00007\u00007\u00006\u0000 \u0000 \u0000D\u0000e\u0000c\u0000i\u0000s\u0000i\u0000o\u0000n\u0000 \u0000D\u0000a\u0000t\u0000e\u0000:\u0000 \u00000\u00005\u0000/\u00001\u00000\u0000/\u00001\u00008\u0000 \u0000A\u0000r\u0000c\u0000h\u0000i\u0000v\u0000e\u0000 \u0000D\u0000a\u0000t\u0000e\u0000:\u0000 \u00000\u00005\u0000/\u00000\u00009\u0000/\u00001\u00008\u0000 \u0000 \u0000 \u0000 \u0000D\u0000O\u0000C\u0000K\u0000E\u0000T\u0000 \u0000N\u0000O\u0000.\u0000 \u00001\u00005\u0000-\u00001\u00001\u0000 \u00001\u00004\u00003\u0000 \u0000 \u0000D\u0000A\u0000T\u0000E\u0000:\u0000 \u0000M\u0000a\u0000y\u0000 \u00001\u00000\u0000,\u0000 \u00002\u00000\u00001\u00008\u0000 \u0000 \u0000R\u0000E\u0000M\u0000A\u0000N\u0000D\u0000E\u0000D\u0000 \u0000I\u0000S\u0000S\u0000U\u0000E\u0000 \u0000 \u0000T\u0000h\u0000e\u0000 \u0000c\u0000l\u0000a\u0000i\u0000m\u0000 \u0000f\u0000o\u0000r\u0000 \u0000a\u0000 \u0000c\u0000o\u0000m\u0000p\u0000e\u0000n\u0000s\u0000a\u0000b\u0000l\u0000e\u0000 \u0000i\u0000n\u0000i\u0000t\u0000i\u0000a\u0000l\u0000 \u0000r\u0000a\u0000t\u0000i\u0000n\u0000g\u0000 \u0000f\u0000o\u0000r\u0000 \u0000h\u0000e\u0000a\u0000r\u0000i\u0000n\u0000g\u0000 \u0000l\u0000o\u0000s\u0000s\u0000 \u0000i\u0000s\u0000 \u0000r\u0000e\u0000m\u0000a\u0000n\u0000d\u0000e\u0000d\u0000.\u0000 \u0000 \u0000T\u0000h\u0000e\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000 \u0000h\u0000a\u0000d\u0000 \u0000a\u0000c\u0000t\u0000i\u0000v\u0000e\u0000 \u0000s\u0000e\u0000r\u0000v\u0000i\u0000c\u0000e\u0000 \u0000f\u0000r\u0000o\u0000m\u0000 \u0000A\u0000u\u0000g\u0000u\u0000s\u0000t\u0000 \u00001\u00009\u00006\u00000\u0000 \u0000t\u0000o\u0000 \u0000J\u0000a\u0000n\u0000u\u0000a\u0000r\u0000y\u0000 \u00001\u00009\u00006\u00003\u0000.\u0000 \u0000 \u0000 \u0000 \u0000A\u0000 \u0000v\u0000i\u0000d\u0000e\u0000o\u0000c\u0000o\u0000n\u0000f\u0000e\u0000r\u0000e\u0000n\u0000c\u0000e\u0000 \u0000h\u0000e\u0000a\u0000r\u0000i\u0000n\u0000g\u0000 \u0000b\u0000e\u0000f\u0000o\u0000r\u0000e\u0000 \u0000t\u0000h\u0000e\u0000 \u0000u\u0000n\u0000d\u0000e\u0000r\u0000s\u0000i\u0000g\u0000n\u0000e\u0000d\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000s\u0000 \u0000L\u0000a\u0000w\u0000 \u0000J\u0000u\u0000d\u0000g\u0000e\u0000 \u0000w\u0000a\u0000s\u0000 \u0000h\u0000e\u0000l\u0000d\u0000 \u0000i\u0000n\u0000 \u0000F\u0000e\u0000b\u0000r\u0000u\u0000a\u0000r\u0000y\u0000 \u00002\u00000\u00001\u00007\u0000.\u0000 \u0000 \u0000T\u0000h\u0000e\u0000 \u0000h\u0000e\u0000a\u0000r\u0000i\u0000n\u0000g\u0000 \u0000t\u0000r\u0000a\u0000n\u0000s\u0000c\u0000r\u0000i\u0000p\u0000t\u0000 \u0000h\u0000a\u0000s\u0000 \u0000b\u0000e\u0000e\u0000n\u0000 \u0000a\u0000s\u0000s\u0000o\u0000c\u0000i\u0000a\u0000t\u0000e\u0000d\u0000 \u0000w\u0000i\u0000t\u0000h\u0000 \u0000t\u0000h\u0000e\u0000 \u0000c\u0000l\u0000a\u0000i\u0000m\u0000s\u0000 \u0000f\u0000i\u0000l\u0000e\u0000.\u0000 \u0000 \u00001\u0000.\u0000 \u0000T\u0000h\u0000e\u0000 \u0000c\u0000l\u0000a\u0000i\u0000m\u0000 \u0000f\u0000o\u0000r\u0000 \u0000a\u0000 \u0000c\u0000o\u0000m\u0000p\u0000e\u0000n\u0000s\u0000a\u0000b\u0000l\u0000e\u0000 \u0000i\u0000n\u0000i\u0000t\u0000i\u0000a\u0000l\u0000 \u0000r\u0000a\u0000t\u0000i\u0000n\u0000g\u0000 \u0000f\u0000o\u0000r\u0000 \u0000h\u0000e\u0000a\u0000r\u0000i\u0000n\u0000g\u0000 \u0000l\u0000o\u0000s\u0000s\u0000 \u0000i\u0000s\u0000 \u0000r\u0000e\u0000m\u0000a\u0000n\u0000d\u0000e\u0000d\u0000.\u0000 \u0000 \u0000B\u0000a\u0000s\u0000e\u0000d\u0000 \u0000o\u0000n\u0000 \u0000t\u0000h\u0000e\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000\u0019 s\u0000 \u0000t\u0000e\u0000s\u0000t\u0000i\u0000m\u0000o\u0000n\u0000y\u0000 \u0000i\u0000n\u0000 \u0000F\u0000e\u0000b\u0000r\u0000u\u0000a\u0000r\u0000y\u0000 \u00002\u00000\u00001\u00007\u0000 \u0000t\u0000h\u0000a\u0000t\u0000 \u0000h\u0000i\u0000s\u0000 \u0000h\u0000e\u0000a\u0000r\u0000i\u0000n\u0000g\u0000 \u0000a\u0000c\u0000u\u0000i\u0000t\u0000y\u0000 \u0000h\u0000a\u0000s\u0000 \u0000w\u0000o\u0000r\u0000s\u0000e\u0000n\u0000e\u0000d\u0000 \u0000s\u0000i\u0000n\u0000c\u0000e\u0000 \u0000t\u0000h\u0000e\u0000 \u0000p\u0000r\u0000e\u0000v\u0000i\u0000o\u0000u\u0000s\u0000 \u0000e\u0000x\u0000a\u0000m\u0000i\u0000n\u0000a\u0000t\u0000i\u0000o\u0000n\u0000 \u0000i\u0000n\u0000 \u0000A\u0000u\u0000g\u0000u\u0000s\u0000t\u0000 \u00002\u00000\u00001\u00002\u0000,\u0000 \u0000t\u0000h\u0000e\u0000 \u0000B\u0000o\u0000a\u0000r\u0000d\u0000 \u0000f\u0000i\u0000n\u0000d\u0000s\u0000 \u0000t\u0000h\u0000e\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000 \u0000s\u0000h\u0000o\u0000u\u0000l\u0000d\u0000 \u0000b\u0000e\u0000 \u0000a\u0000f\u0000f\u0000o\u0000r\u0000d\u0000e\u0000d\u0000 \u0000a\u0000d\u0000d\u0000i\u0000t\u0000i\u0000o\u0000n\u0000a\u0000l\u0000 \u0000V\u0000A\u0000 \u0000e\u0000x\u0000a\u0000m\u0000i\u0000n\u0000a\u0000t\u0000i\u0000o\u0000n\u0000 \u0000t\u0000o\u0000 \u0000d\u0000e\u0000t\u0000e\u0000r\u0000m\u0000i\u0000n\u0000e\u0000 \u0000t\u0000h\u0000e\u0000 \u0000c\u0000u\u0000r\u0000r\u0000e\u0000n\u0000t\u0000 \u0000s\u0000e\u0000v\u0000e\u0000r\u0000i\u0000t\u0000y\u0000 \u0000o\u0000f\u0000 \u0000t\u0000h\u0000e\u0000 \u0000h\u0000e\u0000a\u0000r\u0000i\u0000n\u0000g\u0000 \u0000l\u0000o\u0000s\u0000s\u0000.\u0000 \u0000 \u0000 \u0000 \u0000T\u0000h\u0000e\u0000 \u0000m\u0000a\u0000t\u0000t\u0000e\u0000r\u0000 \u0000i\u0000s\u0000 \u0000R\u0000E\u0000M\u0000A\u0000N\u0000D\u0000E\u0000D\u0000 \u0000f\u0000o\u0000r\u0000 \u0000t\u0000h\u0000e\u0000 \u0000f\u0000o\u0000l\u0000l\u0000o\u0000w\u0000i\u0000n\u0000g\u0000 \u0000a\u0000c\u0000t\u0000i\u0000o\u0000n\u0000:\u0000 \u0000 \u00001\u0000.\u0000 \u0000U\u0000n\u0000d\u0000e\u0000r\u0000t\u0000a\u0000k\u0000e\u0000 \u0000a\u0000p\u0000p\u0000r\u0000o\u0000p\u0000r\u0000i\u0000a\u0000t\u0000e\u0000 \u0000d\u0000e\u0000v\u0000e\u0000l\u0000o\u0000p\u0000m\u0000e\u0000n\u0000t\u0000 \u0000t\u0000o\u0000 \u0000o\u0000b\u0000t\u0000a\u0000i\u0000n\u0000 \u0000a\u0000l\u0000l\u0000 \u0000o\u0000u\u0000t\u0000s\u0000t\u0000a\u0000n\u0000d\u0000i\u0000n\u0000g\u0000 \u0000t\u0000r\u0000e\u0000a\u0000t\u0000m\u0000e\u0000n\u0000t\u0000 \u0000r\u0000e\u0000c\u0000o\u0000r\u0000d\u0000s\u0000.\u0000 \u0000 \u0000 \u0000 \u00002\u0000.\u0000 \u0000 \u0000A\u0000f\u0000f\u0000o\u0000r\u0000d\u0000 \u0000t\u0000h\u0000e\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000 \u0000a\u0000 \u0000V\u0000A\u0000 \u0000e\u0000x\u0000a\u0000m\u0000i\u0000n\u0000a\u0000t\u0000i\u0000o\u0000n\u0000 \u0000t\u0000o\u0000 \u0000d\u0000e\u0000t\u0000e\u0000r\u0000m\u0000i\u0000n\u0000e\u0000 \u0000t\u0000h\u0000e\u0000 \u0000c\u0000u\u0000r\u0000r\u0000e\u0000n\u0000t\u0000 \u0000s\u0000e\u0000v\u0000e\u0000r\u0000i\u0000t\u0000y\u0000 \u0000o\u0000f\u0000 \u0000t\u0000h\u0000e\u0000 \u0000h\u0000e\u0000a\u0000r\u0000i\u0000n\u0000g\u0000 \u0000l\u0000o\u0000s\u0000s\u0000.\u0000 \u0000 \u0000A\u0000l\u0000l\u0000 \u0000p\u0000e\u0000r\u0000t\u0000i\u0000n\u0000e\u0000n\u0000t\u0000 \u0000e\u0000v\u0000i\u0000d\u0000e\u0000n\u0000c\u0000e\u0000 \u0000o\u0000f\u0000 \u0000r\u0000e\u0000c\u0000o\u0000r\u0000d\u0000 \u0000s\u0000h\u0000o\u0000u\u0000l\u0000d\u0000 \u0000b\u0000e\u0000 \u0000m\u0000a\u0000d\u0000e\u0000 \u0000a\u0000v\u0000a\u0000i\u0000l\u0000a\u0000b\u0000l\u0000e\u0000 \u0000t\u0000o\u0000 \u0000a\u0000n\u0000d\u0000 \u0000r\u0000e\u0000v\u0000i\u0000e\u0000w\u0000e\u0000d\u0000 \u0000b\u0000y\u0000 \u0000t\u0000h\u0000e\u0000 \u0000e\u0000x\u0000a\u0000m\u0000i\u0000n\u0000e\u0000r\u0000.\u0000 \u0000 \u0000A\u0000n\u0000y\u0000 \u0000i\u0000n\u0000d\u0000i\u0000c\u0000a\u0000t\u0000e\u0000d\u0000 \u0000s\u0000t\u0000u\u0000d\u0000i\u0000e\u0000s\u0000 \u0000s\u0000h\u0000o\u0000u\u0000l\u0000d\u0000 \u0000b\u0000e\u0000 \u0000p\u0000e\u0000r\u0000f\u0000o\u0000r\u0000m\u0000e\u0000d\u0000.\u0000 \u0000 \u0000E\u0000n\u0000s\u0000u\u0000r\u0000e\u0000 \u0000t\u0000h\u0000a\u0000t\u0000 \u0000t\u0000h\u0000e\u0000 \u0000e\u0000x\u0000a\u0000m\u0000i\u0000n\u0000e\u0000r\u0000 \u0000p\u0000r\u0000o\u0000v\u0000i\u0000d\u0000e\u0000s\u0000 \u0000a\u0000l\u0000l\u0000 \u0000i\u0000n\u0000f\u0000o\u0000r\u0000m\u0000a\u0000t\u0000i\u0000o\u0000n\u0000 \u0000r\u0000e\u0000q\u0000u\u0000i\u0000r\u0000e\u0000d\u0000 \u0000f\u0000o\u0000r\u0000 \u0000r\u0000a\u0000t\u0000i\u0000n\u0000g\u0000 \u0000p\u0000u\u0000r\u0000p\u0000o\u0000s\u0000e\u0000s\u0000.\u0000 \u0000 \u0000 \u0000 \u00003\u0000.\u0000 \u0000T\u0000h\u0000e\u0000r\u0000e\u0000a\u0000f\u0000t\u0000e\u0000r\u0000,\u0000 \u0000r\u0000e\u0000a\u0000d\u0000j\u0000u\u0000d\u0000i\u0000c\u0000a\u0000t\u0000e\u0000 \u0000t\u0000h\u0000e\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000\u0019 s\u0000 \u0000c\u0000l\u0000a\u0000i\u0000m\u0000.\u0000 \u0000 \u0000I\u0000f\u0000 \u0000t\u0000h\u0000e\u0000 \u0000b\u0000e\u0000n\u0000e\u0000f\u0000i\u0000t\u0000 \u0000s\u0000o\u0000u\u0000g\u0000h\u0000t\u0000 \u0000o\u0000n\u0000 \u0000a\u0000p\u0000p\u0000e\u0000a\u0000l\u0000 \u0000r\u0000e\u0000m\u0000a\u0000i\u0000n\u0000s\u0000 \u0000d\u0000e\u0000n\u0000i\u0000e\u0000d\u0000,\u0000 \u0000t\u0000h\u0000e\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000 \u0000s\u0000h\u0000o\u0000u\u0000l\u0000d\u0000 \u0000b\u0000e\u0000 \u0000p\u0000r\u0000o\u0000v\u0000i\u0000d\u0000e\u0000d\u0000 \u0000a\u0000 \u0000s\u0000u\u0000p\u0000p\u0000l\u0000e\u0000m\u0000e\u0000n\u0000t\u0000a\u0000l\u0000 \u0000s\u0000t\u0000a\u0000t\u0000e\u0000m\u0000e\u0000n\u0000t\u0000 \u0000o\u0000f\u0000 \u0000t\u0000h\u0000e\u0000 \u0000c\u0000a\u0000s\u0000e\u0000 \u0000(\u0000S\u0000S\u0000O\u0000C\u0000)\u0000.\u0000 \u0000 \u0000T\u0000h\u0000e\u0000 \u0000S\u0000S\u0000O\u0000C\u0000 \u0000m\u0000u\u0000s\u0000t\u0000 \u0000c\u0000o\u0000n\u0000t\u0000a\u0000i\u0000n\u0000 \u0000n\u0000o\u0000t\u0000i\u0000c\u0000e\u0000 \u0000o\u0000f\u0000 \u0000a\u0000l\u0000l\u0000 \u0000r\u0000e\u0000l\u0000e\u0000v\u0000a\u0000n\u0000t\u0000 \u0000a\u0000c\u0000t\u0000i\u0000o\u0000n\u0000s\u0000 \u0000t\u0000a\u0000k\u0000e\u0000n\u0000 \u0000o\u0000n\u0000 \u0000t\u0000h\u0000e\u0000 \u0000c\u0000l\u0000a\u0000i\u0000m\u0000 \u0000f\u0000o\u0000r\u0000 \u0000b\u0000e\u0000n\u0000e\u0000f\u0000i\u0000t\u0000s\u0000,\u0000 \u0000t\u0000o\u0000 \u0000i\u0000n\u0000c\u0000l\u0000u\u0000d\u0000e\u0000 \u0000a\u0000 \u0000s\u0000u\u0000m\u0000m\u0000a\u0000r\u0000y\u0000 \u0000o\u0000f\u0000 \u0000t\u0000h\u0000e\u0000 \u0000e\u0000v\u0000i\u0000d\u0000e\u0000n\u0000c\u0000e\u0000 \u0000a\u0000n\u0000d\u0000 \u0000a\u0000p\u0000p\u0000l\u0000i\u0000c\u0000a\u0000b\u0000l\u0000e\u0000 \u0000l\u0000a\u0000w\u0000 \u0000a\u0000n\u0000d\u0000 \u0000r\u0000e\u0000g\u0000u\u0000l\u0000a\u0000t\u0000i\u0000o\u0000n\u0000s\u0000 \u0000c\u0000o\u0000n\u0000s\u0000i\u0000d\u0000e\u0000r\u0000e\u0000d\u0000 \u0000p\u0000e\u0000r\u0000t\u0000i\u0000n\u0000e\u0000n\u0000t\u0000 \u0000t\u0000o\u0000 \u0000t\u0000h\u0000e\u0000 \u0000i\u0000s\u0000s\u0000u\u0000e\u0000 \u0000c\u0000u\u0000r\u0000r\u0000e\u0000n\u0000t\u0000l\u0000y\u0000 \u0000o\u0000n\u0000 \u0000a\u0000p\u0000p\u0000e\u0000a\u0000l\u0000.\u0000 \u0000 \u0000A\u0000n\u0000 \u0000a\u0000p\u0000p\u0000r\u0000o\u0000p\u0000r\u0000i\u0000a\u0000t\u0000e\u0000 \u0000p\u0000e\u0000r\u0000i\u0000o\u0000d\u0000 \u0000o\u0000f\u0000 \u0000t\u0000i\u0000m\u0000e\u0000 \u0000s\u0000h\u0000o\u0000u\u0000l\u0000d\u0000 \u0000b\u0000e\u0000 \u0000a\u0000l\u0000l\u0000o\u0000w\u0000e\u0000d\u0000 \u0000f\u0000o\u0000r\u0000 \u0000r\u0000e\u0000s\u0000p\u0000o\u0000n\u0000s\u0000e\u0000.\u0000 \u0000 \u0000 \u0000 \u0000 \u0000 \u0000 \u0000 \u0000 \u0000T\u0000.\u0000 \u0000R\u0000E\u0000Y\u0000N\u0000O\u0000L\u0000D\u0000S\u0000 \u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000s\u0000 \u0000L\u0000a\u0000w\u0000 \u0000J\u0000u\u0000d\u0000g\u0000e\u0000 \u0000 \u0000B\u0000o\u0000a\u0000r\u0000d\u0000 \u0000o\u0000f\u0000 \u0000V\u0000e\u0000t\u0000e\u0000r\u0000a\u0000n\u0000s\u0000\u0019 \u0000A\u0000p\u0000p\u0000e\u0000a\u0000l\u0000s\u0000 \u0000 \u0000A\u0000T\u0000T\u0000O\u0000R\u0000N\u0000E\u0000Y\u0000 \u0000F\u0000O\u0000R\u0000 \u0000T\u0000H\u0000E\u0000 \u0000B\u0000O\u0000A\u0000R\u0000D\u0000 \u0000N\u0000.\u0000 \u0000S\u0000n\u0000y\u0000d\u0000e\u0000r\u0000,\u0000 \u0000C\u0000o\u0000u\u0000n\u0000s\u0000e\u0000l\u0000 \u0000 \u0000 \u0000 \u0000"
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
697 F. Supp. 677 (1988) The CITY OF NEW YORK, Plaintiff, v. EXXON CORPORATION, et al., Defendants. No. 85 Civ. 1939 (KC). United States District Court, S.D. New York. September 29, 1988. *678 *679 Peter Lehner, New York City Law Dept., New York City, for plaintiff. Michael M. Gordon, Cadwalader, Wichersham & Taft, New York City, for Exxon Corp. and Exxon Research & Eng. Co. Marvin Katz, New York City, for Chrysler Corp. Thomas P. McCaffey, New York City, for United Tech. & Carrier Corp. Arthur Schmauder, Shanley & Fisher, P.C., New York City, for BASF Wyandotte Corp. K. Dennis Sisk, Hunton & Williams, New York City, for Dana Corp., Public Service Elec. & Gas Co., Borg-Warner Corp. Dennis M. Reznick, McElroy, Deutsch & Mulvaney, New York City, for Ingersoll-Rand Corp. Eric M. Wagner, Cole & Deitz, New York City, for Refinement Intern. Alan H. McLean, Hughes, Hubbard & Reed, New York City, for Nat. Can Corp. Jeffrey G. Miller, Verner, Liipfert, Bernhard, McPherson and Hand, Washington, D.C., for Koppers Co., Inc. Sidley and Austin, New York City, for Alcan Aluminum. Breed, Abbott and Morgan, New York City, for Ford Motor Co.
OPINION CONBOY, District Judge: The City of New York ("the City") commenced this action in March of 1985 under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq.[1], together with various state law claims. According to the complaint, the fifteen corporate defendants named therein generated hazardous industrial and chemical wastes that were ultimately disposed of at five City landfills. The wastes were transported to the landfills by certain waste-hauling companies owned or operated by Russell Mahler. Mahler gained access to the City landfills for the purpose of dumping the defendants' wastes by bribing an employee of the City's Department of Sanitation.[2] *680 The City now seeks (i) recovery of the costs incurred to date for evaluating the nature and extent of chemical contamination at the five sites and for emergency measures undertaken to control off-site migration of hazardous substances; (ii) a declaratory judgment that defendants are liable for the future costs of investigations and remedial actions at the sites; and (iii) damages for injury to natural resources caused by defendants' wastes. In August of 1986, the original defendants filed their answers, which included counterclaims against the City under CERCLA and common law, and also filed three separate third-party complaints against more than 300 additional parties. On January 23, 1987, the Court severed and stayed the third-party actions pending the outcome of the main action. On September 29, 1987, the Court, at the request of thirteen of the fifteen original defendants, further streamlined the case by dividing it into three phases. In the first phase, issues of liability would be determined. If necessary, the Court would then consider remedies and damages following the completion of the City's plans for closure of the five landfills.[3] In the last phase, the Court would allocate liability and damages. The late honorable Edward Weinfeld severed and stayed the third-party actions because, among other reasons, he anticipated that a settlement between some or all of the original parties might lead to the amicable disposition of the entire case. A proposed settlement is now before the Court. On May 25, the City and defendants American National Can Corporation, BASF Corporation, Borg-Warner Corporation, Dana Corporation, Ford Motor Company, Koppers Company, Inc., and Public Service Electric and Gas Company ("the settling companies" or "the settling defendants") moved for the entry of Judgment on Consent ("the Judgment"). The Judgment provides that, within ten days of its entry, the settling companies will deliver to the City a Landfills Remedial Fund Agreement ("the Agreement") executed by and binding upon CNA Insurance Company ("CNA"). Pursuant to the Agreement, CNA will pay to the City the sum of twelve million five hundred fifty-five thousand dollars in five installments over a period of six years. All monies paid to the City pursuant to the Agreement are to be used by the City for removal, remedial, and response costs incurred in connection with the landfills. In addition to the monies paid directly to the City, the settling companies will pay $1,243,492.00 into a Natural Resource Trust Fund ("NRT Fund") to be established and administered by NYSDEC. Monies paid into the NRT Fund are to be used for assessing any remedying damage to natural resources resulting from the release of hazardous substances from the landfills. Upon fulfillment by the settling companies of their obligations described above, the Judgment provides that the City's claims against the settling companies are dismissed with prejudice and the City releases the settling companies, and certain additional companies, from liability for all claims relating to the landfills. In turn, the settling companies' counterclaims against the City, as well their claims against any of the remaining parties, including third-party actions, are dismissed. Thus, the Judgment will completely resolve and terminate this litigation as to the settling companies. Although not a party to this action, New York State, through NYSDEC, participated in the negotiations that led to the proposed settlement, and the obligations assumed by the settling defendants' under the Judgment will discharge their liability to both the City and the State. Nonetheless, NYSDEC and the settling companies have executed a separate Order on Consent (or "Consent Order") to formalize their agreement.[4]*681 The effectiveness of the Order on Consent is conditioned on the Court's approval of the Judgment and is incorporated therein by reference. Two of the eight remaining original defendants and twelve of the approximately 350 third-party defendants have opposed the proposed Judgment. The substance of their opposition is set forth in the memoranda of law of original defendants Exxon Corporation and Exxon Research and Engineering Company, Inc. ("Exxon") and third-party defendant Clairol, Incorporated ("Clairol"). Exxon takes exception to Section 3, Paragraph 4 of the Judgment which provides that the Judgment "shall constitute the resolution of liability to a State ... within the meaning of Section 113(f)(2) of CERCLA." Settlement pursuant to Section 113(f)(2), 42 U.S.C. § 9613(f)(2), which on its face governs only settlements by "the United States or a State," may subject non-settling CERCLA defendants to a disproportionate share of liability from which they would otherwise be protected, and may also subject them to contribution actions by settling defendants which might otherwise be barred.[5] Consequently, Exxon contends that the issue of whether the City is a "State" within the meaning of section 113 should be resolved before the Court approves the Judgment. As Exxon points out, a nearly identical issue is raised in its pending motion for summary judgment. The complaint asserts claims, in the alternative, under CERCLA sections 107(a)(4)(A) and 107(a)(4)(B), which impose liability on certain statutorily defined responsible persons for, respectively: (A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian Tribe not inconsistent with the national contingency plan; (B) any other necessary costs of response incurred by any other person consistent with the national contingency plan; (emphasis added). In its pending motion, Exxon argues, inter alia, that the City lacks the capacity to proceed as a "State" under § 107(a)(4)(A). Exxon suggests that the Court reserve decision on the proposed Judgment until the Court determines the City's right to assume the role of the State in the context of the pending summary judgment motion. Without citing any specific deficiency, Exxon also contends that the settling parties have not presented a factual record sufficient to justify approval of the settlement. Clairol is equally concerned with the settlement's impact on contribution rights and apportionment of liability, but Clairol's interpretation of the Judgment differs from Exxon's. Specifically, Clairol does not object to the Judgment in so far as it resolves the City's claims against the settling companies. Apparently ignoring Section 3, Paragraph 4 of the Judgment, Clairol states that the resolution of the City's claims against the settling companies "does not adversely affect the right of Clairol or any other person and, therefore, no one but the City and the Settling Defendants has any interest in it." Memorandum in Opposition to Motion for Entry of Judgment on Consent at 2. Clairol's demurrer is limited *682 to that portion of the Judgment which incorporates the Consent Order between the State and the settling companies. According to Clairol, "the purpose and effect of the proposed consent judgment which incorporates the agreement between the Settling Defendants and the State is to provide the Settling Defendants with the benefits of section 113(f)(2) of" CERCLA. Id.[6] Because, Clairol asserts, it would be improper to afford judicial approval to claims that have never been asserted before the Court, Clairol insists that the portion of the Judgment which incorporates the Consent Order should be severed, or, in the alternative, that the State be required to file a motion, on notice, for leave to intervene in this action. If granted, Clairol further argues that the Consent Order must be reviewed in the context of a full hearing, on notice, to determine if it is fair and reasonable. Last, Clairol contends that all interested parties should be afforded an opportunity to conduct discovery in preparation for that hearing.
ANALYSIS In response to Clairol's and Exxon's objections, several of the settling parties have argued that a ruling on the applicability of section 113(f)(2) to the settlement would be premature. Frankly, this position is somewhat surprising since it is the proposed Judgment and Consent Orders' references to section 113(f)(2) which has inspired Exxon's and Clairol's objections in the first place. The non-settling parties' fear, not without justification, that the approved Judgment will at some point be invoked as a conclusive ruling on the applicability of section 113(f)(2) to the settlement. If the only issue before the Court is, as the settlers assert, the adequacy, fairness, and reasonableness of the payment terms of the Judgment, they have certainly sent mixed signals to the Court and to the other litigants in the way they have structured the settlement. Nonetheless, the arguments for avoiding a ruling on contribution and apportionment issues are not frivolous and they will be addressed. As the settling parties have pointed out, the Case Management Order, which was entered with Exxon's consent, provides that the "[a]llocation of liability and damages, if any, will be adjudicated following the adjudication of issues related to landfill remedies and damages." (emphasis added).[7] Apart from the planned, orderly disposition of the action, the settling parties argue that the postponement of contribution issues, both legal and factual, is sensible since intervening events may render the issue moot. Under the most optimistic scenario, the remaining defendants will settle with the City and the State, foreclosing any contribution actions by or against anyone. Alternatively, if the case proceeds against some or all of the remaining defendants, the Court might rule that the non-settling defendants are simply not liable to the City, thus foreclosing any contribution actions by or against them. Finally, even if some or all of the remaining defendants are found liable, a ruling on the contribution protection available to the settling parties with respect to the CERCLA claims will still leave open questions about contribution and apportionment of liability. For example, if the remaining defendants are held liable under state law only or under both state law and CERCLA, the Court may have to determine whether state rules of contribution and apportionment apply to the claims. Hence, the settlers argue, a ruling on these issues would be premature, and, in light of their willingness to proceed without assurances that section 113(f)(2) applies to the settlement, apparently unnecessary.[8] *683 While these arguments are appealing, a determination of the settlement's status under 113(f)(2) will have an immediate impact, as a practical matter, on all of the parties. Although it is true that contribution and apportionment issues will not in all likelihood be resolved, if at all, for several years, section 113(f)(2)'s application to the settlement would guarantee the settling companies that they would not be dragged back into the case should it proceed that far. The remaining defendants, on the other hand, would immediately be confronted with the prospect of covering any shortfall between what the settlers paid and what they would have paid had they remained in the case. See Note, Superfund Settlements: The Failed Promise of the 1986 Amendments, 74 U.Va.L.Rev. 123, 142 (1988). Under alternative contribution frameworks, the City's recovery against the remaining defendants would likely be reduced by at least the settling parties' proportionate share of fault if it turns out to be greater than the settlement amount.[9] Although, as discussed above, contribution and apportionment issues may never ripen, and will not in any event be addressed until the last phase of the case, a ruling on section 113(f)(2)'s application to this case would certainly have a substantial bearing on the remaining defendants' litigation strategy, particularly with respect to settlement. For these reasons, the Court will address the merits of this question and resolve it.[10]
a) The City's Standing Under §§ 107(a)(4)(A) and 113(f)(2). In its motion for summary judgment, Exxon offers three arguments in support of its view that the City cannot proceed as a "State" under § 107(a)(4)(A) of CERCLA: (1) the express language of the section precludes municipalities from proceeding thereunder (2) the structure of the Act demonstrates a clear intent to divide duties and rights among the United States, the states, and other persons including municipalities, and (3) the legislative history supports a narrow, literal reading of section 107. These arguments apply with equal force to section 113(f)(2) and they will be so considered. The first of these three arguments that the meaning of the language is plain and, therefore, the Court should not look beyond the four corners of the statute to interpret it is the strongest. As already noted, § 113(f)(2) refers only to settlements involving the "United States Government or a State." It is axiomatic that the interpretation of a statute must begin with the language of the statute itself, Touche Ross v. Redington, 442 U.S. 560, 566, 99 S. Ct. 2479, 2884, 61 L. Ed. 2d 82 (1979); Caminetti v. United States, 242 U.S. 470, 485, 37 S. Ct. 192, 194, 61 L. Ed. 2d 442 (1917), and, *684 ordinarily, a court must assume that Congress expressed its purpose through the ordinary meaning of the words it used. Escondido Mut. Water Co. v. La Jolla Band of Mission Indians, 466 U.S. 765, 772, 104 S. Ct. 2105, 2110, 80 L. Ed. 2d 753 (1984). Accordingly, if the text of section 113 were the only source of its meaning, Exxon's restrictive interpretation of § 113 would be highly persuasive.[11] But, as Exxon points out, Congress has supplied definitions of the statutory terms at issue, and those definitions are controlling. See Conoco, Inc. v. Federal Energy Regulatory Com'n, 622 F.2d 796, 800 (5th Cir.1980); see also Perrin v. United States, 444 U.S. 37, 42, 100 S. Ct. 311, 314, 62 L. Ed. 2d 199 (1979) (unless otherwise defined words will be given their ordinary meaning). CERCLA's statutory definitions are found in section 101. Section 101(27) defines "United States" and "State" to "include the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the United States Virgin Islands, the Commonwealth of the Northern Marianas, and any other territory or possession over which the United States has jurisdiction" (emphasis added). Section 101(21) provides that "`person' means an individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, United States Government, State, municipality, commission, political subdivision of a State, or any interstate body" (emphasis added). Contrasting the exclusion of municipalities from the definition of "United States" and "State" with their inclusion in the definition of "person," Exxon asserts that Congress must have intended to limit enforcement actions by municipalities to § 107(a)(4)(B), which refers to actions by "any other person" (other than the United States or a State), and, by extension, to deny the benefits of 113(f)(2) to parties settling with municipal plaintiffs. The Court cannot agree. First, Exxon's reliance on the maxim "expressio unius est exclusio alterius" the expression of one thing is the exclusion of another would be justified if section 101(27) defined "State" to mean the various enumerated entities. See Colautti v. Franklin, 439 U.S. 379, 392 n. 10, 99 S. Ct. 675, 684 n. 10, 58 L. Ed. 2d 596 (1979) (definition that declares what term "means" excludes any meaning not stated). Instead, "State" is defined to include the entities on the illustrative list. In construing CERCLA section 107(a)(4)(A) to permit enforcement actions by municipalities, the court in Mayor and Board of Alderman v. Drew Chemical Corp., 621 F. Supp. 663, 666 (D.C.N.J.1985), observed: A term whose statutory definition declares what it `includes' is more susceptible to extension of meaning by construction than where the definition declares what a term `means.' It has been said `the word includes is usually a term of enlargement, and not of limitation.... It, therefore, conveys the conclusion that there are other items includable, though not specifically enumerated....' (quoting Singer, 24 Statutes and Statutory Construction § 47.07 (4th Ed.1984)). See also Pfizer Inc. v. Government of India, 434 U.S. 308, 312 n. 9, 98 S. Ct. 584, 587 n. 9, 54 L. Ed. 2d 563 (1978). The Court likewise interprets the statutory definition of "State" to invite inclusion of entities not specifically enumerated. Moreover, contrary to Exxon's analysis, the conclusion that Congress intentionally used the word "includes" to indicate enlargement is strengthened, rather than weakened, by comparison with the definition of "person" in § 101(21). There, Congress defined "person" to mean the various entities listed. "`[W]here Congress includes particular language in one section of a statute but omits it in another section of *685 the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.'" Russello v. United States, 464 U.S. 16, 23, 104 S. Ct. 296, 300, 78 L. Ed. 2d 17 (1983); see Tayofa v. Department of Justice, 748 F.2d 1389, 1392-93 (10th Cir.1984) (clear use of different terminology within body of legislation is evidence of intentional differentiation); Lankford v. Law Enforcement Assistance Administration, 620 F.2d 35, 36 (4th Cir.1980) (same). To interpret both definitions as being exclusive, as Exxon urges, would render Congress' use of different terminology in each definition meaningless. On the other hand, the same rule of statutory construction lends some support to Exxon's second argument that the overall structure of CERCLA demonstrates a clear Congressional intent to divide duties among the United States, States, local governments, and private parties. Political subdivisions are expressly granted rights and roles in some sections and omitted from others, including §§ 107 and 113(f)(2). At a minimum, however, it is clear that political subdivisions are not relegated to the role of private parties under the Act, and in several provisions of CERCLA are afforded powers and duties on par with those given the states. For example, section 104(d), 42 U.S.C. § 9604(d), empowers states or their political subdivisions to enter into clean-up agreements with the EPA on a cost-sharing basis. See New York v. Shore Realty Corp., 759 F.2d 1032, 1041 (2d Cir.1985). Private parties have no such power. Other examples include § 111(c)(11), 42 U.S.C. § 9611(c)(11) (authorizing Superfund disbursements to local governments for expenses incurred under section 123 for temporary emergency measures), § 104(i)(15), 42 U.S.C. § 9604(i)(15) (role of Agency for Toxic Substance and Disease Registry to be carried out directly or through agreements with states or their political subdivisions), and § 123(b)(1), 42 U.S.C. § 9623(b)(1) (Superfund may be used to reimburse local governments for costs incurred in carrying out temporary emergency measures). Thus, a broad reading of Sections 113 to encompass municipalities as well as states and the Federal government, is not necessarily inconsistent with the structure of CERCLA. More important, a broad reading of sections 107(a)(4)(A) and 113(f)(2) is entirely consistent with the overall purpose of the Act. Particularly where, as here, the Act being interpreted "is far from being a model of statutory or syntactic clarity," Exxon, 633 F.Supp. at 613-14, it should be enforced "`in such a manner that its overriding purpose will be achieved, even if the words used leave room for a contrary interpretation.'" Capitano v. Secretary of Health & Human Services, 732 F.2d 1066, 1075 (2d Cir.1984) (quoting Haberman v. Finch, 418 F.2d 664, 666 (2d Cir.1969)). "CERCLA is essentially a remedial statute designed by Congress to protect and preserve public health and the environment. [Courts] are therefore obligated to construe its provisions liberally to avoid frustration of the beneficial legislative purposes." Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir.1986); see also Drew Chemical, 621 F.Supp. at 668. Since one of the principal purposes of CERCLA is to ensure "that those responsible for problems caused by the disposal of chemical poisons bear the costs and responsibility for remedying the harmful conditions they created," Dedham, 805 F.2d at 1081 (quoting Reilly Tar & Chemical Corp., 546 F. Supp. 1100, 1112 (D.C.Minn.1982)), allowing the City to proceed under section 107(a)(4)(A) and settle under section 113(f)(2) would certainly advance the Act's remedial purposes by encouraging early and complete settlements. Exxon finds its weakest support for a restrictive reading of section 113 in CERCLA's legislative history. As Judge Weinfeld noted, in ruling on defendants' motion to dismiss in this case, "the Committee Reports and other legislative materials regarding CERCLA are dubious sources for interpretation of the statute, which in its final form reflected legislative judgments which differed substantially from those incorporated in the earlier House and Senate bills." Exxon, 633 F.Supp. at 613-14 *686 n. 2 (emphasis added). See also Dedham, 805 F.2d at 1080 (quoting United States v. Mottolo, 605 F. Supp. 898, 902 (D.N.H.1985)) ("`CERCLA has acquired a well-deserved notoriety for vaguely drafted provisions and an indefinite, if not contradictory, legislative history'"). Apart from the general unreliability of CERCLA's legislative history, the legislative materials offered by Exxon in support of a restrictive interpretation of "State" are simply not persuasive. For example, Exxon notes that a CERCLA predecessor bill, H.R. 85, contained the same definition of "State" found in CERCLA. Since the previous definition also suggests enlargement rather than limitation, it is difficult to see how it bolsters Exxon's interpretation of the statute. Exxon also points out that H.R. 85, like the final version of CERCLA, divided rights between and duties among the United States, states, municipalities, and other persons. But again, in light of H.R. 85's expansive definition of "State" and the remedial purpose of the Act, the legislative history arguably supports an expansive reading of sections 107 and 113. At best, the predecessor bill supports the same competing inferences as the final version of the Act. Finally, the restrictive interpretation of section 113(f)(2) urged by Exxon would be particularly inappropriate in this case. None of the objecting parties seriously questions the monetary terms of the settlement, and NYSDEC is prepared to place its stamp of approval on the settlement by releasing its CERCLA claims against the settling companies. In effect, the state has expressed its approval of the City's role in this litigation, and the Judgment reflects a comprehensive settlement worked out between the State, the City, and the settlers. To deny the settling parties the statutory benefits of section 113(f)(2) under these circumstances would be unduly formalistic.
b) The Consent Order's Status Under § 113(f)(2). A more difficult question is raised by Clairol's objection to the portion of the proposed Judgment which incorporates the Consent Order between the settling defendants and the State. Before addressing that objection, however, it will be helpful to explain Clairol's position since the settling companies appear either to misunderstand it or mischaracterize it. According to the settling companies, Clairol's objective is to prevent a comprehensive resolution of all of their potential liability to the City and the State for the costs incurred in cleaning up the contaminated landfills.[12] To demonstrate the fallacy of this argument, we need only consider the consequences of severing the Consent Order from the Judgment, but in all other respects leaving the settlement intact. First, since both the Judgment and the Consent Order set forth all of the settling companies' obligations, the severance of the Consent Order would in no way diminish those obligations. Indeed, in this respect, the effect of the settlement would be the same if the Consent Order did not exist at all. Under the terms of the Judgment, the City would still receive $12,555,000.00 from CNA directly, and the NRT Fund would receive $1,243,492.00.[13] Second, the Judgment, once approved, would operate to release the City's claims against the settling companies and in the Court's view, as discussed above, would provide the settling companies with the benefits of section 113(f)(2). In addition, all claims by or against the settling companies, including counterclaims against the City, would be dismissed, thereby terminating the litigation as to the settling companies. Finally, although no longer incorporated in the Judgment, the Consent Order would operate to release the settling companies from liability to the State for the matters addressed *687 in the settlement. Furthermore, according to the settling parties, the Consent Order, as an administrative settlement, activates the protections and benefits of section 113(f)(2) with respect to the State's claims regardless of whether the State portion of the settlement receives judicial approval.[14] Thus, it appears that the incorporation of the Consent Order into the Judgment is superfluous. With or without the Consent Order, the Judgment reflects the comprehensive settlement worked out between the City, the State, and the settling defendants, and, in conjunction with the Consent Order, assures that the settlers will be free from liability to both governments for their role in the contamination of the landfills. If so, the Court must ask why the settlers insist upon the incorporation of the Consent Order in the Judgment?[15] The logical answer to that question is provided by Clairol: [I]t is clear, although the joint motion papers do not expressly so state, that the Settling Defendants intend to rely upon this court's approval of the consent judgment resolving a case in which the State is not a party to satisfy the requirement of section 113(f)(2) of CERCLA, that their settlement be `judicially approved,' thereby immunizing them from any liability for contribution with respect to any proceedings which may someday be brought by the State against any other party (including, but not limited to the non-settling defendants and the 320 third party defendants). Memorandum in Opposition to Motion for Entry of Judgment on Consent at 7 (emphasis supplied emphasis added). Should the State proceed against Clairol or any other non-settling parties after the Judgment is approved, Clairol fears that the Court's formal approval of the Consent Order, through its incorporation in the Judgment, will preclude the defendants in a future State proceeding from seeking contribution from or impleading the settling defendants. Although the settling companies have argued that as an administrative settlement, the Consent Order is on equal footing with a judicially approved settlement, they have apparently structured the settlement package in such a way as to insure that the Consent Order is both an "administrative settlement" and "judicially approved." By approving the settlement package as offered, however, I would also in effect be ruling on the State's right to recover from other potentially liable parties any shortfall between the payments under the Consent Order and the settlers' proportionate share of fault.[16] The question, then, is not simply whether the Court has the power to approve a settlement involving a non-party, but whether the Court can expressly or tacitly affect the legal status of the non-party's claims, or more precisely the legal consequences of the settlement of those claims, by an order of the Court. To resolve this issue, we begin with the basic proposition that federal district courts "have jurisdiction only over such matters as Congress has validly conferred upon them." 1 J. Moore, Moore's Federal Practice para. 0.60[1] at 604 (2d ed. 1988). "Jurisdiction is power to declare the law," Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L. Ed. 264 (1869), and where it does not otherwise exist, neither the litigants nor the Court itself can confer it. *688 See Green v. Department of Commerce, 618 F.2d 836, 838-39 (D.C.Cir.1980); Bishop v. Committee on Professional Ethics, 686 F.2d 1278, 1284 (8th Cir.1982); Magalotti v. Ford Motor Co., 418 F. Supp. 430, 432 (D.C.Mich.1976). While it is often stated that a federal court must possess jurisdiction over the subject matter of a case and over the persons whose rights are to be affected, see, e.g., F.T.C. v. Compagnie De Saint-Gobain-Pont-a-Mousson, 636 F.2d 1300, 1318 (D.C.Cir.1980); Rankin v. Howard, 633 F.2d 844, 848 (9th Cir.), cert. denied, 451 U.S. 939, 101 S. Ct. 2020, 68 L. Ed. 2d 326 (1980), it is "sometimes overlooked, that an action must [also] be properly commenced before a valid judgment or order can be entered therein." 2 J. Moore, Moore's Federal Practice para. 3.04 at 3-13 (2d Ed.1988). See Rapoport v. Banco Mexicano Somex, S.A., 668 F.2d 667, 670 (2d Cir.1982); United States v. Black, 356 F. Supp. 366, 368 (W.D.N.Y.1973); Minersville Coal Co. v. Anthracite Export Ass'n, 55 F.R.D. 429, 432 (M.D.Pa.1972); Warren v. Arzt, 18 F.R.D. 11, 13 (S.D.N.Y.1955). Obviously, the City has properly commenced this action but the Court's jurisdiction over the City's claims does not give the Court unfettered power to resolve all of the issues and claims arising out of the transactions underlying the lawsuit. In Energetics, Inc. v. Allied Bank of Texas, 784 F.2d 1300 (5th Cir.1986), the defendant bank had taken control of one of its depositor's bank accounts as an offset after the depositor defaulted on certain loans. The plaintiff, Energetics, Inc., was a third-party who claimed that the account contained money held in trust by the depositor, Republic Drilling & Service, Inc., for Energetic's benefit and was, therefore, not subject to offset by the bank. The district court ordered the bank to turn the money over to Energetics, but the court also held that Republic's trustee in bankruptcy was entitled to a portion of the funds equal to an amount that Energetics owed to Republic. On appeal, the circuit court affirmed the judgment in favor of Energetics (though the sum was reduced) but reversed the award to the trustee: The trustee in bankruptcy of Republic is not a party to this case. It is obvious that the district judge was attempting to achieve a just result by awarding the entire [account balance] to Energetics and then requiring that $176,797.94 of that judgment be paid by Energetics to the Republic trustee if the trustee made a claim for it against Energetics. The district court's judgment is invalid, however, because it awards a judgment which is partially for the benefit of a party not before the court. The judge has no power to award relief to the trustee in bankruptcy of Republic against a debt owed by the bank when the trustee is not before the court.... Our case is between Allied and Energetics. We have no authority to deal with a claim a third party may have against the bank. We can only dispose of and we do dispose of the claims which exist between the parties before us. Id. at 1305 (citations omitted). See also SEC v. Investors Security Leasing Corp., 560 F.2d 561, 568 (3d Cir.1977). This court is also constrained to dispose of only those claims which exist between the parties before it. The State has not commenced a separate action under CERCLA nor has it sought to intervene in this one.[17] This does not mean that non-parties cannot participate in the settlement of a properly commenced action.[18] To the contrary, *689 in the Court's view, the contemporaneous settlement of the State's claims along with the City's claims is all to the good. The ideal settlement in this case, or in any case, would resolve the claims of all existing and potential plaintiffs and defendants. To the extent that the Judgment reflects a comprehensive resolution of the settling defendants' liability to the state as well as the City, it weighs in favor of approval of the Consent Judgment. But by its own choice the State's claims are incidental or ancillary to the claims between the litigants before me and it is with respect to the latter claims and those claims alone that I will "declare the law." The Court recognizes that the settling companies want to depart from this case with assurances that they have paid for peace on all fronts. But if the parties structured the settlement in its present form solely to ensure the settling companies complete contribution protection in effect to guarantee that the Judgment and Consent Order allows them to fully and finally close the book on this matter that issue can resolved to the settling companies' satisfaction without regard to the larger question of whether section 113(f)(2) applies to the settlement. As discussed above, cases decided before and after the effective date of SARA have held that the UFCA applies to CERCLA settlements. See Conservation Chemical, Hines Lumber Co., and Lyncott Corp., supra. None of the objecting parties have argued that the settlers should not be protected from contribution claims. They simply object to the possibility, apparently contemplated by the express language of section 113(f)(2), that they will have to make up the settlers' shortfall in this action or in an action commenced by the State without a commensurate right to force the settlers to shoulder their fair share. Lest there be any doubt, I adopt the reasoning of Conservation Chemical and conclude that if § 113(f)(2) does not govern the City's settlement, the settling companies are still entitled to contribution protection from other potentially liable parties.[19]
c) Procedural Objections. Although Clairol's procedural objections are premised on the assumption that the Court is being asked to approve the Consent Order, I will assume that the objections stand with respect to the City side of the Judgment in light of my conclusion that the City is entitled to proceed as a "State" pursuant to section 113(f)(2). In support of its contention that the Court must review the proposed Judgment in the context of a hearing preceded by public notice and discovery, Clairol relies, in part, on the procedures followed in United States v. Pepper's Steel and Alloys, Inc., 658 F. Supp. 1160 (S.D.Fla.1987); United States v. Conservation Chemical Co., 628 F. Supp. 391 (W.D.Mo.1985); United States v. Hooker Chemical & Plastics Corp., 607 F. Supp. 1052 (W.D.N.Y.1985), aff'd, 776 F.2d 410 (2d Cir.1985); and United States v. Seymour Recycling Corp., 554 F. Supp. 1334 (S.D.Ind.1982). In each case, Clairol asserts, the CERCLA claims being settled[20] were fully disclosed and known long *690 prior to the settlement; the proposed settlement was the product of extensive negotiations in which all parties to the litigation actively participated; notice of the proposed settlement was given to the public via publication in the Federal Register; the comments and views of non-parties to the lawsuit were actively solicited; and in all cases except for Pepper's Steel where the settlement was unopposed, hearings were conducted at which various experts were called to testify, subject to cross-examination, concerning the fairness and adequacy of the settlement. Preliminarily, I note that Clairol simply mischaracterizes some of the procedures followed in these cases. For example, contrary to Clairol's assertion, the claims in these cases were not all fully disclosed and known long prior to the settlement. In Seymour, the original complaint was filed in 1980 but was not amended to add a CERCLA claim, as well as 24 new defendants, until October 26, 1982 the same day the proposed consent decree was filed with the court. Id. at 1335-36. In addition, the consent decree before the court in Seymour was not, as Clairol asserts, the product of extensive negotiations in which all parties participated, but was an arrangement worked out between certain of the defendants, the Government, and several non-parties. Id. As in Seymour it appears that the settlement negotiations in Conservation Chemical did not involve all of the parties and, in fact, several of the defendants objected to the proposed settlement. Id. at 395. It is true that notice of the proposed settlement was given to the public through the Federal Register, and the comments of non-parties were actively solicited, but Clairol fails to mention that those procedures were followed pursuant to Department of Justice regulations which govern consent judgments involving the United States. Id. at 399; see 28 C.F.R. § 50.7. Nothing in CERCLA suggests that identical or even similar public notice obligations are imposed on other categories of plaintiffs. The fact remains that three of the four courts called upon to approve CERCLA settlements did conduct what appear to have been fairly extensive evidentiary hearings. What distinguishes those cases from the case at bar, however, are the terms of the settlements. Unlike the present case, the courts in Seymour, Hooker, and Conservation were called upon to determine the adequacy of extensive, long-term response plans over which the courts might have been exercising continuing jurisdiction. See Conservation Chemical 628 F.Supp. at 394 (hearing held to determine the appropriateness of the remedy provisions of preliminary settlement agreement); Hooker Chemical 607 F.Supp. at 1057 (hearing held on remedial plan to determine if it was consistent with congressional intent); Seymour 554 F.Supp. at 1337 (hearing held on settlement involving surface cleanup plan for contaminated site). Here, the settlement terms involve only the payment of money which in no way restricts the ability of the City or the State to select an appropriate response plan for the landfills.[21] To the extent that any response plan for the landfills must conform to CERCLA standards, including public notice, review and criticism, the plan cannot logically be scrutinized until it exists. When a plan is proposed, it will be subject to whatever review CERCLA requires. See, e.g., section 113(k), 42 U.S.C. § 9613(k) (EPA response actions must be based on an administrative record made available to the public at or near the facility at issue and remedial action plans must be developed with the participation of potentially affected persons); section 117, 42 U.S.C. § 9617 (establishing procedures for public participation in development of remedial action plan undertaken by EPA by a State or by any other person pursuant to cooperative agreement, abatement order, or consent judgment); section 121, 42 U.S.C. § 9621 (establishing standards for EPA remedial action plans). *691 Although applicable to federal settlements only, section 122, 42 U.S.C. § 9622 strongly supports the view that settlements involving monetary payments only are to be reviewed with lesser stringency than those involving response activity. Section 122 addresses three types of settlements: (1) clean-up agreements; (2) so called de minimis settlements involving only a minor portion of the subject response costs; and (3) cost recovery settlements. The only type of settlements subject to mandatory judicial review under section 122 are those involving clean-up agreements. The two categories of money settlements can be effected through administrative orders subject only to a 30 day public notice and comment period. Tellingly, section 122 contains no requirement that proposed money settlements be reviewed via an evidentiary hearing, let alone that interested parties be allowed to conduct discovery before such a hearing. Nor would such procedures be required if, as Clairol suggests, the Court reviewed the proposed settlement under the standards governing class action settlements pursuant to Fed.R.Civ.P. 23(e).[22] In City of Detroit v. Grinell Corp., 495 F.2d 448 (2d Cir.1974), several members of the plaintiff class in a private antitrust action appealed the district court's approval of a settlement agreement. The appellants contended, inter alia, that they should have been afforded an opportunity, through discovery, to develop facts which might have had some bearing on the district court's inquiry. The appellants sought discovery of data on class damages without which, they argued, the lower court could not make a competent evaluation of the settlement offer. Because there were already sufficient facts before the court to approve the settlement and, further, because the opponents had access to those facts, the court rejected appellants' contention that they were entitled to discovery before the settlement was approved: Appellant's claim that there was a need for further discovery to develop the facts falls flat in view of the extensive evidentiary base already available at the document depository. Id. at 463. In response to appellants' assertion that it was incumbent upon the proponents of the settlement to produce the factual material supporting it, the Court stated: [Counsel for appellants] apparently feels that he may sit back and request the production of documents that have already been produced documents with which he may be unfamiliar simply because he entered the litigation when it was already in an advanced stage. In general the position taken by the objectors is that by merely objecting, they are entitled to stop the settlement in its tracks, without demonstrating any factual basis for their objections, and to force the parties to expend large amounts of time, money and effort to answer their rhetorical questions, notwithstanding the copious discovery available from years of prior pre-trial proceedings. To allow the objectors to disrupt the settlement on the basis of nothing more than their unsupported suppositions would completely thwart the settlement process. Id. at 464. Clairol's failure to familiarize itself with the record in this case is less justified than that of the dissenting class members in Grinell. Clairol actively supported the severance and stay of the third-party actions in this case which, among other things, protected Clairol from the expenses, burdens, and intrusions inherent in litigation of this kind. At the same time, however, Clairol was not precluded from *692 keeping abreast of ongoing discovery, albeit at a price. Having chosen, despite its awareness that settlement among the original parties was contemplated and encouraged by the Court, to ignore the ample evidentiary record until the last moment, Clairol will not now be permitted to delay and possibly endanger the settlement based on its self-imposed ignorance. Clairol's insistence on an evidentiary hearing also runs contrary to the standards governing class action settlements. In reviewing a proposed class action settlement, a court must have "before it sufficient materials to evaluate the settlement and [come] to the correct conclusion." Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir.1982). If so, "an evidentiary hearing is not required unless the objectors raise `cogent factual objections to the settlement.'" Malchman v. Davis, 706 F.2d 426, 434 (2d Cir.1983). See also, In Re Agent Orange Product Liability Litigation, 597 F. Supp. 740, 760 (E.D.N.Y.1984) (evidentiary hearing not required before approval of class action settlement). Here, the objectors have offered no more than generalized assertions that the record before the Court is insufficient. The question then is not whether the Court disregarded any bright line procedural rules governing CERCLA settlements there are none but whether the procedures chosen provide the Court with sufficient information to intelligently evaluate the settlement. This question, in turn, cannot be adequately addressed without first considering the Court's role in reviewing a CERCLA settlement. Before approving a CERCLA settlement, the Court must be convinced that it is fair, adequate, and reasonable, and consistent with the Constitution and the mandate of Congress. Conservation Chemical, 628 F.Supp. at 400; See also Hooker Chemical, 607 F.Supp. at 1057.[23] In making this determination, the reviewing court should consider "the strength of the plaintiff's case, the good faith efforts of the negotiators, the opinions of counsel, and the possible risks involved in litigation if the settlement is not approved." United States v. Hooker Chemicals and Plastics Corp., 540 F. Supp. 1067, 1075 (W.D.N.Y.1982). "The underlying purpose of the court in making these inquiries is to determine whether the decree adequately protects the public interest." Conservation Chemical, 628 F.Supp. at 400. In assessing the various factors enumerated above, however, the Court's role is not unlimited. Settlements are to be encouraged and the court does not "have the right or the duty to reach any ultimate conclusions on the issues of fact and law which underlie the merits of the dispute." Grinnell 495 F.2d at 456. And "where there has been arms length bargaining among the parties [and] sufficient discovery has taken place to enable ... counsel to evaluate accurately the strengths and weaknesses of the plaintiff's case ... there is a presumption in favor of the settlement," Wellman v. Dickinson, 497 F. Supp. 824, 830 (S.D.N.Y.1980), aff'd, 647 F.2d 163 (2d Cir.1981), particularly where "a government agency committed to the protection of the public interest" has participated in and endorsed the agreement. Id. Finally, in addition to the general federal policy favoring *693 settlements, see Florida Trailer & Equipment Co. v. Deal, 284 F.2d 567, 571 (5th Cir.1960), the reviewing court must be mindful that Congress, in enacting the 1986 amendments to CERCLA sought to "expedite effective remedial actions and minimize litigation." Section 122(a). The balance to be struck between the policies favoring settlements and the need to safeguard the public interest in cases of this type was best summarized in United States v. Carrols Development Corp., 454 F. Supp. 1215 (N.D.N.Y.1978): It is not the Court's function to determine whether this is the best possible settlement that could have been obtained but rather the Court's duty is to determine "whether the settlement is within the reaches of the public interest." Id. at 1222 (quoting United States v. Gillette Company, 406 F. Supp. 713, 716 (D.Mass.1975). Id. at 1222. The record before the Court provides a sufficient basis to make this determination. First, it is clear that the settlement was entered into in good faith. As the moving parties' affidavits demonstrate, the settlement is the product of arms length negotiations, extending over the course of approximately one year, between the City, the State, and the settling companies. In addition to the Corporation Counsel and the defendants, the Judgment has been independently reviewed and approved by the Commissioner of the Department of Sanitation and the State Comptroller. Neither Clairol nor Exxon have come forward with any evidence, or even conclusory statements, casting doubt on the good faith of the settling parties, and the record in this case attests to the adverserial vigor with which the settling parties have otherwise approached this litigation. It is also clear that the settling parties had a sufficient factual record upon which to reach an informed decision about settlement terms. Indeed, more than three years of discovery has produced a voluminous evidentiary record in this case. That record, consisting of hundreds of thousands of documents and approximately eighty depositions, includes information concerning the business transactions between the settling defendants and the waste-hauling companies; the volume and nature of the wastes disposed of at the landfills; the use of the city's landfills by the waste hauling companies; and environmental conditions at the landfills. On the basis of preliminary data concerning environmental conditions at the landfills and NYSDEC's regulatory requirements for the remediation of hazardous waste sites, the settling parties and the State have estimated that remediation would cost approximately $400,000,000. Against this figure, the settling parties had to consider the formidable risks and expenses of continuing litigation. Of principal importance in this regard is the City's concession that, as the owner and operator of the landfills and as a possible generator and transporter of hazardous substances, the City is itself potentially liable under CERCLA. Indeed several defendants, including Exxon, have argued that the City is solely responsible for any releases of hazardous substances from the landfills. In addition, the defendants have raised doubts about the City's ability to prove that any significant amount of their wastes ended up in the 5 City landfills.[24] Nonetheless, the settling companies are willing to settle because of the inherent risks of continued litigation, and because a "victory" after protracted litigation may prove to be more expensive than settlement. In light of the arguable weaknesses in the City's case, the proposed settlement is clearly in the public interest and consistent with CERCLA. The immediate public benefit is the availability of $13,798,472 for cleanup and remediation costs which might otherwise be drawn from public coffers. That figure does not reflect the money the City will save by not having to prosecute possibly fruitless claims against the settling companies. These benefits will, of *694 course, be amplified if the present settlement encourages some or all of the remaining defendants to resolve the case through negotiation rather than expensive, risky, and protracted litigation. Finally, the Court is satisfied that the settlement is fair to the remaining defendants. Initially, the fact that only a fraction of the more than 300 remaining defendants have voiced objections to the settlement is strong evidence of its fairness. See Grinell, 495 F.2d at 462; Agent Orange, 597 F.Supp. at 762. Additionally, there is no suggestion in this case that the City or the State is favoring some defendants at the expense of others. Neither Exxon nor Clairol has refuted the settling parties assertion that the City is prepared to offer all of the non-settling parties a settlement at the same "price-per-gallon" as that offered to the settling companies. Furthermore, the settling defendants have agreed to forgo all claims against any of the remaining parties notwithstanding section 113(f)(2) which, if applicable, allows settling defendants to retain contribution rights against non-settlers. And, despite Clairol's complaint that settlement pursuant to section 113(f)(2) immunizes the settling companies from future contribution actions, Exxon itself has asserted that the settling companies are protected from contribution actions under all potentially applicable contribution frameworks. To the extent that the non-settling parties are disadvantaged in any concrete way by the applicability of section 113(f)(2) to the overall settlement, their dispute is with Congress. In conclusion, the Judgment in its present form is unacceptable because it incorporates the Order on Consent. In all other respects the Court concludes that the Judgment is fair, adequate, and reasonable, and consistent with the Constitution and CERCLA. The settling parties may submit for the Court's approval an amended version of the Judgment that is in accord with this opinion. SO ORDERED. NOTES [1] The original complaint tracked the language of CERCLA § 107(a)(4)(A), 42 U.S.C. § 9607(a)(4)(A), which is applicable to governmental plaintiffs seeking recovery of response costs incurred in connection with hazardous waste sites, but inadvertently cited § 107(a)(4)(B), 42 U.S.C. § 9607(a)(4)(B), which applies to private plaintiffs. In April of 1986, the City amended its complaint to assert alternative claims under both sections. The City also seeks recovery for natural resource damages pursuant to § 107(a)(4)(C), 42 U.S.C. § 9607(a)(4)(C). [2] The facts underlying this action are set forth in greater detail in City of New York v. Exxon, 633 F. Supp. 609 (S.D.N.Y.1986). [3] The five City landfills have been classified by the New York State Department of Environmental Conservation ("NYSDEC") as "inactive hazardous waste sites," and the City and the State are currently formulating plans for their closure. See the Affidavit of Philip Gleason, Director of Landfills Engineering in the New York City Department of Sanitation, dated July 13, 1987. [4] Two weeks before the City and the settling defendants filed the instant motion, NYSDEC filed an administrative claim against the settling defendants, apparently to set the stage for the execution of the Consent Order. [5] Section 113(f)(2) provides:
A person who has resolved his liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement. (emphasis added). Furthermore, if a party settles with "a State" pursuant to 113(f)(2), that party "may seek contribution from any person who is not a party to [the] settlement." § 113(f)(3)(B), 42 U.S.C. § 9613(f)(3)(B). These provisions place non-settling CERCLA defendants at a disadvantage in two ways. First, it leaves them open to contribution claims from settling defendants who have paid more than their proportionate share of liability. Second, if settling defendants have paid less than their proportionate share of liability, section 113(f)(2) apparently compels the non-settlers to absorb the shortfall. [6] Each of the agreements at issue here, the Judgment and the Consent Order, states that it constitutes "the resolution of liability to a State in an administrative or judicially approved settlement within the meaning of Section 113(f)(2) of CERCLA." Judgment Section 3, Paragraph 4; Consent Order Paragraph 5. [7] Issues of allocation are unlikely to be addressed, if at all, until well into the 1990s. See the affidavit of Philip Gleason in support of the Motion for Entry of the Case Management Order. [8] Exxon's concern that it will be prejudiced by section 113(f)(2)'s provision allowing settlers to retain contribution rights is purely academic since the Judgment provides for the dismissal of the settling companies' claims against the remaining parties. [9] Several courts have held that the Uniform Comparative Fault Act ("UCFA"), pursuant to which the claim of the releasing person is reduced by released person's equitable share of fault, is the contribution framework best suited to CERCLA cases. See Lyncott Corp. v. Chemical Waste Management, Inc., 690 F. Supp. 1409 (E.D.Pa.1988); Hines Lumber Co. v. Vulcan Materials Co., No. 85 Cow. 1142 (N.D.Ill. Dec. 4, 1987) [available on WESTLAW, 1987 WL 27368]; United States v. Conservation Chemical Co., 628 F. Supp. 391, 400 (W.D.Mo.1985). Conservation Chemical, an action commenced by the United States, was decided before the effective date of the Superfund Amendments and Reauthorization Act of 1986, (P.L. 99-499) ("SARA") which, among other things, added section 113(f)(2) to CERCLA. Lyncott and Hines Lumber, both involving private plaintiffs, were decided after the effective date of SARA.
If New York General Obligations Law § 15-108 were deemed applicable, the releasing person's claim would be reduced by the greater of (1) the settling defendants' share of liability or (2) the settlement amount. Furthermore, under both the Uniform Comparative Fault Act and New York law, the settling defendants would not be entitled to seek contribution for any excess paid beyond their proportionate share of liability. UCFA § 4; NYGOL § 15-108. [10] It is unnecessary to await the development of "a complete factual record" on the pending summary judgment motion as Exxon suggests. Whether a city or other political subdivision of a state can proceed as a state under sections 107(a)(4)(A) and 113(f)(2) is a question of law. The 6 pages of Exxon's 159 page summary judgment motion devoted to the question is bereft of any reference to the "factual record." [11] Though not necessarily conclusive. The "[m]ere incantation of the plain meaning rule ... cannot substitute for meaningful analysis," Shippers National Freight Claim Council v. I.C.C., 712 F.2d 740, 747 (2d Cir.1983), cert. denied, 467 U.S. 1251, 104 S. Ct. 3534, 82 L. Ed. 2d 839 (1984), and "the plain meaning doctrine has always been considered subservient to a truly discernible legislative purpose," Aviation Consumer Action Project v. Washburn, 535 F.2d 101, 106 (D.C.Cir.1976). [12] For example, defendants PSE & G and Dana Corporation assert, in opposition to Clairol's demand that the Consent Order be severed, that they "did not bargain for a partial settlement or agree to pay more than $13.7 million to discharge the claims of the City alone." Reply Memorandum in Support of Joint Motion for Entry of Judgment on Consent at 13-14. [13] If the Consent Order did not exist, NYSDEC would in a sense be a third-party beneficiary of the agreement between the settling defendants and the City. [14] Defendants American National Can, BASF Corporation, Borg-Warner Corporation, Ford Motor Company, and Koppers Company, Inc., have asserted that "[u]nder the express terms of § 113(f)(2) administrative settlements with a State preclude claims for contribution for all matters addressed in the settlement." Memorandum of Five Settling Defendants at 11. Similarly, the City asserts that the Consent Order constitutes a resolution of liability within the meaning of § 113(f)(2). Reply Memorandum of the City of New York at 34. [15] PSE & G and Dana Corporation assert that "[t]o sever the State Settlement is to destroy the whole settlement." Memorandum in Support of Joint Motion for Entry of Judgment on Consent at 14. [16] Actually, this would be achieved in two ways. First, as noted above, by the Consent Order appearing to receive separate review and approval. Second, by the incorporation in the Judgment of Paragraph 5 of the Consent Order which expressly declares its status under that section. [17] The State has not even informally presented its position on the proposed settlement to the Court. [18] It is apparent that non-parties have participated in court approved settlements and, indeed, have done so in at least two reported CERCLA cases. In O'Neil v. Picillo, 682 F. Supp. 706 (D.R.I.1988), the State of Rhode Island sued 35 defendants who were allegedly responsible for creation of a hazardous waste site. On the scheduled first day of trial, the State and the Environmental Protection Agency, a non-party, settled with all but 5 of the defendants. The settlement totaled 5.8 million dollars with 25% going to the State and 75% going to the EPA.
In United States v. Seymour Recycling Corp., 554 F. Supp. 1334 (S.D.Ind.1982), the United States sued various parties allegedly responsible for the creation of hazardous waste site in Seymour Indiana. The Government later amended the complaint to assert claims under CERCLA and add 24 new defendants. On the same day the Government filed the amended complaint, the State of Indiana and the County of Jackson moved to intervene, and the Government, the State, the County, the City of Seymour, the Board of Aviation Commissioners of Seymour, Indiana, and the 24 new defendants filed a proposed Consent Decree with the Court. Several of the non-party settlers participated in the hearings held on the adequacy of the settlement, and the consent decree incorporated the nonparty local governments' covenants not to sue. Some of the defendants have cited United States v. Wade, 577 F. Supp. 1326 (E.D.Pa.1983), as a case involving non-party participation in a CERCLA settlement. Although by no means clear, there is some suggestion that the settlement discussed in Wade was reached entirely outside the context of the litigation. [19] Section 113(f)(1) provides that CERCLA contribution claims "shall be governed by Federal Law" and resolved "using such equitable factors as the court determines are appropriate." [20] Strictly speaking, Hooker, 607 F. Supp. 1052, was not a CERCLA case. In the original complaint, the Environmental Protection Agency ("EPA") asserted claims under several other environmental statutes for the purpose of remedying the dangerous conditions at a hazardous waste site in upstate New York. Id. at 1053, 1055. EPA later moved to add claims under CERCLA but the case settled before the motion was decided. Id. at 1056. [21] O'Neil v. Picillc, 682 F. Supp. 706, is silent on the procedures, if any, used to review the monetary settlement in that case. [22] Before a proposed class action settlement can be approved, all members of the class must be notified of the proposal, and the proponents of the settlement must demonstrate that it is fair, adequate, and reasonable. 3B Moore, Moore's Federal Practice para. 23.80 (2d ed. 1987). Since absent class members will be bound by the settlement terms negotiated by representative parties, the court in reviewing a class action settlement functions as a fiduciary for absent class members. In re Warner Communications Securities Litigation, 798 F.2d 35 (2d Cir.1986); Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir.) cert. denied, 423 U.S. 864, 96 S. Ct. 124, 46 L. Ed. 2d 93 (1975). [23] These cases predate the enactment of SARA but the House Judiciary Committee comments on section 113 appear to endorse the standard of review set forth in the pre-SARA cases. The Judiciary Committee noted that an earlier version of section 113(f)(2) expressly conditioned the favorable contribution rights of the section on "judicially approved good faith settlement," but the words "good faith" were eventually deleted from the statute because:
[t]he amendment recognizes that judicial examination and approval of the settlement itself is adequate to protect against improper or "bad faith" settlements. Before initially approving a consent decree under CERCLA, a court must satisfy itself that the settlement is reasonable, fair, and consistent with the purposes the CERCLA is intended to serve. Because this process ensures that the "good faith" of the settlement is examined by the court, a supposedly separate requirement of good faith in the contribution section would lead to unnecessary confusion, would cast doubt on the availability of contribution protection under the section, and would lessen the incentive for settlement created by such protection. (emphasis added). H.R.Rep. No. 253(III), 99th Cong., 2d Sess., reprinted in 1986 U.S.Code Cong. & Admin.News 2835, 3038, 3042. [24] According to settling defendants American National Can, Ford Motor Company, BASF Corporation, Borg-Warner Corporation, and Koppers Company, Inc., a substantial portion of the defendants' wastes ended up at locations other than the 5 City landfills. Memorandum of Five Settling Defendants in Support of the Entry of Consent Judgment at 4. | 10-30-2013 | [
"697 F. Supp. 677 (1988) The CITY OF NEW YORK, Plaintiff, v. EXXON CORPORATION, et al., Defendants. No. 85 Civ. 1939 (KC). United States District Court, S.D. New York. September 29, 1988. *678 *679 Peter Lehner, New York City Law Dept., New York City, for plaintiff. Michael M. Gordon, Cadwalader, Wichersham & Taft, New York City, for Exxon Corp. and Exxon Research & Eng. Co. Marvin Katz, New York City, for Chrysler Corp. Thomas P. McCaffey, New York City, for United Tech. & Carrier Corp. Arthur Schmauder, Shanley & Fisher, P.C., New York City, for BASF Wyandotte Corp. K. Dennis Sisk, Hunton & Williams, New York City, for Dana Corp., Public Service Elec. & Gas Co., Borg-Warner Corp. Dennis M. Reznick, McElroy, Deutsch & Mulvaney, New York City, for Ingersoll-Rand Corp. Eric M. Wagner, Cole & Deitz, New York City, for Refinement Intern. Alan H. McLean, Hughes, Hubbard & Reed, New York City, for Nat. Can Corp. Jeffrey G. Miller, Verner, Liipfert, Bernhard, McPherson and Hand, Washington, D.C., for Koppers Co., Inc. Sidley and Austin, New York City, for Alcan Aluminum.",
"Breed, Abbott and Morgan, New York City, for Ford Motor Co. OPINION CONBOY, District Judge: The City of New York (\"the City\") commenced this action in March of 1985 under the Comprehensive Environmental Response, Compensation, and Liability Act (\"CERCLA\"), 42 U.S.C. §§ 9601 et seq. [1], together with various state law claims. According to the complaint, the fifteen corporate defendants named therein generated hazardous industrial and chemical wastes that were ultimately disposed of at five City landfills. The wastes were transported to the landfills by certain waste-hauling companies owned or operated by Russell Mahler. Mahler gained access to the City landfills for the purpose of dumping the defendants' wastes by bribing an employee of the City's Department of Sanitation. [2] *680 The City now seeks (i) recovery of the costs incurred to date for evaluating the nature and extent of chemical contamination at the five sites and for emergency measures undertaken to control off-site migration of hazardous substances; (ii) a declaratory judgment that defendants are liable for the future costs of investigations and remedial actions at the sites; and (iii) damages for injury to natural resources caused by defendants' wastes.",
"In August of 1986, the original defendants filed their answers, which included counterclaims against the City under CERCLA and common law, and also filed three separate third-party complaints against more than 300 additional parties. On January 23, 1987, the Court severed and stayed the third-party actions pending the outcome of the main action. On September 29, 1987, the Court, at the request of thirteen of the fifteen original defendants, further streamlined the case by dividing it into three phases. In the first phase, issues of liability would be determined. If necessary, the Court would then consider remedies and damages following the completion of the City's plans for closure of the five landfills. [3] In the last phase, the Court would allocate liability and damages. The late honorable Edward Weinfeld severed and stayed the third-party actions because, among other reasons, he anticipated that a settlement between some or all of the original parties might lead to the amicable disposition of the entire case.",
"A proposed settlement is now before the Court. On May 25, the City and defendants American National Can Corporation, BASF Corporation, Borg-Warner Corporation, Dana Corporation, Ford Motor Company, Koppers Company, Inc., and Public Service Electric and Gas Company (\"the settling companies\" or \"the settling defendants\") moved for the entry of Judgment on Consent (\"the Judgment\"). The Judgment provides that, within ten days of its entry, the settling companies will deliver to the City a Landfills Remedial Fund Agreement (\"the Agreement\") executed by and binding upon CNA Insurance Company (\"CNA\"). Pursuant to the Agreement, CNA will pay to the City the sum of twelve million five hundred fifty-five thousand dollars in five installments over a period of six years.",
"All monies paid to the City pursuant to the Agreement are to be used by the City for removal, remedial, and response costs incurred in connection with the landfills. In addition to the monies paid directly to the City, the settling companies will pay $1,243,492.00 into a Natural Resource Trust Fund (\"NRT Fund\") to be established and administered by NYSDEC. Monies paid into the NRT Fund are to be used for assessing any remedying damage to natural resources resulting from the release of hazardous substances from the landfills. Upon fulfillment by the settling companies of their obligations described above, the Judgment provides that the City's claims against the settling companies are dismissed with prejudice and the City releases the settling companies, and certain additional companies, from liability for all claims relating to the landfills. In turn, the settling companies' counterclaims against the City, as well their claims against any of the remaining parties, including third-party actions, are dismissed.",
"Thus, the Judgment will completely resolve and terminate this litigation as to the settling companies. Although not a party to this action, New York State, through NYSDEC, participated in the negotiations that led to the proposed settlement, and the obligations assumed by the settling defendants' under the Judgment will discharge their liability to both the City and the State. Nonetheless, NYSDEC and the settling companies have executed a separate Order on Consent (or \"Consent Order\") to formalize their agreement. [4]*681 The effectiveness of the Order on Consent is conditioned on the Court's approval of the Judgment and is incorporated therein by reference.",
"Two of the eight remaining original defendants and twelve of the approximately 350 third-party defendants have opposed the proposed Judgment. The substance of their opposition is set forth in the memoranda of law of original defendants Exxon Corporation and Exxon Research and Engineering Company, Inc. (\"Exxon\") and third-party defendant Clairol, Incorporated (\"Clairol\"). Exxon takes exception to Section 3, Paragraph 4 of the Judgment which provides that the Judgment \"shall constitute the resolution of liability to a State ... within the meaning of Section 113(f)(2) of CERCLA.\" Settlement pursuant to Section 113(f)(2), 42 U.S.C. § 9613(f)(2), which on its face governs only settlements by \"the United States or a State,\" may subject non-settling CERCLA defendants to a disproportionate share of liability from which they would otherwise be protected, and may also subject them to contribution actions by settling defendants which might otherwise be barred. [5] Consequently, Exxon contends that the issue of whether the City is a \"State\" within the meaning of section 113 should be resolved before the Court approves the Judgment. As Exxon points out, a nearly identical issue is raised in its pending motion for summary judgment.",
"The complaint asserts claims, in the alternative, under CERCLA sections 107(a)(4)(A) and 107(a)(4)(B), which impose liability on certain statutorily defined responsible persons for, respectively: (A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian Tribe not inconsistent with the national contingency plan; (B) any other necessary costs of response incurred by any other person consistent with the national contingency plan; (emphasis added). In its pending motion, Exxon argues, inter alia, that the City lacks the capacity to proceed as a \"State\" under § 107(a)(4)(A). Exxon suggests that the Court reserve decision on the proposed Judgment until the Court determines the City's right to assume the role of the State in the context of the pending summary judgment motion. Without citing any specific deficiency, Exxon also contends that the settling parties have not presented a factual record sufficient to justify approval of the settlement.",
"Clairol is equally concerned with the settlement's impact on contribution rights and apportionment of liability, but Clairol's interpretation of the Judgment differs from Exxon's. Specifically, Clairol does not object to the Judgment in so far as it resolves the City's claims against the settling companies. Apparently ignoring Section 3, Paragraph 4 of the Judgment, Clairol states that the resolution of the City's claims against the settling companies \"does not adversely affect the right of Clairol or any other person and, therefore, no one but the City and the Settling Defendants has any interest in it.\" Memorandum in Opposition to Motion for Entry of Judgment on Consent at 2. Clairol's demurrer is limited *682 to that portion of the Judgment which incorporates the Consent Order between the State and the settling companies. According to Clairol, \"the purpose and effect of the proposed consent judgment which incorporates the agreement between the Settling Defendants and the State is to provide the Settling Defendants with the benefits of section 113(f)(2) of\" CERCLA. Id. [6] Because, Clairol asserts, it would be improper to afford judicial approval to claims that have never been asserted before the Court, Clairol insists that the portion of the Judgment which incorporates the Consent Order should be severed, or, in the alternative, that the State be required to file a motion, on notice, for leave to intervene in this action.",
"If granted, Clairol further argues that the Consent Order must be reviewed in the context of a full hearing, on notice, to determine if it is fair and reasonable. Last, Clairol contends that all interested parties should be afforded an opportunity to conduct discovery in preparation for that hearing. ANALYSIS In response to Clairol's and Exxon's objections, several of the settling parties have argued that a ruling on the applicability of section 113(f)(2) to the settlement would be premature. Frankly, this position is somewhat surprising since it is the proposed Judgment and Consent Orders' references to section 113(f)(2) which has inspired Exxon's and Clairol's objections in the first place. The non-settling parties' fear, not without justification, that the approved Judgment will at some point be invoked as a conclusive ruling on the applicability of section 113(f)(2) to the settlement.",
"If the only issue before the Court is, as the settlers assert, the adequacy, fairness, and reasonableness of the payment terms of the Judgment, they have certainly sent mixed signals to the Court and to the other litigants in the way they have structured the settlement. Nonetheless, the arguments for avoiding a ruling on contribution and apportionment issues are not frivolous and they will be addressed. As the settling parties have pointed out, the Case Management Order, which was entered with Exxon's consent, provides that the \"[a]llocation of liability and damages, if any, will be adjudicated following the adjudication of issues related to landfill remedies and damages.\" (emphasis added). [7] Apart from the planned, orderly disposition of the action, the settling parties argue that the postponement of contribution issues, both legal and factual, is sensible since intervening events may render the issue moot. Under the most optimistic scenario, the remaining defendants will settle with the City and the State, foreclosing any contribution actions by or against anyone. Alternatively, if the case proceeds against some or all of the remaining defendants, the Court might rule that the non-settling defendants are simply not liable to the City, thus foreclosing any contribution actions by or against them.",
"Finally, even if some or all of the remaining defendants are found liable, a ruling on the contribution protection available to the settling parties with respect to the CERCLA claims will still leave open questions about contribution and apportionment of liability. For example, if the remaining defendants are held liable under state law only or under both state law and CERCLA, the Court may have to determine whether state rules of contribution and apportionment apply to the claims. Hence, the settlers argue, a ruling on these issues would be premature, and, in light of their willingness to proceed without assurances that section 113(f)(2) applies to the settlement, apparently unnecessary. [8] *683 While these arguments are appealing, a determination of the settlement's status under 113(f)(2) will have an immediate impact, as a practical matter, on all of the parties. Although it is true that contribution and apportionment issues will not in all likelihood be resolved, if at all, for several years, section 113(f)(2)'s application to the settlement would guarantee the settling companies that they would not be dragged back into the case should it proceed that far.",
"The remaining defendants, on the other hand, would immediately be confronted with the prospect of covering any shortfall between what the settlers paid and what they would have paid had they remained in the case. See Note, Superfund Settlements: The Failed Promise of the 1986 Amendments, 74 U.Va.L.Rev. 123, 142 (1988). Under alternative contribution frameworks, the City's recovery against the remaining defendants would likely be reduced by at least the settling parties' proportionate share of fault if it turns out to be greater than the settlement amount. [9] Although, as discussed above, contribution and apportionment issues may never ripen, and will not in any event be addressed until the last phase of the case, a ruling on section 113(f)(2)'s application to this case would certainly have a substantial bearing on the remaining defendants' litigation strategy, particularly with respect to settlement.",
"For these reasons, the Court will address the merits of this question and resolve it. [10] a) The City's Standing Under §§ 107(a)(4)(A) and 113(f)(2). In its motion for summary judgment, Exxon offers three arguments in support of its view that the City cannot proceed as a \"State\" under § 107(a)(4)(A) of CERCLA: (1) the express language of the section precludes municipalities from proceeding thereunder (2) the structure of the Act demonstrates a clear intent to divide duties and rights among the United States, the states, and other persons including municipalities, and (3) the legislative history supports a narrow, literal reading of section 107. These arguments apply with equal force to section 113(f)(2) and they will be so considered. The first of these three arguments that the meaning of the language is plain and, therefore, the Court should not look beyond the four corners of the statute to interpret it is the strongest. As already noted, § 113(f)(2) refers only to settlements involving the \"United States Government or a State.\" It is axiomatic that the interpretation of a statute must begin with the language of the statute itself, Touche Ross v. Redington, 442 U.S. 560, 566, 99 S. Ct. 2479, 2884, 61 L. Ed.",
"2d 82 (1979); Caminetti v. United States, 242 U.S. 470, 485, 37 S. Ct. 192, 194, 61 L. Ed. 2d 442 (1917), and, *684 ordinarily, a court must assume that Congress expressed its purpose through the ordinary meaning of the words it used. Escondido Mut. Water Co. v. La Jolla Band of Mission Indians, 466 U.S. 765, 772, 104 S. Ct. 2105, 2110, 80 L. Ed. 2d 753 (1984). Accordingly, if the text of section 113 were the only source of its meaning, Exxon's restrictive interpretation of § 113 would be highly persuasive.",
"[11] But, as Exxon points out, Congress has supplied definitions of the statutory terms at issue, and those definitions are controlling. See Conoco, Inc. v. Federal Energy Regulatory Com'n, 622 F.2d 796, 800 (5th Cir.1980); see also Perrin v. United States, 444 U.S. 37, 42, 100 S. Ct. 311, 314, 62 L. Ed. 2d 199 (1979) (unless otherwise defined words will be given their ordinary meaning). CERCLA's statutory definitions are found in section 101. Section 101(27) defines \"United States\" and \"State\" to \"include the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the United States Virgin Islands, the Commonwealth of the Northern Marianas, and any other territory or possession over which the United States has jurisdiction\" (emphasis added). Section 101(21) provides that \"`person' means an individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, United States Government, State, municipality, commission, political subdivision of a State, or any interstate body\" (emphasis added). Contrasting the exclusion of municipalities from the definition of \"United States\" and \"State\" with their inclusion in the definition of \"person,\" Exxon asserts that Congress must have intended to limit enforcement actions by municipalities to § 107(a)(4)(B), which refers to actions by \"any other person\" (other than the United States or a State), and, by extension, to deny the benefits of 113(f)(2) to parties settling with municipal plaintiffs.",
"The Court cannot agree. First, Exxon's reliance on the maxim \"expressio unius est exclusio alterius\" the expression of one thing is the exclusion of another would be justified if section 101(27) defined \"State\" to mean the various enumerated entities. See Colautti v. Franklin, 439 U.S. 379, 392 n. 10, 99 S. Ct. 675, 684 n. 10, 58 L. Ed. 2d 596 (1979) (definition that declares what term \"means\" excludes any meaning not stated). Instead, \"State\" is defined to include the entities on the illustrative list. In construing CERCLA section 107(a)(4)(A) to permit enforcement actions by municipalities, the court in Mayor and Board of Alderman v. Drew Chemical Corp., 621 F. Supp.",
"663, 666 (D.C.N.J.1985), observed: A term whose statutory definition declares what it `includes' is more susceptible to extension of meaning by construction than where the definition declares what a term `means.' It has been said `the word includes is usually a term of enlargement, and not of limitation.... It, therefore, conveys the conclusion that there are other items includable, though not specifically enumerated....' (quoting Singer, 24 Statutes and Statutory Construction § 47.07 (4th Ed.1984)). See also Pfizer Inc. v. Government of India, 434 U.S. 308, 312 n. 9, 98 S. Ct. 584, 587 n. 9, 54 L. Ed. 2d 563 (1978). The Court likewise interprets the statutory definition of \"State\" to invite inclusion of entities not specifically enumerated. Moreover, contrary to Exxon's analysis, the conclusion that Congress intentionally used the word \"includes\" to indicate enlargement is strengthened, rather than weakened, by comparison with the definition of \"person\" in § 101(21). There, Congress defined \"person\" to mean the various entities listed.",
"\"`[W]here Congress includes particular language in one section of a statute but omits it in another section of *685 the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.'\" Russello v. United States, 464 U.S. 16, 23, 104 S. Ct. 296, 300, 78 L. Ed. 2d 17 (1983); see Tayofa v. Department of Justice, 748 F.2d 1389, 1392-93 (10th Cir.1984) (clear use of different terminology within body of legislation is evidence of intentional differentiation); Lankford v. Law Enforcement Assistance Administration, 620 F.2d 35, 36 (4th Cir.1980) (same).",
"To interpret both definitions as being exclusive, as Exxon urges, would render Congress' use of different terminology in each definition meaningless. On the other hand, the same rule of statutory construction lends some support to Exxon's second argument that the overall structure of CERCLA demonstrates a clear Congressional intent to divide duties among the United States, States, local governments, and private parties. Political subdivisions are expressly granted rights and roles in some sections and omitted from others, including §§ 107 and 113(f)(2). At a minimum, however, it is clear that political subdivisions are not relegated to the role of private parties under the Act, and in several provisions of CERCLA are afforded powers and duties on par with those given the states. For example, section 104(d), 42 U.S.C. § 9604(d), empowers states or their political subdivisions to enter into clean-up agreements with the EPA on a cost-sharing basis.",
"See New York v. Shore Realty Corp., 759 F.2d 1032, 1041 (2d Cir.1985). Private parties have no such power. Other examples include § 111(c)(11), 42 U.S.C. § 9611(c)(11) (authorizing Superfund disbursements to local governments for expenses incurred under section 123 for temporary emergency measures), § 104(i)(15), 42 U.S.C. § 9604(i)(15) (role of Agency for Toxic Substance and Disease Registry to be carried out directly or through agreements with states or their political subdivisions), and § 123(b)(1), 42 U.S.C. § 9623(b)(1) (Superfund may be used to reimburse local governments for costs incurred in carrying out temporary emergency measures). Thus, a broad reading of Sections 113 to encompass municipalities as well as states and the Federal government, is not necessarily inconsistent with the structure of CERCLA. More important, a broad reading of sections 107(a)(4)(A) and 113(f)(2) is entirely consistent with the overall purpose of the Act.",
"Particularly where, as here, the Act being interpreted \"is far from being a model of statutory or syntactic clarity,\" Exxon, 633 F.Supp. at 613-14, it should be enforced \"`in such a manner that its overriding purpose will be achieved, even if the words used leave room for a contrary interpretation.'\" Capitano v. Secretary of Health & Human Services, 732 F.2d 1066, 1075 (2d Cir.1984) (quoting Haberman v. Finch, 418 F.2d 664, 666 (2d Cir.1969)). \"CERCLA is essentially a remedial statute designed by Congress to protect and preserve public health and the environment. [Courts] are therefore obligated to construe its provisions liberally to avoid frustration of the beneficial legislative purposes.\" Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir.1986); see also Drew Chemical, 621 F.Supp. at 668.",
"Since one of the principal purposes of CERCLA is to ensure \"that those responsible for problems caused by the disposal of chemical poisons bear the costs and responsibility for remedying the harmful conditions they created,\" Dedham, 805 F.2d at 1081 (quoting Reilly Tar & Chemical Corp., 546 F. Supp. 1100, 1112 (D.C.Minn.1982)), allowing the City to proceed under section 107(a)(4)(A) and settle under section 113(f)(2) would certainly advance the Act's remedial purposes by encouraging early and complete settlements. Exxon finds its weakest support for a restrictive reading of section 113 in CERCLA's legislative history. As Judge Weinfeld noted, in ruling on defendants' motion to dismiss in this case, \"the Committee Reports and other legislative materials regarding CERCLA are dubious sources for interpretation of the statute, which in its final form reflected legislative judgments which differed substantially from those incorporated in the earlier House and Senate bills.\" Exxon, 633 F.Supp. at 613-14 *686 n. 2 (emphasis added).",
"See also Dedham, 805 F.2d at 1080 (quoting United States v. Mottolo, 605 F. Supp. 898, 902 (D.N.H.1985)) (\"`CERCLA has acquired a well-deserved notoriety for vaguely drafted provisions and an indefinite, if not contradictory, legislative history'\"). Apart from the general unreliability of CERCLA's legislative history, the legislative materials offered by Exxon in support of a restrictive interpretation of \"State\" are simply not persuasive. For example, Exxon notes that a CERCLA predecessor bill, H.R. 85, contained the same definition of \"State\" found in CERCLA. Since the previous definition also suggests enlargement rather than limitation, it is difficult to see how it bolsters Exxon's interpretation of the statute. Exxon also points out that H.R.",
"85, like the final version of CERCLA, divided rights between and duties among the United States, states, municipalities, and other persons. But again, in light of H.R. 85's expansive definition of \"State\" and the remedial purpose of the Act, the legislative history arguably supports an expansive reading of sections 107 and 113. At best, the predecessor bill supports the same competing inferences as the final version of the Act. Finally, the restrictive interpretation of section 113(f)(2) urged by Exxon would be particularly inappropriate in this case. None of the objecting parties seriously questions the monetary terms of the settlement, and NYSDEC is prepared to place its stamp of approval on the settlement by releasing its CERCLA claims against the settling companies. In effect, the state has expressed its approval of the City's role in this litigation, and the Judgment reflects a comprehensive settlement worked out between the State, the City, and the settlers. To deny the settling parties the statutory benefits of section 113(f)(2) under these circumstances would be unduly formalistic. b) The Consent Order's Status Under § 113(f)(2). A more difficult question is raised by Clairol's objection to the portion of the proposed Judgment which incorporates the Consent Order between the settling defendants and the State. Before addressing that objection, however, it will be helpful to explain Clairol's position since the settling companies appear either to misunderstand it or mischaracterize it.",
"According to the settling companies, Clairol's objective is to prevent a comprehensive resolution of all of their potential liability to the City and the State for the costs incurred in cleaning up the contaminated landfills. [12] To demonstrate the fallacy of this argument, we need only consider the consequences of severing the Consent Order from the Judgment, but in all other respects leaving the settlement intact. First, since both the Judgment and the Consent Order set forth all of the settling companies' obligations, the severance of the Consent Order would in no way diminish those obligations. Indeed, in this respect, the effect of the settlement would be the same if the Consent Order did not exist at all. Under the terms of the Judgment, the City would still receive $12,555,000.00 from CNA directly, and the NRT Fund would receive $1,243,492.00. [13] Second, the Judgment, once approved, would operate to release the City's claims against the settling companies and in the Court's view, as discussed above, would provide the settling companies with the benefits of section 113(f)(2).",
"In addition, all claims by or against the settling companies, including counterclaims against the City, would be dismissed, thereby terminating the litigation as to the settling companies. Finally, although no longer incorporated in the Judgment, the Consent Order would operate to release the settling companies from liability to the State for the matters addressed *687 in the settlement. Furthermore, according to the settling parties, the Consent Order, as an administrative settlement, activates the protections and benefits of section 113(f)(2) with respect to the State's claims regardless of whether the State portion of the settlement receives judicial approval. [14] Thus, it appears that the incorporation of the Consent Order into the Judgment is superfluous.",
"With or without the Consent Order, the Judgment reflects the comprehensive settlement worked out between the City, the State, and the settling defendants, and, in conjunction with the Consent Order, assures that the settlers will be free from liability to both governments for their role in the contamination of the landfills. If so, the Court must ask why the settlers insist upon the incorporation of the Consent Order in the Judgment? [15] The logical answer to that question is provided by Clairol: [I]t is clear, although the joint motion papers do not expressly so state, that the Settling Defendants intend to rely upon this court's approval of the consent judgment resolving a case in which the State is not a party to satisfy the requirement of section 113(f)(2) of CERCLA, that their settlement be `judicially approved,' thereby immunizing them from any liability for contribution with respect to any proceedings which may someday be brought by the State against any other party (including, but not limited to the non-settling defendants and the 320 third party defendants). Memorandum in Opposition to Motion for Entry of Judgment on Consent at 7 (emphasis supplied emphasis added). Should the State proceed against Clairol or any other non-settling parties after the Judgment is approved, Clairol fears that the Court's formal approval of the Consent Order, through its incorporation in the Judgment, will preclude the defendants in a future State proceeding from seeking contribution from or impleading the settling defendants.",
"Although the settling companies have argued that as an administrative settlement, the Consent Order is on equal footing with a judicially approved settlement, they have apparently structured the settlement package in such a way as to insure that the Consent Order is both an \"administrative settlement\" and \"judicially approved.\" By approving the settlement package as offered, however, I would also in effect be ruling on the State's right to recover from other potentially liable parties any shortfall between the payments under the Consent Order and the settlers' proportionate share of fault. [16] The question, then, is not simply whether the Court has the power to approve a settlement involving a non-party, but whether the Court can expressly or tacitly affect the legal status of the non-party's claims, or more precisely the legal consequences of the settlement of those claims, by an order of the Court. To resolve this issue, we begin with the basic proposition that federal district courts \"have jurisdiction only over such matters as Congress has validly conferred upon them.\"",
"1 J. Moore, Moore's Federal Practice para. 0.60[1] at 604 (2d ed. 1988). \"Jurisdiction is power to declare the law,\" Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L. Ed. 264 (1869), and where it does not otherwise exist, neither the litigants nor the Court itself can confer it. *688 See Green v. Department of Commerce, 618 F.2d 836, 838-39 (D.C.Cir.1980); Bishop v. Committee on Professional Ethics, 686 F.2d 1278, 1284 (8th Cir.1982); Magalotti v. Ford Motor Co., 418 F. Supp. 430, 432 (D.C.Mich.1976). While it is often stated that a federal court must possess jurisdiction over the subject matter of a case and over the persons whose rights are to be affected, see, e.g., F.T.C. v. Compagnie De Saint-Gobain-Pont-a-Mousson, 636 F.2d 1300, 1318 (D.C.Cir.1980); Rankin v. Howard, 633 F.2d 844, 848 (9th Cir. ), cert. denied, 451 U.S. 939, 101 S. Ct. 2020, 68 L. Ed.",
"2d 326 (1980), it is \"sometimes overlooked, that an action must [also] be properly commenced before a valid judgment or order can be entered therein.\" 2 J. Moore, Moore's Federal Practice para. 3.04 at 3-13 (2d Ed.1988). See Rapoport v. Banco Mexicano Somex, S.A., 668 F.2d 667, 670 (2d Cir.1982); United States v. Black, 356 F. Supp. 366, 368 (W.D.N.Y.1973); Minersville Coal Co. v. Anthracite Export Ass'n, 55 F.R.D. 429, 432 (M.D.Pa.1972); Warren v. Arzt, 18 F.R.D. 11, 13 (S.D.N.Y.1955). Obviously, the City has properly commenced this action but the Court's jurisdiction over the City's claims does not give the Court unfettered power to resolve all of the issues and claims arising out of the transactions underlying the lawsuit. In Energetics, Inc. v. Allied Bank of Texas, 784 F.2d 1300 (5th Cir.1986), the defendant bank had taken control of one of its depositor's bank accounts as an offset after the depositor defaulted on certain loans. The plaintiff, Energetics, Inc., was a third-party who claimed that the account contained money held in trust by the depositor, Republic Drilling & Service, Inc., for Energetic's benefit and was, therefore, not subject to offset by the bank.",
"The district court ordered the bank to turn the money over to Energetics, but the court also held that Republic's trustee in bankruptcy was entitled to a portion of the funds equal to an amount that Energetics owed to Republic. On appeal, the circuit court affirmed the judgment in favor of Energetics (though the sum was reduced) but reversed the award to the trustee: The trustee in bankruptcy of Republic is not a party to this case. It is obvious that the district judge was attempting to achieve a just result by awarding the entire [account balance] to Energetics and then requiring that $176,797.94 of that judgment be paid by Energetics to the Republic trustee if the trustee made a claim for it against Energetics. The district court's judgment is invalid, however, because it awards a judgment which is partially for the benefit of a party not before the court.",
"The judge has no power to award relief to the trustee in bankruptcy of Republic against a debt owed by the bank when the trustee is not before the court.... Our case is between Allied and Energetics. We have no authority to deal with a claim a third party may have against the bank. We can only dispose of and we do dispose of the claims which exist between the parties before us. Id.",
"at 1305 (citations omitted). See also SEC v. Investors Security Leasing Corp., 560 F.2d 561, 568 (3d Cir.1977). This court is also constrained to dispose of only those claims which exist between the parties before it. The State has not commenced a separate action under CERCLA nor has it sought to intervene in this one. [17] This does not mean that non-parties cannot participate in the settlement of a properly commenced action. [18] To the contrary, *689 in the Court's view, the contemporaneous settlement of the State's claims along with the City's claims is all to the good. The ideal settlement in this case, or in any case, would resolve the claims of all existing and potential plaintiffs and defendants.",
"To the extent that the Judgment reflects a comprehensive resolution of the settling defendants' liability to the state as well as the City, it weighs in favor of approval of the Consent Judgment. But by its own choice the State's claims are incidental or ancillary to the claims between the litigants before me and it is with respect to the latter claims and those claims alone that I will \"declare the law.\" The Court recognizes that the settling companies want to depart from this case with assurances that they have paid for peace on all fronts. But if the parties structured the settlement in its present form solely to ensure the settling companies complete contribution protection in effect to guarantee that the Judgment and Consent Order allows them to fully and finally close the book on this matter that issue can resolved to the settling companies' satisfaction without regard to the larger question of whether section 113(f)(2) applies to the settlement.",
"As discussed above, cases decided before and after the effective date of SARA have held that the UFCA applies to CERCLA settlements. See Conservation Chemical, Hines Lumber Co., and Lyncott Corp., supra. None of the objecting parties have argued that the settlers should not be protected from contribution claims. They simply object to the possibility, apparently contemplated by the express language of section 113(f)(2), that they will have to make up the settlers' shortfall in this action or in an action commenced by the State without a commensurate right to force the settlers to shoulder their fair share. Lest there be any doubt, I adopt the reasoning of Conservation Chemical and conclude that if § 113(f)(2) does not govern the City's settlement, the settling companies are still entitled to contribution protection from other potentially liable parties.",
"[19] c) Procedural Objections. Although Clairol's procedural objections are premised on the assumption that the Court is being asked to approve the Consent Order, I will assume that the objections stand with respect to the City side of the Judgment in light of my conclusion that the City is entitled to proceed as a \"State\" pursuant to section 113(f)(2). In support of its contention that the Court must review the proposed Judgment in the context of a hearing preceded by public notice and discovery, Clairol relies, in part, on the procedures followed in United States v. Pepper's Steel and Alloys, Inc., 658 F. Supp. 1160 (S.D.Fla.1987); United States v. Conservation Chemical Co., 628 F. Supp. 391 (W.D.Mo.1985); United States v. Hooker Chemical & Plastics Corp., 607 F. Supp. 1052 (W.D.N.Y.1985), aff'd, 776 F.2d 410 (2d Cir.1985); and United States v. Seymour Recycling Corp., 554 F. Supp. 1334 (S.D.Ind.1982). In each case, Clairol asserts, the CERCLA claims being settled[20] were fully disclosed and known long *690 prior to the settlement; the proposed settlement was the product of extensive negotiations in which all parties to the litigation actively participated; notice of the proposed settlement was given to the public via publication in the Federal Register; the comments and views of non-parties to the lawsuit were actively solicited; and in all cases except for Pepper's Steel where the settlement was unopposed, hearings were conducted at which various experts were called to testify, subject to cross-examination, concerning the fairness and adequacy of the settlement.",
"Preliminarily, I note that Clairol simply mischaracterizes some of the procedures followed in these cases. For example, contrary to Clairol's assertion, the claims in these cases were not all fully disclosed and known long prior to the settlement. In Seymour, the original complaint was filed in 1980 but was not amended to add a CERCLA claim, as well as 24 new defendants, until October 26, 1982 the same day the proposed consent decree was filed with the court. Id. at 1335-36. In addition, the consent decree before the court in Seymour was not, as Clairol asserts, the product of extensive negotiations in which all parties participated, but was an arrangement worked out between certain of the defendants, the Government, and several non-parties.",
"Id. As in Seymour it appears that the settlement negotiations in Conservation Chemical did not involve all of the parties and, in fact, several of the defendants objected to the proposed settlement. Id. at 395. It is true that notice of the proposed settlement was given to the public through the Federal Register, and the comments of non-parties were actively solicited, but Clairol fails to mention that those procedures were followed pursuant to Department of Justice regulations which govern consent judgments involving the United States. Id. at 399; see 28 C.F.R. § 50.7.",
"Nothing in CERCLA suggests that identical or even similar public notice obligations are imposed on other categories of plaintiffs. The fact remains that three of the four courts called upon to approve CERCLA settlements did conduct what appear to have been fairly extensive evidentiary hearings. What distinguishes those cases from the case at bar, however, are the terms of the settlements. Unlike the present case, the courts in Seymour, Hooker, and Conservation were called upon to determine the adequacy of extensive, long-term response plans over which the courts might have been exercising continuing jurisdiction.",
"See Conservation Chemical 628 F.Supp. at 394 (hearing held to determine the appropriateness of the remedy provisions of preliminary settlement agreement); Hooker Chemical 607 F.Supp. at 1057 (hearing held on remedial plan to determine if it was consistent with congressional intent); Seymour 554 F.Supp. at 1337 (hearing held on settlement involving surface cleanup plan for contaminated site). Here, the settlement terms involve only the payment of money which in no way restricts the ability of the City or the State to select an appropriate response plan for the landfills. [21] To the extent that any response plan for the landfills must conform to CERCLA standards, including public notice, review and criticism, the plan cannot logically be scrutinized until it exists.",
"When a plan is proposed, it will be subject to whatever review CERCLA requires. See, e.g., section 113(k), 42 U.S.C. § 9613(k) (EPA response actions must be based on an administrative record made available to the public at or near the facility at issue and remedial action plans must be developed with the participation of potentially affected persons); section 117, 42 U.S.C. § 9617 (establishing procedures for public participation in development of remedial action plan undertaken by EPA by a State or by any other person pursuant to cooperative agreement, abatement order, or consent judgment); section 121, 42 U.S.C. § 9621 (establishing standards for EPA remedial action plans). *691 Although applicable to federal settlements only, section 122, 42 U.S.C. § 9622 strongly supports the view that settlements involving monetary payments only are to be reviewed with lesser stringency than those involving response activity. Section 122 addresses three types of settlements: (1) clean-up agreements; (2) so called de minimis settlements involving only a minor portion of the subject response costs; and (3) cost recovery settlements.",
"The only type of settlements subject to mandatory judicial review under section 122 are those involving clean-up agreements. The two categories of money settlements can be effected through administrative orders subject only to a 30 day public notice and comment period. Tellingly, section 122 contains no requirement that proposed money settlements be reviewed via an evidentiary hearing, let alone that interested parties be allowed to conduct discovery before such a hearing. Nor would such procedures be required if, as Clairol suggests, the Court reviewed the proposed settlement under the standards governing class action settlements pursuant to Fed.R.Civ.P. 23(e).",
"[22] In City of Detroit v. Grinell Corp., 495 F.2d 448 (2d Cir.1974), several members of the plaintiff class in a private antitrust action appealed the district court's approval of a settlement agreement. The appellants contended, inter alia, that they should have been afforded an opportunity, through discovery, to develop facts which might have had some bearing on the district court's inquiry. The appellants sought discovery of data on class damages without which, they argued, the lower court could not make a competent evaluation of the settlement offer.",
"Because there were already sufficient facts before the court to approve the settlement and, further, because the opponents had access to those facts, the court rejected appellants' contention that they were entitled to discovery before the settlement was approved: Appellant's claim that there was a need for further discovery to develop the facts falls flat in view of the extensive evidentiary base already available at the document depository. Id. at 463. In response to appellants' assertion that it was incumbent upon the proponents of the settlement to produce the factual material supporting it, the Court stated: [Counsel for appellants] apparently feels that he may sit back and request the production of documents that have already been produced documents with which he may be unfamiliar simply because he entered the litigation when it was already in an advanced stage. In general the position taken by the objectors is that by merely objecting, they are entitled to stop the settlement in its tracks, without demonstrating any factual basis for their objections, and to force the parties to expend large amounts of time, money and effort to answer their rhetorical questions, notwithstanding the copious discovery available from years of prior pre-trial proceedings.",
"To allow the objectors to disrupt the settlement on the basis of nothing more than their unsupported suppositions would completely thwart the settlement process. Id. at 464. Clairol's failure to familiarize itself with the record in this case is less justified than that of the dissenting class members in Grinell. Clairol actively supported the severance and stay of the third-party actions in this case which, among other things, protected Clairol from the expenses, burdens, and intrusions inherent in litigation of this kind.",
"At the same time, however, Clairol was not precluded from *692 keeping abreast of ongoing discovery, albeit at a price. Having chosen, despite its awareness that settlement among the original parties was contemplated and encouraged by the Court, to ignore the ample evidentiary record until the last moment, Clairol will not now be permitted to delay and possibly endanger the settlement based on its self-imposed ignorance. Clairol's insistence on an evidentiary hearing also runs contrary to the standards governing class action settlements. In reviewing a proposed class action settlement, a court must have \"before it sufficient materials to evaluate the settlement and [come] to the correct conclusion.\" Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir.1982). If so, \"an evidentiary hearing is not required unless the objectors raise `cogent factual objections to the settlement.'\"",
"Malchman v. Davis, 706 F.2d 426, 434 (2d Cir.1983). See also, In Re Agent Orange Product Liability Litigation, 597 F. Supp. 740, 760 (E.D.N.Y.1984) (evidentiary hearing not required before approval of class action settlement). Here, the objectors have offered no more than generalized assertions that the record before the Court is insufficient. The question then is not whether the Court disregarded any bright line procedural rules governing CERCLA settlements there are none but whether the procedures chosen provide the Court with sufficient information to intelligently evaluate the settlement. This question, in turn, cannot be adequately addressed without first considering the Court's role in reviewing a CERCLA settlement. Before approving a CERCLA settlement, the Court must be convinced that it is fair, adequate, and reasonable, and consistent with the Constitution and the mandate of Congress. Conservation Chemical, 628 F.Supp. at 400; See also Hooker Chemical, 607 F.Supp. at 1057. [23] In making this determination, the reviewing court should consider \"the strength of the plaintiff's case, the good faith efforts of the negotiators, the opinions of counsel, and the possible risks involved in litigation if the settlement is not approved.\"",
"United States v. Hooker Chemicals and Plastics Corp., 540 F. Supp. 1067, 1075 (W.D.N.Y.1982). \"The underlying purpose of the court in making these inquiries is to determine whether the decree adequately protects the public interest.\" Conservation Chemical, 628 F.Supp. at 400. In assessing the various factors enumerated above, however, the Court's role is not unlimited. Settlements are to be encouraged and the court does not \"have the right or the duty to reach any ultimate conclusions on the issues of fact and law which underlie the merits of the dispute.\" Grinnell 495 F.2d at 456. And \"where there has been arms length bargaining among the parties [and] sufficient discovery has taken place to enable ... counsel to evaluate accurately the strengths and weaknesses of the plaintiff's case ... there is a presumption in favor of the settlement,\" Wellman v. Dickinson, 497 F. Supp. 824, 830 (S.D.N.Y.1980), aff'd, 647 F.2d 163 (2d Cir.1981), particularly where \"a government agency committed to the protection of the public interest\" has participated in and endorsed the agreement. Id. Finally, in addition to the general federal policy favoring *693 settlements, see Florida Trailer & Equipment Co. v. Deal, 284 F.2d 567, 571 (5th Cir.1960), the reviewing court must be mindful that Congress, in enacting the 1986 amendments to CERCLA sought to \"expedite effective remedial actions and minimize litigation.\"",
"Section 122(a). The balance to be struck between the policies favoring settlements and the need to safeguard the public interest in cases of this type was best summarized in United States v. Carrols Development Corp., 454 F. Supp. 1215 (N.D.N.Y.1978): It is not the Court's function to determine whether this is the best possible settlement that could have been obtained but rather the Court's duty is to determine \"whether the settlement is within the reaches of the public interest.\" Id. at 1222 (quoting United States v. Gillette Company, 406 F. Supp. 713, 716 (D.Mass.1975). Id. at 1222. The record before the Court provides a sufficient basis to make this determination. First, it is clear that the settlement was entered into in good faith. As the moving parties' affidavits demonstrate, the settlement is the product of arms length negotiations, extending over the course of approximately one year, between the City, the State, and the settling companies. In addition to the Corporation Counsel and the defendants, the Judgment has been independently reviewed and approved by the Commissioner of the Department of Sanitation and the State Comptroller. Neither Clairol nor Exxon have come forward with any evidence, or even conclusory statements, casting doubt on the good faith of the settling parties, and the record in this case attests to the adverserial vigor with which the settling parties have otherwise approached this litigation. It is also clear that the settling parties had a sufficient factual record upon which to reach an informed decision about settlement terms.",
"Indeed, more than three years of discovery has produced a voluminous evidentiary record in this case. That record, consisting of hundreds of thousands of documents and approximately eighty depositions, includes information concerning the business transactions between the settling defendants and the waste-hauling companies; the volume and nature of the wastes disposed of at the landfills; the use of the city's landfills by the waste hauling companies; and environmental conditions at the landfills. On the basis of preliminary data concerning environmental conditions at the landfills and NYSDEC's regulatory requirements for the remediation of hazardous waste sites, the settling parties and the State have estimated that remediation would cost approximately $400,000,000.",
"Against this figure, the settling parties had to consider the formidable risks and expenses of continuing litigation. Of principal importance in this regard is the City's concession that, as the owner and operator of the landfills and as a possible generator and transporter of hazardous substances, the City is itself potentially liable under CERCLA. Indeed several defendants, including Exxon, have argued that the City is solely responsible for any releases of hazardous substances from the landfills. In addition, the defendants have raised doubts about the City's ability to prove that any significant amount of their wastes ended up in the 5 City landfills. [24] Nonetheless, the settling companies are willing to settle because of the inherent risks of continued litigation, and because a \"victory\" after protracted litigation may prove to be more expensive than settlement. In light of the arguable weaknesses in the City's case, the proposed settlement is clearly in the public interest and consistent with CERCLA.",
"The immediate public benefit is the availability of $13,798,472 for cleanup and remediation costs which might otherwise be drawn from public coffers. That figure does not reflect the money the City will save by not having to prosecute possibly fruitless claims against the settling companies. These benefits will, of *694 course, be amplified if the present settlement encourages some or all of the remaining defendants to resolve the case through negotiation rather than expensive, risky, and protracted litigation. Finally, the Court is satisfied that the settlement is fair to the remaining defendants. Initially, the fact that only a fraction of the more than 300 remaining defendants have voiced objections to the settlement is strong evidence of its fairness. See Grinell, 495 F.2d at 462; Agent Orange, 597 F.Supp. at 762. Additionally, there is no suggestion in this case that the City or the State is favoring some defendants at the expense of others.",
"Neither Exxon nor Clairol has refuted the settling parties assertion that the City is prepared to offer all of the non-settling parties a settlement at the same \"price-per-gallon\" as that offered to the settling companies. Furthermore, the settling defendants have agreed to forgo all claims against any of the remaining parties notwithstanding section 113(f)(2) which, if applicable, allows settling defendants to retain contribution rights against non-settlers. And, despite Clairol's complaint that settlement pursuant to section 113(f)(2) immunizes the settling companies from future contribution actions, Exxon itself has asserted that the settling companies are protected from contribution actions under all potentially applicable contribution frameworks. To the extent that the non-settling parties are disadvantaged in any concrete way by the applicability of section 113(f)(2) to the overall settlement, their dispute is with Congress. In conclusion, the Judgment in its present form is unacceptable because it incorporates the Order on Consent.",
"In all other respects the Court concludes that the Judgment is fair, adequate, and reasonable, and consistent with the Constitution and CERCLA. The settling parties may submit for the Court's approval an amended version of the Judgment that is in accord with this opinion. SO ORDERED. NOTES [1] The original complaint tracked the language of CERCLA § 107(a)(4)(A), 42 U.S.C. § 9607(a)(4)(A), which is applicable to governmental plaintiffs seeking recovery of response costs incurred in connection with hazardous waste sites, but inadvertently cited § 107(a)(4)(B), 42 U.S.C. § 9607(a)(4)(B), which applies to private plaintiffs. In April of 1986, the City amended its complaint to assert alternative claims under both sections.",
"The City also seeks recovery for natural resource damages pursuant to § 107(a)(4)(C), 42 U.S.C. § 9607(a)(4)(C). [2] The facts underlying this action are set forth in greater detail in City of New York v. Exxon, 633 F. Supp. 609 (S.D.N.Y.1986). [3] The five City landfills have been classified by the New York State Department of Environmental Conservation (\"NYSDEC\") as \"inactive hazardous waste sites,\" and the City and the State are currently formulating plans for their closure. See the Affidavit of Philip Gleason, Director of Landfills Engineering in the New York City Department of Sanitation, dated July 13, 1987. [4] Two weeks before the City and the settling defendants filed the instant motion, NYSDEC filed an administrative claim against the settling defendants, apparently to set the stage for the execution of the Consent Order. [5] Section 113(f)(2) provides: A person who has resolved his liability to the United States or a State in an administrative or judicially approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement. (emphasis added).",
"Furthermore, if a party settles with \"a State\" pursuant to 113(f)(2), that party \"may seek contribution from any person who is not a party to [the] settlement.\" § 113(f)(3)(B), 42 U.S.C. § 9613(f)(3)(B). These provisions place non-settling CERCLA defendants at a disadvantage in two ways. First, it leaves them open to contribution claims from settling defendants who have paid more than their proportionate share of liability. Second, if settling defendants have paid less than their proportionate share of liability, section 113(f)(2) apparently compels the non-settlers to absorb the shortfall. [6] Each of the agreements at issue here, the Judgment and the Consent Order, states that it constitutes \"the resolution of liability to a State in an administrative or judicially approved settlement within the meaning of Section 113(f)(2) of CERCLA.\" Judgment Section 3, Paragraph 4; Consent Order Paragraph 5. [7] Issues of allocation are unlikely to be addressed, if at all, until well into the 1990s.",
"See the affidavit of Philip Gleason in support of the Motion for Entry of the Case Management Order. [8] Exxon's concern that it will be prejudiced by section 113(f)(2)'s provision allowing settlers to retain contribution rights is purely academic since the Judgment provides for the dismissal of the settling companies' claims against the remaining parties. [9] Several courts have held that the Uniform Comparative Fault Act (\"UCFA\"), pursuant to which the claim of the releasing person is reduced by released person's equitable share of fault, is the contribution framework best suited to CERCLA cases. See Lyncott Corp. v. Chemical Waste Management, Inc., 690 F. Supp.",
"1409 (E.D.Pa.1988); Hines Lumber Co. v. Vulcan Materials Co., No. 85 Cow. 1142 (N.D.Ill. Dec. 4, 1987) [available on WESTLAW, 1987 WL 27368]; United States v. Conservation Chemical Co., 628 F. Supp. 391, 400 (W.D.Mo.1985). Conservation Chemical, an action commenced by the United States, was decided before the effective date of the Superfund Amendments and Reauthorization Act of 1986, (P.L. 99-499) (\"SARA\") which, among other things, added section 113(f)(2) to CERCLA. Lyncott and Hines Lumber, both involving private plaintiffs, were decided after the effective date of SARA. If New York General Obligations Law § 15-108 were deemed applicable, the releasing person's claim would be reduced by the greater of (1) the settling defendants' share of liability or (2) the settlement amount. Furthermore, under both the Uniform Comparative Fault Act and New York law, the settling defendants would not be entitled to seek contribution for any excess paid beyond their proportionate share of liability. UCFA § 4; NYGOL § 15-108. [10] It is unnecessary to await the development of \"a complete factual record\" on the pending summary judgment motion as Exxon suggests.",
"Whether a city or other political subdivision of a state can proceed as a state under sections 107(a)(4)(A) and 113(f)(2) is a question of law. The 6 pages of Exxon's 159 page summary judgment motion devoted to the question is bereft of any reference to the \"factual record.\" [11] Though not necessarily conclusive. The \"[m]ere incantation of the plain meaning rule ... cannot substitute for meaningful analysis,\" Shippers National Freight Claim Council v. I.C.C., 712 F.2d 740, 747 (2d Cir.1983), cert. denied, 467 U.S. 1251, 104 S. Ct. 3534, 82 L. Ed. 2d 839 (1984), and \"the plain meaning doctrine has always been considered subservient to a truly discernible legislative purpose,\" Aviation Consumer Action Project v. Washburn, 535 F.2d 101, 106 (D.C.Cir.1976). [12] For example, defendants PSE & G and Dana Corporation assert, in opposition to Clairol's demand that the Consent Order be severed, that they \"did not bargain for a partial settlement or agree to pay more than $13.7 million to discharge the claims of the City alone.\"",
"Reply Memorandum in Support of Joint Motion for Entry of Judgment on Consent at 13-14. [13] If the Consent Order did not exist, NYSDEC would in a sense be a third-party beneficiary of the agreement between the settling defendants and the City. [14] Defendants American National Can, BASF Corporation, Borg-Warner Corporation, Ford Motor Company, and Koppers Company, Inc., have asserted that \"[u]nder the express terms of § 113(f)(2) administrative settlements with a State preclude claims for contribution for all matters addressed in the settlement.\"",
"Memorandum of Five Settling Defendants at 11. Similarly, the City asserts that the Consent Order constitutes a resolution of liability within the meaning of § 113(f)(2). Reply Memorandum of the City of New York at 34. [15] PSE & G and Dana Corporation assert that \"[t]o sever the State Settlement is to destroy the whole settlement.\" Memorandum in Support of Joint Motion for Entry of Judgment on Consent at 14. [16] Actually, this would be achieved in two ways. First, as noted above, by the Consent Order appearing to receive separate review and approval. Second, by the incorporation in the Judgment of Paragraph 5 of the Consent Order which expressly declares its status under that section. [17] The State has not even informally presented its position on the proposed settlement to the Court. [18] It is apparent that non-parties have participated in court approved settlements and, indeed, have done so in at least two reported CERCLA cases.",
"In O'Neil v. Picillo, 682 F. Supp. 706 (D.R.I.1988), the State of Rhode Island sued 35 defendants who were allegedly responsible for creation of a hazardous waste site. On the scheduled first day of trial, the State and the Environmental Protection Agency, a non-party, settled with all but 5 of the defendants. The settlement totaled 5.8 million dollars with 25% going to the State and 75% going to the EPA. In United States v. Seymour Recycling Corp., 554 F. Supp. 1334 (S.D.Ind.1982), the United States sued various parties allegedly responsible for the creation of hazardous waste site in Seymour Indiana.",
"The Government later amended the complaint to assert claims under CERCLA and add 24 new defendants. On the same day the Government filed the amended complaint, the State of Indiana and the County of Jackson moved to intervene, and the Government, the State, the County, the City of Seymour, the Board of Aviation Commissioners of Seymour, Indiana, and the 24 new defendants filed a proposed Consent Decree with the Court. Several of the non-party settlers participated in the hearings held on the adequacy of the settlement, and the consent decree incorporated the nonparty local governments' covenants not to sue.",
"Some of the defendants have cited United States v. Wade, 577 F. Supp. 1326 (E.D.Pa.1983), as a case involving non-party participation in a CERCLA settlement. Although by no means clear, there is some suggestion that the settlement discussed in Wade was reached entirely outside the context of the litigation. [19] Section 113(f)(1) provides that CERCLA contribution claims \"shall be governed by Federal Law\" and resolved \"using such equitable factors as the court determines are appropriate.\" [20] Strictly speaking, Hooker, 607 F. Supp. 1052, was not a CERCLA case. In the original complaint, the Environmental Protection Agency (\"EPA\") asserted claims under several other environmental statutes for the purpose of remedying the dangerous conditions at a hazardous waste site in upstate New York.",
"Id. at 1053, 1055. EPA later moved to add claims under CERCLA but the case settled before the motion was decided. Id. at 1056. [21] O'Neil v. Picillc, 682 F. Supp. 706, is silent on the procedures, if any, used to review the monetary settlement in that case. [22] Before a proposed class action settlement can be approved, all members of the class must be notified of the proposal, and the proponents of the settlement must demonstrate that it is fair, adequate, and reasonable. 3B Moore, Moore's Federal Practice para. 23.80 (2d ed.",
"1987). Since absent class members will be bound by the settlement terms negotiated by representative parties, the court in reviewing a class action settlement functions as a fiduciary for absent class members. In re Warner Communications Securities Litigation, 798 F.2d 35 (2d Cir.1986); Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir.) cert. denied, 423 U.S. 864, 96 S. Ct. 124, 46 L. Ed. 2d 93 (1975). [23] These cases predate the enactment of SARA but the House Judiciary Committee comments on section 113 appear to endorse the standard of review set forth in the pre-SARA cases.",
"The Judiciary Committee noted that an earlier version of section 113(f)(2) expressly conditioned the favorable contribution rights of the section on \"judicially approved good faith settlement,\" but the words \"good faith\" were eventually deleted from the statute because: [t]he amendment recognizes that judicial examination and approval of the settlement itself is adequate to protect against improper or \"bad faith\" settlements. Before initially approving a consent decree under CERCLA, a court must satisfy itself that the settlement is reasonable, fair, and consistent with the purposes the CERCLA is intended to serve. Because this process ensures that the \"good faith\" of the settlement is examined by the court, a supposedly separate requirement of good faith in the contribution section would lead to unnecessary confusion, would cast doubt on the availability of contribution protection under the section, and would lessen the incentive for settlement created by such protection. (emphasis added). H.R.Rep. No. 253(III), 99th Cong., 2d Sess., reprinted in 1986 U.S.Code Cong.",
"& Admin.News 2835, 3038, 3042. [24] According to settling defendants American National Can, Ford Motor Company, BASF Corporation, Borg-Warner Corporation, and Koppers Company, Inc., a substantial portion of the defendants' wastes ended up at locations other than the 5 City landfills. Memorandum of Five Settling Defendants in Support of the Entry of Consent Judgment at 4."
]
| https://www.courtlistener.com/api/rest/v3/opinions/2127918/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
ORDER
Jason R. Irwin (Plaintiff) appeals from the judgment entered in favor of Kyung Joo Park (Defendant) on Plaintiffs action for negligence against Defendant in the operation of his motor vehicle. We affirm. We have reviewed the briefs of the parties, the legal file, and the record on appeal, and find the claim of error to be without merit. No error of law appears. An extended opinion would have no prece-dential value. The parties have been furnished with a memorandum for their information only, setting forth the reasons for this order pursuant to Rule 84.16(b). | 10-02-2021 | [
"ORDER Jason R. Irwin (Plaintiff) appeals from the judgment entered in favor of Kyung Joo Park (Defendant) on Plaintiffs action for negligence against Defendant in the operation of his motor vehicle. We affirm. We have reviewed the briefs of the parties, the legal file, and the record on appeal, and find the claim of error to be without merit. No error of law appears. An extended opinion would have no prece-dential value. The parties have been furnished with a memorandum for their information only, setting forth the reasons for this order pursuant to Rule 84.16(b)."
]
| https://www.courtlistener.com/api/rest/v3/opinions/5113603/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
From the petition it appears that in June, 1887, a judgment was rendered in the District Court of Bexar County in favor of the appellees here, in a suit against Jesus Zapeda et al. for the recovery of the land involved in the present suit against Jesus Zapeda and Victoriano Zapeda; that in March, 1895, under a writ of possession, plaintiffs were placed in possession of the land, whereby they are owners in fee simple of the land and entitled to possession, and that thereafter said Zapeda re-entered and dispossessed plaintiffs and now holds possession against plaintiffs, and the latter prays for relief appropriate in the premises. Judgment was rendered by the court against defendants, from which they appeal. The first assignment is to the overruling of an application for continuance. The showing was made that the petition in the original suit was missing, and defendants asked for a continuance in order to *Page 649 show by said petition when found that Victoriano Zapeda was not mentioned therein and no relief asked therein against him. It appears from the court's explanation appended to the bill of exception that plaintiff admitted that the document was as defendants claimed it to be. Therefore no injury resulted to defendants from overruling the motion. There is nothing in the second assignment, because the judgment rendered in 1888 could not become dormant in respect to its force as an adjudication. The judgment was conclusive of the title between the parties to the proceeding at that time, and in respect to this quality it remained in effect. Nor is there anything in the third assignment. The judgment in the first proceeding certainly determined the question of title and possession of this land, but this would not preclude the plaintiffs from afterward instituting another action in trespass to try title or for the purpose of obtaining relief based upon said judgment. The evidence sustains the conclusion that Victoriano Zapeda was a party to the original proceeding, hence the fourth assignment is without any force. The fifth assignment is not well taken. Limitation was not pleaded. Evidence of title in Victoriano Zapeda mentioned in this assignment does not appear from the record to have been introduced or offered. The remaining assignments are certainly without merit. The judgment is affirmed. Affirmed. Writ of error refused. | 07-06-2016 | [
"From the petition it appears that in June, 1887, a judgment was rendered in the District Court of Bexar County in favor of the appellees here, in a suit against Jesus Zapeda et al. for the recovery of the land involved in the present suit against Jesus Zapeda and Victoriano Zapeda; that in March, 1895, under a writ of possession, plaintiffs were placed in possession of the land, whereby they are owners in fee simple of the land and entitled to possession, and that thereafter said Zapeda re-entered and dispossessed plaintiffs and now holds possession against plaintiffs, and the latter prays for relief appropriate in the premises. Judgment was rendered by the court against defendants, from which they appeal. The first assignment is to the overruling of an application for continuance. The showing was made that the petition in the original suit was missing, and defendants asked for a continuance in order to *Page 649 show by said petition when found that Victoriano Zapeda was not mentioned therein and no relief asked therein against him. It appears from the court's explanation appended to the bill of exception that plaintiff admitted that the document was as defendants claimed it to be.",
"Therefore no injury resulted to defendants from overruling the motion. There is nothing in the second assignment, because the judgment rendered in 1888 could not become dormant in respect to its force as an adjudication. The judgment was conclusive of the title between the parties to the proceeding at that time, and in respect to this quality it remained in effect. Nor is there anything in the third assignment. The judgment in the first proceeding certainly determined the question of title and possession of this land, but this would not preclude the plaintiffs from afterward instituting another action in trespass to try title or for the purpose of obtaining relief based upon said judgment. The evidence sustains the conclusion that Victoriano Zapeda was a party to the original proceeding, hence the fourth assignment is without any force. The fifth assignment is not well taken. Limitation was not pleaded.",
"Evidence of title in Victoriano Zapeda mentioned in this assignment does not appear from the record to have been introduced or offered. The remaining assignments are certainly without merit. The judgment is affirmed. Affirmed. Writ of error refused."
]
| https://www.courtlistener.com/api/rest/v3/opinions/3970432/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
550 N.E.2d 812 (1990) Gladys BRINEGAR and Harold F. Hodges, Appellants, v. ROBERTSON CORPORATION, Appellee. No. 47A04-8811-CV-388. Court of Appeals of Indiana, Fourth District. February 28, 1990. Transfer Denied June 7, 1990. *813 Edward F. McCrea, McCrea & McCrea, Bloomington, for appellants. James L. Whitlatch, Bunder, Robertson, Kelley & Steger, Bloomington, for appellee. MILLER, Judge. Plaintiffs-appellants Gladys Brinegar and Harold Hodges appeal the trial court's judgment in favor of defendant-appellee Robertson Corporation (Robertson) in an action based on negligence for property damages which occurred when a fire originated on Robertson's property and spread to adjacent property owned by Brinegar and Hodges. Brinegar and Hodges, claiming damages of $45,652.66 and $9,000.00 respectively, sued Robertson for negligence. At the trial, the court rejected Brinegar and Hodges' theory of res ipsa loquitur and the case proceeded on a theory of negligence. The jury found against Brinegar and Hodges. Brinegar and Hodges appeal claiming the following issues:: 1. Whether the trial court erred in failing to give an instruction on the doctrine res ipsa loquitur and the granting of a motion for judgment on the evidence on this issue where the cause of the fire was undetermined; 2. Whether it was error for the trial court to permit two witnesses to testify that defendant's conduct was reasonable; that fires can start without fault; and that no other lawsuits were filed against Robertson, implying defendant could not have been negligent; 3. Whether it was error for the trial court to fail to give further instructions to the jury upon the receipt of a note from the jury after deliberations had begun. We affirm.
FACTS In August, 1986 a fire occurred in Bedford, Indiana originating in a mill owned and operated by Robertson. The fire began a few hours after the mill closed and spread to real estate owned by Brinegar and Hodges. *814 The mill was a large building primarily constructed of wood that had a portion of its structure built during the year 1881. The mill processed wheat into a biscuit flour-like substance that was sold as an adhesive extender, similar in purpose to glue, used in the manufacturing of plywood and veneers. The manufacturing process included the use of six large rollers, which needed lubrication because of friction involved, to grind the wheat. A dust control system was installed to prevent dust explosion. The building was regularly inspected by the fire department and always passed inspection. There was no evidence the fire was caused by a dust explosion. Although Robertson did not have a central alarm system, sprinkling system, or a night watchman on its premises, Robertson took all precautions required of it or suggested to it by the local fire department. The building was regularly inspected and complied with all relevant codes. No sprinkling systems or alarms were required and there was testimony indicating that they probably would not have prevented the fire. The origin of the fire could not be determined by any expert. Machines used in the mill were checked after the machines were turned off for the day. The motors were inspected after the fire and it was not determined that they had anything to do with the cause of the fire. There was testimony from experienced firefighting officials indicating that a fire can start without fault. There was also testimony that an individual had admitted starting the fire at the Robertson mill. Arson was not ruled out as a cause. Additional facts will be given when necessary to the decision.
ISSUE ONE
Removal of the doctrine of res ipsa loquitur from jury consideration. Brinegar and Hodges argue that the trial court erred by preventing the jury from considering whether the doctrine of res ipsa loquitur should apply to this case. At the conclusion of plaintiffs' evidence, Robertson made a motion for judgment on the evidence requesting that the doctrine be withdrawn from the jury. After hearing argument of counsel, the trial judge removed the doctrine from the case because arson had not been ruled out. The judge reasoned that it was not "fair to charge someone with a duty to prevent arson." Because the refusal of the instruction and judgment on the evidence are related, we will discuss these issues together. The doctrine of res ipsa loquitur is a rule of evidence whereby an inference of negligence can be drawn under certain factual circumstances. SCM Corp. v. Letterer (1983), Ind. App., 448 N.E.2d 686, 689. There are three prerequisites to the application of the doctrine. As stated in SCM Corporation, they are: (1) the event must be of a kind which ordinarily does not occur in the absence of someone's negligence; (2) it must be caused by an agency or instrumentality within the exclusive control of the defendant; and (3) it was not due to any voluntary action or contribution on the part of the plaintiff. See also W. Prosser, Law of Torts, § 39, page 214 (4th ed. 1971); I.L. Friemer and M. Friedman, Products Liability § 12.03. Robertson contends that the only prerequisite met in the present case is that the event was not due any voluntary action or contribution on the part of the plaintiffs, and, since the other prerequisites were not met, the granting of the directed verdict and the refusal of plaintiff's final instruction number one was proper. We agree. A review of the Indiana cases which have considered the res ipsa loquitur question reveals that there are no cases which address the issue of whether the doctrine can be considered by the jury when the cause of the fire has not been established.[1] However, *815 a review of the cases from other jurisdictions reveal persuasive arguments that the doctrine should not apply under these circumstances. For instance, in Menth v. Breeze Corporation (1950), 4 N.J. 428, 73 A.2d 183, 18 A.L.R. 2d 1071, the plaintiffs suffered damage when their household furnishings and personal effects (located in their apartment) were destroyed by a fire which started in an adjoining shed on an unimproved lot which was leased and used by the defendant. In the shed were stored burlap bags, with an oily discolored appearance, which were used to transport waste aluminum shavings from the defendant's factory to the shed. The bags were emptied into another shed; however, they may have contained aluminum shavings which adhered to the insides of the bag. The court discussed the rule of res ipsa loquitur as applied to cases involving fires in the following language which we find persuasive: The rule of res ipsa loquitur is infrequently applied to cases involving fires, and to a lesser extent to explosion cases. Kapros v. Pierce Oil Corp., 324 Mo. 992, 25 S.W.2d 777, 78 A.L.R. 722 (Mo.Sup.Ct. 1930); Highland Golf Club of Iowa Falls, Iowa v. Sinclair Refining Co., 59 F. Supp. 911, 919 (Iowa Dist.Ct. 1945); Keyser Canning Co. v. Klots Throwing Co., 94 W. Va. 346, 118 S.E. 521, 31 A.L.R. 283, 292 (W.Va.Sup.Ct. 1923); Noonan v. Great Atlantic & Pacific Tea Co., 104 N.J.L. 136, 138, 139 A. 9, 56 A.L.R. 590 (E. & A. 1927); 22 Am.Jur. (Explosions and Explosives) § 95, p 212. The reasons are not difficult to perceive. The cause of a fire is generally unknown, fires commonly occur where due care has been exercised as well as where due care was wanting. Where a fire originates on a defendant's premises, that alone is not evidence that it was started by the defendant, nor that the fire was caused by any negligence on its part. Little v. Lynn & Marblehead Real Estate Co., 301 Mass. 156, 16 N.E.2d 688 (Mass.Sup.Jud.Ct. 1938); Brownhill v. Kivlin, 317 Mass. 168, 57 N.E.2d 539, 540 (Mass.Sup.Jud. Ct. 1944); 22 Am Jur (Fires) §§ 75 and 76, pp. 642-643. Whether a fire case falls within the operation and scope of the res ipsa loquitur rule must of necessity depend upon the particular facts and circumstances appearing in the individual case. The surrounding circumstances under which a fire is communicated to the premises of a neighbor may in exceptional or unusual cases justify the application of the rule. The general rule, however, is that the destruction of property by fire, either on premises where it starts, or upon other property to which it is communicated, does not of itself raise a presumption of negligence in either the kindling or management of the fire unless there are special circumstances present that lead to a reasonable conclusion that due care was wanting. 22 Am Jur (Fires) 78, p 644. It is also essential to the application of the res ipsa loquitur doctrine that those seeking to obtain the benefit of its presumptive effect must show that in all probability the direct cause of the injury and so much of the surrounding circumstances *816 essential to its occurrence were in the exclusive control of the defendant, or his agents or servants. Hamrah v. Clements, 3 N.J. 285, 69 A.2d 720 (1949); Cf. Oelschlaeger v. Hahne & Co., 2 N.J. 490, 66 A.2d 861 (1949); Woschenko v. C. Schmidt & Sons, 2 N.J. 269, 274, 66 A.2d 159 (1949); Grugan v. Shore Hotels Finance, etc., Corp., 126 N.J.L. 257, 262, 18 A.2d 29; 38 Am.Jur. (Negligence) § 300, p. 996. In case of fire the rule requires that the actual cause of it must have been under the exclusive control of the party charged with negligence. Under the testimony before us the fire may have resulted from one or more of several causes, including the acts of third parties or strangers over whom defendant had no control. Hamrah v. Clements, supra. Mere possession of the premises and shed from which the fire spread is not a basis for the application of the res ipsa loquitur rule. Additionally the instrumentality or thing causing the fire must be shown to warrant the application of the rule. Hamrah v. Clements, supra; cf. Oelschlaeger v. Hahne & Co., supra; The President Wilson, 5 F. Supp. 684, 686 (Cal.Dist.Ct. 1933); Highland Golf Club of Iowa Falls, Iowa v. Sinclair Refining Co., supra.
73 A.2d 183, 186-187. In Hahn v. Eastern Illinois Office Equipment Company (1976), 42 Ill. App. 3d 29, 355 N.E.2d 336 the rule was discussed as follows: The mere occurrence of a fire is not sufficient to invoke the doctrine of res ipsa loquitur.
(Edmonds v. Heil (1948), 333 Ill. App. 497, 77 N.E.2d 863.) It is only when the fact of the fire plus the surrounding circumstances give rise to an inference of negligence that res ipsa loquitur is applicable. "Res Ipsa Loquitur Fires," 8 A.L.R. 3d 974, 984, 992. The doctrine does not relieve the plaintiff of proving that negligence was the cause of the injury (Mabee v. Sutliff and Case Co., Inc. (1948), 335 Ill. App. 353, 366, 82 N.E.2d 63, 69-70), although it makes proof of negligence easier. Plaintiff cites several cases involving fires where res ipsa loquitur was held to be applicable. (Collgood, Inc. v. Sands Drug Co. (1972), 5 Ill. App. 3d 910, 284 N.E.2d 406; Arado v. Epstein (1944), 323 Ill. App. 194, 55 N.E.2d 561; Edmonds v. Heil; Oakdale Building Corp. v. Smithereen Co. (1944), 322 Ill. App. 222, 54 N.E.2d 231.) In each of these cases circumstances beyond the mere occurrence of the fire existed which justified the establishment of a prima facie case of negligence. In Collgood, defendant's employees were in the area of defendant's exclusive control to install fixtures. Shortly after their arrival, the fire department responded to an alarm there and found a space heater with red hot filiments one foot away from a burning box. In Arado, defendants and his workmen were the only once in the basement when the fire started. Under those circumstances the facts of the occurrence were peculiarly within the knowledge of the defendant. In Edmonds the fire occurred shortly after the janitor had fired the boiler. According to the testimony the janitor was mistakenly operating the system on "pounds" of pressure rather than "ounces". In Oakdale, a fire started within 15 minutes after one of defendant's employees had left the empty apartment. In the case at bar, the witnesses who testified pinpointed the fire as originating in defendant's furnace. No other circumstances which could raise an inference of negligence were established. Accordingly the trial court was correct in holding that the doctrine of res ipsa loquitur was not applicable. See Welch v. New Harper Hotel Co. (1915), 196 Ill. App. 94. Plaintiff presented no evidence from which a jury could say that it is more likely than not that negligence was the cause of the fire. When no such balance of probabilities in favor of negligence can reasonably be found, res ipsa loquitur does not apply. Prosser, Torts, 218 (4th Ed. 1971). (Emphasis added) 355 N.E.2d at 339. See 18 A.L.R. 2d 1081 (1951) Annot. Fire-Liability for Spread; 8 A.L.R. 3d 974 *817 (1966) Annot. Res Ipsa Loquitur Fires; 21 A.L.R. 4th, 929 (1983), Annot. Res Ipsa Loquitur Cause of Liability for Real Property Fires. The law is settled in Indiana that the defendant must have exclusive control of the offending instrumentality in order for the doctrine to apply. Shull v. B.F. Goodrich Co. (1985), Ind. App., 477 N.E.2d 924; SCM Corp. v. Letterer (1983), Ind. App., 448 N.E.2d 686. Here, the cause (the "thing" or "instrumentality" which caused the fire) was unknown. Thus, the trial court properly excluded the doctrine of res ipsa loquitur from consideration by the jury.
ISSUE TWO
Improper admission of witness testimony. Brinegar and Hodges also cite as error the inclusion of testimony by several witnesses. They first complain that the trial court erred in allowing two witnesses to testify to the reasonableness of Robertson's conduct. They claim ordinary care, reasonableness, lack of negligence are all terms that a jury must determine. They cite Indianapolis St. R. Company v. Seerley (1904), 35 Ind. App. 467, 72 N.E. 169, rehearing denied 35 Ind. App. 467, 72 N.E. 1034, for the general rule that witnesses are not allowed to give their opinions as to what is ordinary care. They assert the first error occurred when the trial court allowed, over their objection, Bedford Fire Chief Don E. Tyree to answer questions by defense counsel as follows: Q: You didn't ask him [Robertson] to be perfect, did you? A: No, sir. Q. In fact, he was very reasonable was he not? [Objection overruled] Q. [to Court] ... I asked if in his opinion he was reasonable in the maintenance of the property your Honor [the Court: I think being the Chief of the fire department with 36 years of experience he has the qualifications to give an opinion so I will overrule the objection] ... I think he has already answered the question and the answer was yes. A: Yes. Indiana courts have established two rules governing admissibility of opinion testimony on the ultimate fact at issue. The rules are as follows: (1) the admissibility of lay opinion on the ultimate fact and issue rests within the discretion of the trial court; and (2) expert opinion evidence is admissible, even as to the ultimate fact in issue, where a subject does not come within the range of common knowledge or experience. Breese v. State (1983), Ind. App., 449 N.E.2d 1098; Gerrick v. State (1983), Ind. App., 451 N.E.2d 327. Tyree, as fire chief of Bedford and associated with the Bedford Fire Department for thirty-six (36) years, is clearly qualified as an expert witness. He would also qualify as an expert witness based on his personal knowledge of the Robertson property. If a witness exhibits a degree of knowledge to make it appear his opinion is of some value, the witness may testify as an expert. Pollard v. State (1982), Ind. App., 439 N.E.2d 177. A court's decision regarding expert testimony is granted broad discretion and will only be reviewed for an abuse of that discretion. Lawhorn v. State (1983), Ind., 452 N.E.2d 915. Brinegar and Hodges also complain that a second and more grievous error was committed when ex-fireman Charlie Robbins was allowed to say Robertson was reasonable and to give exculpatory possible explanations for the cause of the fire: Q: ... can fires start in the absence of any fault or anybody acting unreasonably? (Objection overruled) Q: I think he may have answered it, can fires start in the absence of any fault or anybody acting unreasonably. A: Yes. Q: In fact, do most fires start in that manner. MR. MC CREA: Same objection Your Honor. THE COURT: The objection is overruled.
*818 A: Well, yes, a lot of fires do start with no fault because you have the speed of his feed belts for instance, you have numerous belts, motors throughout the building... . Robertson points out that Robbins also qualifies as an expert under Indiana law as Robbins had been with the Bedford Fire Department for twenty-six and a half years. He had been Assistant Chief for the department for many years. He had also been a training officer with the fire department and had been to numerous fire training schools. Robbins had also inspected the Robertson mill several times. Robbins was asked the following questions immediately preceding the above questioning and gave the following answers without objection: Q. Based upon your experience with the Fire Department and your training, are there a variety of causes of fires? A. Well, yes there can be all types of situations that causes fires. Q. There are a lot of causes. A. You, got electrical situations, you got lightning, you got, you know, of course there is always (indiscernable) as far as that goes, well, there are just numerous instances. The question as to whether or not fires can start without anyone being negligent or at fault was clearly within the witness's knowledge and admissible. That fact, under the circumstances of this case, where the cause of the fire is unknown, was not an invasion of the jury's prerogative to determine negligence. It was merely an expert's recognition of the same fact or circumstances of which our courts have regularly taken notice, that is, "the cause of a fire is generally unknown, fires commonly occur where due care has been exercised as well as when due care was wanting." Menth v. Breeze, supra. Finally, Brinegar and Hodges contend that, over objection, Joe Robertson, was allowed to tell the jury that Robertson had not been involved in any other lawsuits as a result of the fire. They claim that allowing the introduction of this irrelevant evidence was prejudicial to the plaintiff suggesting the evidence implied Robertson could not have been negligent because no one else filed a lawsuit and implying Brinegar and Hodges filed a meritless suit. At trial, Brinegar and Hodges' only objection was relevancy. We agree with Robertson that since the only basis for the objection is relevancy, nothing is properly preserved for appeal. Dean v. State (1982), Ind., 433 N.E.2d 1172. The determination of relevancy rests within the discretion of the trial court and a decision will only be reversed for a clear abuse of that discretion. Morris v. State (1982), Ind. App., 433 N.E.2d 74. No such clear abuse is present here. We find no error in admitting all of the foregoing testimony.
ISSUE THREE
Failure to respond to jury question after deliberation had begun. Finally Brinegar and Hodges contend that, after the jurors had retired for deliberations, they delivered a handwritten note to the trial court which stated: "The scales are balanced if it tips the least amount because of evidence?" Brinegar states that the trial court responded: "I can't answer the question. Do you want food?" Brinegar and Hodges assert the jurors should have been told in response to this message that if the scales of justice are tipped in a party's favor, then that party has met his burden. Robertson does not dispute that the jury presented its question to the court.[2] However, even if the jury question was as Brinegar and Hodges presented, we are not persuaded that the *819 trial court abused its discretion in not responding to the jury's handwritten note. Failure to answer a jury's question regarding the law during deliberations is not error per se, and the trial court must exercise discretion in determining whether certain questions of the jury should be answered. Bituminous Fire and Marine Insurance Company v. Culligan Fyrprotexion, Inc. (1982), 437 N.E.2d 1360, 1364; Smith v. State (1979), 270 Ind. 579, 388 N.E.2d 484; and Crowdus v. State (1982), 431 N.E.2d 796. Our supreme court has disapproved of giving of any single instruction after the jury has commenced deliberation except in limited circumstances. Jenkins v. State (1981), Ind., 424 N.E.2d 1002, 1003. Here, the court was under no duty to answer the jury's question nor under any duty to again read all of the instructions. Brinegar and Hodges do not contend the original instruction was ambiguous. Thus, we find no error. RATLIFF, C.J., concurring with separate opinion. CONOVER, J., dissenting with opinion. RATLIFF, Chief Judge, concurring. I concur completely with Judge Miller's opinion on the Issues One and Three. I concur in result as to Issue Two for the reasons hereinafter stated. In discussing the admissibility of expert testimony, Judge Miller appears to follow the archaic rule that for expert testimony to be admitted, the subject must be beyond the range of common knowledge and experience. I cannot accept this view of the law. In Summers v. State (1986), Ind. App., 495 N.E.2d 799, we laid the holding of the older cases to rest in favor of the modern view that expert testimony is admissible if the witness is qualified by knowledge, skill, experience, training, or education to give such testimony and that testimony would aid the jurors in understanding the facts. In Summers we said: "The trend of recent cases seems to focus more attention on the knowledge and skill of the expert and whether the expert's opinion will be helpful to the trier of fact than on the question of the knowledge of the jury. See E.W. Cleary, McCormick on Evidence, at 33 (3d ed. 1984). ..... The modern trend is away from strict application of the rule excluding expert testimony on subjects within the common knowledge of jurors. Carlson v. Hudson (1974), 19 Ill. App. 3d 576, 312 N.E.2d 19; Stanley v. Board of Education (1973), 9 Ill. App. 3d 963, 293 N.E.2d 417. `Traditionally, expert testimony has not been permitted when its subject matter is not beyond the knowledge and experience of the average juror [citation omitted], but more recently, the trend is to permit it if the expert has some special knowledge and his testimony is of aid to the jury even though the average juror would also have some knowledge of the subject matter. [Citations omitted.]'
Binge v. J.J. Borders Construction Co. (1981), 95 Ill. App. 3d 238, 50 Ill. Dec. 788, 791, 419 N.E.2d 1237, 1240. The modern standard for admissibility of expert testimony is whether that testimony will aid the jurors in understanding the facts. Johnson v. Commonwealth Edison Co. (1985), 133 Ill. App. 3d 472, 88 Ill. Dec. 449, 478 N.E.2d 1057. In order to be admitted into evidence, the expert testimony must assist the trier of fact in understanding the evidence or deciding a factual issue, and the witness must be qualified by knowledge, skill, experience, training, or education to give such testimony. Ruffiner v. Material Service Corp. (1985), 134 Ill. App. 3d 747, 89 Ill. Dec. 414, 480 N.E.2d 1157." 495 N.E.2d at 802-3. Our supreme court appeared to have adopted the Summers test in Mihay v. State (1987), Ind., 515 N.E.2d 498. Unfortunately, as pointed out by Judge Miller in Estate of Hunt v. Board of Commissioners of Henry County (1988), Ind. App., 526 N.E.2d 1230, our supreme court in Brooke v. State (1987), Ind., 516 N.E.2d 9, reverted *820 to the old rule. Again, in Henson v. State (1989), Ind., 535 N.E.2d 1189, the court reiterated the traditional rule. However, in Wissman v. State (1989), Ind., 540 N.E.2d 1209, 1213, our supreme court stated: "Expert testimony is inappropriate and may be excluded when it concerns matters within the common knowledge and experience of ordinary persons and which the jury may determine as well as the expert. Grimes v. State (1983), Ind., 450 N.E.2d 512. However, even if evidence is not beyond the knowledge and expertise of the average juror, the expert may nevertheless testify concerning his special knowledge of the subject. Summers v. State (1986), Ind. App., 495 N.E.2d 799." Therefore, I remain steadfast in my belief that the rule announced in Summers is the proper test for the admissibility of expert testimony. My opinion is buttressed further by the recognition of the holding in Summers in Justice Givan's opinion in Wissman. The standards embodied in the modern rule as espoused in Summers were met here. Further, I quite agree that a qualified expert witness may give an opinion as to an ultimate fact in issue. Breese v. State (1983), Ind. App., 449 N.E.2d 1098. CONOVER, Judge, dissenting. I respectfully dissent. The trial judge erred by removing the doctrine of res ipsa loquitur from the case. While the majority makes a distinction between fire cases and those involving other types of injury, I see no reason for such distinction. Further, if such distinction is proper, sufficient evidence under the Indiana rule was presented by Plaintiffs below to invoke the doctrine of res ipsa loquitur. Initially, the trial judge concluded at the close of the Plaintiffs' case in chief res ipsa loquitur did not apply because "Arson has not been ruled out. I don't think it would be fair to charge someone with a duty to prevent arson." (R. 331) The only mention of arson came during the cross-examination of the local fire inspector, Jack Butterfield. He testified during cross-examination: Q. With regard to other possible causes, have you ruled out arson[?] A. I never rule out arson. Q. Were there several fires with regard to businesses in a couple of year period [sic] in the mid-1980's. A. We've had our share. Q. In fact, did one person claim that he torched the Robertson Mill. A. Yes, he did. (R. 220) In Indiana, it is not necessary before the doctrine is invoked that the plaintiff exclude all other possible causes. Our supreme court clearly has said: ... It is appellant's position that since the evidence tended to establish that the accident could have resulted from more than one cause, i.e., negligence of appellant and/or a defective tire manufactured and sold by Firestone, the doctrine of res ipsa loquitur does not apply. With appellant's contention we cannot agree. To assert the doctrine of res ipsa loquitur it is not necessary to prove that the only cause of the accident was defendant's negligence. To the contrary it is said: `... the physical cause of the injury and the attendant circumstances indicate such an unusual occurrence that in the light of ordinary experience it would probably not have happened if those who had the management or control of the causative instrument had exercised proper care' [Supreme Court's emphasis] ... 21 I.L.E. Negligence, § 163, p. 401. It is therefore not necessary for a plaintiff to exclude every other possibility other than the defendant's negligence as a cause. This principle has been recognized in Indiana. `... A number of different causes or inferences may be thus left to the final determination of the triers of the facts' ... Merriman v. Kraft (1969), 253 Ind. 58, 249 N.E.2d 485, 487. *821 Plaintiffs below presented substantial evidence the fire could have been the result of Robertson's negligence. Fire inspector Butterfield testified Robertson's factory was an old, highly flammable wood building whose contents were volatile with dust present that could have been explosive. (R. 197) Further, there was some evidence from which the jury could have inferred the fire was the result of the bearings and motors situated in the basement of the mill becoming overheated because there was testimony the fire started in the basement. Butterfield testified he inspected two motors in the basement but the motors were burned so severely it could not be determined whether the motors were the cause. He further testified motors could experience electrical problems if the bearings became overheated. From this evidence, the jury could reasonably infer Robertson's negligence proximately caused the resulting fire albeit there was some evidence a third person "torched" the building. I believe it clear Plaintiffs below met the requirements listed in SCM Corp. v. Letterer (1983), Ind. App., 448 N.E.2d 686, 689. Without question (1) the event was not of a kind which ordinarily does not occur in the absence of someone's negligence; (2) Robertson's building and premises were within its exclusive possession and control; and (3) the fire was not due to any voluntary action or contribution by the plaintiffs. That there was some evidence a third person "torched the premises" is merely conflicting evidence to be weighed along with res ipsa loquitur's presumption of negligence by the fact finder at the conclusion of the trial. Merriman, 249 N.E.2d at 487. For those reasons, I believe the trial court erred. I vote to reverse. NOTES [1] Brinegar and Hodges cite cases in support of giving the instruction; however the cases cited all involved actions for damages where the cause of the fire was known. They rely on Smith v. Insurance Company of North America (1980), Ind. App., 411 N.E.2d 638, where a trash fire was left unattended by defendant's employee on defendant's property. They also cite Shull v. B.F. Goodrich Company (1985), Ind. App., 477 N.E.2d 924. Shull involved an action for damages for injuries suffered when a dock-plate (a mechanical device) malfunctioned, throwing plaintiff to the floor of his trailer. They also cite a California case, Levy-Zentner Co. v. Southern Pac. Transportation Co. (1977), 74 Cal. App. 3d 762, 142 Cal. Rptr. 1, where the fire was found to be caused by a third party. Because similar fires had occurred previously, the court held the fire was foreseeable, and held the defendant warehouse owner responsible. In the present case, Robertson had no reason to foresee arson.
Robertson cites McKinney Supply Company v. Orovitz (1957), Fla., 96 So. 2d 209, where a fire spread from the defendant's liquified petroleum plant to adjoining property. The court held plaintiffs were not entitled to rely on the doctrine because an essential element thereof the cause of the damage was not one which does not occur in the absence of negligence had not been proved. He also cites Tedrow v. Des Moines Housing Corp. (1958), 249 Iowa 766, 87 N.W.2d 463, 467, where the court found the cause of the fire was mere conjecture. The court held evidence need not be conclusive, but must rise above speculation. [2] Although the parties agree that the jury did present this question to the court, there is nothing in the record, pursuant to Appellate Rule 7.2, to indicate that such a question was indeed presented to the court, how the plaintiffs found out about this question, or what the judge's response was to such question. | 10-30-2013 | [
"550 N.E.2d 812 (1990) Gladys BRINEGAR and Harold F. Hodges, Appellants, v. ROBERTSON CORPORATION, Appellee. No. 47A04-8811-CV-388. Court of Appeals of Indiana, Fourth District. February 28, 1990. Transfer Denied June 7, 1990. *813 Edward F. McCrea, McCrea & McCrea, Bloomington, for appellants. James L. Whitlatch, Bunder, Robertson, Kelley & Steger, Bloomington, for appellee. MILLER, Judge. Plaintiffs-appellants Gladys Brinegar and Harold Hodges appeal the trial court's judgment in favor of defendant-appellee Robertson Corporation (Robertson) in an action based on negligence for property damages which occurred when a fire originated on Robertson's property and spread to adjacent property owned by Brinegar and Hodges. Brinegar and Hodges, claiming damages of $45,652.66 and $9,000.00 respectively, sued Robertson for negligence. At the trial, the court rejected Brinegar and Hodges' theory of res ipsa loquitur and the case proceeded on a theory of negligence. The jury found against Brinegar and Hodges.",
"Brinegar and Hodges appeal claiming the following issues:: 1. Whether the trial court erred in failing to give an instruction on the doctrine res ipsa loquitur and the granting of a motion for judgment on the evidence on this issue where the cause of the fire was undetermined; 2. Whether it was error for the trial court to permit two witnesses to testify that defendant's conduct was reasonable; that fires can start without fault; and that no other lawsuits were filed against Robertson, implying defendant could not have been negligent; 3. Whether it was error for the trial court to fail to give further instructions to the jury upon the receipt of a note from the jury after deliberations had begun. We affirm. FACTS In August, 1986 a fire occurred in Bedford, Indiana originating in a mill owned and operated by Robertson.",
"The fire began a few hours after the mill closed and spread to real estate owned by Brinegar and Hodges. *814 The mill was a large building primarily constructed of wood that had a portion of its structure built during the year 1881. The mill processed wheat into a biscuit flour-like substance that was sold as an adhesive extender, similar in purpose to glue, used in the manufacturing of plywood and veneers. The manufacturing process included the use of six large rollers, which needed lubrication because of friction involved, to grind the wheat. A dust control system was installed to prevent dust explosion. The building was regularly inspected by the fire department and always passed inspection.",
"There was no evidence the fire was caused by a dust explosion. Although Robertson did not have a central alarm system, sprinkling system, or a night watchman on its premises, Robertson took all precautions required of it or suggested to it by the local fire department. The building was regularly inspected and complied with all relevant codes. No sprinkling systems or alarms were required and there was testimony indicating that they probably would not have prevented the fire. The origin of the fire could not be determined by any expert.",
"Machines used in the mill were checked after the machines were turned off for the day. The motors were inspected after the fire and it was not determined that they had anything to do with the cause of the fire. There was testimony from experienced firefighting officials indicating that a fire can start without fault. There was also testimony that an individual had admitted starting the fire at the Robertson mill. Arson was not ruled out as a cause. Additional facts will be given when necessary to the decision. ISSUE ONE Removal of the doctrine of res ipsa loquitur from jury consideration. Brinegar and Hodges argue that the trial court erred by preventing the jury from considering whether the doctrine of res ipsa loquitur should apply to this case. At the conclusion of plaintiffs' evidence, Robertson made a motion for judgment on the evidence requesting that the doctrine be withdrawn from the jury.",
"After hearing argument of counsel, the trial judge removed the doctrine from the case because arson had not been ruled out. The judge reasoned that it was not \"fair to charge someone with a duty to prevent arson.\" Because the refusal of the instruction and judgment on the evidence are related, we will discuss these issues together. The doctrine of res ipsa loquitur is a rule of evidence whereby an inference of negligence can be drawn under certain factual circumstances. SCM Corp. v. Letterer (1983), Ind. App., 448 N.E.2d 686, 689. There are three prerequisites to the application of the doctrine. As stated in SCM Corporation, they are: (1) the event must be of a kind which ordinarily does not occur in the absence of someone's negligence; (2) it must be caused by an agency or instrumentality within the exclusive control of the defendant; and (3) it was not due to any voluntary action or contribution on the part of the plaintiff. See also W. Prosser, Law of Torts, § 39, page 214 (4th ed.",
"1971); I.L. Friemer and M. Friedman, Products Liability § 12.03. Robertson contends that the only prerequisite met in the present case is that the event was not due any voluntary action or contribution on the part of the plaintiffs, and, since the other prerequisites were not met, the granting of the directed verdict and the refusal of plaintiff's final instruction number one was proper. We agree. A review of the Indiana cases which have considered the res ipsa loquitur question reveals that there are no cases which address the issue of whether the doctrine can be considered by the jury when the cause of the fire has not been established.",
"[1] However, *815 a review of the cases from other jurisdictions reveal persuasive arguments that the doctrine should not apply under these circumstances. For instance, in Menth v. Breeze Corporation (1950), 4 N.J. 428, 73 A.2d 183, 18 A.L.R. 2d 1071, the plaintiffs suffered damage when their household furnishings and personal effects (located in their apartment) were destroyed by a fire which started in an adjoining shed on an unimproved lot which was leased and used by the defendant. In the shed were stored burlap bags, with an oily discolored appearance, which were used to transport waste aluminum shavings from the defendant's factory to the shed. The bags were emptied into another shed; however, they may have contained aluminum shavings which adhered to the insides of the bag.",
"The court discussed the rule of res ipsa loquitur as applied to cases involving fires in the following language which we find persuasive: The rule of res ipsa loquitur is infrequently applied to cases involving fires, and to a lesser extent to explosion cases. Kapros v. Pierce Oil Corp., 324 Mo. 992, 25 S.W.2d 777, 78 A.L.R. 722 (Mo.Sup.Ct. 1930); Highland Golf Club of Iowa Falls, Iowa v. Sinclair Refining Co., 59 F. Supp. 911, 919 (Iowa Dist.Ct. 1945); Keyser Canning Co. v. Klots Throwing Co., 94 W. Va. 346, 118 S.E.",
"521, 31 A.L.R. 283, 292 (W.Va.Sup.Ct. 1923); Noonan v. Great Atlantic & Pacific Tea Co., 104 N.J.L. 136, 138, 139 A. 9, 56 A.L.R. 590 (E. & A. 1927); 22 Am.Jur. (Explosions and Explosives) § 95, p 212. The reasons are not difficult to perceive. The cause of a fire is generally unknown, fires commonly occur where due care has been exercised as well as where due care was wanting. Where a fire originates on a defendant's premises, that alone is not evidence that it was started by the defendant, nor that the fire was caused by any negligence on its part. Little v. Lynn & Marblehead Real Estate Co., 301 Mass.",
"156, 16 N.E.2d 688 (Mass.Sup.Jud.Ct. 1938); Brownhill v. Kivlin, 317 Mass. 168, 57 N.E.2d 539, 540 (Mass.Sup.Jud. Ct. 1944); 22 Am Jur (Fires) §§ 75 and 76, pp. 642-643. Whether a fire case falls within the operation and scope of the res ipsa loquitur rule must of necessity depend upon the particular facts and circumstances appearing in the individual case. The surrounding circumstances under which a fire is communicated to the premises of a neighbor may in exceptional or unusual cases justify the application of the rule. The general rule, however, is that the destruction of property by fire, either on premises where it starts, or upon other property to which it is communicated, does not of itself raise a presumption of negligence in either the kindling or management of the fire unless there are special circumstances present that lead to a reasonable conclusion that due care was wanting.",
"22 Am Jur (Fires) 78, p 644. It is also essential to the application of the res ipsa loquitur doctrine that those seeking to obtain the benefit of its presumptive effect must show that in all probability the direct cause of the injury and so much of the surrounding circumstances *816 essential to its occurrence were in the exclusive control of the defendant, or his agents or servants. Hamrah v. Clements, 3 N.J. 285, 69 A.2d 720 (1949); Cf. Oelschlaeger v. Hahne & Co., 2 N.J. 490, 66 A.2d 861 (1949); Woschenko v. C. Schmidt & Sons, 2 N.J. 269, 274, 66 A.2d 159 (1949); Grugan v. Shore Hotels Finance, etc., Corp., 126 N.J.L. 257, 262, 18 A.2d 29; 38 Am.Jur. (Negligence) § 300, p. 996. In case of fire the rule requires that the actual cause of it must have been under the exclusive control of the party charged with negligence.",
"Under the testimony before us the fire may have resulted from one or more of several causes, including the acts of third parties or strangers over whom defendant had no control. Hamrah v. Clements, supra. Mere possession of the premises and shed from which the fire spread is not a basis for the application of the res ipsa loquitur rule. Additionally the instrumentality or thing causing the fire must be shown to warrant the application of the rule. Hamrah v. Clements, supra; cf. Oelschlaeger v. Hahne & Co., supra; The President Wilson, 5 F. Supp. 684, 686 (Cal.Dist.Ct. 1933); Highland Golf Club of Iowa Falls, Iowa v. Sinclair Refining Co., supra.",
"73 A.2d 183, 186-187. In Hahn v. Eastern Illinois Office Equipment Company (1976), 42 Ill. App. 3d 29, 355 N.E.2d 336 the rule was discussed as follows: The mere occurrence of a fire is not sufficient to invoke the doctrine of res ipsa loquitur. (Edmonds v. Heil (1948), 333 Ill. App. 497, 77 N.E.2d 863.) It is only when the fact of the fire plus the surrounding circumstances give rise to an inference of negligence that res ipsa loquitur is applicable. \"Res Ipsa Loquitur Fires,\" 8 A.L.R. 3d 974, 984, 992. The doctrine does not relieve the plaintiff of proving that negligence was the cause of the injury (Mabee v. Sutliff and Case Co., Inc. (1948), 335 Ill. App.",
"353, 366, 82 N.E.2d 63, 69-70), although it makes proof of negligence easier. Plaintiff cites several cases involving fires where res ipsa loquitur was held to be applicable. (Collgood, Inc. v. Sands Drug Co. (1972), 5 Ill. App. 3d 910, 284 N.E.2d 406; Arado v. Epstein (1944), 323 Ill. App. 194, 55 N.E.2d 561; Edmonds v. Heil; Oakdale Building Corp. v. Smithereen Co. (1944), 322 Ill. App.",
"222, 54 N.E.2d 231.) In each of these cases circumstances beyond the mere occurrence of the fire existed which justified the establishment of a prima facie case of negligence. In Collgood, defendant's employees were in the area of defendant's exclusive control to install fixtures. Shortly after their arrival, the fire department responded to an alarm there and found a space heater with red hot filiments one foot away from a burning box. In Arado, defendants and his workmen were the only once in the basement when the fire started. Under those circumstances the facts of the occurrence were peculiarly within the knowledge of the defendant. In Edmonds the fire occurred shortly after the janitor had fired the boiler. According to the testimony the janitor was mistakenly operating the system on \"pounds\" of pressure rather than \"ounces\". In Oakdale, a fire started within 15 minutes after one of defendant's employees had left the empty apartment.",
"In the case at bar, the witnesses who testified pinpointed the fire as originating in defendant's furnace. No other circumstances which could raise an inference of negligence were established. Accordingly the trial court was correct in holding that the doctrine of res ipsa loquitur was not applicable. See Welch v. New Harper Hotel Co. (1915), 196 Ill. App. 94. Plaintiff presented no evidence from which a jury could say that it is more likely than not that negligence was the cause of the fire. When no such balance of probabilities in favor of negligence can reasonably be found, res ipsa loquitur does not apply. Prosser, Torts, 218 (4th Ed. 1971). (Emphasis added) 355 N.E.2d at 339.",
"See 18 A.L.R. 2d 1081 (1951) Annot. Fire-Liability for Spread; 8 A.L.R. 3d 974 *817 (1966) Annot. Res Ipsa Loquitur Fires; 21 A.L.R. 4th, 929 (1983), Annot. Res Ipsa Loquitur Cause of Liability for Real Property Fires. The law is settled in Indiana that the defendant must have exclusive control of the offending instrumentality in order for the doctrine to apply. Shull v. B.F. Goodrich Co. (1985), Ind. App., 477 N.E.2d 924; SCM Corp. v. Letterer (1983), Ind. App., 448 N.E.2d 686. Here, the cause (the \"thing\" or \"instrumentality\" which caused the fire) was unknown. Thus, the trial court properly excluded the doctrine of res ipsa loquitur from consideration by the jury.",
"ISSUE TWO Improper admission of witness testimony. Brinegar and Hodges also cite as error the inclusion of testimony by several witnesses. They first complain that the trial court erred in allowing two witnesses to testify to the reasonableness of Robertson's conduct. They claim ordinary care, reasonableness, lack of negligence are all terms that a jury must determine. They cite Indianapolis St. R. Company v. Seerley (1904), 35 Ind. App. 467, 72 N.E. 169, rehearing denied 35 Ind. App. 467, 72 N.E.",
"1034, for the general rule that witnesses are not allowed to give their opinions as to what is ordinary care. They assert the first error occurred when the trial court allowed, over their objection, Bedford Fire Chief Don E. Tyree to answer questions by defense counsel as follows: Q: You didn't ask him [Robertson] to be perfect, did you? A: No, sir. Q. In fact, he was very reasonable was he not? [Objection overruled] Q. [to Court] ... I asked if in his opinion he was reasonable in the maintenance of the property your Honor [the Court: I think being the Chief of the fire department with 36 years of experience he has the qualifications to give an opinion so I will overrule the objection] ... I think he has already answered the question and the answer was yes. A: Yes. Indiana courts have established two rules governing admissibility of opinion testimony on the ultimate fact at issue. The rules are as follows: (1) the admissibility of lay opinion on the ultimate fact and issue rests within the discretion of the trial court; and (2) expert opinion evidence is admissible, even as to the ultimate fact in issue, where a subject does not come within the range of common knowledge or experience.",
"Breese v. State (1983), Ind. App., 449 N.E.2d 1098; Gerrick v. State (1983), Ind. App., 451 N.E.2d 327. Tyree, as fire chief of Bedford and associated with the Bedford Fire Department for thirty-six (36) years, is clearly qualified as an expert witness. He would also qualify as an expert witness based on his personal knowledge of the Robertson property. If a witness exhibits a degree of knowledge to make it appear his opinion is of some value, the witness may testify as an expert. Pollard v. State (1982), Ind. App., 439 N.E.2d 177. A court's decision regarding expert testimony is granted broad discretion and will only be reviewed for an abuse of that discretion. Lawhorn v. State (1983), Ind., 452 N.E.2d 915.",
"Brinegar and Hodges also complain that a second and more grievous error was committed when ex-fireman Charlie Robbins was allowed to say Robertson was reasonable and to give exculpatory possible explanations for the cause of the fire: Q: ... can fires start in the absence of any fault or anybody acting unreasonably? (Objection overruled) Q: I think he may have answered it, can fires start in the absence of any fault or anybody acting unreasonably. A: Yes. Q: In fact, do most fires start in that manner. MR. MC CREA: Same objection Your Honor. THE COURT: The objection is overruled. *818 A: Well, yes, a lot of fires do start with no fault because you have the speed of his feed belts for instance, you have numerous belts, motors throughout the building... . Robertson points out that Robbins also qualifies as an expert under Indiana law as Robbins had been with the Bedford Fire Department for twenty-six and a half years.",
"He had been Assistant Chief for the department for many years. He had also been a training officer with the fire department and had been to numerous fire training schools. Robbins had also inspected the Robertson mill several times. Robbins was asked the following questions immediately preceding the above questioning and gave the following answers without objection: Q. Based upon your experience with the Fire Department and your training, are there a variety of causes of fires? A. Well, yes there can be all types of situations that causes fires. Q. There are a lot of causes. A. You, got electrical situations, you got lightning, you got, you know, of course there is always (indiscernable) as far as that goes, well, there are just numerous instances. The question as to whether or not fires can start without anyone being negligent or at fault was clearly within the witness's knowledge and admissible. That fact, under the circumstances of this case, where the cause of the fire is unknown, was not an invasion of the jury's prerogative to determine negligence.",
"It was merely an expert's recognition of the same fact or circumstances of which our courts have regularly taken notice, that is, \"the cause of a fire is generally unknown, fires commonly occur where due care has been exercised as well as when due care was wanting.\" Menth v. Breeze, supra. Finally, Brinegar and Hodges contend that, over objection, Joe Robertson, was allowed to tell the jury that Robertson had not been involved in any other lawsuits as a result of the fire. They claim that allowing the introduction of this irrelevant evidence was prejudicial to the plaintiff suggesting the evidence implied Robertson could not have been negligent because no one else filed a lawsuit and implying Brinegar and Hodges filed a meritless suit. At trial, Brinegar and Hodges' only objection was relevancy. We agree with Robertson that since the only basis for the objection is relevancy, nothing is properly preserved for appeal.",
"Dean v. State (1982), Ind., 433 N.E.2d 1172. The determination of relevancy rests within the discretion of the trial court and a decision will only be reversed for a clear abuse of that discretion. Morris v. State (1982), Ind. App., 433 N.E.2d 74. No such clear abuse is present here. We find no error in admitting all of the foregoing testimony. ISSUE THREE Failure to respond to jury question after deliberation had begun. Finally Brinegar and Hodges contend that, after the jurors had retired for deliberations, they delivered a handwritten note to the trial court which stated: \"The scales are balanced if it tips the least amount because of evidence?\" Brinegar states that the trial court responded: \"I can't answer the question.",
"Do you want food?\" Brinegar and Hodges assert the jurors should have been told in response to this message that if the scales of justice are tipped in a party's favor, then that party has met his burden. Robertson does not dispute that the jury presented its question to the court. [2] However, even if the jury question was as Brinegar and Hodges presented, we are not persuaded that the *819 trial court abused its discretion in not responding to the jury's handwritten note. Failure to answer a jury's question regarding the law during deliberations is not error per se, and the trial court must exercise discretion in determining whether certain questions of the jury should be answered. Bituminous Fire and Marine Insurance Company v. Culligan Fyrprotexion, Inc. (1982), 437 N.E.2d 1360, 1364; Smith v. State (1979), 270 Ind.",
"579, 388 N.E.2d 484; and Crowdus v. State (1982), 431 N.E.2d 796. Our supreme court has disapproved of giving of any single instruction after the jury has commenced deliberation except in limited circumstances. Jenkins v. State (1981), Ind., 424 N.E.2d 1002, 1003. Here, the court was under no duty to answer the jury's question nor under any duty to again read all of the instructions. Brinegar and Hodges do not contend the original instruction was ambiguous. Thus, we find no error. RATLIFF, C.J., concurring with separate opinion. CONOVER, J., dissenting with opinion.",
"RATLIFF, Chief Judge, concurring. I concur completely with Judge Miller's opinion on the Issues One and Three. I concur in result as to Issue Two for the reasons hereinafter stated. In discussing the admissibility of expert testimony, Judge Miller appears to follow the archaic rule that for expert testimony to be admitted, the subject must be beyond the range of common knowledge and experience. I cannot accept this view of the law. In Summers v. State (1986), Ind. App., 495 N.E.2d 799, we laid the holding of the older cases to rest in favor of the modern view that expert testimony is admissible if the witness is qualified by knowledge, skill, experience, training, or education to give such testimony and that testimony would aid the jurors in understanding the facts. In Summers we said: \"The trend of recent cases seems to focus more attention on the knowledge and skill of the expert and whether the expert's opinion will be helpful to the trier of fact than on the question of the knowledge of the jury.",
"See E.W. Cleary, McCormick on Evidence, at 33 (3d ed. 1984). ..... The modern trend is away from strict application of the rule excluding expert testimony on subjects within the common knowledge of jurors. Carlson v. Hudson (1974), 19 Ill. App. 3d 576, 312 N.E.2d 19; Stanley v. Board of Education (1973), 9 Ill. App. 3d 963, 293 N.E.2d 417. `Traditionally, expert testimony has not been permitted when its subject matter is not beyond the knowledge and experience of the average juror [citation omitted], but more recently, the trend is to permit it if the expert has some special knowledge and his testimony is of aid to the jury even though the average juror would also have some knowledge of the subject matter.",
"[Citations omitted.]' Binge v. J.J. Borders Construction Co. (1981), 95 Ill. App. 3d 238, 50 Ill. Dec. 788, 791, 419 N.E.2d 1237, 1240. The modern standard for admissibility of expert testimony is whether that testimony will aid the jurors in understanding the facts. Johnson v. Commonwealth Edison Co. (1985), 133 Ill. App. 3d 472, 88 Ill. Dec. 449, 478 N.E.2d 1057. In order to be admitted into evidence, the expert testimony must assist the trier of fact in understanding the evidence or deciding a factual issue, and the witness must be qualified by knowledge, skill, experience, training, or education to give such testimony.",
"Ruffiner v. Material Service Corp. (1985), 134 Ill. App. 3d 747, 89 Ill. Dec. 414, 480 N.E.2d 1157.\" 495 N.E.2d at 802-3. Our supreme court appeared to have adopted the Summers test in Mihay v. State (1987), Ind., 515 N.E.2d 498. Unfortunately, as pointed out by Judge Miller in Estate of Hunt v. Board of Commissioners of Henry County (1988), Ind. App., 526 N.E.2d 1230, our supreme court in Brooke v. State (1987), Ind., 516 N.E.2d 9, reverted *820 to the old rule. Again, in Henson v. State (1989), Ind., 535 N.E.2d 1189, the court reiterated the traditional rule. However, in Wissman v. State (1989), Ind., 540 N.E.2d 1209, 1213, our supreme court stated: \"Expert testimony is inappropriate and may be excluded when it concerns matters within the common knowledge and experience of ordinary persons and which the jury may determine as well as the expert.",
"Grimes v. State (1983), Ind., 450 N.E.2d 512. However, even if evidence is not beyond the knowledge and expertise of the average juror, the expert may nevertheless testify concerning his special knowledge of the subject. Summers v. State (1986), Ind. App., 495 N.E.2d 799.\" Therefore, I remain steadfast in my belief that the rule announced in Summers is the proper test for the admissibility of expert testimony. My opinion is buttressed further by the recognition of the holding in Summers in Justice Givan's opinion in Wissman. The standards embodied in the modern rule as espoused in Summers were met here. Further, I quite agree that a qualified expert witness may give an opinion as to an ultimate fact in issue. Breese v. State (1983), Ind. App., 449 N.E.2d 1098. CONOVER, Judge, dissenting.",
"I respectfully dissent. The trial judge erred by removing the doctrine of res ipsa loquitur from the case. While the majority makes a distinction between fire cases and those involving other types of injury, I see no reason for such distinction. Further, if such distinction is proper, sufficient evidence under the Indiana rule was presented by Plaintiffs below to invoke the doctrine of res ipsa loquitur. Initially, the trial judge concluded at the close of the Plaintiffs' case in chief res ipsa loquitur did not apply because \"Arson has not been ruled out. I don't think it would be fair to charge someone with a duty to prevent arson.\" (R. 331) The only mention of arson came during the cross-examination of the local fire inspector, Jack Butterfield. He testified during cross-examination: Q.",
"With regard to other possible causes, have you ruled out arson[?] A. I never rule out arson. Q. Were there several fires with regard to businesses in a couple of year period [sic] in the mid-1980's. A. We've had our share. Q. In fact, did one person claim that he torched the Robertson Mill. A. Yes, he did. (R. 220) In Indiana, it is not necessary before the doctrine is invoked that the plaintiff exclude all other possible causes. Our supreme court clearly has said: ... It is appellant's position that since the evidence tended to establish that the accident could have resulted from more than one cause, i.e., negligence of appellant and/or a defective tire manufactured and sold by Firestone, the doctrine of res ipsa loquitur does not apply. With appellant's contention we cannot agree. To assert the doctrine of res ipsa loquitur it is not necessary to prove that the only cause of the accident was defendant's negligence.",
"To the contrary it is said: `... the physical cause of the injury and the attendant circumstances indicate such an unusual occurrence that in the light of ordinary experience it would probably not have happened if those who had the management or control of the causative instrument had exercised proper care' [Supreme Court's emphasis] ... 21 I.L.E. Negligence, § 163, p. 401. It is therefore not necessary for a plaintiff to exclude every other possibility other than the defendant's negligence as a cause. This principle has been recognized in Indiana. `... A number of different causes or inferences may be thus left to the final determination of the triers of the facts' ... Merriman v. Kraft (1969), 253 Ind. 58, 249 N.E.2d 485, 487. *821 Plaintiffs below presented substantial evidence the fire could have been the result of Robertson's negligence. Fire inspector Butterfield testified Robertson's factory was an old, highly flammable wood building whose contents were volatile with dust present that could have been explosive.",
"(R. 197) Further, there was some evidence from which the jury could have inferred the fire was the result of the bearings and motors situated in the basement of the mill becoming overheated because there was testimony the fire started in the basement. Butterfield testified he inspected two motors in the basement but the motors were burned so severely it could not be determined whether the motors were the cause. He further testified motors could experience electrical problems if the bearings became overheated. From this evidence, the jury could reasonably infer Robertson's negligence proximately caused the resulting fire albeit there was some evidence a third person \"torched\" the building. I believe it clear Plaintiffs below met the requirements listed in SCM Corp. v. Letterer (1983), Ind. App., 448 N.E.2d 686, 689.",
"Without question (1) the event was not of a kind which ordinarily does not occur in the absence of someone's negligence; (2) Robertson's building and premises were within its exclusive possession and control; and (3) the fire was not due to any voluntary action or contribution by the plaintiffs. That there was some evidence a third person \"torched the premises\" is merely conflicting evidence to be weighed along with res ipsa loquitur's presumption of negligence by the fact finder at the conclusion of the trial. Merriman, 249 N.E.2d at 487. For those reasons, I believe the trial court erred. I vote to reverse.",
"NOTES [1] Brinegar and Hodges cite cases in support of giving the instruction; however the cases cited all involved actions for damages where the cause of the fire was known. They rely on Smith v. Insurance Company of North America (1980), Ind. App., 411 N.E.2d 638, where a trash fire was left unattended by defendant's employee on defendant's property. They also cite Shull v. B.F. Goodrich Company (1985), Ind. App., 477 N.E.2d 924. Shull involved an action for damages for injuries suffered when a dock-plate (a mechanical device) malfunctioned, throwing plaintiff to the floor of his trailer. They also cite a California case, Levy-Zentner Co. v. Southern Pac.",
"Transportation Co. (1977), 74 Cal. App. 3d 762, 142 Cal. Rptr. 1, where the fire was found to be caused by a third party. Because similar fires had occurred previously, the court held the fire was foreseeable, and held the defendant warehouse owner responsible. In the present case, Robertson had no reason to foresee arson. Robertson cites McKinney Supply Company v. Orovitz (1957), Fla., 96 So. 2d 209, where a fire spread from the defendant's liquified petroleum plant to adjoining property. The court held plaintiffs were not entitled to rely on the doctrine because an essential element thereof the cause of the damage was not one which does not occur in the absence of negligence had not been proved. He also cites Tedrow v. Des Moines Housing Corp. (1958), 249 Iowa 766, 87 N.W.2d 463, 467, where the court found the cause of the fire was mere conjecture. The court held evidence need not be conclusive, but must rise above speculation.",
"[2] Although the parties agree that the jury did present this question to the court, there is nothing in the record, pursuant to Appellate Rule 7.2, to indicate that such a question was indeed presented to the court, how the plaintiffs found out about this question, or what the judge's response was to such question."
]
| https://www.courtlistener.com/api/rest/v3/opinions/2082070/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 1:19-mj-00306 Document 9 Filed on 03/07/19 in TXSD Page 1 of 1 United States District Court Southern District of Texas UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS ENTERED BROWNSVILLE DIVISION March 07, 2019 David J. Bradley, Clerk UNITED STATES OF AMERICA §
VS. § CASE NO.: B-19-MJ-306-01
Gerardo Rodriguez-Lois §
JUDGMENT
On March 7, 2019, defendant appeared in person and with appointed counsel, Rudy Rodriguez, Assistant Federal Public Defender.
Whereupon the defendant entered a plea of guilty to the offense being there and then a detainee held in custody or confinement under the laws of the United States, did willfully, knowingly, and unlawfully escape from a facility where he was being held for immigration proceedings, as charged in the Criminal Complaint; and the Court having asked the defendant whether he had anything to say why judgment should not pronounced, and no sufficient cause to the contrary being shown or appearing to the Court;
IT IS ADJUDGED that the defendant is guilty as charged and convicted.
The defendant is hereby sentenced to time served with one (1) year of Supervised Release (SRT) without supervision and a special assessment of $25.00 is imposed.
DONE at Brownsville, Texas, on March 7, 2019.
__________________________________ Ronald G. Morgan United States Magistrate Judge
R E T U R N
I have executed the within Judgment and Commitment as follows: Defendant delivered on ___________________ to __________________________________ at _____________________________________, with a certified copy of the Judgment.
By: _______________________________, Deputy U.S. Marshal | 2019-03-07 | [
"Case 1:19-mj-00306 Document 9 Filed on 03/07/19 in TXSD Page 1 of 1 United States District Court Southern District of Texas UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS ENTERED BROWNSVILLE DIVISION March 07, 2019 David J. Bradley, Clerk UNITED STATES OF AMERICA § VS. § CASE NO. : B-19-MJ-306-01 Gerardo Rodriguez-Lois § JUDGMENT On March 7, 2019, defendant appeared in person and with appointed counsel, Rudy Rodriguez, Assistant Federal Public Defender. Whereupon the defendant entered a plea of guilty to the offense being there and then a detainee held in custody or confinement under the laws of the United States, did willfully, knowingly, and unlawfully escape from a facility where he was being held for immigration proceedings, as charged in the Criminal Complaint; and the Court having asked the defendant whether he had anything to say why judgment should not pronounced, and no sufficient cause to the contrary being shown or appearing to the Court; IT IS ADJUDGED that the defendant is guilty as charged and convicted. The defendant is hereby sentenced to time served with one (1) year of Supervised Release (SRT) without supervision and a special assessment of $25.00 is imposed.",
"DONE at Brownsville, Texas, on March 7, 2019. __________________________________ Ronald G. Morgan United States Magistrate Judge R E T U R N I have executed the within Judgment and Commitment as follows: Defendant delivered on ___________________ to __________________________________ at _____________________________________, with a certified copy of the Judgment. By: _______________________________, Deputy U.S. Marshal"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/61424034/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Citation Nr: 0920140
Decision Date: 05/29/09 Archive Date: 06/08/09
DOCKET NO. 08-36 539 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Oakland,
California
THE ISSUE
Entitlement to a total disability rating based on individual
unemployability due to service-connected disabilities (TDIU).
REPRESENTATION
Appellant represented by: AMVETS
ATTORNEY FOR THE BOARD
Jennifer Margulies, Associate Counsel
INTRODUCTION
The Veteran served on active duty from December 1945 to
October 1947 and from July 1948 to June 1952.
This matter is before the Board of Veterans' Appeals (Board)
on appeal from a March 2008 rating decision of the Department
of Veterans Affairs (VA) Regional Office (RO) in Oakland,
California, which denied entitlement to TDIU.
Please note this appeal has been advanced on the Board's
docket pursuant to 38 C.F.R. § 20.900(c) (2008). 38 U.S.C.A.
§ 7107(a)(2) (West 2002).
FINDINGS OF FACT
1. The Veteran is service-connected for post traumatic
stress disorder (PTSD), evaluated as 50 percent disabling;
bilateral hearing loss, evaluated as 20 percent disabling;
and tinnitus, evaluated as 10 percent disabling. The
Veteran's combined evaluation for compensation is 60 percent
disabling.
2. The Veteran also suffers from the following non-service
connected disabilities: seborrheic keratoses, rosacea,
hypertension, hyperlipidemia, obesity and sleep apnea.
3. The medical evidence of record does not demonstrate that
the Veteran is unemployable solely due to his service-
connected disabilities.
CONCLUSION OF LAW
The criteria for TDIU have not been met. 38 U.S.C.A. §§
1155, 5103, 5107 (West 2002); 38 C.F.R. §§ 3.340, 3.341(a),
4.16, 4.25 (2008).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
The Veteran contends that he is unable to secure gainful
employment due to his service-connected disabilities. In a
statement received in January 2009 he reported that although
his PTSD was troublesome and caused social problems, it was
his hearing loss that was most difficult to deal with and was
most obstructive if he needed to be in gainful employment.
Total disability ratings for compensation based on individual
unemployability may be assigned when the combined schedular
rating for the service-connected disabilities is less than
100 percent and when it is found that the service-connected
disabilities are sufficient to produce unemployability
without regard to advancing age, provided that, if there is
only one such disability, this disability is ratable at 60
percent or more, or, if there are two or more disabilities,
there is at least one disability ratable at 40 percent or
more and additional disabilities to bring the combined rating
to 70 percent or more. The Veteran's employment history, his
educational and vocational attainment, as well as his
particular physical disabilities are to be considered in
making a determination on unemployability. 38 C.F.R. §
3.340, 3.341, 4.16 (2008).
The Veteran's service-connected disabilities, alone, must be
sufficiently severe to produce unemployability. Hatlestad v.
Brown, 5 Vet. App. 524, 529 (1993). In determining whether
unemployability exists, consideration may be given to the
Veteran's level of education, special training, and previous
work experience, but not his age or to any impairment caused
by non-service connected disabilities. 38 C.F.R. §§ 3.341,
4.16, 4.19.
In this case, service connection is in effect for the
following disabilities: PTSD, evaluated as 50 percent
disabling; bilateral hearing loss, evaluated as 20 percent
disabling; and tinnitus, evaluated as 10 percent disabling.
The combined evaluation for compensation is 60 percent
disabling. Therefore, because the Veteran does not have one
service-connected disability rated as at least 60 percent or
two or more disabilities with a combined rating of a least 70
percent, the initial criteria for schedular consideration for
the grant of TDIU under 38 C.F.R. § 4.16(a) are not met.
Since the Veteran fails to meet the percentage standards as
set forth in 38 C.F.R.
§ 4.16(a), the Board must consider whether there is evidence
to warrant assignment of a TDIU on an extra-schedular basis,
pursuant to 38 C.F.R.
§ 4.16(b). The Veteran's service-connected disabilities,
employment history, educational and vocational attainment,
and all other factors bearing on the issue must be addressed.
38 C.F.R. § 4.16(b) (2008).
For the Veteran to prevail on a claim for TDIU on an extra-
schedular basis, the record must reflect some factor that
takes the case outside the norm. The sole fact that a
claimant is unemployed or has difficulty obtaining employment
is not enough. A disability rating in itself is recognition
that the impairment makes it difficult to obtain or keep
employment, but the ultimate question is whether the Veteran
is capable of performing the physical and mental acts
required by employment, not whether he can find employment.
Van Hoose v. Brown, 4 Vet. App. 361 (1993).
A review of the record shows that the Veteran did not
graduate from high school and obtained his GED while in
service. In addition to his service-connected disabilities,
the Veteran's medical records also reveal a history of
seborrheic keratoses, rosacea, hypertension, hyperlipidemia,
obesity and sleep apnea.
The Veteran is currently 80 years of age and retired after 35
years of working as a train conductor. A February 2008 VA
examination stated that the Veteran has been retired for a
number of years and "is not intending to return to work."
The examiner concluded that the Veteran's hearing loss has no
effect on his occupational functioning. On the most recent
PTSD examination in July 2007 the examiner indicated that
PTSD symptoms were having a moderate to severe effect on the
Veteran but the examiner did not indicate unemployability due
to PTSD. His cognitive functioning was intact. The Veteran
has not indicated that he has attempted to look for
employment subsequent to retiring.
None of the VA medical records ascribe an inability to work
due to the Veteran's service-connected disabilities; in fact,
the evidence shows that he retired from his job after working
for 35 years. While the Board does not wish to minimize the
nature and extent of the Veteran's overall disability, the
evidence of record does not support his claim that his
service-connected disabilities are sufficient to produce
unemployability without regard to his advancing age.
The Board finds that there is no evidence showing anything
out of the ordinary in the Veteran's situation, which would
warrant extra-schedular consideration. In making this
determination, the Board is not refuting the Veteran's noted
physical and psychiatric limitations. Even if the Veteran
has considerable difficulty hearing and some social
limitations due to his service-connected disabilities, there
is no evidence showing he is unable to sustain gainful
employment solely due to his service-connected disabilities.
Thus, the Board finds that TDIU is not warranted on a
schedular or on an extra-schedular basis at this time.
Duty to Notify and Assist
The Veterans Claims Assistance Act of 2000 (VCAA) imposes
obligations on VA in terms of its duty to notify and assist
claimants. When VA receives a complete or substantially
complete application for benefits, it is required to notify
the claimant and the representative, if any, of any
information and medical or lay evidence that is necessary to
substantiate the claim. 38 U.S.C.A. § 5103(a); 38 C.F.R. §
3.159(b) (2008); Quartuccio v. Principi, 16 Vet. App. 183
(2002). In Pelegrini v. Principi, 18 Vet. App. 112, 120-21
(2004), the Court held that VA must inform the claimant of
any information and evidence not of record (1) that is
necessary to substantiate the claim; (2) that VA will seek to
provide; and (3) that the claimant is expected to provide.
The Board concludes that the Veteran has been afforded
appropriate notice under the VCAA. The RO provided a VCAA
notice letter to the Veteran in December 2007, prior to the
initial adjudication of the claim. The letter notified the
Veteran of what information and evidence must be submitted to
substantiate a claim for TDIU.
As to informing the Veteran of which information and evidence
he was to provide to VA and which information and evidence VA
would attempt to obtain on his behalf, VA informed him it had
a duty to obtain any records held by any federal agency. It
also informed him that on his behalf, VA would make
reasonable efforts to obtain records that were not held by a
federal agency, such as records from private doctors and
hospitals. The VCAA letter of December 2007 stated that he
would need to give VA enough information about the records so
that it could obtain them for him.
The Court in Dingess/Hartman holds that the VCAA notice
requirements of
38 U.S.C.A. § 5103(a) and 38 C.F.R. § 3.159(b) apply to all
five elements of a service connection claim. As previously
defined by the courts, those five elements include: (1)
veteran status; (2) existence of a disability; (3) a
connection between the veteran's service and the disability;
(4) degree of disability; and (5) effective date of the
disability.
Elements (1), (2) and (3) (veteran status, current existence
of a disability and relationship of such disability to the
veteran's service), are not at issue. Regarding elements (4)
(degree of disability) and (5) (effective date of the
disability), he was provided with notice of the type of
evidence necessary to establish a disability rating in the
December 2007 letter.
VA must also make reasonable efforts to assist the claimant
in obtaining evidence necessary to substantiate the claim for
the benefit sought, unless no reasonable possibility exists
that such assistance would aid in substantiating the claim.
38 U.S.C.A. § 5103A; 38 C.F.R. § 3.159. In connection with
the current appeal, VA has obtained the Veteran's service
treatment records and VA treatment records. Given the
absence of any competent and credible evidence suggesting
that the Veteran's service-connected disabilities render him
unemployable, a VA examination is not needed in this case.
The evidence of record is sufficient to equitably adjudicate
the Veteran's claim.
For the foregoing reasons, the Board concludes that all
reasonable efforts were made by VA to obtain evidence
necessary to substantiate the claim. The evidence of record
provides sufficient information to adequately evaluate the
claim. Therefore, no further assistance to the veteran with
the development of evidence is required. 38 U.S.C.A.
§ 5103A; 38 C.F.R. § 3.159; Mayfield v. Nicholson, 444 F.3d
1328 (Fed. Cir. 2006).
ORDER
Entitlement to TDIU is denied.
____________________________________________
HOLLY E. MOEHLMANN
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs | 05-29-2009 | [
"Citation Nr: 0920140 Decision Date: 05/29/09 Archive Date: 06/08/09 DOCKET NO. 08-36 539 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in Oakland, California THE ISSUE Entitlement to a total disability rating based on individual unemployability due to service-connected disabilities (TDIU). REPRESENTATION Appellant represented by: AMVETS ATTORNEY FOR THE BOARD Jennifer Margulies, Associate Counsel INTRODUCTION The Veteran served on active duty from December 1945 to October 1947 and from July 1948 to June 1952. This matter is before the Board of Veterans' Appeals (Board) on appeal from a March 2008 rating decision of the Department of Veterans Affairs (VA) Regional Office (RO) in Oakland, California, which denied entitlement to TDIU. Please note this appeal has been advanced on the Board's docket pursuant to 38 C.F.R. § 20.900(c) (2008). 38 U.S.C.A. § 7107(a)(2) (West 2002).",
"FINDINGS OF FACT 1. The Veteran is service-connected for post traumatic stress disorder (PTSD), evaluated as 50 percent disabling; bilateral hearing loss, evaluated as 20 percent disabling; and tinnitus, evaluated as 10 percent disabling. The Veteran's combined evaluation for compensation is 60 percent disabling. 2. The Veteran also suffers from the following non-service connected disabilities: seborrheic keratoses, rosacea, hypertension, hyperlipidemia, obesity and sleep apnea. 3. The medical evidence of record does not demonstrate that the Veteran is unemployable solely due to his service- connected disabilities. CONCLUSION OF LAW The criteria for TDIU have not been met. 38 U.S.C.A. §§ 1155, 5103, 5107 (West 2002); 38 C.F.R. §§ 3.340, 3.341(a), 4.16, 4.25 (2008). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran contends that he is unable to secure gainful employment due to his service-connected disabilities. In a statement received in January 2009 he reported that although his PTSD was troublesome and caused social problems, it was his hearing loss that was most difficult to deal with and was most obstructive if he needed to be in gainful employment.",
"Total disability ratings for compensation based on individual unemployability may be assigned when the combined schedular rating for the service-connected disabilities is less than 100 percent and when it is found that the service-connected disabilities are sufficient to produce unemployability without regard to advancing age, provided that, if there is only one such disability, this disability is ratable at 60 percent or more, or, if there are two or more disabilities, there is at least one disability ratable at 40 percent or more and additional disabilities to bring the combined rating to 70 percent or more. The Veteran's employment history, his educational and vocational attainment, as well as his particular physical disabilities are to be considered in making a determination on unemployability.",
"38 C.F.R. § 3.340, 3.341, 4.16 (2008). The Veteran's service-connected disabilities, alone, must be sufficiently severe to produce unemployability. Hatlestad v. Brown, 5 Vet. App. 524, 529 (1993). In determining whether unemployability exists, consideration may be given to the Veteran's level of education, special training, and previous work experience, but not his age or to any impairment caused by non-service connected disabilities. 38 C.F.R. §§ 3.341, 4.16, 4.19. In this case, service connection is in effect for the following disabilities: PTSD, evaluated as 50 percent disabling; bilateral hearing loss, evaluated as 20 percent disabling; and tinnitus, evaluated as 10 percent disabling. The combined evaluation for compensation is 60 percent disabling. Therefore, because the Veteran does not have one service-connected disability rated as at least 60 percent or two or more disabilities with a combined rating of a least 70 percent, the initial criteria for schedular consideration for the grant of TDIU under 38 C.F.R. § 4.16(a) are not met. Since the Veteran fails to meet the percentage standards as set forth in 38 C.F.R. § 4.16(a), the Board must consider whether there is evidence to warrant assignment of a TDIU on an extra-schedular basis, pursuant to 38 C.F.R.",
"§ 4.16(b). The Veteran's service-connected disabilities, employment history, educational and vocational attainment, and all other factors bearing on the issue must be addressed. 38 C.F.R. § 4.16(b) (2008). For the Veteran to prevail on a claim for TDIU on an extra- schedular basis, the record must reflect some factor that takes the case outside the norm. The sole fact that a claimant is unemployed or has difficulty obtaining employment is not enough. A disability rating in itself is recognition that the impairment makes it difficult to obtain or keep employment, but the ultimate question is whether the Veteran is capable of performing the physical and mental acts required by employment, not whether he can find employment. Van Hoose v. Brown, 4 Vet. App. 361 (1993). A review of the record shows that the Veteran did not graduate from high school and obtained his GED while in service. In addition to his service-connected disabilities, the Veteran's medical records also reveal a history of seborrheic keratoses, rosacea, hypertension, hyperlipidemia, obesity and sleep apnea.",
"The Veteran is currently 80 years of age and retired after 35 years of working as a train conductor. A February 2008 VA examination stated that the Veteran has been retired for a number of years and \"is not intending to return to work.\" The examiner concluded that the Veteran's hearing loss has no effect on his occupational functioning. On the most recent PTSD examination in July 2007 the examiner indicated that PTSD symptoms were having a moderate to severe effect on the Veteran but the examiner did not indicate unemployability due to PTSD.",
"His cognitive functioning was intact. The Veteran has not indicated that he has attempted to look for employment subsequent to retiring. None of the VA medical records ascribe an inability to work due to the Veteran's service-connected disabilities; in fact, the evidence shows that he retired from his job after working for 35 years. While the Board does not wish to minimize the nature and extent of the Veteran's overall disability, the evidence of record does not support his claim that his service-connected disabilities are sufficient to produce unemployability without regard to his advancing age. The Board finds that there is no evidence showing anything out of the ordinary in the Veteran's situation, which would warrant extra-schedular consideration. In making this determination, the Board is not refuting the Veteran's noted physical and psychiatric limitations.",
"Even if the Veteran has considerable difficulty hearing and some social limitations due to his service-connected disabilities, there is no evidence showing he is unable to sustain gainful employment solely due to his service-connected disabilities. Thus, the Board finds that TDIU is not warranted on a schedular or on an extra-schedular basis at this time. Duty to Notify and Assist The Veterans Claims Assistance Act of 2000 (VCAA) imposes obligations on VA in terms of its duty to notify and assist claimants. When VA receives a complete or substantially complete application for benefits, it is required to notify the claimant and the representative, if any, of any information and medical or lay evidence that is necessary to substantiate the claim. 38 U.S.C.A. § 5103(a); 38 C.F.R. § 3.159(b) (2008); Quartuccio v. Principi, 16 Vet. App. 183 (2002). In Pelegrini v. Principi, 18 Vet. App. 112, 120-21 (2004), the Court held that VA must inform the claimant of any information and evidence not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; and (3) that the claimant is expected to provide. The Board concludes that the Veteran has been afforded appropriate notice under the VCAA.",
"The RO provided a VCAA notice letter to the Veteran in December 2007, prior to the initial adjudication of the claim. The letter notified the Veteran of what information and evidence must be submitted to substantiate a claim for TDIU. As to informing the Veteran of which information and evidence he was to provide to VA and which information and evidence VA would attempt to obtain on his behalf, VA informed him it had a duty to obtain any records held by any federal agency. It also informed him that on his behalf, VA would make reasonable efforts to obtain records that were not held by a federal agency, such as records from private doctors and hospitals. The VCAA letter of December 2007 stated that he would need to give VA enough information about the records so that it could obtain them for him.",
"The Court in Dingess/Hartman holds that the VCAA notice requirements of 38 U.S.C.A. § 5103(a) and 38 C.F.R. § 3.159(b) apply to all five elements of a service connection claim. As previously defined by the courts, those five elements include: (1) veteran status; (2) existence of a disability; (3) a connection between the veteran's service and the disability; (4) degree of disability; and (5) effective date of the disability. Elements (1), (2) and (3) (veteran status, current existence of a disability and relationship of such disability to the veteran's service), are not at issue. Regarding elements (4) (degree of disability) and (5) (effective date of the disability), he was provided with notice of the type of evidence necessary to establish a disability rating in the December 2007 letter. VA must also make reasonable efforts to assist the claimant in obtaining evidence necessary to substantiate the claim for the benefit sought, unless no reasonable possibility exists that such assistance would aid in substantiating the claim. 38 U.S.C.A. § 5103A; 38 C.F.R.",
"§ 3.159. In connection with the current appeal, VA has obtained the Veteran's service treatment records and VA treatment records. Given the absence of any competent and credible evidence suggesting that the Veteran's service-connected disabilities render him unemployable, a VA examination is not needed in this case. The evidence of record is sufficient to equitably adjudicate the Veteran's claim. For the foregoing reasons, the Board concludes that all reasonable efforts were made by VA to obtain evidence necessary to substantiate the claim. The evidence of record provides sufficient information to adequately evaluate the claim.",
"Therefore, no further assistance to the veteran with the development of evidence is required. 38 U.S.C.A. § 5103A; 38 C.F.R. § 3.159; Mayfield v. Nicholson, 444 F.3d 1328 (Fed. Cir. 2006). ORDER Entitlement to TDIU is denied. ____________________________________________ HOLLY E. MOEHLMANN Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs"
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 United States v. Nos. 01-5602/5603/5666/5667 ELECTRONIC CITATION: 2003 FED App. 0239P (6th Cir.) Solorio et al. File Name: 03a0239p.06
_________________ UNITED STATES COURT OF APPEALS COUNSEL FOR THE SIXTH CIRCUIT ARGUED: Robert L. Marlow, Shelbyville, Tennessee, _________________ Michael D. Noel, Nashville, Tennessee, for Appellants. John A. Drennan, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: UNITED STATES OF AMERICA , X Robert L. Marlow, Shelbyville, Tennessee, Michael D. Noel, Plaintiff-Appellee, - Nashville, Tennessee, Thomas J. Drake, Jr., Nashville, - Tennessee, Paul J. Bruno, BRUNO, HAYMAKER & - Nos. 01-5602/ HEROUX, Nashville, Tennessee, for Appellants. John A. v. - 5603/5666/5667 Drennan, UNITED STATES DEPARTMENT OF JUSTICE, > Washington, D.C., Robert Anderson, ASSISTANT UNITED , JOSE RUIZ SOLORIO - STATES ATTORNEY, Nashville, Tennessee, for Appellee. (01-5602); RICKY MART IN - LUNA (01-5603); DELMAS - _________________ DENNIS (01-5666); MARCO - OPINION JUAREZ (01-5667), - _________________ Defendants-Appellants. - - KAREN NELSON MOORE, Circuit Judge. Delmas N Dennis, Marco Juarez, Jose Ruiz Solorio, and Ricky Martin Appeal from the United States District Court Luna were all arrested for conspiring to possess with the for the Middle District of Tennessee at Nashville. intent to distribute cocaine in violation of 21 U.S.C. § 841, as No. 99-00120—Aleta A. Trauger, District Judge. well as for other various drug-related crimes. The four defendants were part of a vast drug enterprise that brought Submitted and Argued: April 29, 2003 large quantities of cocaine and marijuana into Nashville. They were convicted by a jury of these crimes and given Decided and Filed: July 22, 2003 sentences ranging from 210 months (Solorio) to 292 months (Juarez). Before: MOORE and ROGERS, Circuit Judges; KATZ, District Judge.* On appeal, they together raise nine claims of error. For the reasons that follow, we find none of their claims of error persuasive, and so we AFFIRM the judgment of the district court. * The Honorable David A. Katz, United States District Judge for the Northern District of Ohio, sitting by designation.
1 Nos. 01-5602/5603/5666/5667 United States v. 3 4 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
I. BACKGROUND were stored at Solorio’s ranch. McMurry and Booker gave the money to pay for the cocaine and marijuana to Juarez, A. Factual Background who gave it to Luna, who gave it to the parties owed. The defendants in this case were all part of a drug ring that 1. Juarez’s Role in the Conspiracy bought, transported, and sold sizeable amounts of marijuana and cocaine. The leaders of this operation (which was based Juarez was employed directly by McMurry and Booker. in Nashville) were Terrell McMurry and Timothy Booker. They paid him a salary, roughly between four and five McMurry and Booker, as putative defendants, entered into thousand dollars a month. Juarez helped McMurry and plea agreements with the government, and thus became the Booker transport and unload cocaine. He also helped send government’s key witnesses at trial. They testified cash payments back to McMurry’s and Booker’s suppliers. extensively to the roles of the four defendants in the overall As the operation developed, McMurry, Booker, and Rocha conspiracy. rented an apartment for Juarez in Chicago so that Juarez could deliver drugs to McMurry’s and Booker’s customers there. McMurry and Booker began distributing cocaine and marijuana in 1994. They had two main sources of drugs. The In addition to McMurry’s and Booker’s testimony, there first were Omar Rocha Rodriguez (known as Omar Rocha) was considerable other evidence against Juarez. Juarez was and Adriana Rocha Espinoza (a woman who lived with stopped by police in Chicago on October 30, 1998. He Rocha). Rocha and Espinoza lived in San Diego and sent consented to a search, in which the FBI discovered that the drugs to McMurry and Booker through Chicago. The vehicle had been retrofitted with hidden compartments of a shipments from Rocha and Espinoza, which each consisted of type that were used for transporting drugs. The FBI between twenty and forty kilograms of cocaine, came three intercepted phone calls between Juarez and McMurry times from May 1998 to August 1999 (this being the time discussing Juarez’s plans to unload a shipment of drugs into period stated in the indictment). The second source of drugs Hearn’s house and revealing that one of the 50-pound came from a source known as “Alex,” who was in Chicago. shipments of marijuana was short. The FBI also intercepted phone calls between Juarez and Booker discussing various At trial, Booker and McMurry explained that the drug-related matters. Juarez was photographed with conspiracy operated in the following way. When the drugs McMurry and Booker visiting Rocha in San Diego and was arrived in Nashville, they were delivered by a green Tahoe also seen with Rocha in Chicago several times. truck, which Luna (who was also known as “Playboy”) would meet. The drugs were unloaded by Luna, Juarez, McMurry, More evidence against Juarez was obtained in the course of and Quentin Hearn.1 The drugs were generally kept at the his arrest on March 18, 1999. That morning Juarez had left homes of Juarez, McMurry, or Hearn. Especially large loads the apartment he leased at 710 Saxony Drive in a white pickup, went to Hearn’s residence to unload the forty pounds of marijuana that were in the truck, and was arrested while 1 driving away. After his arrest, the police searched his Quentin Hearn, M cMurry’s cousin, was another putative defendant apartment pursuant to a valid search warrant. In the who accepted a deal with the government and testified against the apartment, they found two 9-mm Glock handguns. The guns defendants at trial. Nos. 01-5602/5603/5666/5667 United States v. 5 6 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
were located inside a pair of boots, which were on top of a were a Mexican passport, a visa, and a border-crossing card small black bag. Inside the bag was a variety of drug all with the name Omar Saenz Neda.2 The picture in the trafficking tools: a money counter, drug ledgers, paper passport, however, was of Luna. money wrappers, and rubber bands. In the search of the apartment, officers found one of Luna’s pagers. They also 3. Dennis’s Role in the Conspiracy found drug ledgers with the name “Cepillo” next to some figures. Dennis was McMurry’s and Booker’s largest drug customer; McMurry testified that Dennis normally received 2. Luna’s Role in the Conspiracy half of each arriving drug shipment. Hearn testified that he delivered the drugs to Dennis at his store and returned Luna, like Juarez, aided in the transport and delivery of Dennis’s payment to McMurry and Booker. In one drugs, counted drug money, and transported McMurry and transaction, Dennis paid McMurry $60,000 for cocaine. Booker’s cash payments back to the drug suppliers. Luna was not employed directly by McMurry and Booker. Instead, he It was through a wiretap that the government discovered worked principally for Rocha and was seen with him in that Dennis was involved with McMurry. Government agents Chicago several times. intercepted a conversation between Dennis and McMurry. Though the conversation was essentially in code — Dennis In addition to Booker’s and McMurry’s testimony against and McMurry deliberately used phrases and terms that only Luna, there was other independent evidence implicating Luna those inside the conspiracy would understand — McMurry in the conspiracy. On January 29, 1999, the Nashville police “decoded” the conversation at trial, explaining how the stopped Luna. They found that his vehicle, like Juarez’s, had conversation really was about how Dennis owed $6,000 to been retrofitted with hidden compartments. The FBI, who McMurry and how Dennis needed to return a number of was intercepting McMurry’s conversations, overheard short-weighed kilograms of cocaine (known as “bad checks”). McMurry and Espinoza discussing this stop. Luna was also visually spotted by the government both with McMurry (in a parking garage) and with Rocha and Espinoza (in the Los Angeles Airport). On April 15, 1999, after Juarez had been arrested, the police searched Luna’s Nashville apartment pursuant to a valid warrant. They found transaction receipts bearing his name, receipts bearing Juarez’s and Espinoza’s names, and a document indicating that a “Solorio Ruiz Jose” (presumably the defendant, Jose Ruiz Solorio) had rented an automobile. 2 In a subsequent search of Rocha’s residence, officers found a wallet The police also found a drug ledger, balls of elastic bands with a Mexican driver’s license, a Mexican voting card, and a Mexican commonly used in drug transactions, a number of cellular birth certificate all in the name of Omar Saenz N eda. In this search, telephones, and a yellow sheet of paper with “Sepillo” written police found several pieces of paper with “Cepillo” and “Jose Ruiz” written on them, drug ledgers, and a personal planner with Luna’s, on it. Two days later, Luna was arrested. In his possession Juarez’s, and Solorio’s names, and Solorio’s cell-phone numbe r. Nos. 01-5602/5603/5666/5667 United States v. 7 8 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
4. Solorio’s Role in the Conspiracy Solorio. Solorio was asked if he was “Cepillo” and raised his hand and nodded.5 McMurry testified that after Solorio was Jose Ruiz Solorio, who was known as “Cepillo,”3 was more arrested, Solorio approached him in jail and told him that he loosely connected to these drug transactions. While Booker had 40 kilograms of drugs buried at his Nashville ranch that and McMurry knew the other three defendants intimately and needed to be excavated. testified extensively against them, they had less of a connection to Solorio. McMurry and Booker never talked to B. The Results of the Jury Trial or met Solorio before his arrest. McMurry did testify, however, that they often stored drugs at Solorio’s ranch in the The jury convicted the defendants on different counts of the Nashville area. indictment. All were convicted on Count 7 of the indictment, which alleged that the defendants had conspired to possess The more significant ties were between Solorio and Rocha. with intent to distribute cocaine in the amount of 5 kilograms The FBI intercepted several telephone conversations between or more from May 31, 1998 to August 17, 1999. While them. In one of these essentially coded conversations, Juarez, Luna, and Dennis were all convicted on Count 7 in the Solorio spoke of getting one thousand “tires” out in a week — full amount of 5 kilograms or more, Solorio was only “tires” apparently being euphemisms for units of cocaine. convicted of conspiring with respect to 500 grams or more. After the FBI intercepted another of Solorio’s and Rocha’s conversations, Solorio was photographed with Rocha and Dennis was convicted only on Count 7. He was sentenced another man by the name of Moises Picos-Picos.4 to 240 months. Luna was convicted on Count 4 (conspiracy to possess with intent to distribute 100 kilograms of Moises Picos-Picos, who also testified for the government marijuana) as well as Count 7. Luna was sentenced to 235 at trial, worked for Solorio. Solorio leased an apartment for months. Solorio, in addition to Count 7, was convicted on Picos-Picos and arranged for him to come over from Tijuana Count 10 (possession with intent to distribute 500 grams or to help Solorio. Picos-Picos undertook many drug-related more of cocaine) and Count 11 (possession with intent to tasks for Solorio, such as delivering bags of cocaine and distribute 100 kilograms or more of marijuana). Solorio was money and keeping records of his drug transactions. sentenced to 210 months. Juarez was convicted on Counts 2 (possession with intent to distribute 500 grams or more of On August 17, 1999 (after the arrests of Juarez and Luna), cocaine), 3 (attempt to conduct a financial transaction law enforcement officers executed an arrest warrant for affecting interstate commerce involving the proceeds of unlawful activity), and 4 (conspiracy to possess with intent to 3 Bo th Officer Ta ylor and Agent W illiams testified that Cepillo was an alias for Solorio. Agent Go mez, a translator with the FBI, testified that 5 The name “Cep illo” had been found in doc uments in Ro cha’s her analysis of the wiretapped conversations revealed that Cepillo was residence along with pap ers with the name “Jo se Ruiz” (Solorio’s first actually a nickname for Solorio. Moreover, Solorio admitted at one point name). “Cepillo” was listed as a client in the drug ledger found in that he was known as Cepillo, as discussed below. Solorio’s nam e is Juare z’s apartment. The name “Cepillo Tires” was found in ledgers in often spelled “Solario” in various documents related to this case. Luna’s apartment (“tires” again often being used as a code for units of 4 cocaine). A receipt bearing Solorio’s real name was also found at Luna ’s Picos-Picos is sometimes known as Picos-Peraza or just Peraza. apartment. Nos. 01-5602/5603/5666/5667 United States v. 9 10 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
distribute 100 kilograms or more of marijuana), as well as 1. Standard of Review Count 7. He was sentenced to concurrent terms, the longest of which is 292 months. “This court reviews de novo a denial of a motion for judgment of acquittal, but affirms the decision ‘if the II. ANALYSIS evidence, viewed in the light most favorable to the government, would allow a rational trier of fact to find the The defendants raise a total of nine issues on appeal. The defendant guilty beyond a reasonable doubt.’” United States defendants allege that the district court erred in holding that v. Harrod, 168 F.3d 887, 889-90 (6th Cir.) (citation omitted), the evidence was sufficient and that a new trial was not cert. denied, 526 U.S. 1127 (1999). needed, failed to exclude the testimony of government witnesses after they violated a sequestration order, improperly 2. Luna’s Insufficiency Claim refused to dismiss a juror who knew a government witness in the case, imposed sentences in violation of Apprendi, failed Luna alleges that the evidence against him was insufficient properly to resolve contested issues of fact as required by because, when he was arrested, there were no drugs or large Federal Rule of Criminal Procedure 32, improperly enhanced sums of money in his possession. Nevertheless, we hold that a sentence for the possession of a firearm, unacceptably failed the evidence is clearly sufficient against him. McMurry, to reduce a sentence for a defendant’s mitigating role, Booker, and Hearn all testified extensively against Luna, improperly enhanced a sentence for a defendant’s supervisory explaining that Luna transported and delivered drugs and paid role, and failed to depart downwards on a number of off their suppliers. Luna was photographed with Rocha discretionary issues. As we explain below, we conclude that several times. State police had stopped Luna in a car outfitted none of these contentions of error have merit. for transporting narcotics, and this incident became a topic of conversation between McMurry and Espinoza. A search of A. Sufficiency of the Evidence Juarez’s apartment revealed Luna’s cell phone. A search of Luna’s apartment revealed drug ledgers, balls of elastic bands Luna and Solorio argue that the district court erred in commonly used in drug transactions, and a number of cellular denying their Federal Rule of Criminal Procedure 29 motions telephones. Finally, when Luna was arrested, he was found for acquittal. Ultimately, we conclude that the evidence with a Mexican passport, a visa, and a border-crossing card against them is sufficient to uphold their convictions, and so all with the name Omar Saenz Neda. Luna’s argument that we reject their claims. Solorio then makes the related the evidence was somehow insufficient because he did not argument that the jury finding that he possessed with intent to possess any drugs on his person at the time of his arrest is distribute 500 grams of cocaine is fundamentally inconsistent simply unpersuasive. with the indictment (which alleged that he possessed with intent to distribute 5 kilograms of cocaine). As we consider 3. Solorio’s Insufficiency Claim the facts adduced at trial not to be fatally incompatible with the indictment, we reject this claim. Solorio also claims that the evidence was insufficient against him. Solorio argues that the evidence was not sufficient to support the jury verdict on Count 7 (the conspiracy charge) or on Counts 10 and 11 (the possession Nos. 01-5602/5603/5666/5667 United States v. 11 12 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
charges). Solorio also argues that a fatal variance was created pounds of marijuana and $210,500. In the context of this between the evidence adduced at trial and the terms of the case, we find this testimony sufficient to support Solorio’s indictment. We reject all of these claims of error. convictions on Counts 10 and 11.6 a. Sufficiency of the Evidence With Respect to c. The Alleged Inconsistency Between the Count 7 Indictment and the Jury Verdict Solorio’s first argument is that there was not sufficient Related to Solorio’s sufficiency arguments is his argument evidence to convict him of the conspiracy to distribute that the evidence adduced at trial was inconsistent with the cocaine charge (Count 7). While the evidence is not quite as terms of the indictment, necessitating reversal. We conclude overwhelming as it was in Luna’s case, the evidence against that this claim is without merit as well. Solorio is certainly sufficient. There is evidence that Solorio was connected to McMurry’s and Booker’s operation. The jury found Solorio guilty on Count 7 of conspiring to Because Rocha was McMurry’s and Booker’s supplier, possess with intent to distribute 500 grams of cocaine. Solorio as Rocha’s agent was part of the conspiracy. In Solorio seems to argue that this is inconsistent with the addition, there were far more direct ties between Solorio and indictment, because Count 7 of the indictment alleged that McMurry’s and Booker’s operation. McMurry explicitly Solorio (as well as the other defendants) conspired to possess testified that his and Booker’s drugs were kept at Solorio’s with intent to distribute 5 kilograms of cocaine. We interpret ranch. As described earlier, searches of Rocha’s, Luna’s, and this claim as arguing either that a variance developed between Juarez’s apartments all revealed evidence that Solorio was a part of their combined operation. There was also extensive testimony from Picos-Picos establishing Solorio’s relationship with Rocha and the various drug deals he made 6 Solo rio makes the related argument that the district court erred in and authorized Picos-Picos to conduct. We hold that a denying his Federal Rule of Criminal Procedure 33 motion for a new trial reasonable jury could well have found that Solorio was part because the verdict was against the weight of the evidence. We review of the Count 7 conspiracy. the district court’s decision on this ground for an abuse of discretion. United States v. Fro st, 125 F.3d 346 , 382 (6th C ir. 199 7), cert. denied, 525 U.S. 810 (199 8). In evaluating a Rule 33 motion based on the weight b. Sufficiency of the Evidence With Respect to of the evidence, unlike a sufficiency claim, “the trial judge can consider Counts 10 and 11 the cred ibility of the witnesses and the weight of the evidence to insure that there is not a miscarriage of justice. It has often been said that he/she Solorio also claims that there is insufficient evidence to sits as a thirteenth juror.” Un ited States v. A shworth, 836 F.2d 260, 266 support his conviction on Counts 10 and 11, which are (6th Cir. 1988) (quotation omitted). For the reasons exp lained imme diately above , the evidence ag ainst charges of possession of 500 grams or more of cocaine and Solo rio was certainly adequate, especially given the wide discretion given 100 kilograms or more of marijuana. We hold that there is to the district co urt judge. See id. (“Th e cou rt of appeals, howe ver, does sufficient evidence to support these charges. Picos-Picos not sit as a ‘thirteenth juror’ to judge the credibility of witnesses . . . . testified that Solorio arranged for Picos-Picos to deliver one Rather, we are limited to examining the evidence produced at trial to kilogram of cocaine. Solorio’s drug records, as Picos-Picos determine whether the district court’s determination that the evidence does not ‘prepond erate heavily against the verdict’ is a clear and m anifest testified, showed a single drug transaction involving 500 abuse of discretion.”) (citation omitted). Nos. 01-5602/5603/5666/5667 United States v. 13 14 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
the indictment and the facts adduced at trial or that the unless ‘substantial rights’ of the defendant have been indictment was constructively amended.7 affected,” while a constructive amendment is per se prejudicial. Id. (citation omitted); see also United States v. “This court reviews de novo the determination as to Manning, 142 F.3d 336, 339 (6th Cir. 1998) (stating that a whether there has been an amendment to, or variance from, an substantial right of the defendant is violated by a variance indictment.” United States v. Smith, 320 F.3d 647, 656 (6th “only when a defendant proves prejudice to his ability to Cir.) (emphasis removed), cert. denied, 123 S. Ct. 1954 defend himself or to the overall fairness of the trial”). (2003). There is a difference between these two terms. “A variance [to the indictment] occurs when the charging terms Solorio can show neither a prejudicial variance nor a [of the indictment] are unchanged, but the evidence at trial constructive amendment. The facts adduced at trial were not proves facts materially different from those alleged in the materially different from those alleged in the indictment. The indictment. In contrast, an amendment involves a change, concept of variance is designed to prevent the prosecution whether literal or in effect, in the terms of the indictment.” from convicting the defendant of a different offense, not a United States v. Chilingirian, 280 F.3d 704, 711 (6th Cir. lesser variation on the charged offense. See Charles Alan 2002) (quotations omitted). “This Circuit has held that a Wright, 3 Federal Practice & Procedure § 516, at 25 (2d ed. variance rises to the level of a constructive amendment when 1982) (stating that “a defendant may be convicted of a lesser the terms of an indictment are in effect altered by the offense necessarily included in the offense with which he is presentation of evidence and jury instructions which so charged” and noting that the principle of variance only modify essential elements of the offense charged that there is prevents him from “be[ing] convicted of a different offense”). a substantial likelihood that the defendant may have been Solorio’s complaint here is merely that he was convicted of convicted of an offense other than that charged in the a lesser-included offense, which is perfectly appropriate under indictment.” Id. at 712 (quotation omitted). Federal Rule of Criminal Procedure 31. See Fed. R. Crim. P. 31(c) (stating that “[a] defendant may be found guilty of any Although the distinction between a variance and a of the following: (1) an offense necessarily included in the constructive amendment has been called “sketchy,” we have offense charged”). Solorio therefore cannot show a noted that the “consequences of each are significantly prejudicial variance, because he cannot show that the different.” Id. “A variance will not constitute reversible error variance affected his ability to defend himself. He similarly cannot show a constructive amendment to the indictment because he was not “convicted of an offense other than that 7 charged in the indictment.” Chilingirian, 280 F.3d at 712. The government argues that this issue was not raised in the district court and therefore should be reviewed for plain error. The governme nt is correct when it points out that Solorio never specifically made an We considered a case materially identical to this one in a argument about an improper variance in his motion for acquittal. He did, recent unpublished opinion. United States v. Vazquez, 49 however, state in that motion that since the jury found that Solorio did not Fed. Appx. 550, 2002 WL 31367162 (6th Cir. Oct. 18, 2002), conspire to distribute five kilograms, “the government failed to prove an cert. denied, 123 S. Ct. 1331 (2003). In Vazquez, “the essential element of Count 7 against Defendant Solorio.” J.A. at 21 5. W e indictment charged Vazquez and his co-defendants with a hold that Solorio did adequately raise the variance issue, although we agree that this argument was awkwardly phrased both in the district court cocaine conspiracy that involved at least twelve kilograms of and on ap peal. cocaine, which would have violated 21 U.S.C. Nos. 01-5602/5603/5666/5667 United States v. 15 16 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
§ 841(b)(1)(A).” Id. at 552 (footnote omitted). The jury, Booker, after the court discovered that the two had conversed however, “specifically found that Vazquez conspired to during a trial recess. Assuming that there was a violation of distribute more than five hundred grams but less than five the relevant rule, we believe that the district court promptly kilograms of cocaine.” Id. at 551. Since § 841(b)(1)(A) and effectively remedied the violation, rendering total requires a conspiracy of five kilograms or more, Vazquez was exclusion of McMurry’s and Booker’s testimony unnecessary. convicted of a conspiracy under § 841(b)(1)(B). As a result, we reject the defendants’ claims of error. We dismissed Vazquez’s claim of a fatal variance or 1. Facts Surrounding the Sequestration Order constructive amendment: McMurry and Booker were the key witnesses for the Even if Vazquez can show a variance between the government against the four defendants. McMurry testified indictment and the proof at trial . . . we are not persuaded first, testifying on Wednesday, September 20, 2000, through that it is substantially likely that Vazquez was convicted Friday, September 22, 2000. Booker did not testify until of an offense other than the one charged in the Tuesday, September 26. On Saturday, September 23, the indictment. Vazquez was charged with a § 841(b)(1)(A) government found out that Booker and McMurry had a cocaine conspiracy and convicted of the lesser-included conversation about the case in a holding cell where they were offense of a § 841(b)(1)(B) cocaine conspiracy. See Fed. both confined. The conversation took place on Thursday, R. Crim. P. 31(c). Because the essential elements of the September 21, during a trial break. The government brought former necessarily include those of the latter, we hold the issue before the district court, and a hearing was held on that the indictment was not constructively amended and this issue on Monday, September 25. Both Booker and affirm Vazquez’s conviction. McMurry testified. Id. at 552-53. This case involves an identical fact pattern. According to both Booker and McMurry, the conversation The indictment charged Solorio with a conspiracy involving was brief. Booker initiated the conversation by asking more than five kilograms under § 841(b)(1)(A). While the McMurry how his testimony was going, to which McMurry jury did not find Solorio had conspired with respect to five responded that the defense lawyers were “going to try to trip kilograms or more (which would have established a violation [Booker] up on some dates.” J.A. at 1337 (Trial Test. of of § 841(b)(1)(A)), the jury did find that Solorio had Booker). McMurry referred to one date in particular, conspired with respect to 500 grams or more, which made out “sometime in October when Carlos [Brittain] got pulled the requirements of § 841(b)(1)(B). The jury merely over.” J.A. at 1348. Booker responded by saying that he did convicted Solorio of a lesser-included offense, and as a result, not remember any dates and that he would just admit to not his claims of prejudicial variance and constructive remembering them. McMurry told Booker he was not amendment are meritless. impressed with the attorneys involved in the case and that defendant Dennis should have plea bargained. Booker also B. Sequestration Order testified that McMurry mentioned something about six VIP tickets and six thousand dollars, though McMurry denied that All four defendants raise the issue of whether the district court erred in failing to strike the testimony of McMurry and Nos. 01-5602/5603/5666/5667 United States v. 17 18 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
he said anything about the tickets or the money.8 Booker testifying and that the portion of McMurry’s testimony that plainly stated that nothing that McMurry had said affected his was subsequent to the violation should have been struck. testimony. 2. Sequestration Analysis The district court found that there was a violation of Federal Rule of Evidence 615. However, the district court We review the district court’s decision regarding found that there was no evidence that the government had sequestration of witnesses for an abuse of discretion. United arranged (or even known about) the violation of Rule 615, States v. Gibson, 675 F.2d 825, 835 (6th Cir.), cert. denied, and no evidence that any of the defendants had been 459 U.S. 972 (1982). prejudiced by this violation. The district court took three steps to remedy the violation. It foreclosed the government Federal Rule of Evidence 615 states that “[a]t the request of from asking Booker (who had not yet testified) about the stop a party the court shall order witnesses excluded so that they of Carlos Brittain, the VIP tickets, or the $6,000. The district cannot hear the testimony of other witnesses.” Fed. R. Evid. court allowed the parties to explore the sequestration violation 615. This rule codifies, to an extent, the sequestration powers fully in cross-examination, which they did. The district court of the trial judge at common law; we have stated that its also instructed the jury that they could consider the Rule 615 purpose is to prevent “the influencing of a witness’ testimony violation in making credibility determinations. Defense by another witness.” United States v. Rugiero, 20 F.3d 1387, counsel also repeatedly pointed out the violation in closing 1392 (6th Cir.) (citing Gibson, 675 F.2d at 835), cert. denied, argument, encouraging the jury to devalue Booker’s and 513 U.S. 878 (1994). However, while the purpose of the rule McMurry’s testimony. is apparent; its purview is not. Circuits have split on the question of whether “the scope of Rule 615 extends beyond On appeal, all the defendants argue that the district court’s the courtroom to permit the court to preclude out-of-court remedies for the sequestration violation were insufficient, communication between witnesses about the case during claiming that Booker should have been disqualified from trial.” Charles Alan Wright & Victor James Gold, 29 Federal Practice & Procedure § 6243, at 61 (1997); compare United States v. Sepulveda, 15 F.3d 1161, 1176 (1st Cir. 1993) (stating that Rule 615 authorizes a trial court to “‘order 8 Governm ent agents intercepted a conversation between Dennis and witnesses excluded’ only from the courtroom proper”) McM urry where the two discussed the fact that Dennis owed $6,000 to (citation omitted), cert. denied, 512 U.S. 1223 (1994), with McM urry and the fact that Dennis needed to return a number of “bad United States v. Prichard, 781 F.2d 179, 183 (10th Cir. 1986) checks.” J.A. at 785 (Trial Test. of McMurry). McM urry exp lained in (stating that a “sequestration order pursuant to Fed. R. Evid. court that the $6,000 was “drug mo ney that [Dennis] owed me from the 615 requires not only that witnesses be excluded from the drugs that I fronted him.” J.A. at 501 (Trial Test. of McM urry). Apparently, Dennis attempted to rebut McM urry’s explanation of the courtroom, but that witnesses also refrain from discussing conversation by suggesting that the $6,000 was not for drugs, but was for their testimony outside the courtroom”). This court once VIP tic ke ts to a c on cert. D en nis claim s th at M cM urry’s stateme nt to suggested in dicta that the rule’s ambit extends beyond the Bo oker abo ut the V IP tickets and the $6 ,000 may ha ve be en M cM urry’s courtroom. See Rugiero, 20 F.3d at 1394 (“[W]e think it attempt to persuade Booker to testify that the $6,000 was owed for drugs unnecessary, once the rule is invoked, that either party need and not VIP tickets, thereby corroborating McM urry’s story and undermining Dennis’s defense. ask the court to instruct each witness not to discuss his Nos. 01-5602/5603/5666/5667 United States v. 19 20 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
testimony with another witness yet to testify.”). This court in Gibson, 675 F.2d at 836 (quoting Holder v. United States, Rugiero did not, however, resolve the issue; we assumed that 150 U.S. 91, 912 (1893)); see also Charles Alan Wright & there was a violation of the rule but concluded that in any Victor James Gold, 29 Federal Practice & Procedure § 6246, event the violation was not prejudicial. Id. (“But even if we at 93-95 (1997) (explaining that the district judge has many count this as a violation . . . we find no prejudicial error in the options when faced with a violation of Rule 615, including district court’s rulings.”). holding the witness in contempt, holding the counsel who is responsible for the violation in contempt, allowing the As in Rugiero, we feel no need to decide the delicate issue witness to be cross-examined, explaining the significance of of whether Rule 615 extends beyond the courtroom. the violation to the jury, declaring a mistrial, striking the Assuming that Rule 615 extends to cover this situation and witness’s testimony in part, and disqualifying the witness that it was violated by the witnesses in this case, we hold that from testifying entirely). As Gibson notes, we only permit district court’s remedy to the alleged violation was exclusion in “particular circumstances,” such as where a appropriately fashioned and well within her discretion.9 It is “witness has remained in court with the ‘consent, connivance, well settled in this circuit that a “‘violation of an order procurement, or knowledge’ of the party seeking his directing that witnesses be separated does not automatically testimony.” Gibson, 675 F.2d at 836 (citation omitted) bar a witness’ testimony.’” Id. (citation omitted). Instead: (holding it was not an abuse of discretion for the district court to bar a party’s witness from testifying after the witness had If a witness disobeys the order of withdrawal, while he remained in open court with the party’s knowledge in may be proceeded against for contempt and his testimony violation of a sequestration order). Exclusion is considered is open to comment to the jury by reason of his conduct, a very severe remedy. See John W. Strong, McCormick on he is not thereby disqualified, and the weight of authority Evidence § 50, at 210 (5th ed. 1999) (“The courts are is that he cannot be excluded on that ground merely, markedly reluctant to resort to the drastic remedy of although the right to exclude under particular disqualifying the witness.”); Charles Alan Wright & Victor circumstances may be supported as within the sound James Gold, 29 Federal Practice & Procedure § 6246, at 95 discretion of the trial court. (1997) (calling it a “drastic remed[y] that impose[s] significant hardship on a party that loses the testimony of a key witness”).10 Moreover, in order for a party to receive a 9 new trial based on a district court’s failure to exclude Of course, even if Rule 6 15 o nly applies to in-court communications testimony, we have also held that the party must show that the between witnesses, trial courts still would “retain[] discretion to preclude error prejudiced its right to a fair trial. Rugiero, 20 F.3d at such out-of-court communications between witnesses as a function of the court’s general powers to manage the conduct of the trial.” Charles Alan W right & Victor James Gold, 29 Federal Practice & Proced ure § 6243, 10 at 62 (1997). Such orders a re “generally thought to be a standard Given the rare circumstances under which this remedy is justified concomitant of basic sequestration fare, serving to fortify the protections as well as the district court’s discretion not to impose it, the authors of offered by Rule 615,” United States v. Sepulveda, 15 F.3d 1161, 1176 (1st Federal Practice and Procedure “have found no federal appeals court Cir. 199 3), cert. denied, 512 U.S. 1223 (1994), and we mean to cast no decision holding that the failure to disqualify a witness after violation of aspersions on their use. an exclusion order is an abuse of discretion.” Charles A lan W right & In the case at bar, no independent seque stration order wa s issued, so Victor James Gold, 29 Federal Practice & Procedure § 6246, at 96 n.22 our only concern here is the protections afforded by Rule 615. (1997). Nos. 01-5602/5603/5666/5667 United States v. 21 22 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
1394 (holding that it was not an abuse of discretion for a Brittain’s stop.11 Second, McMurry may have stated district court to permit a witness’s testimony even after the something about VIP tickets and six thousand dollars. In witness had violated the sequestration order with the response, the district court prevented the government from knowledge of the witness’s party because the error was not inquiring into this subject with Booker. These limitations prejudicial). prevented Booker’s testimony from being tainted by Booker’s and McMurry’s conversation. Additionally, the district court We conclude that the defendants have not shown that gave a specific instruction to the jury regarding the violation exclusion was necessary in this case. First, the defendants do of the Rule, and allowed the defense counsel to raise the not even argue that the prosecution had any knowledge of the violation in their cross-examinations of Booker and in their clandestine meeting between McMurry and Booker. Our closing arguments. These sensible and well-tailored steps not decision in Gibson suggests that exclusion of a witness is only prevented the defendants from being prejudiced, but also only justified when the party seeking the testimony did not unduly interfere with the government’s case. As a knowingly violates the sequestration order. Both Gibson and result of these careful measures, the defendants are now Rugiero involved parties that knew of their witness’s unable to show that the district court’s failure to exclude the sequestration violation at the time it took place. Rugiero, in witnesses was prejudicial. See Rugiero, 20 F.3d at 1394 fact, upheld a district court’s order not to exclude the witness (requiring prejudice before exclusion could be ordered); because of a lack of prejudice, though it called the issue “a Charles Alan Wright & Victor James Gold, 29 Federal close one.” Id. Here, none of the defendants even argue that Practice & Procedure § 6246, at 91-92 (1997) (stating that the prosecution knew about the violation of the sequestration “[v]iolation of an exclusion order is prejudicial if the witness order at the time of its occurrence. who violated that order subsequently gave important testimony that was influenced by the testimony of other Even if exclusion could be an appropriate remedy in a case witnesses”). There is no evidence that any significant aspect like this one — where the sequestration rule was violated of Booker’s testimony was influenced by McMurry’s without the knowledge of the party seeking to use the testimony of the sequestered witness — the measures taken by the district judge eliminated any prejudice the defendants 11 Juarez argues that even McM urry’s and Booker’s general could have possibly faced as a result of the violation. discussion about dates prejudiced his defense. Juarez argues that McM urry lied when he stated o n the stand that there were coc aine deals McMurry made two statements to Booker that potentially after May of 1998, and claims that McM urry discussed dates with Booker could have influenced his testimony. First, McMurry to get him to corroborate McMurry’s lie. mentioned that he was quizzed about dates. Only one date in Juare z’s claim is pure speculation. Not only is there no evidence that particular was mentioned and that was the date that Carlos McM urry lied on the stand, there also is no eviden ce that McM urry and Booker discussed the date when the cocaine deals ceased or referred to the Brittain was stopped by police. In response, the district court May 1998 d ate. McM urry told Booker that the defendants’ lawyers were prevented the government from asking Booker about going to try to trip Booker up on dates; Booker then stated that he did not remember any dates and that he would just admit to failing to remember them. Other than discussing the date of the stop of Carlos Brittain, there was no discussion of particular dates or eve nts that occurred o n those dates. Juarez’s claim that he was prejudiced by the discussion of dates is therefore not at all persuasive. Nos. 01-5602/5603/5666/5667 United States v. 23 24 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
previous testimony. We therefore dismiss this contention of 2. Legal Analysis error. “‘[A] district court’s determination on a motion for either C. Juror Misconduct a new trial or relief from judgment because a juror failed to fully disclose information during voir dire is reversible only Luna and Solorio raise the issue of whether the district for either an abuse of discretion . . . or a clear error of law in court erred in not granting a new trial based on the fact that a the exercise of this discretion.’” Zerka v. Green, 49 F.3d juror had not explained during voir dire his relationship with 1181, 1184 (6th Cir. 1995) (citation omitted). one of the government’s witnesses. Because Luna and Solorio have not shown deliberate concealment or actual bias There are two ways in which a party seeking a new trial on the part of the juror, their claim fails. based on a juror’s concealment of information can obtain a new trial. First, if a juror deliberately conceals material 1. Factual Background information on voir dire, the party seeking a new trial can obtain relief by showing that the juror could have been On September 22, 2000, during the fourth day of trial, juror challenged for cause. See Zerka, 49 F.3d at 1185 (“‘We hold James Fox submitted a note to the judge. The note explained that to obtain a new trial in such a situation, a party must first that Fox had worked with government witness Donna Webber demonstrate that a juror failed to answer honestly a material at Opryland. Fox was called into court. He stated that he question on voir dire, and then further show that a correct worked with Webber at Opryland from 1982 to 1989, in food response would have provided a valid basis for a challenge service. Initially, the district judge believed that Fox should for cause.’”) (quoting McDonough Power Equip., Inc. v. be disqualified, but the government suggested that Fox could Greenwood, 464 U.S. 548, 555-56 (1984)) (emphases still be a fair juror. The court then interrogated Fox on the removed). In such a case, “bias may [but need not] be nature of his relationship with Webber. Fox stated that they inferred.” Zerka, 49 F.3d at 1186 (emphasis removed). were merely coworkers and not friends, never socializing with each other outside of work. Fox had no opinion as to It is possible, however, that a juror could have concealed Webber’s truthfulness and stated that his previous information in a non-deliberate fashion, through an “honest, relationship with her would not affect his evaluation of her though mistaken, response.” Id. at 1186 n.7. If information testimony or make him more or less likely to believe the is not deliberately concealed, bias may not be inferred. government’s representation of the facts. Instead, “the movant must show actual bias” in order to obtain a new trial. Id. at 1186 (emphasis removed).12 Counsel for Juarez objected, stating that had he known about the relationship between Fox and Webber, he would have exercised his peremptories differently. Counsel for 12 Some circuits have held that a showing of deliberate concealment Solorio and Luna also objected. is necessary for relief under McDonough. See Fitzgerald v. Greene, 150 F.3d 357 , 364 n.3 (4th Cir.) (listing cases), cert. den ied, 525 U.S. 956 (1998). As Fitzgerald reports, however, we rejected that position in Zerka, when we held that “McDonough doe s not entirely foreclose a p arty from seeking a new trial on the basis of a prospective juror’s honest, though mistaken response.” Zerka v. Green, 49 F .3d 1 181 , 118 6 n.7 (6th Nos. 01-5602/5603/5666/5667 United States v. 25 26 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
Luna and Solorio have not shown that they are entitled to Court’s decision in Apprendi v. New Jersey, 530 U.S. 466 relief under either of these prongs. First, there has been no (2000). As we conclude that their sentences were all within showing of deliberate concealment. We find it eminently the prescribed statutory maximums, however, we reject their plausible that James Fox only remembered having met Donna challenges. Webber when she appeared on the stand and began testifying. The defendants have pointed to nothing (such as one of Fox’s Count 7 charged Juarez, Luna, and Solorio with conspiring answers to a question asked in voir dire) that contradicts this to possess with intent to distribute five kilograms or more of point, which is also supported by the fact that Fox went cocaine. The jury found Juarez and Luna guilty under Count directly to the judge after hearing Webber’s testimony. 7 with a quantity of cocaine that was five kilograms or more. The jury found Solorio guilty under Count 7, but found that Second, there has been no showing that Fox was actually the cocaine involved was less than five kilograms, but was biased. Fox was repeatedly asked whether his relationship 500 grams or more. Juarez and Luna were sentenced pursuant with Webber would have any effect on his perception of her to 21 U.S.C. § 841(b)(1)(A), which applies to convictions testimony. He repeatedly and unambiguously answered that involving quantities of cocaine of five kilograms or more and it would not. We find this conclusion particularly reasonable provides a statutory sentencing range of ten years to life in in light of the fact that Fox and Webber’s relationship was prison. Juarez received a sentence of 292 months, and Luna limited in scope and had ended over a decade before the trial received a sentence of 235 months. Solorio was sentenced commenced.13 pursuant to 21 U.S.C. § 841(b)(1)(B), which applies to convictions involving cocaine quantities of 500 grams or D. Apprendi Violations more and provides a statutory range of five to forty years of imprisonment. Solorio received a sentence of 210 months. Juarez, Luna, and Solorio claim that the district judge used, for sentencing purposes, a drug quantity not found by the The defendants allege that Apprendi was violated by the jury, thereby violating principles laid out in the Supreme district court when, in determining base offense levels under the Guidelines, it held the defendants responsible for a higher quantity of drugs than determined by the jury. The district judge determined Juarez and Luna’s base levels after finding Cir. 1995). 150 kilograms of cocaine. The district judge determined 13 Solorio’s base level after finding forty-three kilograms of The defendants’ argum ent that they may ha ve exe rcised their cocaine. peremptory challenges against Fox if they had known about his connection with Webbe r is unavailing. A showing that the juror The defendants’ Apprendi claims have no merit. The mere deliberately concealed information and could have been challenged for cause (or, alternatively, that the juror was actually biased) must be made. fact that the district judge computed the defendants’ sentences See Zerka, 49 F.3d at 1185 (“‘[I]t ill serves the important end o f finality under the Guidelines using a different quantity of drugs than to wipe the slate clean to recreate the peremptory challenge proc ess the jury found is irrelevant under Apprendi as long as the because counsel lacked an item of information which objectively he resultant sentence is still below the prescribed statutory should have obtained from a juror on voir dire exam ination.’”) (emp hasis maximum for the quantity of drugs actually found by the jury. removed) (quoting McDonough Power Equip., Inc. v. Greenwood, 464 U.S. 548, 555 (1984)). See United States v. Lawrence, 308 F.3d 623, 634 (6th Cir. Nos. 01-5602/5603/5666/5667 United States v. 27 28 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
2002) (“Apprendi by its terms applies only where the finding E. Rule 32 Violation ‘increases the penalty for a crime beyond the prescribed statutory maximum,’ and we have squarely held that In conjunction with his Apprendi claim, Luna argues that Apprendi does not apply to the Guidelines.”) (citation even if he was not sentenced in violation of Apprendi, the omitted); United States v. Garcia, 252 F.3d 838, 843 (6th Cir. district court erred to failing to make drug quantity findings 2001) (“Apprendi does not purport to apply to penalties in as required by former Federal Rule of Criminal Procedure excess of any particular range or based on any particular 32(c)(1), now Rule 32(i)(3)(B). The rule now states that “for offense level under the Sentencing Guidelines.”). Because any disputed portion of the presentence report or other Juarez’s and Luna’s sentences were below the life-sentence controverted matter” that arises at sentencing, the court must ceiling of 21 U.S.C. § 841(b)(1)(A) and because the jury “rule on the dispute or determine that a ruling is unnecessary found that Juarez and Luna had both conspired to possess either because the matter will not affect sentencing, or with intent to distribute more than five kilograms as required because the court will not consider the matter in sentencing.” by 21 U.S.C. § 841(b)(1)(A), their Apprendi claims fail. Fed. R. Crim. P. 32(i)(3)(B).15 We explained the former Similarly, because Solorio’s sentence was within the statutory range of five to forty years under 21 U.S.C. § 841(b)(1)(B) and because the jury found that Solorio conspired to possess conduct has been proved b y a preponderance of the evidence”). with intent to distribute 500 grams of cocaine or more as was 15 necessary for a conviction under 21 U.S.C. § 841(b)(1)(B), The former rule, literally read, required courts to “rule on any his Apprendi claim also fails.14 unresolved objections to the presentence report.” See Fed. R. Crim. P. 32(c)(1) (2001) (emp hasis added). According to the Advisory Committee, the text of the rule left it unclear “whether that provision 14 should be read literally to mean every objection that might have been The facts surro unding Solorio’s conviction are slightly different made to the report or only on those objections that might in some way than the facts surroun ding Juarez ’s and L una’s. In Solorio’s case, the jury actually affect the sentence.” Fed. R. Crim. P. 32 , adviso ry com mittee’s found that Solo rio had conspired to possess with intent to distribute 500 note (2002). The broader reading of the rule, the committee feared, grams or more, but did not find that Solorio had conspired with resp ect to “might place an unreasonable burden on the court without providing any 5 kilograms or more of cocaine. The district judge, however, determined real benefit to the sentencing process.” Id. To am eliorate this concern, Solorio’s sentence under the Guidelines using 43 kilograms, which the rule was revised to “narrow[] the req uirement for court find ings to according to Solorio, contravenes the jury’s “finding” that less than five those instances when the objection addresses a ‘controverted matter.’” Id. kilograms were involved. This, however, does not change our Apprendi W e, however, had not adopted the broad view of the rule tha t the rule analysis, for it does not change the fact that Solorio’s sentence was within has been amended to prevent. Even before the rule change, we ha d held the statutory range under 21 U.S.C. § 8 41(b)(1 )(B), app licable to that a district court’s failure to address a co ntroverted matter under Rule defendants that conspire to p ossess with intent to distribute 500 grams or 32(c)(1) did not warrant reversal as long as the controverted m atter did more of cocaine. not affect the d efendant’s sentence. See Un ited States v. P arrott, 148 F.3d Any appearance of inconsistency between the district judge’s and the 629, 634 (6th Cir. 1998) (explaining that such errors must be considered jury’s findings is obviated when one considers the differing standards of harmless under Fed. R. Crim. P. 52(a)). We had also held that the proof in the two contexts. It is entirely plausible that a district judge defendant had a duty to controvert expressly a matter in the district court could find one drug quantity made out by a preponderance of the evidence before Rule 3 2 wo uld ap ply. See U nited States v. H urst, 228 F.3d 751, even though the jury found a lesser quantity proved beyond a reasonable 760 (6th Cir. 2000) (holding that because the defendant “did not exp ressly dou bt. See Un ited States v. W atts, 519 U.S. 148 , 157 (1997 ) (holding call [these matters] to the court’s attention during the sentencing hearing, “that a jury’s verdict of acquittal does not prevent the sentencing court it can hardly be said that these matters were su fficiently ‘controverted’ to from considering conduct underlying the acquitted charge, so long as that trigger the sentencing court’s fact-finding duty under Rule 32(c)(1)”). Nos. 01-5602/5603/5666/5667 United States v. 29 30 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
version of the rule as requiring that “a court may not merely F. Firearm Enhancement summarily adopt the factual findings in the presentence report or simply declare that the facts are supported by a Next we address Juarez’s claim that the district court erred preponderance of the evidence.” United States v. Tarwater, in increasing his base offense level by two levels pursuant to 308 F.3d 494, 518 (6th Cir. 2002). U.S.S.G. § 2D1.1(b)(1) for possessing a firearm.
Luna claims that the district judge did not make a 1. Relevant Factual Development determination, for sentencing purposes, of the quantity of drugs for which Luna was responsible. This claim is Early in the morning of March 18, 1999, Juarez drove away meritless. At Luna’s sentencing hearing, the district judge from his apartment, located at 710 Saxony Drive, in a white stated that the government was “maintaining that . . . the pickup truck. Inside of the pickup was forty pounds of conspiracy was between 200 and 400 kilograms.” J.A. at marijuana. Juarez helped Hearn to unload the marijuana at 2378. The district judge determined that once the drug Hearn’s residence. Juarez was stopped and arrested while he quantity reached 150 kilograms (which it did in this case), the was leaving. Subsequent to his arrest, the police searched total offense would be 38, because “[t]hat’s the highest it can Juarez’s apartment pursuant to a valid search warrant. In the be.” J.A. at 2378. The district court correctly found that a apartment, they found two 9-mm Glock handguns. The guns further quantity determination was unnecessary because the were located at the bottom of a pair of boots, which were on base offense level “would be the same whether it’s 150 top of a little black bag. Inside the bag were a variety of drug kilograms or 900 kilograms or whatever.” J.A. at 2378; see trafficking tools: a money counter, drug ledgers, paper also United States Sentencing Commission Guidelines money wrappers, and rubber bands. Boxes for the firearms Manual (“U.S.S.G.”) § 2D1.1(C)(1), at 112 (2001) (reporting were later found at Luna’s house. that for “150 KG or more of Cocaine” the base offense level is 38). The district court therefore properly resolved all At the time of Juarez’s arrest, his apartment was in disarray. material factual disputes. Luna’s contention to the contrary The food in the refrigerator was rotten, and the electricity was is meritless.16 turned off. Juarez claims that he was not living in the apartment at the time of the arrest in March but admits that he and his wife had lived there the previous summer and that his name was on the lease. 2. Legal Analysis “A district court’s finding that a defendant possessed a 16 firearm during a drug crime is a factual finding subject to the W e cannot help but noting tha t Luna’s claim also fails be cause it clearly erroneous standard of review.” United States v. was no t prop erly raised . As we held in the Hurst case (and as the recent amendment to Rule 32 was meant to insure), a criminal defendant has a Bartholomew, 310 F.3d 912, 924 (6th Cir. 2002), cert. denied, duty to tell the district judge that matters are controverted. Luna never 123 S. Ct. 1005 (2003). Enhancement analysis under raised this matter in front of the district judge. Luna’s counsel was asked, § 2D1.1(b)(1) has two parts. First, the government has the “Are there any other issues in dispute, Mr. Drake, that I didn’t already initial burden of showing “by a preponderance of the evidence rule on?” He answered, “No, your Honor.” J.A. at 2379. Nos. 01-5602/5603/5666/5667 United States v. 31 32 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
that the defendant possessed the firearm” for purposes of (1996) (affirming the enhancement of a defendant’s sentence § 2D1.1(b)(1). United States v. Miggins, 302 F.3d 384, 390- when the guns were found in a “residence to which 91 (6th Cir. 2002), cert. denied, 123 S. Ct. 712, 909, 1772 [defendant] had full access and where drugs were found”). (2002-03). Possession may be actual or constructive. “To Juarez’s argument that Luna was the one who owed the guns establish constructive possession, the government must show is irrelevant. See United States v. Saikaly, 207 F.3d 363, 368 that the defendant had ownership, dominion, or control over (6th Cir. 2000) (“Saikaly also seems to rely on the fact that he the [firearm] or dominion over the premises where the did not own the firearms. This is irrelevant. The issue is not [firearm] is located.” Id. (quotations omitted). “[T]he burden ownership, but possession of the firearms.”). The district [then] shifts to the defendant to demonstrate that it was court did not clearly err in applying this enhancement. clearly improbable that the weapon was connected to the offense.” Id. Only if the defendant can make this showing G. Supervisory Role Increase does the enhancement not apply. We next turn to Solorio’s claim that the district court erred The government met its burden of showing constructive in increasing his base offense level by three points for his possession. Juarez leased the apartment where the guns were leadership role in the drug conspiracy. We conclude that the found and had left them in the apartment on the morning of district court did not err in making this determination, and March 18, 1999, the morning he was arrested. It therefore therefore uphold the supervisory role increase. falls to Juarez to prove that it was clearly improbable that the weapon was connected to the offense. Juarez has not shown We note at the outset that it is unclear what standard of this to be the case. The firearms, two 9-mm handguns, are review we employ with regard to a district court’s weapons “often used in drug trafficking.” United States v. enhancement decision under § 3B1.1. A few years ago it was Jernigan, Nos. 01-2121/2304, 2003 WL 463483, at *4 (6th clear that we reviewed a district court’s factual findings for Cir. Feb. 18, 2003). Moreover, the firearms were found in a clear error and legal conclusions de novo. See, e.g., United pair of boots on top of a bag full of other objects related to States v. Taylor, 248 F.3d 506, 515 (6th Cir.), cert. denied, drug trafficking, including a money counter, drug ledgers, 534 U.S. 981 (2001). The Supreme Court’s decision in paper money wrappers, and rubber bands. When Juarez was Buford v. United States, 532 U.S. 59 (2001), however, has arrested on March 18, 1999, he had just smuggled forty suggested that deference may be appropriate when we review pounds of marijuana, apparently from the apartment. The a district court’s application of the Guidelines, especially district court found “evidence of drug activity in that when it involves fact-bound determinations, issues that apartment both before and after the guns were brought there.” district courts may have comparatively greater expertise in J.A. at 2454. Juarez has not therefore shown that it was addressing, or situations in which there will be limited value clearly improbable that the weapon was connected to the to uniform court of appeals precedent. In United States v. offense. See Keszthelyi, 308 F.3d at 579 (affirming the Dupree, 323 F.3d 480 (6th Cir. 2003), this court noted that enhancement of a defendant’s sentence when drugs were the impact of Buford on supervisory enhancements had not found in the residence and firearms were found in the been resolved, stating that “standard of review for defendant’s bedroom, including a shotgun found in a closet enhancements under § 3B1.1 is now open to question.” Id. at containing cash from the drug transactions); United States v. Hill, 79 F.3d 1477, 1486 (6th Cir.), cert. denied, 519 U.S. 858 Nos. 01-5602/5603/5666/5667 United States v. 33 34 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
494. The Dupree court apparently did not resolve this thorny should be considered a supervisor. As the government notes, question.17 there is uncontroverted evidence that Solorio recruited Moises Picos-Picos as an accomplice and exercised control over him. We do not need to resolve the Buford question here, for we Solorio arranged for Picos-Picos to come from Tijuana to would affirm the district court’s application of the help Solorio and leased an apartment for him. In return, enhancement regardless of the standard of review. To begin Picos-Picos worked for Solorio, delivering bags of cocaine the analysis, Guideline § 3B1.1(b) provides that a court and money, and keeping records of drug transactions for should increase a defendant’s base offense level by three Solorio. Solorio planned and directed all of Picos-Picos’s levels, “[i]f the defendant was a manager or supervisor (but drug activities. This is sufficient to establish that Solorio was not an organizer or leader) and the criminal activity involved a supervisor within the meaning of the Guideline. See five or more participants or was otherwise extensive.” See Dupree, 323 F.3d at 494 (upholding the enhancement for a U.S.S.G. § 3B1.1(b) (2001). The government bears the robber who supplied the gun, provided information about the burden of proving that the enhancement applies. Dupree, 323 victimized store and armored truck service, and moved F.3d at 491. surveillance cameras). In considering whether a defendant was a manager or Solorio’s only argument against the enhancement is that the supervisor, we consider such factors as “‘the defendant’s “Picos-Peraza matter was separate from any dealing with exercise of decision-making authority, any recruitment of Omar Rocha and the conspirators related to Mr. Rocha.” accomplices, the claimed right to a larger share of the fruits of Solorio Br. at 24. Solorio therefore argues that an the crime, the degree of participation in planning the offense, enhancement under § 3B1.1(b) was inappropriate because it and the degree of control the defendant exercised over requires a showing that the enterprise had “five or more others.’” Id. Under this standard, we believe that Solorio participants or was otherwise extensive.” U.S.S.G. § 3B1.1(b). Solorio argues, in effect, that the jury’s verdict holding that he conspired only with respect to 500 grams of 17 cocaine proves that he did not belong to the larger conspiracy. After looking closely at Dupree, we are of the opinion that the Dupree court did not resolve the Buford issue. The Dupree court noted It supposedly demonstrates that the jury believed that there that we had (in an unpublished opinion) suggested that Buford may mean was a subconspiracy between himself and Picos-Picos. This that § 3B1.1 enhancements should be reviewed under a more deferential conspiracy, Solorio alleges, is not “extensive” within the standard of review. The Dupree court did no t resolve this conflict, but meaning of the Guideline and does not involve five people — concluded by stating that “[g]iven this court’s recent reference to a more thereby preventing Solorio from receiving the enhancement. deferential standard of review, we uphold the enhancement based on the district court’s findings.” United States v. Dupree, 323 F.3d 480 , 494 (6th Cir. 2003). We do not find this argument persuasive. The district court Although this language could be taken to read that the Buford at sentencing explicitly found that Solorio was part of the deferential standard of review is now the law for § 3B 1.1 applications, we larger conspiracy. Even if the jury had found that Solorio was believe that the Dupree court did not decide this issue. The court never only part of a conspiracy between himself and Picos-Picos, stated that Buford either did or did not apply to this factual situation, and the differences in the standards of proof at the guilt and Dupree contains no legal analysis of the issue. Under these circumstances we do not believe that we have taken a clear p osition on the applicability sentencing phases resolve any seeming inconsistency. As a of Buford to review of § 3 B1.1 enhance ments. result, even if the jury verdict were construed as finding that Nos. 01-5602/5603/5666/5667 United States v. 35 36 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
Solorio did not belong to the larger conspiracy beyond a reduction. There is no doubt that Solorio was intimately reasonable doubt, the district judge still could have found by connected with the drug conspiracy. His own records indicate a preponderance that Solorio did belong to the larger that he distributed extensive amounts of cocaine and conspiracy. See United States v. Watts, 519 U.S. 148, 157 marijuana. To the extent that Solorio did not distribute the (1997) (explaining “that a jury’s verdict of acquittal does not drugs himself, he was directing his associate Picos-Picos to prevent the sentencing court from considering conduct do so in his stead. Picos-Picos delivered large quantities of underlying the acquitted charge, so long as that conduct has drugs for Solorio and received cash payments for him as well. been proved by a preponderance of the evidence”). We The control he exerted over Picos-Picos clearly reflects that therefore affirm the district court’s decision to apply the Solorio was no minor participant in this conspiracy. We can supervisory enhancement. see no error in the district court’s denial of the mitigating-role reduction. H. Mitigating Role Reduction I. Downward Departure Solorio claims that the district court erred in denying him a mitigating-role reduction pursuant to U.S.S.G. § 3B1.2 for We now turn to the defendants’ last claim of error. Juarez having a small role in the conspiracy. This claim is easily and Solorio both argue that the district court erred by refusing resolved against Solorio. to depart downward from their sentences under the Guidelines. Juarez argues that he should have been given a “Whether a defendant is entitled to a downward downward departure on the basis of harsh conditions of [adjustment] under § 3B1.2 depends heavily on factual confinement. Solorio argues he should have been given a determinations, which we review only for clear error.” downward departure based on his status as a deportable United States v. Campbell, 279 F.3d 392, 396 (6th Cir. 2002). person. Solorio has the burden of proving, by a preponderance of the evidence, that he is entitled to the reduction. United States v. We have held that “a district court’s discretionary refusal to Bartholomew, 310 F.3d 912, 924 (6th Cir. 2002). Under depart downward is generally not appealable, unless the § 3B1.2, a defendant can receive a four-level reduction for district court mistakenly believed it did not have legal being a minimal participant or a two-level reduction for being authority to depart downward.” United States v. Pruitt, 156 a minor participant. “A minimal participant is one who is F.3d 638, 650 (6th Cir. 1998), cert. denied, 525 U.S. 1091 ‘plainly among the least culpable of those involved in the (1999). The defendant has the burden to show that the district conduct of a group,’ and a minor participant is one who ‘is court believed it lacked authority to depart downward. See less culpable than most other participants, but whose role United States v. Cook, 238 F.3d 786, 791 (6th Cir.) (stating could not be described as minimal.’” Id. (quoting U.S.S.G. that “where explicit mention is not made of the court’s power § 3B1.2, cmt. nn. 1, 3). to depart downwards, ‘it should be assumed that the court in the exercise of its discretion found downward departure Solorio here was not less culpable than most of the other unwarranted’”) (citation omitted), cert. denied, 534 U.S. 876 participants in the conspiracy. All the reasons that supported (2001). the district court’s finding that Solorio was a supervisor justify the denial of Solorio’s request for a mitigating-role Nos. 01-5602/5603/5666/5667 United States v. 37 38 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al.
In both Juarez’s and Solorio’s cases, the district judge depart in this case is unreviewable. We accordingly dismiss stated that she did not find a departure to be authorized, but Juarez’s and Solorio’s allegations of error. that even if it were, she would exercise her discretion not to depart. It appears that we have never squarely addressed in a III. CONCLUSION published opinion whether a district judge’s refusal to grant a departure is reviewable when it is clear both that the judge For the foregoing reasons, we AFFIRM the district court’s believes that she has no authority to depart and that she would decision in all respects. not depart even if she had the authority — although this phrasing seems to be a common practice in district courts. See United States v. Hill, No. 89-5952/5954/5957, 1991 WL 63621, at *3 (6th Cir. Apr. 23, 1991) (holding unappealable a refusal to depart when the judge made an apparently ambiguous remark indicating that he would not depart even if he were authorized to do so); see also United States v. Norfleet, No. 98-1311, 1999 WL 1281718, at *2-*3 (6th Cir. Dec. 28, 1999), cert. denied, 529 U.S. 1135 (2000); United States v. Coleman, No. 98-1861, 2000 WL 1872015, at *1 (6th Cir. Dec. 14, 2000). If there was any doubt about the issue, we dispel it today by holding the district judge’s refusal to depart here to be unreviewable. This accords with the practice of the federal circuits that have considered the question. United States v. DeLeon, 187 F.3d 60, 69 (1st Cir.), cert. denied, 528 U.S. 1030 (1999); United States v. Williams, 898 F.2d 1400, 1403 (9th Cir. 1990); see also Charles Alan Wright et al., 15B Federal Practice & Procedure § 3918.8, at 585 (2d ed. 1992) (“If the district court both concludes that there is no authority to make a downward departure and that in any event there is no basis for making a departure, the alternative discretionary refusal to depart has been held sufficient to support the sentence and to defeat review.”). Given the “strong presumption that a district court’s denial of a downward departure is based on an exercise of discretion,” Cook, 238 F.3d at 791, and the useless formality of a remand to a judge who has already stated that she would not exercise her discretion to depart, we conclude that the decision not to | 09-22-2015 | [
"RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 United States v. Nos. 01-5602/5603/5666/5667 ELECTRONIC CITATION: 2003 FED App. 0239P (6th Cir.) Solorio et al. File Name: 03a0239p.06 _________________ UNITED STATES COURT OF APPEALS COUNSEL FOR THE SIXTH CIRCUIT ARGUED: Robert L. Marlow, Shelbyville, Tennessee, _________________ Michael D. Noel, Nashville, Tennessee, for Appellants. John A. Drennan, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: UNITED STATES OF AMERICA , X Robert L. Marlow, Shelbyville, Tennessee, Michael D. Noel, Plaintiff-Appellee, - Nashville, Tennessee, Thomas J. Drake, Jr., Nashville, - Tennessee, Paul J. Bruno, BRUNO, HAYMAKER & - Nos.",
"01-5602/ HEROUX, Nashville, Tennessee, for Appellants. John A. v. - 5603/5666/5667 Drennan, UNITED STATES DEPARTMENT OF JUSTICE, > Washington, D.C., Robert Anderson, ASSISTANT UNITED , JOSE RUIZ SOLORIO - STATES ATTORNEY, Nashville, Tennessee, for Appellee. (01-5602); RICKY MART IN - LUNA (01-5603); DELMAS - _________________ DENNIS (01-5666); MARCO - OPINION JUAREZ (01-5667), - _________________ Defendants-Appellants. - - KAREN NELSON MOORE, Circuit Judge. Delmas N Dennis, Marco Juarez, Jose Ruiz Solorio, and Ricky Martin Appeal from the United States District Court Luna were all arrested for conspiring to possess with the for the Middle District of Tennessee at Nashville.",
"intent to distribute cocaine in violation of 21 U.S.C. § 841, as No. 99-00120—Aleta A. Trauger, District Judge. well as for other various drug-related crimes. The four defendants were part of a vast drug enterprise that brought Submitted and Argued: April 29, 2003 large quantities of cocaine and marijuana into Nashville. They were convicted by a jury of these crimes and given Decided and Filed: July 22, 2003 sentences ranging from 210 months (Solorio) to 292 months (Juarez). Before: MOORE and ROGERS, Circuit Judges; KATZ, District Judge. * On appeal, they together raise nine claims of error. For the reasons that follow, we find none of their claims of error persuasive, and so we AFFIRM the judgment of the district court. * The Honorable David A. Katz, United States District Judge for the Northern District of Ohio, sitting by designation. 1 Nos. 01-5602/5603/5666/5667 United States v. 3 4 United States v. Nos.",
"01-5602/5603/5666/5667 Solorio et al. Solorio et al. I. BACKGROUND were stored at Solorio’s ranch. McMurry and Booker gave the money to pay for the cocaine and marijuana to Juarez, A. Factual Background who gave it to Luna, who gave it to the parties owed. The defendants in this case were all part of a drug ring that 1. Juarez’s Role in the Conspiracy bought, transported, and sold sizeable amounts of marijuana and cocaine.",
"The leaders of this operation (which was based Juarez was employed directly by McMurry and Booker. in Nashville) were Terrell McMurry and Timothy Booker. They paid him a salary, roughly between four and five McMurry and Booker, as putative defendants, entered into thousand dollars a month. Juarez helped McMurry and plea agreements with the government, and thus became the Booker transport and unload cocaine. He also helped send government’s key witnesses at trial. They testified cash payments back to McMurry’s and Booker’s suppliers. extensively to the roles of the four defendants in the overall As the operation developed, McMurry, Booker, and Rocha conspiracy. rented an apartment for Juarez in Chicago so that Juarez could deliver drugs to McMurry’s and Booker’s customers there. McMurry and Booker began distributing cocaine and marijuana in 1994. They had two main sources of drugs.",
"The In addition to McMurry’s and Booker’s testimony, there first were Omar Rocha Rodriguez (known as Omar Rocha) was considerable other evidence against Juarez. Juarez was and Adriana Rocha Espinoza (a woman who lived with stopped by police in Chicago on October 30, 1998. He Rocha). Rocha and Espinoza lived in San Diego and sent consented to a search, in which the FBI discovered that the drugs to McMurry and Booker through Chicago. The vehicle had been retrofitted with hidden compartments of a shipments from Rocha and Espinoza, which each consisted of type that were used for transporting drugs.",
"The FBI between twenty and forty kilograms of cocaine, came three intercepted phone calls between Juarez and McMurry times from May 1998 to August 1999 (this being the time discussing Juarez’s plans to unload a shipment of drugs into period stated in the indictment). The second source of drugs Hearn’s house and revealing that one of the 50-pound came from a source known as “Alex,” who was in Chicago. shipments of marijuana was short. The FBI also intercepted phone calls between Juarez and Booker discussing various At trial, Booker and McMurry explained that the drug-related matters. Juarez was photographed with conspiracy operated in the following way. When the drugs McMurry and Booker visiting Rocha in San Diego and was arrived in Nashville, they were delivered by a green Tahoe also seen with Rocha in Chicago several times.",
"truck, which Luna (who was also known as “Playboy”) would meet. The drugs were unloaded by Luna, Juarez, McMurry, More evidence against Juarez was obtained in the course of and Quentin Hearn.1 The drugs were generally kept at the his arrest on March 18, 1999. That morning Juarez had left homes of Juarez, McMurry, or Hearn. Especially large loads the apartment he leased at 710 Saxony Drive in a white pickup, went to Hearn’s residence to unload the forty pounds of marijuana that were in the truck, and was arrested while 1 driving away. After his arrest, the police searched his Quentin Hearn, M cMurry’s cousin, was another putative defendant apartment pursuant to a valid search warrant.",
"In the who accepted a deal with the government and testified against the apartment, they found two 9-mm Glock handguns. The guns defendants at trial. Nos. 01-5602/5603/5666/5667 United States v. 5 6 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. were located inside a pair of boots, which were on top of a were a Mexican passport, a visa, and a border-crossing card small black bag. Inside the bag was a variety of drug all with the name Omar Saenz Neda.2 The picture in the trafficking tools: a money counter, drug ledgers, paper passport, however, was of Luna. money wrappers, and rubber bands.",
"In the search of the apartment, officers found one of Luna’s pagers. They also 3. Dennis’s Role in the Conspiracy found drug ledgers with the name “Cepillo” next to some figures. Dennis was McMurry’s and Booker’s largest drug customer; McMurry testified that Dennis normally received 2. Luna’s Role in the Conspiracy half of each arriving drug shipment. Hearn testified that he delivered the drugs to Dennis at his store and returned Luna, like Juarez, aided in the transport and delivery of Dennis’s payment to McMurry and Booker. In one drugs, counted drug money, and transported McMurry and transaction, Dennis paid McMurry $60,000 for cocaine. Booker’s cash payments back to the drug suppliers.",
"Luna was not employed directly by McMurry and Booker. Instead, he It was through a wiretap that the government discovered worked principally for Rocha and was seen with him in that Dennis was involved with McMurry. Government agents Chicago several times. intercepted a conversation between Dennis and McMurry. Though the conversation was essentially in code — Dennis In addition to Booker’s and McMurry’s testimony against and McMurry deliberately used phrases and terms that only Luna, there was other independent evidence implicating Luna those inside the conspiracy would understand — McMurry in the conspiracy. On January 29, 1999, the Nashville police “decoded” the conversation at trial, explaining how the stopped Luna. They found that his vehicle, like Juarez’s, had conversation really was about how Dennis owed $6,000 to been retrofitted with hidden compartments. The FBI, who McMurry and how Dennis needed to return a number of was intercepting McMurry’s conversations, overheard short-weighed kilograms of cocaine (known as “bad checks”). McMurry and Espinoza discussing this stop. Luna was also visually spotted by the government both with McMurry (in a parking garage) and with Rocha and Espinoza (in the Los Angeles Airport). On April 15, 1999, after Juarez had been arrested, the police searched Luna’s Nashville apartment pursuant to a valid warrant. They found transaction receipts bearing his name, receipts bearing Juarez’s and Espinoza’s names, and a document indicating that a “Solorio Ruiz Jose” (presumably the defendant, Jose Ruiz Solorio) had rented an automobile.",
"2 In a subsequent search of Rocha’s residence, officers found a wallet The police also found a drug ledger, balls of elastic bands with a Mexican driver’s license, a Mexican voting card, and a Mexican commonly used in drug transactions, a number of cellular birth certificate all in the name of Omar Saenz N eda. In this search, telephones, and a yellow sheet of paper with “Sepillo” written police found several pieces of paper with “Cepillo” and “Jose Ruiz” written on them, drug ledgers, and a personal planner with Luna’s, on it. Two days later, Luna was arrested. In his possession Juarez’s, and Solorio’s names, and Solorio’s cell-phone numbe r. Nos. 01-5602/5603/5666/5667 United States v. 7 8 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. 4. Solorio’s Role in the Conspiracy Solorio.",
"Solorio was asked if he was “Cepillo” and raised his hand and nodded.5 McMurry testified that after Solorio was Jose Ruiz Solorio, who was known as “Cepillo,”3 was more arrested, Solorio approached him in jail and told him that he loosely connected to these drug transactions. While Booker had 40 kilograms of drugs buried at his Nashville ranch that and McMurry knew the other three defendants intimately and needed to be excavated. testified extensively against them, they had less of a connection to Solorio. McMurry and Booker never talked to B. The Results of the Jury Trial or met Solorio before his arrest.",
"McMurry did testify, however, that they often stored drugs at Solorio’s ranch in the The jury convicted the defendants on different counts of the Nashville area. indictment. All were convicted on Count 7 of the indictment, which alleged that the defendants had conspired to possess The more significant ties were between Solorio and Rocha. with intent to distribute cocaine in the amount of 5 kilograms The FBI intercepted several telephone conversations between or more from May 31, 1998 to August 17, 1999. While them. In one of these essentially coded conversations, Juarez, Luna, and Dennis were all convicted on Count 7 in the Solorio spoke of getting one thousand “tires” out in a week — full amount of 5 kilograms or more, Solorio was only “tires” apparently being euphemisms for units of cocaine.",
"convicted of conspiring with respect to 500 grams or more. After the FBI intercepted another of Solorio’s and Rocha’s conversations, Solorio was photographed with Rocha and Dennis was convicted only on Count 7. He was sentenced another man by the name of Moises Picos-Picos.4 to 240 months. Luna was convicted on Count 4 (conspiracy to possess with intent to distribute 100 kilograms of Moises Picos-Picos, who also testified for the government marijuana) as well as Count 7. Luna was sentenced to 235 at trial, worked for Solorio. Solorio leased an apartment for months. Solorio, in addition to Count 7, was convicted on Picos-Picos and arranged for him to come over from Tijuana Count 10 (possession with intent to distribute 500 grams or to help Solorio. Picos-Picos undertook many drug-related more of cocaine) and Count 11 (possession with intent to tasks for Solorio, such as delivering bags of cocaine and distribute 100 kilograms or more of marijuana).",
"Solorio was money and keeping records of his drug transactions. sentenced to 210 months. Juarez was convicted on Counts 2 (possession with intent to distribute 500 grams or more of On August 17, 1999 (after the arrests of Juarez and Luna), cocaine), 3 (attempt to conduct a financial transaction law enforcement officers executed an arrest warrant for affecting interstate commerce involving the proceeds of unlawful activity), and 4 (conspiracy to possess with intent to 3 Bo th Officer Ta ylor and Agent W illiams testified that Cepillo was an alias for Solorio.",
"Agent Go mez, a translator with the FBI, testified that 5 The name “Cep illo” had been found in doc uments in Ro cha’s her analysis of the wiretapped conversations revealed that Cepillo was residence along with pap ers with the name “Jo se Ruiz” (Solorio’s first actually a nickname for Solorio. Moreover, Solorio admitted at one point name). “Cepillo” was listed as a client in the drug ledger found in that he was known as Cepillo, as discussed below. Solorio’s nam e is Juare z’s apartment. The name “Cepillo Tires” was found in ledgers in often spelled “Solario” in various documents related to this case.",
"Luna’s apartment (“tires” again often being used as a code for units of 4 cocaine). A receipt bearing Solorio’s real name was also found at Luna ’s Picos-Picos is sometimes known as Picos-Peraza or just Peraza. apartment. Nos. 01-5602/5603/5666/5667 United States v. 9 10 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. distribute 100 kilograms or more of marijuana), as well as 1. Standard of Review Count 7. He was sentenced to concurrent terms, the longest of which is 292 months. “This court reviews de novo a denial of a motion for judgment of acquittal, but affirms the decision ‘if the II. ANALYSIS evidence, viewed in the light most favorable to the government, would allow a rational trier of fact to find the The defendants raise a total of nine issues on appeal. The defendant guilty beyond a reasonable doubt.’” United States defendants allege that the district court erred in holding that v. Harrod, 168 F.3d 887, 889-90 (6th Cir.) (citation omitted), the evidence was sufficient and that a new trial was not cert.",
"denied, 526 U.S. 1127 (1999). needed, failed to exclude the testimony of government witnesses after they violated a sequestration order, improperly 2. Luna’s Insufficiency Claim refused to dismiss a juror who knew a government witness in the case, imposed sentences in violation of Apprendi, failed Luna alleges that the evidence against him was insufficient properly to resolve contested issues of fact as required by because, when he was arrested, there were no drugs or large Federal Rule of Criminal Procedure 32, improperly enhanced sums of money in his possession. Nevertheless, we hold that a sentence for the possession of a firearm, unacceptably failed the evidence is clearly sufficient against him. McMurry, to reduce a sentence for a defendant’s mitigating role, Booker, and Hearn all testified extensively against Luna, improperly enhanced a sentence for a defendant’s supervisory explaining that Luna transported and delivered drugs and paid role, and failed to depart downwards on a number of off their suppliers. Luna was photographed with Rocha discretionary issues. As we explain below, we conclude that several times. State police had stopped Luna in a car outfitted none of these contentions of error have merit.",
"for transporting narcotics, and this incident became a topic of conversation between McMurry and Espinoza. A search of A. Sufficiency of the Evidence Juarez’s apartment revealed Luna’s cell phone. A search of Luna’s apartment revealed drug ledgers, balls of elastic bands Luna and Solorio argue that the district court erred in commonly used in drug transactions, and a number of cellular denying their Federal Rule of Criminal Procedure 29 motions telephones. Finally, when Luna was arrested, he was found for acquittal. Ultimately, we conclude that the evidence with a Mexican passport, a visa, and a border-crossing card against them is sufficient to uphold their convictions, and so all with the name Omar Saenz Neda. Luna’s argument that we reject their claims. Solorio then makes the related the evidence was somehow insufficient because he did not argument that the jury finding that he possessed with intent to possess any drugs on his person at the time of his arrest is distribute 500 grams of cocaine is fundamentally inconsistent simply unpersuasive. with the indictment (which alleged that he possessed with intent to distribute 5 kilograms of cocaine).",
"As we consider 3. Solorio’s Insufficiency Claim the facts adduced at trial not to be fatally incompatible with the indictment, we reject this claim. Solorio also claims that the evidence was insufficient against him. Solorio argues that the evidence was not sufficient to support the jury verdict on Count 7 (the conspiracy charge) or on Counts 10 and 11 (the possession Nos. 01-5602/5603/5666/5667 United States v. 11 12 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. charges). Solorio also argues that a fatal variance was created pounds of marijuana and $210,500. In the context of this between the evidence adduced at trial and the terms of the case, we find this testimony sufficient to support Solorio’s indictment. We reject all of these claims of error.",
"convictions on Counts 10 and 11.6 a. Sufficiency of the Evidence With Respect to c. The Alleged Inconsistency Between the Count 7 Indictment and the Jury Verdict Solorio’s first argument is that there was not sufficient Related to Solorio’s sufficiency arguments is his argument evidence to convict him of the conspiracy to distribute that the evidence adduced at trial was inconsistent with the cocaine charge (Count 7). While the evidence is not quite as terms of the indictment, necessitating reversal. We conclude overwhelming as it was in Luna’s case, the evidence against that this claim is without merit as well. Solorio is certainly sufficient. There is evidence that Solorio was connected to McMurry’s and Booker’s operation. The jury found Solorio guilty on Count 7 of conspiring to Because Rocha was McMurry’s and Booker’s supplier, possess with intent to distribute 500 grams of cocaine. Solorio as Rocha’s agent was part of the conspiracy.",
"In Solorio seems to argue that this is inconsistent with the addition, there were far more direct ties between Solorio and indictment, because Count 7 of the indictment alleged that McMurry’s and Booker’s operation. McMurry explicitly Solorio (as well as the other defendants) conspired to possess testified that his and Booker’s drugs were kept at Solorio’s with intent to distribute 5 kilograms of cocaine. We interpret ranch. As described earlier, searches of Rocha’s, Luna’s, and this claim as arguing either that a variance developed between Juarez’s apartments all revealed evidence that Solorio was a part of their combined operation. There was also extensive testimony from Picos-Picos establishing Solorio’s relationship with Rocha and the various drug deals he made 6 Solo rio makes the related argument that the district court erred in and authorized Picos-Picos to conduct.",
"We hold that a denying his Federal Rule of Criminal Procedure 33 motion for a new trial reasonable jury could well have found that Solorio was part because the verdict was against the weight of the evidence. We review of the Count 7 conspiracy. the district court’s decision on this ground for an abuse of discretion. United States v. Fro st, 125 F.3d 346 , 382 (6th C ir.",
"199 7), cert. denied, 525 U.S. 810 (199 8). In evaluating a Rule 33 motion based on the weight b. Sufficiency of the Evidence With Respect to of the evidence, unlike a sufficiency claim, “the trial judge can consider Counts 10 and 11 the cred ibility of the witnesses and the weight of the evidence to insure that there is not a miscarriage of justice. It has often been said that he/she Solorio also claims that there is insufficient evidence to sits as a thirteenth juror.” Un ited States v. A shworth, 836 F.2d 260, 266 support his conviction on Counts 10 and 11, which are (6th Cir.",
"1988) (quotation omitted). For the reasons exp lained imme diately above , the evidence ag ainst charges of possession of 500 grams or more of cocaine and Solo rio was certainly adequate, especially given the wide discretion given 100 kilograms or more of marijuana. We hold that there is to the district co urt judge. See id. (“Th e cou rt of appeals, howe ver, does sufficient evidence to support these charges. Picos-Picos not sit as a ‘thirteenth juror’ to judge the credibility of witnesses . . . . testified that Solorio arranged for Picos-Picos to deliver one Rather, we are limited to examining the evidence produced at trial to kilogram of cocaine. Solorio’s drug records, as Picos-Picos determine whether the district court’s determination that the evidence does not ‘prepond erate heavily against the verdict’ is a clear and m anifest testified, showed a single drug transaction involving 500 abuse of discretion.”) (citation omitted). Nos.",
"01-5602/5603/5666/5667 United States v. 13 14 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. the indictment and the facts adduced at trial or that the unless ‘substantial rights’ of the defendant have been indictment was constructively amended.7 affected,” while a constructive amendment is per se prejudicial. Id. (citation omitted); see also United States v. “This court reviews de novo the determination as to Manning, 142 F.3d 336, 339 (6th Cir. 1998) (stating that a whether there has been an amendment to, or variance from, an substantial right of the defendant is violated by a variance indictment.” United States v. Smith, 320 F.3d 647, 656 (6th “only when a defendant proves prejudice to his ability to Cir.) (emphasis removed), cert. denied, 123 S. Ct. 1954 defend himself or to the overall fairness of the trial”). (2003). There is a difference between these two terms.",
"“A variance [to the indictment] occurs when the charging terms Solorio can show neither a prejudicial variance nor a [of the indictment] are unchanged, but the evidence at trial constructive amendment. The facts adduced at trial were not proves facts materially different from those alleged in the materially different from those alleged in the indictment. The indictment. In contrast, an amendment involves a change, concept of variance is designed to prevent the prosecution whether literal or in effect, in the terms of the indictment.” from convicting the defendant of a different offense, not a United States v. Chilingirian, 280 F.3d 704, 711 (6th Cir.",
"lesser variation on the charged offense. See Charles Alan 2002) (quotations omitted). “This Circuit has held that a Wright, 3 Federal Practice & Procedure § 516, at 25 (2d ed. variance rises to the level of a constructive amendment when 1982) (stating that “a defendant may be convicted of a lesser the terms of an indictment are in effect altered by the offense necessarily included in the offense with which he is presentation of evidence and jury instructions which so charged” and noting that the principle of variance only modify essential elements of the offense charged that there is prevents him from “be[ing] convicted of a different offense”). a substantial likelihood that the defendant may have been Solorio’s complaint here is merely that he was convicted of convicted of an offense other than that charged in the a lesser-included offense, which is perfectly appropriate under indictment.” Id. at 712 (quotation omitted). Federal Rule of Criminal Procedure 31. See Fed. R. Crim.",
"P. 31(c) (stating that “[a] defendant may be found guilty of any Although the distinction between a variance and a of the following: (1) an offense necessarily included in the constructive amendment has been called “sketchy,” we have offense charged”). Solorio therefore cannot show a noted that the “consequences of each are significantly prejudicial variance, because he cannot show that the different.” Id. “A variance will not constitute reversible error variance affected his ability to defend himself. He similarly cannot show a constructive amendment to the indictment because he was not “convicted of an offense other than that 7 charged in the indictment.” Chilingirian, 280 F.3d at 712.",
"The government argues that this issue was not raised in the district court and therefore should be reviewed for plain error. The governme nt is correct when it points out that Solorio never specifically made an We considered a case materially identical to this one in a argument about an improper variance in his motion for acquittal. He did, recent unpublished opinion. United States v. Vazquez, 49 however, state in that motion that since the jury found that Solorio did not Fed. Appx. 550, 2002 WL 31367162 (6th Cir. Oct. 18, 2002), conspire to distribute five kilograms, “the government failed to prove an cert. denied, 123 S. Ct. 1331 (2003).",
"In Vazquez, “the essential element of Count 7 against Defendant Solorio.” J.A. at 21 5. W e indictment charged Vazquez and his co-defendants with a hold that Solorio did adequately raise the variance issue, although we agree that this argument was awkwardly phrased both in the district court cocaine conspiracy that involved at least twelve kilograms of and on ap peal. cocaine, which would have violated 21 U.S.C. Nos. 01-5602/5603/5666/5667 United States v. 15 16 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. § 841(b)(1)(A).” Id. at 552 (footnote omitted). The jury, Booker, after the court discovered that the two had conversed however, “specifically found that Vazquez conspired to during a trial recess. Assuming that there was a violation of distribute more than five hundred grams but less than five the relevant rule, we believe that the district court promptly kilograms of cocaine.” Id.",
"at 551. Since § 841(b)(1)(A) and effectively remedied the violation, rendering total requires a conspiracy of five kilograms or more, Vazquez was exclusion of McMurry’s and Booker’s testimony unnecessary. convicted of a conspiracy under § 841(b)(1)(B). As a result, we reject the defendants’ claims of error. We dismissed Vazquez’s claim of a fatal variance or 1. Facts Surrounding the Sequestration Order constructive amendment: McMurry and Booker were the key witnesses for the Even if Vazquez can show a variance between the government against the four defendants. McMurry testified indictment and the proof at trial . .",
". we are not persuaded first, testifying on Wednesday, September 20, 2000, through that it is substantially likely that Vazquez was convicted Friday, September 22, 2000. Booker did not testify until of an offense other than the one charged in the Tuesday, September 26. On Saturday, September 23, the indictment. Vazquez was charged with a § 841(b)(1)(A) government found out that Booker and McMurry had a cocaine conspiracy and convicted of the lesser-included conversation about the case in a holding cell where they were offense of a § 841(b)(1)(B) cocaine conspiracy. See Fed.",
"both confined. The conversation took place on Thursday, R. Crim. P. 31(c). Because the essential elements of the September 21, during a trial break. The government brought former necessarily include those of the latter, we hold the issue before the district court, and a hearing was held on that the indictment was not constructively amended and this issue on Monday, September 25. Both Booker and affirm Vazquez’s conviction. McMurry testified. Id. at 552-53. This case involves an identical fact pattern. According to both Booker and McMurry, the conversation The indictment charged Solorio with a conspiracy involving was brief. Booker initiated the conversation by asking more than five kilograms under § 841(b)(1)(A).",
"While the McMurry how his testimony was going, to which McMurry jury did not find Solorio had conspired with respect to five responded that the defense lawyers were “going to try to trip kilograms or more (which would have established a violation [Booker] up on some dates.” J.A. at 1337 (Trial Test. of of § 841(b)(1)(A)), the jury did find that Solorio had Booker). McMurry referred to one date in particular, conspired with respect to 500 grams or more, which made out “sometime in October when Carlos [Brittain] got pulled the requirements of § 841(b)(1)(B). The jury merely over.” J.A. at 1348. Booker responded by saying that he did convicted Solorio of a lesser-included offense, and as a result, not remember any dates and that he would just admit to not his claims of prejudicial variance and constructive remembering them. McMurry told Booker he was not amendment are meritless.",
"impressed with the attorneys involved in the case and that defendant Dennis should have plea bargained. Booker also B. Sequestration Order testified that McMurry mentioned something about six VIP tickets and six thousand dollars, though McMurry denied that All four defendants raise the issue of whether the district court erred in failing to strike the testimony of McMurry and Nos. 01-5602/5603/5666/5667 United States v. 17 18 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. he said anything about the tickets or the money.8 Booker testifying and that the portion of McMurry’s testimony that plainly stated that nothing that McMurry had said affected his was subsequent to the violation should have been struck. testimony.",
"2. Sequestration Analysis The district court found that there was a violation of Federal Rule of Evidence 615. However, the district court We review the district court’s decision regarding found that there was no evidence that the government had sequestration of witnesses for an abuse of discretion. United arranged (or even known about) the violation of Rule 615, States v. Gibson, 675 F.2d 825, 835 (6th Cir.",
"), cert. denied, and no evidence that any of the defendants had been 459 U.S. 972 (1982). prejudiced by this violation. The district court took three steps to remedy the violation. It foreclosed the government Federal Rule of Evidence 615 states that “[a]t the request of from asking Booker (who had not yet testified) about the stop a party the court shall order witnesses excluded so that they of Carlos Brittain, the VIP tickets, or the $6,000. The district cannot hear the testimony of other witnesses.” Fed. R. Evid. court allowed the parties to explore the sequestration violation 615. This rule codifies, to an extent, the sequestration powers fully in cross-examination, which they did. The district court of the trial judge at common law; we have stated that its also instructed the jury that they could consider the Rule 615 purpose is to prevent “the influencing of a witness’ testimony violation in making credibility determinations.",
"Defense by another witness.” United States v. Rugiero, 20 F.3d 1387, counsel also repeatedly pointed out the violation in closing 1392 (6th Cir.) (citing Gibson, 675 F.2d at 835), cert. denied, argument, encouraging the jury to devalue Booker’s and 513 U.S. 878 (1994). However, while the purpose of the rule McMurry’s testimony. is apparent; its purview is not. Circuits have split on the question of whether “the scope of Rule 615 extends beyond On appeal, all the defendants argue that the district court’s the courtroom to permit the court to preclude out-of-court remedies for the sequestration violation were insufficient, communication between witnesses about the case during claiming that Booker should have been disqualified from trial.” Charles Alan Wright & Victor James Gold, 29 Federal Practice & Procedure § 6243, at 61 (1997); compare United States v. Sepulveda, 15 F.3d 1161, 1176 (1st Cir. 1993) (stating that Rule 615 authorizes a trial court to “‘order 8 Governm ent agents intercepted a conversation between Dennis and witnesses excluded’ only from the courtroom proper”) McM urry where the two discussed the fact that Dennis owed $6,000 to (citation omitted), cert. denied, 512 U.S. 1223 (1994), with McM urry and the fact that Dennis needed to return a number of “bad United States v. Prichard, 781 F.2d 179, 183 (10th Cir.",
"1986) checks.” J.A. at 785 (Trial Test. of McMurry). McM urry exp lained in (stating that a “sequestration order pursuant to Fed. R. Evid. court that the $6,000 was “drug mo ney that [Dennis] owed me from the 615 requires not only that witnesses be excluded from the drugs that I fronted him.” J.A. at 501 (Trial Test. of McM urry). Apparently, Dennis attempted to rebut McM urry’s explanation of the courtroom, but that witnesses also refrain from discussing conversation by suggesting that the $6,000 was not for drugs, but was for their testimony outside the courtroom”). This court once VIP tic ke ts to a c on cert. D en nis claim s th at M cM urry’s stateme nt to suggested in dicta that the rule’s ambit extends beyond the Bo oker abo ut the V IP tickets and the $6 ,000 may ha ve be en M cM urry’s courtroom.",
"See Rugiero, 20 F.3d at 1394 (“[W]e think it attempt to persuade Booker to testify that the $6,000 was owed for drugs unnecessary, once the rule is invoked, that either party need and not VIP tickets, thereby corroborating McM urry’s story and undermining Dennis’s defense. ask the court to instruct each witness not to discuss his Nos. 01-5602/5603/5666/5667 United States v. 19 20 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. testimony with another witness yet to testify.”). This court in Gibson, 675 F.2d at 836 (quoting Holder v. United States, Rugiero did not, however, resolve the issue; we assumed that 150 U.S. 91, 912 (1893)); see also Charles Alan Wright & there was a violation of the rule but concluded that in any Victor James Gold, 29 Federal Practice & Procedure § 6246, event the violation was not prejudicial.",
"Id. (“But even if we at 93-95 (1997) (explaining that the district judge has many count this as a violation . . . we find no prejudicial error in the options when faced with a violation of Rule 615, including district court’s rulings.”). holding the witness in contempt, holding the counsel who is responsible for the violation in contempt, allowing the As in Rugiero, we feel no need to decide the delicate issue witness to be cross-examined, explaining the significance of of whether Rule 615 extends beyond the courtroom.",
"the violation to the jury, declaring a mistrial, striking the Assuming that Rule 615 extends to cover this situation and witness’s testimony in part, and disqualifying the witness that it was violated by the witnesses in this case, we hold that from testifying entirely). As Gibson notes, we only permit district court’s remedy to the alleged violation was exclusion in “particular circumstances,” such as where a appropriately fashioned and well within her discretion.9 It is “witness has remained in court with the ‘consent, connivance, well settled in this circuit that a “‘violation of an order procurement, or knowledge’ of the party seeking his directing that witnesses be separated does not automatically testimony.” Gibson, 675 F.2d at 836 (citation omitted) bar a witness’ testimony.’” Id. (citation omitted).",
"Instead: (holding it was not an abuse of discretion for the district court to bar a party’s witness from testifying after the witness had If a witness disobeys the order of withdrawal, while he remained in open court with the party’s knowledge in may be proceeded against for contempt and his testimony violation of a sequestration order). Exclusion is considered is open to comment to the jury by reason of his conduct, a very severe remedy. See John W. Strong, McCormick on he is not thereby disqualified, and the weight of authority Evidence § 50, at 210 (5th ed. 1999) (“The courts are is that he cannot be excluded on that ground merely, markedly reluctant to resort to the drastic remedy of although the right to exclude under particular disqualifying the witness.”); Charles Alan Wright & Victor circumstances may be supported as within the sound James Gold, 29 Federal Practice & Procedure § 6246, at 95 discretion of the trial court. (1997) (calling it a “drastic remed[y] that impose[s] significant hardship on a party that loses the testimony of a key witness”).10 Moreover, in order for a party to receive a 9 new trial based on a district court’s failure to exclude Of course, even if Rule 6 15 o nly applies to in-court communications testimony, we have also held that the party must show that the between witnesses, trial courts still would “retain[] discretion to preclude error prejudiced its right to a fair trial.",
"Rugiero, 20 F.3d at such out-of-court communications between witnesses as a function of the court’s general powers to manage the conduct of the trial.” Charles Alan W right & Victor James Gold, 29 Federal Practice & Proced ure § 6243, 10 at 62 (1997). Such orders a re “generally thought to be a standard Given the rare circumstances under which this remedy is justified concomitant of basic sequestration fare, serving to fortify the protections as well as the district court’s discretion not to impose it, the authors of offered by Rule 615,” United States v. Sepulveda, 15 F.3d 1161, 1176 (1st Federal Practice and Procedure “have found no federal appeals court Cir. 199 3), cert. denied, 512 U.S. 1223 (1994), and we mean to cast no decision holding that the failure to disqualify a witness after violation of aspersions on their use. an exclusion order is an abuse of discretion.” Charles A lan W right & In the case at bar, no independent seque stration order wa s issued, so Victor James Gold, 29 Federal Practice & Procedure § 6246, at 96 n.22 our only concern here is the protections afforded by Rule 615.",
"(1997). Nos. 01-5602/5603/5666/5667 United States v. 21 22 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. 1394 (holding that it was not an abuse of discretion for a Brittain’s stop.11 Second, McMurry may have stated district court to permit a witness’s testimony even after the something about VIP tickets and six thousand dollars. In witness had violated the sequestration order with the response, the district court prevented the government from knowledge of the witness’s party because the error was not inquiring into this subject with Booker. These limitations prejudicial). prevented Booker’s testimony from being tainted by Booker’s and McMurry’s conversation. Additionally, the district court We conclude that the defendants have not shown that gave a specific instruction to the jury regarding the violation exclusion was necessary in this case. First, the defendants do of the Rule, and allowed the defense counsel to raise the not even argue that the prosecution had any knowledge of the violation in their cross-examinations of Booker and in their clandestine meeting between McMurry and Booker. Our closing arguments. These sensible and well-tailored steps not decision in Gibson suggests that exclusion of a witness is only prevented the defendants from being prejudiced, but also only justified when the party seeking the testimony did not unduly interfere with the government’s case.",
"As a knowingly violates the sequestration order. Both Gibson and result of these careful measures, the defendants are now Rugiero involved parties that knew of their witness’s unable to show that the district court’s failure to exclude the sequestration violation at the time it took place. Rugiero, in witnesses was prejudicial. See Rugiero, 20 F.3d at 1394 fact, upheld a district court’s order not to exclude the witness (requiring prejudice before exclusion could be ordered); because of a lack of prejudice, though it called the issue “a Charles Alan Wright & Victor James Gold, 29 Federal close one.” Id. Here, none of the defendants even argue that Practice & Procedure § 6246, at 91-92 (1997) (stating that the prosecution knew about the violation of the sequestration “[v]iolation of an exclusion order is prejudicial if the witness order at the time of its occurrence. who violated that order subsequently gave important testimony that was influenced by the testimony of other Even if exclusion could be an appropriate remedy in a case witnesses”). There is no evidence that any significant aspect like this one — where the sequestration rule was violated of Booker’s testimony was influenced by McMurry’s without the knowledge of the party seeking to use the testimony of the sequestered witness — the measures taken by the district judge eliminated any prejudice the defendants 11 Juarez argues that even McM urry’s and Booker’s general could have possibly faced as a result of the violation. discussion about dates prejudiced his defense.",
"Juarez argues that McM urry lied when he stated o n the stand that there were coc aine deals McMurry made two statements to Booker that potentially after May of 1998, and claims that McM urry discussed dates with Booker could have influenced his testimony. First, McMurry to get him to corroborate McMurry’s lie. mentioned that he was quizzed about dates. Only one date in Juare z’s claim is pure speculation. Not only is there no evidence that particular was mentioned and that was the date that Carlos McM urry lied on the stand, there also is no eviden ce that McM urry and Booker discussed the date when the cocaine deals ceased or referred to the Brittain was stopped by police. In response, the district court May 1998 d ate.",
"McM urry told Booker that the defendants’ lawyers were prevented the government from asking Booker about going to try to trip Booker up on dates; Booker then stated that he did not remember any dates and that he would just admit to failing to remember them. Other than discussing the date of the stop of Carlos Brittain, there was no discussion of particular dates or eve nts that occurred o n those dates. Juarez’s claim that he was prejudiced by the discussion of dates is therefore not at all persuasive. Nos. 01-5602/5603/5666/5667 United States v. 23 24 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al.",
"Solorio et al. previous testimony. We therefore dismiss this contention of 2. Legal Analysis error. “‘[A] district court’s determination on a motion for either C. Juror Misconduct a new trial or relief from judgment because a juror failed to fully disclose information during voir dire is reversible only Luna and Solorio raise the issue of whether the district for either an abuse of discretion . . . or a clear error of law in court erred in not granting a new trial based on the fact that a the exercise of this discretion.’” Zerka v. Green, 49 F.3d juror had not explained during voir dire his relationship with 1181, 1184 (6th Cir. 1995) (citation omitted). one of the government’s witnesses. Because Luna and Solorio have not shown deliberate concealment or actual bias There are two ways in which a party seeking a new trial on the part of the juror, their claim fails.",
"based on a juror’s concealment of information can obtain a new trial. First, if a juror deliberately conceals material 1. Factual Background information on voir dire, the party seeking a new trial can obtain relief by showing that the juror could have been On September 22, 2000, during the fourth day of trial, juror challenged for cause. See Zerka, 49 F.3d at 1185 (“‘We hold James Fox submitted a note to the judge. The note explained that to obtain a new trial in such a situation, a party must first that Fox had worked with government witness Donna Webber demonstrate that a juror failed to answer honestly a material at Opryland. Fox was called into court. He stated that he question on voir dire, and then further show that a correct worked with Webber at Opryland from 1982 to 1989, in food response would have provided a valid basis for a challenge service.",
"Initially, the district judge believed that Fox should for cause.’”) (quoting McDonough Power Equip., Inc. v. be disqualified, but the government suggested that Fox could Greenwood, 464 U.S. 548, 555-56 (1984)) (emphases still be a fair juror. The court then interrogated Fox on the removed). In such a case, “bias may [but need not] be nature of his relationship with Webber. Fox stated that they inferred.” Zerka, 49 F.3d at 1186 (emphasis removed). were merely coworkers and not friends, never socializing with each other outside of work. Fox had no opinion as to It is possible, however, that a juror could have concealed Webber’s truthfulness and stated that his previous information in a non-deliberate fashion, through an “honest, relationship with her would not affect his evaluation of her though mistaken, response.” Id.",
"at 1186 n.7. If information testimony or make him more or less likely to believe the is not deliberately concealed, bias may not be inferred. government’s representation of the facts. Instead, “the movant must show actual bias” in order to obtain a new trial. Id. at 1186 (emphasis removed).12 Counsel for Juarez objected, stating that had he known about the relationship between Fox and Webber, he would have exercised his peremptories differently. Counsel for 12 Some circuits have held that a showing of deliberate concealment Solorio and Luna also objected.",
"is necessary for relief under McDonough. See Fitzgerald v. Greene, 150 F.3d 357 , 364 n.3 (4th Cir.) (listing cases), cert. den ied, 525 U.S. 956 (1998). As Fitzgerald reports, however, we rejected that position in Zerka, when we held that “McDonough doe s not entirely foreclose a p arty from seeking a new trial on the basis of a prospective juror’s honest, though mistaken response.” Zerka v. Green, 49 F .3d 1 181 , 118 6 n.7 (6th Nos. 01-5602/5603/5666/5667 United States v. 25 26 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. Luna and Solorio have not shown that they are entitled to Court’s decision in Apprendi v. New Jersey, 530 U.S. 466 relief under either of these prongs. First, there has been no (2000). As we conclude that their sentences were all within showing of deliberate concealment.",
"We find it eminently the prescribed statutory maximums, however, we reject their plausible that James Fox only remembered having met Donna challenges. Webber when she appeared on the stand and began testifying. The defendants have pointed to nothing (such as one of Fox’s Count 7 charged Juarez, Luna, and Solorio with conspiring answers to a question asked in voir dire) that contradicts this to possess with intent to distribute five kilograms or more of point, which is also supported by the fact that Fox went cocaine. The jury found Juarez and Luna guilty under Count directly to the judge after hearing Webber’s testimony. 7 with a quantity of cocaine that was five kilograms or more. The jury found Solorio guilty under Count 7, but found that Second, there has been no showing that Fox was actually the cocaine involved was less than five kilograms, but was biased.",
"Fox was repeatedly asked whether his relationship 500 grams or more. Juarez and Luna were sentenced pursuant with Webber would have any effect on his perception of her to 21 U.S.C. § 841(b)(1)(A), which applies to convictions testimony. He repeatedly and unambiguously answered that involving quantities of cocaine of five kilograms or more and it would not. We find this conclusion particularly reasonable provides a statutory sentencing range of ten years to life in in light of the fact that Fox and Webber’s relationship was prison. Juarez received a sentence of 292 months, and Luna limited in scope and had ended over a decade before the trial received a sentence of 235 months. Solorio was sentenced commenced.13 pursuant to 21 U.S.C. § 841(b)(1)(B), which applies to convictions involving cocaine quantities of 500 grams or D. Apprendi Violations more and provides a statutory range of five to forty years of imprisonment. Solorio received a sentence of 210 months. Juarez, Luna, and Solorio claim that the district judge used, for sentencing purposes, a drug quantity not found by the The defendants allege that Apprendi was violated by the jury, thereby violating principles laid out in the Supreme district court when, in determining base offense levels under the Guidelines, it held the defendants responsible for a higher quantity of drugs than determined by the jury.",
"The district judge determined Juarez and Luna’s base levels after finding Cir. 1995). 150 kilograms of cocaine. The district judge determined 13 Solorio’s base level after finding forty-three kilograms of The defendants’ argum ent that they may ha ve exe rcised their cocaine. peremptory challenges against Fox if they had known about his connection with Webbe r is unavailing. A showing that the juror The defendants’ Apprendi claims have no merit. The mere deliberately concealed information and could have been challenged for cause (or, alternatively, that the juror was actually biased) must be made. fact that the district judge computed the defendants’ sentences See Zerka, 49 F.3d at 1185 (“‘[I]t ill serves the important end o f finality under the Guidelines using a different quantity of drugs than to wipe the slate clean to recreate the peremptory challenge proc ess the jury found is irrelevant under Apprendi as long as the because counsel lacked an item of information which objectively he resultant sentence is still below the prescribed statutory should have obtained from a juror on voir dire exam ination.’”) (emp hasis maximum for the quantity of drugs actually found by the jury.",
"removed) (quoting McDonough Power Equip., Inc. v. Greenwood, 464 U.S. 548, 555 (1984)). See United States v. Lawrence, 308 F.3d 623, 634 (6th Cir. Nos. 01-5602/5603/5666/5667 United States v. 27 28 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. 2002) (“Apprendi by its terms applies only where the finding E. Rule 32 Violation ‘increases the penalty for a crime beyond the prescribed statutory maximum,’ and we have squarely held that In conjunction with his Apprendi claim, Luna argues that Apprendi does not apply to the Guidelines.”) (citation even if he was not sentenced in violation of Apprendi, the omitted); United States v. Garcia, 252 F.3d 838, 843 (6th Cir. district court erred to failing to make drug quantity findings 2001) (“Apprendi does not purport to apply to penalties in as required by former Federal Rule of Criminal Procedure excess of any particular range or based on any particular 32(c)(1), now Rule 32(i)(3)(B). The rule now states that “for offense level under the Sentencing Guidelines.”).",
"Because any disputed portion of the presentence report or other Juarez’s and Luna’s sentences were below the life-sentence controverted matter” that arises at sentencing, the court must ceiling of 21 U.S.C. § 841(b)(1)(A) and because the jury “rule on the dispute or determine that a ruling is unnecessary found that Juarez and Luna had both conspired to possess either because the matter will not affect sentencing, or with intent to distribute more than five kilograms as required because the court will not consider the matter in sentencing.” by 21 U.S.C. § 841(b)(1)(A), their Apprendi claims fail. Fed.",
"R. Crim. P. 32(i)(3)(B).15 We explained the former Similarly, because Solorio’s sentence was within the statutory range of five to forty years under 21 U.S.C. § 841(b)(1)(B) and because the jury found that Solorio conspired to possess conduct has been proved b y a preponderance of the evidence”). with intent to distribute 500 grams of cocaine or more as was 15 necessary for a conviction under 21 U.S.C. § 841(b)(1)(B), The former rule, literally read, required courts to “rule on any his Apprendi claim also fails.14 unresolved objections to the presentence report.” See Fed. R. Crim.",
"P. 32(c)(1) (2001) (emp hasis added). According to the Advisory Committee, the text of the rule left it unclear “whether that provision 14 should be read literally to mean every objection that might have been The facts surro unding Solorio’s conviction are slightly different made to the report or only on those objections that might in some way than the facts surroun ding Juarez ’s and L una’s. In Solorio’s case, the jury actually affect the sentence.” Fed. R. Crim. P. 32 , adviso ry com mittee’s found that Solo rio had conspired to possess with intent to distribute 500 note (2002). The broader reading of the rule, the committee feared, grams or more, but did not find that Solorio had conspired with resp ect to “might place an unreasonable burden on the court without providing any 5 kilograms or more of cocaine.",
"The district judge, however, determined real benefit to the sentencing process.” Id. To am eliorate this concern, Solorio’s sentence under the Guidelines using 43 kilograms, which the rule was revised to “narrow[] the req uirement for court find ings to according to Solorio, contravenes the jury’s “finding” that less than five those instances when the objection addresses a ‘controverted matter.’” Id. kilograms were involved. This, however, does not change our Apprendi W e, however, had not adopted the broad view of the rule tha t the rule analysis, for it does not change the fact that Solorio’s sentence was within has been amended to prevent.",
"Even before the rule change, we ha d held the statutory range under 21 U.S.C. § 8 41(b)(1 )(B), app licable to that a district court’s failure to address a co ntroverted matter under Rule defendants that conspire to p ossess with intent to distribute 500 grams or 32(c)(1) did not warrant reversal as long as the controverted m atter did more of cocaine. not affect the d efendant’s sentence. See Un ited States v. P arrott, 148 F.3d Any appearance of inconsistency between the district judge’s and the 629, 634 (6th Cir. 1998) (explaining that such errors must be considered jury’s findings is obviated when one considers the differing standards of harmless under Fed. R. Crim.",
"P. 52(a)). We had also held that the proof in the two contexts. It is entirely plausible that a district judge defendant had a duty to controvert expressly a matter in the district court could find one drug quantity made out by a preponderance of the evidence before Rule 3 2 wo uld ap ply. See U nited States v. H urst, 228 F.3d 751, even though the jury found a lesser quantity proved beyond a reasonable 760 (6th Cir. 2000) (holding that because the defendant “did not exp ressly dou bt. See Un ited States v. W atts, 519 U.S. 148 , 157 (1997 ) (holding call [these matters] to the court’s attention during the sentencing hearing, “that a jury’s verdict of acquittal does not prevent the sentencing court it can hardly be said that these matters were su fficiently ‘controverted’ to from considering conduct underlying the acquitted charge, so long as that trigger the sentencing court’s fact-finding duty under Rule 32(c)(1)”). Nos.",
"01-5602/5603/5666/5667 United States v. 29 30 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. version of the rule as requiring that “a court may not merely F. Firearm Enhancement summarily adopt the factual findings in the presentence report or simply declare that the facts are supported by a Next we address Juarez’s claim that the district court erred preponderance of the evidence.” United States v. Tarwater, in increasing his base offense level by two levels pursuant to 308 F.3d 494, 518 (6th Cir. 2002). U.S.S.G. § 2D1.1(b)(1) for possessing a firearm.",
"Luna claims that the district judge did not make a 1. Relevant Factual Development determination, for sentencing purposes, of the quantity of drugs for which Luna was responsible. This claim is Early in the morning of March 18, 1999, Juarez drove away meritless. At Luna’s sentencing hearing, the district judge from his apartment, located at 710 Saxony Drive, in a white stated that the government was “maintaining that . . . the pickup truck. Inside of the pickup was forty pounds of conspiracy was between 200 and 400 kilograms.” J.A. at marijuana. Juarez helped Hearn to unload the marijuana at 2378. The district judge determined that once the drug Hearn’s residence. Juarez was stopped and arrested while he quantity reached 150 kilograms (which it did in this case), the was leaving. Subsequent to his arrest, the police searched total offense would be 38, because “[t]hat’s the highest it can Juarez’s apartment pursuant to a valid search warrant. In the be.” J.A. at 2378.",
"The district court correctly found that a apartment, they found two 9-mm Glock handguns. The guns further quantity determination was unnecessary because the were located at the bottom of a pair of boots, which were on base offense level “would be the same whether it’s 150 top of a little black bag. Inside the bag were a variety of drug kilograms or 900 kilograms or whatever.” J.A. at 2378; see trafficking tools: a money counter, drug ledgers, paper also United States Sentencing Commission Guidelines money wrappers, and rubber bands. Boxes for the firearms Manual (“U.S.S.G.”) § 2D1.1(C)(1), at 112 (2001) (reporting were later found at Luna’s house. that for “150 KG or more of Cocaine” the base offense level is 38). The district court therefore properly resolved all At the time of Juarez’s arrest, his apartment was in disarray. material factual disputes. Luna’s contention to the contrary The food in the refrigerator was rotten, and the electricity was is meritless.16 turned off. Juarez claims that he was not living in the apartment at the time of the arrest in March but admits that he and his wife had lived there the previous summer and that his name was on the lease. 2.",
"Legal Analysis “A district court’s finding that a defendant possessed a 16 firearm during a drug crime is a factual finding subject to the W e cannot help but noting tha t Luna’s claim also fails be cause it clearly erroneous standard of review.” United States v. was no t prop erly raised . As we held in the Hurst case (and as the recent amendment to Rule 32 was meant to insure), a criminal defendant has a Bartholomew, 310 F.3d 912, 924 (6th Cir. 2002), cert. denied, duty to tell the district judge that matters are controverted. Luna never 123 S. Ct. 1005 (2003).",
"Enhancement analysis under raised this matter in front of the district judge. Luna’s counsel was asked, § 2D1.1(b)(1) has two parts. First, the government has the “Are there any other issues in dispute, Mr. Drake, that I didn’t already initial burden of showing “by a preponderance of the evidence rule on?” He answered, “No, your Honor.” J.A. at 2379. Nos. 01-5602/5603/5666/5667 United States v. 31 32 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. that the defendant possessed the firearm” for purposes of (1996) (affirming the enhancement of a defendant’s sentence § 2D1.1(b)(1). United States v. Miggins, 302 F.3d 384, 390- when the guns were found in a “residence to which 91 (6th Cir. 2002), cert.",
"denied, 123 S. Ct. 712, 909, 1772 [defendant] had full access and where drugs were found”). (2002-03). Possession may be actual or constructive. “To Juarez’s argument that Luna was the one who owed the guns establish constructive possession, the government must show is irrelevant. See United States v. Saikaly, 207 F.3d 363, 368 that the defendant had ownership, dominion, or control over (6th Cir. 2000) (“Saikaly also seems to rely on the fact that he the [firearm] or dominion over the premises where the did not own the firearms. This is irrelevant. The issue is not [firearm] is located.” Id. (quotations omitted). “[T]he burden ownership, but possession of the firearms.”). The district [then] shifts to the defendant to demonstrate that it was court did not clearly err in applying this enhancement. clearly improbable that the weapon was connected to the offense.” Id. Only if the defendant can make this showing G. Supervisory Role Increase does the enhancement not apply. We next turn to Solorio’s claim that the district court erred The government met its burden of showing constructive in increasing his base offense level by three points for his possession. Juarez leased the apartment where the guns were leadership role in the drug conspiracy. We conclude that the found and had left them in the apartment on the morning of district court did not err in making this determination, and March 18, 1999, the morning he was arrested. It therefore therefore uphold the supervisory role increase.",
"falls to Juarez to prove that it was clearly improbable that the weapon was connected to the offense. Juarez has not shown We note at the outset that it is unclear what standard of this to be the case. The firearms, two 9-mm handguns, are review we employ with regard to a district court’s weapons “often used in drug trafficking.” United States v. enhancement decision under § 3B1.1. A few years ago it was Jernigan, Nos. 01-2121/2304, 2003 WL 463483, at *4 (6th clear that we reviewed a district court’s factual findings for Cir. Feb. 18, 2003). Moreover, the firearms were found in a clear error and legal conclusions de novo. See, e.g., United pair of boots on top of a bag full of other objects related to States v. Taylor, 248 F.3d 506, 515 (6th Cir.",
"), cert. denied, drug trafficking, including a money counter, drug ledgers, 534 U.S. 981 (2001). The Supreme Court’s decision in paper money wrappers, and rubber bands. When Juarez was Buford v. United States, 532 U.S. 59 (2001), however, has arrested on March 18, 1999, he had just smuggled forty suggested that deference may be appropriate when we review pounds of marijuana, apparently from the apartment. The a district court’s application of the Guidelines, especially district court found “evidence of drug activity in that when it involves fact-bound determinations, issues that apartment both before and after the guns were brought there.” district courts may have comparatively greater expertise in J.A.",
"at 2454. Juarez has not therefore shown that it was addressing, or situations in which there will be limited value clearly improbable that the weapon was connected to the to uniform court of appeals precedent. In United States v. offense. See Keszthelyi, 308 F.3d at 579 (affirming the Dupree, 323 F.3d 480 (6th Cir. 2003), this court noted that enhancement of a defendant’s sentence when drugs were the impact of Buford on supervisory enhancements had not found in the residence and firearms were found in the been resolved, stating that “standard of review for defendant’s bedroom, including a shotgun found in a closet enhancements under § 3B1.1 is now open to question.” Id. at containing cash from the drug transactions); United States v. Hill, 79 F.3d 1477, 1486 (6th Cir. ), cert.",
"denied, 519 U.S. 858 Nos. 01-5602/5603/5666/5667 United States v. 33 34 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. 494. The Dupree court apparently did not resolve this thorny should be considered a supervisor. As the government notes, question.17 there is uncontroverted evidence that Solorio recruited Moises Picos-Picos as an accomplice and exercised control over him. We do not need to resolve the Buford question here, for we Solorio arranged for Picos-Picos to come from Tijuana to would affirm the district court’s application of the help Solorio and leased an apartment for him.",
"In return, enhancement regardless of the standard of review. To begin Picos-Picos worked for Solorio, delivering bags of cocaine the analysis, Guideline § 3B1.1(b) provides that a court and money, and keeping records of drug transactions for should increase a defendant’s base offense level by three Solorio. Solorio planned and directed all of Picos-Picos’s levels, “[i]f the defendant was a manager or supervisor (but drug activities. This is sufficient to establish that Solorio was not an organizer or leader) and the criminal activity involved a supervisor within the meaning of the Guideline. See five or more participants or was otherwise extensive.” See Dupree, 323 F.3d at 494 (upholding the enhancement for a U.S.S.G. § 3B1.1(b) (2001). The government bears the robber who supplied the gun, provided information about the burden of proving that the enhancement applies. Dupree, 323 victimized store and armored truck service, and moved F.3d at 491. surveillance cameras).",
"In considering whether a defendant was a manager or Solorio’s only argument against the enhancement is that the supervisor, we consider such factors as “‘the defendant’s “Picos-Peraza matter was separate from any dealing with exercise of decision-making authority, any recruitment of Omar Rocha and the conspirators related to Mr. Rocha.” accomplices, the claimed right to a larger share of the fruits of Solorio Br. at 24. Solorio therefore argues that an the crime, the degree of participation in planning the offense, enhancement under § 3B1.1(b) was inappropriate because it and the degree of control the defendant exercised over requires a showing that the enterprise had “five or more others.’” Id. Under this standard, we believe that Solorio participants or was otherwise extensive.” U.S.S.G. § 3B1.1(b). Solorio argues, in effect, that the jury’s verdict holding that he conspired only with respect to 500 grams of 17 cocaine proves that he did not belong to the larger conspiracy.",
"After looking closely at Dupree, we are of the opinion that the Dupree court did not resolve the Buford issue. The Dupree court noted It supposedly demonstrates that the jury believed that there that we had (in an unpublished opinion) suggested that Buford may mean was a subconspiracy between himself and Picos-Picos. This that § 3B1.1 enhancements should be reviewed under a more deferential conspiracy, Solorio alleges, is not “extensive” within the standard of review.",
"The Dupree court did no t resolve this conflict, but meaning of the Guideline and does not involve five people — concluded by stating that “[g]iven this court’s recent reference to a more thereby preventing Solorio from receiving the enhancement. deferential standard of review, we uphold the enhancement based on the district court’s findings.” United States v. Dupree, 323 F.3d 480 , 494 (6th Cir. 2003). We do not find this argument persuasive. The district court Although this language could be taken to read that the Buford at sentencing explicitly found that Solorio was part of the deferential standard of review is now the law for § 3B 1.1 applications, we larger conspiracy. Even if the jury had found that Solorio was believe that the Dupree court did not decide this issue. The court never only part of a conspiracy between himself and Picos-Picos, stated that Buford either did or did not apply to this factual situation, and the differences in the standards of proof at the guilt and Dupree contains no legal analysis of the issue.",
"Under these circumstances we do not believe that we have taken a clear p osition on the applicability sentencing phases resolve any seeming inconsistency. As a of Buford to review of § 3 B1.1 enhance ments. result, even if the jury verdict were construed as finding that Nos. 01-5602/5603/5666/5667 United States v. 35 36 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. Solorio did not belong to the larger conspiracy beyond a reduction. There is no doubt that Solorio was intimately reasonable doubt, the district judge still could have found by connected with the drug conspiracy. His own records indicate a preponderance that Solorio did belong to the larger that he distributed extensive amounts of cocaine and conspiracy. See United States v. Watts, 519 U.S. 148, 157 marijuana. To the extent that Solorio did not distribute the (1997) (explaining “that a jury’s verdict of acquittal does not drugs himself, he was directing his associate Picos-Picos to prevent the sentencing court from considering conduct do so in his stead. Picos-Picos delivered large quantities of underlying the acquitted charge, so long as that conduct has drugs for Solorio and received cash payments for him as well. been proved by a preponderance of the evidence”). We The control he exerted over Picos-Picos clearly reflects that therefore affirm the district court’s decision to apply the Solorio was no minor participant in this conspiracy.",
"We can supervisory enhancement. see no error in the district court’s denial of the mitigating-role reduction. H. Mitigating Role Reduction I. Downward Departure Solorio claims that the district court erred in denying him a mitigating-role reduction pursuant to U.S.S.G. § 3B1.2 for We now turn to the defendants’ last claim of error. Juarez having a small role in the conspiracy. This claim is easily and Solorio both argue that the district court erred by refusing resolved against Solorio. to depart downward from their sentences under the Guidelines.",
"Juarez argues that he should have been given a “Whether a defendant is entitled to a downward downward departure on the basis of harsh conditions of [adjustment] under § 3B1.2 depends heavily on factual confinement. Solorio argues he should have been given a determinations, which we review only for clear error.” downward departure based on his status as a deportable United States v. Campbell, 279 F.3d 392, 396 (6th Cir. 2002). person. Solorio has the burden of proving, by a preponderance of the evidence, that he is entitled to the reduction. United States v. We have held that “a district court’s discretionary refusal to Bartholomew, 310 F.3d 912, 924 (6th Cir. 2002). Under depart downward is generally not appealable, unless the § 3B1.2, a defendant can receive a four-level reduction for district court mistakenly believed it did not have legal being a minimal participant or a two-level reduction for being authority to depart downward.” United States v. Pruitt, 156 a minor participant.",
"“A minimal participant is one who is F.3d 638, 650 (6th Cir. 1998), cert. denied, 525 U.S. 1091 ‘plainly among the least culpable of those involved in the (1999). The defendant has the burden to show that the district conduct of a group,’ and a minor participant is one who ‘is court believed it lacked authority to depart downward. See less culpable than most other participants, but whose role United States v. Cook, 238 F.3d 786, 791 (6th Cir.) (stating could not be described as minimal.’” Id. (quoting U.S.S.G. that “where explicit mention is not made of the court’s power § 3B1.2, cmt. nn. 1, 3). to depart downwards, ‘it should be assumed that the court in the exercise of its discretion found downward departure Solorio here was not less culpable than most of the other unwarranted’”) (citation omitted), cert. denied, 534 U.S. 876 participants in the conspiracy. All the reasons that supported (2001).",
"the district court’s finding that Solorio was a supervisor justify the denial of Solorio’s request for a mitigating-role Nos. 01-5602/5603/5666/5667 United States v. 37 38 United States v. Nos. 01-5602/5603/5666/5667 Solorio et al. Solorio et al. In both Juarez’s and Solorio’s cases, the district judge depart in this case is unreviewable. We accordingly dismiss stated that she did not find a departure to be authorized, but Juarez’s and Solorio’s allegations of error. that even if it were, she would exercise her discretion not to depart. It appears that we have never squarely addressed in a III. CONCLUSION published opinion whether a district judge’s refusal to grant a departure is reviewable when it is clear both that the judge For the foregoing reasons, we AFFIRM the district court’s believes that she has no authority to depart and that she would decision in all respects. not depart even if she had the authority — although this phrasing seems to be a common practice in district courts. See United States v. Hill, No.",
"89-5952/5954/5957, 1991 WL 63621, at *3 (6th Cir. Apr. 23, 1991) (holding unappealable a refusal to depart when the judge made an apparently ambiguous remark indicating that he would not depart even if he were authorized to do so); see also United States v. Norfleet, No. 98-1311, 1999 WL 1281718, at *2-*3 (6th Cir. Dec. 28, 1999), cert. denied, 529 U.S. 1135 (2000); United States v. Coleman, No. 98-1861, 2000 WL 1872015, at *1 (6th Cir. Dec. 14, 2000). If there was any doubt about the issue, we dispel it today by holding the district judge’s refusal to depart here to be unreviewable. This accords with the practice of the federal circuits that have considered the question.",
"United States v. DeLeon, 187 F.3d 60, 69 (1st Cir. ), cert. denied, 528 U.S. 1030 (1999); United States v. Williams, 898 F.2d 1400, 1403 (9th Cir. 1990); see also Charles Alan Wright et al., 15B Federal Practice & Procedure § 3918.8, at 585 (2d ed. 1992) (“If the district court both concludes that there is no authority to make a downward departure and that in any event there is no basis for making a departure, the alternative discretionary refusal to depart has been held sufficient to support the sentence and to defeat review.”). Given the “strong presumption that a district court’s denial of a downward departure is based on an exercise of discretion,” Cook, 238 F.3d at 791, and the useless formality of a remand to a judge who has already stated that she would not exercise her discretion to depart, we conclude that the decision not to"
]
| https://www.courtlistener.com/api/rest/v3/opinions/2970858/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 1:20-cv-10434 Document 1-16 Filed 12/10/20 Page 1 of 2
EXHIBIT P
49024567;5 FILED: NEW YORK COUNTY CLERK 11/24/2020 02:48 PM INDEX NO. 656014/2020 NYSCEF DOC. NO. 47Case 1:20-cv-10434 Document 1-16 Filed 12/10/20 Page 2 of 2NYSCEF: 11/24/2020 RECEIVED
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
ARGONAUT INSURANCE COMPANY, Index No. 656014/2020
Plaintiff,
v.
DRIVETRAIN, ABC CORPORATIONS I- LLC; 10; and JOHN DOES 1-10,
Defendants.
NOTICE OF APPEARANCE
PLEASE TAKE NOTICE that Bradford J. Sandler hereby appears in the above-captioned
action as counsel for Defendant Drivetrain, LLC, and demands that all documents be served upon
the undersigned.
Dated: November , 2020 PA SKI STANG ZIEHL & JONES LLP
radford J. Sandler 780 Third Avenue, 13th Floor New York, NY 10017 Telephone: (212) 561-7700 Facsimile: (212) 561-7777 E-mail: bsandler@pszjiaw.com
Attorney for Defendant Drivetrain, LLC
_NY:41612.1 36869/003
1 of 1 | 2020-12-10 | [
"Case 1:20-cv-10434 Document 1-16 Filed 12/10/20 Page 1 of 2 EXHIBIT P 49024567;5 FILED: NEW YORK COUNTY CLERK 11/24/2020 02:48 PM INDEX NO. 656014/2020 NYSCEF DOC. NO. 47Case 1:20-cv-10434 Document 1-16 Filed 12/10/20 Page 2 of 2NYSCEF: 11/24/2020 RECEIVED SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK ARGONAUT INSURANCE COMPANY, Index No. 656014/2020 Plaintiff, v. DRIVETRAIN, ABC CORPORATIONS I- LLC; 10; and JOHN DOES 1-10, Defendants. NOTICE OF APPEARANCE PLEASE TAKE NOTICE that Bradford J. Sandler hereby appears in the above-captioned action as counsel for Defendant Drivetrain, LLC, and demands that all documents be served upon the undersigned. Dated: November , 2020 PA SKI STANG ZIEHL & JONES LLP radford J. Sandler 780 Third Avenue, 13th Floor New York, NY 10017 Telephone: (212) 561-7700 Facsimile: (212) 561-7777 E-mail: bsandler@pszjiaw.com Attorney for Defendant Drivetrain, LLC _NY:41612.1 36869/003 1 of 1"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/154189587/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
935 P.2d 398 (1996) David WALTERS, Governor of the State of Oklahoma and Ken Feagins, a nonresident individual, Appellants, v. STATE of Oklahoma ex rel., OKLAHOMA TAX COMMISSION, Appellee. No. 85148. Court of Appeals of Oklahoma, Division No. 1. August 23, 1996. Rehearing Denied November 4, 1996. Certiorari Denied March 5, 1997. Stanley M. Ward, Norman, Ken Feagins, Dallas, Texas; Duchess Bartmess, Oklahoma City, for Appellants. Stanley Johnston, Robert B. Struble, Oklahoma City, for Appellee. Released for Publication by Order of the Court of Appeals of Oklahoma, Division No. 1.
*399 MEMORANDUM OPINION CARL B. JONES, Presiding Judge: Appellants brought this declaratory judgment action against the Oklahoma Tax Commission [the Commission] challenging the constitutionality of Senate Bill No. 1121 [S.B. 1121], which was enacted by the Oklahoma Legislature in 1994. On cross-motions for summary judgment, the trial court rendered judgment for Appellee, and Appellants appeal. S.B. 1121, among other things, changed the method of calculating state income tax for nonresident and part-year resident individuals. Okla.Sess.Laws 1994, ch. 278, § 27; see now 68 O.S.Supp.1994 § 2362.[1] Prior to amendment, § 2362 provided that the taxable income of a nonresident individual, trust, or estate, "shall be the same as if he were a *400 resident individual [etc.]," and established a system by which the taxpayer's adjusted gross income as reported to the federal government was excludable from state taxable income unless the income was attributable to ownership of property, conduct of a business, trade, or profession, or other business or property in this state. Income from sources outside Oklahoma was not included in a nonresident's taxable income. S.B. 1121 modified existing law by requiring nonresident and part-time residents to apply the Oklahoma tax rate applicable to their adjusted gross income from all sources (not just income earned in Oklahoma) and calculate their tax liability as if paying Oklahoma income tax on all such taxable income, prorated according to the percentage the Oklahoma taxable income bears to the adjusted gross income from all sources. The Commission describes the amendment as one which created "tax equity," assuring that nonresidents and part-year residents pay tax on their Oklahoma income based on the rate determined by their total taxable income, just as full-time Oklahoma residents do. Appellants contend that S.B. 1121 was a "revenue bill," and so is unconstitutional because it was enacted contrary to the requirements of Okla. Const., Art. V, § 33.[2] Appellants also contend the bill is invalid under the state Constitution because it embraces more than one subject. Okla. Const., Art. V, § 57. In addition, Appellants raise equal protection, due process, and Commerce Clause objections to the bill under the state and federal constitutions. This appeal is brought under the accelerated procedures of Rule 1.203(A), Rules of Appellate Procedure in Civil Cases, 12 Ohio St. 1993 Supp. Ch. 15, App. 2. Summary judgment will be affirmed if the record reveals no substantial controversy as to any material fact, and that one party is entitled to judgment as a matter of law. See Johnson v. Mid-South Sports, 806 P.2d 1107, 1108 (Okla.1991). Our review is limited to the record and issues actually presented to the trial court. Hughey v. Grand River Dam Auth., 897 P.2d 1138, 1143 (Okla.1995). In our review of the trial court judgment we must be guided also by the strong presumption that legislative enactments are constitutional. Black v. Ball Janitorial Service, Inc., 730 P.2d 510, 512 (Okla.1986); Reherman v. Oklahoma Water Resources Bd., 679 P.2d 1296, 1300 (Okla.1984). A legislative act will be upheld against constitutional challenge unless it is clearly, palpably, and plainly inconsistent with our fundamental law. Reherman, 679 P.2d at 1300. Any question of constitutionality, even in a close case, will be resolved in favor of validity of the legislation. Leveridge v. Oklahoma Tax Comm'n, 294 P.2d 809, 811 (Okla.1956). At the outset, we reject the Commission's argument that Appellant Walters lacks standing to press a request for declaratory relief in this case. We concede that Walters, as a full-time Oklahoma resident, has no direct interest in the effects of S.B. 1121 on nonresidents and part-year residents. We find, however, that Walters (whose veto of the bill was overridden) has standing to question whether the bill passes constitutional *401 muster under the one-subject rule in Art. V, § 57. The affidavit of the Governor states that the interests of the state are involved in that the bill is harmful to the interest of the state in attracting new out-of-state business. In this summary judgment proceeding that statement suffices to supply standing in that under the statute, the state's interest is squarely brought before the court. Feagins has standing to press the claim for relief in all respects, and we will not burden this opinion with an extended discussion of the nuances of standing. The accepted test for a "revenue bill" is the two-pronged analysis stated by the court in Leveridge: A revenue bill is one whose principal purpose is to increase state tax revenue and which levies a tax in the strict sense. Leveridge, 294 P.2d at 811; see Board of County Comm'rs v. Oklahoma Pub. Empl. Retirement Sys., 405 P.2d 68, 72-73 (Okla.1965).[3] The term "has been confined to bills to levy taxes in the strict sense of the words, and has not been understood to extend to bills for other purposes, which may incidentally create revenue." The Nashville, 17 Fed.Cas. 1176, 1178 (No. 10,023) (D.Ind. 1868), quoted in Anderson v. Ritterbusch, 22 Okla. 761, 98 P. 1002, 1006 (1908). Appellants argue that S.B. 1121 satisfies both prongs of the revenue bill test. The Commission estimated that § 27 of the bill would raise approximately $18 million dollars in revenue, the bulk of which would go into the general revenue fund. For the most part, however, the sections of S.B. 1121 were predicted to be revenue-neutral. In fact, the Commission's impact statements showed that two sections of the bill would have a negative impact on revenue. Moreover, § 27 would not uniformly increase state taxes for all nonresidents and part-year residents. If a taxpayer had losses from out-of-state business (which would reduce federal adjusted gross income), the Commission projected that § 27 would actually result in a decrease in state tax. It appears, then, that the Commission is correct to characterize S.B. 1121 as merely a change in the way the tax laws are administered. The bill's principal object is not to raise revenue, and it does not levy a tax in the strict sense. That it has the incidental effect of increasing general revenues does not mean make it a revenue bill. The trial court correctly rejected the challenge to S.B. 1121 under Art. V, § 33. Appellants argue S.B. 1121 is void under Art. V, § 57[4] because it relates, according to its title, to several different subjects: "revenue and taxation, debtor and creditor, intoxicating liquors, motor vehicles and soldiers and sailors." Appellants assert there is no overarching purpose or theme to the divers provisions in the bill. The Commission asserts the common theme of the bill's provisions is administration of the state tax laws. The purpose of § 57 is to prevent legislative "log-rollingthe enactment of legislation through the combination of unpopular causes with popular legislation on an entirely different subject," Campbell v. White, 856 P.2d 255, 258 (Okla.1993); Bond v. Phelps, 200 Okla. 70, 191 P.2d 938, 950 (1948); and "veto-proofing" a bill by attachment of a popular rider to an otherwise unpopular bill. See Johnson v. Walters, 819 P.2d 694, 697 (Okla.1991). If the bill's provisions are "germane, relative and cognate" to the subject expressed in the title, then the bill satisfies the mandate of § 57. See Black v. Oklahoma Funding Bond Comm'n, 193 Okla. 1, 140 P.2d 740, 743 (1943); Campbell, 856 P.2d at 260. The proper construction to be given to the one-subject rule seems to have narrowed somewhat in recent years. See Campbell, 856 P.2d at 258-60; and Johnson, at 699 *402 (Wilson, J., concurring) (suggesting that strict compliance with § 57 would be required thereafter). In this case, we agree with the trial court that "[e]very provision of the Act in some way deals with enforcement of the tax laws of Oklahoma or provides for a method of reporting or for provisions to be placed on tax forms as the method for donating funds to the State." Appellants have failed to point out any section of the bill which does not relate to the general subject of tax administration: tax liens; filing of a bond with the Commission by persons in liquor business; inspection and registration of vehicles by the Commission or its motor license agents; confidentiality of tax information; approval of bond in lieu of payment of disputed taxes; tax refund claims; estate tax returns and audits; tax exemptions; tax code changes; and the like all relate to the state tax laws and their administration. We hold that S.B. 1121 does not violate the one-subject rule of Art. V, § 57. Appellants' various other constitutional challenges to S.B. 1121 are based on their contention that § 27 of the bill imposes an indirect tax on income derived outside of the state. The Commission properly responds that § 27 does not impose a tax on such out-of-state income, but merely uses that income in calculating the rate at which Oklahoma-derived income shall be taxed. With that understanding of § 27 in mind, some of Appellants' constitutional arguments are clearly without merit. Appellants claim a due process violation under Okla. Const., Art. II, §§ 2 and 7, and the Fourteenth Amendment to the U.S. Constitution, but they have failed to establish the necessary factual predicate to assert such a claim, because their out-of-state income is not being taxed. The bill does not offend the privileges and immunities clause of the U.S. Constitution, Art. IV, § 2, cl. 1, by taxing the property of persons who are not represented in the Legislature. Quite simply, § 27 of S.B. 1121 is not an impermissible attempt to extend the jurisdiction of Oklahoma's taxing authority beyond its borders. Use of out-of-state income to calculate a tax rate for in-state income in no way represents a tax on the out-of-state income. See Brady v. State, 80 N.Y.2d 596, 592 N.Y.S.2d 955, 958, 607 N.E.2d 1060, 1063 (Ct.App.1992), cert. denied, 509 U.S. 905, 113 S. Ct. 2998, 125 L. Ed. 2d 692 (1993); cf., Maxwell v. Bugbee, 250 U.S. 525, 539, 40 S. Ct. 2, 6, 63 L. Ed. 1124 (1919) (inclusion of entire estate of decedent to calculate inheritance tax rate for property in New Jersey "is in no just sense a tax upon the foreign property."). Similarly, Appellants' claim that nonresidents and part-year residents are denied equal protection of the laws, in violation of those same constitutional provisions, lacks a factual basis because Appellants' have failed to show how they are members of a class which has been treated differently. Appellants are treated no differently than other nonresidents or part-year residents, and the method for determining tax rates based on a taxpayer's total income is not different for nonresidents or part-year residents from the method used for full-time Oklahoma residents. Appellants' final constitutional attack on S.B. 1121 asserts that it unfairly erects a barrier to interstate commerce in violation of the Commerce Clause of the U.S. Constitution, Art. I, § 8, cl. 3. Appellants claim the bill places an arbitrary and discriminatory tax burden on foreign income of nonresidents and part-year residents. As we have just observed, however, the bill does not tax foreign income. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S. Ct. 1076, 51 L. Ed. 2d 326 (1977), cited by Appellants, is inapposite to the situation presented here. In Complete Auto Transit, a motor carrier transporting cars in Mississippi for General Motors brought a Commerce Clause challenge to a "privilege tax" levied by the State of Mississippi. (The Court rejected its challenge.) S.B. 1121 does not purport to tax interstate commerce. Having reviewed the record and the briefs of the parties, this Court finds that the trial court judgment must be AFFIRMED. GARRETT and JOPLIN, JJ., concur. NOTES [1] S.B. 1121 amended 68 O.S. § 2362 to read in pertinent part:
"For tax years beginning on or after January 1, 1994, the Oklahoma taxable income of a part-year resident individual, nonresident individual, a nonresident trust and a nonresident estate shall be calculated ... as if all income were earned in Oklahoma. "Using Oklahoma income tax rates, part-year resident individuals, nonresident individuals, nonresident trusts and nonresident estates shall compute their tax liability on the amount computed in the preceding paragraph. "From the liability computed there shall be deducted all allowable credits to determine the amount of tax due. "Part-year resident individuals, nonresident individuals, nonresident trusts and nonresident estates shall divide adjusted gross income from Oklahoma sources by the adjusted gross income from all sources to arrive at the applicable percentage that Oklahoma adjusted gross income represents of all adjusted income received by the taxpayer in the income year. "Part-year resident individuals, nonresident individuals, nonresident trusts and nonresident estates shall multiply the amount of Oklahoma tax computed by the applicable percentage calculated in the preceding paragraph in order to determine the amount of income tax which must be paid to the State of Oklahoma. Nothing in this section shall be construed to allow for greater than one hundred percent (100%) of a taxpayer's income to be taxed. * * *" [2] Section 33, as amended by State Question No. 640 in 1992, provides,
"A. All bills for raising revenue shall originate in the House of Representatives. The Senate may propose amendments to revenue bills. "B. No revenue bill shall be passed during the last five days of the session. "C. Any revenue bill originating in the House of Representatives shall not become effective until it has been referred to the people of the state at the next general election held throughout the state and shall become effective and be in force when it has been approved by a majority of the votes cast on the measure at such election and not otherwise, except as otherwise provided in subsection D of this section. "D. Any revenue bill originating in the House of Representatives may become law without being submitted to a vote of the people of the state if such bill receives the approval of three-fourths (3/4) of the membership of the House of Representatives and three-fourths (3/4) of the membership of the Senate and is submitted to the Governor for appropriate action. Any such revenue bill shall not be subject to the emergency measure provision authorized in [Art. V, § 58] and shall not become effective and be in force until ninety days after it has been approved by the Legislature, and acted on by the Governor." [3] See, generally, Ramsey, What is a "Revenue Bill" Within the Meaning of Our Most Recent Constitutional Amendment, 63 Okla.B.J. 1567 (1992), discussing the subject following passage of State Question No. 640. [4] "Every act of the Legislature shall embrace but one subject, which shall be clearly expressed in its title, except general appropriation bills, general revenue bills, and bills adopting a code, digest, or revision of statutes ... Provided, That if any subject be embraced in any act contrary to the provisions of this section, such act shall be void only as to so much of the law as may not be expressed in the title thereof." | 10-30-2013 | [
"935 P.2d 398 (1996) David WALTERS, Governor of the State of Oklahoma and Ken Feagins, a nonresident individual, Appellants, v. STATE of Oklahoma ex rel., OKLAHOMA TAX COMMISSION, Appellee. No. 85148. Court of Appeals of Oklahoma, Division No. 1. August 23, 1996. Rehearing Denied November 4, 1996. Certiorari Denied March 5, 1997. Stanley M. Ward, Norman, Ken Feagins, Dallas, Texas; Duchess Bartmess, Oklahoma City, for Appellants. Stanley Johnston, Robert B. Struble, Oklahoma City, for Appellee. Released for Publication by Order of the Court of Appeals of Oklahoma, Division No. 1. *399 MEMORANDUM OPINION CARL B. JONES, Presiding Judge: Appellants brought this declaratory judgment action against the Oklahoma Tax Commission [the Commission] challenging the constitutionality of Senate Bill No.",
"1121 [S.B. 1121], which was enacted by the Oklahoma Legislature in 1994. On cross-motions for summary judgment, the trial court rendered judgment for Appellee, and Appellants appeal. S.B. 1121, among other things, changed the method of calculating state income tax for nonresident and part-year resident individuals. Okla.Sess.Laws 1994, ch. 278, § 27; see now 68 O.S.Supp.1994 § 2362. [1] Prior to amendment, § 2362 provided that the taxable income of a nonresident individual, trust, or estate, \"shall be the same as if he were a *400 resident individual [etc.",
"],\" and established a system by which the taxpayer's adjusted gross income as reported to the federal government was excludable from state taxable income unless the income was attributable to ownership of property, conduct of a business, trade, or profession, or other business or property in this state. Income from sources outside Oklahoma was not included in a nonresident's taxable income. S.B. 1121 modified existing law by requiring nonresident and part-time residents to apply the Oklahoma tax rate applicable to their adjusted gross income from all sources (not just income earned in Oklahoma) and calculate their tax liability as if paying Oklahoma income tax on all such taxable income, prorated according to the percentage the Oklahoma taxable income bears to the adjusted gross income from all sources. The Commission describes the amendment as one which created \"tax equity,\" assuring that nonresidents and part-year residents pay tax on their Oklahoma income based on the rate determined by their total taxable income, just as full-time Oklahoma residents do.",
"Appellants contend that S.B. 1121 was a \"revenue bill,\" and so is unconstitutional because it was enacted contrary to the requirements of Okla. Const., Art. V, § 33. [2] Appellants also contend the bill is invalid under the state Constitution because it embraces more than one subject. Okla. Const., Art. V, § 57. In addition, Appellants raise equal protection, due process, and Commerce Clause objections to the bill under the state and federal constitutions. This appeal is brought under the accelerated procedures of Rule 1.203(A), Rules of Appellate Procedure in Civil Cases, 12 Ohio St. 1993 Supp. Ch. 15, App. 2.",
"Summary judgment will be affirmed if the record reveals no substantial controversy as to any material fact, and that one party is entitled to judgment as a matter of law. See Johnson v. Mid-South Sports, 806 P.2d 1107, 1108 (Okla.1991). Our review is limited to the record and issues actually presented to the trial court. Hughey v. Grand River Dam Auth., 897 P.2d 1138, 1143 (Okla.1995). In our review of the trial court judgment we must be guided also by the strong presumption that legislative enactments are constitutional. Black v. Ball Janitorial Service, Inc., 730 P.2d 510, 512 (Okla.1986); Reherman v. Oklahoma Water Resources Bd., 679 P.2d 1296, 1300 (Okla.1984). A legislative act will be upheld against constitutional challenge unless it is clearly, palpably, and plainly inconsistent with our fundamental law.",
"Reherman, 679 P.2d at 1300. Any question of constitutionality, even in a close case, will be resolved in favor of validity of the legislation. Leveridge v. Oklahoma Tax Comm'n, 294 P.2d 809, 811 (Okla.1956). At the outset, we reject the Commission's argument that Appellant Walters lacks standing to press a request for declaratory relief in this case. We concede that Walters, as a full-time Oklahoma resident, has no direct interest in the effects of S.B.",
"1121 on nonresidents and part-year residents. We find, however, that Walters (whose veto of the bill was overridden) has standing to question whether the bill passes constitutional *401 muster under the one-subject rule in Art. V, § 57. The affidavit of the Governor states that the interests of the state are involved in that the bill is harmful to the interest of the state in attracting new out-of-state business. In this summary judgment proceeding that statement suffices to supply standing in that under the statute, the state's interest is squarely brought before the court. Feagins has standing to press the claim for relief in all respects, and we will not burden this opinion with an extended discussion of the nuances of standing. The accepted test for a \"revenue bill\" is the two-pronged analysis stated by the court in Leveridge: A revenue bill is one whose principal purpose is to increase state tax revenue and which levies a tax in the strict sense.",
"Leveridge, 294 P.2d at 811; see Board of County Comm'rs v. Oklahoma Pub. Empl. Retirement Sys., 405 P.2d 68, 72-73 (Okla.1965). [3] The term \"has been confined to bills to levy taxes in the strict sense of the words, and has not been understood to extend to bills for other purposes, which may incidentally create revenue.\" The Nashville, 17 Fed.Cas. 1176, 1178 (No. 10,023) (D.Ind. 1868), quoted in Anderson v. Ritterbusch, 22 Okla. 761, 98 P. 1002, 1006 (1908). Appellants argue that S.B. 1121 satisfies both prongs of the revenue bill test.",
"The Commission estimated that § 27 of the bill would raise approximately $18 million dollars in revenue, the bulk of which would go into the general revenue fund. For the most part, however, the sections of S.B. 1121 were predicted to be revenue-neutral. In fact, the Commission's impact statements showed that two sections of the bill would have a negative impact on revenue. Moreover, § 27 would not uniformly increase state taxes for all nonresidents and part-year residents. If a taxpayer had losses from out-of-state business (which would reduce federal adjusted gross income), the Commission projected that § 27 would actually result in a decrease in state tax. It appears, then, that the Commission is correct to characterize S.B. 1121 as merely a change in the way the tax laws are administered. The bill's principal object is not to raise revenue, and it does not levy a tax in the strict sense.",
"That it has the incidental effect of increasing general revenues does not mean make it a revenue bill. The trial court correctly rejected the challenge to S.B. 1121 under Art. V, § 33. Appellants argue S.B. 1121 is void under Art. V, § 57[4] because it relates, according to its title, to several different subjects: \"revenue and taxation, debtor and creditor, intoxicating liquors, motor vehicles and soldiers and sailors.\" Appellants assert there is no overarching purpose or theme to the divers provisions in the bill. The Commission asserts the common theme of the bill's provisions is administration of the state tax laws. The purpose of § 57 is to prevent legislative \"log-rollingthe enactment of legislation through the combination of unpopular causes with popular legislation on an entirely different subject,\" Campbell v. White, 856 P.2d 255, 258 (Okla.1993); Bond v. Phelps, 200 Okla. 70, 191 P.2d 938, 950 (1948); and \"veto-proofing\" a bill by attachment of a popular rider to an otherwise unpopular bill.",
"See Johnson v. Walters, 819 P.2d 694, 697 (Okla.1991). If the bill's provisions are \"germane, relative and cognate\" to the subject expressed in the title, then the bill satisfies the mandate of § 57. See Black v. Oklahoma Funding Bond Comm'n, 193 Okla. 1, 140 P.2d 740, 743 (1943); Campbell, 856 P.2d at 260. The proper construction to be given to the one-subject rule seems to have narrowed somewhat in recent years. See Campbell, 856 P.2d at 258-60; and Johnson, at 699 *402 (Wilson, J., concurring) (suggesting that strict compliance with § 57 would be required thereafter). In this case, we agree with the trial court that \"[e]very provision of the Act in some way deals with enforcement of the tax laws of Oklahoma or provides for a method of reporting or for provisions to be placed on tax forms as the method for donating funds to the State.\" Appellants have failed to point out any section of the bill which does not relate to the general subject of tax administration: tax liens; filing of a bond with the Commission by persons in liquor business; inspection and registration of vehicles by the Commission or its motor license agents; confidentiality of tax information; approval of bond in lieu of payment of disputed taxes; tax refund claims; estate tax returns and audits; tax exemptions; tax code changes; and the like all relate to the state tax laws and their administration.",
"We hold that S.B. 1121 does not violate the one-subject rule of Art. V, § 57. Appellants' various other constitutional challenges to S.B. 1121 are based on their contention that § 27 of the bill imposes an indirect tax on income derived outside of the state. The Commission properly responds that § 27 does not impose a tax on such out-of-state income, but merely uses that income in calculating the rate at which Oklahoma-derived income shall be taxed. With that understanding of § 27 in mind, some of Appellants' constitutional arguments are clearly without merit.",
"Appellants claim a due process violation under Okla. Const., Art. II, §§ 2 and 7, and the Fourteenth Amendment to the U.S. Constitution, but they have failed to establish the necessary factual predicate to assert such a claim, because their out-of-state income is not being taxed. The bill does not offend the privileges and immunities clause of the U.S. Constitution, Art. IV, § 2, cl.",
"1, by taxing the property of persons who are not represented in the Legislature. Quite simply, § 27 of S.B. 1121 is not an impermissible attempt to extend the jurisdiction of Oklahoma's taxing authority beyond its borders. Use of out-of-state income to calculate a tax rate for in-state income in no way represents a tax on the out-of-state income. See Brady v. State, 80 N.Y.2d 596, 592 N.Y.S.2d 955, 958, 607 N.E.2d 1060, 1063 (Ct.App.1992), cert. denied, 509 U.S. 905, 113 S. Ct. 2998, 125 L. Ed. 2d 692 (1993); cf., Maxwell v. Bugbee, 250 U.S. 525, 539, 40 S. Ct. 2, 6, 63 L. Ed. 1124 (1919) (inclusion of entire estate of decedent to calculate inheritance tax rate for property in New Jersey \"is in no just sense a tax upon the foreign property.\"). Similarly, Appellants' claim that nonresidents and part-year residents are denied equal protection of the laws, in violation of those same constitutional provisions, lacks a factual basis because Appellants' have failed to show how they are members of a class which has been treated differently.",
"Appellants are treated no differently than other nonresidents or part-year residents, and the method for determining tax rates based on a taxpayer's total income is not different for nonresidents or part-year residents from the method used for full-time Oklahoma residents. Appellants' final constitutional attack on S.B. 1121 asserts that it unfairly erects a barrier to interstate commerce in violation of the Commerce Clause of the U.S. Constitution, Art. I, § 8, cl. 3. Appellants claim the bill places an arbitrary and discriminatory tax burden on foreign income of nonresidents and part-year residents. As we have just observed, however, the bill does not tax foreign income. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S. Ct. 1076, 51 L. Ed. 2d 326 (1977), cited by Appellants, is inapposite to the situation presented here. In Complete Auto Transit, a motor carrier transporting cars in Mississippi for General Motors brought a Commerce Clause challenge to a \"privilege tax\" levied by the State of Mississippi. (The Court rejected its challenge.) S.B. 1121 does not purport to tax interstate commerce.",
"Having reviewed the record and the briefs of the parties, this Court finds that the trial court judgment must be AFFIRMED. GARRETT and JOPLIN, JJ., concur. NOTES [1] S.B. 1121 amended 68 O.S. § 2362 to read in pertinent part: \"For tax years beginning on or after January 1, 1994, the Oklahoma taxable income of a part-year resident individual, nonresident individual, a nonresident trust and a nonresident estate shall be calculated ... as if all income were earned in Oklahoma. \"Using Oklahoma income tax rates, part-year resident individuals, nonresident individuals, nonresident trusts and nonresident estates shall compute their tax liability on the amount computed in the preceding paragraph. \"From the liability computed there shall be deducted all allowable credits to determine the amount of tax due.",
"\"Part-year resident individuals, nonresident individuals, nonresident trusts and nonresident estates shall divide adjusted gross income from Oklahoma sources by the adjusted gross income from all sources to arrive at the applicable percentage that Oklahoma adjusted gross income represents of all adjusted income received by the taxpayer in the income year. \"Part-year resident individuals, nonresident individuals, nonresident trusts and nonresident estates shall multiply the amount of Oklahoma tax computed by the applicable percentage calculated in the preceding paragraph in order to determine the amount of income tax which must be paid to the State of Oklahoma. Nothing in this section shall be construed to allow for greater than one hundred percent (100%) of a taxpayer's income to be taxed. * * *\" [2] Section 33, as amended by State Question No. 640 in 1992, provides, \"A. All bills for raising revenue shall originate in the House of Representatives. The Senate may propose amendments to revenue bills. \"B. No revenue bill shall be passed during the last five days of the session. \"C. Any revenue bill originating in the House of Representatives shall not become effective until it has been referred to the people of the state at the next general election held throughout the state and shall become effective and be in force when it has been approved by a majority of the votes cast on the measure at such election and not otherwise, except as otherwise provided in subsection D of this section. \"D. Any revenue bill originating in the House of Representatives may become law without being submitted to a vote of the people of the state if such bill receives the approval of three-fourths (3/4) of the membership of the House of Representatives and three-fourths (3/4) of the membership of the Senate and is submitted to the Governor for appropriate action.",
"Any such revenue bill shall not be subject to the emergency measure provision authorized in [Art. V, § 58] and shall not become effective and be in force until ninety days after it has been approved by the Legislature, and acted on by the Governor.\" [3] See, generally, Ramsey, What is a \"Revenue Bill\" Within the Meaning of Our Most Recent Constitutional Amendment, 63 Okla.B.J. 1567 (1992), discussing the subject following passage of State Question No. 640. [4] \"Every act of the Legislature shall embrace but one subject, which shall be clearly expressed in its title, except general appropriation bills, general revenue bills, and bills adopting a code, digest, or revision of statutes ...",
"Provided, That if any subject be embraced in any act contrary to the provisions of this section, such act shall be void only as to so much of the law as may not be expressed in the title thereof.\""
]
| https://www.courtlistener.com/api/rest/v3/opinions/2604631/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
SIMPSON, J. The bill in this case was filed by the ■appellee to enforce a material-man’s lien on a building owned by said respondent Robinson, which had been ■erected by Fred. Jay, contractor. The assignments of •error relate to the action of the court in overruling demurrer to the original bill. The first insistence is that the bill does not allege, nor do the exhibits show, that the materials furnished were used in the building described. The third section •of the amended bill alleges that the material was furnished for the building. This court has said that: “In actions by which it is sought to declare and enforce the lien given by statute to mechanics, materialmen, and the like, every fact necessary to the creation of the lien must be alleged and proved. This is the general rule of pleading which is applied with much strictness to this class of actions.” — Cook v. Rome Brick Co., 98 Ala. 409, 413, 12 South. 918, 919. We have also held that the lien does not attach to material furnished for the building not *568used in it, but left lying on the premises after the completion of the building. — Lee v. King, 99 Ala. 246, 13 South. 506; Porter & Blair Hardware Co. v. Lee et al., 105 Ala. 361, 368, 17 South. 216. This court also said: “We do not declare as a universal proposition that the burden is on the materialman to show that the goods were used in the construction of the particular building; but, where the contractor stipulates to furnish the material, and the owner of the property is not notified of the purchase, the materialman should show, with reasonable satisfaction, that the goods were used in the building.”—May & Thomas Hardware Co. v. McGonnell, 102 Ala. 577, 581, 14 South. 768. In another case where there was a contract to build two houses, this court said: “It does not appear by the statement of the claim filed in the office of the judge of probate what part of the gross amount claimed was for materials used in the building of this house. Ylery clearly, in principle, and upon all authority, the statement thus filed was wholly bad and inefficacious to fix a lien upon either of the lots and houses in question.” — Leftwich Lumber Co. et al. v. Florence, etc., Ass’n, 104 Ala. 584, 595, 596, 18 South. 48, 51. The act of March 4,1901 (Acts 1900-01, p. 2115), provides for the enforcement of the lien, where two or more buildings are erected under a general contract; and this court in commenting on that act said: “Prior to this statute, in order to acquire a lien, the particular goods must have been furnished for the erection of the particular building on which the lien is sought, and, to secure the benefits of the lien, it was necessary to allege and prove that each piece of material so furnished was actually used upon the particular building so designated.”— Cocciola et al. v. Wood-Dickerson Supply Co., 136 Ala. 532, 33 South. 856. In that case the bill alleged that *569the material was purchased for the building “cmd so used” (italics supplied), so that, taking the statement of the court in connection with the statute in question, we hold that this case, in connection with the others cited, is authority for the principle that “it must be alleged and proved” that the material was actually used upon the particular building, where there is but one, and on the particular building, where there is a contract for more than one building. Consequently this ground of demurrer was well taken. The bill is also subject to the demurrer on the ground that it does not allege that within four months after the indebtedness accrued the statement required by law was filed in the office of the judge of probate. — Acts 1900-01, p. 2118, § 2: It is true that the bill alleges that the' statement (Exhibit A to the bill) was filed, and, at the end of that statement, there is a note stating that the amount due was payable January 1, 1908, the statement being filed March 17, 1908, but that does not supply the deficiency of the necessary averment in the bill that the statement was filed within the time required by law. This is not only hot an allegation in the bill, but is not proof of the fact, as the law does not provide for any such statement in the paper, nor make it proof of any such fact. — 3 Ency. Pl. & Pr. 362; 13 Id. 986-988. The description of the property in “Exhibit A” referred to in the bill for that purpose is probably not sufficient (Montgomery Iron Works v. Dorman, 78 Ala. 218, 220, 221); but this is not material in this case, as the bill does not pray for the enforcement of the lien on the lot, but only “that a decree be rendered for lien and judgment on said building,” and the description is sufficient to identify the building. The bill is also subject to the ground of demurrer “that the statement filed in the office of the judge of *570probate was not the one of which complainant gave respondent 10 days’ notice.” The two statements are for different amounts, and different items. Said act- of March 4, 1901 (page 2117), requires duplicate accounts lo be furnished the contractor and the owner at the time the material is furnished, and the bill alleges that said Exhibit A is a copy of said duplicates, and the notice does not correspond with said duplicates furnished. It will be noticed, also, that the bill claims a lien on the building, while the notice is that a lien will be claimed on the lots. We have not deemed it necessary to discuss that part of the bill alleging that a small portion of the material was furnished to the owner directly, for two reasons, to wit: The statement filed claims only that the goods were furnished to the contractor, and the account attached to the notice shows affirmatively that the goods claimed to have been furnished to the owner had been paid for before the notice was given, and the original statement filed shows the same fact. The decree of the court is reversed, and the cause remanded. Reversed and remanded. Anderson, McClellan, and Sayre, JJ., concur. | 07-27-2022 | [
"SIMPSON, J. The bill in this case was filed by the ■appellee to enforce a material-man’s lien on a building owned by said respondent Robinson, which had been ■erected by Fred. Jay, contractor. The assignments of •error relate to the action of the court in overruling demurrer to the original bill. The first insistence is that the bill does not allege, nor do the exhibits show, that the materials furnished were used in the building described.",
"The third section •of the amended bill alleges that the material was furnished for the building. This court has said that: “In actions by which it is sought to declare and enforce the lien given by statute to mechanics, materialmen, and the like, every fact necessary to the creation of the lien must be alleged and proved. This is the general rule of pleading which is applied with much strictness to this class of actions.” — Cook v. Rome Brick Co., 98 Ala. 409, 413, 12 South. 918, 919. We have also held that the lien does not attach to material furnished for the building not *568used in it, but left lying on the premises after the completion of the building. — Lee v. King, 99 Ala. 246, 13 South. 506; Porter & Blair Hardware Co. v. Lee et al., 105 Ala. 361, 368, 17 South. 216. This court also said: “We do not declare as a universal proposition that the burden is on the materialman to show that the goods were used in the construction of the particular building; but, where the contractor stipulates to furnish the material, and the owner of the property is not notified of the purchase, the materialman should show, with reasonable satisfaction, that the goods were used in the building.”—May & Thomas Hardware Co. v. McGonnell, 102 Ala. 577, 581, 14 South.",
"768. In another case where there was a contract to build two houses, this court said: “It does not appear by the statement of the claim filed in the office of the judge of probate what part of the gross amount claimed was for materials used in the building of this house. Ylery clearly, in principle, and upon all authority, the statement thus filed was wholly bad and inefficacious to fix a lien upon either of the lots and houses in question.” — Leftwich Lumber Co. et al. v. Florence, etc., Ass’n, 104 Ala. 584, 595, 596, 18 South.",
"48, 51. The act of March 4,1901 (Acts 1900-01, p. 2115), provides for the enforcement of the lien, where two or more buildings are erected under a general contract; and this court in commenting on that act said: “Prior to this statute, in order to acquire a lien, the particular goods must have been furnished for the erection of the particular building on which the lien is sought, and, to secure the benefits of the lien, it was necessary to allege and prove that each piece of material so furnished was actually used upon the particular building so designated.”— Cocciola et al. v. Wood-Dickerson Supply Co., 136 Ala. 532, 33 South. 856. In that case the bill alleged that *569the material was purchased for the building “cmd so used” (italics supplied), so that, taking the statement of the court in connection with the statute in question, we hold that this case, in connection with the others cited, is authority for the principle that “it must be alleged and proved” that the material was actually used upon the particular building, where there is but one, and on the particular building, where there is a contract for more than one building.",
"Consequently this ground of demurrer was well taken. The bill is also subject to the demurrer on the ground that it does not allege that within four months after the indebtedness accrued the statement required by law was filed in the office of the judge of probate. — Acts 1900-01, p. 2118, § 2: It is true that the bill alleges that the' statement (Exhibit A to the bill) was filed, and, at the end of that statement, there is a note stating that the amount due was payable January 1, 1908, the statement being filed March 17, 1908, but that does not supply the deficiency of the necessary averment in the bill that the statement was filed within the time required by law. This is not only hot an allegation in the bill, but is not proof of the fact, as the law does not provide for any such statement in the paper, nor make it proof of any such fact.",
"— 3 Ency. Pl. & Pr. 362; 13 Id. 986-988. The description of the property in “Exhibit A” referred to in the bill for that purpose is probably not sufficient (Montgomery Iron Works v. Dorman, 78 Ala. 218, 220, 221); but this is not material in this case, as the bill does not pray for the enforcement of the lien on the lot, but only “that a decree be rendered for lien and judgment on said building,” and the description is sufficient to identify the building. The bill is also subject to the ground of demurrer “that the statement filed in the office of the judge of *570probate was not the one of which complainant gave respondent 10 days’ notice.” The two statements are for different amounts, and different items. Said act- of March 4, 1901 (page 2117), requires duplicate accounts lo be furnished the contractor and the owner at the time the material is furnished, and the bill alleges that said Exhibit A is a copy of said duplicates, and the notice does not correspond with said duplicates furnished.",
"It will be noticed, also, that the bill claims a lien on the building, while the notice is that a lien will be claimed on the lots. We have not deemed it necessary to discuss that part of the bill alleging that a small portion of the material was furnished to the owner directly, for two reasons, to wit: The statement filed claims only that the goods were furnished to the contractor, and the account attached to the notice shows affirmatively that the goods claimed to have been furnished to the owner had been paid for before the notice was given, and the original statement filed shows the same fact. The decree of the court is reversed, and the cause remanded. Reversed and remanded. Anderson, McClellan, and Sayre, JJ., concur."
]
| https://www.courtlistener.com/api/rest/v3/opinions/7365091/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
DETAILED ACTION
Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Priority Receipt is acknowledged of certified copies of papers required by 37 CFR 1.55.
Election/Restrictions Applicant’s election without traverse of Group II, claims 10-20 (and new claims 21-23) in the reply filed on 17 February 2022 is acknowledged. Claims 1-9 are withdrawn from further consideration pursuant to 37 CFR 1.142(b) as being drawn to a nonelected invention, there being no allowable generic or linking claim. Election was made without traverse in said reply.
Claim Rejections - 35 USC § 112 The following is a quotation of 35 U.S.C. 112(b): (b) CONCLUSION.—The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.
The following is a quotation of 35 U.S.C. 112 (pre-AIA ), second paragraph: The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.
Claims 10-23 are rejected under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), second paragraph, as being indefinite for failing to particularly point out and distinctly Regarding claim 10, it is unclear what is meant by “each of the cartridge” since the term “each” would refer to plural cartridges. Clarification and correction are required. In claim 10, it is unclear how the claimed detergent supply device elements function absent a controller (i.e. the pump extracting detergent and the electrode sensors detecting and transmitting electric signals) as such controller detail appears to be a requisite element for the detergent supply device to function as claimed. Clarification and correction are required. In claim 17, the recitation of “a first set of electrode sensors” and “a second set of electrode sensors” is indefinite because it is unclear what Applicant intends. Claim 10 already recites “at least three electrodes”, and it is unclear whether further recitations of sets of electrode sensors include the previously cited at least three electrodes or are separate sensors. Clarification and correction are required.
Claim Rejections - 35 USC § 102 In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status. The following is a quotation of the appropriate paragraphs of 35 U.S.C. 102 that form the basis for the rejections under this section made in this Office action: A person shall be entitled to a patent unless –
(a)(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.
(a)(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention.
Claim(s) 10 is/are rejected under 35 U.S.C. 102(a) as being anticipated by US 2012/0152290 to BROSNAN et al. (“BROSNAN”). Regarding claim 10, BROSNAN (in claims 1, 3, 4, and associated text) discloses a washing machine (10) having a cabinet (18), a tub (36) located inside the cabinet and configured to receive water, a drum (basket, not shown; see ¶ [0016]) rotatably provided inside the tub and configured to accommodate laundry, and a detergent supply device located at the cabinet and configured to supply detergent into the tub, wherein the detergent supply device comprises: a cartridge (12,14,16) configured to contain the detergent; a pump (40) connected to the cartridge and configured to pump the detergent contained in the cartridge to the tub; and a passage (lines 42,44,46) that is configured to guide the pumped detergent into the tub, wherein at least three electrode sensors (142) are located at each of the cartridge, at least one of the at least three electrode sensors being located at a height that is different from the remaining ones of the at least three electrode sensors (note ,
Claim Rejections - 35 USC § 103 In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status. The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
The factual inquiries for establishing a background for determining obviousness under 35 U.S.C. 103 are summarized as follows: 1. Determining the scope and contents of the prior art. 2. Ascertaining the differences between the prior art and the claims at issue. 3. Resolving the level of ordinary skill in the pertinent art. 4. Considering objective evidence present in the application indicating obviousness or nonobviousness. This application currently names joint inventors. In considering patentability of the claims the examiner presumes that the subject matter of the various claims was
Claims 10-16 is/are rejected under 35 U.S.C. 103 as being unpatentable over KR 10-2015-0103988 to LG ELECTRONICS (“LG”; cited by Examiner - machine translation provided) in view of BROSNAN. Regarding claims 10-16, LG discloses a washing machine having a cabinet (see Fig. 1), a tub (130) located inside the cabinet and configured to receive water, a drum (120) rotatably provided inside the tub and configured to accommodate laundry, and a detergent supply device (see Figs. 1 and 3-7) located at the cabinet and configured to supply detergent into the tub, wherein the detergent supply device comprises: a cartridge (250a,250b) configured to contain the detergent; a pump (see abstract and claim 1; see also “pumping means”) connected to the cartridge and configured to pump the detergent contained in the cartridge to the tub; and a passage (bosses 262a,262b and lines 277a,277b) that is configured to guide the pumped detergent into the tub, wherein electrode sensors (291,293) are located at each of the cartridge, wherein the detergent supply device further comprises a housing (drawer 200 or housing 260) that accommodates the cartridge, and wherein the electrode sensors are located at a rear wall of the housing (note sensors are configured to connect to rear housing at connecting portion 294), wherein each of the electrode sensors comprises an electrode plate (293) and a terminal (top end of 293 in Fig. 5) that is connected to the electrode plate and that is configured to transmit an electric signal, wherein the electrode plate is located at an opening of a rear surface of the cartridge, and wherein the detergent contained in the cartridge contacts the electrode plate (see, e.g., Figs. 5 and 7), wherein the electrode plate is configured to, based on a determination that the electrode plate contacts the detergent, transmit the electric signal through the terminal (the electrode plate configuration in Figs. 5 and 7 is fully capable of performing such use), wherein the electrode plate is located between a rear wall of the housing and a rear side of the cartridge (see, e.g., Figs. 5 and 7, noting electrode portion in notch of wall 250a), wherein the terminal is located at a rear wall protrusion of the cartridge and protrudes along a direction perpendicular to the rear wall of the cartridge (see, e.g., Figs. 5 and 7, noting electrode portion in notch of wall 250a). LG discloses the claimed invention including plural sensors at each cartridge, but LG appears to only disclose two sensors rather than three sensors at each cartridge. LG also does not appear to disclose at least one of the electrode sensors being located at a height that is different from the remaining ones of the at least three electrode sensors. Regarding the number of sensors, it is known in the art to provide at least three sensors for determining a detergent level in a detergent supply device cartridge (see BROSNAN above). Therefore, the position is taken that it would have been obvious at the time of effective filing to duplicate the number of sensors as desired in order to achieve desired sensor measurements for determining fluid level and/or a low level in a cartridge. It has been held that mere duplication of the essential working parts of a device involves only routine skill in the art. See MPEP § 2144.04(VI)(B) regarding Obviousness and Duplication of Parts. Regarding the sensors having different heights, BROSNAN discloses such configuration (see Figs. 3-4) for determining various types of measurements such as “fluid level, a chemical characteristic, and/or any other suitable measurement and/or characteristic” (see ¶ [0027]). Therefore, the position is taken that it would have been obvious at the time of effective filing to provide a duplicate sensor in a different height to achieve a known and desired measurement such as fluid level, fluid type, and the like by simply rearranging the sensor at a different level. It has been held that rearranging parts of an invention involves only routine skill in the art. See MPEP § 2144.04(VI)(C) regarding Obviousness and Relocation of Parts.
Claim 23 is/are rejected under 35 U.S.C. 103 as being unpatentable over LG in view of BROSNAN, as applied to claim 10, and further in view of US 2011/0154864 to SCHULZE. LG and BROSNAN, supra, disclose the claimed invention including plural cartridges, but neither discloses wherein a passage switching valve is connected to at least one of the plurality of cartridges, and wherein the pump is connected to the at least one of the plurality of cartridges through the passage switching valve. SCHULZE teaches an art-related washing machine configuration in which plural cartridges are connected to a pump with a passage switching valve (16) for feeding different cartridge doses to a washing machine. Therefore, the position is taken that it would have been obvious at the time of effective filing to substitute one known multiple dosing configuration for the other to achieve the same and predictable results of dosing plural additive cartridges in a washing machine.
Allowable Subject Matter Claims 17-22 would be allowable if rewritten to overcome the rejection(s) under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), 2nd paragraph, set forth in this Office action and to include all of the limitations of the base claim and any intervening claims.
Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to JOSEPH L PERRIN whose telephone number is (571)272-1305. The examiner can normally be reached M-F 7:30-4:00. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Michael E. Barr can be reached on 571-272-1414. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center. Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
Joseph L. Perrin, Ph.D. Primary Examiner Art Unit 1711 | 2022-03-13T11:38:44 | [
"DETAILED ACTION Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Priority Receipt is acknowledged of certified copies of papers required by 37 CFR 1.55. Election/Restrictions Applicant’s election without traverse of Group II, claims 10-20 (and new claims 21-23) in the reply filed on 17 February 2022 is acknowledged. Claims 1-9 are withdrawn from further consideration pursuant to 37 CFR 1.142(b) as being drawn to a nonelected invention, there being no allowable generic or linking claim. Election was made without traverse in said reply. Claim Rejections - 35 USC § 112 The following is a quotation of 35 U.S.C. 112(b): (b) CONCLUSION.—The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention. The following is a quotation of 35 U.S.C. 112 (pre-AIA ), second paragraph: The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention. Claims 10-23 are rejected under 35 U.S.C.",
"112(b) or 35 U.S.C. 112 (pre-AIA ), second paragraph, as being indefinite for failing to particularly point out and distinctly Regarding claim 10, it is unclear what is meant by “each of the cartridge” since the term “each” would refer to plural cartridges. Clarification and correction are required. In claim 10, it is unclear how the claimed detergent supply device elements function absent a controller (i.e. the pump extracting detergent and the electrode sensors detecting and transmitting electric signals) as such controller detail appears to be a requisite element for the detergent supply device to function as claimed. Clarification and correction are required.",
"In claim 17, the recitation of “a first set of electrode sensors” and “a second set of electrode sensors” is indefinite because it is unclear what Applicant intends. Claim 10 already recites “at least three electrodes”, and it is unclear whether further recitations of sets of electrode sensors include the previously cited at least three electrodes or are separate sensors. Clarification and correction are required. Claim Rejections - 35 USC § 102 In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status. The following is a quotation of the appropriate paragraphs of 35 U.S.C. 102 that form the basis for the rejections under this section made in this Office action: A person shall be entitled to a patent unless – (a)(1) the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.",
"(a)(2) the claimed invention was described in a patent issued under section 151, or in an application for patent published or deemed published under section 122(b), in which the patent or application, as the case may be, names another inventor and was effectively filed before the effective filing date of the claimed invention. Claim(s) 10 is/are rejected under 35 U.S.C. 102(a) as being anticipated by US 2012/0152290 to BROSNAN et al. (“BROSNAN”). Regarding claim 10, BROSNAN (in claims 1, 3, 4, and associated text) discloses a washing machine (10) having a cabinet (18), a tub (36) located inside the cabinet and configured to receive water, a drum (basket, not shown; see ¶ [0016]) rotatably provided inside the tub and configured to accommodate laundry, and a detergent supply device located at the cabinet and configured to supply detergent into the tub, wherein the detergent supply device comprises: a cartridge (12,14,16) configured to contain the detergent; a pump (40) connected to the cartridge and configured to pump the detergent contained in the cartridge to the tub; and a passage (lines 42,44,46) that is configured to guide the pumped detergent into the tub, wherein at least three electrode sensors (142) are located at each of the cartridge, at least one of the at least three electrode sensors being located at a height that is different from the remaining ones of the at least three electrode sensors (note , Claim Rejections - 35 USC § 103 In the event the determination of the status of the application as subject to AIA 35 U.S.C.",
"102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status. The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.",
"Patentability shall not be negated by the manner in which the invention was made. The factual inquiries for establishing a background for determining obviousness under 35 U.S.C. 103 are summarized as follows: 1. Determining the scope and contents of the prior art. 2. Ascertaining the differences between the prior art and the claims at issue. 3. Resolving the level of ordinary skill in the pertinent art. 4. Considering objective evidence present in the application indicating obviousness or nonobviousness. This application currently names joint inventors. In considering patentability of the claims the examiner presumes that the subject matter of the various claims was Claims 10-16 is/are rejected under 35 U.S.C. 103 as being unpatentable over KR 10-2015-0103988 to LG ELECTRONICS (“LG”; cited by Examiner - machine translation provided) in view of BROSNAN.",
"Regarding claims 10-16, LG discloses a washing machine having a cabinet (see Fig. 1), a tub (130) located inside the cabinet and configured to receive water, a drum (120) rotatably provided inside the tub and configured to accommodate laundry, and a detergent supply device (see Figs. 1 and 3-7) located at the cabinet and configured to supply detergent into the tub, wherein the detergent supply device comprises: a cartridge (250a,250b) configured to contain the detergent; a pump (see abstract and claim 1; see also “pumping means”) connected to the cartridge and configured to pump the detergent contained in the cartridge to the tub; and a passage (bosses 262a,262b and lines 277a,277b) that is configured to guide the pumped detergent into the tub, wherein electrode sensors (291,293) are located at each of the cartridge, wherein the detergent supply device further comprises a housing (drawer 200 or housing 260) that accommodates the cartridge, and wherein the electrode sensors are located at a rear wall of the housing (note sensors are configured to connect to rear housing at connecting portion 294), wherein each of the electrode sensors comprises an electrode plate (293) and a terminal (top end of 293 in Fig. 5) that is connected to the electrode plate and that is configured to transmit an electric signal, wherein the electrode plate is located at an opening of a rear surface of the cartridge, and wherein the detergent contained in the cartridge contacts the electrode plate (see, e.g., Figs.",
"5 and 7), wherein the electrode plate is configured to, based on a determination that the electrode plate contacts the detergent, transmit the electric signal through the terminal (the electrode plate configuration in Figs. 5 and 7 is fully capable of performing such use), wherein the electrode plate is located between a rear wall of the housing and a rear side of the cartridge (see, e.g., Figs. 5 and 7, noting electrode portion in notch of wall 250a), wherein the terminal is located at a rear wall protrusion of the cartridge and protrudes along a direction perpendicular to the rear wall of the cartridge (see, e.g., Figs. 5 and 7, noting electrode portion in notch of wall 250a). LG discloses the claimed invention including plural sensors at each cartridge, but LG appears to only disclose two sensors rather than three sensors at each cartridge.",
"LG also does not appear to disclose at least one of the electrode sensors being located at a height that is different from the remaining ones of the at least three electrode sensors. Regarding the number of sensors, it is known in the art to provide at least three sensors for determining a detergent level in a detergent supply device cartridge (see BROSNAN above). Therefore, the position is taken that it would have been obvious at the time of effective filing to duplicate the number of sensors as desired in order to achieve desired sensor measurements for determining fluid level and/or a low level in a cartridge. It has been held that mere duplication of the essential working parts of a device involves only routine skill in the art. See MPEP § 2144.04(VI)(B) regarding Obviousness and Duplication of Parts. Regarding the sensors having different heights, BROSNAN discloses such configuration (see Figs. 3-4) for determining various types of measurements such as “fluid level, a chemical characteristic, and/or any other suitable measurement and/or characteristic” (see ¶ [0027]).",
"Therefore, the position is taken that it would have been obvious at the time of effective filing to provide a duplicate sensor in a different height to achieve a known and desired measurement such as fluid level, fluid type, and the like by simply rearranging the sensor at a different level. It has been held that rearranging parts of an invention involves only routine skill in the art. See MPEP § 2144.04(VI)(C) regarding Obviousness and Relocation of Parts. Claim 23 is/are rejected under 35 U.S.C. 103 as being unpatentable over LG in view of BROSNAN, as applied to claim 10, and further in view of US 2011/0154864 to SCHULZE. LG and BROSNAN, supra, disclose the claimed invention including plural cartridges, but neither discloses wherein a passage switching valve is connected to at least one of the plurality of cartridges, and wherein the pump is connected to the at least one of the plurality of cartridges through the passage switching valve. SCHULZE teaches an art-related washing machine configuration in which plural cartridges are connected to a pump with a passage switching valve (16) for feeding different cartridge doses to a washing machine. Therefore, the position is taken that it would have been obvious at the time of effective filing to substitute one known multiple dosing configuration for the other to achieve the same and predictable results of dosing plural additive cartridges in a washing machine.",
"Allowable Subject Matter Claims 17-22 would be allowable if rewritten to overcome the rejection(s) under 35 U.S.C. 112(b) or 35 U.S.C. 112 (pre-AIA ), 2nd paragraph, set forth in this Office action and to include all of the limitations of the base claim and any intervening claims. Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to JOSEPH L PERRIN whose telephone number is (571)272-1305. The examiner can normally be reached M-F 7:30-4:00. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool.",
"To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Michael E. Barr can be reached on 571-272-1414. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of published or unpublished applications may be obtained from Patent Center. Unpublished application information in Patent Center is available to registered users. To file and manage patent submissions in Patent Center, visit: https://patentcenter.uspto.gov. Visit https://www.uspto.gov/patents/apply/patent-center for more information about Patent Center and https://www.uspto.gov/patents/docx for information about filing in DOCX format. For additional questions, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. Joseph L. Perrin, Ph.D. Primary Examiner Art Unit 1711"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2022-03-20.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case: 14-40759 Document: 00513079582 Page: 1 Date Filed: 06/16/2015
IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 14-40759 Conference Calendar United States Court of Appeals Fifth Circuit
FILED June 16, 2015 UNITED STATES OF AMERICA, Lyle W. Cayce Clerk Plaintiff-Appellee
v.
FLAVIO LOZANO-TORRES, also known as El Borracho,
Defendant-Appellant
Appeal from the United States District Court for the Southern District of Texas USDC No. 5:12-CR-223-5
Before DAVIS, JONES, and HIGGINSON, Circuit Judges. PER CURIAM: * The attorney appointed to represent Flavio Lozano-Torres has moved for leave to withdraw and has filed a brief in accordance with Anders v. California, 386 U.S. 738 (1967), and United States v. Flores, 632 F.3d 229 (5th Cir. 2011). Lozano-Torres has not filed a response. We have reviewed counsel’s brief and the relevant portions of the record reflected therein. We concur with counsel’s assessment that the appeal presents no nonfrivolous issue for appellate review.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. Case: 14-40759 Document: 00513079582 Page: 2 Date Filed: 06/16/2015
No. 14-40759
Accordingly, counsel’s motion for leave to withdraw is GRANTED, counsel is excused from further responsibilities herein, and the APPEAL IS DISMISSED. See 5TH CIR. R. 42.2.
2 | 06-17-2015 | [
"Case: 14-40759 Document: 00513079582 Page: 1 Date Filed: 06/16/2015 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 14-40759 Conference Calendar United States Court of Appeals Fifth Circuit FILED June 16, 2015 UNITED STATES OF AMERICA, Lyle W. Cayce Clerk Plaintiff-Appellee v. FLAVIO LOZANO-TORRES, also known as El Borracho, Defendant-Appellant Appeal from the United States District Court for the Southern District of Texas USDC No. 5:12-CR-223-5 Before DAVIS, JONES, and HIGGINSON, Circuit Judges.",
"PER CURIAM: * The attorney appointed to represent Flavio Lozano-Torres has moved for leave to withdraw and has filed a brief in accordance with Anders v. California, 386 U.S. 738 (1967), and United States v. Flores, 632 F.3d 229 (5th Cir. 2011). Lozano-Torres has not filed a response. We have reviewed counsel’s brief and the relevant portions of the record reflected therein. We concur with counsel’s assessment that the appeal presents no nonfrivolous issue for appellate review. * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.",
"Case: 14-40759 Document: 00513079582 Page: 2 Date Filed: 06/16/2015 No. 14-40759 Accordingly, counsel’s motion for leave to withdraw is GRANTED, counsel is excused from further responsibilities herein, and the APPEAL IS DISMISSED. See 5TH CIR. R. 42.2. 2"
]
| https://www.courtlistener.com/api/rest/v3/opinions/2809063/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Matter of Cohen v Town of Ramapo Bldg., Planning & Zoning Dept. (2017 NY Slip Op 03946)
Matter of Cohen v Town of Ramapo Bldg., Planning & Zoning Dept.
2017 NY Slip Op 03946
Decided on May 17, 2017
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on May 17, 2017
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
CHERYL E. CHAMBERS, J.P.
SANDRA L. SGROI
COLLEEN D. DUFFY
BETSY BARROS, JJ.
2015-00563
(Index No. 1224/14)
[*1]In the Matter of Elliot J. Cohen, et al., appellants,
vTown of Ramapo Building, Planning & Zoning Department, et al., respondents-respondents, et al., respondent.
Berwin Cohen, Monsey, NY, for appellants. Michael L. Klein, Town Attorney, Suffern, NY (Michael B. Specht of counsel), for respondents-respondents Town of Ramapo Building, Planning & Zoning Department, Town of Ramapo Planning Board, Town of Ramapo Zoning Board of Appeals, Town of Ramapo Community Design Review Committee, and Town of Ramapo Department of Public Works.
DECISION & ORDER In a proceeding pursuant to CPLR article 78, inter alia, to review a determination of the Zoning Board of Appeals of the Town of Ramapo dated February 27, 2014, which, after a hearing, granted the application of Divrei Chaim for area variances, the petitioners appeal, as limited by their brief, from so much of a judgment of the Supreme Court, Rockland County (Garvey, J.), dated October 29, 2014, as, in effect, denied that branch of the amended petition which was to annul the February 27, 2014, determination and dismissed that portion of the proceeding. ORDERED that the judgment is affirmed insofar as appealed from, with costs. Divrei Chaim, a yeshiva, sought several area variances so that it could construct and operate a religious school on its property in Monsey. The Zoning Board of Appeals of the Town of Ramapo (hereinafter the ZBA) granted the application for the area variances after it heard testimony both in favor of and against the requested variances. Two individuals who live in the vicinity of the proposed religious school commenced this proceeding pursuant to CPLR article 78, seeking, inter alia, to annul the ZBA's determination. In a judgment dated October 29, 2014, the Supreme Court, inter alia, in effect, denied that branch of the amended petition which was to annul the ZBA's determination and dismissed that portion of the proceeding. The petitioners appeal. "[L]ocal zoning boards have broad discretion in considering applications for area variances" (Matter of Pecoraro v Board of Appeals of Town of Hempstead, 2 NY3d 608, 613). "Courts may set aside a zoning board determination only where the record reveals that the board acted illegally or arbitrarily, or abused its discretion, or that it merely succumbed to generalized community pressure" (id. at 613). A determination is rational and not arbitrary or capricious "if it has some objective factual basis, as opposed to resting entirely on subjective considerations such as general community opposition" (Matter of Halperin v City of New Rochelle, 24 AD3d 768, 772). Further, "while religious institutions are not exempt from local zoning laws, greater flexibility is [*2]required in evaluating an application for a religious use than an application for another use and every effort to accommodate the religious use must be made" (Matter of Genesis Assembly of God v Davies, 208 AD2d 627, 628). Contrary to the petitioners' contention, the ZBA engaged in the required balancing test and considered the five relevant statutory factors in granting the application for area variances (see Town Law § 267-b[3][b]). The record reveals that the ZBA's determination had a rational basis and was not arbitrary or capricious (see Matter of Pecoraro v Board of Appeals of Town of Hempstead, 2 NY3d at 612). A zoning board is "not required to justify its determination with supporting evidence with respect to each of the five factors, so long as its ultimate determination balancing the relevant considerations [is] rational" (Matter of Merlotto v Town of Patterson Zoning Bd. of Appeals, 43 AD3d 926, 929). The petitioners' remaining contentions are without merit. CHAMBERS, J.P., SGROI, DUFFY and BARROS, JJ., concur.
ENTER:
Aprilanne Agostino Clerk of the Court | 05-17-2017 | [
"Matter of Cohen v Town of Ramapo Bldg., Planning & Zoning Dept. (2017 NY Slip Op 03946) Matter of Cohen v Town of Ramapo Bldg., Planning & Zoning Dept. 2017 NY Slip Op 03946 Decided on May 17, 2017 Appellate Division, Second Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the Official Reports. Decided on May 17, 2017 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department CHERYL E. CHAMBERS, J.P. SANDRA L. SGROI COLLEEN D. DUFFY BETSY BARROS, JJ.",
"2015-00563 (Index No. 1224/14) [*1]In the Matter of Elliot J. Cohen, et al., appellants, vTown of Ramapo Building, Planning & Zoning Department, et al., respondents-respondents, et al., respondent. Berwin Cohen, Monsey, NY, for appellants. Michael L. Klein, Town Attorney, Suffern, NY (Michael B. Specht of counsel), for respondents-respondents Town of Ramapo Building, Planning & Zoning Department, Town of Ramapo Planning Board, Town of Ramapo Zoning Board of Appeals, Town of Ramapo Community Design Review Committee, and Town of Ramapo Department of Public Works. DECISION & ORDER In a proceeding pursuant to CPLR article 78, inter alia, to review a determination of the Zoning Board of Appeals of the Town of Ramapo dated February 27, 2014, which, after a hearing, granted the application of Divrei Chaim for area variances, the petitioners appeal, as limited by their brief, from so much of a judgment of the Supreme Court, Rockland County (Garvey, J.",
"), dated October 29, 2014, as, in effect, denied that branch of the amended petition which was to annul the February 27, 2014, determination and dismissed that portion of the proceeding. ORDERED that the judgment is affirmed insofar as appealed from, with costs. Divrei Chaim, a yeshiva, sought several area variances so that it could construct and operate a religious school on its property in Monsey. The Zoning Board of Appeals of the Town of Ramapo (hereinafter the ZBA) granted the application for the area variances after it heard testimony both in favor of and against the requested variances. Two individuals who live in the vicinity of the proposed religious school commenced this proceeding pursuant to CPLR article 78, seeking, inter alia, to annul the ZBA's determination. In a judgment dated October 29, 2014, the Supreme Court, inter alia, in effect, denied that branch of the amended petition which was to annul the ZBA's determination and dismissed that portion of the proceeding.",
"The petitioners appeal. \"[L]ocal zoning boards have broad discretion in considering applications for area variances\" (Matter of Pecoraro v Board of Appeals of Town of Hempstead, 2 NY3d 608, 613). \"Courts may set aside a zoning board determination only where the record reveals that the board acted illegally or arbitrarily, or abused its discretion, or that it merely succumbed to generalized community pressure\" (id. at 613). A determination is rational and not arbitrary or capricious \"if it has some objective factual basis, as opposed to resting entirely on subjective considerations such as general community opposition\" (Matter of Halperin v City of New Rochelle, 24 AD3d 768, 772).",
"Further, \"while religious institutions are not exempt from local zoning laws, greater flexibility is [*2]required in evaluating an application for a religious use than an application for another use and every effort to accommodate the religious use must be made\" (Matter of Genesis Assembly of God v Davies, 208 AD2d 627, 628). Contrary to the petitioners' contention, the ZBA engaged in the required balancing test and considered the five relevant statutory factors in granting the application for area variances (see Town Law § 267-b[3][b]). The record reveals that the ZBA's determination had a rational basis and was not arbitrary or capricious (see Matter of Pecoraro v Board of Appeals of Town of Hempstead, 2 NY3d at 612). A zoning board is \"not required to justify its determination with supporting evidence with respect to each of the five factors, so long as its ultimate determination balancing the relevant considerations [is] rational\" (Matter of Merlotto v Town of Patterson Zoning Bd.",
"of Appeals, 43 AD3d 926, 929). The petitioners' remaining contentions are without merit. CHAMBERS, J.P., SGROI, DUFFY and BARROS, JJ., concur. ENTER: Aprilanne Agostino Clerk of the Court"
]
| https://www.courtlistener.com/api/rest/v3/opinions/4169214/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
945 A.2d 978 (2008) 286 Conn. 915 STATE of Connecticut v. Richard P. LEMAY. Supreme Court of Connecticut. Decided April 2, 2008. Michael Zariphes, special public defender, in support of the petition. Thomas M. DeLillo, assistant state's attorney, in opposition. The defendant's petition for certification for appeal from the Appellate Court, 105 Conn.App. 486, 938 A.2d 611 (2008), is denied. | 10-30-2013 | [
"945 A.2d 978 (2008) 286 Conn. 915 STATE of Connecticut v. Richard P. LEMAY. Supreme Court of Connecticut. Decided April 2, 2008. Michael Zariphes, special public defender, in support of the petition. Thomas M. DeLillo, assistant state's attorney, in opposition. The defendant's petition for certification for appeal from the Appellate Court, 105 Conn.App. 486, 938 A.2d 611 (2008), is denied."
]
| https://www.courtlistener.com/api/rest/v3/opinions/1560420/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
CRICHTON, J., would grant and assigns reasons: |,I respectfully disagree with the majority’s decision to deny this writ application, as I believe the court of appeal erred in reversing the trial court’s ruling granting the motion for partial summary judgment filed by defendant Texas Brine Company, LLC. Specifically, I find there are no genuine issues of material fact as to the waiver of the right to rescind the insurance contract. Accordingly, I would grant the writ application filed by Texas Brine Company, LLC, reverse the court of appeal, and reinstate the trial court’s ruling. | 08-23-2021 | [
"CRICHTON, J., would grant and assigns reasons: |,I respectfully disagree with the majority’s decision to deny this writ application, as I believe the court of appeal erred in reversing the trial court’s ruling granting the motion for partial summary judgment filed by defendant Texas Brine Company, LLC. Specifically, I find there are no genuine issues of material fact as to the waiver of the right to rescind the insurance contract. Accordingly, I would grant the writ application filed by Texas Brine Company, LLC, reverse the court of appeal, and reinstate the trial court’s ruling."
]
| https://www.courtlistener.com/api/rest/v3/opinions/4838058/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Beady,' J.: It appears from the record that in 1860 John Garvey, who was -the father of the plaintiff, purchased a piece of ground in the city -of New York, which, at his request, was conveyed to James Garvey, his brother. In 1862 James Garvey conveyed the property mentioned to Michael Morrison without any consideration. Subsequently, and on or about the 1st of May, 1866, a lease was executed' •of the premises by John and James Garvey both, and by which they were demised for one year from May 1, 1866, by John to James. And this, notwithstanding that, as we have seen, they had ■already been conveyed to Morrison. On the 1st of February, 1867, however, by deed duly recorded, Michael Morrison, to whom the premises had been conveyed by James Garvey, by deed duly executed and recorded, as stated heretofore, reconveyed them to James. The latter paid nothing at the time of this transfer. On •or about the 14th of December, 1869, an instrument was executed between James Garvey and his brother John for the consideration of one dollar, whereby the former granted, bargained and released to the latter a certain lot of land, being the premises in question. And on the same day, although dated December fifteenth, another instrument was executed by the parties, John Garvey being the party of the first part, and James of the second part, by which, for the consideration of one dollar, the same premises were conveyed to James, but which contained the following clause: “And it is hereby further agreed, by and between the said parties, that the party of the second part shall and will collect all rents from said described premises, and to defray all necessary repairs, taxes and insurance that may accrue out of the said rents. Now this *500agreement, witnessetfy expressly, that said party of the- second part shall and will grant, release and convey forever to Joseph James Garvey, of Tompkinsville, Richmond county, and State of New York, a son of the aforesaid John Garvey, for the sum of one-dollar, all the above described lot of land with the building erected thereon, and also all sums of money that may have beeii collected for rents or otherwise from the same, after deducting the sum of' three thousand five hundred dollars, without interest thereon, and also the expenses defrayed for all repairs, taxes and insurance from the day and year first above written, until the time when the said Joseph James Garvey shall become at the age of twenty-one years,, which will be on the twenty-eighth day of October, in the year-eighteen hundred and eightv-one.” In 1877 James Garvey, having in the meantime married, died leaving the defendant Joseph Garvey, an infant, his only child and heir-at-law him surviving, and leaving, also, his wife, a widow, the-defendant Margaret Owens, who has since married. The execution of these papers in tlieir form furnish a curious-episode in the history of legal transactions. It does not satisfactorily appear from the record that any reason existed for transferring the-property to James when John paid the consideration. But people in the humbler walks of life, and particularly of the nationality of the Garvey’s, have very extraordinary methods of dealing with real estate. Sometimes it arises from an apprehension of creditors and sometimes from a fear, however unfounded, that the purchaser’s-wife may in some way interfere with the transfer of the property — an interference, it may be here remarked, which often results to the great benefit of the owner. It is probably said, however, that the last instrument of the series-mentioned, was intended as a mortgage to secure James for advances made and by which, as we have seen, he was to make a transfer of the property to the plaintiff when the prerequisites called for by the instrument had been complied with and occurred. The proof of the execution of these papers, more particularly the latter two which were not recorded, was necessary for the success of the plaintiff, who claims through his father John Garvey, under the last instrument executed between the parties according to its date. The signature of James to these instruments was questioned and *501the trial was a serious issue. The learned justice presiding, in expressing his views about the controversy, said that although there might be some suspicious circumstances connected with the presentation of the claim of the plaintiff, yet there were others which •supported it; and he referred to the lease already mentioned as one. He determined that the deed of the fourteenth of December and the •agreement of December 15, 1869, were both signed by James, expressing his judgment about the signatures upon these papers •on comparison with others. J ohn Garvey, however, who was called as a witness, was ashed to look at the signatures of John and James Garvey and to state in whose handwriting they were. And this was objected to as incompetent to prove any transaction between himself and the deceased, the witness being a party through whom the plaintiff claimed title. The objection was overruled and the defendant excepted. He was also asked as to the instruments which were last executed, bearing ■dates the fourteenth and fifteenth of December, and that question was objected to, on the ground that it related to a transaction between the witness and his deceased brother. T.he objection was overruled and an exception duly taken. The objection was again repeated when the papers were offered in evidence because they had not been established so far as James Garvey was concerned. And the objection being overruled, an exception was duly taken. Joseph •J. Gar'vey the plaintiff wTas subsequently called as a witness on his •own behalf, and was interrogated in regard to these signatures. An ■objection was taken but overruled and then an exception was noted. The question presented upon this state of facts in limine is whether the witnesses under section 829 of the Code of Civil Procedure were competent to testify as to these signatures. That section provides that upon the trial of an action, or hearing upon the merits of a special proceeding, the party or person interested in the ■event, or a person from whom or under whom such a party or interested person derives his interest or title by assignment or otherwise, shall not be examined as a witness in his own behalf or interest, or in behalf of the person succeeding to his title, concerning a personal transaction or communication between the witness and the deceased person. ■ The proof of the signatures of James Garvey, by John Garvey, related to a personal transaction between them, concerning as it *502did the former’s interest in real estate which James held, he alleged, for' .his benefit and in trust; and the testimony of the plaintiff was that of an interested party testifying to a transaction with another and .the deceased James Garvey, for his benefit and against whose heirs he claimed adversely. In the case of Resseguie v. Mason (58 Barb., 89) it was held tuAt the provisions of section 399 of the Code-related as well to written as to verbal communications, and that in an action brought against the writer of letters relating to business transactions by the administrator of the person addressed, the defendant was an incompetent person to prove that the letters were written, or that they were received and retained by the person addressed. In the case of Denham v. Jayne (3 Hun, 614) it appeared that the defendants held lands in trust for Maria, the wife of one Mark Cornell, and to secure to the defendants certain advances of money made by them for her account. A reference was ordered to determine the amount, and the referee found an amount due to the defendants as to which there was a dispute. It appeared that Mrs. Cornell,, the plaintiff in the action originally, died during its pendency, and the then named plaintiff had been substituted as her representative. It also appeared that the complaint verified by her had been prepared under the direction of the defendant Jayne, who was a witness before the referee, and who testified that she signed the affidavit, in his presence, verifying the complaint. He also gave evidence to show generally that he was acquainted with her handwriting. The referee admitted the complaint as evidence of the amount due by the defendants, but the court held that the evidence of Jayne, a party to the action, that he had seen Mrs. Cornell sign it, was testimony of a transaction between them and was not admissible under section 399 of the Code. Little doubt is entertained, upon an examination of the record in this case, that the property in dispute was originally purchased by John Garvey and should be given to his heir, the plaintiff, in accordance with the agreement of December 15, 1869, and it is to be regretted, therefore, that the judgment may not be affirmed as the justice of the case would seem to require. But no doubt is entertained that the testimony of John Garvey, which was objected to, was incompetent and could not be admitted under the provisions of *503section 829 of tbe Code, to which reference has already been made. The plaintiff was, of course, interested in the event of this action, and his father John was the person through whom he derived his title and his right of action. The words of the statute just referred to are words of exclusion and, as said in Holcomb v. Holcomb (95 N. Y., 325), " are as comprehensive as language can express. Transactions and communications embrace every variety of affairs which can form the subject of negotiation, interviews or actions between two persons, and include every method by which one person can derive impressions or information from the conduct, condition or language of another. The statute is a beneficial one and ought not to be limited or narrowed by construction.” But if there were any doubt as to the propriety of admitting the testimony of the plaintiff in this action, for the reason that the proof of the signature may be regarded as an independent fact founded upon relations other than those gi’owing out of the transaction under consideration (see McKenna v. Bolger, * decided at this term), there can be none as to the impropriety of admitting the evidence of his father John, between whom and the deceased James the arrangement took place, by which the last instruments were executed and their negotiations consummated. The statement by him that the deceased signed the papers exhibited, or that the signature of James made upon them was his, was in effect a statement that the instrument was the embodiment of an agreement made between them. The judgment must, therefore, be reversed and a new trial ordered, with costs to abide the event. Daniels, J., and Davis, P. J., concurred on the ground that John Garvey was not competent to prove the signature of the deceased party to the deed, through which the plaintiff derived his title. Judgment reversed, new trial ordered, costs to abide event.
Post, p. 526. | 02-04-2022 | [
"Beady,' J.: It appears from the record that in 1860 John Garvey, who was -the father of the plaintiff, purchased a piece of ground in the city -of New York, which, at his request, was conveyed to James Garvey, his brother. In 1862 James Garvey conveyed the property mentioned to Michael Morrison without any consideration. Subsequently, and on or about the 1st of May, 1866, a lease was executed' •of the premises by John and James Garvey both, and by which they were demised for one year from May 1, 1866, by John to James. And this, notwithstanding that, as we have seen, they had ■already been conveyed to Morrison. On the 1st of February, 1867, however, by deed duly recorded, Michael Morrison, to whom the premises had been conveyed by James Garvey, by deed duly executed and recorded, as stated heretofore, reconveyed them to James. The latter paid nothing at the time of this transfer. On •or about the 14th of December, 1869, an instrument was executed between James Garvey and his brother John for the consideration of one dollar, whereby the former granted, bargained and released to the latter a certain lot of land, being the premises in question. And on the same day, although dated December fifteenth, another instrument was executed by the parties, John Garvey being the party of the first part, and James of the second part, by which, for the consideration of one dollar, the same premises were conveyed to James, but which contained the following clause: “And it is hereby further agreed, by and between the said parties, that the party of the second part shall and will collect all rents from said described premises, and to defray all necessary repairs, taxes and insurance that may accrue out of the said rents.",
"Now this *500agreement, witnessetfy expressly, that said party of the- second part shall and will grant, release and convey forever to Joseph James Garvey, of Tompkinsville, Richmond county, and State of New York, a son of the aforesaid John Garvey, for the sum of one-dollar, all the above described lot of land with the building erected thereon, and also all sums of money that may have beeii collected for rents or otherwise from the same, after deducting the sum of' three thousand five hundred dollars, without interest thereon, and also the expenses defrayed for all repairs, taxes and insurance from the day and year first above written, until the time when the said Joseph James Garvey shall become at the age of twenty-one years,, which will be on the twenty-eighth day of October, in the year-eighteen hundred and eightv-one.” In 1877 James Garvey, having in the meantime married, died leaving the defendant Joseph Garvey, an infant, his only child and heir-at-law him surviving, and leaving, also, his wife, a widow, the-defendant Margaret Owens, who has since married. The execution of these papers in tlieir form furnish a curious-episode in the history of legal transactions. It does not satisfactorily appear from the record that any reason existed for transferring the-property to James when John paid the consideration. But people in the humbler walks of life, and particularly of the nationality of the Garvey’s, have very extraordinary methods of dealing with real estate.",
"Sometimes it arises from an apprehension of creditors and sometimes from a fear, however unfounded, that the purchaser’s-wife may in some way interfere with the transfer of the property — an interference, it may be here remarked, which often results to the great benefit of the owner. It is probably said, however, that the last instrument of the series-mentioned, was intended as a mortgage to secure James for advances made and by which, as we have seen, he was to make a transfer of the property to the plaintiff when the prerequisites called for by the instrument had been complied with and occurred. The proof of the execution of these papers, more particularly the latter two which were not recorded, was necessary for the success of the plaintiff, who claims through his father John Garvey, under the last instrument executed between the parties according to its date.",
"The signature of James to these instruments was questioned and *501the trial was a serious issue. The learned justice presiding, in expressing his views about the controversy, said that although there might be some suspicious circumstances connected with the presentation of the claim of the plaintiff, yet there were others which •supported it; and he referred to the lease already mentioned as one. He determined that the deed of the fourteenth of December and the •agreement of December 15, 1869, were both signed by James, expressing his judgment about the signatures upon these papers •on comparison with others. J ohn Garvey, however, who was called as a witness, was ashed to look at the signatures of John and James Garvey and to state in whose handwriting they were. And this was objected to as incompetent to prove any transaction between himself and the deceased, the witness being a party through whom the plaintiff claimed title. The objection was overruled and the defendant excepted.",
"He was also asked as to the instruments which were last executed, bearing ■dates the fourteenth and fifteenth of December, and that question was objected to, on the ground that it related to a transaction between the witness and his deceased brother. T.he objection was overruled and an exception duly taken. The objection was again repeated when the papers were offered in evidence because they had not been established so far as James Garvey was concerned. And the objection being overruled, an exception was duly taken. Joseph •J. Gar'vey the plaintiff wTas subsequently called as a witness on his •own behalf, and was interrogated in regard to these signatures.",
"An ■objection was taken but overruled and then an exception was noted. The question presented upon this state of facts in limine is whether the witnesses under section 829 of the Code of Civil Procedure were competent to testify as to these signatures. That section provides that upon the trial of an action, or hearing upon the merits of a special proceeding, the party or person interested in the ■event, or a person from whom or under whom such a party or interested person derives his interest or title by assignment or otherwise, shall not be examined as a witness in his own behalf or interest, or in behalf of the person succeeding to his title, concerning a personal transaction or communication between the witness and the deceased person. ■ The proof of the signatures of James Garvey, by John Garvey, related to a personal transaction between them, concerning as it *502did the former’s interest in real estate which James held, he alleged, for' .his benefit and in trust; and the testimony of the plaintiff was that of an interested party testifying to a transaction with another and .the deceased James Garvey, for his benefit and against whose heirs he claimed adversely.",
"In the case of Resseguie v. Mason (58 Barb., 89) it was held tuAt the provisions of section 399 of the Code-related as well to written as to verbal communications, and that in an action brought against the writer of letters relating to business transactions by the administrator of the person addressed, the defendant was an incompetent person to prove that the letters were written, or that they were received and retained by the person addressed. In the case of Denham v. Jayne (3 Hun, 614) it appeared that the defendants held lands in trust for Maria, the wife of one Mark Cornell, and to secure to the defendants certain advances of money made by them for her account. A reference was ordered to determine the amount, and the referee found an amount due to the defendants as to which there was a dispute. It appeared that Mrs. Cornell,, the plaintiff in the action originally, died during its pendency, and the then named plaintiff had been substituted as her representative.",
"It also appeared that the complaint verified by her had been prepared under the direction of the defendant Jayne, who was a witness before the referee, and who testified that she signed the affidavit, in his presence, verifying the complaint. He also gave evidence to show generally that he was acquainted with her handwriting. The referee admitted the complaint as evidence of the amount due by the defendants, but the court held that the evidence of Jayne, a party to the action, that he had seen Mrs. Cornell sign it, was testimony of a transaction between them and was not admissible under section 399 of the Code.",
"Little doubt is entertained, upon an examination of the record in this case, that the property in dispute was originally purchased by John Garvey and should be given to his heir, the plaintiff, in accordance with the agreement of December 15, 1869, and it is to be regretted, therefore, that the judgment may not be affirmed as the justice of the case would seem to require. But no doubt is entertained that the testimony of John Garvey, which was objected to, was incompetent and could not be admitted under the provisions of *503section 829 of tbe Code, to which reference has already been made. The plaintiff was, of course, interested in the event of this action, and his father John was the person through whom he derived his title and his right of action. The words of the statute just referred to are words of exclusion and, as said in Holcomb v. Holcomb (95 N. Y., 325), \" are as comprehensive as language can express. Transactions and communications embrace every variety of affairs which can form the subject of negotiation, interviews or actions between two persons, and include every method by which one person can derive impressions or information from the conduct, condition or language of another.",
"The statute is a beneficial one and ought not to be limited or narrowed by construction.” But if there were any doubt as to the propriety of admitting the testimony of the plaintiff in this action, for the reason that the proof of the signature may be regarded as an independent fact founded upon relations other than those gi’owing out of the transaction under consideration (see McKenna v. Bolger, * decided at this term), there can be none as to the impropriety of admitting the evidence of his father John, between whom and the deceased James the arrangement took place, by which the last instruments were executed and their negotiations consummated. The statement by him that the deceased signed the papers exhibited, or that the signature of James made upon them was his, was in effect a statement that the instrument was the embodiment of an agreement made between them. The judgment must, therefore, be reversed and a new trial ordered, with costs to abide the event.",
"Daniels, J., and Davis, P. J., concurred on the ground that John Garvey was not competent to prove the signature of the deceased party to the deed, through which the plaintiff derived his title. Judgment reversed, new trial ordered, costs to abide event. Post, p. 526."
]
| https://www.courtlistener.com/api/rest/v3/opinions/6132242/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Exhibit 10.1
Ramco-Gershenson Properties Trust 2015 Executive Incentive Plan
For 2015, the CEO and CFO positions will participate in a formal short-term incentive program, based on operating funds from operations (FFO) per share, subject to a maximum ratio of net Debt to Adjusted EBITDA. The CEO will have a target short-term incentive opportunity equal to 125% of base salary while the CFO will have a target opportunity equal to 75% of base salary.
Specific metrics and requirements are as follows:
Funds From Operations Per Share:
Threshold payout (50% of target incentive), target payout (100% of target incentive) and maximum payout (200% of target incentive) shall occur at achievement of operating FFO per share for 2015 (adjusted for any equity issued during the year) equal to or greater than targets established by the Compensation Committee of the Trust (the “Compensation Committee”). Payouts are interpolated on a linear basis for achievement of results between threshold, target, and maximum levels.
Maximum Net Debt to Adjusted EBITDA:
Payment of any amounts under the short-term incentive program is subject to achievement of a ratio of net Debt to adjusted EBITDA at December 31, 2015 equal to or less than the maximum ratio established by the Compensation Committee.
Administration Guidelines • This Plan shall be administered by the Trust’s Compensation Committee, which shall be authorized to interpret this Plan, to make, amend and rescind rules and regulations relating to this Plan, to make awards under this Plan, and to make all other determinations under this Plan necessary or advisable for its administration. The Compensation Committee may at its discretion reduce the payments that would otherwise be made under this Plan.
• The performance targets shall be established by the Compensation Committee based on the Trust’s approved 2015 budget. Under the Compensation Committee’s Charter, it has the discretion to exclude from the calculation of annual incentive goals, any non-recurring special charges and amounts. Such special charges could generally include items such as significant litigation and settlement costs; restructuring charges; changes in accounting policies; acquisition and divestiture impacts; and material unbudgeted expenses incurred by or at the direction of the Board. To that end, the Committee may consider any strategic decision or change in the budget made throughout the course of 2015 that can have a material impact on operating FFO per share, either positive or negative, that was not accounted for in the budget setting process at the beginning of the year. In particular, the maximum ratio of
1
--------------------------------------------------------------------------------
Exhibit 10.1
net Debt to adjusted EBITDA shall be subject to adjustment by the Compensation Committee in the event of material, unbudgeted capital expenditures (such as acquisitions or development projects) that are approved by the Board of Trustees during 2015. • All determinations, interpretations and constructions made by the Compensation Committee shall be final and conclusive.
• Rights under this Plan may not be transferred, assigned or pledged.
• Nothing in this Plan confers on any participant any right to continued employment and this Plan does not interfere with the Trust’s right to terminate an employee’s employment.
• A participant must be a full-time employee in good standing at the date of payment of the award in or around February 2016 in order to receive any payment under the Plan. No payment will be made to any person who leaves the full-time employ of the Trust before such date.
Adopted: February 23, 2015
16675102.1
2 | [
"Exhibit 10.1 Ramco-Gershenson Properties Trust 2015 Executive Incentive Plan For 2015, the CEO and CFO positions will participate in a formal short-term incentive program, based on operating funds from operations (FFO) per share, subject to a maximum ratio of net Debt to Adjusted EBITDA. The CEO will have a target short-term incentive opportunity equal to 125% of base salary while the CFO will have a target opportunity equal to 75% of base salary. Specific metrics and requirements are as follows: Funds From Operations Per Share: Threshold payout (50% of target incentive), target payout (100% of target incentive) and maximum payout (200% of target incentive) shall occur at achievement of operating FFO per share for 2015 (adjusted for any equity issued during the year) equal to or greater than targets established by the Compensation Committee of the Trust (the “Compensation Committee”).",
"Payouts are interpolated on a linear basis for achievement of results between threshold, target, and maximum levels. Maximum Net Debt to Adjusted EBITDA: Payment of any amounts under the short-term incentive program is subject to achievement of a ratio of net Debt to adjusted EBITDA at December 31, 2015 equal to or less than the maximum ratio established by the Compensation Committee. Administration Guidelines • This Plan shall be administered by the Trust’s Compensation Committee, which shall be authorized to interpret this Plan, to make, amend and rescind rules and regulations relating to this Plan, to make awards under this Plan, and to make all other determinations under this Plan necessary or advisable for its administration. The Compensation Committee may at its discretion reduce the payments that would otherwise be made under this Plan.",
"• The performance targets shall be established by the Compensation Committee based on the Trust’s approved 2015 budget. Under the Compensation Committee’s Charter, it has the discretion to exclude from the calculation of annual incentive goals, any non-recurring special charges and amounts. Such special charges could generally include items such as significant litigation and settlement costs; restructuring charges; changes in accounting policies; acquisition and divestiture impacts; and material unbudgeted expenses incurred by or at the direction of the Board. To that end, the Committee may consider any strategic decision or change in the budget made throughout the course of 2015 that can have a material impact on operating FFO per share, either positive or negative, that was not accounted for in the budget setting process at the beginning of the year. In particular, the maximum ratio of 1 -------------------------------------------------------------------------------- Exhibit 10.1 net Debt to adjusted EBITDA shall be subject to adjustment by the Compensation Committee in the event of material, unbudgeted capital expenditures (such as acquisitions or development projects) that are approved by the Board of Trustees during 2015.",
"• All determinations, interpretations and constructions made by the Compensation Committee shall be final and conclusive. • Rights under this Plan may not be transferred, assigned or pledged. • Nothing in this Plan confers on any participant any right to continued employment and this Plan does not interfere with the Trust’s right to terminate an employee’s employment. • A participant must be a full-time employee in good standing at the date of payment of the award in or around February 2016 in order to receive any payment under the Plan. No payment will be made to any person who leaves the full-time employ of the Trust before such date. Adopted: February 23, 2015 16675102.1 2"
]
| https://github.com/TheAtticusProject/cuad | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
|
Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
EXAMINER’S AMENDMENT
An examiner's amendment to the record appears below. Should the changes and/or additions be unacceptable to applicant, an amendment may be filed as provided by 37 CFR 1.312. To ensure consideration of such an amendment, it MUST be submitted no later than the payment of the issue fee.
The application has been amended as follows: Claim 10 has been cancelled.
Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to Hong Cho whose telephone number is 571-272-3087. The examiner can normally be reached on Mon-Fri during 7 am to 4 pm. If attempts to reach the examiner by telephone are unsuccessful, the examiner's supervisor, Hassan Phillips can be reached on 571-272-3940. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300.
/HONG S CHO/ Primary Examiner, Art Unit 2467 | 2021-03-24T10:36:58 | [
"Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . EXAMINER’S AMENDMENT An examiner's amendment to the record appears below. Should the changes and/or additions be unacceptable to applicant, an amendment may be filed as provided by 37 CFR 1.312. To ensure consideration of such an amendment, it MUST be submitted no later than the payment of the issue fee. The application has been amended as follows: Claim 10 has been cancelled.",
"Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to Hong Cho whose telephone number is 571-272-3087. The examiner can normally be reached on Mon-Fri during 7 am to 4 pm. If attempts to reach the examiner by telephone are unsuccessful, the examiner's supervisor, Hassan Phillips can be reached on 571-272-3940. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. /HONG S CHO/ Primary Examiner, Art Unit 2467"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-03-28.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
74 B.R. 697 (1987) In re Roger E. OWEN and Bettey J. Owen, Debtors. James R. GEEKIE, Trustee, Plaintiff, v. Bettey J. OWEN, Roger E. Owen; and Hardware State Bank, Lovington, Illinois, Defendants. Bankruptcy No. 285-00130, Adv. No. 86-9127. United States Bankruptcy Court, C.D. Illinois. June 18, 1987. E. Dean Andrews, Paris, Ill., for trustee. Dan L. Flannell, Sullivan, Ill., for Hardware State Bank. *698 Kenneth L. Bast, Mattoon, Ill., for debtors.
OPINION LARRY LESSEN, Chief Judge. This matter is before the Court on the Trustee's objection to the homestead exemption claimed by the Debtor, Roger Owen. The parties have submitted briefs to the Court and have stipulated as to the facts. The issue is whether the Debtor, Roger Owen, is entitled to claim a homestead exemption in a home he jointly occupied with his wife, Bettey Owen. The property is owned solely by Bettey Owen, and the Trustee does not object to her claimed homestead exemption. As a threshold matter the Court must determine whether the Trustee's objection was timely filed. The Debtors originally filed a Chapter 11 petition on February 26, 1985, with the first meeting of creditors held April 23, 1985. On May 5, 1986, an Order was entered converting the case to a Chapter 7. The Debtors filed an Amended Schedule B-4 on May 21, 1986, claiming a homestead exemption for both Bettey and Roger Owen. The Order of conversion did not indicate a time within which any objections to claimed exemptions must be filed. There was never another first meeting of creditors held after the case was converted to Chapter 7. Bankruptcy Rule 4003(b) provides: (b) The Trustee or any creditor may file objections to the list of property claimed as exempt within 30 days after the conclusion of the meeting of creditors held pursuant to Rule 2003(a) or the filing of any amendment to the list unless, within such period, further time is granted by the court. The Trustee has never filed a formal objection to the claimed homestead exemption. Still, the Court believes the Trustee has complied with the basic purpose of the thirty day requirement of Rule 4003(b), which is to ensure timely notice to debtors that the trustee objects to their claimed exemptions. See, Matter of Young, 806 F.2d 1303, 1305 (5th Cir.1987). In In re Starns, 52 B.R. 405 (D.C.Tex. 1985), the court held that a creditor's failure to file objections to exemptions within thirty days after the first meeting of creditors did not constitute a waiver of its right to object, where the debtor received actual notice from the creditor early in the proceeding that the scheduled exemptions were disputed. In Starns, the creditor had filed a motion for relief from the automatic stay, in which it disputed the debtor's claimed exemptions. The Court found that the motion operated as a formal objection to the exemptions, stating: Certainly the steps taken by Freedman were sufficient to bring the issue before the court in a timely manner with sufficient notice to interested parties. And certainly these steps satisfied the intent of Rule 4003 that exemption questions be resolved early in bankruptcy proceedings. The proper procedure, of course, is to file an objection to the claim of exemptions within the time limit established in Rule 4003(b) to ensure that it is properly docketed by the clerk of court and brought on for hearing before the bankruptcy court. Nevertheless, although Freedman did not comply with the letter of this procedure, this court is satisfied that its filing did meet the concerns underlying the rule. See In re Grosslight, 757 F.2d 773, 777 (6th Cir.1985) (treating adversary proceeding in which creditor sought relief from automatic stay to proceed with case in state court as an objection the debtor's claim of exemptions). Id. at 411. Here too, early in the Chapter 7 proceeding, on June 27, 1986, the Trustee filed a Complaint to sell real estate, seeking the Court's permission to sell the homestead property free and clear of all liens and claims, with liens and claims to attach to the sale proceeds "in the order of their priority, which this Court shall determine as required after sale." In this Complaint the Trustee stated in paragraph 6: "ROGER E. OWEN may have rights in the property by virtue of his status as spouse of BETTEY J. OWEN." From this point on in the proceedings, the Debtors were aware the Trustee objected to Roger Owen's *699 claimed homestead exemption. In the Court's Order To Sell Real Estate Free and Clear of Liens and Claims entered on July 11, 1986, the Court stated: "Any liens and claims shall attach to the proceeds of the sale in the respective order of their priority, which priority, including questions of homestead, this Court shall determine as required after the sale date." The parties agreed it was in the best interest of all to go ahead and sell the property, with determinations as to homestead exemptions to be determined at a later date. The Trustee's Report of Sale filed August 15, 1986, states in paragraph 5: ROGER E. OWEN has claimed a homestead interest in the property but the Trustee questions whether ROGER E. OWEN is entitled to that exemption since the title to the real estate was not owned by ROGER E. OWEN or possessed by lease or otherwise within the meaning of Section 12-901 of Chapter 110, Illinois Revised Statutes. In the Report of Sale the Trustee asked the Court to set a hearing and determine whether Roger Owen is entitled to a homestead interest in the proceeds of the sale. The Trustee's Complaint to sell real estate free and clear of liens clearly put the Debtors on notice early in the proceedings that the Trustee objected to Roger Owen's claimed homestead exemption. The Debtors have not been prejudiced in any way by the Trustee's failure to file a formal objection within the time limits of Rule 4003(b). As stated by the court in In re Rollins, 63 B.R. 780 (Bankr.E.D. Tenn.1986): [T]he trustee's failure to object within the time allowed by Rule 4003(b) does not mean the debtor is entitled to the exemption. There was no need for the trustee to dispute the claim of exemption until he recovered the $3,000. Furthermore, the debtor cannot make property exempt simply by claiming it as exempt when there is no apparent legal basis for the exemption. In that situation, the trustee's failure to object to the claim of exemption within the time limit of Rule 4003(b) does not create an exemption. In re Dembs, 757 F.2d 777, 13 Bankr.Ct. Dec. 592, 12 Coll.Bankr.Cas.2d 591 (6th Cir.1985); In re Grosslight, 757 F.2d 773, 12 Coll.Bankr.Cas.2d 525 (6th Cir.1985); In re Bennett, 36 B.R. 893 (Bankr.W.D. Ky.1984). Id. at 783-84. Here too, the trustee's failure to file a formal objection within the time limits of Rule 4003(b) will not create a homestead exemption for a debtor not otherwise entitled to one under the exemption statutes. The Illinois exemption statute provides: Every individual is entitled to an estate of homestead to the extent in value of $7,500, in the farm or lot of land and buildings thereon, . . . owned or rightly possessed by lease or otherwise and occupied by him or her as a residence. . . . Ill.Rev.Stat. Ch. 110, para. 12-901. The statute clearly establishes that homestead is an estate, and that the individual entitled to the estate must either own the property to which the estate attaches, or rightly possess the property by lease or otherwise. Either ownership or possession through a lease gives an individual an estate in the property. Here, Roger Owen has no ownership interest or leasehold interest in the property to which the estate may attach. His sole claim to entitlement of a $7,500 homestead exemption is that he lived in the home with his wife, who was the sole title-holder. In Jones v. Kilfether, 12 Ill.App.2d 390, 139 N.E.2d 801 (1956), a husband who lived with his wife claimed a homestead right in premises owned by his wife and her brother as tenants in common, based upon his mere occupancy of the premises. The court held: [S]ince, under the rule heretofore enunciated, the right of homestead can have no separate existence independently of the title which constitutes one of its essential elements and from which it is inseparable, he has no right of homestead. . . . Id. at 396, 397, 139 N.E.2d 801. Similarly, in Sterling Savings & Loan Association v. Schultz, 71 Ill.App.2d 94, 218 N.E.2d 53 (1966) the court stated:
*700 The right of homestead being by our present statute enlarged into an estate, it follows that like all other estates, it can have no separate existence apart from the title on which it depends. We have held that the estate of homestead created by the statute is based upon the title of the householder, and can have no separate existence independently of the title, which constitutes one of its essential elements, and from which it is inseparable. Id. at 112, 218 N.E.2d 53, citing DeMartini v. DeMartini, 385 Ill. 128, 52 N.E.2d 138 (1944). Since Roger Owen had no title, he has no homestead under the Illinois exemption statute. The Debtors cite Willard v. Northwest National Bank of Chicago, 137 Ill.App.3d 255, 92 Ill.Dec. 92, 484 N.E.2d 823 (1985) for the proposition that an untitled spouse does have a homestead interest. In Willard, the husband, sole titleholder of the residence where he and his wife lived, conveyed his residence into a land trust and assigned his beneficial interest as security for a loan. His wife signed none of the documents involved. He defaulted on the loan and the property was sold. The court found that the wife did have a homestead "right", stating: While it is probably true that William is the "householder" to whom the estate runs (citations omitted) it does not follow that Pauline had no right. The Homestead Exemption benefits not just the householder, but the family, and affords the householder's spouse a veto-like power where alienation or encumbrance of the homestead are concerned. Id. 71 Ill.App.2d at 97, 218 N.E.2d 53. However, while the wife in Willard had a right to be protected where the husband conveyed his homestead without her consent, nothing in the case indicates she was entitled to receive a separate homestead exemption. Rather, the court states, "it appears that the conveyance into trust was ineffective to transfer the Willards' homestead interest. . . ." The language is singular, indicating only one homestead interest existed, based upon the husband's title. The wife merely has a right to keep the husband from conveying away both his property and his homestead interest without her consent. She has a right to the benefit of the exemption owned by the husband for the family's protection. The court found that the husband and wife might be entitled to a setoff for the amount of the exemption, or possibly a declaration that the sale was void. But, there is no indication there would be two separate $7,500 exemptions. Rather, the court's language leads to the conclusion there is only one interest, for the benefit of the family, that the titled spouse cannot convey without the other spouse's consent. For the foregoing reasons, the Court concludes that the number of exemptions available is to be determined by the number of individuals in title who qualify for the homestead estate. Therefore, the Trustee's objection to the homestead exemption claimed by Roger Owen is allowed, and Roger Owen is entitled to no homestead exemption from the proceeds of the sale of the real estate. This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure. See written Order. | 10-30-2013 | [
"74 B.R. 697 (1987) In re Roger E. OWEN and Bettey J. Owen, Debtors. James R. GEEKIE, Trustee, Plaintiff, v. Bettey J. OWEN, Roger E. Owen; and Hardware State Bank, Lovington, Illinois, Defendants. Bankruptcy No. 285-00130, Adv. No. 86-9127. United States Bankruptcy Court, C.D. Illinois. June 18, 1987. E. Dean Andrews, Paris, Ill., for trustee. Dan L. Flannell, Sullivan, Ill., for Hardware State Bank. *698 Kenneth L. Bast, Mattoon, Ill., for debtors. OPINION LARRY LESSEN, Chief Judge. This matter is before the Court on the Trustee's objection to the homestead exemption claimed by the Debtor, Roger Owen. The parties have submitted briefs to the Court and have stipulated as to the facts. The issue is whether the Debtor, Roger Owen, is entitled to claim a homestead exemption in a home he jointly occupied with his wife, Bettey Owen. The property is owned solely by Bettey Owen, and the Trustee does not object to her claimed homestead exemption.",
"As a threshold matter the Court must determine whether the Trustee's objection was timely filed. The Debtors originally filed a Chapter 11 petition on February 26, 1985, with the first meeting of creditors held April 23, 1985. On May 5, 1986, an Order was entered converting the case to a Chapter 7. The Debtors filed an Amended Schedule B-4 on May 21, 1986, claiming a homestead exemption for both Bettey and Roger Owen. The Order of conversion did not indicate a time within which any objections to claimed exemptions must be filed. There was never another first meeting of creditors held after the case was converted to Chapter 7. Bankruptcy Rule 4003(b) provides: (b) The Trustee or any creditor may file objections to the list of property claimed as exempt within 30 days after the conclusion of the meeting of creditors held pursuant to Rule 2003(a) or the filing of any amendment to the list unless, within such period, further time is granted by the court.",
"The Trustee has never filed a formal objection to the claimed homestead exemption. Still, the Court believes the Trustee has complied with the basic purpose of the thirty day requirement of Rule 4003(b), which is to ensure timely notice to debtors that the trustee objects to their claimed exemptions. See, Matter of Young, 806 F.2d 1303, 1305 (5th Cir.1987). In In re Starns, 52 B.R. 405 (D.C.Tex. 1985), the court held that a creditor's failure to file objections to exemptions within thirty days after the first meeting of creditors did not constitute a waiver of its right to object, where the debtor received actual notice from the creditor early in the proceeding that the scheduled exemptions were disputed. In Starns, the creditor had filed a motion for relief from the automatic stay, in which it disputed the debtor's claimed exemptions. The Court found that the motion operated as a formal objection to the exemptions, stating: Certainly the steps taken by Freedman were sufficient to bring the issue before the court in a timely manner with sufficient notice to interested parties.",
"And certainly these steps satisfied the intent of Rule 4003 that exemption questions be resolved early in bankruptcy proceedings. The proper procedure, of course, is to file an objection to the claim of exemptions within the time limit established in Rule 4003(b) to ensure that it is properly docketed by the clerk of court and brought on for hearing before the bankruptcy court. Nevertheless, although Freedman did not comply with the letter of this procedure, this court is satisfied that its filing did meet the concerns underlying the rule. See In re Grosslight, 757 F.2d 773, 777 (6th Cir.1985) (treating adversary proceeding in which creditor sought relief from automatic stay to proceed with case in state court as an objection the debtor's claim of exemptions). Id.",
"at 411. Here too, early in the Chapter 7 proceeding, on June 27, 1986, the Trustee filed a Complaint to sell real estate, seeking the Court's permission to sell the homestead property free and clear of all liens and claims, with liens and claims to attach to the sale proceeds \"in the order of their priority, which this Court shall determine as required after sale.\" In this Complaint the Trustee stated in paragraph 6: \"ROGER E. OWEN may have rights in the property by virtue of his status as spouse of BETTEY J. OWEN.\"",
"From this point on in the proceedings, the Debtors were aware the Trustee objected to Roger Owen's *699 claimed homestead exemption. In the Court's Order To Sell Real Estate Free and Clear of Liens and Claims entered on July 11, 1986, the Court stated: \"Any liens and claims shall attach to the proceeds of the sale in the respective order of their priority, which priority, including questions of homestead, this Court shall determine as required after the sale date.\" The parties agreed it was in the best interest of all to go ahead and sell the property, with determinations as to homestead exemptions to be determined at a later date. The Trustee's Report of Sale filed August 15, 1986, states in paragraph 5: ROGER E. OWEN has claimed a homestead interest in the property but the Trustee questions whether ROGER E. OWEN is entitled to that exemption since the title to the real estate was not owned by ROGER E. OWEN or possessed by lease or otherwise within the meaning of Section 12-901 of Chapter 110, Illinois Revised Statutes.",
"In the Report of Sale the Trustee asked the Court to set a hearing and determine whether Roger Owen is entitled to a homestead interest in the proceeds of the sale. The Trustee's Complaint to sell real estate free and clear of liens clearly put the Debtors on notice early in the proceedings that the Trustee objected to Roger Owen's claimed homestead exemption. The Debtors have not been prejudiced in any way by the Trustee's failure to file a formal objection within the time limits of Rule 4003(b).",
"As stated by the court in In re Rollins, 63 B.R. 780 (Bankr.E.D. Tenn.1986): [T]he trustee's failure to object within the time allowed by Rule 4003(b) does not mean the debtor is entitled to the exemption. There was no need for the trustee to dispute the claim of exemption until he recovered the $3,000. Furthermore, the debtor cannot make property exempt simply by claiming it as exempt when there is no apparent legal basis for the exemption. In that situation, the trustee's failure to object to the claim of exemption within the time limit of Rule 4003(b) does not create an exemption. In re Dembs, 757 F.2d 777, 13 Bankr.Ct.",
"Dec. 592, 12 Coll.Bankr.Cas.2d 591 (6th Cir.1985); In re Grosslight, 757 F.2d 773, 12 Coll.Bankr.Cas.2d 525 (6th Cir.1985); In re Bennett, 36 B.R. 893 (Bankr.W.D. Ky.1984). Id. at 783-84. Here too, the trustee's failure to file a formal objection within the time limits of Rule 4003(b) will not create a homestead exemption for a debtor not otherwise entitled to one under the exemption statutes. The Illinois exemption statute provides: Every individual is entitled to an estate of homestead to the extent in value of $7,500, in the farm or lot of land and buildings thereon, .",
". . owned or rightly possessed by lease or otherwise and occupied by him or her as a residence. . . . Ill.Rev.Stat. Ch. 110, para. 12-901. The statute clearly establishes that homestead is an estate, and that the individual entitled to the estate must either own the property to which the estate attaches, or rightly possess the property by lease or otherwise. Either ownership or possession through a lease gives an individual an estate in the property. Here, Roger Owen has no ownership interest or leasehold interest in the property to which the estate may attach.",
"His sole claim to entitlement of a $7,500 homestead exemption is that he lived in the home with his wife, who was the sole title-holder. In Jones v. Kilfether, 12 Ill.App.2d 390, 139 N.E.2d 801 (1956), a husband who lived with his wife claimed a homestead right in premises owned by his wife and her brother as tenants in common, based upon his mere occupancy of the premises. The court held: [S]ince, under the rule heretofore enunciated, the right of homestead can have no separate existence independently of the title which constitutes one of its essential elements and from which it is inseparable, he has no right of homestead. . . . Id. at 396, 397, 139 N.E.2d 801. Similarly, in Sterling Savings & Loan Association v. Schultz, 71 Ill.App.2d 94, 218 N.E.2d 53 (1966) the court stated: *700 The right of homestead being by our present statute enlarged into an estate, it follows that like all other estates, it can have no separate existence apart from the title on which it depends. We have held that the estate of homestead created by the statute is based upon the title of the householder, and can have no separate existence independently of the title, which constitutes one of its essential elements, and from which it is inseparable.",
"Id. at 112, 218 N.E.2d 53, citing DeMartini v. DeMartini, 385 Ill. 128, 52 N.E.2d 138 (1944). Since Roger Owen had no title, he has no homestead under the Illinois exemption statute. The Debtors cite Willard v. Northwest National Bank of Chicago, 137 Ill.App.3d 255, 92 Ill.Dec. 92, 484 N.E.2d 823 (1985) for the proposition that an untitled spouse does have a homestead interest. In Willard, the husband, sole titleholder of the residence where he and his wife lived, conveyed his residence into a land trust and assigned his beneficial interest as security for a loan. His wife signed none of the documents involved. He defaulted on the loan and the property was sold.",
"The court found that the wife did have a homestead \"right\", stating: While it is probably true that William is the \"householder\" to whom the estate runs (citations omitted) it does not follow that Pauline had no right. The Homestead Exemption benefits not just the householder, but the family, and affords the householder's spouse a veto-like power where alienation or encumbrance of the homestead are concerned. Id. 71 Ill.App.2d at 97, 218 N.E.2d 53. However, while the wife in Willard had a right to be protected where the husband conveyed his homestead without her consent, nothing in the case indicates she was entitled to receive a separate homestead exemption. Rather, the court states, \"it appears that the conveyance into trust was ineffective to transfer the Willards' homestead interest. . . .\" The language is singular, indicating only one homestead interest existed, based upon the husband's title.",
"The wife merely has a right to keep the husband from conveying away both his property and his homestead interest without her consent. She has a right to the benefit of the exemption owned by the husband for the family's protection. The court found that the husband and wife might be entitled to a setoff for the amount of the exemption, or possibly a declaration that the sale was void. But, there is no indication there would be two separate $7,500 exemptions. Rather, the court's language leads to the conclusion there is only one interest, for the benefit of the family, that the titled spouse cannot convey without the other spouse's consent. For the foregoing reasons, the Court concludes that the number of exemptions available is to be determined by the number of individuals in title who qualify for the homestead estate. Therefore, the Trustee's objection to the homestead exemption claimed by Roger Owen is allowed, and Roger Owen is entitled to no homestead exemption from the proceeds of the sale of the real estate.",
"This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure. See written Order."
]
| https://www.courtlistener.com/api/rest/v3/opinions/1829650/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
DETAILED ACTION
Notice of Pre-AIA or AIA Status The present application is being examined under the pre-AIA first to invent provisions. This action is in response to the communication filed on 05/05/2021.
Response to Arguments
Applicant's arguments/remarks filed on 05/05/2021 with respect to claim(s) 1 and the similarly amended independent claims have been considered but are moot in view of the new ground(s) of rejection. Upon further consideration, the previously cited prior art reference(s) Vanttinen et al. (U.S. Pub. 20020126630) does address the new amended limitations set forth within independent claim(s) 1. Therefore, new rejections have been formulated to address the limitations as set forth in independent claim 1 and the similarly amended independent and their respective dependent claims.
Claim Rejections – 35 USC § 103
The following is a quotation of 35 U.S.C. 103(a) which forms the basis for all obviousness rejections set forth in this Office action: (a) A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made. The factual inquiries set forth in Graham v. John Deere Co., 383 U.S. 1, 148 USPQ 459 (1966), that are applied for establishing a background for determining obviousness under 35 U.S.C. 103(a) are summarized as follows: 1. Determining the scope and contents of the prior art.2. Ascertaining the differences between the prior art and the claims at issue.3. Resolving the level of ordinary skill in the pertinent art.4. Considering objective evidence present in the application indicating obviousness or nonobviousness. Claims 1-3, 5-10, 12-15 are rejected under 35 U.S.C. 103(a) as being unpatentable over Vanttinen et al. (U.S. Pub. 20020126630) in view of Koulakiotis et al. (U.S. Pub. 20040081192).
Regarding claim 1, Vanttinen disclose a method to communicate capabilities of a device, comprising: identifying a subset of radio access capabilities among a set of radio access capabilities of a mobile station to be transmitted for a data transfer session (para. 44, Fig. 6, The terminal uses a specific training sequence to indicate to the base station that the channel request in question is specifically of the EGPRS-type. ; sending a request to a network (para. 44, in the first step, the terminal sends a Channel Request CR 600 to the network part, the request requesting the particular quantity of blocks to be allocated for use by the mobile station (para. 52, the terminal uses a specific training sequence to indicate to the base station that the channel request in question is specifically of the EGPRS-type. I), receiving an allocation of the quantity of blocks from the network (para. 57, Fig. 7a, the network allocates to the terminal a channel on the radio path for data transmission and sends information about the allocated resources to the terminal); and sending the identified subset of radio access capabilities via the allocated blocks (para. 45, Fig. 6a, The terminal then sends the network part a PRR (Packet Resource Request) message in a first control block (step 608). Vanttinen does not specifically disclose determining a data size of the identified subset of radio access capabilities to be transmitted for the data transfer session. However Koulakiotis teach (para. 54, an additional function `traffic volume’ monitoring and radio resource request for MBMS` is provided by the MBMC for periodically predicting the expected amount of MBMS traffic volume in kbps that is . Koulakiotis further disclose determining a particular quantity of blocks based on the determined data size (para. 54, based on this calculation, the function then requests appropriate logical channel and transport channel resources from the RRC). Vanttinen and Koulakiotis are analogous because they pertain to the field of wireless communication networks and, more specifically, to network control signaling. Therefore, it would have been obvious to one having ordinary skill in the art at the time the invention was made to combine the teachings of Koulakiotis in the system of Vanttinen to precisely determine the amount resources that are required to allocate all the traffic of a high level priority session and with type of radio resources is going to using to transmitting the data. The motivation for doing so would have been to improve the data transmission quality of the high priority sessions. Regarding claim 2, Vanttinen disclose wherein the request is a channel request message sent by the mobile station to the network, wherein the allocation of the particular quantity of blocks is received at the mobile station in an assignment message, and wherein the identified subset of radio access capabilities is sent to the network via an associated control channel (para. 42-45, a system known as the EGPRS (EDGE General Packet Radio System) will be used as an example in this specific case, the invention not being, however, restricted to it. In the . Regarding claim 3, Vanttinen disclose wherein the particular quantity of blocks is requested by the mobile station by sending a quantity value in a channel request message (para. 44, Fig. 6a, After having received the message, the network part allocates to the terminal a channel on the radio path for data transmission (step 602)). Regarding claim 5, Vanttinen disclose wherein the radio access capabilities pertain at least to a specific type of use by the mobile station for the data transfer session (para. 44, Fig. 6a, The terminal uses a specific training sequence to indicate to the base station that the channel request in question is specifically of the EGPRS-type). Regarding claim 6, Vanttinen disclose wherein the particular quantity of blocks is determined based on radio access capabilities that are supported by the network and the mobile station (para. 55, If necessary the network allocates new resources in step 614A to the terminal on the basis of the information it has received). Regarding claim 7, Vanttinen disclose wherein sending the identified subset of radio access capabilities to the network occurs after the mobile station registers with a core network of the network during a registration process, and wherein while registering with the core network during the registration process, the mobile station sends one of an exhaustive subset of radio access capabilities or a subset of radio access capabilities relevant only to downlink communications to the core network (para. 6, 9, the Figure shows the essential parts of messages sent by different devices. The messages sent by the network part are marked with DL (downlink). A terminal sends a CR (Channel Request) 100 to the network part of the system (…), in which method the terminal informs the system network part that it wishes to send data to the network part; the network part receives the message and allocates a default amount of radio resources to the terminal; the network part informs the allocated resources to the terminal; the terminal sends a first control message to inform the network part about the terminal's radio path characteristics). Claim 8 recites an apparatus corresponding to the method of claim 1 and thus is rejected under the same reason set forth in the rejection of claim 1. Regarding claims 9-10 the limitations of claims 9-10, respectively, are rejected in the same manner as analyzed above with respect to claims 2-3, respectively. Regarding claims 12-14 the limitations of claims 12-14, respectively, are rejected in the same manner as analyzed above with respect to claims 5-7, respectively. Claim 15 recites a computer–program product corresponding to the method of claim 1 and thus is rejected under the same reason set forth in the rejection of claim 1.
Claims 4 and 11 are rejected under 35 U.S.C. 103(a) as being unpatentable over Vanttinen et al. (U.S. Pub. 20020126630) in view of Koulakiotis et al. (U.S. Pub. 20040081192) further in view of Landais (U.S. Pub. 20020080758). claim 4, Vanttinen and Koulakiotis does not specifically disclose wherein sending the identified subset of radio access capabilities to the network comprises sending the identified subset of radio access capabilities during a temporary block flow setup process. However Landais teach (para. 20, in a packet transfer mode, in which resources are assigned temporarily, when there is actually data to be transmitted during a call, the resources forming a temporary block flow (TBF), i.e. a virtual channel enabling transfer of data between the mobile station and the network in a given transmission direction). Vanttinen, Koulakiotis and Landais are analogous because they pertain to the field of wireless communication networks and, more specifically, to network control signaling. Therefore, it would have been obvious to one having ordinary skill in the art at the time the invention was made to combine the teachings of Landais in the system of Vanttinen and Koulakiotis to allow this type of signaling while the amount of resources are low or the bandwidth usage is limited. The motivation for doing so would have been to improve the management of the available resources. Regarding claim 11 the limitations of claim 11 are rejected in the same manner as analyzed above with respect to claim 4.
Conclusion
Applicant's amendment necessitated the new ground(s) of rejection presented in this Office action. Accordingly, THIS ACTION IS MADE FINAL. See MPEP § 706.07(a). Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to RAUL RIVAS whose telephone number is (571)270–5590. The examiner can normally be reached on Monday – Friday, from 8:30am to 5:00pm. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Chi Pham can be reached on (571) 272–3179. The fax phone number for the organization where this application or proceeding is assigned is 571–273–8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800–786–9199 (IN USA OR CANADA) or 571–272–1000.
/RR/ Examiner, Art Unit 2471
/CHI H PHAM/ Supervisory Patent Examiner, Art Unit 2471 | 2021-10-26T07:10:47 | [
"DETAILED ACTION Notice of Pre-AIA or AIA Status The present application is being examined under the pre-AIA first to invent provisions. This action is in response to the communication filed on 05/05/2021. Response to Arguments Applicant's arguments/remarks filed on 05/05/2021 with respect to claim(s) 1 and the similarly amended independent claims have been considered but are moot in view of the new ground(s) of rejection. Upon further consideration, the previously cited prior art reference(s) Vanttinen et al. (U.S. Pub. 20020126630) does address the new amended limitations set forth within independent claim(s) 1. Therefore, new rejections have been formulated to address the limitations as set forth in independent claim 1 and the similarly amended independent and their respective dependent claims. Claim Rejections – 35 USC § 103 The following is a quotation of 35 U.S.C. 103(a) which forms the basis for all obviousness rejections set forth in this Office action: (a) A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.",
"Patentability shall not be negatived by the manner in which the invention was made. The factual inquiries set forth in Graham v. John Deere Co., 383 U.S. 1, 148 USPQ 459 (1966), that are applied for establishing a background for determining obviousness under 35 U.S.C. 103(a) are summarized as follows: 1. Determining the scope and contents of the prior art.2. Ascertaining the differences between the prior art and the claims at issue.3. Resolving the level of ordinary skill in the pertinent art.4. Considering objective evidence present in the application indicating obviousness or nonobviousness. Claims 1-3, 5-10, 12-15 are rejected under 35 U.S.C. 103(a) as being unpatentable over Vanttinen et al.",
"(U.S. Pub. 20020126630) in view of Koulakiotis et al. (U.S. Pub. 20040081192). Regarding claim 1, Vanttinen disclose a method to communicate capabilities of a device, comprising: identifying a subset of radio access capabilities among a set of radio access capabilities of a mobile station to be transmitted for a data transfer session (para. 44, Fig. 6, The terminal uses a specific training sequence to indicate to the base station that the channel request in question is specifically of the EGPRS-type. ; sending a request to a network (para. 44, in the first step, the terminal sends a Channel Request CR 600 to the network part, the request requesting the particular quantity of blocks to be allocated for use by the mobile station (para.",
"52, the terminal uses a specific training sequence to indicate to the base station that the channel request in question is specifically of the EGPRS-type. I), receiving an allocation of the quantity of blocks from the network (para. 57, Fig. 7a, the network allocates to the terminal a channel on the radio path for data transmission and sends information about the allocated resources to the terminal); and sending the identified subset of radio access capabilities via the allocated blocks (para. 45, Fig. 6a, The terminal then sends the network part a PRR (Packet Resource Request) message in a first control block (step 608). Vanttinen does not specifically disclose determining a data size of the identified subset of radio access capabilities to be transmitted for the data transfer session. However Koulakiotis teach (para. 54, an additional function `traffic volume’ monitoring and radio resource request for MBMS` is provided by the MBMC for periodically predicting the expected amount of MBMS traffic volume in kbps that is . Koulakiotis further disclose determining a particular quantity of blocks based on the determined data size (para.",
"54, based on this calculation, the function then requests appropriate logical channel and transport channel resources from the RRC). Vanttinen and Koulakiotis are analogous because they pertain to the field of wireless communication networks and, more specifically, to network control signaling. Therefore, it would have been obvious to one having ordinary skill in the art at the time the invention was made to combine the teachings of Koulakiotis in the system of Vanttinen to precisely determine the amount resources that are required to allocate all the traffic of a high level priority session and with type of radio resources is going to using to transmitting the data. The motivation for doing so would have been to improve the data transmission quality of the high priority sessions.",
"Regarding claim 2, Vanttinen disclose wherein the request is a channel request message sent by the mobile station to the network, wherein the allocation of the particular quantity of blocks is received at the mobile station in an assignment message, and wherein the identified subset of radio access capabilities is sent to the network via an associated control channel (para. 42-45, a system known as the EGPRS (EDGE General Packet Radio System) will be used as an example in this specific case, the invention not being, however, restricted to it. In the .",
"Regarding claim 3, Vanttinen disclose wherein the particular quantity of blocks is requested by the mobile station by sending a quantity value in a channel request message (para. 44, Fig. 6a, After having received the message, the network part allocates to the terminal a channel on the radio path for data transmission (step 602)). Regarding claim 5, Vanttinen disclose wherein the radio access capabilities pertain at least to a specific type of use by the mobile station for the data transfer session (para. 44, Fig.",
"6a, The terminal uses a specific training sequence to indicate to the base station that the channel request in question is specifically of the EGPRS-type). Regarding claim 6, Vanttinen disclose wherein the particular quantity of blocks is determined based on radio access capabilities that are supported by the network and the mobile station (para. 55, If necessary the network allocates new resources in step 614A to the terminal on the basis of the information it has received). Regarding claim 7, Vanttinen disclose wherein sending the identified subset of radio access capabilities to the network occurs after the mobile station registers with a core network of the network during a registration process, and wherein while registering with the core network during the registration process, the mobile station sends one of an exhaustive subset of radio access capabilities or a subset of radio access capabilities relevant only to downlink communications to the core network (para. 6, 9, the Figure shows the essential parts of messages sent by different devices.",
"The messages sent by the network part are marked with DL (downlink). A terminal sends a CR (Channel Request) 100 to the network part of the system (…), in which method the terminal informs the system network part that it wishes to send data to the network part; the network part receives the message and allocates a default amount of radio resources to the terminal; the network part informs the allocated resources to the terminal; the terminal sends a first control message to inform the network part about the terminal's radio path characteristics). Claim 8 recites an apparatus corresponding to the method of claim 1 and thus is rejected under the same reason set forth in the rejection of claim 1.",
"Regarding claims 9-10 the limitations of claims 9-10, respectively, are rejected in the same manner as analyzed above with respect to claims 2-3, respectively. Regarding claims 12-14 the limitations of claims 12-14, respectively, are rejected in the same manner as analyzed above with respect to claims 5-7, respectively. Claim 15 recites a computer–program product corresponding to the method of claim 1 and thus is rejected under the same reason set forth in the rejection of claim 1. Claims 4 and 11 are rejected under 35 U.S.C. 103(a) as being unpatentable over Vanttinen et al. (U.S. Pub. 20020126630) in view of Koulakiotis et al. (U.S. Pub. 20040081192) further in view of Landais (U.S. Pub. 20020080758). claim 4, Vanttinen and Koulakiotis does not specifically disclose wherein sending the identified subset of radio access capabilities to the network comprises sending the identified subset of radio access capabilities during a temporary block flow setup process. However Landais teach (para. 20, in a packet transfer mode, in which resources are assigned temporarily, when there is actually data to be transmitted during a call, the resources forming a temporary block flow (TBF), i.e.",
"a virtual channel enabling transfer of data between the mobile station and the network in a given transmission direction). Vanttinen, Koulakiotis and Landais are analogous because they pertain to the field of wireless communication networks and, more specifically, to network control signaling. Therefore, it would have been obvious to one having ordinary skill in the art at the time the invention was made to combine the teachings of Landais in the system of Vanttinen and Koulakiotis to allow this type of signaling while the amount of resources are low or the bandwidth usage is limited. The motivation for doing so would have been to improve the management of the available resources. Regarding claim 11 the limitations of claim 11 are rejected in the same manner as analyzed above with respect to claim 4.",
"Conclusion Applicant's amendment necessitated the new ground(s) of rejection presented in this Office action. Accordingly, THIS ACTION IS MADE FINAL. See MPEP § 706.07(a). Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to RAUL RIVAS whose telephone number is (571)270–5590. The examiner can normally be reached on Monday – Friday, from 8:30am to 5:00pm.",
"If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Chi Pham can be reached on (571) 272–3179. The fax phone number for the organization where this application or proceeding is assigned is 571–273–8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only.",
"If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800–786–9199 (IN USA OR CANADA) or 571–272–1000. /RR/ Examiner, Art Unit 2471 /CHI H PHAM/ Supervisory Patent Examiner, Art Unit 2471"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-10-31.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 1:20-cv-06516-VM Document 94-4 Filed 10/30/20 Page 1 of 3 Case 1:20-cv-06516-VM Document 94-4 Filed 10/30/20 Page 2 of 3 Case 1:20-cv-06516-VM Document 94-4 Filed 10/30/20 Page 3 of 3
Inbound Ballot Outbound Ballot Election Mail (Non Ballot) Week Start Date Processing Score Processing Score Processing Score 17-Oct 94.90% 86.73% 95.26% Please Note: this only includes scores for mailpieces that have been properly identified by the mailer as election mail, outbound ballots, or inbound ballots and if it adhered to Service Performance Measurement business rules. | 2020-10-30 | [
"Case 1:20-cv-06516-VM Document 94-4 Filed 10/30/20 Page 1 of 3 Case 1:20-cv-06516-VM Document 94-4 Filed 10/30/20 Page 2 of 3 Case 1:20-cv-06516-VM Document 94-4 Filed 10/30/20 Page 3 of 3 Inbound Ballot Outbound Ballot Election Mail (Non Ballot) Week Start Date Processing Score Processing Score Processing Score 17-Oct 94.90% 86.73% 95.26% Please Note: this only includes scores for mailpieces that have been properly identified by the mailer as election mail, outbound ballots, or inbound ballots and if it adhered to Service Performance Measurement business rules."
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/150554854/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
TAFT, Circuit Judge. The First National Bank was organized in October, 1863, under the national banking laws, and its charter rights were extended September 6, 1882. It did not formally accept the Hewitt act, in accordance with the terms of that act. The averment of the bill upon tills point is: “Your orator shows that from the 1st day of July, 1887, although it was not by the United States banking acts bound to submit to taxation under the ‘Hewitt BUI,’ it nevertheless did so, and from said date regularly reported to the auditor of public accounts of the state of Kentucky, under, and in accordance with the provisions of said Hewitt bill; and the said state, through its proper officers, received and appropriated said taxes paid by your orator as aforesaid. Your orator has no real estate, and never had. In the way above stated, your orator accepted the provisions of the Hewitt bill.” The American National Bank was organized after the passage of the Hewitt act, so that it could not accept that act in accordance with its provisions. The averment of its bill upon this point is: “Your orator shows that from the 1st day of July, 1890, although it was not by the United Slates banking acts bound to submit to taxation under the *410Hewitt bill, it nevertheless did so, and from said date regularly reported to the auditor of public accounts of the state of Kentucky, under, and in accordance with the provisions of said Hewitt bill; and the said state, through its proper officers, received and appropriated said taxes paid by your orator as aforesaid. Your orator has since its organization paid, to the city, taxes on the building in which it docs business. In the way above stated, your orator accepted the provisions of the Hewitt bill.” Each of the bills in the above-entitled causes contained these aver-ments : “Your orator respectfully shows to the court that the existing laws of the state of Kentucky do not provide for taxing the shares of your orator as permitted by the act of congress, but attempt to subject to taxation its franchise granted by the congress of the United States and its other intangible property, such as its surplus, undivided profits, and investments, without lawful right to do so, and contrary to the act of congress in such eases made and provided. Your orator has never consented to this method of taxation, but has always protested against the same as illegal and contrary to the act of congress. And your orator respectfully submits that said statute of the state of Kentucky is repugnant to the act of congress in such cases made and provided, and, because of said repugnancy, is void and of no binding force as against your orator. Your orator further shows and submits to the court that by reason of the formal contract entered into by all the other banks and trust companies in the city of Louisville, and by reason of the former adjudication in favor of said banks and trust companies establishing the validity of said contract, they will escape local taxation, except on the houses owned by them respectively, in which they respectively do business; and your orator, coming, as it does, into direct competition with said institutions, will be driven out of business if subjected to. local taxation; wherefore it respectfully insists it is protected by the acts of congress against such unjust discrimination.” The first question is whether the revenue act of November, 1892, taxes the national banks in a way inconsistent with the permission given by congress. Section 5219 of the Revised Statutes of the United States is as follows: “Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares in assessing taxes imposed by authority of the state within which the association is located; but the legislature of each state may determine and direct the manner and place of taxing all the shares of national banking associations located within the state, subject only to the two restrictions, that the taxation shall not be at a greater' rate than is assessed upon other moneyed capital in the hands of individual citizens of such state, and that the shares of any national banking association owned by nonresidents of any state shall be taxed in the city or town where the bank is located and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either state, county or municipal taxes, to the same extent according to its value, as other real property is taxed.” Tke state derives its power to tax national banks from this section. The question is whether the provision for taxation of banks under the revenue act of November, 1892, is a violation of this section. The provisions of that act are that all banks shall be taxed upon their real property and personal property, and also taxed upon their franchises to be assessed by subtracting the value of the tangible property from the value of the capital stock of the company. It is argued that the state has no right to tax the franchises conferred by the government of the United States. But it has been *411decided in the cases of Henderson Bridge Co. v. Kentucky, 166 U. S. 150, 17 Sup. Ct. 532, and Adams Exp. Co. v. Kentucky, 166 C. S. 171, 17 Sup. Ct. 527, that the word “franchise,” in the revenue act of 1892 was not employed in a technical sense, and that the legislative intention was plain that the entire property, tangible and intangible, of all foreign and domestic corporations, and all foreign and domestic companies, possessing no franchise, should be valued as an eutirety, that the value of the tangible property should be deducted, and that the value of the intangible, property thus ascertained should be taxed under these provisions. It will be seen, therefore, that the taxation upon ail banks is nothing but a tax upon the value of its capital stock. There is no discrimination whatever against national banks in favor of state banks, because they are all subject to the same rule of taxation. The supreme court of the United States has given section 5219 a very liberal construction in sustaining state taxation of national banks if not inconsistent with the purpose of congress to prevent a discrimination in favor of state banks as against national banks. Mr. Justice Miller, in delivering the opinion of the court in the case of Davenport Nat. Bank v. Davenport Board of Equalization, 123 U. S. 83, 8 Sup. Ct. 73, said: “It has never been held by this court that the states should abandon systems of taxation of their own banks, or of money in the hands of their other corporations, which they may think the most wise and efficient modes of taxing their own corporate organizations, in order to make that taxation conform to the system of taxing the national banks upon the shares of their stock in the hands of their owners. All that has ever been held to be necessary is that the system of state taxation of its own citizens, of its own banks, and of its own corporations shall not work a discrimination unfavorable to the holders pf the’ shares of the national banks. Nor does the act of con gress require anything more than this. Neither its language nor its purpose can be construed to go any further. Within these limits, the manner of assessing and collecting all taxes by the states is uncontrolled by Hie act of congress.” See, also, Mercantile Bank v. City of New York, 121 U. S. 138, 7 Sup. Ct. 826. and Bank of Redemption v. Boston, 125 U. S. 60, 8 Sup. Ct. 772; Palmer v. McMahon, 133 U. S. 660, 10 Sup. Ct. 324. It is contended, however, that the definition .given to the term “capital stock,” used in the revenue act of 1892, includes more than the sum of the values of the shares of the capital stock of a corporation. It is true that in the case referred to (Henderson Bridge Co. v. Com., 31 S. W. 486) the court of appeals of Kentucky held that it was proper for the board of valuation and assessment to fix a valuation of the capital stock of the Henderson Bridge Company at more than the market value of the sum of the shares of the capital stock. In that company the shares of capital stock aggregated $1,000,000, the market value of which was 90 cents on the dollar. It had a mortgage upon, its property to secure a bonded indebtedness of 82,000,000. In reaching the amount of the capital stock of the bridge company, the board added the market value of the shares of the capital stock to the market value of the mortgage bonds, taking it for granted that that would show the real amount of property, tangible and intangible, *412owned by the company. This mode of assessing the cápital stock was held to be proper under the law. In such a case, of course, the assessment for taxation would be more than the value of the shares of the capital stock. There could be no such result, however, in the application of the law to national banks, because they are not permitted to issue bonds, and do not hold property under mortgage. It is not averred in the bill, and it does not appear, that the assessment of valuation for taxation against these complainant banks exceeds the market "value of their shares of capital stock. However the law may operate, therefore, upon that class of corporations which have bonded indebtedness, it certainly does not in the case of the national banks tax anything more than the equivalent in value of the shares of the capital stock. If it does so, there ought, to be some averment to show this. Supervisors v. Stanley, 105 U. S. 311. The bill contains no such statement. Another objection to the operation of the revenue act upon the complainants is that certain of the state banks and national banks are now, by reason of the previous litigation, enabled to escape all taxation except that provided under the Hewitt act, and that this is a discrimination against them, in violation of section 5219, above quoted. . • In Lionberger v. Rouse, 9 Wall. 468, the fact that a state could not collect a tax past a certain amount in the two banks of issue, which it had at that time, was held no bar to the collection of the tax on the shares of the national banks for a greater amount. In this case Mr. Justice Davis, who delivered the opinion of the court, concluded as follows: “Without pursuing the subject further, it is enough to say, in our opinion, congress meant no more by the second limitation in the provisorio the forty-first section of the national banking act than to require of each state, as a condition to the exercise of the power to tax the shares in national banks, that it should, as far as it had the capacity, tax in like manner the shares of banks of issue of its own creation.” In the former litigation certain banks have been declared to be free from taxation by reason of a contract of exemption. By subsequent decisions in the same court, if that be a material question in that court, the former ruling was declared erroneous. But, by the doctrine of res judicata, the particular banks engaged in the prior litigation are able to rely upon it as a bar to the enforcement of the law of 1892. That law, by its terms, applied to all banks equally. In so far as the state has had the power to do so, therefore, it has-made the taxation of all banks equal. We do not think that the exceptions to the operation of the law, produced by the accident of litigation, can make the discrimination arising between the parties to the litigation and those who were not parties, — a discrimination within the inhibition of section 5219 of the national banking act. The motions ‘for preliminary injunction will be denied, the demurrers to the bills will be sustained, and the bills dismissed. | 11-26-2022 | [
"TAFT, Circuit Judge. The First National Bank was organized in October, 1863, under the national banking laws, and its charter rights were extended September 6, 1882. It did not formally accept the Hewitt act, in accordance with the terms of that act. The averment of the bill upon tills point is: “Your orator shows that from the 1st day of July, 1887, although it was not by the United States banking acts bound to submit to taxation under the ‘Hewitt BUI,’ it nevertheless did so, and from said date regularly reported to the auditor of public accounts of the state of Kentucky, under, and in accordance with the provisions of said Hewitt bill; and the said state, through its proper officers, received and appropriated said taxes paid by your orator as aforesaid.",
"Your orator has no real estate, and never had. In the way above stated, your orator accepted the provisions of the Hewitt bill.” The American National Bank was organized after the passage of the Hewitt act, so that it could not accept that act in accordance with its provisions. The averment of its bill upon this point is: “Your orator shows that from the 1st day of July, 1890, although it was not by the United Slates banking acts bound to submit to taxation under the *410Hewitt bill, it nevertheless did so, and from said date regularly reported to the auditor of public accounts of the state of Kentucky, under, and in accordance with the provisions of said Hewitt bill; and the said state, through its proper officers, received and appropriated said taxes paid by your orator as aforesaid.",
"Your orator has since its organization paid, to the city, taxes on the building in which it docs business. In the way above stated, your orator accepted the provisions of the Hewitt bill.” Each of the bills in the above-entitled causes contained these aver-ments : “Your orator respectfully shows to the court that the existing laws of the state of Kentucky do not provide for taxing the shares of your orator as permitted by the act of congress, but attempt to subject to taxation its franchise granted by the congress of the United States and its other intangible property, such as its surplus, undivided profits, and investments, without lawful right to do so, and contrary to the act of congress in such eases made and provided. Your orator has never consented to this method of taxation, but has always protested against the same as illegal and contrary to the act of congress. And your orator respectfully submits that said statute of the state of Kentucky is repugnant to the act of congress in such cases made and provided, and, because of said repugnancy, is void and of no binding force as against your orator. Your orator further shows and submits to the court that by reason of the formal contract entered into by all the other banks and trust companies in the city of Louisville, and by reason of the former adjudication in favor of said banks and trust companies establishing the validity of said contract, they will escape local taxation, except on the houses owned by them respectively, in which they respectively do business; and your orator, coming, as it does, into direct competition with said institutions, will be driven out of business if subjected to.",
"local taxation; wherefore it respectfully insists it is protected by the acts of congress against such unjust discrimination.” The first question is whether the revenue act of November, 1892, taxes the national banks in a way inconsistent with the permission given by congress. Section 5219 of the Revised Statutes of the United States is as follows: “Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares in assessing taxes imposed by authority of the state within which the association is located; but the legislature of each state may determine and direct the manner and place of taxing all the shares of national banking associations located within the state, subject only to the two restrictions, that the taxation shall not be at a greater' rate than is assessed upon other moneyed capital in the hands of individual citizens of such state, and that the shares of any national banking association owned by nonresidents of any state shall be taxed in the city or town where the bank is located and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either state, county or municipal taxes, to the same extent according to its value, as other real property is taxed.” Tke state derives its power to tax national banks from this section. The question is whether the provision for taxation of banks under the revenue act of November, 1892, is a violation of this section.",
"The provisions of that act are that all banks shall be taxed upon their real property and personal property, and also taxed upon their franchises to be assessed by subtracting the value of the tangible property from the value of the capital stock of the company. It is argued that the state has no right to tax the franchises conferred by the government of the United States. But it has been *411decided in the cases of Henderson Bridge Co. v. Kentucky, 166 U. S. 150, 17 Sup. Ct. 532, and Adams Exp. Co. v. Kentucky, 166 C. S. 171, 17 Sup. Ct. 527, that the word “franchise,” in the revenue act of 1892 was not employed in a technical sense, and that the legislative intention was plain that the entire property, tangible and intangible, of all foreign and domestic corporations, and all foreign and domestic companies, possessing no franchise, should be valued as an eutirety, that the value of the tangible property should be deducted, and that the value of the intangible, property thus ascertained should be taxed under these provisions. It will be seen, therefore, that the taxation upon ail banks is nothing but a tax upon the value of its capital stock. There is no discrimination whatever against national banks in favor of state banks, because they are all subject to the same rule of taxation. The supreme court of the United States has given section 5219 a very liberal construction in sustaining state taxation of national banks if not inconsistent with the purpose of congress to prevent a discrimination in favor of state banks as against national banks.",
"Mr. Justice Miller, in delivering the opinion of the court in the case of Davenport Nat. Bank v. Davenport Board of Equalization, 123 U. S. 83, 8 Sup. Ct. 73, said: “It has never been held by this court that the states should abandon systems of taxation of their own banks, or of money in the hands of their other corporations, which they may think the most wise and efficient modes of taxing their own corporate organizations, in order to make that taxation conform to the system of taxing the national banks upon the shares of their stock in the hands of their owners. All that has ever been held to be necessary is that the system of state taxation of its own citizens, of its own banks, and of its own corporations shall not work a discrimination unfavorable to the holders pf the’ shares of the national banks.",
"Nor does the act of con gress require anything more than this. Neither its language nor its purpose can be construed to go any further. Within these limits, the manner of assessing and collecting all taxes by the states is uncontrolled by Hie act of congress.” See, also, Mercantile Bank v. City of New York, 121 U. S. 138, 7 Sup. Ct. 826. and Bank of Redemption v. Boston, 125 U. S. 60, 8 Sup. Ct. 772; Palmer v. McMahon, 133 U. S. 660, 10 Sup. Ct. 324. It is contended, however, that the definition .given to the term “capital stock,” used in the revenue act of 1892, includes more than the sum of the values of the shares of the capital stock of a corporation. It is true that in the case referred to (Henderson Bridge Co. v.",
"Com., 31 S. W. 486) the court of appeals of Kentucky held that it was proper for the board of valuation and assessment to fix a valuation of the capital stock of the Henderson Bridge Company at more than the market value of the sum of the shares of the capital stock. In that company the shares of capital stock aggregated $1,000,000, the market value of which was 90 cents on the dollar. It had a mortgage upon, its property to secure a bonded indebtedness of 82,000,000. In reaching the amount of the capital stock of the bridge company, the board added the market value of the shares of the capital stock to the market value of the mortgage bonds, taking it for granted that that would show the real amount of property, tangible and intangible, *412owned by the company. This mode of assessing the cápital stock was held to be proper under the law. In such a case, of course, the assessment for taxation would be more than the value of the shares of the capital stock.",
"There could be no such result, however, in the application of the law to national banks, because they are not permitted to issue bonds, and do not hold property under mortgage. It is not averred in the bill, and it does not appear, that the assessment of valuation for taxation against these complainant banks exceeds the market \"value of their shares of capital stock. However the law may operate, therefore, upon that class of corporations which have bonded indebtedness, it certainly does not in the case of the national banks tax anything more than the equivalent in value of the shares of the capital stock. If it does so, there ought, to be some averment to show this.",
"Supervisors v. Stanley, 105 U. S. 311. The bill contains no such statement. Another objection to the operation of the revenue act upon the complainants is that certain of the state banks and national banks are now, by reason of the previous litigation, enabled to escape all taxation except that provided under the Hewitt act, and that this is a discrimination against them, in violation of section 5219, above quoted. . • In Lionberger v. Rouse, 9 Wall. 468, the fact that a state could not collect a tax past a certain amount in the two banks of issue, which it had at that time, was held no bar to the collection of the tax on the shares of the national banks for a greater amount. In this case Mr. Justice Davis, who delivered the opinion of the court, concluded as follows: “Without pursuing the subject further, it is enough to say, in our opinion, congress meant no more by the second limitation in the provisorio the forty-first section of the national banking act than to require of each state, as a condition to the exercise of the power to tax the shares in national banks, that it should, as far as it had the capacity, tax in like manner the shares of banks of issue of its own creation.” In the former litigation certain banks have been declared to be free from taxation by reason of a contract of exemption. By subsequent decisions in the same court, if that be a material question in that court, the former ruling was declared erroneous.",
"But, by the doctrine of res judicata, the particular banks engaged in the prior litigation are able to rely upon it as a bar to the enforcement of the law of 1892. That law, by its terms, applied to all banks equally. In so far as the state has had the power to do so, therefore, it has-made the taxation of all banks equal. We do not think that the exceptions to the operation of the law, produced by the accident of litigation, can make the discrimination arising between the parties to the litigation and those who were not parties, — a discrimination within the inhibition of section 5219 of the national banking act. The motions ‘for preliminary injunction will be denied, the demurrers to the bills will be sustained, and the bills dismissed."
]
| https://www.courtlistener.com/api/rest/v3/opinions/8862484/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Continued Examination Under 37 CFR 1.114 A request for continued examination under 37 CFR 1.114, including the fee set forth in 37 CFR 1.17(e), was filed in this application after final rejection. Since this application is eligible for continued examination under 37 CFR 1.114, and the fee set forth in 37 CFR 1.17(e) has been timely paid, the finality of the previous Office action has been withdrawn pursuant to 37 CFR 1.114. Applicant's submission filed on 11/13/2020 has been entered. Status of Claims In the amendment filed on 04/20/2021, claim(s) 1, 15 and 18 (and by extension its/their dependents) have been amended, claim(s) 3-4 has/have been canceled. Claim(s) 1-2, 5-19 is/are pending in this application. Response to Arguments Applicant's arguments filed 04/20/2021 have been fully considered but they are not persuasive. With respect to claim 1 applicant argued: An aspect of the invention is to provide such a model that is readily adaptable to new driver assistance systems. Id., [0015]. The inventive model includes a processor defined lane that is a collection of defined rectangular lane segments - which are in turn processor defined virtual areas that correspond to an area surrounding the vehicle that can be freely traveled by the vehicle - so that the lane corresponds to a set of such virtual areas. See e.g., id., [0016]-[0018]; Fig. 2. The driver assistance systems can then use the defined lane to determine vehicle-related distance from a boundary of the lane. Id. This virtual area or lane is shown, for example, in Figures 2-7 as the set of solid rectangles between (Figs. 2-3) and spanning (Figs. 4 and 7) traffic lane markings. In other words, a purpose of the claimed invention is to define the free-travel areas in terms of rectangular lane segments. Supra. By defining the free-travel area in terms ofPage 7 of 10
Unspool, by contrast, is directed to a specific driver assistance system that provides a graphic display of situational warnings. See e.g., Unspool, [0004]-[0005]. Sensors 12 detect surrounding obstacles, and a controller 30 analyzes these and other inputs to identify potential threats to safe operation of the vehicle. Id., [0052]. In so doing, the controller defines various zones around the vehicle, such as a comfort zone 84, a forward safety zone 86, etc. Id. PNG media_image1.png 15 26 media_image1.png Greyscale [0053]-[0064]. When objects are detected within these zones, which threaten driving safety, an integrated situation awareness display ISAD 40 informs the driver of the threat, e.g., by illuminating corresponding zones via the display. Id. In other words, when an object is detected in the forward safety zone 86, a graphic corresponding to the forward safety zone is e.g., illuminated, indicated to the driver that an object has been detected there. Id. Page 8 of 10 It is not the case, however, that the controller 30 defines "at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations, such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled, wherein defining each of the at least one lane segment is based on a determination the corresponding area can be freely travelled," as required by the claim. First, there is no indication that the forward safety zone 86 is defined "based on each of the identified objects, free-space boundaries and roadway limitations." Rather, the forward safety zone 86 (or any other zone of Unspool) appears to be defined solely based on distances with respect to the vehicle. See e.g., id., [0057]. Indeed, it cannot be the case that these zones are defined based on, e.g., the identified objects, as the point of the zones is to identify to the user where detected objects lie - and if the boundaries of those zones were to change as the object distribution about the vehicle changed, then it would cause confusion. Second, there is no indication that each of the zones are defined "such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled." Rather, the zones are defined to indicate an area where the presence of an object would pose a safety threat. The defining of the zones is therefore indifferent to whether the vehicle may freely travel in those zones. Third, there is no indication that "defining each of the at least one lane segment is based on a determination that the corresponding area can be freely travelled." This, again, is because the zones are defined irrespective of whether the corresponding area can be freely traveled. The controller of Unspool simply does not care - when defining the boundaries of the different zones - whether the vehicle can freely travel in those boundaries, or not. All that the controller does is define the boundaries so that, if an object is detected therein, they can be identified as a threat to the vehicle.
Applicant's arguments are not persuasive. The issue at hand is that applicant’s amendment and specification do not support the interpretation that applicant appears to be taking. Specifically, the amendment in question reads: at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations, such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled, wherein defining each of the at least one lane segment is based on a determination the corresponding area can be freely travelled
Applicant appears to be interpreting “defining each of the at least one lane segment” as being limited to “defining the boundaries of the at least one lane segment” however this is not actually cited in the claims nor does applicants specification explicitly define the term define as meaning “defining the boundaries” in the context of the claim. In response to applicant's argument that the references fail to show certain features of applicant’s invention, it is noted that the features upon which applicant relies (i.e., defining the boundaries) are not recited in the rejected claim(s). Although the claims are interpreted in light of the specification, limitations from the specification are not read into the claims. See In re Van Geuns, 988 F.2d 1181, 26 USPQ2d 1057 (Fed. Cir. 1993).
state or describe exactly the nature, scope, or meaning of something” and the teachings of Unspool, specifically wherein Unspool can define certain lane segments based on their occupancy (See Unspool Fig. 8b and 9C ¶[68-69] for example) meets the limitation of “defining each of the at least one lane segment is based on a determination the corresponding area can be freely travelled” since it is defining it as being occupied. All of applicants arguments appear to be based on this interpretation of “define” which is not supported by applicant’s claims and therefore all of applicant’s arguments are not persuasive. Claim Rejections - 35 USC § 103 The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
Claim(s) 1-2, 5-7, 10-13, and 15-19 is/are rejected under 35 U.S.C. 103 as being unpatentable over Unspool (US 2015/0314783) in view of applicant admitted prior art (AAPA).
With respect to claim 1 Unspool teaches a method comprising the acts of: receiving, at a controller (Unspool Fig. 1 element 30 ¶[8]), sensor data of at least one sensor system (Unspool Fig. 1 element 12 ¶[8]); identifying, by the controller, objects, free-space boundaries and roadway limitations based on the sensor data (Unspool Fig. 13a-c ¶[73]);
generating, by the controller, the computer model having the defined lane, the computer model being available to a driver assistance system of the vehicle (Unspool Fig. 3-14 At least ¶[4-5, 52-53, 57]); determining, by the driver assistance system, based on the computer model, a vehicle- related distance with respect to the lane segment boundary of the lane (Unspool Fig. 3-14 At least ¶[4-5, 52-53, 57]);
Thus as shown above Unspool teaches a base invention of a driver assist system that provides warning based on a model of the drivers surroundings. AAPA teaches a technique of an autonomous vehicle which assists the driver applicable to the base invention. One of ordinary skill in the art would have recognized that applying the known technique from AAPA to the base invention of Unspool since it would have resulted in the predictable result of the warnings and control suggestions taught by Unspool being autonomously implemented by an autonomous vehicle and would have improved the system by automating a manual activity and thus being more convenient. Therefore it would have been obvious to one of ordinary skill in the art at the time of the invention to modify the device taught by Unspool to apply the technique from the teachings of AAPA because the technique taught by AAPA was recognized as part of the ordinary capabilities of one skilled in the art and one of ordinary skill in the art would have been capable of applying this known technique to the known device taught by Unspool that was ready for improvement and the results would have been predictable to one of ordinary skill in the art
a receiving device that receives objects, free-space boundaries, roadway limitations and/or sensor data of at least one sensor system (Unspool Fig. 1 element 12 Fig. 13a-c ¶[8, 73]); and a processor that executes processing to (Unspool Fig. 13a-c ¶[73]): identify objects, free-space boundaries and roadway limitations based on the sensor data, define a lane (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]): at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations, such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]) wherein defining each of the at least one lane segment is based on a determination that the corresponding area can be freely traveled (Unspool Fig. 3 element 86a-c, 88a-b Fig. 8b and 9C ¶[68-69]), and a lane as a set of lane segments that indicate a collective area surrounding the vehicle that can be freely traveled, determine a vehicle-related distance with respect to the lane segment boundary of the lane (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]), and generate a computer model of the area surrounding the vehicle, the computer model having the defined lane (Unspool Fig. 3-14 At least ¶[4-5, 52-53, 57]); and an output unit for sending the computer model to a driver assistance system that controls the vehicle in an automated driving mode based on the computer model (AAPA ¶[4-10]).
a surround model unit, comprising (Unspool Fig. 1 element 30 ¶[8]): a receiving device that receives objects, free-space boundaries, roadway limitations and/or sensor data of at least one sensor system (Unspool Fig. 13a-c ¶[73]); and a processor that executes processing to: identify objects, free-space boundaries and roadway limitations based on the sensor data (Unspool Fig. 13a-c ¶[73]), define a lane (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]): at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]), such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]) wherein defining each of the at least one lane segment is based on a determination that the corresponding area can be freely traveled (Unspool Fig. 3 element 86a-c, 88a-b Fig. 8b and 9C ¶[68-69]), and a lane as a set of lane segments that indicate a collective area surrounding the vehicle that can be freely traveled, generate a computer model of the area surrounding the vehicle (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]), the computer model having the defined lane, determine a vehicle-related distance with respect to the lane segment boundary of the lane (Unspool Fig. 3-14 At least ¶[4-5, 52-53, 57]); and a driver assistance system that receives the computer model, including the defined lane, from the surround model unit, wherein the driver assistance systems controls the vehicle
With respect to claim 2 Unspool teaches a method, wherein the at least one lane segment boundary is a front lane segment boundary, a rear lane segment boundary, a left lane segment boundary or a right lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]).
With respect to claim 5 Unspool teaches a method, wherein the lane segment is determined based on traffic lane boundaries (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]).
With respect to claim 6 Unspool teaches a method, wherein at least a first lane segment is assigned to a traffic lane traveled by the vehicle, at least a second lane segment is assigned to a traffic lane not traveled by the vehicle, and the first lane segment and the second lane segment have an at least partially, common lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b Fig. 11c element 146 ¶[59, 71]).
With respect to claim 7 Unspool teaches a method, wherein a rate of change of the vehicle-related distance is determined for the at least one lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]) note the virtual lane taught by Unspool is inherently upgraded in real time which would inherently include a rate of change of the vehicle-related distance is determined for the at least one lane segment boundary.
With respect to claim 10 Unspool teaches a method, wherein a type of lane segment boundary is determined for the at least one lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59] at least left and right boundary).
With respect to claim 11 Unspool teaches a method, wherein the lane segment and the vehicle- related distance of the lane segment boundary are determined taking into account a roadway course and/or a traffic lane boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]).
With respect to claim 12 Unspool teaches a method, wherein the lane segment and the vehicle- related distance of the lane segment boundary are determined taking into account a predicted travel route course (Unspool Fig. 3 element 86a-c, 88a-b ¶[59] the area shown in front of the vehicle is inherently the predicted course).
With respect to claim 13 Unspool teaches a method wherein at least one confidence value is indicated for the lane segment, and the confidence value indicates a probability by which free traveling can take place on the lane segment (Unspool Fig. 13a-c ¶[73] note: the time until a stop to avoid the obstacle is equivalent to and reads on a probability by which free traveling can occur on the segment).
.
Claims 8 and 9 is/are rejected under 35 U.S.C. 103 as being unpatentable over in view of Unspool (US 2015/0314783) in view of applicant admitted prior art (AAPA) and further in view of Shibata (US 2015/0039156). With respect to claims 8 and 9 Unspool does not clearly teach wherein an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary. It is noted that it is unclear to the examiner if “an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary” is different from regular vehicle acceleration which is taught by Shibata. For the sake of this action they are viewed as the same. It is further noted that, applicant does not claim how the determined acceleration is actually used and merely taking additional readings without showing how those readings are being used to control the system does not make the claims patentably unique). Shibata teaches a method, wherein an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary (Shibata at least Fig. 6 ¶[37-41, 64]. Thus as shown above Unspool teaches a base invention of a driver assistance system that defines boundaries and lanes. Shibata teaches a technique of wherein an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary applicable to the base invention. One of ordinary skill in the art would have recognized that applying the known technique from Shibata to the base invention of Unspool
Claims 14 is/are rejected under 35 U.S.C. 103 as being unpatentable over Unspool (US 2015/0314783) in view of applicant admitted prior art (AAPA) and further in view of Zeng (US 2014/0032108). With respect to claim 14 Unspool does not clearly teach a method, wherein a standard deviation is indicated for the vehicle-related distance of the lane segment boundary, for a rate of change of the vehicle-related distance of the lane segment boundary, and/or for an acceleration of a change in the vehicle-related distance of the lane segment boundary. Zeng teaches a method, wherein a standard deviation is indicated for the vehicle-related distance of the lane segment boundary, for a rate of change of the vehicle-related distance of the lane segment boundary, and/or for an acceleration of a change in the vehicle-related distance of the lane segment boundary (Zeng ¶[60]).
• (1) a finding that the prior art contained a "base" device (method, or product) upon which the claimed invention can be seen as an "improvement;" • (2) a finding that the prior art contained a known technique that is applicable to the base device (method, or product); • (3) a finding that one of ordinary skill in the art would have recognized that applying the known technique would have yielded predictable results and resulted in an improved system; and • (4) whatever additional findings based on the Graham factual inquiries may be necessary, in view of the facts of the case under consideration, to explain a conclusion of obviousness. In the case of the instant application and references, (1) Unspool teaches a method for producing computer models and using those models to make decisions for the vehicles. (2) Zeng teaches a technique to correct for errors in the distances detected. (3) One of ordinary skill in the art would have recognized the technique used by Zeng could be applied to the teachings of Unspool because it would yield a predictable result (more accurate distance measurements) and it would be an improvement to the base device (more accurate distance measurements) (4) Therefore it would have been obvious to one of ordinary skill in the art at the time of the invention to modify the device taught by Unspool to include the teachings of Zeng because it would allow the system to remove false information as explained in Zeng ¶[60]). Conclusion Applicant's amendment necessitated the new ground(s) of rejection presented in this Office action. Accordingly, THIS ACTION IS MADE FINAL. See MPEP § 706.07(a). Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to JORDAN S FEI whose telephone number is (571)270-7767. The examiner can normally be reached on 9-5 Monday-Thursday. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Christian Chace can be reached on (571) 272-4190. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300.
/J.S.F/ Examiner, Art Unit 3665 /CHRISTIAN CHACE/Supervisory Patent Examiner, Art Unit 3665 | 2021-08-11T10:49:42 | [
"Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Continued Examination Under 37 CFR 1.114 A request for continued examination under 37 CFR 1.114, including the fee set forth in 37 CFR 1.17(e), was filed in this application after final rejection. Since this application is eligible for continued examination under 37 CFR 1.114, and the fee set forth in 37 CFR 1.17(e) has been timely paid, the finality of the previous Office action has been withdrawn pursuant to 37 CFR 1.114. Applicant's submission filed on 11/13/2020 has been entered.",
"Status of Claims In the amendment filed on 04/20/2021, claim(s) 1, 15 and 18 (and by extension its/their dependents) have been amended, claim(s) 3-4 has/have been canceled. Claim(s) 1-2, 5-19 is/are pending in this application. Response to Arguments Applicant's arguments filed 04/20/2021 have been fully considered but they are not persuasive. With respect to claim 1 applicant argued: An aspect of the invention is to provide such a model that is readily adaptable to new driver assistance systems. Id., [0015]. The inventive model includes a processor defined lane that is a collection of defined rectangular lane segments - which are in turn processor defined virtual areas that correspond to an area surrounding the vehicle that can be freely traveled by the vehicle - so that the lane corresponds to a set of such virtual areas.",
"See e.g., id., [0016]-[0018]; Fig. 2. The driver assistance systems can then use the defined lane to determine vehicle-related distance from a boundary of the lane. Id. This virtual area or lane is shown, for example, in Figures 2-7 as the set of solid rectangles between (Figs. 2-3) and spanning (Figs. 4 and 7) traffic lane markings. In other words, a purpose of the claimed invention is to define the free-travel areas in terms of rectangular lane segments. Supra. By defining the free-travel area in terms ofPage 7 of 10 Unspool, by contrast, is directed to a specific driver assistance system that provides a graphic display of situational warnings.",
"See e.g., Unspool, [0004]-[0005]. Sensors 12 detect surrounding obstacles, and a controller 30 analyzes these and other inputs to identify potential threats to safe operation of the vehicle. Id., [0052]. In so doing, the controller defines various zones around the vehicle, such as a comfort zone 84, a forward safety zone 86, etc. Id. PNG media_image1.png 15 26 media_image1.png Greyscale [0053]-[0064]. When objects are detected within these zones, which threaten driving safety, an integrated situation awareness display ISAD 40 informs the driver of the threat, e.g., by illuminating corresponding zones via the display. Id. In other words, when an object is detected in the forward safety zone 86, a graphic corresponding to the forward safety zone is e.g., illuminated, indicated to the driver that an object has been detected there. Id.",
"Page 8 of 10 It is not the case, however, that the controller 30 defines \"at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations, such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled, wherein defining each of the at least one lane segment is based on a determination the corresponding area can be freely travelled,\" as required by the claim. First, there is no indication that the forward safety zone 86 is defined \"based on each of the identified objects, free-space boundaries and roadway limitations.\"",
"Rather, the forward safety zone 86 (or any other zone of Unspool) appears to be defined solely based on distances with respect to the vehicle. See e.g., id., [0057]. Indeed, it cannot be the case that these zones are defined based on, e.g., the identified objects, as the point of the zones is to identify to the user where detected objects lie - and if the boundaries of those zones were to change as the object distribution about the vehicle changed, then it would cause confusion. Second, there is no indication that each of the zones are defined \"such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled.\" Rather, the zones are defined to indicate an area where the presence of an object would pose a safety threat. The defining of the zones is therefore indifferent to whether the vehicle may freely travel in those zones. Third, there is no indication that \"defining each of the at least one lane segment is based on a determination that the corresponding area can be freely travelled.\" This, again, is because the zones are defined irrespective of whether the corresponding area can be freely traveled.",
"The controller of Unspool simply does not care - when defining the boundaries of the different zones - whether the vehicle can freely travel in those boundaries, or not. All that the controller does is define the boundaries so that, if an object is detected therein, they can be identified as a threat to the vehicle. Applicant's arguments are not persuasive. The issue at hand is that applicant’s amendment and specification do not support the interpretation that applicant appears to be taking. Specifically, the amendment in question reads: at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations, such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled, wherein defining each of the at least one lane segment is based on a determination the corresponding area can be freely travelled Applicant appears to be interpreting “defining each of the at least one lane segment” as being limited to “defining the boundaries of the at least one lane segment” however this is not actually cited in the claims nor does applicants specification explicitly define the term define as meaning “defining the boundaries” in the context of the claim.",
"In response to applicant's argument that the references fail to show certain features of applicant’s invention, it is noted that the features upon which applicant relies (i.e., defining the boundaries) are not recited in the rejected claim(s). Although the claims are interpreted in light of the specification, limitations from the specification are not read into the claims. See In re Van Geuns, 988 F.2d 1181, 26 USPQ2d 1057 (Fed. Cir. 1993). state or describe exactly the nature, scope, or meaning of something” and the teachings of Unspool, specifically wherein Unspool can define certain lane segments based on their occupancy (See Unspool Fig. 8b and 9C ¶[68-69] for example) meets the limitation of “defining each of the at least one lane segment is based on a determination the corresponding area can be freely travelled” since it is defining it as being occupied.",
"All of applicants arguments appear to be based on this interpretation of “define” which is not supported by applicant’s claims and therefore all of applicant’s arguments are not persuasive. Claim Rejections - 35 USC § 103 The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.",
"Claim(s) 1-2, 5-7, 10-13, and 15-19 is/are rejected under 35 U.S.C. 103 as being unpatentable over Unspool (US 2015/0314783) in view of applicant admitted prior art (AAPA). With respect to claim 1 Unspool teaches a method comprising the acts of: receiving, at a controller (Unspool Fig. 1 element 30 ¶[8]), sensor data of at least one sensor system (Unspool Fig. 1 element 12 ¶[8]); identifying, by the controller, objects, free-space boundaries and roadway limitations based on the sensor data (Unspool Fig. 13a-c ¶[73]); generating, by the controller, the computer model having the defined lane, the computer model being available to a driver assistance system of the vehicle (Unspool Fig. 3-14 At least ¶[4-5, 52-53, 57]); determining, by the driver assistance system, based on the computer model, a vehicle- related distance with respect to the lane segment boundary of the lane (Unspool Fig.",
"3-14 At least ¶[4-5, 52-53, 57]); Thus as shown above Unspool teaches a base invention of a driver assist system that provides warning based on a model of the drivers surroundings. AAPA teaches a technique of an autonomous vehicle which assists the driver applicable to the base invention. One of ordinary skill in the art would have recognized that applying the known technique from AAPA to the base invention of Unspool since it would have resulted in the predictable result of the warnings and control suggestions taught by Unspool being autonomously implemented by an autonomous vehicle and would have improved the system by automating a manual activity and thus being more convenient. Therefore it would have been obvious to one of ordinary skill in the art at the time of the invention to modify the device taught by Unspool to apply the technique from the teachings of AAPA because the technique taught by AAPA was recognized as part of the ordinary capabilities of one skilled in the art and one of ordinary skill in the art would have been capable of applying this known technique to the known device taught by Unspool that was ready for improvement and the results would have been predictable to one of ordinary skill in the art a receiving device that receives objects, free-space boundaries, roadway limitations and/or sensor data of at least one sensor system (Unspool Fig.",
"1 element 12 Fig. 13a-c ¶[8, 73]); and a processor that executes processing to (Unspool Fig. 13a-c ¶[73]): identify objects, free-space boundaries and roadway limitations based on the sensor data, define a lane (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]): at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations, such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]) wherein defining each of the at least one lane segment is based on a determination that the corresponding area can be freely traveled (Unspool Fig.",
"3 element 86a-c, 88a-b Fig. 8b and 9C ¶[68-69]), and a lane as a set of lane segments that indicate a collective area surrounding the vehicle that can be freely traveled, determine a vehicle-related distance with respect to the lane segment boundary of the lane (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]), and generate a computer model of the area surrounding the vehicle, the computer model having the defined lane (Unspool Fig. 3-14 At least ¶[4-5, 52-53, 57]); and an output unit for sending the computer model to a driver assistance system that controls the vehicle in an automated driving mode based on the computer model (AAPA ¶[4-10]). a surround model unit, comprising (Unspool Fig.",
"1 element 30 ¶[8]): a receiving device that receives objects, free-space boundaries, roadway limitations and/or sensor data of at least one sensor system (Unspool Fig. 13a-c ¶[73]); and a processor that executes processing to: identify objects, free-space boundaries and roadway limitations based on the sensor data (Unspool Fig. 13a-c ¶[73]), define a lane (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]): at least one lane segment having a closed lane segment boundary, based on each of the identified objects, free-space boundaries and roadway limitations (Unspool Fig.",
"3 element 86a-c, 88a-b ¶[59]), such that each lane segment is a virtual area indicating a corresponding area surrounding the vehicle that can be freely traveled (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]) wherein defining each of the at least one lane segment is based on a determination that the corresponding area can be freely traveled (Unspool Fig. 3 element 86a-c, 88a-b Fig. 8b and 9C ¶[68-69]), and a lane as a set of lane segments that indicate a collective area surrounding the vehicle that can be freely traveled, generate a computer model of the area surrounding the vehicle (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]), the computer model having the defined lane, determine a vehicle-related distance with respect to the lane segment boundary of the lane (Unspool Fig. 3-14 At least ¶[4-5, 52-53, 57]); and a driver assistance system that receives the computer model, including the defined lane, from the surround model unit, wherein the driver assistance systems controls the vehicle With respect to claim 2 Unspool teaches a method, wherein the at least one lane segment boundary is a front lane segment boundary, a rear lane segment boundary, a left lane segment boundary or a right lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]).",
"With respect to claim 5 Unspool teaches a method, wherein the lane segment is determined based on traffic lane boundaries (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]). With respect to claim 6 Unspool teaches a method, wherein at least a first lane segment is assigned to a traffic lane traveled by the vehicle, at least a second lane segment is assigned to a traffic lane not traveled by the vehicle, and the first lane segment and the second lane segment have an at least partially, common lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b Fig. 11c element 146 ¶[59, 71]). With respect to claim 7 Unspool teaches a method, wherein a rate of change of the vehicle-related distance is determined for the at least one lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]) note the virtual lane taught by Unspool is inherently upgraded in real time which would inherently include a rate of change of the vehicle-related distance is determined for the at least one lane segment boundary. With respect to claim 10 Unspool teaches a method, wherein a type of lane segment boundary is determined for the at least one lane segment boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59] at least left and right boundary).",
"With respect to claim 11 Unspool teaches a method, wherein the lane segment and the vehicle- related distance of the lane segment boundary are determined taking into account a roadway course and/or a traffic lane boundary (Unspool Fig. 3 element 86a-c, 88a-b ¶[59]). With respect to claim 12 Unspool teaches a method, wherein the lane segment and the vehicle- related distance of the lane segment boundary are determined taking into account a predicted travel route course (Unspool Fig. 3 element 86a-c, 88a-b ¶[59] the area shown in front of the vehicle is inherently the predicted course). With respect to claim 13 Unspool teaches a method wherein at least one confidence value is indicated for the lane segment, and the confidence value indicates a probability by which free traveling can take place on the lane segment (Unspool Fig. 13a-c ¶[73] note: the time until a stop to avoid the obstacle is equivalent to and reads on a probability by which free traveling can occur on the segment).",
". Claims 8 and 9 is/are rejected under 35 U.S.C. 103 as being unpatentable over in view of Unspool (US 2015/0314783) in view of applicant admitted prior art (AAPA) and further in view of Shibata (US 2015/0039156). With respect to claims 8 and 9 Unspool does not clearly teach wherein an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary. It is noted that it is unclear to the examiner if “an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary” is different from regular vehicle acceleration which is taught by Shibata. For the sake of this action they are viewed as the same. It is further noted that, applicant does not claim how the determined acceleration is actually used and merely taking additional readings without showing how those readings are being used to control the system does not make the claims patentably unique). Shibata teaches a method, wherein an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary (Shibata at least Fig.",
"6 ¶[37-41, 64]. Thus as shown above Unspool teaches a base invention of a driver assistance system that defines boundaries and lanes. Shibata teaches a technique of wherein an acceleration of a change in the vehicle-related distance is determined for the at least one lane segment boundary applicable to the base invention. One of ordinary skill in the art would have recognized that applying the known technique from Shibata to the base invention of Unspool Claims 14 is/are rejected under 35 U.S.C. 103 as being unpatentable over Unspool (US 2015/0314783) in view of applicant admitted prior art (AAPA) and further in view of Zeng (US 2014/0032108). With respect to claim 14 Unspool does not clearly teach a method, wherein a standard deviation is indicated for the vehicle-related distance of the lane segment boundary, for a rate of change of the vehicle-related distance of the lane segment boundary, and/or for an acceleration of a change in the vehicle-related distance of the lane segment boundary.",
"Zeng teaches a method, wherein a standard deviation is indicated for the vehicle-related distance of the lane segment boundary, for a rate of change of the vehicle-related distance of the lane segment boundary, and/or for an acceleration of a change in the vehicle-related distance of the lane segment boundary (Zeng ¶[60]). • (1) a finding that the prior art contained a \"base\" device (method, or product) upon which the claimed invention can be seen as an \"improvement;\" • (2) a finding that the prior art contained a known technique that is applicable to the base device (method, or product); • (3) a finding that one of ordinary skill in the art would have recognized that applying the known technique would have yielded predictable results and resulted in an improved system; and • (4) whatever additional findings based on the Graham factual inquiries may be necessary, in view of the facts of the case under consideration, to explain a conclusion of obviousness.",
"In the case of the instant application and references, (1) Unspool teaches a method for producing computer models and using those models to make decisions for the vehicles. (2) Zeng teaches a technique to correct for errors in the distances detected. (3) One of ordinary skill in the art would have recognized the technique used by Zeng could be applied to the teachings of Unspool because it would yield a predictable result (more accurate distance measurements) and it would be an improvement to the base device (more accurate distance measurements) (4) Therefore it would have been obvious to one of ordinary skill in the art at the time of the invention to modify the device taught by Unspool to include the teachings of Zeng because it would allow the system to remove false information as explained in Zeng ¶[60]). Conclusion Applicant's amendment necessitated the new ground(s) of rejection presented in this Office action. Accordingly, THIS ACTION IS MADE FINAL.",
"See MPEP § 706.07(a). Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action.",
"In no event, however, will the statutory period for reply expire later than SIX MONTHS from the date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to JORDAN S FEI whose telephone number is (571)270-7767. The examiner can normally be reached on 9-5 Monday-Thursday. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Christian Chace can be reached on (571) 272-4190. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300.",
"/J.S.F/ Examiner, Art Unit 3665 /CHRISTIAN CHACE/Supervisory Patent Examiner, Art Unit 3665"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-08-15.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
*984OPINION OF THE COURT Paul G. Feinman, J. In this proceeding, commenced by order to show cause pursuant to Lien Law § 19 (6), petitioners seek to discharge a mechanic’s lien filed by respondent. For the reasons which follow, the petition is granted in its entirety. Factual and Procedural Background Petitioners are the lessees of a cooperative apartment located in the building known as 17 East 80th Street, New York, New York 10021, tax block 1492, tax lot 11 (verified petition 1I1Í1, 3). The building is owned by 17 East 80 Realty Corp., the shares of which are owned by petitioners (verified petition 1Í 4). Petitioners apparently lease the entire property from the corporation (verified petition 1f 4). They have a proprietary lease for apartment 11, which is their personal residence, dated August 7, 2002 (verified petition 11111, 2, exhibit A). Apartment 11 is on the sixth floor and sixth floor mezzanine (reply, exhibit D, certification of occupancy). Petitioners entered into an agreement with respondent on October 10, 2002 in which respondent agreed to undertake “the project” involving the “6th FI. & Penthouse,” commencing October 16, 2002, and to be substantially completed “not later than 3 months from the date of commencement” (affidavit in opposition, exhibit A). The agreed-upon bid proposal references work for a children’s bathroom, master bathroom, kitchen, office/laundry room, recreation room, dining room, living room, and stairs. It also references skylights and roof repairs, with a roof terrace listed under the category of “alternates.”. The contract sum totaled $552,325. On July 19, 2005, respondent filed a notice of mechanic’s lien against the building, naming petitioners as the owners and lienors, for “labor to combine two apartments, 6F and penthouse,” in the amount of $26,544.90 (verified petition, exhibit B). According to the notice of mechanic’s lien, the time when the last item of work was performed and material furnished was December 10, 2004. Petitioners bring this proceeding to discharge the lien. They proffer two grounds: that the lien was untimely filed, and that it fails to sufficiently identify the unit or the property in question. *985Legal Analysis A mechanic’s lien may only be claimed against an interest in real property and the owner of that property (Lien Law §§ 3, 4). Although a notice of a hen may generally be filed within eight months after the date of the last item of work performed or material furnished, where the real property at issue is a single-family dwelling, the notice of lien must be filed within four months after the date of the last item of work performed or material furnished (Lien Law § 10 [1]). Where the county clerk indexes liens by a block index, a valid lien must contain a designation of the number of every block affected by the notice of lien (Lien Law § 10 [2]). In Interior Resources Intl. v Shapiro & Shapiro (NYLJ, Mar. 24, 1992, at 23, col 1 [Civ Ct, NY County]), it was held that, although located in a multiple-unit dwelling, a cooperative apartment, similar to a condominium apartment, is a single-family dwelling and subject to the four-month notice requirement for purposes of the Lien Law.* There is no appellate authority on this subject, and the one published decision addressing whether a cooperative apartment is a single-family dwelling, while discussing Interior Resources, does not explicitly agree or disagree with Interior Resources’ conclusion, as the court found petitioners lacked standing to bring the petition (Newman v Valmar Elec. Co., 9 Misc 3d 450, 454 [Sup Ct, NY County 2005]). Respondent argues here that the single-dwelling category is not at issue because, according to the contract, it performed work in two units, namely, the sixth floor and the sixth floor mezzanine or penthouse, as well as the roof, and thus it worked in a multiple dwelling and had eight months to file a notice of lien. Its president also suggests that the roof “was likely common area work that accrued to the benefit of all cooperative unit owners” (Choong affidavit in opposition H 6). In addition to the contract, respondent submits three documents: (1) a copy of the City of New York Department of Buildings work permit issued on October 7, 2002 which indicates “ALT2 - MECH-HVAC New a/c unit roof & associated ductwork in 6th floor + 6th mezz. apt. No change of use, occupancy or egress”; (2) a Department of Buildings technical report form noting that work was to be done on the “6th, *986roof, mezz”; and (3) a New York City Department of Environmental Protection asbestos control program form, indicating that the scope of work was: “Demolition & construction of interior partitions, new AC unit & roof, associated ductwork & relocation of existing fixtures as per plans filed herewith,” and that approximately two square feet of roof was removed apparently for testing of hazardous materials (affidavit in opposition, exhibits B, C). Petitioners strenuously disagree with the characterization that respondent’s work involved more than one unit. They point to the certificate of occupancy, dated 1980, which shows that the sixth floor consists of one half of a duplex apartment, with the second half of the duplex apartment located on the sixth floor mezzanine (Abbott reply affidavit 1HÍ 4-7, exhibit D). Having sufficiently established that their dwelling unit consists of two floors, they further argue that their proprietary lease gives them exclusive use of the roof, and contend that the “work performed by Respondents on the roof was not performed on any common area of the Premises” (Abbott reply affidavit 1i1i 10-12, exhibit E). Respondent offers nothing to contradict petitioners’ arguments or even to raise a question of fact concerning the work done on the roof. Although the contract mentions a roof terrace, the permits mention only the installation of air conditioning equipment and associated ductwork on the roof for the apartment, and do not suggest the sort of roofing work that would benefit the entire ownership of the building. Respondent’s president offers no statements concerning the work beyond what the contents of the permits set forth, other than his speculation concerning the common area of the roof (see Choong affidavit in opposition fH 2-7). As nothing establishes that respondent worked on more than one dwelling unit, the court is persuaded that the four-month time limit for single-dwelling units applies. Furthermore, there is no reason that the status of the building as a cooperative rather than a condominium should lead to a different result. Here, it is clear that the notice of lien should have been filed within four months of December 10, 2004, and thus it was untimely. In light of the foregoing, the court need not reach the issue of whether the lien complies with the requirement that on its face it bears a description of the property “sufficient for identification” as required by Lien Law § 9 (7). Because the notice of lien was untimely, the petition must be granted and the lien discharged pursuant to Lien Law § 19 (6). *987It is adjudged and ordered that the petition is granted and the notice of mechanic’s lien dated July 15, 2005 and filed on July 19, 2005 is deemed discharged upon service of a copy of this decision, order and judgment upon the clerk of the court and completion of additional paperwork as required by the clerk.
Individual condominium apartments were previously held to be single-family dwellings (Matter of City of Albany Indus. Dev. Agency v DeGraff-Moffly/Gen. Contrs., 164 AD2d 20, 22 [3d Dept 1990]). | 02-05-2022 | [
"*984OPINION OF THE COURT Paul G. Feinman, J. In this proceeding, commenced by order to show cause pursuant to Lien Law § 19 (6), petitioners seek to discharge a mechanic’s lien filed by respondent. For the reasons which follow, the petition is granted in its entirety. Factual and Procedural Background Petitioners are the lessees of a cooperative apartment located in the building known as 17 East 80th Street, New York, New York 10021, tax block 1492, tax lot 11 (verified petition 1I1Í1, 3). The building is owned by 17 East 80 Realty Corp., the shares of which are owned by petitioners (verified petition 1Í 4). Petitioners apparently lease the entire property from the corporation (verified petition 1f 4). They have a proprietary lease for apartment 11, which is their personal residence, dated August 7, 2002 (verified petition 11111, 2, exhibit A). Apartment 11 is on the sixth floor and sixth floor mezzanine (reply, exhibit D, certification of occupancy). Petitioners entered into an agreement with respondent on October 10, 2002 in which respondent agreed to undertake “the project” involving the “6th FI.",
"& Penthouse,” commencing October 16, 2002, and to be substantially completed “not later than 3 months from the date of commencement” (affidavit in opposition, exhibit A). The agreed-upon bid proposal references work for a children’s bathroom, master bathroom, kitchen, office/laundry room, recreation room, dining room, living room, and stairs. It also references skylights and roof repairs, with a roof terrace listed under the category of “alternates.”. The contract sum totaled $552,325. On July 19, 2005, respondent filed a notice of mechanic’s lien against the building, naming petitioners as the owners and lienors, for “labor to combine two apartments, 6F and penthouse,” in the amount of $26,544.90 (verified petition, exhibit B). According to the notice of mechanic’s lien, the time when the last item of work was performed and material furnished was December 10, 2004. Petitioners bring this proceeding to discharge the lien. They proffer two grounds: that the lien was untimely filed, and that it fails to sufficiently identify the unit or the property in question.",
"*985Legal Analysis A mechanic’s lien may only be claimed against an interest in real property and the owner of that property (Lien Law §§ 3, 4). Although a notice of a hen may generally be filed within eight months after the date of the last item of work performed or material furnished, where the real property at issue is a single-family dwelling, the notice of lien must be filed within four months after the date of the last item of work performed or material furnished (Lien Law § 10 [1]). Where the county clerk indexes liens by a block index, a valid lien must contain a designation of the number of every block affected by the notice of lien (Lien Law § 10 [2]). In Interior Resources Intl.",
"v Shapiro & Shapiro (NYLJ, Mar. 24, 1992, at 23, col 1 [Civ Ct, NY County]), it was held that, although located in a multiple-unit dwelling, a cooperative apartment, similar to a condominium apartment, is a single-family dwelling and subject to the four-month notice requirement for purposes of the Lien Law. * There is no appellate authority on this subject, and the one published decision addressing whether a cooperative apartment is a single-family dwelling, while discussing Interior Resources, does not explicitly agree or disagree with Interior Resources’ conclusion, as the court found petitioners lacked standing to bring the petition (Newman v Valmar Elec. Co., 9 Misc 3d 450, 454 [Sup Ct, NY County 2005]). Respondent argues here that the single-dwelling category is not at issue because, according to the contract, it performed work in two units, namely, the sixth floor and the sixth floor mezzanine or penthouse, as well as the roof, and thus it worked in a multiple dwelling and had eight months to file a notice of lien.",
"Its president also suggests that the roof “was likely common area work that accrued to the benefit of all cooperative unit owners” (Choong affidavit in opposition H 6). In addition to the contract, respondent submits three documents: (1) a copy of the City of New York Department of Buildings work permit issued on October 7, 2002 which indicates “ALT2 - MECH-HVAC New a/c unit roof & associated ductwork in 6th floor + 6th mezz. apt.",
"No change of use, occupancy or egress”; (2) a Department of Buildings technical report form noting that work was to be done on the “6th, *986roof, mezz”; and (3) a New York City Department of Environmental Protection asbestos control program form, indicating that the scope of work was: “Demolition & construction of interior partitions, new AC unit & roof, associated ductwork & relocation of existing fixtures as per plans filed herewith,” and that approximately two square feet of roof was removed apparently for testing of hazardous materials (affidavit in opposition, exhibits B, C). Petitioners strenuously disagree with the characterization that respondent’s work involved more than one unit. They point to the certificate of occupancy, dated 1980, which shows that the sixth floor consists of one half of a duplex apartment, with the second half of the duplex apartment located on the sixth floor mezzanine (Abbott reply affidavit 1HÍ 4-7, exhibit D).",
"Having sufficiently established that their dwelling unit consists of two floors, they further argue that their proprietary lease gives them exclusive use of the roof, and contend that the “work performed by Respondents on the roof was not performed on any common area of the Premises” (Abbott reply affidavit 1i1i 10-12, exhibit E). Respondent offers nothing to contradict petitioners’ arguments or even to raise a question of fact concerning the work done on the roof. Although the contract mentions a roof terrace, the permits mention only the installation of air conditioning equipment and associated ductwork on the roof for the apartment, and do not suggest the sort of roofing work that would benefit the entire ownership of the building.",
"Respondent’s president offers no statements concerning the work beyond what the contents of the permits set forth, other than his speculation concerning the common area of the roof (see Choong affidavit in opposition fH 2-7). As nothing establishes that respondent worked on more than one dwelling unit, the court is persuaded that the four-month time limit for single-dwelling units applies. Furthermore, there is no reason that the status of the building as a cooperative rather than a condominium should lead to a different result.",
"Here, it is clear that the notice of lien should have been filed within four months of December 10, 2004, and thus it was untimely. In light of the foregoing, the court need not reach the issue of whether the lien complies with the requirement that on its face it bears a description of the property “sufficient for identification” as required by Lien Law § 9 (7). Because the notice of lien was untimely, the petition must be granted and the lien discharged pursuant to Lien Law § 19 (6). *987It is adjudged and ordered that the petition is granted and the notice of mechanic’s lien dated July 15, 2005 and filed on July 19, 2005 is deemed discharged upon service of a copy of this decision, order and judgment upon the clerk of the court and completion of additional paperwork as required by the clerk. Individual condominium apartments were previously held to be single-family dwellings (Matter of City of Albany Indus.",
"Dev. Agency v DeGraff-Moffly/Gen. Contrs., 164 AD2d 20, 22 [3d Dept 1990])."
]
| https://www.courtlistener.com/api/rest/v3/opinions/6176201/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
OPINION OF THE COURT. This action is brought against the defendants, as in-dorsers of a promissory note, payable at the Bank of Michigan. To the declaration there is a demurrer, for the following reasons: First: There is no venue set forth in the margin of the declaration; Second: The averment of notice, of nonpayment, is not laid with certainty, as to time or place. There Is no formal venue laid in the margin of the declaration; but there is a venue in the body of it, and that is sufficient. By the rule adopted in England, Hilary Term, 4 Wm. IV.. the venue, in the body of the declaration, is to be omitted, and it is laid in the margin only. Under this rule, the venue, not being laid in the margin, is ground of demurrer. There is an averment of demand, of the drawer of the note, when it became due, and that due notice of nonpayment was given to the defendants. This is all the law requires. Under the averment of due notice, all the facts, in proof of that allegation, may be given in evidence. Firth v. Thrush, 8 Barn. & C. 387; 2 Man. & R. 359. Demurrer overruled, and judgment. | 11-24-2022 | [
"OPINION OF THE COURT. This action is brought against the defendants, as in-dorsers of a promissory note, payable at the Bank of Michigan. To the declaration there is a demurrer, for the following reasons: First: There is no venue set forth in the margin of the declaration; Second: The averment of notice, of nonpayment, is not laid with certainty, as to time or place. There Is no formal venue laid in the margin of the declaration; but there is a venue in the body of it, and that is sufficient. By the rule adopted in England, Hilary Term, 4 Wm. IV.. the venue, in the body of the declaration, is to be omitted, and it is laid in the margin only.",
"Under this rule, the venue, not being laid in the margin, is ground of demurrer. There is an averment of demand, of the drawer of the note, when it became due, and that due notice of nonpayment was given to the defendants. This is all the law requires. Under the averment of due notice, all the facts, in proof of that allegation, may be given in evidence. Firth v. Thrush, 8 Barn. & C. 387; 2 Man. & R. 359. Demurrer overruled, and judgment."
]
| https://www.courtlistener.com/api/rest/v3/opinions/8630658/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
September 26, 1977
78-86 MEMORANDUM OPINION FOR THE COUNSEL TO THE PRESIDENT
Consultants— Employment to Assist Presidential Nominee at His Confirmation Hearing (5 U.S.C. § 3190, 31 U.S.C. § 628)
This responds to your request for our opinion as to the legality of paying a consultant (an attorney) from funds appropriated to the W hite House Office to assist a nominee to a regulatory agency in his confirmation hearing and to prepare the individual to assume his position, if appointed. The question appears to be a novel one. Authority to hire consultants is found in 5 U .S.C . § 3109 (1976) which provides in pertinent part: £ $ $ $ $
(b) W hen authorized by an appropriation or other statute, the head of an agency may procure by contract the temporary (not in excess of 1 year) or intermittent services of experts or consultants or an organiza tion thereof . . . . The current appropriation for the W hite House authorizes the hiring of consultants in the following terms: For expenses necessary for the White House Office as authorized by law, including not to exceed $3,850,000 for services as authorized by 5 U .S.C . 31 09 ,iat such per diem rates for individuals as the President may specify and other personal services without regard to the provisions of law regulating the employment and compensation of persons in the Governm ent serv ice.1 The Civil Service Commission construes § 3109 as authorizing the em ploy ment of consultants to obtain advice of a specialized nature unavailable within the agency itself, to obtain outside viewpoints, or to acquire the services of experts who are not needed or available full tim e.2 Conversely, the Commis-
'E xecutive Office A ppropriations A ct, 1977, 90 Stat. 966. 2Federal Personnel Manual. Ch. 304, par. l-3a. W e do not necessarily imply that the White House Office is subject to the Civil Service C om m ission’s jurisdiction in this respect by citing its (Continued)
376 sion disapproves of the use of consultants to do what can be done as well by regular em ployees.3 Section 3109 would thus appear to encompass the employment of outside counsel to assist the nominee if, in your judgm ent, this would provide expert or professional services not available within the White House Office. But § 3109 does not in itself resolve the problem. We must consider whether services of this type are subject to any other statutory prohibition. Funds appropriated to the White House Office are subject, as are agency funds, to the general restriction of 31 U .S.C . § 628 (1976) which provides: Except as otherwise provided by law, sums appropriated for the various branches of expenditure in the public service shall be applied solely to the objects for which they are respectively made, and for no others. With respect to a general appropriation for necessary expenses, the Comptroller General has consistently ruled that expenditures are authorized “ if reasonably necessary or incident” to the activity for which the funds are appropriated. See, e.g ., 50 Comp. Gen. 534 (1971); 29 Comp. Gen. 419 (1950). However, expenditures primarily for the personal benefit of present or prospective employees, rather than for a governmental activity, have been disapproved.4 The question is whether assisting a nominee is a “ reasonably necessary” activity of the White House Office. To our knowledge, neither the Comptroller General nor any other authority has passed on the question. No objection has been raised to the practice of the Department of Justice of utilizing its own personnel to assist nominees to positions in the Department and to the Federal bench by briefing them on their prospective duties and by on occasion presenting their background to the Senate in the best light. An important function of the White House Office is to assist the President in presenting his viewpoints to Congress. This would seem to cover reasonable advocacy of his nominations. It therefore appears that assisting a nominee to be confirmed can be viewed as an ordinary and necessary activity of the White House Office. If the issue were now to be raised with the Comptroller General, it may be that he would defer to this longstanding administrative practice, particularly since Congress is almost certainly aware of it. Cf. 38 Comp. Gen. 758, 767 (1959); 28 Comp. Gen. 673 (1950). There is, however, a line of Comptroller General decisions holding that “ an officer or employee has on his shoulders the duty o f qualifying him self for the
(Continued) interpretation o f the statute. The C om m ission's construction is m erely the best available interpretation. ^Federal Personnel Manual, Ch. 304, par. I-3b. “For exam ple, medical exam inations o f em ployees at Governm ent expense may be provided without specific authorization when necessary to the safety o f other em ployees or to prevent loss of services from occupational disease but not when there is no prospect o f harm to the Governm ent from the em ployee’s illness. Compare 30 Com p. Gen. 387 (1951); 22 Comp. Gen. 32 (1942); with 33 Com p. Gen. 231 (1953). Sim ilarly, special clothing or equipm ent may be provided at Governm ent expense only if the G overnm ent, rather than the em ployee, receives the prim ary benefit from its use. See 45 Com p. G en. 215 (1965); 3 Comp. Gen. 433 (1924).
377 performance o f his official d u ties.” 22 Comp. Gen. 460, 461 (1942). Thus, the Com ptroller General has disapproved paym ent of bar admission fees,5 reimbursement for preem ploym ent examinations by private doctors,6 and use of a general appropriation to employ a doctor to give preemployment examinations on a regular basis.7 We doubt that these decisions apply to the present case because obtaining Senate confirmation for a Presidential appoint ment differs from ordinary employment. W hile assisting a nominee may serve the nom inee’s personal interest, it also advances the official interests of the Presidency. The confirmation process can therefore be viewed as more than simply personal qualification o f the nominee. On that basis, we think that White House Office funds may be expended to protect the official interest involved.
L eon U lm an D epu ty A ssistant Attorney G eneral Office o f L egal Counsel
S51 Com p. G en. 701 (1972); 47 C om p. G en. 116 (1967); 22 C om p. G en. 460 (1942). 631 C om p. G en. 465 (1952). 722 Com p. G en. 243 (1942).
378 | 01-27-2017 | [
"September 26, 1977 78-86 MEMORANDUM OPINION FOR THE COUNSEL TO THE PRESIDENT Consultants— Employment to Assist Presidential Nominee at His Confirmation Hearing (5 U.S.C. § 3190, 31 U.S.C. § 628) This responds to your request for our opinion as to the legality of paying a consultant (an attorney) from funds appropriated to the W hite House Office to assist a nominee to a regulatory agency in his confirmation hearing and to prepare the individual to assume his position, if appointed. The question appears to be a novel one. Authority to hire consultants is found in 5 U .S.C . § 3109 (1976) which provides in pertinent part: £ $ $ $ $ (b) W hen authorized by an appropriation or other statute, the head of an agency may procure by contract the temporary (not in excess of 1 year) or intermittent services of experts or consultants or an organiza tion thereof . . .",
". The current appropriation for the W hite House authorizes the hiring of consultants in the following terms: For expenses necessary for the White House Office as authorized by law, including not to exceed $3,850,000 for services as authorized by 5 U .S.C . 31 09 ,iat such per diem rates for individuals as the President may specify and other personal services without regard to the provisions of law regulating the employment and compensation of persons in the Governm ent serv ice.1 The Civil Service Commission construes § 3109 as authorizing the em ploy ment of consultants to obtain advice of a specialized nature unavailable within the agency itself, to obtain outside viewpoints, or to acquire the services of experts who are not needed or available full tim e.2 Conversely, the Commis- 'E xecutive Office A ppropriations A ct, 1977, 90 Stat. 966. 2Federal Personnel Manual.",
"Ch. 304, par. l-3a. W e do not necessarily imply that the White House Office is subject to the Civil Service C om m ission’s jurisdiction in this respect by citing its (Continued) 376 sion disapproves of the use of consultants to do what can be done as well by regular em ployees.3 Section 3109 would thus appear to encompass the employment of outside counsel to assist the nominee if, in your judgm ent, this would provide expert or professional services not available within the White House Office. But § 3109 does not in itself resolve the problem. We must consider whether services of this type are subject to any other statutory prohibition.",
"Funds appropriated to the White House Office are subject, as are agency funds, to the general restriction of 31 U .S.C . § 628 (1976) which provides: Except as otherwise provided by law, sums appropriated for the various branches of expenditure in the public service shall be applied solely to the objects for which they are respectively made, and for no others. With respect to a general appropriation for necessary expenses, the Comptroller General has consistently ruled that expenditures are authorized “ if reasonably necessary or incident” to the activity for which the funds are appropriated. See, e.g ., 50 Comp. Gen. 534 (1971); 29 Comp. Gen. 419 (1950). However, expenditures primarily for the personal benefit of present or prospective employees, rather than for a governmental activity, have been disapproved.4 The question is whether assisting a nominee is a “ reasonably necessary” activity of the White House Office. To our knowledge, neither the Comptroller General nor any other authority has passed on the question. No objection has been raised to the practice of the Department of Justice of utilizing its own personnel to assist nominees to positions in the Department and to the Federal bench by briefing them on their prospective duties and by on occasion presenting their background to the Senate in the best light.",
"An important function of the White House Office is to assist the President in presenting his viewpoints to Congress. This would seem to cover reasonable advocacy of his nominations. It therefore appears that assisting a nominee to be confirmed can be viewed as an ordinary and necessary activity of the White House Office. If the issue were now to be raised with the Comptroller General, it may be that he would defer to this longstanding administrative practice, particularly since Congress is almost certainly aware of it. Cf. 38 Comp. Gen. 758, 767 (1959); 28 Comp. Gen. 673 (1950). There is, however, a line of Comptroller General decisions holding that “ an officer or employee has on his shoulders the duty o f qualifying him self for the (Continued) interpretation o f the statute. The C om m ission's construction is m erely the best available interpretation. ^Federal Personnel Manual, Ch. 304, par.",
"I-3b. “For exam ple, medical exam inations o f em ployees at Governm ent expense may be provided without specific authorization when necessary to the safety o f other em ployees or to prevent loss of services from occupational disease but not when there is no prospect o f harm to the Governm ent from the em ployee’s illness. Compare 30 Com p. Gen. 387 (1951); 22 Comp. Gen. 32 (1942); with 33 Com p. Gen. 231 (1953). Sim ilarly, special clothing or equipm ent may be provided at Governm ent expense only if the G overnm ent, rather than the em ployee, receives the prim ary benefit from its use. See 45 Com p. G en. 215 (1965); 3 Comp. Gen. 433 (1924). 377 performance o f his official d u ties.” 22 Comp. Gen. 460, 461 (1942). Thus, the Com ptroller General has disapproved paym ent of bar admission fees,5 reimbursement for preem ploym ent examinations by private doctors,6 and use of a general appropriation to employ a doctor to give preemployment examinations on a regular basis.7 We doubt that these decisions apply to the present case because obtaining Senate confirmation for a Presidential appoint ment differs from ordinary employment.",
"W hile assisting a nominee may serve the nom inee’s personal interest, it also advances the official interests of the Presidency. The confirmation process can therefore be viewed as more than simply personal qualification o f the nominee. On that basis, we think that White House Office funds may be expended to protect the official interest involved. L eon U lm an D epu ty A ssistant Attorney G eneral Office o f L egal Counsel S51 Com p. G en. 701 (1972); 47 C om p. G en. 116 (1967); 22 C om p. G en. 460 (1942). 631 C om p. G en. 465 (1952). 722 Com p. G en. 243 (1942).",
"378"
]
| https://www.courtlistener.com/api/rest/v3/opinions/4120468/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
378 F.2d 439 Ralph R. POSTON, Martin P. Bessell, and Willard J. Wylie, as Association Trustees of the Miami Iron Workers Pension Fund, Local No. 272, Appellants,v.Charles C. CARAKER et al., etc. Appellees. No. 23719. United States Court of Appeals Fifth Circuit. June 8, 1967.
Leonard H. Wolf, Miami, Fla., for appellants. Seymour A. Gopman, Kastenbaum, Mamber, Gopman, Epstein & Miles, Miami Beach, Fla., for appellees. Before PHILLIPS,* COLEMAN, and SIMPSON, Circuit Judges. COLEMAN, Circuit Judge:
1 In this case the Association Trustees of a Pension Fund Trust1 sought a decree declaring that it would be legal for them to be compensated from the fund for their services. The District Court dismissed the petition. We affirm.
2 The facts are not in dispute and the issue presented is purely one of law. On October 1, 1964, the Steel and Ornamental Erectors Association of South Florida, Inc., an association of employers and the recognized collective bargaining agent of such employers, entered into a declaration of trust with Local Union #272, International Association of Bridge, Structural and Ornamental Iron Workers, AFL-CIO, by which the parties established the Miami Iron Workers Pension Fund, Local #272.
3 As provided by the statute, the pension fund trust was established for the sole and exclusive benefit of the employees. The trust is administered by three trustees for the Association and three for the Union. The trust provided that in the event of a deadlock on a matter arising in connection with the administration of the fund then the trustees shall select an impartial umpire to decide the matter and break the deadlock. It further provided that if no such umpire could be agreed upon then any trustee could petition the District Court to make the appointment.
4 On August 4, 1965, subject to confirmation of the legality of the practice, the trustees voted to compensate the Association (Management) Trustees as a regular expense for attending trustee meetings. After receiving conflicting advice on this point, the Association trustees unanimously voted to compensate themselves, the Union trustees voted against it, and the deadlock ensued.
5 The Association trustees then filed their petition praying for an order naming an impartial arbitrator to resolve the deadlock and for "a declaratory decree as to the legality of the resolution as proposed by the Association Trustees so that the Trustees may proceed in the administration of the Trust as herein set forth".
6 This was met by a motion to dismiss on the ground that the petition for appointment of the arbitrator failed to state a cause of action or a claim for which relief could be granted and, further, that the deadlock involved a legal issue beyond the power of an umpire as it could only be determined by a court of competent jurisdiction. Upon consideration of the briefs of the parties, the petition was dismissed and the Association trustees have appealed.
7 The decision of the District Court is brief and to the point. We can best define the issues and pass upon the matter by quoting the following portion of the dismissal order:
8 "The Petitioners maintain that there is language in the agreements establishing the Pension Fund Trust which is subject to an interpretation allowing them to receive compensation out of the fund for their services. However, 29 U.S.C. § 186(c) (5) must be strictly construed. It clearly states that any monies paid to a trust fund created under that section shall be used `for the sole and exclusive benefit of the employees * * *'
9 Any person who violates Section 186 is subject to severe penal sanctions. No express provision allowing the compensation of the Trustees from the fund for their services has been pointed out to the Court in the instant case. Therefore, it would be a derogation of the stated purpose of Section 186 to `interpret' such a provision into the Union-Association agreements. To `bootstrap' such terms into the agreements by `interpretation' would be unfair to the Union employees. They could not have been aware at the time the Union-Association agreements were entered into that they were consenting to the payment of the trustees for their services. The language which the Petitioners based their resolution on is not easily subject to such an `interpretation', especially when one considers that a fund created pursuant to Section 186 is to be used solely for the benefit of the employees.
10 Absent an express term allowing for trustee compensation from the trust fund, any resolution permitting such would be illegal as well as unfair to the employees. Also, even if such an express agreement did exist between the Union and Association, which is not the case here, it might still be illegal due to the narrow construction which must be placed on Section 186. Therefore, it is
11 ORDERED and ADJUDGED that the motion to dismiss of the Respondents be and the same is hereby granted."
12 The Association trustees contend the dismissal was erroneous because 29 U.S.C. § 186 does not prohibit compensation to trustees; the Court should have had before him the Declaration of Trust, Minutes of Trustees' Meetings, and other evidence; and case law entitled the trustees to compensation on the wording of this Declaration of Trust.
13 "* * * [W]hile a trustee petitioning for the appointment of an umpire [under § 186(c) (5)] need not demonstrate that his interpretation that the issue was one the trustees could decide is the correct one, * * * he must at least establish that it is a possible one. * * * [A] court need not order arbitration when it is prepared to say "with positive assurance that the contract is not susceptible to an interpretation to cover the asserted dispute." Barrett v. Miller, 2 Cir., 1960, 276 F.2d 429, 431 [citations omitted].
14 Thus if § 186(c) (5) does not expressly allow compensation to trustees, or if the Declaration of Trust is not susceptible to an interpretation that compensation is allowable, the Court below committed no error in dismissing the petition.
15 Section 186 does not in terms address the problem of what expenses are allowable in the administration of employee trusts. Judicial comment on the problem is scarce. The litigants on both sides claim comfort from American Bakeries Co. v. Barrick, N.D.Ohio, 1958, 162 F.Supp. 882. The Court in that case held that, in order to avoid the inference of improper practices, the trustees of an Employees' Trust Fund could not maintain offices under the roof of a building owned by a union. The Court observed, in passing,
16 "The primary and principal purpose of the Act is to provide and maintain the trust fund for the sole and exclusive benefit of the employees of the employers, and their families and dependents, and any act or conduct in the management and operation of the fund which departs from that purpose well may be found to be a violation of the Act, subject, upon cause shown to the restraining jurisdiction of the District Court.
17 All would agree that complete records of all proceedings of the trustees and a complete accounting system should be installed; that no payments to trustees out of the fund for services of any kind, except such compensation as may be the subject of written agreement should be made; that trust funds may not be used for Union purposes and that no expenditures except for essential things and services on behalf of the trust fund should be made. * * *" 162 F.Supp. at 884 [emphasis added]
18 The American Bakeries case thus infers that trustee compensation may lawfully be provided in a Trust Agreement.
19 Although it alluded to the question, the Court below did not, in fact, decide whether compensation to trustees is barred by the act, nor was such a decision necessary to the disposition of the compensation issue presented. The Court was absolutely right in holding that even if permitted by statute, compensation would nevertheless have to be authorized by the trust instrument, American Bakeries Co. v. Barrick, supra. The Court found that "no express provision allowing the compensation of the Trustees from the fund for their services has been pointed out to the Court in the instant case."
20 It is too late for the appellants to argue here that the Court should have had the entire trust instrument before it. An examination of the record reveals that the appellants filed a brief in support of their position. In that brief they cited only the following provisions of the trust instrument:
21 "Article VI, Section 2(d), Powers and Duties of the Trustees
22 To employ such persons as may be necessary to administer the trust and Pension Plan, including legal counsel, accountants, pension or insurance consultants, administrators, actuaries, investment counselors and any other expert and/or clerical assistants as the Board, in its discretion, may deem necessary or appropriate, and to pay or cause to be paid, compensation and expenses in connection therewith; * * *"
23 "Article VI, Section 13
24 The trustees shall be reimbursed out of the Fund for all reasonable and necessary expenses which may occur in the performance of their duties."
25 "Article XI, Section 2
26 This Trust Agreement is irrevocable and under no circumstances shall any moneys paid into the Trust or any part thereof be recoverable by or paid to any employer or Association, nor shall any of the same be used or diverted to a purpose other than generally stated in this Trust Agreement, or for necessary and reasonable expenses incurred in the establishment and administration of the Trust and Pension Plan."
27 It is only reasonable to assume that when confronted with the motion to dismiss appellants met it with the most favorable language they could find in the trust instrument. In any event, it is too fundamental to require citation that they must stand or fall here on the issues as presented below. They cannot now invoke what might have been.
28 The closest approach to compensation in the cited language of the trust instrument is that the "trustees shall be reimbursed out of the Fund for all reasonable and necessary expenses [emphasis added] which may occur in the performance of their duties". In our view, and we have been cited no authority to the contrary, reimbursement for necessary expenses, especially in the construction of a statutory trust such as we have here, cannot be held to mean or include compensation for services rendered.
29 We therefore conclude that the District Judge was right when he found that absence of authorization in the trust instrument was dispositive of the case, and there was no legal basis upon which he could have appointed an impartial umpire.
30 Affirmed.
Notes:
* Of the Tenth Circuit, sitting by designation
1 Created pursuant to the Labor Management Relations Act, § 302(c) (5), 61 Stat. 136 (1947), 29 U.S.C.A. § 186(c) (5) (1952) | 08-23-2011 | [
"378 F.2d 439 Ralph R. POSTON, Martin P. Bessell, and Willard J. Wylie, as Association Trustees of the Miami Iron Workers Pension Fund, Local No. 272, Appellants,v.Charles C. CARAKER et al., etc. Appellees. No. 23719. United States Court of Appeals Fifth Circuit. June 8, 1967. Leonard H. Wolf, Miami, Fla., for appellants. Seymour A. Gopman, Kastenbaum, Mamber, Gopman, Epstein & Miles, Miami Beach, Fla., for appellees. Before PHILLIPS,* COLEMAN, and SIMPSON, Circuit Judges. COLEMAN, Circuit Judge: 1 In this case the Association Trustees of a Pension Fund Trust1 sought a decree declaring that it would be legal for them to be compensated from the fund for their services.",
"The District Court dismissed the petition. We affirm. 2 The facts are not in dispute and the issue presented is purely one of law. On October 1, 1964, the Steel and Ornamental Erectors Association of South Florida, Inc., an association of employers and the recognized collective bargaining agent of such employers, entered into a declaration of trust with Local Union #272, International Association of Bridge, Structural and Ornamental Iron Workers, AFL-CIO, by which the parties established the Miami Iron Workers Pension Fund, Local #272. 3 As provided by the statute, the pension fund trust was established for the sole and exclusive benefit of the employees. The trust is administered by three trustees for the Association and three for the Union. The trust provided that in the event of a deadlock on a matter arising in connection with the administration of the fund then the trustees shall select an impartial umpire to decide the matter and break the deadlock. It further provided that if no such umpire could be agreed upon then any trustee could petition the District Court to make the appointment.",
"4 On August 4, 1965, subject to confirmation of the legality of the practice, the trustees voted to compensate the Association (Management) Trustees as a regular expense for attending trustee meetings. After receiving conflicting advice on this point, the Association trustees unanimously voted to compensate themselves, the Union trustees voted against it, and the deadlock ensued. 5 The Association trustees then filed their petition praying for an order naming an impartial arbitrator to resolve the deadlock and for \"a declaratory decree as to the legality of the resolution as proposed by the Association Trustees so that the Trustees may proceed in the administration of the Trust as herein set forth\". 6 This was met by a motion to dismiss on the ground that the petition for appointment of the arbitrator failed to state a cause of action or a claim for which relief could be granted and, further, that the deadlock involved a legal issue beyond the power of an umpire as it could only be determined by a court of competent jurisdiction.",
"Upon consideration of the briefs of the parties, the petition was dismissed and the Association trustees have appealed. 7 The decision of the District Court is brief and to the point. We can best define the issues and pass upon the matter by quoting the following portion of the dismissal order: 8 \"The Petitioners maintain that there is language in the agreements establishing the Pension Fund Trust which is subject to an interpretation allowing them to receive compensation out of the fund for their services. However, 29 U.S.C. § 186(c) (5) must be strictly construed. It clearly states that any monies paid to a trust fund created under that section shall be used `for the sole and exclusive benefit of the employees * * *' 9 Any person who violates Section 186 is subject to severe penal sanctions. No express provision allowing the compensation of the Trustees from the fund for their services has been pointed out to the Court in the instant case. Therefore, it would be a derogation of the stated purpose of Section 186 to `interpret' such a provision into the Union-Association agreements.",
"To `bootstrap' such terms into the agreements by `interpretation' would be unfair to the Union employees. They could not have been aware at the time the Union-Association agreements were entered into that they were consenting to the payment of the trustees for their services. The language which the Petitioners based their resolution on is not easily subject to such an `interpretation', especially when one considers that a fund created pursuant to Section 186 is to be used solely for the benefit of the employees. 10 Absent an express term allowing for trustee compensation from the trust fund, any resolution permitting such would be illegal as well as unfair to the employees. Also, even if such an express agreement did exist between the Union and Association, which is not the case here, it might still be illegal due to the narrow construction which must be placed on Section 186. Therefore, it is 11 ORDERED and ADJUDGED that the motion to dismiss of the Respondents be and the same is hereby granted.\" 12 The Association trustees contend the dismissal was erroneous because 29 U.S.C.",
"§ 186 does not prohibit compensation to trustees; the Court should have had before him the Declaration of Trust, Minutes of Trustees' Meetings, and other evidence; and case law entitled the trustees to compensation on the wording of this Declaration of Trust. 13 \"* * * [W]hile a trustee petitioning for the appointment of an umpire [under § 186(c) (5)] need not demonstrate that his interpretation that the issue was one the trustees could decide is the correct one, * * * he must at least establish that it is a possible one. * * * [A] court need not order arbitration when it is prepared to say \"with positive assurance that the contract is not susceptible to an interpretation to cover the asserted dispute.\"",
"Barrett v. Miller, 2 Cir., 1960, 276 F.2d 429, 431 [citations omitted]. 14 Thus if § 186(c) (5) does not expressly allow compensation to trustees, or if the Declaration of Trust is not susceptible to an interpretation that compensation is allowable, the Court below committed no error in dismissing the petition. 15 Section 186 does not in terms address the problem of what expenses are allowable in the administration of employee trusts. Judicial comment on the problem is scarce. The litigants on both sides claim comfort from American Bakeries Co. v. Barrick, N.D.Ohio, 1958, 162 F.Supp. 882. The Court in that case held that, in order to avoid the inference of improper practices, the trustees of an Employees' Trust Fund could not maintain offices under the roof of a building owned by a union. The Court observed, in passing, 16 \"The primary and principal purpose of the Act is to provide and maintain the trust fund for the sole and exclusive benefit of the employees of the employers, and their families and dependents, and any act or conduct in the management and operation of the fund which departs from that purpose well may be found to be a violation of the Act, subject, upon cause shown to the restraining jurisdiction of the District Court. 17 All would agree that complete records of all proceedings of the trustees and a complete accounting system should be installed; that no payments to trustees out of the fund for services of any kind, except such compensation as may be the subject of written agreement should be made; that trust funds may not be used for Union purposes and that no expenditures except for essential things and services on behalf of the trust fund should be made.",
"* * *\" 162 F.Supp. at 884 [emphasis added] 18 The American Bakeries case thus infers that trustee compensation may lawfully be provided in a Trust Agreement. 19 Although it alluded to the question, the Court below did not, in fact, decide whether compensation to trustees is barred by the act, nor was such a decision necessary to the disposition of the compensation issue presented. The Court was absolutely right in holding that even if permitted by statute, compensation would nevertheless have to be authorized by the trust instrument, American Bakeries Co. v. Barrick, supra. The Court found that \"no express provision allowing the compensation of the Trustees from the fund for their services has been pointed out to the Court in the instant case.\" 20 It is too late for the appellants to argue here that the Court should have had the entire trust instrument before it.",
"An examination of the record reveals that the appellants filed a brief in support of their position. In that brief they cited only the following provisions of the trust instrument: 21 \"Article VI, Section 2(d), Powers and Duties of the Trustees 22 To employ such persons as may be necessary to administer the trust and Pension Plan, including legal counsel, accountants, pension or insurance consultants, administrators, actuaries, investment counselors and any other expert and/or clerical assistants as the Board, in its discretion, may deem necessary or appropriate, and to pay or cause to be paid, compensation and expenses in connection therewith; * * *\" 23 \"Article VI, Section 13 24 The trustees shall be reimbursed out of the Fund for all reasonable and necessary expenses which may occur in the performance of their duties.\" 25 \"Article XI, Section 2 26 This Trust Agreement is irrevocable and under no circumstances shall any moneys paid into the Trust or any part thereof be recoverable by or paid to any employer or Association, nor shall any of the same be used or diverted to a purpose other than generally stated in this Trust Agreement, or for necessary and reasonable expenses incurred in the establishment and administration of the Trust and Pension Plan.\" 27 It is only reasonable to assume that when confronted with the motion to dismiss appellants met it with the most favorable language they could find in the trust instrument.",
"In any event, it is too fundamental to require citation that they must stand or fall here on the issues as presented below. They cannot now invoke what might have been. 28 The closest approach to compensation in the cited language of the trust instrument is that the \"trustees shall be reimbursed out of the Fund for all reasonable and necessary expenses [emphasis added] which may occur in the performance of their duties\". In our view, and we have been cited no authority to the contrary, reimbursement for necessary expenses, especially in the construction of a statutory trust such as we have here, cannot be held to mean or include compensation for services rendered. 29 We therefore conclude that the District Judge was right when he found that absence of authorization in the trust instrument was dispositive of the case, and there was no legal basis upon which he could have appointed an impartial umpire.",
"30 Affirmed. Notes: * Of the Tenth Circuit, sitting by designation 1 Created pursuant to the Labor Management Relations Act, § 302(c) (5), 61 Stat. 136 (1947), 29 U.S.C.A. § 186(c) (5) (1952)"
]
| https://www.courtlistener.com/api/rest/v3/opinions/276166/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Title: General Orders, 7 August 1778 From: Washington, George To:
Head-Quarters White-Plains August 7th 1778. Parole Flanders—C. Signs Epping Dobbs. All returns for Arms, Ammunition, Accoutrements &c. are first to be made out by the Regimental Quarter Masters, which after examined and signed by the Commanding Officers of Regiments are to be given to the Brigade Quarter-Masters who are to digest them into Brigade Returns, get them examined and signed by the Brigadiers or Commandants of Brigades, then present them to the Adjutant General for an Order upon the Commissary of Military Stores, taking receipts from the Regimental Quarter Masters for such Articles as shall be delivered them which they are to charge to the several Companies—The Commanding officers of Companies are again to charge their men with such Arms &c. as shall be delivered them respectively and severely punish any non commissioned Officer or soldier who shall carelessly or willfully waste or destroy them besides making them pay the full value thereof: And as there has been in many Instances a wanton waste of Arms Accoutrements and Ammunition, the Commander in Chief enjoins it upon the Commanding Officers of Regiments to see this order pun[c]tually executed, and as it is of the highest Importance that strict Œconomy should be observed with respect to those essential Articles he desires the Brigadiers to pay particular attention to the observance of the same. The Commander in Chief directs that Doctor Cochran and Doctor Burnet in conjunction with the officers of their departments take the immediate Charge of the Flying-Hospital. The Muster-Rolls of the Army to be drawn agreeable to the directions and forms prescribed by the Commissary or Deputy Commissary General of Musters—The absent Officers to be accounted for by the Commanding Officers of Corps—the dates of Inlistments and different terms of service for which the troops are engaged to be continued on the Rolls—The strictest attention will be expected to this order. A return of the State of the Arms Accoutrements and Cloathing of the Regiments to be made to the Officers of Musters on the day of every Muster—The Rank of the Field Officers of the four Regiments of Light Dragoons having been settled by a board of General Officers at White-Marsh on the 24th day of November last, the Officers are to rank in the following manner— Colonels— L. Colonels Majors. Moylan. White. Washington Baylor. Bird. Jameson. Bland. Temple. Clough. Sheldon— Blackden. Talmadge. The Quarter Master General is authorized to direct the Waggon Master General or his Deputies to use their best endeavours to enlist Waggoners out of the Militia now in service, and if a sufficient number cannot be procured in that way, they are to engage such as may be deficient out of the draughts or levies from the several States—In the latter Case they are not to take on any Account more than four men out of a Company. Lieutenant Jones of the 15th Virginia Regiment is appointed Pay-Master to the same. | 08-07-1778 | [
"Title: General Orders, 7 August 1778 From: Washington, George To: Head-Quarters White-Plains August 7th 1778. Parole Flanders—C. Signs Epping Dobbs. All returns for Arms, Ammunition, Accoutrements &c. are first to be made out by the Regimental Quarter Masters, which after examined and signed by the Commanding Officers of Regiments are to be given to the Brigade Quarter-Masters who are to digest them into Brigade Returns, get them examined and signed by the Brigadiers or Commandants of Brigades, then present them to the Adjutant General for an Order upon the Commissary of Military Stores, taking receipts from the Regimental Quarter Masters for such Articles as shall be delivered them which they are to charge to the several Companies—The Commanding officers of Companies are again to charge their men with such Arms &c. as shall be delivered them respectively and severely punish any non commissioned Officer or soldier who shall carelessly or willfully waste or destroy them besides making them pay the full value thereof: And as there has been in many Instances a wanton waste of Arms Accoutrements and Ammunition, the Commander in Chief enjoins it upon the Commanding Officers of Regiments to see this order pun[c]tually executed, and as it is of the highest Importance that strict Œconomy should be observed with respect to those essential Articles he desires the Brigadiers to pay particular attention to the observance of the same.",
"The Commander in Chief directs that Doctor Cochran and Doctor Burnet in conjunction with the officers of their departments take the immediate Charge of the Flying-Hospital. The Muster-Rolls of the Army to be drawn agreeable to the directions and forms prescribed by the Commissary or Deputy Commissary General of Musters—The absent Officers to be accounted for by the Commanding Officers of Corps—the dates of Inlistments and different terms of service for which the troops are engaged to be continued on the Rolls—The strictest attention will be expected to this order. A return of the State of the Arms Accoutrements and Cloathing of the Regiments to be made to the Officers of Musters on the day of every Muster—The Rank of the Field Officers of the four Regiments of Light Dragoons having been settled by a board of General Officers at White-Marsh on the 24th day of November last, the Officers are to rank in the following manner— Colonels— L. Colonels Majors. Moylan.",
"White. Washington Baylor. Bird. Jameson. Bland. Temple. Clough. Sheldon— Blackden. Talmadge. The Quarter Master General is authorized to direct the Waggon Master General or his Deputies to use their best endeavours to enlist Waggoners out of the Militia now in service, and if a sufficient number cannot be procured in that way, they are to engage such as may be deficient out of the draughts or levies from the several States—In the latter Case they are not to take on any Account more than four men out of a Company. Lieutenant Jones of the 15th Virginia Regiment is appointed Pay-Master to the same."
]
| https://founders.archives.gov/API/docdata/Washington/03-16-02-0275 | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
862 F.2d 545 117 Lab.Cas. P 56,422 Danforth MANNING, Plaintiff-Appellant,v.The UPJOHN COMPANY, Defendant-Appellee. No. 88-1272
Summary Calendar. United States Court of Appeals,Fifth Circuit. Jan. 3, 1989. Donald E. Cummings, Ralph H. Brock, Lubbock, Tex., for plaintiff-appellant. Richard R. Brann, Paul Mitchell, Houston, Tex., for defendant-appellee. Appeal from the United States District Court for the Northern District of Texas. Before POLITZ, JOHNSON, and SMITH, Circuit Judges. JERRY E. SMITH, Circuit Judge:
1 Plaintiff Danforth Manning appeals from a judgment rendered for defendant the Upjohn Company ("Upjohn") in his suit for wrongful discharge. We affirm.
I.
2 The underlying facts are not in dispute. Manning was hired as a pharmaceutical salesman by Upjohn in 1964. At the time he was employed, he received Upjohn's employee handbook (the "handbook"), which contained the company's policies on vacations, disability pay, retirement, and a policy on reasonable corrective efforts to improve performance. Upjohn from time to time supplemented or changed the handbook without notice to its employees.
3 For over seventeen years, Manning was a successful salesman for Upjohn in and around the Lubbock, Texas, area. In 1982, however, his performance began to slip. Upjohn notified him that, should his performance not improve in the last four months of 1982, the company would put him on probation. His performance did not improve, and on February 25, 1983, the company notified him that he was being placed on probation immediately. In essence, Manning was told to meet several performance criteria by August 1, 1983; the company warned that "[s]hould these criteria not be met, then you may have to seek other employment."
4 By letter dated September 13, 1983, Upjohn extended the period of Manning's probation until January 1, 1984, and altered one of the terms of his probation by lowering the goal which he was expected to meet. Again, the company warned that "when sales figures are in for the Year of 1983, should the criteria stated not be met, you should be prepared to seek other employment."
5 Although the parties dispute whether Manning met the terms of his probation, Upjohn terminated Manning's employment on January 10, 1984. Two years later, Manning filed an original petition in a Texas state court, and Upjohn removed the case to federal district court. After a bench trial on the issue of liability, the district court found that Manning's employment was "at-will" under Texas law and that he could therefore be discharged at any time with or without cause. In addition, the district court found that even if Manning's employment contract had been modified to contain a requirement that he only be discharged for good cause, Upjohn had good cause to terminate Manning's employment. Accordingly, the district court entered judgment for Upjohn.
II.
6 Although the common-law doctrine of employment-at-will has been under attack in a number of states, Texas courts have not been hesitant to declare that it is alive and well in Texas.1 Of course, Texas courts will enforce a contract limiting the employer's right to discharge an employee; to establish a cause of action for wrongful termination, however, an employee must prove that
7 (1) he and his employer had a contract that specifically provided that the employer did not have the right to terminate the employment contract at will; and (2) the employment contract was in writing.
8 Lumpkin, 755 S.W.2d at 539. See also Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 406 (Tex.App.--Beaumont 1987, writ ref'd n.r.e.).
9 In this case, the district court found that there was no agreement limiting Upjohn's right to terminate Manning's employment at will and, in the alternative, that even if Manning could be discharged only for cause, good cause existed for his discharge. Principles of judicial restraint dictate that if resolution of an issue effectively disposes of a case, we should resolve the case on that basis without reaching any other issues that might be presented. Accordingly, because we conclude that the district court's factual finding that good cause existed for Manning's discharge is not clearly erroneous, see Fed.R.Civ.P. 52(a), we do not reach, and express no view upon, the issue of whether Upjohn contractually agreed to limit its right to terminate Manning's employment at will.
10 If an employee, because of contractual arrangements, can be discharged only for good cause, Texas law places upon the employer the burden of proving that good cause existed for the employee's discharge. See Advance Ross Electronics Corp. v. Green, 624 S.W.2d 316, 318 (Tex.App.--Tyler 1981, writ ref'd n.r.e.). If a good-cause requirement is present in this case, the parties agree that it is to be found only in the probation letter sent by Upjohn to Manning that cautions Manning that "when sales figures are in for the Year of 1983, should the criteria stated not be met, you should be prepared to seek other employment."2 We thus review the record to determine whether there is sufficient evidence of Manning's failure to meet the terms of his probation to indicate that the district court's finding of good cause is not clearly erroneous.3
11 There is ample evidence in the record indicating that Manning's supervisors terminated his employment because he failed to meet the probationary criteria. All of his supervisors testified that they considered Manning's sales figures for 1983, concluded that he had failed to meet the probationary criteria, and terminated him on that basis. Their testimony is bolstered by a report written one day after Manning was terminated, which notes his poor performance for the three years prior to his termination and the details of his probation, and concludes that "[Manning] has not met the terms of his probation to continue employment."
12 Manning challenges this testimony on two grounds. First, he argues that, contrary to the terms of his probation, his supervisors failed to abide by their promise to consider various "uncontrollable factors," such as population declines and changes in pharmacies' buying habits, in determining whether he met the terms of his probation; had they done so, he argues, they would have been forced to conclude that he had met the criteria.
13 Manning's argument is belied by his supervisors' testimony. Each testified that he was aware of all of the uncontrollable factors affecting Manning's sales performance, and took these factors into account in determining that he had failed to satisfy the probationary criteria. In circumstances such as these, where a factual finding is dependent upon an assessment of witnesses' credibility, we are loathe to question the judgment of the district court. See Anderson v. City of Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985). We find no reason to do so here.
14 Manning also argues that the evidence shows that it was impossible for his supervisors to have based his termination upon his failure to meet the probationary criteria, as they did not yet have, at the time he was discharged, the 1983 sales figures for his sales area. Although he is correct in noting that the date on the exhibit listing these figures is January 17, 1984, one week after he was terminated, this is insufficient to prove that the figures were not available before that time. There is no indication that the exhibit was the sole source of information on sales figures; Manning's immediate supervisor testified that sales figures were usually available in the "first week of January"4 and that the exhibit could have been a second, duplicate report. Elsewhere in the record, Manning's supervisors testified that they had access to his sales figures, adjusted them by considering uncontrollable factors, and determined that Manning had failed to meet the terms of his probation.5 In these circumstances, we cannot conclude that the district court's finding that Upjohn had good cause for discharging Manning was clearly erroneous.
III.
15 We hold that the record indicates that Manning failed to meet the terms of his probation, and that the district court's finding that Upjohn had good cause for terminating Manning's employment is therefore not clearly erroneous. The judgment of the district court is AFFIRMED.
1 See Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 734 (Tex.1985) ("This court in East Line & R.R.R. Co. v. Scott, 72 Tex. 70, 75, 10 S.W. 99, 102 (1888), held that employment for an indefinite term may be terminated at will and without cause. The courts of Texas have steadfastly refused to vary from that holding."); Lumpkin v. H & C Communications, Inc., 755 S.W.2d 538, 539 (Tex. App.--Houston [1st Dist.] 1988, no writ); Salazar v. Amigos del Valle, Inc., 754 S.W.2d 410, 413 (Tex.App.--Corpus Christi 1988, no writ); Stiver v. Texas Instruments, Inc., 750 S.W.2d 843, 846 (Tex.App.--Houston [14th Dist.] 1988, no writ). In Sabine Pilot Serv., Inc., the Texas Supreme Court recognized a "narrow" exception to the employment-at-will doctrine, holding that an employer may be liable for damages in a wrongful discharge action if the at-will employee establishes that the sole reason for the discharge was that the employee refused to perform an illegal act. See 687 S.W.2d at 735. The Texas Legislature has also created several similarly-narrow exceptions to the doctrine. See, e.g., Tex.Rev.Civ.Stat. Ann. art. 8307c (prohibiting discharge for filing a worker's compensation claim). Calls for the wholesale repudiation of the doctrine in Texas, however, have fallen on deaf ears. See Lumpkin, 755 S.W.2d at 540
2 On appeal, Manning correctly notes that under Texas law, Upjohn's employee handbook does not constitute a modification of his employment contract with Upjohn. See Aiello v. United Air Lines, Inc., 818 F.2d 1196, 1198 (5th Cir.1987); Reynolds Mfg. Co. v. Mendoza, 644 S.W.2d 536, 539 (Tex.App.--Corpus Christi 1982, no writ) (absent an express reciprocal agreement dealing with procedures for discharge, employee handbooks "constitute[ ] no more than general guidelines" and create no contractual rights in employees). Instead, he argues that the district court erred by finding that the two letters he received notifying him that he was being placed on probation did not constitute an agreement by Upjohn to modify his contract to provide that he could be terminated only if he failed to meet the terms of his probation
3 The district court did not specifically find that Upjohn's "good cause" for dismissing Manning was his failure to meet the terms of his probation; rather, it found that Manning's employment was terminated for "poor performance," and, therefore, good cause. Elsewhere, the findings note both Upjohn's complaints about Manning's job performance over the last several years of his employment and Upjohn's conclusion that he did not meet the probationary criteria Manning argues that the finding that good cause existed for his discharge was clearly erroneous insofar as it was based not upon his failure to meet the probationary criteria, but upon his general performance both before and during his probation. We believe that Manning misconstrues the findings. Reading them in a common-sense fashion, we interpret them as meaning that both Manning's pre-probationary and probationary performances were so "poor" as to justify his discharge. If this were not the case, the lengthy and detailed findings of fact relating to Manning's probation would be superfluous. Since the only standard in the record by which to judge whether Manning's probationary performance was "poor" is the probationary criteria--reprinted in full twice in the district court's memorandum opinion--the court necessarily accepted Upjohn's contention that Manning had failed to meet the criteria, thus justifying his discharge.
4 This testimony is supported by exhibits listing sales figures for 1981 and 1982, which both bear dates indicating that they were available in the first week of January
5 Other evidence in the record supports their testimony. The date on the exhibit listing Manning's sales figures for 1983, for example, is January 3, 1984, one week before he was fired. These figures show that Manning suffered a 1.3% drop in sales while the sales district in which his territory was located showed a 8.5% gain. Because Manning's supervisors were likely familiar with the sales figures for the sales area in which his sales district was located, it does not require any leap of faith to conclude that Manning failed to meet the terms of his probation | 08-23-2011 | [
"862 F.2d 545 117 Lab.Cas. P 56,422 Danforth MANNING, Plaintiff-Appellant,v.The UPJOHN COMPANY, Defendant-Appellee. No. 88-1272 Summary Calendar. United States Court of Appeals,Fifth Circuit. Jan. 3, 1989. Donald E. Cummings, Ralph H. Brock, Lubbock, Tex., for plaintiff-appellant. Richard R. Brann, Paul Mitchell, Houston, Tex., for defendant-appellee. Appeal from the United States District Court for the Northern District of Texas. Before POLITZ, JOHNSON, and SMITH, Circuit Judges. JERRY E. SMITH, Circuit Judge: 1 Plaintiff Danforth Manning appeals from a judgment rendered for defendant the Upjohn Company (\"Upjohn\") in his suit for wrongful discharge. We affirm. I. 2 The underlying facts are not in dispute.",
"Manning was hired as a pharmaceutical salesman by Upjohn in 1964. At the time he was employed, he received Upjohn's employee handbook (the \"handbook\"), which contained the company's policies on vacations, disability pay, retirement, and a policy on reasonable corrective efforts to improve performance. Upjohn from time to time supplemented or changed the handbook without notice to its employees. 3 For over seventeen years, Manning was a successful salesman for Upjohn in and around the Lubbock, Texas, area. In 1982, however, his performance began to slip. Upjohn notified him that, should his performance not improve in the last four months of 1982, the company would put him on probation. His performance did not improve, and on February 25, 1983, the company notified him that he was being placed on probation immediately. In essence, Manning was told to meet several performance criteria by August 1, 1983; the company warned that \"[s]hould these criteria not be met, then you may have to seek other employment.\"",
"4 By letter dated September 13, 1983, Upjohn extended the period of Manning's probation until January 1, 1984, and altered one of the terms of his probation by lowering the goal which he was expected to meet. Again, the company warned that \"when sales figures are in for the Year of 1983, should the criteria stated not be met, you should be prepared to seek other employment.\" 5 Although the parties dispute whether Manning met the terms of his probation, Upjohn terminated Manning's employment on January 10, 1984. Two years later, Manning filed an original petition in a Texas state court, and Upjohn removed the case to federal district court. After a bench trial on the issue of liability, the district court found that Manning's employment was \"at-will\" under Texas law and that he could therefore be discharged at any time with or without cause. In addition, the district court found that even if Manning's employment contract had been modified to contain a requirement that he only be discharged for good cause, Upjohn had good cause to terminate Manning's employment. Accordingly, the district court entered judgment for Upjohn. II. 6 Although the common-law doctrine of employment-at-will has been under attack in a number of states, Texas courts have not been hesitant to declare that it is alive and well in Texas.1 Of course, Texas courts will enforce a contract limiting the employer's right to discharge an employee; to establish a cause of action for wrongful termination, however, an employee must prove that 7 (1) he and his employer had a contract that specifically provided that the employer did not have the right to terminate the employment contract at will; and (2) the employment contract was in writing.",
"8 Lumpkin, 755 S.W.2d at 539. See also Benoit v. Polysar Gulf Coast, Inc., 728 S.W.2d 403, 406 (Tex.App.--Beaumont 1987, writ ref'd n.r.e.). 9 In this case, the district court found that there was no agreement limiting Upjohn's right to terminate Manning's employment at will and, in the alternative, that even if Manning could be discharged only for cause, good cause existed for his discharge. Principles of judicial restraint dictate that if resolution of an issue effectively disposes of a case, we should resolve the case on that basis without reaching any other issues that might be presented. Accordingly, because we conclude that the district court's factual finding that good cause existed for Manning's discharge is not clearly erroneous, see Fed.R.Civ.P.",
"52(a), we do not reach, and express no view upon, the issue of whether Upjohn contractually agreed to limit its right to terminate Manning's employment at will. 10 If an employee, because of contractual arrangements, can be discharged only for good cause, Texas law places upon the employer the burden of proving that good cause existed for the employee's discharge. See Advance Ross Electronics Corp. v. Green, 624 S.W.2d 316, 318 (Tex.App.--Tyler 1981, writ ref'd n.r.e.). If a good-cause requirement is present in this case, the parties agree that it is to be found only in the probation letter sent by Upjohn to Manning that cautions Manning that \"when sales figures are in for the Year of 1983, should the criteria stated not be met, you should be prepared to seek other employment. \"2 We thus review the record to determine whether there is sufficient evidence of Manning's failure to meet the terms of his probation to indicate that the district court's finding of good cause is not clearly erroneous.3 11 There is ample evidence in the record indicating that Manning's supervisors terminated his employment because he failed to meet the probationary criteria. All of his supervisors testified that they considered Manning's sales figures for 1983, concluded that he had failed to meet the probationary criteria, and terminated him on that basis.",
"Their testimony is bolstered by a report written one day after Manning was terminated, which notes his poor performance for the three years prior to his termination and the details of his probation, and concludes that \"[Manning] has not met the terms of his probation to continue employment.\" 12 Manning challenges this testimony on two grounds. First, he argues that, contrary to the terms of his probation, his supervisors failed to abide by their promise to consider various \"uncontrollable factors,\" such as population declines and changes in pharmacies' buying habits, in determining whether he met the terms of his probation; had they done so, he argues, they would have been forced to conclude that he had met the criteria. 13 Manning's argument is belied by his supervisors' testimony. Each testified that he was aware of all of the uncontrollable factors affecting Manning's sales performance, and took these factors into account in determining that he had failed to satisfy the probationary criteria.",
"In circumstances such as these, where a factual finding is dependent upon an assessment of witnesses' credibility, we are loathe to question the judgment of the district court. See Anderson v. City of Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985). We find no reason to do so here. 14 Manning also argues that the evidence shows that it was impossible for his supervisors to have based his termination upon his failure to meet the probationary criteria, as they did not yet have, at the time he was discharged, the 1983 sales figures for his sales area. Although he is correct in noting that the date on the exhibit listing these figures is January 17, 1984, one week after he was terminated, this is insufficient to prove that the figures were not available before that time. There is no indication that the exhibit was the sole source of information on sales figures; Manning's immediate supervisor testified that sales figures were usually available in the \"first week of January\"4 and that the exhibit could have been a second, duplicate report.",
"Elsewhere in the record, Manning's supervisors testified that they had access to his sales figures, adjusted them by considering uncontrollable factors, and determined that Manning had failed to meet the terms of his probation.5 In these circumstances, we cannot conclude that the district court's finding that Upjohn had good cause for discharging Manning was clearly erroneous. III. 15 We hold that the record indicates that Manning failed to meet the terms of his probation, and that the district court's finding that Upjohn had good cause for terminating Manning's employment is therefore not clearly erroneous. The judgment of the district court is AFFIRMED. 1 See Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 734 (Tex.1985) (\"This court in East Line & R.R.R. Co. v. Scott, 72 Tex. 70, 75, 10 S.W. 99, 102 (1888), held that employment for an indefinite term may be terminated at will and without cause.",
"The courts of Texas have steadfastly refused to vary from that holding. \"); Lumpkin v. H & C Communications, Inc., 755 S.W.2d 538, 539 (Tex. App.--Houston [1st Dist.] 1988, no writ); Salazar v. Amigos del Valle, Inc., 754 S.W.2d 410, 413 (Tex.App.--Corpus Christi 1988, no writ); Stiver v. Texas Instruments, Inc., 750 S.W.2d 843, 846 (Tex.App.--Houston [14th Dist.] 1988, no writ). In Sabine Pilot Serv., Inc., the Texas Supreme Court recognized a \"narrow\" exception to the employment-at-will doctrine, holding that an employer may be liable for damages in a wrongful discharge action if the at-will employee establishes that the sole reason for the discharge was that the employee refused to perform an illegal act. See 687 S.W.2d at 735. The Texas Legislature has also created several similarly-narrow exceptions to the doctrine. See, e.g., Tex.Rev.Civ.Stat. Ann. art. 8307c (prohibiting discharge for filing a worker's compensation claim).",
"Calls for the wholesale repudiation of the doctrine in Texas, however, have fallen on deaf ears. See Lumpkin, 755 S.W.2d at 540 2 On appeal, Manning correctly notes that under Texas law, Upjohn's employee handbook does not constitute a modification of his employment contract with Upjohn. See Aiello v. United Air Lines, Inc., 818 F.2d 1196, 1198 (5th Cir.1987); Reynolds Mfg. Co. v. Mendoza, 644 S.W.2d 536, 539 (Tex.App.--Corpus Christi 1982, no writ) (absent an express reciprocal agreement dealing with procedures for discharge, employee handbooks \"constitute[ ] no more than general guidelines\" and create no contractual rights in employees). Instead, he argues that the district court erred by finding that the two letters he received notifying him that he was being placed on probation did not constitute an agreement by Upjohn to modify his contract to provide that he could be terminated only if he failed to meet the terms of his probation 3 The district court did not specifically find that Upjohn's \"good cause\" for dismissing Manning was his failure to meet the terms of his probation; rather, it found that Manning's employment was terminated for \"poor performance,\" and, therefore, good cause.",
"Elsewhere, the findings note both Upjohn's complaints about Manning's job performance over the last several years of his employment and Upjohn's conclusion that he did not meet the probationary criteria Manning argues that the finding that good cause existed for his discharge was clearly erroneous insofar as it was based not upon his failure to meet the probationary criteria, but upon his general performance both before and during his probation. We believe that Manning misconstrues the findings. Reading them in a common-sense fashion, we interpret them as meaning that both Manning's pre-probationary and probationary performances were so \"poor\" as to justify his discharge.",
"If this were not the case, the lengthy and detailed findings of fact relating to Manning's probation would be superfluous. Since the only standard in the record by which to judge whether Manning's probationary performance was \"poor\" is the probationary criteria--reprinted in full twice in the district court's memorandum opinion--the court necessarily accepted Upjohn's contention that Manning had failed to meet the criteria, thus justifying his discharge. 4 This testimony is supported by exhibits listing sales figures for 1981 and 1982, which both bear dates indicating that they were available in the first week of January 5 Other evidence in the record supports their testimony. The date on the exhibit listing Manning's sales figures for 1983, for example, is January 3, 1984, one week before he was fired. These figures show that Manning suffered a 1.3% drop in sales while the sales district in which his territory was located showed a 8.5% gain. Because Manning's supervisors were likely familiar with the sales figures for the sales area in which his sales district was located, it does not require any leap of faith to conclude that Manning failed to meet the terms of his probation"
]
| https://www.courtlistener.com/api/rest/v3/opinions/515198/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 1 of 17
1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 HIQ LABS, INC., Case No. 17-cv-03301-EMC 8 Plaintiff, ORDER DEFERRING IN PART AND 9 v. DENYING IN PART PLAINTIFF’S MOTION TO DISMISS AND STRIKE 10 LINKEDIN CORPORATION, COUNTERCLAIMS 11 Defendant. Docket No. 182 12 Northern District of California United States District Court
13
14 This case arises out of Plaintiff hiQ Labs, Inc.’s access to and use of public profiles of
15 Defendant LinkedIn Corp.’s users. hiQ initiated this lawsuit against LinkedIn, bringing claims
16 for, inter alia, declaratory relief, tortious interference, and unfair competition. In response,
17 LinkedIn has asserted counterclaims, including violation of the federal Computer Fraud and Abuse
18 Act, breach of contract, and misappropriation. Currently pending before the Court is hiQ’s motion
19 to dismiss the counterclaims. Having considered the parties’ briefs and accompanying
20 submissions, the Court hereby DEFERS in part and DENIES in part hiQ’s motion.
21 I. FACTUAL & PROCEDURAL BACKGROUND
22 LinkedIn is a company that provides a social network for professionals. See Countercl. ¶
23 20. Members of LinkedIn “create individual profiles that serve as their professional profiles
24 online.” Countercl. ¶ 21. Today, the company has more than 700 million members worldwide.
25 See Countercl. ¶ 21.
26 LinkedIn gives its members numerous privacy protections and privacy choices. For
27 example:
28 • “[I]f a member decides that he or she wants to delete his or her profile, LinkedIn Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 2 of 17
1 will permanently delete the account and all of the data that the member posted to
2 LinkedIn within 30 days.” Countercl. ¶ 56 (alleging that this “helps ensure that
3 members are the ones who have ultimate control over [their information]”).
4 • Members can choose to have all or part of their profiles exempt from indexing by
5 well-known search engines such as Google, Bing, and Duck Duck Go. See
6 Countercl. ¶ 55.
7 • When members update information in their profiles, they can choose whether to
8 broadcast that change on LinkedIn. See Countercl. ¶ 57 (alleging that, if a member
9 chooses the “Do Not Broadcast” setting, the “changes that the member makes to his
10 or her profile will be visible, but the fact that the member made a change will not
11 be broadcast to his or her LinkedIn connections or to anyone else”); see also
12 Countercl. ¶ 58 (alleging that this feature was put in place “in response to feedback Northern District of California United States District Court
13 from LinkedIn members who were hesitant to update their profiles for fear that
14 their co-workers or employers would suspect they were searching for a new job or
15 otherwise thinking of leaving their current jobs”).
16 “LinkedIn’s website and servers are not unconditionally open to the general public.”
17 Countercl. ¶ 25. “This is because LinkedIn’s servers are protected by sophisticated defenses . . .
18 that evaluate whether to grant each request made to LinkedIn’s servers.” Countercl. ¶ 25. These
19 defenses “currently block hundreds of millions of requests to access guest profiles per day from
20 bots and scrapers, which constitute the majority of the requests made to LinkedIn’s servers for
21 guest profiles.” Countercl. ¶ 25.
22 Examples of LinkedIn’s defenses include the following:
23 • The Sentinel system. “Through Sentinel, LinkedIn maintains a list of IP addresses
24 that are not permitted to make calls on LinkedIn’s servers because they either have
25 in the past or are engaged in abuse.” Countercl. ¶ 27.
26 • LinkedIn’s “robots.txt” file. The file “provides a set of instructions to any
27 automated technologies visiting the LinkedIn site, as well as an explicit warning
28 . . . [,] that the use of bots to access LinkedIn without express permission is strictly 2 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 3 of 17
1 prohibited.” Countercl. ¶ 33. The file “does permit some webcrawlers (e.g., search
2 engines such as Google or Bing) to crawl and index the site.” Countercl. ¶ 33; see
3 also Countercl. ¶ 55 (alleging that that LinkedIn’s “Privacy Policy expressly
4 informs members that search engines may index and display information in their
5 profiles” but “LinkedIn limits such indexing to well-known search engines, such as
6 Google, Bing and Duck Duck Go”; furthermore, “LinkedIn permits members to
7 choose the parties of their profiles that search engines index, or to opt out of this
8 feature entirely”).
9 • LinkedIn’s “custom rules.” LinkedIn applies “over 200 custom rules . . . to
10 requests made to its servers to determine whether the requests is from a human or
11 bot.” Countercl. ¶ 30. Some of the rules fall under LinkedIn’s Guest Request
12 Scoring System and Member Request Scoring System. The Guest Request Scoring Northern District of California United States District Court
13 System “monitors and limits page requests made by users who are not logged into
14 LinkedIn. If unusual patterns or high levels of activity are detected, the user is
15 redirected to LinkedIn’s log-in page and is prevented from viewing additional
16 LinkedIn pages while not logged in.” Countercl. ¶ 32. “The Member Request
17 Scoring System monitors page requests made by LinkedIn members while logged
18 into their accounts. If high levels of activity are detected for certain types of
19 accounts, the member is logged out and may either be warned, restricted, or
20 challenged with a CAPTCHA in order to log back into LinkedIn.” Countercl. ¶ 31.
21 • Password barrier. “Much of the information on LinkedIn’s website is behind a
22 password barrier. Periodically, LinkedIn will prevent ‘logged-out’ users from
23 viewing more than a certain number of pages before being asked to enter a user
24 name and password to see more.” Countercl. ¶ 34.
25 • The FUSE system. “FUSE scans and imposes a limit on the activity that an
26 individual LinkedIn member may initiate on the site. This limit is intended to
27 prevent would-be data scrapers utilizing automated technologies from quickly
28 accessing a substantial volume of member profiles.” Countercl. ¶ 26. 3 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 4 of 17
1 In addition to the above defenses, LinkedIn’s User Agreement “prohibits accessing and
2 scraping of LinkedIn’s website through automated software and other technologies.” Countercl. ¶
3 36; see also Countercl. ¶ 49 (citing § 8.2 of the User Agreement). Members of LinkedIn are
4 subject to the User Agreement but so too are users and visitors of the LinkedIn website. See
5 Countercl. ¶ 37. For example, “[t]he relevant version of the User Agreement, effective October
6 23, 2014, states that ‘You agree that by clicking “Join Now[,]” “Join LinkedIn” “Sign Up” or
7 similar[] registering, accessing, or using our services . . . , you are entering into a legally binding
8 agreement (even if you are using our Services on behalf of a company).’” Countercl. ¶ 37.
9 Notwithstanding these measures, hiQ accesses and aggregates publicly available profiles
10 on LinkedIn and uses the data for the data analytic tools it sells.
11 A. hiQ’s First Amended Complaint (“FAC”)
12 In its FAC, hiQ asserts the following claims for relief: Northern District of California United States District Court
13 (1) A declaratory judgment that hiQ has not violated and will not violate the Computer
14 Fraud and Abuse Act of 18 U.S.C. § 1030 by accessing LinkedIn public profiles.
15 (2) A declaratory judgment that hiQ has not violated and will not violate the Digital
16 Millennium Copyright Act, 17 U.S.C. § 1201, by accessing LinkedIn public
17 profiles.
18 (3) A declaratory judgment that hiQ has not committed and will not commit common
19 law trespass to chattels by accessing LinkedIn public profiles.
20 (4) A declaratory judgment that hiQ has not violated and will not violate California
21 Penal Code § 502(c) by accessing LinkedIn public profiles.
22 (5) Intentional interference with contract.
23 (6) Intentional interference with prospective economic advantage.
24 (7) Unfair competition in violation of California Business & Professions Code §
25 17200.
26 (8) Unlawful competition in violation of § 17200.
27 (9) Fraudulent competition in violation of § 17200.
28 4 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 5 of 17
1 B. LinkedIn’s Counterclaims
2 In its responsive counterclaims, LinkedIn pleads the following causes of action against
3 hiQ:
4 (1) Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030.
5 (2) Violation of the California Comprehensive Computer Access and Fraud Act, Cal.
6 Pen. Code § 502 et seq.
7 (3) Breach of contract.
8 (4) Misappropriation.
9 (5) Trespass to chattels.
10 C. Prior Court Rulings
11 Before LinkedIn filed its counterclaims in the instant case, this Court issued an order
12 granting hiQ a preliminary injunction with respect to its claims for relief. See hiQ Labs, Inc. v. Northern District of California United States District Court
13 LinkedIn Corp., 273 F. Supp. 3d 1099 (N.D. Cal. 2017) (hereafter hiQ I). LinkedIn appealed that
14 order; the Ninth Circuit affirmed. See hiQ Labs, Inc. v. LinkedIn Corp., 938 F.3d 985 (9th Cir.
15 2019) (hereinafter hiQ II). LinkedIn thereafter filed a petition for a writ of certiorari with the
16 Supreme Court. LinkedIn’s petition is still pending.
17 II. DISCUSSION
18 A. Legal Standard
19 Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and plain
20 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A
21 complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil
22 Procedure 12(b)(6). See Fed. R. Civ. P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss
23 after the Supreme Court’s decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic
24 Corp. v. Twombly, 550 U.S. 544 (2007), a plaintiff’s “factual allegations [in the complaint] ‘must .
25 . . suggest that the claim has at least a plausible chance of success.’” Levitt v. Yelp! Inc., 765 F.3d
26 1123, 1135 (9th Cir. 2014). The court “accept[s] factual allegations in the complaint as true and
27 construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St.
28 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a 5 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 6 of 17
1 complaint . . . may not simply recite the elements of a cause of action [and] must contain sufficient
2 allegations of underlying facts to give fair notice and to enable the opposing party to defend itself
3 effectively.” Levitt, 765 F.3d at 1135 (internal quotation marks omitted). “A claim has facial
4 plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
5 inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The
6 plausibility standard is not akin to a probability requirement, but it asks for more than a sheer
7 possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted).
8 In the instant case, hiQ has challenged under Rule 12(b)(6) each of LinkedIn’s five
9 counterclaims:
10 (1) Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030.
11 (2) Violation of the California Comprehensive Computer Access and Fraud Act, Cal.
12 Pen. Code § 502 et seq. Northern District of California United States District Court
13 (3) Breach of contract.
14 (4) Misappropriation.
15 (5) Trespass to chattels.
16 B. Violation of the Computer Fraud and Abuse Act
17 The Computer Fraud and Abuse Act (“CFAA”) provides in relevant part: “Whoever . . .
18 intentionally accesses a computer without authorization or exceeds authorized access,[1] and
19 thereby obtains . . . information from any protected computer . . . shall be punished” by fine or
20 imprisonment.” 18 U.S.C. § 1030(a)(2)(C).
21 In its decision affirming the preliminary injunction in this case, the Ninth Circuit provided
22 guidance on its views of the CFAA. It determined, for example, that hiQ had raised a serious
23 question as to its contention that, “where access is open to the general public, the CFAA ‘without
24 authorization’ concept is inapplicable.” hiQ II, 938 F.3d at 1000.
25 Primarily relying on the Ninth Circuit’s decision, hiQ argues that the Court should dismiss
26
27 1 “[E]xceeds authorized access” under the CFAA “means to access a computer with authorization 28 and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. § 1030(e)(6). 6 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 7 of 17
1 LinkedIn’s CFAA counterclaim. At this juncture, however, the Court finds it prudent to defer
2 ruling on hiQ’s motion because LinkedIn has asked the Supreme Court to review the Ninth
3 Circuit’s decision. In addition, the Supreme Court currently has before it a case that will address a
4 related issue – i.e., when does a person exceed authorized access under the CFAA? – that may
5 well have an impact on the instant case. See United States v. Van Buren, 940 F.3d 1192 (11th Cir.
6 2019), certiorari granted by 140 S. Ct. 2667 (2020). These circumstances counsel against a ruling
7 on the CFAA counterclaim at this point in the proceedings. The Court will be in a better position
8 to address the counterclaim once the Supreme Court has issued its decision in Van Buren and/or
9 the instant case.
10 C. Violation of the California Comprehensive Computer Access and Fraud Act, Cal. Pen.
11 Code § 502 et seq.
12 LinkedIn has also asserted a counterclaim for violation of the California Comprehensive Northern District of California United States District Court
13 Computer Access and Fraud Act. The relevant provision in the Act can be found in California
14 Penal Code § 502(c), which provides in relevant part as follows:
15 [A]ny person who commits any of the following acts is guilty of a public offense: 16 (1) Knowingly accesses and without permission alters, damages, 17 deletes, destroys, or otherwise uses any data, computer, computer system, or computer network in order to either (A) 18 devise or execute any scheme or artifice to defraud, deceive, or extort, or (B) wrongfully control or obtain money, 19 property, or data. 20 (2) Knowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or 21 computer network, or takes or copies any supporting documentation, whether existing or residing internal or 22 external to a computer, computer system, or computer network. 23 .... 24 (7) Knowingly and without permission accesses or causes to be 25 accessed any computer, computer system, or computer network. 26
27 Cal. Pen. Code § 502(c). Section 502(c)(7) bears similarity to the CFAA, focusing on
28 unauthorized access. However, §§ 502(c)(1) and (2) are different from the CFAA (at least as 7 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 8 of 17
1 interpreted by the Ninth Circuit), focusing instead on unauthorized use. See also United States v.
2 Christensen, 828 F.3d 763, 789 (9th Cir. 2016) (noting that, “[i]n contrast to the CFAA, the
3 California statute does not require unauthorized access” but rather “knowing access[;] [w]hat
4 makes that access unlawful is that the person ‘without permission takes, copies, or makes use of’
5 data on the computer”); Power Ventures, 844 F.3d at 1069 (noting that, e.g., § 502(c)(2) is
6 different from the CFAA).
7 Although § 502 is not on all fours with the CFAA, the Court nevertheless finds it prudent
8 to defer ruling on the § 502 counterclaim as well. The Supreme Court’s decision in Van Buren
9 and/or the instant case may still affect the § 502 analysis – e.g., whether, as a matter of policy, the
10 use of public information should be deemed criminal conduct.
11 D. Breach of Contract
12 LinkedIn’s breach-of-contract counterclaim is predicated on the User Agreement which Northern District of California United States District Court
13 “prohibits accessing LinkedIn’s website through automated means” and “prohibits scraping data
14 from LinkedIn’s website using automated means.” Countercl. ¶¶ 115-16. According to LinkedIn,
15 “hiQ’s conduct has damaged LinkedIn, and caused and continues to cause irreparable harm and
16 injury to LinkedIn.” Countercl. ¶ 125 (emphasis added).
17 In its motion, hiQ seeks to dismiss only part of the counterclaim. hiQ points out that, in its
18 order granting a preliminary injunction, this Court stated: “hiQ signed up as a LinkedIn user and is
19 thus bound by the User Agreement[,] [b]ut LinkedIn has since terminated hiQ’s user status.” hiQ
20 I, 273 F. Supp. at 1107 n.4. Similarly, the Ninth Circuit in affirming the preliminary injunction
21 order stated: “[h]iQ is no longer bound by the User Agreement, as LinkedIn has terminated hiQ’s
22 user status.” hiQ II, 983 F.3d at 991 n.5. Based on these statements, hiQ argues: “LinkedIn’s
23 claim that hiQ ‘continues to’ breach the User Agreement is precluded by the findings of this Court
24 and the Ninth Circuit,” and, “as LinkedIn cannot state a claim for any continuing or ongoing
25 breach of the User Agreement, LinkedIn’s claim of injunctive relief or for relief accrued past the
26 date of hiQ’s termination should be struck.” Mot. at 12 (emphasis added).
27 The problem with hiQ’s position is that, even if LinkedIn terminated hiQ as a LinkedIn
28 member subject to the User Agreement (a fact that LinkedIn disputes), that does not necessarily 8 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 9 of 17
1 mean that hiQ is not subject to the User Agreement. In its counterclaim, LinkedIn alleges that
2 “[a]ny future use of LinkedIn’s website by hiQ is subject to the terms of the User Agreement,”
3 Countercl. ¶ 126, because, “[b]y its terms, the User Agreement applies not only to LinkedIn
4 members, which hiQ was, but to anybody who uses LinkedIn’s website.” Countercl. ¶ 51
5 (emphasis added). According to LinkedIn, “[a]t all relevant times, LinkedIn . . . prominently
6 displayed a link to the User Agreement on LinkedIn’s homepage. Those who use LinkedIn’s
7 website with actual knowledge of the terms of the User Agreement are required to abide by those
8 terms if they choose to access LinkedIn’s website.” Countercl. ¶ 109. In support, LinkedIn cites
9 Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014).
10 Nguyen is an arbitration-related case; nevertheless, it contains principles relevant to the
11 instant case because the defendant there argued, inter alia, that the plaintiff was subject to an
12 arbitration provision based on Terms of Use posted as a hyperlink on the defendant’s website. Northern District of California United States District Court
13 The Ninth Circuit noted that
14 [c]ontracts formed on the Internet come primarily in two flavors: "clickwrap" (or "click-through") agreements, in which website users 15 are required to click on an "I agree" box after being presented with a list of terms and conditions of use; and "browsewrap" agreements, 16 where a website's terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen. . . . 17 "Unlike a clickwrap agreement, a browsewrap agreement does not 18 require the user to manifest assent to the terms and conditions expressly . . . [a] party instead gives his assent simply by using the 19 website." Indeed, "in a pure-form browsewrap agreement, 'the website will contain a notice that – by merely using the services of, 20 obtaining information from, or initiating applications within the website – the user is agreeing to and is bound by the site's terms of 21 service.'" Thus, "by visiting the website – something that the user has already done – the user agrees to the Terms of Use not listed on 22 the site itself but available only by clicking a hyperlink." "The defining feature of browsewrap agreements is that the user can 23 continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a 24 webpage exists." "Because no affirmative action is required by the website user to agree to the terms of a contract other than his or her 25 use of the website, the determination of the validity of the browsewrap contract depends on whether the user has actual or 26 constructive knowledge of a website's terms and conditions." 27 Id. at 1175-76.
28 The Ninth Circuit continued by noting that “courts have consistently enforced browsewrap 9 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 10 of 17
1 agreements where the user had actual notice of the agreement”; in contrast, “where . . . there is no
2 evidence that the website user had actual knowledge of the agreement, the validity of the
3 browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry
4 notice of the terms of the contract.” Id. at 1176-77.
5 Thus, under Nguyen, LinkedIn has a basis for arguing that, if hiQ has actual notice of the
6 terms of the User Agreement (which contains, e.g., a prohibition against scraping), it can be
7 subject to those terms. Although currently hiQ is allowed access to the LinkedIn website and to
8 copy or use public profiles posted thereon under the preliminary injunction, this does not mean
9 that hiQ is entitled to a permanent injunction. Based on the counterclaim as pled, LinkedIn has a
10 basis for asserting that it is entitled to a permanent injunction – or at least a declaration – that hiQ
11 is subject to the User Agreement in the future. Because whether hiQ can be bound to the User
12 Agreement raises a factual question, the counterclaim cannot be dismissed at this juncture. Northern District of California United States District Court
13 E. Misappropriation
14 The California Court of Appeal has explained that
15 [c]ommon law misappropriation is one of a number of doctrines subsumed under the umbrella of unfair competition. It is normally 16 invoked in an effort to protect something of value not otherwise covered by patent or copyright law, trade secret law, breach of 17 confidential relationship, or some other form of unfair competition. The elements of a claim for misappropriation under California law 18 consist of the following: (a) the plaintiff invested substantial time, skill or money in developing its property; (b) the defendant 19 appropriated and used the plaintiff's property at little or no cost to the defendant; (c) the defendant's appropriation and use of the 20 plaintiff's property was without the authorization or consent of the plaintiff; and (d) the plaintiff can establish that it has been injured by 21 the defendant's conduct. 22 United States Golf Ass'n v. Arroyo Software Corp., 69 Cal. App. 4th 607, 618 (1999) [hereinafter
23 USGA].
24 In its counterclaim, LinkedIn alleges that hiQ engaged in misappropriation because,
25 “without authorization, [it] wrongfully accessed LinkedIn’s website, computer systems and
26 servers, and obtained data from the LinkedIn site. The data that hiQ took included time-sensitive
27 updates to member profiles.” Countercl. ¶ 130. In response, hiQ makes two arguments: (1)
28 LinkedIn has no ownership interest in the data allegedly misappropriated (rather, that data belongs 10 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 11 of 17
1 to LinkedIn members) and (2) any misappropriation counterclaim here would be preempted by the
2 California Uniform Trade Secret Act (“CUTSA”).
3 1. Property Rights
4 hiQ’s first argument is, in essence, that LinkedIn has no property rights at issue in the
5 instant case. hiQ is corrected that LinkedIn’s members, and not LinkedIn itself, owns the
6 information in their public profiles. However, that does not mean that LinkedIn has no property
7 rights. As LinkedIn points out, there may be “quasi-property” rights that are protected. For
8 example, one company can misappropriate “another’s commercial advantage” by misappropriating
9 the “‘expenditure of labor, skill, and money’ of another.” Am. Cyanamid Co. v. Am. Home
10 Assurance Co., 30 Cal. App. 4th 969, 976-77 (1994) (quoting International News Service v.
11 Associated Press, 248 U.S. 215, 239 (1918) [hereinafter INS]).
12 As indicated above, California’s recognition of this kind of misappropriation is based on Northern District of California United States District Court
13 INS which recognized a property interest in “hot news.” See id.; see also Sammons & Sons v.
14 Ladd-Fab, Inc., 138 Cal. App. 3d 306, 311 (1982) (noting that “INS expanded existing concepts of
15 unfair competition to include protection against appropriation of competitive advantage ‘acquired
16 by complainant as the result of organization and the expenditure of labor, skill, and money’ by a
17 defendant who thereby ‘is endeavoring to reap where it has not sown’”). In INS, the plaintiff and
18 the defendant were competitors in the gathering and distribution of news and its publication for
19 profit in newspapers throughout the United States.” INS, 248 U.S. at 229. The plaintiff filed suit
20 to stop the defendant from, inter alia, copying news from bulletin boards and early editions of the
21 plaintiff’s newspapers and selling it, “either bodily or after rewriting it, to defendant’s customers.”
22 Id. at 231.
23 The Supreme Court noted that, while “the news of current events may be regarded as
24 common property[,] [w]hat we are concerned with is the business of making it known to the
25 world.” Id. at 235. “The peculiar value of news is in the spreading of it while it is fresh.” Id. In
26 other words,
27 although we may and do assume that neither party has any remaining property interest as against the public in uncopyrighted 28 news matter after the moment of its first publication, it by no means 11 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 12 of 17
follows that there is no remaining property interest in it as between 1 themselves. For, to both of them alike, news matter, however little susceptible of ownership or dominion in the absolute sense, is stock 2 in trade, to be gathered at the cost of enterprise, organization, skill, labor, and money, and to be distributed and sold to those who will 3 pay money for it, as for any other merchandise. Regarding the news, therefore, as but the material out of which both parties are 4 seeking to make profits at the same time and in the same field, we hardly can fail to recognize that for this purpose, and as between 5 them, it must be regarded as quasi property, irrespective of the rights of either as against the public. 6
7 Id. at 236 (emphasis added). California courts have cited INS approvingly. See, e.g., Balboa Ins.
8 Co. v. Trans Glob. Equities, 218 Cal. App. 3d 1327, 1342 (1990) (“Common law misappropriation
9 presents a final legal theory under the broad unfair competition umbrella. The doctrine originated
10 in the United States Supreme Court's decision of [INS].”).
11 hiQ suggests that, to the extent INS is recognized under California law, INS should be
12 narrowly construed and Northern District of California United States District Court
13 limited to cases where: (i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a 14 defendant's use of the information constitutes free-riding on the plaintiff's efforts; (iv) the defendant is in direct competition with a 15 product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others 16 would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened. 17
18 Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 845 (2d Cir. 1997) [hereinafter “NBA”].
19 But hiQ has cited no California state court opinion adopting this narrow view. Rather, the
20 elements of a common law misappropriation claim under California law have been outlined above.
21 See Balboa, 218 Cal. App. 3d at 1342 (recognizing that common law misappropriation has its
22 roots in INS but not limiting the claim to the hot news context and stating that “[t]he cause of
23 action has three elements: (1) the plaintiff has invested substantial time and money in development
24 of its . . . property; (2) the defendant has appropriated the [property] at little or no cost; and (3) the
25 plaintiff has been injured by the defendant’s conduct”) (internal quotation marks omitted).
26 Although hiQ has cited Pollstar v. Gigmania, Ltd., 170 F. Supp. 2d 974, 979 (E.D. Cal. 2000),
27 where the district court applied the Second Circuit’s approach above, that case is not dispositive.
28 hiQ has cited no California case that imposes the NBA restrictions, even in a case involving “hot 12 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 13 of 17
1 news.”
2 If anything, California authority rejects, at least in part, the narrow interpretation. For
3 instance, in USGA, the state court expressly rejected the argument that an essential element of a
4 misappropriation claim was direct competition between the plaintiff and the defendant. See
5 USGA, 69 Cal. App. 4th at 618 (“Under the California law applicable here, . . . the essential
6 elements of a misappropriation claim simply do not include any such requirement of proof of
7 direct competition between the plaintiff and the defendant.”). Cf. Colo. Escrow & Title Servs.,
8 LLC v. Deinema, No. 2012CV387, 2015 Colo. Dist. LEXIS 1802, *34-36 (Colo. Dist. Ct. Jan. 23,
9 2015) (noting that Colorado law recognizes a misappropriation claim “where one either
10 wrongfully profits from another’s expenditure of labor, skill or money, or capitalizes wrongfully
11 on the commercial values of another”; rejecting the argument that such a claim requires that the
12 plaintiff and defendant be competitors – it was enough that “ESI has profited from TCR's Northern District of California United States District Court
13 accumulation and organization of public records”).
14 Finally, even if the Court were inclined to adopt a narrow view of INS, LinkedIn has still
15 met that standard (at least based on the allegations made by the parties). For example, regarding
16 direct competition, hiQ itself has charged LinkedIn with blocking hiQ’s access because LinkedIn
17 “wants to monetize [its] data itself with a competing product.” hiQ I, 273 F. Supp. 3d at 1117.
18 Also, to the extent information must be time sensitive, LinkedIn has alleged that “[t]he data that
19 hiQ took included time-sensitive updates to member profiles.” Countercl. ¶ 130. Finally, there
20 are questions of fact as to whether hiQ is a free rider with respect to LinkedIn and whether hiQ’s
21 use of LinkedIn’s data reduces LinkedIn’s incentive to invest in its infrastructure.
22 2. CUTSA Preemption
23 hiQ argues that, even if LinkedIn has a property interest to support a misappropriation
24 counterclaim, the counterclaim must still be dismissed based on CUTSA preemption. This
25 contention lacks merit. As LinkedIn points out, the misappropriation counterclaim is not
26 preempted because the whole point of such a claim is to protect a property right “not otherwise
27 covered by patent or copyright law, trade secret law, breach of confidential relationship, or some
28 other form of unfair competition.” USGA, 69 Cal. App. 4th at 618 (emphasis added). 13 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 14 of 17
1 hiQ points out that, under certain circumstances, there can be CUTSA preemption even
2 where the property right at issue does not constitute a trade secret per se. For instance, in Lifeline
3 Food Co. v. Gilman Cheese Corp., No. 5:15-cv-00034-PSG, 2015 U.S. Dist. LEXIS 64155 (N.D.
4 Cal. May 15, 2015), the district court noted that the “CUTSA may supersede ‘claims based on the
5 misappropriation of information that does not satisfy the definition of trade secret under CUTSA’
6 when ‘the basis of the alleged property right is in essence that the information is not . . . generally
7 known to the public,’ because then ‘the claim is sufficiently close to a trade secret claim that it
8 should be superseded.’” Id. at *3. However, in the instant case, LinkedIn is not making any claim
9 that the public profiles are confidential or not generally known to the public. Rather, the property
10 right it is claiming is based on the labor, skill, money, etc. that it put into developing the
11 professional networking system. There is thus no basis for CUTSA preemption.
12 F. Trespass to Chattels Northern District of California United States District Court
13 “Under California law, trespass to chattels ‘lies where an intentional interference with the
14 possession of personal property has proximately caused injury.’” Intel Corp. v. Hamidi, 30 Cal.
15 4th 1342, 1350-51 (2003). The owner of the property may recover actual damages suffered by
16 reason of the impairment of the property or the loss of its use.2 See id. at 1351. Injunctive relief is
17 also possible where there is threatened injury. See id. at 1352 (asking whether the defendant’s
18 actions “cause or threatened to cause damage to Intel’s computer system, or injury to it rights in
19 that personal property”).
20 In its motion, hiQ argues that the trespass claim should be dismissed because LinkedIn has
21 failed to adequately allege injury. In response, LinkedIn contends that it has adequately alleged
22 existing injury as well as threatened future injury.
23 Regarding existing injury, LinkedIn contends that a small amount of harm can support
24 trespass to chattels. See Opp’n at 24. In support, it cites Thrifty-Tel, Inc. v. Bezenek, 46 Cal. App.
25
26 2 In Intel, the California Supreme Court rejected the plaintiff’s argument that its damages included the time its staff spent time attempting to block the defendant’s email messages. “‘[I]t is circular 27 to premise the damage element of a tort solely upon the steps taken to prevent the damage. Injury can only be established by the completed tort’s consequences, not by the cost of the steps taken to 28 avoid the injury and prevent the tort; otherwise, we can create injury for every supposed tort.’” Intel, 30 Cal. 4th at 1359. 14 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 15 of 17
1 4th 1559 (1996). In Thrifty-Tel, the plaintiff was a company that provided long-distance telephone
2 services. “Subscribers' telephones are programmed with a confidential access code and a six-digit
3 authorization code that directs calls into Thrifty-Tel's computerized switching network. An
4 unauthorized user who knows both an access and an authorization code can make long-distance
5 calls without being charged for them.” Id. at 1563. During a three-day period, the defendants’
6 children “gained entry into Thrifty-Tel’s system with [a confidential] code [that a friend knew]
7 and conducted manual random searches for a six-digit authorization code. They made
8 approximately 90 calls, consuming roughly 24 minutes of telephone time during the first 2 days.”
9 Id. at 1564. The following day, they made “72 manual attempts to identify an authorization code
10 over an almost 16-minute period.” Id. The state appellate court found that the plaintiff had a valid
11 trespass claim and remanded to the trial court to determine damages. See id. at 1570, 1572
12 (holding that “the superior court erred in awarding contract or tort damages based on [a] tariff Northern District of California United States District Court
13 instead of requiring plaintiff to prove actual damages”).
14 But Thrifty-Tel is distinguishable from the instant case in that, there, an actual entry into
15 the plaintiff’s system was made, thus making the case more akin to a traditional computer hacking
16 or “breaking and entering” claim whereas, here, there has been an alleged burden on LinkedIn’s
17 servers and/or infrastructure. Thus, more on point than Thrifty-Tel is the California Supreme
18 Court opinion in Intel which noted that, “[s]hort of dispossession, personal injury, or physical
19 damage . . . , intermeddling is actionable only if the chattel is impaired as to its condition, quality,
20 or value or . . . the possessor is deprived of the use of the chattel for a substantial time” – i.e., “for
21 a time so substantial that it is possible to estimate the loss caused thereby.” Intel, 30 Cal. 4th at
22 1357 (internal quotation marks omitted; adding that “‘[a] mere momentary or theoretical
23 deprivation of use is not sufficient unless there is a dispossession’”). This statement from Intel
24 suggests that, at least as to impaired use, the quantum of harm cannot be negligible.
25 That being said, LinkedIn fairly argues that there is a question of fact as to what extent
26 hiQ’s actions burdened LinkedIn’s servers/infrastructure. LinkedIn has alleged:
27 • “[S]craping traffic has grown substantially over the past few years.” Countercl. ¶
28 82. 15 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 16 of 17
1 • “LinkedIn . . . receives many millions of unauthorized requests of its servers from
2 bots every day. The volume . . . reached 95 million requests per day by the outset
3 of the parties’ dispute, and has further increased dramatically during this litigation.”
4 Countercl. ¶ 82.
5 • “[T]aken in the aggregate, automated scrapers place a substantial burden on
6 LinkedIn’s infrastructure – reaching at present into hundreds of millions of blocked
7 access requests per day.” Countercl. ¶ 83. “[T]he significant volume of automated
8 scraping activity forces LinkedIn to invest more in capital and operational
9 resources than it otherwise would if it were able to prevent these access requests
10 from ever happening. Scraping operations force LinkedIn to alter its priorities for
11 use of its computing resources and impair the efficiency of such resources.”
12 Countercl. ¶ 83. Northern District of California United States District Court
13 • “On information and belief, hiQ’s bots made millions of calls to LinkedIn’s servers
14 prior to May 23, 2017 [the date of the cease-and-desist letter].” Countercl. ¶ 68.
15 • “The full extent of hiQ’s illicit scraping is not currently known to LinkedIn, as hiQ
16 has gone to substantial lengths to hide its methods from public view.” Countercl. ¶
17 64.
18 In short, the requests generated by hiQ’s bots burden LinkedIn’s servers.
19 As to future injury, LinkedIn has also alleged enough to support a request for injunctive
20 relief. Regarding injunctive relief, the California Supreme Court took note in Intel of two district
21 court decisions finding that unauthorized robotic data collection from a company’s publicly
22 accessible website was a trespass on the company’s computer system in part because of “the
23 deleterious impact this activity could have, especially if replicated by other searchers, on the
24 functioning of a Web site’s computer equipment.” Intel, 30 Cal. 4th at 1354. Tracking Intel,
25 LinkedIn makes the following allegations in support of its counterclaim for trespass to chattels: (1)
26 “LinkedIn owns, possesses, and/or has the right to possess the servers and infrastructure used to
27 run its business”; (2) “hiQ intentionally interfered with LinkedIn’s use and possession” of such;
28 and (3) “hiQ’s conduct, if expanded and/or replicated unchecked by others, will cause harm to 16 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 17 of 17
1 LinkedIn in the form of impaired condition, quality and value of its servers, infrastructure and
2 services.” Countercl. ¶¶ 136-37, 139; see also Countercl. ¶ 84 (“It is only because of LinkedIn’s
3 ongoing protection efforts as well as its willingness to spend increasing amounts to maintain a
4 high service level that it has been able to prevent a degradation in the quality of its services.”);
5 Countercl. ¶ 85 (“LinkedIn will be forced into making the choice of investing more in its
6 infrastructure to ensure the availability of its website, or succumbing to the burden of bot-based
7 scraping.”).
8 III. CONCLUSION
9 For the foregoing reasons, the Court denies hiQ’s motion to dismiss the counterclaims for
10 breach of contract, misappropriation, and trespass to chattels. The Court defers ruling on the
11 motion to dismiss the counterclaims for violation of the CFAA and California Penal Code § 502.
12 For administrative purposes only, the Court terminates hiQ’s motion to dismiss, even Northern District of California United States District Court
13 though the CFAA and § 502 counterclaims have not yet been addressed. To be clear, this
14 termination does not bar hiQ from renewing its motion to dismiss the CFAA and § 502
15 counterclaims once the Supreme Court issues its decision in Van Buren and/or this case.
16
17 IT IS SO ORDERED.
18
19 Dated: April 19, 2021
20
21 ______________________________________ EDWARD M. CHEN 22 United States District Judge 23
24
25
26
27
28 17 | 2021-04-19 | [
"Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 1 of 17 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 HIQ LABS, INC., Case No. 17-cv-03301-EMC 8 Plaintiff, ORDER DEFERRING IN PART AND 9 v. DENYING IN PART PLAINTIFF’S MOTION TO DISMISS AND STRIKE 10 LINKEDIN CORPORATION, COUNTERCLAIMS 11 Defendant. Docket No. 182 12 Northern District of California United States District Court 13 14 This case arises out of Plaintiff hiQ Labs, Inc.’s access to and use of public profiles of 15 Defendant LinkedIn Corp.’s users.",
"hiQ initiated this lawsuit against LinkedIn, bringing claims 16 for, inter alia, declaratory relief, tortious interference, and unfair competition. In response, 17 LinkedIn has asserted counterclaims, including violation of the federal Computer Fraud and Abuse 18 Act, breach of contract, and misappropriation. Currently pending before the Court is hiQ’s motion 19 to dismiss the counterclaims. Having considered the parties’ briefs and accompanying 20 submissions, the Court hereby DEFERS in part and DENIES in part hiQ’s motion. 21 I. FACTUAL & PROCEDURAL BACKGROUND 22 LinkedIn is a company that provides a social network for professionals. See Countercl. ¶ 23 20. Members of LinkedIn “create individual profiles that serve as their professional profiles 24 online.” Countercl. ¶ 21.",
"Today, the company has more than 700 million members worldwide. 25 See Countercl. ¶ 21. 26 LinkedIn gives its members numerous privacy protections and privacy choices. For 27 example: 28 • “[I]f a member decides that he or she wants to delete his or her profile, LinkedIn Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 2 of 17 1 will permanently delete the account and all of the data that the member posted to 2 LinkedIn within 30 days.” Countercl. ¶ 56 (alleging that this “helps ensure that 3 members are the ones who have ultimate control over [their information]”).",
"4 • Members can choose to have all or part of their profiles exempt from indexing by 5 well-known search engines such as Google, Bing, and Duck Duck Go. See 6 Countercl. ¶ 55. 7 • When members update information in their profiles, they can choose whether to 8 broadcast that change on LinkedIn. See Countercl. ¶ 57 (alleging that, if a member 9 chooses the “Do Not Broadcast” setting, the “changes that the member makes to his 10 or her profile will be visible, but the fact that the member made a change will not 11 be broadcast to his or her LinkedIn connections or to anyone else”); see also 12 Countercl. ¶ 58 (alleging that this feature was put in place “in response to feedback Northern District of California United States District Court 13 from LinkedIn members who were hesitant to update their profiles for fear that 14 their co-workers or employers would suspect they were searching for a new job or 15 otherwise thinking of leaving their current jobs”).",
"16 “LinkedIn’s website and servers are not unconditionally open to the general public.” 17 Countercl. ¶ 25. “This is because LinkedIn’s servers are protected by sophisticated defenses . . . 18 that evaluate whether to grant each request made to LinkedIn’s servers.” Countercl. ¶ 25. These 19 defenses “currently block hundreds of millions of requests to access guest profiles per day from 20 bots and scrapers, which constitute the majority of the requests made to LinkedIn’s servers for 21 guest profiles.” Countercl. ¶ 25. 22 Examples of LinkedIn’s defenses include the following: 23 • The Sentinel system. “Through Sentinel, LinkedIn maintains a list of IP addresses 24 that are not permitted to make calls on LinkedIn’s servers because they either have 25 in the past or are engaged in abuse.” Countercl. ¶ 27. 26 • LinkedIn’s “robots.txt” file.",
"The file “provides a set of instructions to any 27 automated technologies visiting the LinkedIn site, as well as an explicit warning 28 . . . [,] that the use of bots to access LinkedIn without express permission is strictly 2 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 3 of 17 1 prohibited.” Countercl. ¶ 33. The file “does permit some webcrawlers (e.g., search 2 engines such as Google or Bing) to crawl and index the site.” Countercl. ¶ 33; see 3 also Countercl. ¶ 55 (alleging that that LinkedIn’s “Privacy Policy expressly 4 informs members that search engines may index and display information in their 5 profiles” but “LinkedIn limits such indexing to well-known search engines, such as 6 Google, Bing and Duck Duck Go”; furthermore, “LinkedIn permits members to 7 choose the parties of their profiles that search engines index, or to opt out of this 8 feature entirely”). 9 • LinkedIn’s “custom rules.” LinkedIn applies “over 200 custom rules . .",
". to 10 requests made to its servers to determine whether the requests is from a human or 11 bot.” Countercl. ¶ 30. Some of the rules fall under LinkedIn’s Guest Request 12 Scoring System and Member Request Scoring System. The Guest Request Scoring Northern District of California United States District Court 13 System “monitors and limits page requests made by users who are not logged into 14 LinkedIn. If unusual patterns or high levels of activity are detected, the user is 15 redirected to LinkedIn’s log-in page and is prevented from viewing additional 16 LinkedIn pages while not logged in.” Countercl.",
"¶ 32. “The Member Request 17 Scoring System monitors page requests made by LinkedIn members while logged 18 into their accounts. If high levels of activity are detected for certain types of 19 accounts, the member is logged out and may either be warned, restricted, or 20 challenged with a CAPTCHA in order to log back into LinkedIn.” Countercl. ¶ 31. 21 • Password barrier. “Much of the information on LinkedIn’s website is behind a 22 password barrier. Periodically, LinkedIn will prevent ‘logged-out’ users from 23 viewing more than a certain number of pages before being asked to enter a user 24 name and password to see more.” Countercl. ¶ 34.",
"25 • The FUSE system. “FUSE scans and imposes a limit on the activity that an 26 individual LinkedIn member may initiate on the site. This limit is intended to 27 prevent would-be data scrapers utilizing automated technologies from quickly 28 accessing a substantial volume of member profiles.” Countercl. ¶ 26. 3 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 4 of 17 1 In addition to the above defenses, LinkedIn’s User Agreement “prohibits accessing and 2 scraping of LinkedIn’s website through automated software and other technologies.” Countercl. ¶ 3 36; see also Countercl. ¶ 49 (citing § 8.2 of the User Agreement). Members of LinkedIn are 4 subject to the User Agreement but so too are users and visitors of the LinkedIn website. See 5 Countercl. ¶ 37. For example, “[t]he relevant version of the User Agreement, effective October 6 23, 2014, states that ‘You agree that by clicking “Join Now[,]” “Join LinkedIn” “Sign Up” or 7 similar[] registering, accessing, or using our services . . . , you are entering into a legally binding 8 agreement (even if you are using our Services on behalf of a company).’” Countercl.",
"¶ 37. 9 Notwithstanding these measures, hiQ accesses and aggregates publicly available profiles 10 on LinkedIn and uses the data for the data analytic tools it sells. 11 A. hiQ’s First Amended Complaint (“FAC”) 12 In its FAC, hiQ asserts the following claims for relief: Northern District of California United States District Court 13 (1) A declaratory judgment that hiQ has not violated and will not violate the Computer 14 Fraud and Abuse Act of 18 U.S.C. § 1030 by accessing LinkedIn public profiles. 15 (2) A declaratory judgment that hiQ has not violated and will not violate the Digital 16 Millennium Copyright Act, 17 U.S.C. § 1201, by accessing LinkedIn public 17 profiles. 18 (3) A declaratory judgment that hiQ has not committed and will not commit common 19 law trespass to chattels by accessing LinkedIn public profiles.",
"20 (4) A declaratory judgment that hiQ has not violated and will not violate California 21 Penal Code § 502(c) by accessing LinkedIn public profiles. 22 (5) Intentional interference with contract. 23 (6) Intentional interference with prospective economic advantage. 24 (7) Unfair competition in violation of California Business & Professions Code § 25 17200. 26 (8) Unlawful competition in violation of § 17200. 27 (9) Fraudulent competition in violation of § 17200. 28 4 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 5 of 17 1 B. LinkedIn’s Counterclaims 2 In its responsive counterclaims, LinkedIn pleads the following causes of action against 3 hiQ: 4 (1) Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030. 5 (2) Violation of the California Comprehensive Computer Access and Fraud Act, Cal. 6 Pen.",
"Code § 502 et seq. 7 (3) Breach of contract. 8 (4) Misappropriation. 9 (5) Trespass to chattels. 10 C. Prior Court Rulings 11 Before LinkedIn filed its counterclaims in the instant case, this Court issued an order 12 granting hiQ a preliminary injunction with respect to its claims for relief. See hiQ Labs, Inc. v. Northern District of California United States District Court 13 LinkedIn Corp., 273 F. Supp. 3d 1099 (N.D. Cal. 2017) (hereafter hiQ I). LinkedIn appealed that 14 order; the Ninth Circuit affirmed.",
"See hiQ Labs, Inc. v. LinkedIn Corp., 938 F.3d 985 (9th Cir. 15 2019) (hereinafter hiQ II). LinkedIn thereafter filed a petition for a writ of certiorari with the 16 Supreme Court. LinkedIn’s petition is still pending. 17 II. DISCUSSION 18 A. Legal Standard 19 Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include “a short and plain 20 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 21 complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil 22 Procedure 12(b)(6). See Fed. R. Civ.",
"P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss 23 after the Supreme Court’s decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic 24 Corp. v. Twombly, 550 U.S. 544 (2007), a plaintiff’s “factual allegations [in the complaint] ‘must . 25 . . suggest that the claim has at least a plausible chance of success.’” Levitt v. Yelp! Inc., 765 F.3d 26 1123, 1135 (9th Cir. 2014).",
"The court “accept[s] factual allegations in the complaint as true and 27 construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. 28 Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But “allegations in a 5 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 6 of 17 1 complaint . . . may not simply recite the elements of a cause of action [and] must contain sufficient 2 allegations of underlying facts to give fair notice and to enable the opposing party to defend itself 3 effectively.” Levitt, 765 F.3d at 1135 (internal quotation marks omitted). “A claim has facial 4 plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable 5 inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The 6 plausibility standard is not akin to a probability requirement, but it asks for more than a sheer 7 possibility that a defendant has acted unlawfully.” Id.",
"(internal quotation marks omitted). 8 In the instant case, hiQ has challenged under Rule 12(b)(6) each of LinkedIn’s five 9 counterclaims: 10 (1) Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030. 11 (2) Violation of the California Comprehensive Computer Access and Fraud Act, Cal. 12 Pen. Code § 502 et seq. Northern District of California United States District Court 13 (3) Breach of contract. 14 (4) Misappropriation. 15 (5) Trespass to chattels. 16 B. Violation of the Computer Fraud and Abuse Act 17 The Computer Fraud and Abuse Act (“CFAA”) provides in relevant part: “Whoever . . . 18 intentionally accesses a computer without authorization or exceeds authorized access,[1] and 19 thereby obtains .",
". . information from any protected computer . . . shall be punished” by fine or 20 imprisonment.” 18 U.S.C. § 1030(a)(2)(C). 21 In its decision affirming the preliminary injunction in this case, the Ninth Circuit provided 22 guidance on its views of the CFAA. It determined, for example, that hiQ had raised a serious 23 question as to its contention that, “where access is open to the general public, the CFAA ‘without 24 authorization’ concept is inapplicable.” hiQ II, 938 F.3d at 1000. 25 Primarily relying on the Ninth Circuit’s decision, hiQ argues that the Court should dismiss 26 27 1 “[E]xceeds authorized access” under the CFAA “means to access a computer with authorization 28 and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C.",
"§ 1030(e)(6). 6 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 7 of 17 1 LinkedIn’s CFAA counterclaim. At this juncture, however, the Court finds it prudent to defer 2 ruling on hiQ’s motion because LinkedIn has asked the Supreme Court to review the Ninth 3 Circuit’s decision. In addition, the Supreme Court currently has before it a case that will address a 4 related issue – i.e., when does a person exceed authorized access under the CFAA? – that may 5 well have an impact on the instant case. See United States v. Van Buren, 940 F.3d 1192 (11th Cir. 6 2019), certiorari granted by 140 S. Ct. 2667 (2020). These circumstances counsel against a ruling 7 on the CFAA counterclaim at this point in the proceedings. The Court will be in a better position 8 to address the counterclaim once the Supreme Court has issued its decision in Van Buren and/or 9 the instant case.",
"10 C. Violation of the California Comprehensive Computer Access and Fraud Act, Cal. Pen. 11 Code § 502 et seq. 12 LinkedIn has also asserted a counterclaim for violation of the California Comprehensive Northern District of California United States District Court 13 Computer Access and Fraud Act. The relevant provision in the Act can be found in California 14 Penal Code § 502(c), which provides in relevant part as follows: 15 [A]ny person who commits any of the following acts is guilty of a public offense: 16 (1) Knowingly accesses and without permission alters, damages, 17 deletes, destroys, or otherwise uses any data, computer, computer system, or computer network in order to either (A) 18 devise or execute any scheme or artifice to defraud, deceive, or extort, or (B) wrongfully control or obtain money, 19 property, or data. 20 (2) Knowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or 21 computer network, or takes or copies any supporting documentation, whether existing or residing internal or 22 external to a computer, computer system, or computer network. 23 .... 24 (7) Knowingly and without permission accesses or causes to be 25 accessed any computer, computer system, or computer network.",
"26 27 Cal. Pen. Code § 502(c). Section 502(c)(7) bears similarity to the CFAA, focusing on 28 unauthorized access. However, §§ 502(c)(1) and (2) are different from the CFAA (at least as 7 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 8 of 17 1 interpreted by the Ninth Circuit), focusing instead on unauthorized use. See also United States v. 2 Christensen, 828 F.3d 763, 789 (9th Cir. 2016) (noting that, “[i]n contrast to the CFAA, the 3 California statute does not require unauthorized access” but rather “knowing access[;] [w]hat 4 makes that access unlawful is that the person ‘without permission takes, copies, or makes use of’ 5 data on the computer”); Power Ventures, 844 F.3d at 1069 (noting that, e.g., § 502(c)(2) is 6 different from the CFAA).",
"7 Although § 502 is not on all fours with the CFAA, the Court nevertheless finds it prudent 8 to defer ruling on the § 502 counterclaim as well. The Supreme Court’s decision in Van Buren 9 and/or the instant case may still affect the § 502 analysis – e.g., whether, as a matter of policy, the 10 use of public information should be deemed criminal conduct. 11 D. Breach of Contract 12 LinkedIn’s breach-of-contract counterclaim is predicated on the User Agreement which Northern District of California United States District Court 13 “prohibits accessing LinkedIn’s website through automated means” and “prohibits scraping data 14 from LinkedIn’s website using automated means.” Countercl.",
"¶¶ 115-16. According to LinkedIn, 15 “hiQ’s conduct has damaged LinkedIn, and caused and continues to cause irreparable harm and 16 injury to LinkedIn.” Countercl. ¶ 125 (emphasis added). 17 In its motion, hiQ seeks to dismiss only part of the counterclaim. hiQ points out that, in its 18 order granting a preliminary injunction, this Court stated: “hiQ signed up as a LinkedIn user and is 19 thus bound by the User Agreement[,] [b]ut LinkedIn has since terminated hiQ’s user status.” hiQ 20 I, 273 F. Supp. at 1107 n.4.",
"Similarly, the Ninth Circuit in affirming the preliminary injunction 21 order stated: “[h]iQ is no longer bound by the User Agreement, as LinkedIn has terminated hiQ’s 22 user status.” hiQ II, 983 F.3d at 991 n.5. Based on these statements, hiQ argues: “LinkedIn’s 23 claim that hiQ ‘continues to’ breach the User Agreement is precluded by the findings of this Court 24 and the Ninth Circuit,” and, “as LinkedIn cannot state a claim for any continuing or ongoing 25 breach of the User Agreement, LinkedIn’s claim of injunctive relief or for relief accrued past the 26 date of hiQ’s termination should be struck.” Mot. at 12 (emphasis added). 27 The problem with hiQ’s position is that, even if LinkedIn terminated hiQ as a LinkedIn 28 member subject to the User Agreement (a fact that LinkedIn disputes), that does not necessarily 8 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 9 of 17 1 mean that hiQ is not subject to the User Agreement.",
"In its counterclaim, LinkedIn alleges that 2 “[a]ny future use of LinkedIn’s website by hiQ is subject to the terms of the User Agreement,” 3 Countercl. ¶ 126, because, “[b]y its terms, the User Agreement applies not only to LinkedIn 4 members, which hiQ was, but to anybody who uses LinkedIn’s website.” Countercl. ¶ 51 5 (emphasis added). According to LinkedIn, “[a]t all relevant times, LinkedIn . . . prominently 6 displayed a link to the User Agreement on LinkedIn’s homepage. Those who use LinkedIn’s 7 website with actual knowledge of the terms of the User Agreement are required to abide by those 8 terms if they choose to access LinkedIn’s website.” Countercl. ¶ 109. In support, LinkedIn cites 9 Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014). 10 Nguyen is an arbitration-related case; nevertheless, it contains principles relevant to the 11 instant case because the defendant there argued, inter alia, that the plaintiff was subject to an 12 arbitration provision based on Terms of Use posted as a hyperlink on the defendant’s website.",
"Northern District of California United States District Court 13 The Ninth Circuit noted that 14 [c]ontracts formed on the Internet come primarily in two flavors: \"clickwrap\" (or \"click-through\") agreements, in which website users 15 are required to click on an \"I agree\" box after being presented with a list of terms and conditions of use; and \"browsewrap\" agreements, 16 where a website's terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen. . . . 17 \"Unlike a clickwrap agreement, a browsewrap agreement does not 18 require the user to manifest assent to the terms and conditions expressly . . . [a] party instead gives his assent simply by using the 19 website.\" Indeed, \"in a pure-form browsewrap agreement, 'the website will contain a notice that – by merely using the services of, 20 obtaining information from, or initiating applications within the website – the user is agreeing to and is bound by the site's terms of 21 service.'\"",
"Thus, \"by visiting the website – something that the user has already done – the user agrees to the Terms of Use not listed on 22 the site itself but available only by clicking a hyperlink.\" \"The defining feature of browsewrap agreements is that the user can 23 continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a 24 webpage exists.\" \"Because no affirmative action is required by the website user to agree to the terms of a contract other than his or her 25 use of the website, the determination of the validity of the browsewrap contract depends on whether the user has actual or 26 constructive knowledge of a website's terms and conditions.\" 27 Id. at 1175-76. 28 The Ninth Circuit continued by noting that “courts have consistently enforced browsewrap 9 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 10 of 17 1 agreements where the user had actual notice of the agreement”; in contrast, “where .",
". . there is no 2 evidence that the website user had actual knowledge of the agreement, the validity of the 3 browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry 4 notice of the terms of the contract.” Id. at 1176-77. 5 Thus, under Nguyen, LinkedIn has a basis for arguing that, if hiQ has actual notice of the 6 terms of the User Agreement (which contains, e.g., a prohibition against scraping), it can be 7 subject to those terms. Although currently hiQ is allowed access to the LinkedIn website and to 8 copy or use public profiles posted thereon under the preliminary injunction, this does not mean 9 that hiQ is entitled to a permanent injunction. Based on the counterclaim as pled, LinkedIn has a 10 basis for asserting that it is entitled to a permanent injunction – or at least a declaration – that hiQ 11 is subject to the User Agreement in the future. Because whether hiQ can be bound to the User 12 Agreement raises a factual question, the counterclaim cannot be dismissed at this juncture. Northern District of California United States District Court 13 E. Misappropriation 14 The California Court of Appeal has explained that 15 [c]ommon law misappropriation is one of a number of doctrines subsumed under the umbrella of unfair competition.",
"It is normally 16 invoked in an effort to protect something of value not otherwise covered by patent or copyright law, trade secret law, breach of 17 confidential relationship, or some other form of unfair competition. The elements of a claim for misappropriation under California law 18 consist of the following: (a) the plaintiff invested substantial time, skill or money in developing its property; (b) the defendant 19 appropriated and used the plaintiff's property at little or no cost to the defendant; (c) the defendant's appropriation and use of the 20 plaintiff's property was without the authorization or consent of the plaintiff; and (d) the plaintiff can establish that it has been injured by 21 the defendant's conduct. 22 United States Golf Ass'n v. Arroyo Software Corp., 69 Cal. App. 4th 607, 618 (1999) [hereinafter 23 USGA]. 24 In its counterclaim, LinkedIn alleges that hiQ engaged in misappropriation because, 25 “without authorization, [it] wrongfully accessed LinkedIn’s website, computer systems and 26 servers, and obtained data from the LinkedIn site. The data that hiQ took included time-sensitive 27 updates to member profiles.” Countercl. ¶ 130. In response, hiQ makes two arguments: (1) 28 LinkedIn has no ownership interest in the data allegedly misappropriated (rather, that data belongs 10 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 11 of 17 1 to LinkedIn members) and (2) any misappropriation counterclaim here would be preempted by the 2 California Uniform Trade Secret Act (“CUTSA”).",
"3 1. Property Rights 4 hiQ’s first argument is, in essence, that LinkedIn has no property rights at issue in the 5 instant case. hiQ is corrected that LinkedIn’s members, and not LinkedIn itself, owns the 6 information in their public profiles. However, that does not mean that LinkedIn has no property 7 rights. As LinkedIn points out, there may be “quasi-property” rights that are protected. For 8 example, one company can misappropriate “another’s commercial advantage” by misappropriating 9 the “‘expenditure of labor, skill, and money’ of another.” Am. Cyanamid Co. v. Am.",
"Home 10 Assurance Co., 30 Cal. App. 4th 969, 976-77 (1994) (quoting International News Service v. 11 Associated Press, 248 U.S. 215, 239 (1918) [hereinafter INS]). 12 As indicated above, California’s recognition of this kind of misappropriation is based on Northern District of California United States District Court 13 INS which recognized a property interest in “hot news.” See id. ; see also Sammons & Sons v. 14 Ladd-Fab, Inc., 138 Cal.",
"App. 3d 306, 311 (1982) (noting that “INS expanded existing concepts of 15 unfair competition to include protection against appropriation of competitive advantage ‘acquired 16 by complainant as the result of organization and the expenditure of labor, skill, and money’ by a 17 defendant who thereby ‘is endeavoring to reap where it has not sown’”). In INS, the plaintiff and 18 the defendant were competitors in the gathering and distribution of news and its publication for 19 profit in newspapers throughout the United States.” INS, 248 U.S. at 229. The plaintiff filed suit 20 to stop the defendant from, inter alia, copying news from bulletin boards and early editions of the 21 plaintiff’s newspapers and selling it, “either bodily or after rewriting it, to defendant’s customers.” 22 Id. at 231. 23 The Supreme Court noted that, while “the news of current events may be regarded as 24 common property[,] [w]hat we are concerned with is the business of making it known to the 25 world.” Id. at 235.",
"“The peculiar value of news is in the spreading of it while it is fresh.” Id. In 26 other words, 27 although we may and do assume that neither party has any remaining property interest as against the public in uncopyrighted 28 news matter after the moment of its first publication, it by no means 11 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 12 of 17 follows that there is no remaining property interest in it as between 1 themselves. For, to both of them alike, news matter, however little susceptible of ownership or dominion in the absolute sense, is stock 2 in trade, to be gathered at the cost of enterprise, organization, skill, labor, and money, and to be distributed and sold to those who will 3 pay money for it, as for any other merchandise. Regarding the news, therefore, as but the material out of which both parties are 4 seeking to make profits at the same time and in the same field, we hardly can fail to recognize that for this purpose, and as between 5 them, it must be regarded as quasi property, irrespective of the rights of either as against the public. 6 7 Id.",
"at 236 (emphasis added). California courts have cited INS approvingly. See, e.g., Balboa Ins. 8 Co. v. Trans Glob. Equities, 218 Cal. App. 3d 1327, 1342 (1990) (“Common law misappropriation 9 presents a final legal theory under the broad unfair competition umbrella. The doctrine originated 10 in the United States Supreme Court's decision of [INS].”). 11 hiQ suggests that, to the extent INS is recognized under California law, INS should be 12 narrowly construed and Northern District of California United States District Court 13 limited to cases where: (i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a 14 defendant's use of the information constitutes free-riding on the plaintiff's efforts; (iv) the defendant is in direct competition with a 15 product or service offered by the plaintiffs; and (v) the ability of other parties to free-ride on the efforts of the plaintiff or others 16 would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.",
"17 18 Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 845 (2d Cir. 1997) [hereinafter “NBA”]. 19 But hiQ has cited no California state court opinion adopting this narrow view. Rather, the 20 elements of a common law misappropriation claim under California law have been outlined above. 21 See Balboa, 218 Cal. App. 3d at 1342 (recognizing that common law misappropriation has its 22 roots in INS but not limiting the claim to the hot news context and stating that “[t]he cause of 23 action has three elements: (1) the plaintiff has invested substantial time and money in development 24 of its . . . property; (2) the defendant has appropriated the [property] at little or no cost; and (3) the 25 plaintiff has been injured by the defendant’s conduct”) (internal quotation marks omitted). 26 Although hiQ has cited Pollstar v. Gigmania, Ltd., 170 F. Supp. 2d 974, 979 (E.D. Cal. 2000), 27 where the district court applied the Second Circuit’s approach above, that case is not dispositive.",
"28 hiQ has cited no California case that imposes the NBA restrictions, even in a case involving “hot 12 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 13 of 17 1 news.” 2 If anything, California authority rejects, at least in part, the narrow interpretation. For 3 instance, in USGA, the state court expressly rejected the argument that an essential element of a 4 misappropriation claim was direct competition between the plaintiff and the defendant. See 5 USGA, 69 Cal. App. 4th at 618 (“Under the California law applicable here, .",
". . the essential 6 elements of a misappropriation claim simply do not include any such requirement of proof of 7 direct competition between the plaintiff and the defendant.”). Cf. Colo. Escrow & Title Servs., 8 LLC v. Deinema, No. 2012CV387, 2015 Colo. Dist. LEXIS 1802, *34-36 (Colo. Dist. Ct. Jan. 23, 9 2015) (noting that Colorado law recognizes a misappropriation claim “where one either 10 wrongfully profits from another’s expenditure of labor, skill or money, or capitalizes wrongfully 11 on the commercial values of another”; rejecting the argument that such a claim requires that the 12 plaintiff and defendant be competitors – it was enough that “ESI has profited from TCR's Northern District of California United States District Court 13 accumulation and organization of public records”). 14 Finally, even if the Court were inclined to adopt a narrow view of INS, LinkedIn has still 15 met that standard (at least based on the allegations made by the parties). For example, regarding 16 direct competition, hiQ itself has charged LinkedIn with blocking hiQ’s access because LinkedIn 17 “wants to monetize [its] data itself with a competing product.” hiQ I, 273 F. Supp.",
"3d at 1117. 18 Also, to the extent information must be time sensitive, LinkedIn has alleged that “[t]he data that 19 hiQ took included time-sensitive updates to member profiles.” Countercl. ¶ 130. Finally, there 20 are questions of fact as to whether hiQ is a free rider with respect to LinkedIn and whether hiQ’s 21 use of LinkedIn’s data reduces LinkedIn’s incentive to invest in its infrastructure. 22 2. CUTSA Preemption 23 hiQ argues that, even if LinkedIn has a property interest to support a misappropriation 24 counterclaim, the counterclaim must still be dismissed based on CUTSA preemption. This 25 contention lacks merit. As LinkedIn points out, the misappropriation counterclaim is not 26 preempted because the whole point of such a claim is to protect a property right “not otherwise 27 covered by patent or copyright law, trade secret law, breach of confidential relationship, or some 28 other form of unfair competition.” USGA, 69 Cal.",
"App. 4th at 618 (emphasis added). 13 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 14 of 17 1 hiQ points out that, under certain circumstances, there can be CUTSA preemption even 2 where the property right at issue does not constitute a trade secret per se. For instance, in Lifeline 3 Food Co. v. Gilman Cheese Corp., No. 5:15-cv-00034-PSG, 2015 U.S. Dist. LEXIS 64155 (N.D. 4 Cal. May 15, 2015), the district court noted that the “CUTSA may supersede ‘claims based on the 5 misappropriation of information that does not satisfy the definition of trade secret under CUTSA’ 6 when ‘the basis of the alleged property right is in essence that the information is not . . . generally 7 known to the public,’ because then ‘the claim is sufficiently close to a trade secret claim that it 8 should be superseded.’” Id. at *3. However, in the instant case, LinkedIn is not making any claim 9 that the public profiles are confidential or not generally known to the public. Rather, the property 10 right it is claiming is based on the labor, skill, money, etc. that it put into developing the 11 professional networking system.",
"There is thus no basis for CUTSA preemption. 12 F. Trespass to Chattels Northern District of California United States District Court 13 “Under California law, trespass to chattels ‘lies where an intentional interference with the 14 possession of personal property has proximately caused injury.’” Intel Corp. v. Hamidi, 30 Cal. 15 4th 1342, 1350-51 (2003). The owner of the property may recover actual damages suffered by 16 reason of the impairment of the property or the loss of its use.2 See id. at 1351. Injunctive relief is 17 also possible where there is threatened injury. See id. at 1352 (asking whether the defendant’s 18 actions “cause or threatened to cause damage to Intel’s computer system, or injury to it rights in 19 that personal property”). 20 In its motion, hiQ argues that the trespass claim should be dismissed because LinkedIn has 21 failed to adequately allege injury. In response, LinkedIn contends that it has adequately alleged 22 existing injury as well as threatened future injury.",
"23 Regarding existing injury, LinkedIn contends that a small amount of harm can support 24 trespass to chattels. See Opp’n at 24. In support, it cites Thrifty-Tel, Inc. v. Bezenek, 46 Cal. App. 25 26 2 In Intel, the California Supreme Court rejected the plaintiff’s argument that its damages included the time its staff spent time attempting to block the defendant’s email messages. “‘[I]t is circular 27 to premise the damage element of a tort solely upon the steps taken to prevent the damage. Injury can only be established by the completed tort’s consequences, not by the cost of the steps taken to 28 avoid the injury and prevent the tort; otherwise, we can create injury for every supposed tort.’” Intel, 30 Cal.",
"4th at 1359. 14 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 15 of 17 1 4th 1559 (1996). In Thrifty-Tel, the plaintiff was a company that provided long-distance telephone 2 services. “Subscribers' telephones are programmed with a confidential access code and a six-digit 3 authorization code that directs calls into Thrifty-Tel's computerized switching network. An 4 unauthorized user who knows both an access and an authorization code can make long-distance 5 calls without being charged for them.” Id. at 1563. During a three-day period, the defendants’ 6 children “gained entry into Thrifty-Tel’s system with [a confidential] code [that a friend knew] 7 and conducted manual random searches for a six-digit authorization code. They made 8 approximately 90 calls, consuming roughly 24 minutes of telephone time during the first 2 days.” 9 Id. at 1564. The following day, they made “72 manual attempts to identify an authorization code 10 over an almost 16-minute period.” Id.",
"The state appellate court found that the plaintiff had a valid 11 trespass claim and remanded to the trial court to determine damages. See id. at 1570, 1572 12 (holding that “the superior court erred in awarding contract or tort damages based on [a] tariff Northern District of California United States District Court 13 instead of requiring plaintiff to prove actual damages”). 14 But Thrifty-Tel is distinguishable from the instant case in that, there, an actual entry into 15 the plaintiff’s system was made, thus making the case more akin to a traditional computer hacking 16 or “breaking and entering” claim whereas, here, there has been an alleged burden on LinkedIn’s 17 servers and/or infrastructure. Thus, more on point than Thrifty-Tel is the California Supreme 18 Court opinion in Intel which noted that, “[s]hort of dispossession, personal injury, or physical 19 damage .",
". . , intermeddling is actionable only if the chattel is impaired as to its condition, quality, 20 or value or . . . the possessor is deprived of the use of the chattel for a substantial time” – i.e., “for 21 a time so substantial that it is possible to estimate the loss caused thereby.” Intel, 30 Cal. 4th at 22 1357 (internal quotation marks omitted; adding that “‘[a] mere momentary or theoretical 23 deprivation of use is not sufficient unless there is a dispossession’”). This statement from Intel 24 suggests that, at least as to impaired use, the quantum of harm cannot be negligible. 25 That being said, LinkedIn fairly argues that there is a question of fact as to what extent 26 hiQ’s actions burdened LinkedIn’s servers/infrastructure. LinkedIn has alleged: 27 • “[S]craping traffic has grown substantially over the past few years.” Countercl. ¶ 28 82.",
"15 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 16 of 17 1 • “LinkedIn . . . receives many millions of unauthorized requests of its servers from 2 bots every day. The volume . . . reached 95 million requests per day by the outset 3 of the parties’ dispute, and has further increased dramatically during this litigation.” 4 Countercl. ¶ 82.",
"5 • “[T]aken in the aggregate, automated scrapers place a substantial burden on 6 LinkedIn’s infrastructure – reaching at present into hundreds of millions of blocked 7 access requests per day.” Countercl. ¶ 83. “[T]he significant volume of automated 8 scraping activity forces LinkedIn to invest more in capital and operational 9 resources than it otherwise would if it were able to prevent these access requests 10 from ever happening. Scraping operations force LinkedIn to alter its priorities for 11 use of its computing resources and impair the efficiency of such resources.” 12 Countercl. ¶ 83.",
"Northern District of California United States District Court 13 • “On information and belief, hiQ’s bots made millions of calls to LinkedIn’s servers 14 prior to May 23, 2017 [the date of the cease-and-desist letter].” Countercl. ¶ 68. 15 • “The full extent of hiQ’s illicit scraping is not currently known to LinkedIn, as hiQ 16 has gone to substantial lengths to hide its methods from public view.” Countercl. ¶ 17 64. 18 In short, the requests generated by hiQ’s bots burden LinkedIn’s servers. 19 As to future injury, LinkedIn has also alleged enough to support a request for injunctive 20 relief. Regarding injunctive relief, the California Supreme Court took note in Intel of two district 21 court decisions finding that unauthorized robotic data collection from a company’s publicly 22 accessible website was a trespass on the company’s computer system in part because of “the 23 deleterious impact this activity could have, especially if replicated by other searchers, on the 24 functioning of a Web site’s computer equipment.” Intel, 30 Cal. 4th at 1354.",
"Tracking Intel, 25 LinkedIn makes the following allegations in support of its counterclaim for trespass to chattels: (1) 26 “LinkedIn owns, possesses, and/or has the right to possess the servers and infrastructure used to 27 run its business”; (2) “hiQ intentionally interfered with LinkedIn’s use and possession” of such; 28 and (3) “hiQ’s conduct, if expanded and/or replicated unchecked by others, will cause harm to 16 Case 3:17-cv-03301-EMC Document 199 Filed 04/19/21 Page 17 of 17 1 LinkedIn in the form of impaired condition, quality and value of its servers, infrastructure and 2 services.” Countercl. ¶¶ 136-37, 139; see also Countercl. ¶ 84 (“It is only because of LinkedIn’s 3 ongoing protection efforts as well as its willingness to spend increasing amounts to maintain a 4 high service level that it has been able to prevent a degradation in the quality of its services.”); 5 Countercl.",
"¶ 85 (“LinkedIn will be forced into making the choice of investing more in its 6 infrastructure to ensure the availability of its website, or succumbing to the burden of bot-based 7 scraping.”). 8 III. CONCLUSION 9 For the foregoing reasons, the Court denies hiQ’s motion to dismiss the counterclaims for 10 breach of contract, misappropriation, and trespass to chattels. The Court defers ruling on the 11 motion to dismiss the counterclaims for violation of the CFAA and California Penal Code § 502.",
"12 For administrative purposes only, the Court terminates hiQ’s motion to dismiss, even Northern District of California United States District Court 13 though the CFAA and § 502 counterclaims have not yet been addressed. To be clear, this 14 termination does not bar hiQ from renewing its motion to dismiss the CFAA and § 502 15 counterclaims once the Supreme Court issues its decision in Van Buren and/or this case. 16 17 IT IS SO ORDERED. 18 19 Dated: April 19, 2021 20 21 ______________________________________ EDWARD M. CHEN 22 United States District Judge 23 24 25 26 27 28 17"
]
| https://www.courtlistener.com/api/rest/v3/recap-documents/167307834/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
S. B. Strong, J. The plaintiff alledges in his complaint that he has been for the last five years, and is, lawfully possessed of a lot in the village of Hempstead, in the county of Queens, hounded on the north by the middle of Fulton-street, and on the west by the middle of Main-street, comprising half an acre; on which there are a dwelling house and shop fronting on Main-street, and a barn and other out buildings on Fulton-street. That while he has been so possessed of the said premises, the defendants having previously, and in or about the year 1837, laid down and along Main-street, and upon such premises, certain timbers and iron rails, constituting their railroad track, continued them thereon, running over the same with passenger, and freight cars drawn by horses, greatly to his injury, and that such cars were often suffered to stand for an unreasonable time upon his said premises. That about two years ago, and for about one year, the said track was disused, and got “into a *648ruinous and shattered state,” and embarrassed the travel upon the highway, causing the breaking of wagons and other vehicles, and hindering and endangering their passage to and from the premises of the plaintiff. That about the 5th of last August, the defendants took up the old timbers and rails and tore up the soil of his land, and laid down in their place other timbers and iron rails, and have at various times since “ broken his close,” and run upon the said rails upon and over such close with their locomotives, propelled by steam: that “ by the coming of the said locomotives upon and running the same over his said close, the health and lives of his family, tenants and inmates, are prejudiced and endangered, and the value of his property lessened; that an offensive smoke has filled his dwelling house; that the same is a, nuisance of the most flagrant character,” and that the continuance thereof would be an irreparable injury to his said property and the enjoyment thereof; and that his tenants are likely to abandon the same. That the defendants have since such 5th of August last, run upon and over the said premises certain freight cars loaded with manure and merchandise, propelling the same by means of their steam engine and horses, often without agents to watch and conduct them, and to the danger, nuisance and inconvenience of himself and family; and that from the contiguity of his land to the depot, the locomotives frequently stop opposite to his premises, and he is thus injured more than the rest of mankind. He therefore claims two thousand dollars damages, and prays for an order of injunction restraining the defendants during the pendency of this suit from running their locomotives or cars of any description upon or over his said premises, and that a judgment may be given him for his said damages, and for a perpetual injunction. Upon this complaint, verified by the oath of the plaintiff, the defendants have been restrained until now from running their locomotive or cars over the part of their railway south of Fulton-street, which includes that part of it passing the plaintiff’s lot; and I am now asked, upon that document and various affidavits accompanying it, to continue the injunction until final judgment *649shall be rendered in the action. I shall examine with all possible brevity the several points raised and discussed by the counsel for the respective parties on the argument, and shall consider such statements made in the affidavits produced before me as I deem material. The plaintiff grounds his application on the allegations that the railway has been illegally located; that he has not received any compensation for that part of his land which has been taken by the company; and that the establishment is a public nuisance, peculiarly injurious to him. The defendants claim the right to construct their road, as it is, under the act authorizing them to construct, maintain and continue a branch railroad from some convenient point on their main railroad, to some proper place or point in or near the village of Hempstead, passed on the 16th of May, 1836. The second section of that act conferred upon them the power which they possessed in reference to their main road, under the second section of their act of' incorporation, (Laws of 1834, p. 231,) to construct the road “ on the most practicable route.” The company adopted the existing route throughout, and made their road upon it in 1837, and have used it, with but a brief interruption, from that time until the commencement of this suit. No objection is made to the starting ¡ooint on the main road, but it is contended that the terminus in Hempstead is at an improper place, and that therefore it has been illegally assumed. Much was left by the terms of the act to the discretion of those who might manage the affairs of the company, and unless they dearly erred, their selection ought not to be disturbed. If a mere difference of opinion between them and those whose immediate interests might be affected by their acts, should be allowed to annul their proceedings, but few of them could be sustained; particularly when the views of parties are so varied as they usually are relative to the proper location of a railroad. The statute clearly gives to the defendants the right to extend their branch road into the village. No fact is stated in the plaintiff’s papers to show that there "is a more appropriate place in the village for the terminus of the road than that which has been *650selected. In any other part of it, the smoke, of which the plaintiff complains, would be equally offensive ; there would be the same danger from the fire of the engine, the same exposure of human life, and a similar obstruction to the passage through the streets. If a railroad in, or through a populous village is necessarily a nuisance, that would be a reason for” excluding it altogether., But I could not decide that it is, without condemning the action of both the legislative and judicial departments of this state. Many laws have been passed authorizing the construction of railroads through cities and villages. They have been carried into operation, and have been sustained by our courts. If the railroad in question had become a nuisance through mismanagement, that would not prove the impropriety of its original location. Whether it has been so mismanaged, or, indeed, whether it be a nuisance at all, will be considered in another part of this opinion. If, in considering this question, the opinions of those principally interested are entitled to any weight, a large majority appear to be in favor of the existing location. The plaintiff and one of his counsel and two gentlemen residing near the road, above the village, are opposed to it; and the counsel says that he attended a public meeting in the village of Hempstead, before and in reference to the relaying of the track, where, in all the conversations on the subject, it was expressly understood a,nd declared that the company should on no account go below Pulton-street; it being universally understood and declared that the extension of the road beyond that street would be a nuisance. In this, however, he differs from others who were present at the same meeting. Justice Hendrickson swears that “ at such meeting it was neither expressly understood or declared that the railroad company were on no account to run below Pultonstreet and that the object and business of the meeting were to take measures to raise the necessary funds in money to induce the company to locate a depot and relay their branch railroad track to its present termination, Six residents of the village, some of whom are personally known to me to be gentlemen of great respectability and worth, swear that they, together *651with the counsel, to whom I have alluded, and another person, were a committee appointed by the inhabitants of the village, at a meeting held pursuant to public notice, to confer and agree with the railroad company respecting the relaying of the branch track in the said village; that the said counsel acted and performed his duties as one of such committee; and that it was expressly understood and agreed, by both the committee and the company, that the said company should relay and repair their branch track, entirely through Main-street, to the original termination of the said branch at the brook; and another resident of Hempstead swears that he stated to the said counsel that the understanding was that the railroad track was to be relaid below Fulton-street, for the accommodation of merchants and others, for freighting purposes ; and that he must be aware of that understanding: to which the counsel replied; “ certainly ; and no reasonable man can object to it; and I think there will be no difficulty about the matter.” Thirteen persons owning real estate and doing business in that part of Main-street between Fulton street and the southern termination of the branch road, depose, that according to the best of their judgment and belief, the road is and will be ofi great benefit and advantage to the village; and that the street is not obstructed thereby; but that it is improved and rendered more commodious for travelers. It appears, too, from the affidavit of another resident, that the plaintiff had himself subscribed and paid thirty-five dollars towards enabling the defendants to build their depot and “relay their 'branch track in the village.” A certificate was read on the argument, signed by thirty-five persons, describing themselves as residing and doing business on Main-street, stating that the subscribers to it believed that it would be a great benefit and advantage to that street if the track of the Long Island railroad should be relaid from the junction of Main and Fulton-streets to the brook, which is its present termination. A memorial was also read, on the argument, signed by 122 individuals, who, as is stated in an affidavit annexed to it, are residents of the village, and comprise the principal part of its adult male inhabitants, stating their belief, that the use of the track to its *652present termination has been and will be of great convenience and advantage to the village, and expressing a hope that the commissioners of highways, to whom it is addressed, would not take measures to deprive them of such means of conveyance through the village. Many of the persons who have signed the papers which I have mentioned, expressed a wish that the locomotive should not pass below Fulton-street; and no doubt acted upon the supposition that such a regulation would be adopted; but that does not diminish the weight of their testimony or opinions in favor of the propriety of the existing location of the terminus in the village. Taking all the evidence upon this point together, I cannot think that the company has erred in this particular. It is also contended that the defendants exceeded their powers in constructing a part of their road on a curved line, until it formed a junction with the highway leading into Main-street, and then laying their track along the highway. When a statute, or a deed, describes a line extending from one designated point to another, without any qualification, it generally calls for a straight course; but in this case there is express authority for a deviation, if it should become necessary or proper in the adoption of “ the most practicable route.” The word practicable, as used in the statute, had particular reference to the facility of construction; and as to that, there is nothing to show that the directors had any motive to err, or that they did in fact commit any error. Neither does it appear that the curve has created any additional expense, or imposed any serious impediment to the travel, or caused any unnecessary injury to private interests. There may have been some doubt as to the right of the company to lay their track along the highway, when the branch railroad was originally constructed. The statute of May 11th, 1835, (ch. 300,) may not have been broad enough to sanction the procedure. But the act to authorize the formation of railroad corporations and to regulate the same, passed on the 2d of April, 1850, (§ 28, sub. 5,) expressly authorizes those institutions to construct their road along any street or highway which its route shall intersect or touch, with the restriction that the usefulness *653of the street or highway shall not be unnecessarily impaired. By the 49th section of the act, the same power was conferred upon existing railroad corporations. The present track on the highway and street is identical with the old one; but the rails were relaid in 1852, and that was authorized by the act of 1850, unless the usefulness of' the highway or street was, in the language of that act, “ unnecessarily impaired.” There is evidence to show very considerable injuries to the highway, when the old track was partially disused; but the statements made in the depositions and memorials, to which I have referred, show very clearly that since the track has been relaid, the condition of the highway, and particularly of the street in the village, has been improved, and is, indeed, better than it was previous to the adoption of either as a part of the route. The location was originally made without objection or remonstrance from any but two persons, who for some reason preferred that the road should take an untraveled route, rather than the highway, through their lands. It remained unchanged without any further objection from any one from 1837 until 1852. It was sanctioned by some fifty-four inhabitants of Hempstead (and among others by the plaintiff) who on the 20th of November, 1839, took a mortgage upon it for moneys advanced by them to pay for its construction, amounting to $13,950, of which the plaintiff’s part was $300, and is now supported by a large majority of those who are principally affected by it, so far as the views of the people have been made known to me. I am clear that the objections which have been made to the location of the road have not been sustained, but that the want of any serious resistance to it at first, the acquiescence in it for a period of fourteen years, the affirmance of it by the mortgage of the road in its existing state to the plaintiff and others for moneys advanced by them to pay for its construction, .and the approval of it at a public meeting called for the purpose of deliberating and deciding upon the subject, and by a large majority of those who have made the affidavits and sighed the memorials which I have mentioned, are “ confirmation strong” of its propriety. The plaintiff alledges that his land extends to the center of *654Main-street, and that the company have wrongfully taken a part of it for their railroad. It appears from the diagram accompanying the plaintiff’s papers, and from other documents which have been handed to me, that the track has been laid in or near the middle of the street, the rail nearest the plaintiff’s dwelling house being about (and upwards of) twenty feet from the outer edge of the side walk on the same side. Whatever interest the plaintiff had in the land thus taken was therefore subject to the public right to use it as a common highway. The act of 1850 which I have quoted gave to the defendants the right to take it for their railroad, provided they restored the highway to such a state as not unnecessarily to impair its usefulness. With that condition, as the papers in the cause show, they have fully complied. That act however did not, and could not authorize the defendants to impair the plaintiff’s rights without compensation. But have his private rights been impaired or taken, within the meaning of the constitutional provision securing an indemnity for the private property of individuals taken for public purposes? It does not appear very clearly from the papers what right the plaintiff had in the property taken by the defendants. He alledges in his complaint that on or about the 2d of September, 1852, and for five years prior thereto, he was and now is lawfully possessed of the premises described. He does not in that claim any title to such premises or any part of them. But he deposes in Ms affidavit annexed to the order for a temporary injunction, that he owns the property in fee. It is not however competent for a plaintiff to add materially to the causes of action set forth in his complaint, by affidavit. He may for the purpose of obtaining a preliminary injunction thus fortify his original claims, but he cannot enlarge them or prefer others. If however he had directly averred in his complaint that he was seised of the land in fee, it would still be a serious obstacle in the way of his obtaining the relief for which he asks, that neither his title or possession extends back to the year 1837, when the land was originally taken by the defendants. * The right set forth in the complaint, and to that any action must be confined, is limited to the five years immediately preceding the 2d of Septem*655ber. 1852. It is to be inferred from that allegation that he had no interest in the premises, prior to the year 1847. Whatever right in reference to the property was taken by the defendants belonged to the proprietor in 1837, and he alone was entitled to a compensation. If the land was subsequently conveyed to the plaintiff, as it probably was, he took it cum, onere with the railroad upon it. He certainly cannot recover for injuries done to the property when it belonged to another. After his title accrued, the track was merely relaid. That has never been considered as taking any property, within the intent of the constitutional provision. It is continuing the use of it according to _ a previously acquired right. If the defendants, however, so conduct their operations on the land in question as to inflict an injury upon the plaintiff for which he is entitled to redress, he can obtain it in an ordinary action, but he is not entitled to an injunction, unless he has sufficient cause to apprehend some great and irremediable evil. Whether he has or not, in this case, will be considered under another head. But if the plaintiff had a full title to the land in question when it was first taken, and if he would then have been entitled to any compensation from the defendants for appropriating it to a species of locomotion different from that for which it had been dedicated or acquired (concerning which it is not necessary that I should give any opinion, nor do I) there is still a serious obstacle in the way of obtaining an injunction. He could have insisted on receiving a compensation when the land was first taken, and could have prevented the company from using it until such compensation had been paid, or at any rate satisfactorily secured; but after the road had been completed and was in full operation, it would not be equitable, it would not be doing justice to the public to allow him to stop the cars until he might coerce the company to pay him an exorbitant amount, or to go through with the dilatory process of having the damages assessed pursuant to the provisions of the statute. At any rate an injunction should not-be granted until all the ordinary means for obtaining indemnity had failed. It was correctly decided in the case of Hodgkinson v. The Long Island Railroad Company, *656(not reported) that if the plaintiff forbear until the rails are laid, and until the time when an injunction would be seriously injurious, a motion for a preliminary restraint should be denied. The only remaining question is whether the road where it passes the plaintiff’s premises is a nuisance. I have already intimated an opinion that a railroad through a populous village, or a city, is not peí' se a nuisance. The legislature has expressly authorized various companies to lay and use their track through many of our cities and villages, and cars are now drawn by locomotives propelled by steam through Albany, Schenectady, Utica, Syracuse, Rochester, Buffalo, Poughkeepsie, Brooklyn, Jamaica, and many other cities and villages. It was held in the case of Drake v. The Hudson River Railroad Company, (7 Barb. 508,) that a road passing through the streets in the city of New-York, and when the cars are drawn by steam-power into a crowded part of the city (although not to the terminus of the road) was not a nuisance. Similar decisions were made in the cases of Hamilton v. The New-York and Harlem Railroad Company, (9 Paige, 171;) The Lexington and Ohio Railroad Company v. Applegate, (8 Dana, 289,) and Chapman v. The Albany and Schenectady Railroad Company, (10 Barb. 360.) Is there then any thing peculiar to Main-street, or in the management of the defendants, which makes the railroad where it passes the plaintiff’s house a nuisance? It is not averred in the complaint that the railroad constitutes any serious impediment to the travel, along the highway. It no where appears that the rails are badly laid down, so as to create any obstruction on the surface, and it is apparent that the street is of sufficient width for carriages to pass each other without danger or difficulty, on either side of the railway. Besides, a number of respectable inhabitants of the place deposed that the condition of the street as a passway has been considerably improved by the defendants’ works upon it. Is there any thing in the management of the road and its appendages which renders it offensive to the plaintiff, to such an extent as to justify the interposition of this court by way of restraint upon the action of the defendants ? One of the causes *657of complaint is that the steam locomotive .passes as far south as Fulton-street, and occasionally below it. It.is apparent that many of those who have favored the introduction of the road into the village have acted on the supposition that the locomotive was not to proceed below Fulton-street, but there is no evidence of any definite agreement with the defendants to that effect; and as their charter does not restrict them as to the means of transportation on any part of their route, I am not authorized, to interfere, but must leave the matter to the good sense of those who may be intrusted with the management of the affairs of the company. It is manifestly for their interest to conduct its operations in such a manner as to gratify the reasonable wishes of that part of the community which gives to the company an efficient support. The plaintiff complains that about two years ago, and for about a year, the track was disused and suffered “ to go to ruin,” its shattered state embarrassing the travel upon the highway, causing the breaking of vehicles, and hindering their passage to and from his premises. There were no doubt serious grievances at the time, but they resulted from the then impaired condition of the track. The cause has since been removed, and the papers furnish us no reasons to apprehend a recurrence of the same or similar evils. Hone of the papers mention any serious accidents since the track has been relaid and the locomotive has passed over it, and if there had been any, they would no doubt have been discovered by the plaintiff, or the learned member of the bar who has resided during the past summer with him, who acts as one of his counsel-in this action, and has shown a laudable zeal, and made strenuous exertions in behalf of his client. The plaintiff complains also of the smoke from the locomotive, on the ground that it is prejudicial to the health and comfort of himself and his family, and he alledges that the establishment as now conducted is a “ nuisance of the most flagrant character,” and that the lives of his family, tenants and inmates are endangered. The general charge that it is a flagrant nuisance, cannot be taken into consideration, any further than as it may be supported by the facts. In this case there are none except those which I have men*658tioned. The smoke must undoubtedly be annoying to some extent, but not more disagreeable or prejudicial than what may proceed from many lawful establishments in the village, nor is the inconvenience so constant or continuous. There may be some danger to human life from the rapid passage of a railroad train, but in the opinion of many, not more than what results from the passage of ordinary carriages. Accidents to children, or to adults who are not grossly careless, from the locomotives when passing through our most populous cities, are very rare. The times of their passage are generally known, and the noise made by the movement over the rails, and the engineer’s whistle, give timely notice of the approach of the train. When the usual precautions are practiced the danger is very slight, and when there is any carelessness or mismanagement the company and its officers are very properly held to a rigid accountability. It is true that there can be no satisfaction for the loss of life, nor any adequate remuneration for the deprivation of a limb, but the strong probability that the company will encounter a serious loss of property, and that a careless or notoriously incompetent conductor, or engineer, will undergo a disgraceful punishment where serious injuries are inflicted, must necessarily lead to great caution and to consequent security. The evils of which the plaintiff complains are by no means peculiar to himself. They are the necessary concomitants of this species of locomotion, whether in the city or in the country. They cannot be prevented without an entire suspension of one of the greatest improvements of modern times. Private rights should undoubtedly be effectually guarded, but the courts cannot extend the protection of the interest of any one so far as to restrict the lawful pursuits of another. The maxim sic uteri tuo ut non alienum lædas is true when correctly construed. It extends to all damages for which the law gives redress, but no further. If it should be applied literally, it would deprive us to a great extent of the legitimate use of our property, and impair, if not destroy its value. A man who sets up a new store or hotel in the vicinity of an old one, or who discovers and makes a new machine which. wholly supersedes a prior invention, *659or who erects a new dwelling house so near that of his neighbor as to endanger it from the cinders which may escape from the chimney, or as to interrupt some fine prospect, or who plants a grove so near the boundary line of another as to shade a valuable garden, or prevent the free circulation of air around a dwelling house, inflicts an injury for which the law gives no redress, and which cannot be averted by the tribunals intrusted with its administration. So too there, are some useful employments which endanger the lives of human beings which cannot and ought not to be prohibited. Lives are sometimes destroyed by an omnibus, a carman’s cart, a stage or a steamboat, but so long as they are not imminently dangerous they cannot be prohibited. We cannot enjoy our private rights, nor can we avail ourselves of the many advantages resulting from modern discoveries, without encountering some risk to our lives, or our property, or to some extent endangering the lives or injuring the property of others. The questions in all such cases are, is the business a lawful one, and is the injury or danger to others by or from its legitimate pursuit inevitable ? If they are, the law furnishes no remedy either by way of indemnity or prevention. [Kings Special Term, November 22, 1852. S. B. strong, Justice.] The charges against the company for alledged carelessness and mismanagement are sufficiently answered by the affidavits produced by the defendants. From those papers it appears that the freight cars have at the time designated by the plaintiff been under the management and control of a competent conductor, and that their motion was by no means rapid, nor was any one injured. Upon the whole I am satisfied that the case presented in behalf of the plaintiff does not call for, or warrant, the interposition of this court by way of restriction upon the future action of the defendants. The motion for an injunction must therefore be denied, and the order temporarily restraining the defendants must be vacated. | 01-09-2022 | [
"S. B. Strong, J. The plaintiff alledges in his complaint that he has been for the last five years, and is, lawfully possessed of a lot in the village of Hempstead, in the county of Queens, hounded on the north by the middle of Fulton-street, and on the west by the middle of Main-street, comprising half an acre; on which there are a dwelling house and shop fronting on Main-street, and a barn and other out buildings on Fulton-street. That while he has been so possessed of the said premises, the defendants having previously, and in or about the year 1837, laid down and along Main-street, and upon such premises, certain timbers and iron rails, constituting their railroad track, continued them thereon, running over the same with passenger, and freight cars drawn by horses, greatly to his injury, and that such cars were often suffered to stand for an unreasonable time upon his said premises.",
"That about two years ago, and for about one year, the said track was disused, and got “into a *648ruinous and shattered state,” and embarrassed the travel upon the highway, causing the breaking of wagons and other vehicles, and hindering and endangering their passage to and from the premises of the plaintiff. That about the 5th of last August, the defendants took up the old timbers and rails and tore up the soil of his land, and laid down in their place other timbers and iron rails, and have at various times since “ broken his close,” and run upon the said rails upon and over such close with their locomotives, propelled by steam: that “ by the coming of the said locomotives upon and running the same over his said close, the health and lives of his family, tenants and inmates, are prejudiced and endangered, and the value of his property lessened; that an offensive smoke has filled his dwelling house; that the same is a, nuisance of the most flagrant character,” and that the continuance thereof would be an irreparable injury to his said property and the enjoyment thereof; and that his tenants are likely to abandon the same.",
"That the defendants have since such 5th of August last, run upon and over the said premises certain freight cars loaded with manure and merchandise, propelling the same by means of their steam engine and horses, often without agents to watch and conduct them, and to the danger, nuisance and inconvenience of himself and family; and that from the contiguity of his land to the depot, the locomotives frequently stop opposite to his premises, and he is thus injured more than the rest of mankind. He therefore claims two thousand dollars damages, and prays for an order of injunction restraining the defendants during the pendency of this suit from running their locomotives or cars of any description upon or over his said premises, and that a judgment may be given him for his said damages, and for a perpetual injunction. Upon this complaint, verified by the oath of the plaintiff, the defendants have been restrained until now from running their locomotive or cars over the part of their railway south of Fulton-street, which includes that part of it passing the plaintiff’s lot; and I am now asked, upon that document and various affidavits accompanying it, to continue the injunction until final judgment *649shall be rendered in the action. I shall examine with all possible brevity the several points raised and discussed by the counsel for the respective parties on the argument, and shall consider such statements made in the affidavits produced before me as I deem material.",
"The plaintiff grounds his application on the allegations that the railway has been illegally located; that he has not received any compensation for that part of his land which has been taken by the company; and that the establishment is a public nuisance, peculiarly injurious to him. The defendants claim the right to construct their road, as it is, under the act authorizing them to construct, maintain and continue a branch railroad from some convenient point on their main railroad, to some proper place or point in or near the village of Hempstead, passed on the 16th of May, 1836. The second section of that act conferred upon them the power which they possessed in reference to their main road, under the second section of their act of' incorporation, (Laws of 1834, p. 231,) to construct the road “ on the most practicable route.” The company adopted the existing route throughout, and made their road upon it in 1837, and have used it, with but a brief interruption, from that time until the commencement of this suit.",
"No objection is made to the starting ¡ooint on the main road, but it is contended that the terminus in Hempstead is at an improper place, and that therefore it has been illegally assumed. Much was left by the terms of the act to the discretion of those who might manage the affairs of the company, and unless they dearly erred, their selection ought not to be disturbed. If a mere difference of opinion between them and those whose immediate interests might be affected by their acts, should be allowed to annul their proceedings, but few of them could be sustained; particularly when the views of parties are so varied as they usually are relative to the proper location of a railroad. The statute clearly gives to the defendants the right to extend their branch road into the village. No fact is stated in the plaintiff’s papers to show that there \"is a more appropriate place in the village for the terminus of the road than that which has been *650selected. In any other part of it, the smoke, of which the plaintiff complains, would be equally offensive ; there would be the same danger from the fire of the engine, the same exposure of human life, and a similar obstruction to the passage through the streets.",
"If a railroad in, or through a populous village is necessarily a nuisance, that would be a reason for” excluding it altogether., But I could not decide that it is, without condemning the action of both the legislative and judicial departments of this state. Many laws have been passed authorizing the construction of railroads through cities and villages. They have been carried into operation, and have been sustained by our courts. If the railroad in question had become a nuisance through mismanagement, that would not prove the impropriety of its original location. Whether it has been so mismanaged, or, indeed, whether it be a nuisance at all, will be considered in another part of this opinion. If, in considering this question, the opinions of those principally interested are entitled to any weight, a large majority appear to be in favor of the existing location. The plaintiff and one of his counsel and two gentlemen residing near the road, above the village, are opposed to it; and the counsel says that he attended a public meeting in the village of Hempstead, before and in reference to the relaying of the track, where, in all the conversations on the subject, it was expressly understood a,nd declared that the company should on no account go below Pulton-street; it being universally understood and declared that the extension of the road beyond that street would be a nuisance.",
"In this, however, he differs from others who were present at the same meeting. Justice Hendrickson swears that “ at such meeting it was neither expressly understood or declared that the railroad company were on no account to run below Pultonstreet and that the object and business of the meeting were to take measures to raise the necessary funds in money to induce the company to locate a depot and relay their branch railroad track to its present termination, Six residents of the village, some of whom are personally known to me to be gentlemen of great respectability and worth, swear that they, together *651with the counsel, to whom I have alluded, and another person, were a committee appointed by the inhabitants of the village, at a meeting held pursuant to public notice, to confer and agree with the railroad company respecting the relaying of the branch track in the said village; that the said counsel acted and performed his duties as one of such committee; and that it was expressly understood and agreed, by both the committee and the company, that the said company should relay and repair their branch track, entirely through Main-street, to the original termination of the said branch at the brook; and another resident of Hempstead swears that he stated to the said counsel that the understanding was that the railroad track was to be relaid below Fulton-street, for the accommodation of merchants and others, for freighting purposes ; and that he must be aware of that understanding: to which the counsel replied; “ certainly ; and no reasonable man can object to it; and I think there will be no difficulty about the matter.” Thirteen persons owning real estate and doing business in that part of Main-street between Fulton street and the southern termination of the branch road, depose, that according to the best of their judgment and belief, the road is and will be ofi great benefit and advantage to the village; and that the street is not obstructed thereby; but that it is improved and rendered more commodious for travelers.",
"It appears, too, from the affidavit of another resident, that the plaintiff had himself subscribed and paid thirty-five dollars towards enabling the defendants to build their depot and “relay their 'branch track in the village.” A certificate was read on the argument, signed by thirty-five persons, describing themselves as residing and doing business on Main-street, stating that the subscribers to it believed that it would be a great benefit and advantage to that street if the track of the Long Island railroad should be relaid from the junction of Main and Fulton-streets to the brook, which is its present termination. A memorial was also read, on the argument, signed by 122 individuals, who, as is stated in an affidavit annexed to it, are residents of the village, and comprise the principal part of its adult male inhabitants, stating their belief, that the use of the track to its *652present termination has been and will be of great convenience and advantage to the village, and expressing a hope that the commissioners of highways, to whom it is addressed, would not take measures to deprive them of such means of conveyance through the village. Many of the persons who have signed the papers which I have mentioned, expressed a wish that the locomotive should not pass below Fulton-street; and no doubt acted upon the supposition that such a regulation would be adopted; but that does not diminish the weight of their testimony or opinions in favor of the propriety of the existing location of the terminus in the village.",
"Taking all the evidence upon this point together, I cannot think that the company has erred in this particular. It is also contended that the defendants exceeded their powers in constructing a part of their road on a curved line, until it formed a junction with the highway leading into Main-street, and then laying their track along the highway. When a statute, or a deed, describes a line extending from one designated point to another, without any qualification, it generally calls for a straight course; but in this case there is express authority for a deviation, if it should become necessary or proper in the adoption of “ the most practicable route.” The word practicable, as used in the statute, had particular reference to the facility of construction; and as to that, there is nothing to show that the directors had any motive to err, or that they did in fact commit any error.",
"Neither does it appear that the curve has created any additional expense, or imposed any serious impediment to the travel, or caused any unnecessary injury to private interests. There may have been some doubt as to the right of the company to lay their track along the highway, when the branch railroad was originally constructed. The statute of May 11th, 1835, (ch. 300,) may not have been broad enough to sanction the procedure. But the act to authorize the formation of railroad corporations and to regulate the same, passed on the 2d of April, 1850, (§ 28, sub.",
"5,) expressly authorizes those institutions to construct their road along any street or highway which its route shall intersect or touch, with the restriction that the usefulness *653of the street or highway shall not be unnecessarily impaired. By the 49th section of the act, the same power was conferred upon existing railroad corporations. The present track on the highway and street is identical with the old one; but the rails were relaid in 1852, and that was authorized by the act of 1850, unless the usefulness of' the highway or street was, in the language of that act, “ unnecessarily impaired.” There is evidence to show very considerable injuries to the highway, when the old track was partially disused; but the statements made in the depositions and memorials, to which I have referred, show very clearly that since the track has been relaid, the condition of the highway, and particularly of the street in the village, has been improved, and is, indeed, better than it was previous to the adoption of either as a part of the route.",
"The location was originally made without objection or remonstrance from any but two persons, who for some reason preferred that the road should take an untraveled route, rather than the highway, through their lands. It remained unchanged without any further objection from any one from 1837 until 1852. It was sanctioned by some fifty-four inhabitants of Hempstead (and among others by the plaintiff) who on the 20th of November, 1839, took a mortgage upon it for moneys advanced by them to pay for its construction, amounting to $13,950, of which the plaintiff’s part was $300, and is now supported by a large majority of those who are principally affected by it, so far as the views of the people have been made known to me.",
"I am clear that the objections which have been made to the location of the road have not been sustained, but that the want of any serious resistance to it at first, the acquiescence in it for a period of fourteen years, the affirmance of it by the mortgage of the road in its existing state to the plaintiff and others for moneys advanced by them to pay for its construction, .and the approval of it at a public meeting called for the purpose of deliberating and deciding upon the subject, and by a large majority of those who have made the affidavits and sighed the memorials which I have mentioned, are “ confirmation strong” of its propriety. The plaintiff alledges that his land extends to the center of *654Main-street, and that the company have wrongfully taken a part of it for their railroad.",
"It appears from the diagram accompanying the plaintiff’s papers, and from other documents which have been handed to me, that the track has been laid in or near the middle of the street, the rail nearest the plaintiff’s dwelling house being about (and upwards of) twenty feet from the outer edge of the side walk on the same side. Whatever interest the plaintiff had in the land thus taken was therefore subject to the public right to use it as a common highway. The act of 1850 which I have quoted gave to the defendants the right to take it for their railroad, provided they restored the highway to such a state as not unnecessarily to impair its usefulness.",
"With that condition, as the papers in the cause show, they have fully complied. That act however did not, and could not authorize the defendants to impair the plaintiff’s rights without compensation. But have his private rights been impaired or taken, within the meaning of the constitutional provision securing an indemnity for the private property of individuals taken for public purposes? It does not appear very clearly from the papers what right the plaintiff had in the property taken by the defendants. He alledges in his complaint that on or about the 2d of September, 1852, and for five years prior thereto, he was and now is lawfully possessed of the premises described. He does not in that claim any title to such premises or any part of them. But he deposes in Ms affidavit annexed to the order for a temporary injunction, that he owns the property in fee.",
"It is not however competent for a plaintiff to add materially to the causes of action set forth in his complaint, by affidavit. He may for the purpose of obtaining a preliminary injunction thus fortify his original claims, but he cannot enlarge them or prefer others. If however he had directly averred in his complaint that he was seised of the land in fee, it would still be a serious obstacle in the way of his obtaining the relief for which he asks, that neither his title or possession extends back to the year 1837, when the land was originally taken by the defendants. * The right set forth in the complaint, and to that any action must be confined, is limited to the five years immediately preceding the 2d of Septem*655ber.",
"1852. It is to be inferred from that allegation that he had no interest in the premises, prior to the year 1847. Whatever right in reference to the property was taken by the defendants belonged to the proprietor in 1837, and he alone was entitled to a compensation. If the land was subsequently conveyed to the plaintiff, as it probably was, he took it cum, onere with the railroad upon it. He certainly cannot recover for injuries done to the property when it belonged to another.",
"After his title accrued, the track was merely relaid. That has never been considered as taking any property, within the intent of the constitutional provision. It is continuing the use of it according to _ a previously acquired right. If the defendants, however, so conduct their operations on the land in question as to inflict an injury upon the plaintiff for which he is entitled to redress, he can obtain it in an ordinary action, but he is not entitled to an injunction, unless he has sufficient cause to apprehend some great and irremediable evil. Whether he has or not, in this case, will be considered under another head. But if the plaintiff had a full title to the land in question when it was first taken, and if he would then have been entitled to any compensation from the defendants for appropriating it to a species of locomotion different from that for which it had been dedicated or acquired (concerning which it is not necessary that I should give any opinion, nor do I) there is still a serious obstacle in the way of obtaining an injunction.",
"He could have insisted on receiving a compensation when the land was first taken, and could have prevented the company from using it until such compensation had been paid, or at any rate satisfactorily secured; but after the road had been completed and was in full operation, it would not be equitable, it would not be doing justice to the public to allow him to stop the cars until he might coerce the company to pay him an exorbitant amount, or to go through with the dilatory process of having the damages assessed pursuant to the provisions of the statute. At any rate an injunction should not-be granted until all the ordinary means for obtaining indemnity had failed. It was correctly decided in the case of Hodgkinson v. The Long Island Railroad Company, *656(not reported) that if the plaintiff forbear until the rails are laid, and until the time when an injunction would be seriously injurious, a motion for a preliminary restraint should be denied. The only remaining question is whether the road where it passes the plaintiff’s premises is a nuisance. I have already intimated an opinion that a railroad through a populous village, or a city, is not peí' se a nuisance. The legislature has expressly authorized various companies to lay and use their track through many of our cities and villages, and cars are now drawn by locomotives propelled by steam through Albany, Schenectady, Utica, Syracuse, Rochester, Buffalo, Poughkeepsie, Brooklyn, Jamaica, and many other cities and villages.",
"It was held in the case of Drake v. The Hudson River Railroad Company, (7 Barb. 508,) that a road passing through the streets in the city of New-York, and when the cars are drawn by steam-power into a crowded part of the city (although not to the terminus of the road) was not a nuisance. Similar decisions were made in the cases of Hamilton v. The New-York and Harlem Railroad Company, (9 Paige, 171;) The Lexington and Ohio Railroad Company v. Applegate, (8 Dana, 289,) and Chapman v. The Albany and Schenectady Railroad Company, (10 Barb. 360.) Is there then any thing peculiar to Main-street, or in the management of the defendants, which makes the railroad where it passes the plaintiff’s house a nuisance?",
"It is not averred in the complaint that the railroad constitutes any serious impediment to the travel, along the highway. It no where appears that the rails are badly laid down, so as to create any obstruction on the surface, and it is apparent that the street is of sufficient width for carriages to pass each other without danger or difficulty, on either side of the railway. Besides, a number of respectable inhabitants of the place deposed that the condition of the street as a passway has been considerably improved by the defendants’ works upon it. Is there any thing in the management of the road and its appendages which renders it offensive to the plaintiff, to such an extent as to justify the interposition of this court by way of restraint upon the action of the defendants ? One of the causes *657of complaint is that the steam locomotive .passes as far south as Fulton-street, and occasionally below it.",
"It.is apparent that many of those who have favored the introduction of the road into the village have acted on the supposition that the locomotive was not to proceed below Fulton-street, but there is no evidence of any definite agreement with the defendants to that effect; and as their charter does not restrict them as to the means of transportation on any part of their route, I am not authorized, to interfere, but must leave the matter to the good sense of those who may be intrusted with the management of the affairs of the company. It is manifestly for their interest to conduct its operations in such a manner as to gratify the reasonable wishes of that part of the community which gives to the company an efficient support. The plaintiff complains that about two years ago, and for about a year, the track was disused and suffered “ to go to ruin,” its shattered state embarrassing the travel upon the highway, causing the breaking of vehicles, and hindering their passage to and from his premises. There were no doubt serious grievances at the time, but they resulted from the then impaired condition of the track. The cause has since been removed, and the papers furnish us no reasons to apprehend a recurrence of the same or similar evils. Hone of the papers mention any serious accidents since the track has been relaid and the locomotive has passed over it, and if there had been any, they would no doubt have been discovered by the plaintiff, or the learned member of the bar who has resided during the past summer with him, who acts as one of his counsel-in this action, and has shown a laudable zeal, and made strenuous exertions in behalf of his client.",
"The plaintiff complains also of the smoke from the locomotive, on the ground that it is prejudicial to the health and comfort of himself and his family, and he alledges that the establishment as now conducted is a “ nuisance of the most flagrant character,” and that the lives of his family, tenants and inmates are endangered. The general charge that it is a flagrant nuisance, cannot be taken into consideration, any further than as it may be supported by the facts. In this case there are none except those which I have men*658tioned. The smoke must undoubtedly be annoying to some extent, but not more disagreeable or prejudicial than what may proceed from many lawful establishments in the village, nor is the inconvenience so constant or continuous. There may be some danger to human life from the rapid passage of a railroad train, but in the opinion of many, not more than what results from the passage of ordinary carriages. Accidents to children, or to adults who are not grossly careless, from the locomotives when passing through our most populous cities, are very rare. The times of their passage are generally known, and the noise made by the movement over the rails, and the engineer’s whistle, give timely notice of the approach of the train.",
"When the usual precautions are practiced the danger is very slight, and when there is any carelessness or mismanagement the company and its officers are very properly held to a rigid accountability. It is true that there can be no satisfaction for the loss of life, nor any adequate remuneration for the deprivation of a limb, but the strong probability that the company will encounter a serious loss of property, and that a careless or notoriously incompetent conductor, or engineer, will undergo a disgraceful punishment where serious injuries are inflicted, must necessarily lead to great caution and to consequent security. The evils of which the plaintiff complains are by no means peculiar to himself.",
"They are the necessary concomitants of this species of locomotion, whether in the city or in the country. They cannot be prevented without an entire suspension of one of the greatest improvements of modern times. Private rights should undoubtedly be effectually guarded, but the courts cannot extend the protection of the interest of any one so far as to restrict the lawful pursuits of another. The maxim sic uteri tuo ut non alienum lædas is true when correctly construed. It extends to all damages for which the law gives redress, but no further. If it should be applied literally, it would deprive us to a great extent of the legitimate use of our property, and impair, if not destroy its value. A man who sets up a new store or hotel in the vicinity of an old one, or who discovers and makes a new machine which. wholly supersedes a prior invention, *659or who erects a new dwelling house so near that of his neighbor as to endanger it from the cinders which may escape from the chimney, or as to interrupt some fine prospect, or who plants a grove so near the boundary line of another as to shade a valuable garden, or prevent the free circulation of air around a dwelling house, inflicts an injury for which the law gives no redress, and which cannot be averted by the tribunals intrusted with its administration.",
"So too there, are some useful employments which endanger the lives of human beings which cannot and ought not to be prohibited. Lives are sometimes destroyed by an omnibus, a carman’s cart, a stage or a steamboat, but so long as they are not imminently dangerous they cannot be prohibited. We cannot enjoy our private rights, nor can we avail ourselves of the many advantages resulting from modern discoveries, without encountering some risk to our lives, or our property, or to some extent endangering the lives or injuring the property of others. The questions in all such cases are, is the business a lawful one, and is the injury or danger to others by or from its legitimate pursuit inevitable ?",
"If they are, the law furnishes no remedy either by way of indemnity or prevention. [Kings Special Term, November 22, 1852. S. B. strong, Justice.] The charges against the company for alledged carelessness and mismanagement are sufficiently answered by the affidavits produced by the defendants. From those papers it appears that the freight cars have at the time designated by the plaintiff been under the management and control of a competent conductor, and that their motion was by no means rapid, nor was any one injured. Upon the whole I am satisfied that the case presented in behalf of the plaintiff does not call for, or warrant, the interposition of this court by way of restriction upon the future action of the defendants.",
"The motion for an injunction must therefore be denied, and the order temporarily restraining the defendants must be vacated."
]
| https://www.courtlistener.com/api/rest/v3/opinions/5458311/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
DETAILED ACTION Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
This office action is in response to the amendment filed on April 6, 2021, in which claims 1-11 were canceled and claims 12-20 are presented for further examination.
Response to Arguments Applicant’s arguments filed on April 6, 2021, with respect to 12-19 have been fully considered and are persuasive. The 35 USC 112 and 103 rejection set forth in the last office action, mailed on November 6, 2020 have been withdrawn in light of the amendment filed on April 6, 2021.
Claim Rejections - 35 USC § 112 The rejection under 35 USC 112 with respect to claims 1-11 has been withdrawn in view of the cancellation of claims 1-11.
Claim Rejections - 35 USC § 103 The rejection under 35 USC 103 with respect to claims 1-11 has been withdrawn in view of the cancellation of claims 1-11.
Examiner’s Comment (Drawings) New corrected drawings in compliance with 37 CFR 1.121(d) are required in this application because (1). Fig.1 please indicates which portion in that figure represents clients 110, users 102, client 110A, user 102A; servers 130, and item 100. (2). Fig.3A please indicates which portion in that figure represents item 300. (3). Fig.3B please indicates which portion in that figure represents item 313. (4). In page 5 of the drawing, please indicate which portion in the drawing page represents fig 4A, and which portion in that fig.4A represents items 135, 242, and 248, and please link the first portion and second portion of the drawing set forth in page 5. (5). In page 6 of the drawing, please indicate which portion in the drawing page represents fig 4B, and which portion in that fig.4B represents items 135, and 242, and please link the first portion and second portion of the drawing set forth in page 6. (6). In page 7 of the drawing, please indicate which portion in the drawing page represents fig 4C, and which portion in that fig.4C represents items 135, and 242, and please link the first portion and second portion of the drawing set forth in page 7. (7). In page 8 of the drawing, please indicate which portion in the drawing page represents fig 4D, and which portion in that fig.4D represents items 410A, and 410B, and please link the first portion and second portion of the drawing set forth in page 8. (2). Fig.5 please indicates which portion in that figure represents item 500. Applicant is advised to employ the services of a competent patent draftsperson outside the Office, as the U.S. Patent and Trademark Office no longer prepares new drawings. The
Allowable Subject Matter Claims 12-20 are allowed in light of the prior art made of record. The following is an examiner’s statement of reasons for allowance: the claimed invention is involved in retrieving a multidimensional search query spanning a defined length of time, wherein multiple candidates are compared to the multidimensional search query using an optimization function to determine an associated similarity value, where the candidate match is selected from multiple candidates based on the candidate match having a highest associated similarity value, wherein the confidence value is assigned to the candidate match based on the associated similarity value and a size of multidimensional search query and the size of the multidimensional search query is reduced. The similarity search on database using successively smaller versions of multidimensional search query until a candidate match having an optimal confidence value is determined. The prediction result selected from multiple records having associated timestamps is outputted after the candidate match assigned to the optimal confidence value. None of the prior art of record, singular and any order combination reducing the size of the multidimensional search query and adjust weighting of the associated similarity value to account for the size of the multidimensional search query and once the candidate match is found, then successive records immediately after the candidate match is examined to generate the prediction result. The closest prior art: US 20150317344, 20100332475, and 20130173632 (Involved in predicting object properties and events using similarity based information retrieval and modeling by implementing an efficient retrieval strategy is providing an indexing structure that rapidly Any comments considered necessary by applicant must be submitted no later than the payment of the issue fee and, to avoid processing delays, should preferably accompany the issue fee. Such submissions should be clearly labeled “Comments on Statement of Reasons for Allowance.” Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to JEAN M CORRIELUS whose telephone number is (571)272-4032. The examiner can normally be reached on Monday-Friday 6:30a-10p(Midflex). Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice.
Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
/JEAN M CORRIELUS/Primary Examiner, Art Unit 2162 April 13, 2021 | 2021-04-22T09:51:31 | [
"DETAILED ACTION Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . This office action is in response to the amendment filed on April 6, 2021, in which claims 1-11 were canceled and claims 12-20 are presented for further examination. Response to Arguments Applicant’s arguments filed on April 6, 2021, with respect to 12-19 have been fully considered and are persuasive. The 35 USC 112 and 103 rejection set forth in the last office action, mailed on November 6, 2020 have been withdrawn in light of the amendment filed on April 6, 2021.",
"Claim Rejections - 35 USC § 112 The rejection under 35 USC 112 with respect to claims 1-11 has been withdrawn in view of the cancellation of claims 1-11. Claim Rejections - 35 USC § 103 The rejection under 35 USC 103 with respect to claims 1-11 has been withdrawn in view of the cancellation of claims 1-11. Examiner’s Comment (Drawings) New corrected drawings in compliance with 37 CFR 1.121(d) are required in this application because (1). Fig.1 please indicates which portion in that figure represents clients 110, users 102, client 110A, user 102A; servers 130, and item 100. (2).",
"Fig.3A please indicates which portion in that figure represents item 300. (3). Fig.3B please indicates which portion in that figure represents item 313. (4). In page 5 of the drawing, please indicate which portion in the drawing page represents fig 4A, and which portion in that fig.4A represents items 135, 242, and 248, and please link the first portion and second portion of the drawing set forth in page 5. (5). In page 6 of the drawing, please indicate which portion in the drawing page represents fig 4B, and which portion in that fig.4B represents items 135, and 242, and please link the first portion and second portion of the drawing set forth in page 6. (6). In page 7 of the drawing, please indicate which portion in the drawing page represents fig 4C, and which portion in that fig.4C represents items 135, and 242, and please link the first portion and second portion of the drawing set forth in page 7.",
"(7). In page 8 of the drawing, please indicate which portion in the drawing page represents fig 4D, and which portion in that fig.4D represents items 410A, and 410B, and please link the first portion and second portion of the drawing set forth in page 8. (2). Fig.5 please indicates which portion in that figure represents item 500. Applicant is advised to employ the services of a competent patent draftsperson outside the Office, as the U.S. Patent and Trademark Office no longer prepares new drawings. The Allowable Subject Matter Claims 12-20 are allowed in light of the prior art made of record.",
"The following is an examiner’s statement of reasons for allowance: the claimed invention is involved in retrieving a multidimensional search query spanning a defined length of time, wherein multiple candidates are compared to the multidimensional search query using an optimization function to determine an associated similarity value, where the candidate match is selected from multiple candidates based on the candidate match having a highest associated similarity value, wherein the confidence value is assigned to the candidate match based on the associated similarity value and a size of multidimensional search query and the size of the multidimensional search query is reduced. The similarity search on database using successively smaller versions of multidimensional search query until a candidate match having an optimal confidence value is determined. The prediction result selected from multiple records having associated timestamps is outputted after the candidate match assigned to the optimal confidence value.",
"None of the prior art of record, singular and any order combination reducing the size of the multidimensional search query and adjust weighting of the associated similarity value to account for the size of the multidimensional search query and once the candidate match is found, then successive records immediately after the candidate match is examined to generate the prediction result. The closest prior art: US 20150317344, 20100332475, and 20130173632 (Involved in predicting object properties and events using similarity based information retrieval and modeling by implementing an efficient retrieval strategy is providing an indexing structure that rapidly Any comments considered necessary by applicant must be submitted no later than the payment of the issue fee and, to avoid processing delays, should preferably accompany the issue fee. Such submissions should be clearly labeled “Comments on Statement of Reasons for Allowance.” Conclusion Any inquiry concerning this communication or earlier communications from the examiner should be directed to JEAN M CORRIELUS whose telephone number is (571)272-4032.",
"The examiner can normally be reached on Monday-Friday 6:30a-10p(Midflex). Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair.",
"Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. /JEAN M CORRIELUS/Primary Examiner, Art Unit 2162 April 13, 2021"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-04-25.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
[Cite as State v. Daniel, 2016-Ohio-5446.]
COURT OF APPEALS MUSKINGUM COUNTY, OHIO FIFTH APPELLATE DISTRICT
STATE OF OHIO JUDGES: Hon. Sheila G. Farmer, P.J. Plaintiff-Appellee Hon. W. Scott Gwin, J. Hon. William B. Hoffman, J. -vs- Case No. CT2015-0036 TIMOTHY DANIEL
Defendant-Appellant OPINION
CHARACTER OF PROCEEDING: Appeal from the Muskingum County Court of Common Pleas, Case No. CR2013-0251
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: August 17, 2016
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
D. MICHAEL HADDOX ERIC J. ALLEN Prosecuting Attorney The Law Office of Eric J. Allen, Ltd. Muskingum County, Ohio 713 S. Front St. Columbus, Ohio 43206 By: GERALD V. ANDERSON II Assistant Prosecuting Attorney Muskingum County, Ohio 27 North Fifth St., P.O. Box 189 Zanesville, Ohio 43702-0189 Muskingum County, Case No. CT2015-0036 2
Hoffman, J.
{¶1} Defendant-appellant Timothy Daniel appeals his sentence entered by the
Muskingum County Court of Common Pleas via Judgment Entry of May 22, 2015, and
nunc pro tunc Judgment Entry of June 8, 2015. Plaintiff-appellee is the state of Ohio.
STATEMENT OF THE CASE1
{¶2} On January 14, 2014, Appellant was found guilty by a jury of one count of
aggravated murder, one count of having weapons under disability, one count of felonious
assault, one count of carrying a concealed weapon, and one count of improper handling
of a firearm. On February 3, 2014, the trial court imposed sentence. Appellant filed a
direct appeal to this Court in State v. Daniel, Muskingum App. No. CT 2014-0018, 2014-
Ohio-4274.
{¶3} Via Opinion and Judgment Entry of September 25, 2014, this Court
reversed Appellant's conviction for aggravated murder, rendered judgment of conviction
as to murder, in violation of R.C. 2903.02(A), and remanded the matter to the trial court
for resentencing. Id.
{¶4} The trial court conducted a resentencing hearing on May 13, 2015, and
entered a Judgment Entry of sentence on May 22, 2015. The trial court entered a nunc
pro tunc entry on June 8, 2015.2
1A rendition of the underlying facts is unnecessary for resolution of this appeal. 2 At the May 13, 2015 hearing, the trial court stated, “That is the only change that is being made [aggravated murder to murder]. Everything else will remain the same. The gun specs, the consecutive sentences, which the Court of Appeals said they are not allied offenses or similar and, therefore, the consecutive was appropriate.” Tr. at 6. Muskingum County, Case No. CT2015-0036 3
{¶5} The trial court sentenced Appellant to a stated prison term of fifteen years
to life on Count One, Murder, with a firearm specification, including a mandatory term of
three years in prison, which by law must be served consecutively;
{¶6} On Count Two, Having a Weapon While Under Disability, the trial court
imposed a stated prison term of three years;
{¶7} On Count Three, Felonious Assault, the trial court imposed a stated term of
eight years in prison, with a firearm specification, including a three year mandatory term
of incarceration, which by law must be served consecutively;
{¶8} On Count Four, Carrying a Concealed Weapon, the trial court imposed a
stated prison term of eighteen months;
{¶9} On Count Five, Improper Handling of a Firearm, the trial court imposed a
stated prison term of eighteen months.
{¶10} The trial court's May 22, 2015 Re-Sentencing Entry states,
The Court has considered the record, the presentence investigation,
and any victim impact statement, as well as, the principles and purposes of
sentencing under Ohio Revised Code 2929.11 and its balance of
seriousness and recidivism factors under Ohio Revised Code 2929.12***
The Court had previously made judicial finding [sic] that Defendant
has a significant criminal history; had tried to employ witnesses to give
perjured testimony; has shown no remorse for his actions; and that it is
necessary to protect the public.
*** Muskingum County, Case No. CT2015-0036 4
The periods of incarceration imposed for Counts Two, Four and Five
shall be served concurrently; Count Three shall be served consecutively,
along with the mandatory terms for the Firearm Specifications, for an
aggregate prison sentence of twenty-nine (29) years to life in prison.
Defendant is granted credit for time served; he shall pay the costs of this
prosecution. [Underlining omitted.]
{¶11} Appellant appeals, assigning as error,
{¶12} “I. THE TRIAL COURT ERRED IN SENTENCING APPELLANT TO
CONSECUTIVE SENTENCES AS THE COURT FAILED TO ENGAGE IN THE
REQUISITE THREE PART ANALYSIS REQUIRED TO SENTENCE A DEFENDANT TO
CONSECUTIVE SENTENCES BY FAILING TO FIND THAT ANY OF THE THREE
FACTORS LISTED IN 2929.14(C)(4)(a)-(c) APPLIED.”
{¶13} R.C. 2929.14(C)(4)(a)-(c) reads, in pertinent part:
(4) If multiple prison terms are imposed on an offender for convictions
of multiple offenses, the court may require the offender to serve the prison
terms consecutively if the court finds that the consecutive service is
necessary to protect the public from future crime or to punish the offender
and that consecutive sentences are not disproportionate to the seriousness
of the offender's conduct and to the danger the offender poses to the public,
and if the court also finds any of the following:
(a) The offender committed one or more of the multiple offenses
while the offender was awaiting trial or sentencing, was under a sanction Muskingum County, Case No. CT2015-0036 5
imposed pursuant to section 2929.16, 2929.17, or 2929.18 of the Revised
Code, or was under post-release control for a prior offense.
(b) At least two of the multiple offenses were committed as part of
one or more courses of conduct, and the harm caused by two or more of
the multiple offenses so committed was so great or unusual that no single
prison term for any of the offenses committed as part of any of the courses
of conduct adequately reflects the seriousness of the offender's conduct.
(c) The offender's history of criminal conduct demonstrates that
consecutive sentences are necessary to protect the public from future crime
by the offender.
{¶14} In State v. Bonnell, 140 Ohio St. 3d 209, 16 N.E.3d 659, 2014–Ohio–3177,
syllabus, the Supreme Court of Ohio held in order to impose consecutive sentences, a
trial court is required to make the findings mandated by R.C. 2929.14(C)(4) at the
sentencing hearing and incorporate its findings into its sentencing entry, but it has no
obligation to state reasons to support its findings. A failure to make the findings required
by R.C. 2929.14(C)(4) renders a consecutive sentence contrary to law. Bonnell, ¶ 34.
Although the findings are to be made at the sentencing hearing and incorporated into the
sentencing entry, a trial court's inadvertent failure to incorporate the statutory findings in
the sentencing entry after properly making those findings at the sentencing hearing does
not render the sentence contrary to law; rather, such a clerical mistake may be corrected
by the court through a nunc pro tunc entry to reflect what actually occurred in open court.
Bonnell, ¶ 30. Muskingum County, Case No. CT2015-0036 6
{¶15} At the sentencing hearing on May 13, 2015, the trial court stated on the
record,
The Court, also, would tell you, you're a very lucky person. You beat
a murder trial in Franklin County which you shouldn't have, according to that
judge and his opinion sentencing you. You now have a life without parole
reduced to 15 to life, but you still have a very substantial sentence. You’re
a danger to society. That's why you gave -- were given consecutive
sentences to begin with.
{¶16} Tr. at 6.
{¶17} Here, Appellant concedes in his argument “the first two steps, finding
consecutive sentences are necessary to protect the public from future crime or to punish
the offender, as well as, finding that consecutive sentences are not disproportionate to
the seriousness of the conduct and the danger posed to the public [R.C. 2929.14(C)(4)],
are evidence [sic] in the sentencing colloquy by the trial court in this case.” However,
Appellant argues the trial court failed to complete the third step required by the statute to
justify consecutive sentences in finding one of the three factors set forth in R.C.
2929.14(C)(4)(a)-(c).
{¶18} The statute requires the trial court find one of the following: (a) Appellant
committed one or more of the offenses while awaiting trial, sentencing, under a sanction
or under post-release control for a prior offense; (b) at least two of the multiple offenses
were committed as part of one or more courses of conduct, and the harm caused by two
or more of the offenses was so great or unusual that no single prison term for any of the
offenses adequately reflects the serious of Appellant's conduct; (c), or Appellant's criminal Muskingum County, Case No. CT2015-0036 7
conduct history demonstrates consecutive sentences are necessary to protect the public
from future crime.
{¶19} At the May 13, 2015 sentencing hearing, the trial court referenced
Appellant’s prior history of criminal conduct, including a trial in Franklin County for which
Appellant was acquitted of the charge of murder. The Franklin County trial is referenced
in the presentence investigation prepared for the trial court, and the presentence
investigation includes the language of the Franklin County trial court referenced by the
trial court herein at sentencing.
{¶20} Upon this Court’s review of the PSI, we note Appellant has a lengthy history
of criminal conduct including convictions for burglary, corruption of a minor, possession
of marijuana and aggravated assault. The trial court’s statement to Appellant prior to
imposing sentence references the statements made by the Franklin County trial court
during Appellant’s sentencing on other criminal charges.
{¶21} Appellant disputes the trial court’s mention of Appellant’s Franklin County
case. However, we find Appellant’s criminal history, which criminal history was
specifically referenced by the trial court, supports the trial court’s finding Appellant posed
a danger to society due to his past criminal history. The trial court adequately finds
Appellant’s criminal conduct history demonstrates consecutive sentences are necessary
to protect the public from future crime as required by R.C. 2929.14(C)(4)(c).
{¶22} The trial court’s sentencing entry states the court considered the record and
the presentence investigation finding Appellant had a significant criminal history, showing
no remorse for his actions, and consecutive sentencing is necessary to protect the public. Muskingum County, Case No. CT2015-0036 8
{¶23} Appellant's sole assignment of error is overruled, and Appellant’s sentence
in the Muskingum County Court of Common Pleas is affirmed.
By: Hoffman, J.
Farmer, P.J. and
Gwin, J. concur | 08-19-2016 | [
"[Cite as State v. Daniel, 2016-Ohio-5446.] COURT OF APPEALS MUSKINGUM COUNTY, OHIO FIFTH APPELLATE DISTRICT STATE OF OHIO JUDGES: Hon. Sheila G. Farmer, P.J. Plaintiff-Appellee Hon. W. Scott Gwin, J. Hon. William B. Hoffman, J. -vs- Case No. CT2015-0036 TIMOTHY DANIEL Defendant-Appellant OPINION CHARACTER OF PROCEEDING: Appeal from the Muskingum County Court of Common Pleas, Case No. CR2013-0251 JUDGMENT: Affirmed DATE OF JUDGMENT ENTRY: August 17, 2016 APPEARANCES: For Plaintiff-Appellee For Defendant-Appellant D. MICHAEL HADDOX ERIC J. ALLEN Prosecuting Attorney The Law Office of Eric J. Allen, Ltd. Muskingum County, Ohio 713 S. Front St. Columbus, Ohio 43206 By: GERALD V. ANDERSON II Assistant Prosecuting Attorney Muskingum County, Ohio 27 North Fifth St., P.O. Box 189 Zanesville, Ohio 43702-0189 Muskingum County, Case No. CT2015-0036 2 Hoffman, J. {¶1} Defendant-appellant Timothy Daniel appeals his sentence entered by the Muskingum County Court of Common Pleas via Judgment Entry of May 22, 2015, and nunc pro tunc Judgment Entry of June 8, 2015. Plaintiff-appellee is the state of Ohio.",
"STATEMENT OF THE CASE1 {¶2} On January 14, 2014, Appellant was found guilty by a jury of one count of aggravated murder, one count of having weapons under disability, one count of felonious assault, one count of carrying a concealed weapon, and one count of improper handling of a firearm. On February 3, 2014, the trial court imposed sentence. Appellant filed a direct appeal to this Court in State v. Daniel, Muskingum App. No. CT 2014-0018, 2014- Ohio-4274. {¶3} Via Opinion and Judgment Entry of September 25, 2014, this Court reversed Appellant's conviction for aggravated murder, rendered judgment of conviction as to murder, in violation of R.C. 2903.02(A), and remanded the matter to the trial court for resentencing. Id.",
"{¶4} The trial court conducted a resentencing hearing on May 13, 2015, and entered a Judgment Entry of sentence on May 22, 2015. The trial court entered a nunc pro tunc entry on June 8, 2015.2 1A rendition of the underlying facts is unnecessary for resolution of this appeal. 2 At the May 13, 2015 hearing, the trial court stated, “That is the only change that is being made [aggravated murder to murder]. Everything else will remain the same. The gun specs, the consecutive sentences, which the Court of Appeals said they are not allied offenses or similar and, therefore, the consecutive was appropriate.” Tr. at 6.",
"Muskingum County, Case No. CT2015-0036 3 {¶5} The trial court sentenced Appellant to a stated prison term of fifteen years to life on Count One, Murder, with a firearm specification, including a mandatory term of three years in prison, which by law must be served consecutively; {¶6} On Count Two, Having a Weapon While Under Disability, the trial court imposed a stated prison term of three years; {¶7} On Count Three, Felonious Assault, the trial court imposed a stated term of eight years in prison, with a firearm specification, including a three year mandatory term of incarceration, which by law must be served consecutively; {¶8} On Count Four, Carrying a Concealed Weapon, the trial court imposed a stated prison term of eighteen months; {¶9} On Count Five, Improper Handling of a Firearm, the trial court imposed a stated prison term of eighteen months.",
"{¶10} The trial court's May 22, 2015 Re-Sentencing Entry states, The Court has considered the record, the presentence investigation, and any victim impact statement, as well as, the principles and purposes of sentencing under Ohio Revised Code 2929.11 and its balance of seriousness and recidivism factors under Ohio Revised Code 2929.12*** The Court had previously made judicial finding [sic] that Defendant has a significant criminal history; had tried to employ witnesses to give perjured testimony; has shown no remorse for his actions; and that it is necessary to protect the public. *** Muskingum County, Case No. CT2015-0036 4 The periods of incarceration imposed for Counts Two, Four and Five shall be served concurrently; Count Three shall be served consecutively, along with the mandatory terms for the Firearm Specifications, for an aggregate prison sentence of twenty-nine (29) years to life in prison. Defendant is granted credit for time served; he shall pay the costs of this prosecution.",
"[Underlining omitted.] {¶11} Appellant appeals, assigning as error, {¶12} “I. THE TRIAL COURT ERRED IN SENTENCING APPELLANT TO CONSECUTIVE SENTENCES AS THE COURT FAILED TO ENGAGE IN THE REQUISITE THREE PART ANALYSIS REQUIRED TO SENTENCE A DEFENDANT TO CONSECUTIVE SENTENCES BY FAILING TO FIND THAT ANY OF THE THREE FACTORS LISTED IN 2929.14(C)(4)(a)-(c) APPLIED.” {¶13} R.C. 2929.14(C)(4)(a)-(c) reads, in pertinent part: (4) If multiple prison terms are imposed on an offender for convictions of multiple offenses, the court may require the offender to serve the prison terms consecutively if the court finds that the consecutive service is necessary to protect the public from future crime or to punish the offender and that consecutive sentences are not disproportionate to the seriousness of the offender's conduct and to the danger the offender poses to the public, and if the court also finds any of the following: (a) The offender committed one or more of the multiple offenses while the offender was awaiting trial or sentencing, was under a sanction Muskingum County, Case No. CT2015-0036 5 imposed pursuant to section 2929.16, 2929.17, or 2929.18 of the Revised Code, or was under post-release control for a prior offense.",
"(b) At least two of the multiple offenses were committed as part of one or more courses of conduct, and the harm caused by two or more of the multiple offenses so committed was so great or unusual that no single prison term for any of the offenses committed as part of any of the courses of conduct adequately reflects the seriousness of the offender's conduct. (c) The offender's history of criminal conduct demonstrates that consecutive sentences are necessary to protect the public from future crime by the offender. {¶14} In State v. Bonnell, 140 Ohio St. 3d 209, 16 N.E.3d 659, 2014–Ohio–3177, syllabus, the Supreme Court of Ohio held in order to impose consecutive sentences, a trial court is required to make the findings mandated by R.C.",
"2929.14(C)(4) at the sentencing hearing and incorporate its findings into its sentencing entry, but it has no obligation to state reasons to support its findings. A failure to make the findings required by R.C. 2929.14(C)(4) renders a consecutive sentence contrary to law. Bonnell, ¶ 34. Although the findings are to be made at the sentencing hearing and incorporated into the sentencing entry, a trial court's inadvertent failure to incorporate the statutory findings in the sentencing entry after properly making those findings at the sentencing hearing does not render the sentence contrary to law; rather, such a clerical mistake may be corrected by the court through a nunc pro tunc entry to reflect what actually occurred in open court.",
"Bonnell, ¶ 30. Muskingum County, Case No. CT2015-0036 6 {¶15} At the sentencing hearing on May 13, 2015, the trial court stated on the record, The Court, also, would tell you, you're a very lucky person. You beat a murder trial in Franklin County which you shouldn't have, according to that judge and his opinion sentencing you. You now have a life without parole reduced to 15 to life, but you still have a very substantial sentence. You’re a danger to society. That's why you gave -- were given consecutive sentences to begin with. {¶16} Tr. at 6. {¶17} Here, Appellant concedes in his argument “the first two steps, finding consecutive sentences are necessary to protect the public from future crime or to punish the offender, as well as, finding that consecutive sentences are not disproportionate to the seriousness of the conduct and the danger posed to the public [R.C.",
"2929.14(C)(4)], are evidence [sic] in the sentencing colloquy by the trial court in this case.” However, Appellant argues the trial court failed to complete the third step required by the statute to justify consecutive sentences in finding one of the three factors set forth in R.C. 2929.14(C)(4)(a)-(c). {¶18} The statute requires the trial court find one of the following: (a) Appellant committed one or more of the offenses while awaiting trial, sentencing, under a sanction or under post-release control for a prior offense; (b) at least two of the multiple offenses were committed as part of one or more courses of conduct, and the harm caused by two or more of the offenses was so great or unusual that no single prison term for any of the offenses adequately reflects the serious of Appellant's conduct; (c), or Appellant's criminal Muskingum County, Case No.",
"CT2015-0036 7 conduct history demonstrates consecutive sentences are necessary to protect the public from future crime. {¶19} At the May 13, 2015 sentencing hearing, the trial court referenced Appellant’s prior history of criminal conduct, including a trial in Franklin County for which Appellant was acquitted of the charge of murder. The Franklin County trial is referenced in the presentence investigation prepared for the trial court, and the presentence investigation includes the language of the Franklin County trial court referenced by the trial court herein at sentencing. {¶20} Upon this Court’s review of the PSI, we note Appellant has a lengthy history of criminal conduct including convictions for burglary, corruption of a minor, possession of marijuana and aggravated assault. The trial court’s statement to Appellant prior to imposing sentence references the statements made by the Franklin County trial court during Appellant’s sentencing on other criminal charges.",
"{¶21} Appellant disputes the trial court’s mention of Appellant’s Franklin County case. However, we find Appellant’s criminal history, which criminal history was specifically referenced by the trial court, supports the trial court’s finding Appellant posed a danger to society due to his past criminal history. The trial court adequately finds Appellant’s criminal conduct history demonstrates consecutive sentences are necessary to protect the public from future crime as required by R.C. 2929.14(C)(4)(c). {¶22} The trial court’s sentencing entry states the court considered the record and the presentence investigation finding Appellant had a significant criminal history, showing no remorse for his actions, and consecutive sentencing is necessary to protect the public. Muskingum County, Case No.",
"CT2015-0036 8 {¶23} Appellant's sole assignment of error is overruled, and Appellant’s sentence in the Muskingum County Court of Common Pleas is affirmed. By: Hoffman, J. Farmer, P.J. and Gwin, J. concur"
]
| https://www.courtlistener.com/api/rest/v3/opinions/4026608/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Citation Nr: 0631701
Decision Date: 10/12/06 Archive Date: 10/16/06
DOCKET NO. 04-05 009 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in St. Paul,
Minnesota
THE ISSUE
Entitlement to dual (separate) 10 percent ratings for
bilateral tinnitus.
REPRESENTATION
Appellant represented by: Veterans of Foreign Wars of
the United States
ATTORNEY FOR THE BOARD
Mark J. Swiatek, Counsel
INTRODUCTION
The veteran had active military service from September 1965
to August 1968.
This matter is on appeal to the Board of Veterans' Appeals
(Board) from a September 2003 rating determination of the
Department of Veterans Affairs (VA) Regional Office (RO) in
St. Paul, Minnesota that denied entitlement to dual
(separate) 10 percent ratings for bilateral tinnitus.
Regarding the appellant's claim for separate 10 percent
ratings, the VA appealed the decision in Smith v. Nicholson,
19 Vet. App. 63 (2005), which held more than a single 10-
percent disability evaluation could be provided for
bilateral tinnitus. The VA Secretary imposed a stay at the
Board on the adjudication of tinnitus claims affected by
Smith which included all claims in which a claim for
compensation for tinnitus was filed prior to June 13, 2003,
and a disability rating for tinnitus of greater than 10
percent is sought. As a consequence of the holding in
Smith v. Nicholson, 451 F.3d 1344 (Fed. Cir. 2006) (Federal
Circuit), the VA Secretary rescinded stay and directed the
Board to resume adjudication of the previously stayed
claims. The Board's review of the veteran's claim may now
proceed.
FINDING OF FACT
The veteran has been awarded a single 10 percent evaluation
for his bilateral tinnitus, which is the maximum disability
evaluation that may be assigned pursuant to the applicable
disability rating criteria.
CONCLUSION OF LAW
The veteran's claim for dual (separate) 10 percent
disability ratings for bilateral tinnitus is denied as a
matter of law. 38 U.S.C.A. §§ 1155, 7104(c) (West 2002);
38 C.F.R. §§ 4.1, 4.87, Diagnostic Code 6260 (2002) and as
amended at 68 Fed. Reg. 25823, May 14, 2003; Sabonis v.
Brown, 6 Vet. App. 426 (1994).
REASONS AND BASES FOR FINDING AND CONCLUSION
The Veterans Claims Assistance Act of 2000 (VCAA), Pub. L.
No. 106-475, 114 Stat. 2096 (2000), among other things,
redefined the obligations of VA with respect to the duty to
assist and includes an enhanced duty to notify a claimant as
to the information and evidence necessary to substantiate a
claim for VA benefits. The change in the law is applicable
to all claims filed on or after the date of enactment of the
VCAA, or filed before the date of enactment and not yet
final as of that date. VCAA, Pub. L. No. 104-475, § 7(b),
114 Stat. 2096, 2099-2100 (2000); 38 U.S.C.A. § 5107 note
(Effective and Applicability Provisions). The VCAA would be
clearly applicable to this claim if the effective date of
the new law were the sole consideration. However, though
seemly ubiquitous in its application, this case presents one
of the judicially recognized exceptions. Here the extant
law regarding compensation for tinnitus controls the
appellant's situation and no amount of assistance or
additional notice from VA will change the outcome. See
generally, Smith v. Gober, 14 Vet. App. 227, 231-32 (2000);
Dela Cruz v. Principi, 15 Vet. App. 143, 149 (2001) (holding
that statutory interpretation questions not affected by
enactment of VCAA). See also Kane v. Principi, 17 Vet. App.
103 (2003) (extending nonapplication to regulatory
interpretation questions). See also Sabonis, supra.
Turning to the merits of the claim, this matter turns on the
interpretation of the applicable regulation, as the facts
are not in dispute. In summary, the RO rating decision in
November 1968 granted service connection for nerve deafness
and tinnitus and assigned a 0 percent rating for effective
from August 13, 1968, under the version of 38 C.F.R. § 4.85-
4.87, Diagnostic Code 6297 then in effect. The record shows
the tinnitus complaints were directed to the right ear. The
RO issued notice in November 1968. The 0 percent rating was
continued in a November 1971 RO rating decision of which the
veteran was notified in RO correspondence dated in November
1971. In April 2003, the RO received the claim for service
connection for bilateral hearing loss and tinnitus in both
ears. The RO decision in September 2003 granted a single 10
percent rating for bilateral tinnitus effective April 14,
2002. After the September 2003 rating decision, the
veteran's notice of disagreement sought dual (separate)
ratings for his bilateral tinnitus. The RO issued a
statement of the case in December 2003 that explained, in
essence, that the single 10 percent evaluation in the
regulation recognized a unilateral or bilateral disorder.
The revised rating criteria specifically precluded separate
ratings and in light of the recent appellate court ruling
the criteria in effect before June 2003 are not more
favorable.
The VA General Counsel in VAOPGCPREC 2-03 analyzed the
requirements of the various versions of Code 6260 and the
effect of other provisions of the law, including 38 C.F.R.
§ 4.25(b), and the nature of the disability known as
tinnitus.
The opinion explained that bilateral tinnitus comprised a
single disability for VA rating purposes under all of the
versions of Code 6260. Therefore, regardless of whether
tinnitus was perceived as unilateral, bilateral, or in the
head, the original and the revised versions of Code 6260
authorized only a single 10 percent rating for tinnitus and
precluded the assignment of separate ratings for bilateral
tinnitus. The undifferentiated nature of the source of the
noise that is tinnitus is the primary basis for VA's
practice, as reflected in the notice of proposed rule
making, of rating tinnitus as a single disease entity. See
67 Fed. Reg. 59,033 (Sept. 19, 2002); 38 U.S.C.A. § 7104(c)
(West 2002); Splane v. West, 216 F.3d 1058 (Fed. Cir. 2000).
The argument for a higher rating is grounded generally in
the holding in Wanner v. Principi, 17 Vet. App. 4 (2003) and
its interpretation of the regulations, specifically section
4.25(b) which states that disabilities resulting from a
single disease entity are to be rated separately. In
essence, the Veterans Court decision in Smith approved the
construction of section 4.25(b) to bilateral tinnitus that
the representative relies on to support the present appeal.
However, on review of the respective positions, the Federal
Circuit reversed the Veterans Court's decision in Smith,
deferring to the VA interpretation of Diagnostic Code 6260
and section 4.25(b) which limits a veteran to a single
disability rating for tinnitus, regardless whether the
tinnitus is bilateral or unilateral. The opinion stated
that an agency interpretation of its own regulations was
entitled to substantial deference where as here it was not
plainly erroneous or inconsistent with the regulations. In
addition, the Federal Circuit observed that prior legal
precedent supported the VA interpretation of the rating
scheme. See Cromley v. Brown, 7 Vet. App. 376, 378 (1995)
where a claimant with bilateral tinnitus sought an increased
rating, it was noted that "the appellant is already rated at
10%, the highest level possible under the regulations for
tinnitus". The opinion also noted the previously referenced
agency position in the VA General Counsel opinion and that
the VA interpretation of its regulations did not require
observance of administrative procedural formalities
associated with statutory interpretation in order to be
afforded deference. Smith, 451 F.3d at 1351-52.
Where, as in this case, the law and not the evidence is
dispositive, the claim should be denied or the appeal
terminated because of the absence of legal merit or the lack
of entitlement under the law. See, e.g., Shields v. Brown,
8 Vet. App. 346, 351-52 (1995). Accordingly, as the veteran
is in receipt of the highest rating for tinnitus allowed by
law, the appeal for dual (separate) 10 percent ratings for
bilateral tinnitus must be denied as a matter of law.
ORDER
Entitlement to dual (separate) 10 percent ratings for
bilateral tinnitus is denied.
____________________________________________
F. JUDGE FLOWERS
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs | 10-12-2006 | [
"Citation Nr: 0631701 Decision Date: 10/12/06 Archive Date: 10/16/06 DOCKET NO. 04-05 009 ) DATE ) ) On appeal from the Department of Veterans Affairs Regional Office in St. Paul, Minnesota THE ISSUE Entitlement to dual (separate) 10 percent ratings for bilateral tinnitus. REPRESENTATION Appellant represented by: Veterans of Foreign Wars of the United States ATTORNEY FOR THE BOARD Mark J. Swiatek, Counsel INTRODUCTION The veteran had active military service from September 1965 to August 1968. This matter is on appeal to the Board of Veterans' Appeals (Board) from a September 2003 rating determination of the Department of Veterans Affairs (VA) Regional Office (RO) in St. Paul, Minnesota that denied entitlement to dual (separate) 10 percent ratings for bilateral tinnitus.",
"Regarding the appellant's claim for separate 10 percent ratings, the VA appealed the decision in Smith v. Nicholson, 19 Vet. App. 63 (2005), which held more than a single 10- percent disability evaluation could be provided for bilateral tinnitus. The VA Secretary imposed a stay at the Board on the adjudication of tinnitus claims affected by Smith which included all claims in which a claim for compensation for tinnitus was filed prior to June 13, 2003, and a disability rating for tinnitus of greater than 10 percent is sought. As a consequence of the holding in Smith v. Nicholson, 451 F.3d 1344 (Fed.",
"Cir. 2006) (Federal Circuit), the VA Secretary rescinded stay and directed the Board to resume adjudication of the previously stayed claims. The Board's review of the veteran's claim may now proceed. FINDING OF FACT The veteran has been awarded a single 10 percent evaluation for his bilateral tinnitus, which is the maximum disability evaluation that may be assigned pursuant to the applicable disability rating criteria. CONCLUSION OF LAW The veteran's claim for dual (separate) 10 percent disability ratings for bilateral tinnitus is denied as a matter of law. 38 U.S.C.A.",
"§§ 1155, 7104(c) (West 2002); 38 C.F.R. §§ 4.1, 4.87, Diagnostic Code 6260 (2002) and as amended at 68 Fed. Reg. 25823, May 14, 2003; Sabonis v. Brown, 6 Vet. App. 426 (1994). REASONS AND BASES FOR FINDING AND CONCLUSION The Veterans Claims Assistance Act of 2000 (VCAA), Pub. L. No. 106-475, 114 Stat. 2096 (2000), among other things, redefined the obligations of VA with respect to the duty to assist and includes an enhanced duty to notify a claimant as to the information and evidence necessary to substantiate a claim for VA benefits. The change in the law is applicable to all claims filed on or after the date of enactment of the VCAA, or filed before the date of enactment and not yet final as of that date. VCAA, Pub.",
"L. No. 104-475, § 7(b), 114 Stat. 2096, 2099-2100 (2000); 38 U.S.C.A. § 5107 note (Effective and Applicability Provisions). The VCAA would be clearly applicable to this claim if the effective date of the new law were the sole consideration. However, though seemly ubiquitous in its application, this case presents one of the judicially recognized exceptions. Here the extant law regarding compensation for tinnitus controls the appellant's situation and no amount of assistance or additional notice from VA will change the outcome. See generally, Smith v. Gober, 14 Vet. App. 227, 231-32 (2000); Dela Cruz v. Principi, 15 Vet. App. 143, 149 (2001) (holding that statutory interpretation questions not affected by enactment of VCAA). See also Kane v. Principi, 17 Vet. App. 103 (2003) (extending nonapplication to regulatory interpretation questions).",
"See also Sabonis, supra. Turning to the merits of the claim, this matter turns on the interpretation of the applicable regulation, as the facts are not in dispute. In summary, the RO rating decision in November 1968 granted service connection for nerve deafness and tinnitus and assigned a 0 percent rating for effective from August 13, 1968, under the version of 38 C.F.R. § 4.85- 4.87, Diagnostic Code 6297 then in effect. The record shows the tinnitus complaints were directed to the right ear.",
"The RO issued notice in November 1968. The 0 percent rating was continued in a November 1971 RO rating decision of which the veteran was notified in RO correspondence dated in November 1971. In April 2003, the RO received the claim for service connection for bilateral hearing loss and tinnitus in both ears. The RO decision in September 2003 granted a single 10 percent rating for bilateral tinnitus effective April 14, 2002. After the September 2003 rating decision, the veteran's notice of disagreement sought dual (separate) ratings for his bilateral tinnitus. The RO issued a statement of the case in December 2003 that explained, in essence, that the single 10 percent evaluation in the regulation recognized a unilateral or bilateral disorder. The revised rating criteria specifically precluded separate ratings and in light of the recent appellate court ruling the criteria in effect before June 2003 are not more favorable. The VA General Counsel in VAOPGCPREC 2-03 analyzed the requirements of the various versions of Code 6260 and the effect of other provisions of the law, including 38 C.F.R. § 4.25(b), and the nature of the disability known as tinnitus.",
"The opinion explained that bilateral tinnitus comprised a single disability for VA rating purposes under all of the versions of Code 6260. Therefore, regardless of whether tinnitus was perceived as unilateral, bilateral, or in the head, the original and the revised versions of Code 6260 authorized only a single 10 percent rating for tinnitus and precluded the assignment of separate ratings for bilateral tinnitus. The undifferentiated nature of the source of the noise that is tinnitus is the primary basis for VA's practice, as reflected in the notice of proposed rule making, of rating tinnitus as a single disease entity. See 67 Fed. Reg.",
"59,033 (Sept. 19, 2002); 38 U.S.C.A. § 7104(c) (West 2002); Splane v. West, 216 F.3d 1058 (Fed. Cir. 2000). The argument for a higher rating is grounded generally in the holding in Wanner v. Principi, 17 Vet. App. 4 (2003) and its interpretation of the regulations, specifically section 4.25(b) which states that disabilities resulting from a single disease entity are to be rated separately. In essence, the Veterans Court decision in Smith approved the construction of section 4.25(b) to bilateral tinnitus that the representative relies on to support the present appeal. However, on review of the respective positions, the Federal Circuit reversed the Veterans Court's decision in Smith, deferring to the VA interpretation of Diagnostic Code 6260 and section 4.25(b) which limits a veteran to a single disability rating for tinnitus, regardless whether the tinnitus is bilateral or unilateral.",
"The opinion stated that an agency interpretation of its own regulations was entitled to substantial deference where as here it was not plainly erroneous or inconsistent with the regulations. In addition, the Federal Circuit observed that prior legal precedent supported the VA interpretation of the rating scheme. See Cromley v. Brown, 7 Vet. App. 376, 378 (1995) where a claimant with bilateral tinnitus sought an increased rating, it was noted that \"the appellant is already rated at 10%, the highest level possible under the regulations for tinnitus\". The opinion also noted the previously referenced agency position in the VA General Counsel opinion and that the VA interpretation of its regulations did not require observance of administrative procedural formalities associated with statutory interpretation in order to be afforded deference.",
"Smith, 451 F.3d at 1351-52. Where, as in this case, the law and not the evidence is dispositive, the claim should be denied or the appeal terminated because of the absence of legal merit or the lack of entitlement under the law. See, e.g., Shields v. Brown, 8 Vet. App. 346, 351-52 (1995). Accordingly, as the veteran is in receipt of the highest rating for tinnitus allowed by law, the appeal for dual (separate) 10 percent ratings for bilateral tinnitus must be denied as a matter of law. ORDER Entitlement to dual (separate) 10 percent ratings for bilateral tinnitus is denied. ____________________________________________ F. JUDGE FLOWERS Veterans Law Judge, Board of Veterans' Appeals Department of Veterans Affairs"
]
| https://drive.google.com/drive/folders/12lAd8Os7VFeqbTKi4wcqJqODjHIn0-yQ?usp=sharing | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA .
Detailed Action This is a final Office Action for application 16/394,443 in response to arguments and amendments filed on 09/09/2019. Claims 1, 2, 19 and 20 are currently amended. Claim 18 is cancelled by amendment. Claim 21 is added by amendment. Claims 1-17 and 19-21 are currently pending and will be examined below.
Drawings The amendments to Fig. 4 are sufficient overcome objections, therefore objections are withdrawn.
Response to Arguments and Amendments Applicant's arguments filed 09/09/2021 have been fully considered but they are not persuasive. Applicant argues that no reference arts teach newly amended claim 1 (language from previous claim 18) limitation “wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database”. Specifically, applicant argues that cited reference Meyer may teach assigning sequential primitive IDs, but that this does not teach “that vertices relevant to a query are first identified and sorted into a list in a sequential order, where the database system may then identify a first subset of the primitive However, Meyers is only being relied upon for teaching “wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database”, or more simply, it’s being relied upon to teach that each ID assigned is the next in a sequence of identifiers in a graph database. If the IDs are assigned sequentially, then the newest ID will always follow the ID of the penultimate vertex. Further, Meyer is not relied upon to teach “sorting, by the processing system, the vertex identifiers into a list in a sequential order”. Su is cited as teaching this limitation. Su teaches “sorting, by the processing system, the vertex identifiers into a list in a sequential order” by teaching a set of nodes that are contained in paginated results sets which contain tokens to indicate if they’ve already been returned as results. The processes of organizing the nodes into a sequence of pages that are sequentially returned is sorting. Examiner notes that there is nothing in claim 1 language that indicates that the sorting is based on the vertex identifier. Therefore argument is unpersuasive.
Claim Rejections - 35 USC § 103 In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status. The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action:
Claims 1-3, 7-10, 14-16 and 19-21 are rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub. 2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500). Regarding claim 1, Su teaches A method comprising: obtaining, by a processing system including at least one processor, a query to retrieve a set of information from a graph database, wherein the query provides at least one criterion for identifying vertices in the graph database that are relevant to the query; (Par. [0001, 3-4, 6, 25] client devices receives query from a user in order to determine which resources contain nodes (i.e. vertices) relevant to the graph query) identifying, by the processing system, the vertices in the graph database that are relevant to the query in accordance with the at least one criterion; (Par. [0001, 3-4, 6, 25] user query is used to determine which resources contain nodes relevant to the query) obtaining, by the processing system, vertex identifiers of the vertices that are identified as being relevant to the query; (Par. [0025-28] user query is used to obtain the nodes and associated resource identifiers (i.e. vertex identifiers) relevant to the query) sorting, by the processing system, the vertex identifiers into a list in a sequential order; (Par. [0027-28] cursors or skip tokens are provided to indicate which resource or resource identifiers have already been returned so that the next set (e.g. sorted) of resources is returned in subsequent queries) identifying, by the processing system, a first subset of the vertex identifiers in the list that corresponds to a first result index and a result size; (Fig. 8 #820; Par. [0083-4] system determines the accessing, by the processing system, a first subset of the vertices in the graph database that is identified as being relevant to the query and that is identified by the first subset of the vertex identifiers; (Fig. 8 #830; Par. [0083-4] first skip token is generated and associated with a first resource identifier before being returned to user for results.) retrieving, by the processing system, a first subset of the set of information from the first subset of the vertices; and (Fig. 8 #850; Par. [0086] results (i.e. retrieved first subset) up to the first skip token are returned to the user) providing, by the processing system, the first subset of the set of information in a first results page. (Fig. 8 #850; Par. [0086] results up to the first skip token are returned to the user) Su does not explicitly teach wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database. However, from the same field Meyer teaches wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database. (Fig. 7A; Par. [0053, 103] sequential IDs are used for each new item added to the graph database, including the last in any sequence) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the sequential ID assignment of Meyer into the vertex identifiers of Su. The motivation for this combination would have been to provide schema modification Regarding claim 2, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, wherein the retrieving the first subset of the set of information from the first subset of the vertices comprises: traversing the graph database from each of vertex of the first subset of vertices in accordance with at least one parameter of the query. (Fig. 8 #820; Par. [0082-4] after receiving a query which can be for a single relationship level or multiple levels, a determination is made as to the number of resources or resource identifiers that may be returned) Regarding claim 3, Su teaches claim 2 as shown above, and further teaches The method of claim 2, wherein the traversing includes, for each vertex of the first subset of vertices: accessing at least one additional vertex via a connecting edge; and (Fig. 4 #404-410; Par. [0057] in the example given, "Person 2" (#404) has a relationship (i.e. connecting edge) with resource identifier "Item 1" (#410)) retrieving at least a portion of the first subset of the set of information from the at least one additional vertex. (Fig. 4 #404-410; Par. [0082-4]] in the example given, "Person 2" (#404) has a relationship with resource identifier "Item 1" (#410), and query can specify multiple levels for data retrieval) Regarding claim 7, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, further comprising: obtaining a call for the first results page, the call including the first result index and the result size. (Par. [0083-6] after the query is received, a results threshold is determined and a first token is associated with a first resource identifier before returning the results (e.g. after a call) ) Regarding claim 8, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, further comprising: providing a total number of the vertices that are identified as being relevant to the query. (Par. [0083] n number of resources identifiers and/or resources may be returned as long as the size of the resources does not exceed a size threshold) Regarding claim 9, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, further comprising: obtaining a call for a second results page, the call including a second result index and the result size. (Par. [0083-6] after the query is received, a results threshold is determined and a second token is associated with a second resource identifier before returning the results (e.g. after a call)) Regarding claim 10, Su teaches claim 9 as shown above, and further teaches The method of claim 9, further comprising: identifying a second subset of the vertex identifiers in the list that corresponds to the second result index and the result size; (Fig. 8 #840; Par. [0083-5] a second skip token is associated (i.e. identified) with a second resource identifier corresponding to a second set of results under a threshold) accessing a second subset of the vertices in the graph database that is identified as being relevant to the query that is identified by the second subset of the vertex identifiers; (Fig. 8 #850; Par. [0083-6] results up to the second token are returned after ignoring delimiter associated with first token (i.e. accessing second subset)) retrieving a second subset of the set of information from the second subset of the vertices; and (Fig. 8 #850; Par. [0083-6] results up to the second token are returned) providing the second subset of the set of information in the second results page. (Fig. 8 #850; Par. [0083-6] results up to the second token are returned based on page threshold) Regarding claim 14, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, wherein the graph database comprises a tree structure. (Fig. 10A; Par. [0001, 3] the data in the graph database can be organized in a tree structure) Regarding claim 15, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, wherein the query is obtained via a graphical user interface of a client device. (Fig. 10A; Par. [0096, 98-99] the keypad for accepting user input can be accepted via a GUI on the screen) Regarding claim 16, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 15, wherein the first subset of the set of information is presented in the first results page via the graphical user interface of the client device. (Par. [0032, 99, 108] GUI is used to display contents retrieved from the database) Regarding claim 19, see the rejection for claim 1. Su further teaches a processing system including at least one processor (Fig. 9 #902; Par. [0088]) A computer-readable medium sorting instructions which, when executed by the processing system, cause the processing system to perform operations, the operations comprising (Fig. 9 #904; Par. [0088]) Regarding claim 20, see the rejection for claim 19. Regarding claim 21, see the rejection for claim 2.
Claim Rejections - 35 USC § 103 The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
Claims 4-6 are rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub. 2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500), and further in view of Wolchok et al. (US Pub. 2014/0067781). Regarding claim 4, Su and Meyer teach claim 1 as shown above, but do not explicitly teach The method of claim 1, wherein the query includes the result size. However, from the same field Wolchok teaches The method of claim 1, wherein the query includes the result size. (Par. [0029] user request includes the number of results desired) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the result number request of Walchok into the graph database query of Su. The motivation for this combination would have been to specify how the different types of data are to be retrieved from the graph as explained in Wolchok (Par. [0010]). Regarding claim 5, Su, Meyer and Wolchok teach claim 4 as shown above, and Su further teaches The method of claim 4, wherein the query further includes the first result index. (Par. [0027-28, 84] cursors or skip tokens (i.e. indices) are associated with resource identifier to indicate which resource or resource identifiers have already been returned (i.e. included) so that the next set of resources is returned in subsequent queries) Regarding claim 6, Su, Meyer and Wolchok teach claim 4 as shown above, and Su further teaches The method of claim 4, wherein the first result index comprises a first sequential result index of a plurality of result indices, wherein each result index of the plurality of result indices is associated with a different results page of a plurality of results pages. (Par. [0027-28] cursors or skip tokens are associated with resource identifier to indicate which resource or resource identifiers have already been
Claims 11-13 are rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub. 2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500), and further in view of Mestery et al. (US Pub. 2015/0063102). Regarding claim 11, Su and Meyer teach claim 1 as shown above, but do not explicitly teach The method of claim 1, wherein the graph database comprises an active and available inventory database of a telecommunication network. However, from the same field Mestery teaches The method of claim 1, wherein the graph database comprises an active and available inventory database of a telecommunication network. (Par. [0065] a selection of the network services available at each network node is presentable to user) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the available node information of Mestery into the graph database query of Su. The motivation for this combination would have been to represent physical service nodes and associated services as explained in Mestery (Par. [0018]). Regarding claim 12, Su, Meyer and Mestery teach claim 11 as shown above, and Mestery further teaches The method of claim 11, wherein the vertices in the graph database represent physical infrastructure and logical resources of the telecommunication network. (Par. [0065] the graph database is composed of nodes that contain information about the physical node location) Regarding claim 13, Su, Meyer and Mestery teach claim 11 as shown above, and Mestery further teaches The method of claim 11, wherein the vertices in the graph database represent physical infrastructure and logical resources of the telecommunication network. (Par. [0002, 27, 65-6] the graph database is a multi-tenant cloud infrastructure containing information about racks, servers, and virtual machines)
Claim 17 is rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub. 2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500), and further in view of Potiagalov (US Pub. 2017/0177681). Regarding claim 17, Su and Meyer teach claim 1 as shown above, but do not explicitly teach The method of claim 15, wherein the graphical user interface presents at least one button for requesting at least one additional results page. However, from the same field Potiagalov teaches The method of claim 15, wherein the graphical user interface presents at least one button for requesting at least one additional results page. (Fig. 4E2; Par. [0113] a filter button is provided for filtering page results) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the filter button of Potiagalov into the graph database query of Su. The motivation for this combination would have been to provide querying and visualizations of database graph query results as explained in Potiagalov (Par. [0007-8]).
Conclusion THIS ACTION IS MADE FINAL. Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the mailing date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to J MITCHELL CURRAN whose telephone number is (469)295-9081. The examiner can normally be reached on M-F 8:00am - 5:00pm. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, James Trujillo can be reached on (571) 272-3677. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-
/J MITCHELL CURRAN/Examiner, Art Unit 2157
/James Trujillo/Supervisory Patent Examiner, Art Unit 2157 | 2022-01-06T10:32:08 | [
"Notice of Pre-AIA or AIA Status The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . Detailed Action This is a final Office Action for application 16/394,443 in response to arguments and amendments filed on 09/09/2019. Claims 1, 2, 19 and 20 are currently amended. Claim 18 is cancelled by amendment. Claim 21 is added by amendment. Claims 1-17 and 19-21 are currently pending and will be examined below. Drawings The amendments to Fig. 4 are sufficient overcome objections, therefore objections are withdrawn. Response to Arguments and Amendments Applicant's arguments filed 09/09/2021 have been fully considered but they are not persuasive. Applicant argues that no reference arts teach newly amended claim 1 (language from previous claim 18) limitation “wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database”.",
"Specifically, applicant argues that cited reference Meyer may teach assigning sequential primitive IDs, but that this does not teach “that vertices relevant to a query are first identified and sorted into a list in a sequential order, where the database system may then identify a first subset of the primitive However, Meyers is only being relied upon for teaching “wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database”, or more simply, it’s being relied upon to teach that each ID assigned is the next in a sequence of identifiers in a graph database. If the IDs are assigned sequentially, then the newest ID will always follow the ID of the penultimate vertex.",
"Further, Meyer is not relied upon to teach “sorting, by the processing system, the vertex identifiers into a list in a sequential order”. Su is cited as teaching this limitation. Su teaches “sorting, by the processing system, the vertex identifiers into a list in a sequential order” by teaching a set of nodes that are contained in paginated results sets which contain tokens to indicate if they’ve already been returned as results. The processes of organizing the nodes into a sequence of pages that are sequentially returned is sorting. Examiner notes that there is nothing in claim 1 language that indicates that the sorting is based on the vertex identifier.",
"Therefore argument is unpersuasive. Claim Rejections - 35 USC § 103 In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status.",
"The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: Claims 1-3, 7-10, 14-16 and 19-21 are rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub. 2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500). Regarding claim 1, Su teaches A method comprising: obtaining, by a processing system including at least one processor, a query to retrieve a set of information from a graph database, wherein the query provides at least one criterion for identifying vertices in the graph database that are relevant to the query; (Par. [0001, 3-4, 6, 25] client devices receives query from a user in order to determine which resources contain nodes (i.e.",
"vertices) relevant to the graph query) identifying, by the processing system, the vertices in the graph database that are relevant to the query in accordance with the at least one criterion; (Par. [0001, 3-4, 6, 25] user query is used to determine which resources contain nodes relevant to the query) obtaining, by the processing system, vertex identifiers of the vertices that are identified as being relevant to the query; (Par. [0025-28] user query is used to obtain the nodes and associated resource identifiers (i.e. vertex identifiers) relevant to the query) sorting, by the processing system, the vertex identifiers into a list in a sequential order; (Par. [0027-28] cursors or skip tokens are provided to indicate which resource or resource identifiers have already been returned so that the next set (e.g.",
"sorted) of resources is returned in subsequent queries) identifying, by the processing system, a first subset of the vertex identifiers in the list that corresponds to a first result index and a result size; (Fig. 8 #820; Par. [0083-4] system determines the accessing, by the processing system, a first subset of the vertices in the graph database that is identified as being relevant to the query and that is identified by the first subset of the vertex identifiers; (Fig. 8 #830; Par. [0083-4] first skip token is generated and associated with a first resource identifier before being returned to user for results.) retrieving, by the processing system, a first subset of the set of information from the first subset of the vertices; and (Fig. 8 #850; Par. [0086] results (i.e. retrieved first subset) up to the first skip token are returned to the user) providing, by the processing system, the first subset of the set of information in a first results page. (Fig. 8 #850; Par.",
"[0086] results up to the first skip token are returned to the user) Su does not explicitly teach wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database. However, from the same field Meyer teaches wherein when a current last vertex is added to the graph database, the current last vertex is assigned a vertex identifier that is next in a sequence of vertex identifiers following a vertex identifier that is assigned to a penultimate vertex that is added to the graph database. (Fig. 7A; Par.",
"[0053, 103] sequential IDs are used for each new item added to the graph database, including the last in any sequence) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the sequential ID assignment of Meyer into the vertex identifiers of Su. The motivation for this combination would have been to provide schema modification Regarding claim 2, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, wherein the retrieving the first subset of the set of information from the first subset of the vertices comprises: traversing the graph database from each of vertex of the first subset of vertices in accordance with at least one parameter of the query. (Fig.",
"8 #820; Par. [0082-4] after receiving a query which can be for a single relationship level or multiple levels, a determination is made as to the number of resources or resource identifiers that may be returned) Regarding claim 3, Su teaches claim 2 as shown above, and further teaches The method of claim 2, wherein the traversing includes, for each vertex of the first subset of vertices: accessing at least one additional vertex via a connecting edge; and (Fig. 4 #404-410; Par. [0057] in the example given, \"Person 2\" (#404) has a relationship (i.e. connecting edge) with resource identifier \"Item 1\" (#410)) retrieving at least a portion of the first subset of the set of information from the at least one additional vertex. (Fig. 4 #404-410; Par. [0082-4]] in the example given, \"Person 2\" (#404) has a relationship with resource identifier \"Item 1\" (#410), and query can specify multiple levels for data retrieval) Regarding claim 7, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, further comprising: obtaining a call for the first results page, the call including the first result index and the result size. (Par.",
"[0083-6] after the query is received, a results threshold is determined and a first token is associated with a first resource identifier before returning the results (e.g. after a call) ) Regarding claim 8, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, further comprising: providing a total number of the vertices that are identified as being relevant to the query. (Par. [0083] n number of resources identifiers and/or resources may be returned as long as the size of the resources does not exceed a size threshold) Regarding claim 9, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, further comprising: obtaining a call for a second results page, the call including a second result index and the result size. (Par. [0083-6] after the query is received, a results threshold is determined and a second token is associated with a second resource identifier before returning the results (e.g. after a call)) Regarding claim 10, Su teaches claim 9 as shown above, and further teaches The method of claim 9, further comprising: identifying a second subset of the vertex identifiers in the list that corresponds to the second result index and the result size; (Fig. 8 #840; Par. [0083-5] a second skip token is associated (i.e.",
"identified) with a second resource identifier corresponding to a second set of results under a threshold) accessing a second subset of the vertices in the graph database that is identified as being relevant to the query that is identified by the second subset of the vertex identifiers; (Fig. 8 #850; Par. [0083-6] results up to the second token are returned after ignoring delimiter associated with first token (i.e. accessing second subset)) retrieving a second subset of the set of information from the second subset of the vertices; and (Fig. 8 #850; Par. [0083-6] results up to the second token are returned) providing the second subset of the set of information in the second results page. (Fig. 8 #850; Par. [0083-6] results up to the second token are returned based on page threshold) Regarding claim 14, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, wherein the graph database comprises a tree structure. (Fig. 10A; Par.",
"[0001, 3] the data in the graph database can be organized in a tree structure) Regarding claim 15, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 1, wherein the query is obtained via a graphical user interface of a client device. (Fig. 10A; Par. [0096, 98-99] the keypad for accepting user input can be accepted via a GUI on the screen) Regarding claim 16, Su and Meyer teach claim 1 as shown above, and Su further teaches The method of claim 15, wherein the first subset of the set of information is presented in the first results page via the graphical user interface of the client device. (Par. [0032, 99, 108] GUI is used to display contents retrieved from the database) Regarding claim 19, see the rejection for claim 1. Su further teaches a processing system including at least one processor (Fig. 9 #902; Par. [0088]) A computer-readable medium sorting instructions which, when executed by the processing system, cause the processing system to perform operations, the operations comprising (Fig.",
"9 #904; Par. [0088]) Regarding claim 20, see the rejection for claim 19. Regarding claim 21, see the rejection for claim 2. Claim Rejections - 35 USC § 103 The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.",
"Claims 4-6 are rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub. 2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500), and further in view of Wolchok et al. (US Pub. 2014/0067781). Regarding claim 4, Su and Meyer teach claim 1 as shown above, but do not explicitly teach The method of claim 1, wherein the query includes the result size. However, from the same field Wolchok teaches The method of claim 1, wherein the query includes the result size. (Par. [0029] user request includes the number of results desired) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the result number request of Walchok into the graph database query of Su.",
"The motivation for this combination would have been to specify how the different types of data are to be retrieved from the graph as explained in Wolchok (Par. [0010]). Regarding claim 5, Su, Meyer and Wolchok teach claim 4 as shown above, and Su further teaches The method of claim 4, wherein the query further includes the first result index. (Par. [0027-28, 84] cursors or skip tokens (i.e. indices) are associated with resource identifier to indicate which resource or resource identifiers have already been returned (i.e. included) so that the next set of resources is returned in subsequent queries) Regarding claim 6, Su, Meyer and Wolchok teach claim 4 as shown above, and Su further teaches The method of claim 4, wherein the first result index comprises a first sequential result index of a plurality of result indices, wherein each result index of the plurality of result indices is associated with a different results page of a plurality of results pages. (Par.",
"[0027-28] cursors or skip tokens are associated with resource identifier to indicate which resource or resource identifiers have already been Claims 11-13 are rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub. 2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500), and further in view of Mestery et al. (US Pub. 2015/0063102). Regarding claim 11, Su and Meyer teach claim 1 as shown above, but do not explicitly teach The method of claim 1, wherein the graph database comprises an active and available inventory database of a telecommunication network. However, from the same field Mestery teaches The method of claim 1, wherein the graph database comprises an active and available inventory database of a telecommunication network.",
"(Par. [0065] a selection of the network services available at each network node is presentable to user) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the available node information of Mestery into the graph database query of Su. The motivation for this combination would have been to represent physical service nodes and associated services as explained in Mestery (Par. [0018]). Regarding claim 12, Su, Meyer and Mestery teach claim 11 as shown above, and Mestery further teaches The method of claim 11, wherein the vertices in the graph database represent physical infrastructure and logical resources of the telecommunication network.",
"(Par. [0065] the graph database is composed of nodes that contain information about the physical node location) Regarding claim 13, Su, Meyer and Mestery teach claim 11 as shown above, and Mestery further teaches The method of claim 11, wherein the vertices in the graph database represent physical infrastructure and logical resources of the telecommunication network. (Par. [0002, 27, 65-6] the graph database is a multi-tenant cloud infrastructure containing information about racks, servers, and virtual machines) Claim 17 is rejected under 35 U.S.C. 103 as being unpatentable over Su (US Pub.",
"2018/0129716) in view of Meyer et al. (US Pub. 2011/0093500), and further in view of Potiagalov (US Pub. 2017/0177681). Regarding claim 17, Su and Meyer teach claim 1 as shown above, but do not explicitly teach The method of claim 15, wherein the graphical user interface presents at least one button for requesting at least one additional results page. However, from the same field Potiagalov teaches The method of claim 15, wherein the graphical user interface presents at least one button for requesting at least one additional results page. (Fig. 4E2; Par. [0113] a filter button is provided for filtering page results) It would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to combine the filter button of Potiagalov into the graph database query of Su. The motivation for this combination would have been to provide querying and visualizations of database graph query results as explained in Potiagalov (Par. [0007-8]). Conclusion THIS ACTION IS MADE FINAL.",
"Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the mailing date of this final action.",
"Any inquiry concerning this communication or earlier communications from the examiner should be directed to J MITCHELL CURRAN whose telephone number is (469)295-9081. The examiner can normally be reached on M-F 8:00am - 5:00pm. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, James Trujillo can be reached on (571) 272-3677. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair- /J MITCHELL CURRAN/Examiner, Art Unit 2157 /James Trujillo/Supervisory Patent Examiner, Art Unit 2157"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2022-01-09.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
292 S.W.2d 117 (1956) Gilbert FUENTES, Appellant, v. The STATE of Texas, Appellee. No. 28421. Court of Criminal Appeals of Texas. June 30, 1956. *118 Andres Hernandez, Jr., San Antonio, for appellant. Hubert W. Green, Jr., Criminal Dist. Atty., Elbert Hooper, Jr., Asst. Criminal Dist. Atty., San Antonio, and Leon B. Douglas, State's Atty., Austin, for the State. BELCHER, Commissioner. Appellant waived trial by jury, entered a plea of guilty before the court to the offense of indecent fondling of a child's sexual parts, and his punishment was assessed at seventeen years in the penitentiary. The state's testimony shows that a boy, age 8 at the time of the trial, was sent by his mother on an errand, and while gone he met the appellant. After they met, the appellant bought and drank some beer and purchased five soft drinks for the boy. Shortly thereafter they went under a bridge where the appellant kissed the boy, played with his penis, and did or attempted to commit an act of sodomy on the boy, and during this time gave him a dollar and told him not to tell of his conduct. A policeman was notified and he went immediately to the bridge. Officer Gaffney testified that upon his arrival under the bridge he saw the appellant taking indecent liberties with the boy while on top of him on the ground, that as he approached them the boy said, "Police", shook himself loose from appellant and then stated, "He made me do it", and that the appellant offered him (Officer Gaffney) $10 to turn him loose. The officer further testified that he took the boy to his mother and gave her a dollar that the boy had with him at the bridge. Appellant testified that he began drinking beer the day before his arrest on this charge and because of his intoxication he didn't remember anything on the day in question after he left home in the morning. The appellant's testimony and that of other witnesses offered by him shows that he was drunk. He denied offering Officer Gaffney $10 to release him at the time of his arrest, but stated that he did offer him $10 at the jail which was the customary amount in order to get released on a drunken charge. Appellant challenges the validity of Art. 535d, Vernon's Ann.P.C., on the ground that it does not define in plain language an offense in that it fails to state whether the male or female mentioned therein is a human being. The object and purpose of a statute may be determined by the consideration of all its provisions. 39 Tex.Jur. 216, Sec. 116. The statute here under attack provides in part that it shall be unlawful for any person with lascivious intent to intentionally fondle the breast of a female. Further, it provides that it shall not apply when the persons are married. Also, the emergency clause states that the punishment then provided for the molestation of minors was inadequate. The use of the words "breast", "persons", "married", and "minors" and the general context of this statute shows that the legislature intended to make unlawful certain conduct by persons toward other persons under the age of fourteen years. 39 Tex.Jur. 176, Sec. 93. In considering Art. 535d, Vernon's Ann.P.C., we *119 said in Jones v. State, 156 Tex. Crim. 2, 238 S.W.2d 529, 530: "We think it clear that the legislature intended by this statute to make punishable the fondling of the sexual part of a child under 14 with a lewd and immoral intent on the part of the accused to indulge in lust or sexual impurity." We conclude that the statute sufficiently defines and creates an offense. Appellant contends that the offense here charged cannot be sustained on the ground that the state's testimony shows that the intent of the appellant was to commit an act of sodomy instead of the offense of indecent fondling. There is an abundance of testimony affirmatively showing the fondling with lascivious intent of the boy's penis by the appellant. The fact that the testimony relied upon by the state to show indecent fondling of a child's sexual parts also developed facts which constitute another independent crime does not prevent the conviction for the offense on trial. Hence the contention is overruled. 12 Tex.Jur. 560, Sec. 241; Mimms v. State, 145 Tex. Crim. 456, 169 S.W.2d 165; Ward v. State, 148 Tex. Crim. 186, 185 S.W.2d 577. It is insisted that from all the facts and circumstances surrounding the commission of the offense here charged that the appellant was assessed a punishment which was unusual, cruel, and excessive in view of his voluntary recent use of intoxicating liquor to the extent that he was temporarily insane, there being no showing of injury to the boy, and the maximum penalty for the offense of sodomy being fifteen years whereas the maximum penalty for the offense of indecent fondling is twenty-five years. Appellant waived his right of trial by jury and consented for the court to hear, consider, and assess the punishment. The record shows that after he entered his plea of guilty, he was then admonished by the court as to the nature and consequences of such plea before it was accepted. The extent of the punishment to be assessed so long as within the statute rests solely with the trial court. The punishment assessed was within the limits authorized by law. Under the facts we perceive no error in the amount of punishment assessed. 12 Tex.Jur. 802, Sec. 409; White v. State, 154 Tex. Crim. 497, 498, 228 S.W.2d 183. We find the evidence sufficient to sustain the conviction. No reversible error appearing the judgment is affirmed. Opinion approved by the Court. | 10-30-2013 | [
"292 S.W.2d 117 (1956) Gilbert FUENTES, Appellant, v. The STATE of Texas, Appellee. No. 28421. Court of Criminal Appeals of Texas. June 30, 1956. *118 Andres Hernandez, Jr., San Antonio, for appellant. Hubert W. Green, Jr., Criminal Dist. Atty., Elbert Hooper, Jr., Asst. Criminal Dist. Atty., San Antonio, and Leon B. Douglas, State's Atty., Austin, for the State. BELCHER, Commissioner. Appellant waived trial by jury, entered a plea of guilty before the court to the offense of indecent fondling of a child's sexual parts, and his punishment was assessed at seventeen years in the penitentiary. The state's testimony shows that a boy, age 8 at the time of the trial, was sent by his mother on an errand, and while gone he met the appellant.",
"After they met, the appellant bought and drank some beer and purchased five soft drinks for the boy. Shortly thereafter they went under a bridge where the appellant kissed the boy, played with his penis, and did or attempted to commit an act of sodomy on the boy, and during this time gave him a dollar and told him not to tell of his conduct. A policeman was notified and he went immediately to the bridge. Officer Gaffney testified that upon his arrival under the bridge he saw the appellant taking indecent liberties with the boy while on top of him on the ground, that as he approached them the boy said, \"Police\", shook himself loose from appellant and then stated, \"He made me do it\", and that the appellant offered him (Officer Gaffney) $10 to turn him loose.",
"The officer further testified that he took the boy to his mother and gave her a dollar that the boy had with him at the bridge. Appellant testified that he began drinking beer the day before his arrest on this charge and because of his intoxication he didn't remember anything on the day in question after he left home in the morning. The appellant's testimony and that of other witnesses offered by him shows that he was drunk. He denied offering Officer Gaffney $10 to release him at the time of his arrest, but stated that he did offer him $10 at the jail which was the customary amount in order to get released on a drunken charge. Appellant challenges the validity of Art. 535d, Vernon's Ann.P.C., on the ground that it does not define in plain language an offense in that it fails to state whether the male or female mentioned therein is a human being. The object and purpose of a statute may be determined by the consideration of all its provisions.",
"39 Tex.Jur. 216, Sec. 116. The statute here under attack provides in part that it shall be unlawful for any person with lascivious intent to intentionally fondle the breast of a female. Further, it provides that it shall not apply when the persons are married. Also, the emergency clause states that the punishment then provided for the molestation of minors was inadequate. The use of the words \"breast\", \"persons\", \"married\", and \"minors\" and the general context of this statute shows that the legislature intended to make unlawful certain conduct by persons toward other persons under the age of fourteen years. 39 Tex.Jur. 176, Sec. 93. In considering Art. 535d, Vernon's Ann.P.C., we *119 said in Jones v. State, 156 Tex. Crim. 2, 238 S.W.2d 529, 530: \"We think it clear that the legislature intended by this statute to make punishable the fondling of the sexual part of a child under 14 with a lewd and immoral intent on the part of the accused to indulge in lust or sexual impurity.\" We conclude that the statute sufficiently defines and creates an offense.",
"Appellant contends that the offense here charged cannot be sustained on the ground that the state's testimony shows that the intent of the appellant was to commit an act of sodomy instead of the offense of indecent fondling. There is an abundance of testimony affirmatively showing the fondling with lascivious intent of the boy's penis by the appellant. The fact that the testimony relied upon by the state to show indecent fondling of a child's sexual parts also developed facts which constitute another independent crime does not prevent the conviction for the offense on trial. Hence the contention is overruled. 12 Tex.Jur. 560, Sec. 241; Mimms v. State, 145 Tex. Crim.",
"456, 169 S.W.2d 165; Ward v. State, 148 Tex. Crim. 186, 185 S.W.2d 577. It is insisted that from all the facts and circumstances surrounding the commission of the offense here charged that the appellant was assessed a punishment which was unusual, cruel, and excessive in view of his voluntary recent use of intoxicating liquor to the extent that he was temporarily insane, there being no showing of injury to the boy, and the maximum penalty for the offense of sodomy being fifteen years whereas the maximum penalty for the offense of indecent fondling is twenty-five years. Appellant waived his right of trial by jury and consented for the court to hear, consider, and assess the punishment. The record shows that after he entered his plea of guilty, he was then admonished by the court as to the nature and consequences of such plea before it was accepted.",
"The extent of the punishment to be assessed so long as within the statute rests solely with the trial court. The punishment assessed was within the limits authorized by law. Under the facts we perceive no error in the amount of punishment assessed. 12 Tex.Jur. 802, Sec. 409; White v. State, 154 Tex. Crim. 497, 498, 228 S.W.2d 183. We find the evidence sufficient to sustain the conviction. No reversible error appearing the judgment is affirmed. Opinion approved by the Court."
]
| https://www.courtlistener.com/api/rest/v3/opinions/1734347/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Opinion
PETERS, J. Under specified circumstances, General Statutes § 5-192p authorizes the state employees retirement commission (commission) to grant a disability retirement pension to a person in state service. An applicant who has been in state service for less than ten years is entitled to such a pension only if the applicant has suffered a disability that is service connected. To determine the requisite service connection, the retirement commission is directed by § 5-192p (f) to utilize the expertise of the state medical examining board (medical board). The principal issue in this case is whether a pension applicant who is disappointed by an adverse decision of the medical board has a right to review by the commission to determine whether, as a matter of law, the medical board was precluded from making an independent determination of service connection in light of earlier workers’ compensation proceedings arising out of the same facts. We affirm the judgment of the trial court dismissing the pension applicant’s administrative appeal, but we do so on grounds other than those on which the court relied. The plaintiff, Bruce Hill, filed an appeal in the Superior Court from a declaratory ruling by the defendant commission, which had denied his request for service connected disability retirement benefits. The commission based its ruling on a finding by the medical board that the plaintiff had not established that his injury was service connected. He alleged that he was nonetheless entitled to such benefits because he had been injured in an accident that, in workers’ compensation proceedings, had been determined to be service connected. In light of that determination, the plaintiff maintained that the doctrine of collateral estoppel precluded the medi*602cal board from making a contrary finding and required the commission to grant his application for disability retirement benefits. The trial court upheld the commission’s denial of the plaintiffs pension application. It agreed with the commission that the governing statute conferred exclusive authority on the medical board to determine whether an employee’s injury was service connected, apredicate for entitlement to disability retirement benefits. Concluding that the commission lacked subject matter jurisdiction to review the merits of the medical board’s finding, the court dismissed the plaintiffs appeal. In his appeal to this court, the plaintiff maintains that the trial court improperly failed (1) to overrule the commission’s determination that it lacked jurisdiction to review the medical board’s finding that he failed to prove that his injury was service connected, (2) to apply the doctrine of collateral estoppel and (3) to protect his constitutional right to due process. Because each of these issues raises a question of law, our review is plenary. See, e.g., DaCruz v. State Farm Fire & Casualty Co., 268 Conn. 675, 686, 846 A.2d 849 (2004) (collateral estoppel); State v. Long, 268 Conn. 508, 520-21, 847 A.2d 862 (2004) (due process); Lundborg v. Lawler, 63 Conn. App. 451, 455, 776 A.2d 519 (2001) (subject matter jurisdiction). Although we agree with the plaintiff s jurisdictional claim, we disagree with his collateral estoppel and due process claims. Accordingly, we affirm the judgment of the trial court. See Favorite v. Miller, 176 Conn. 310, 317, 407 A.2d 974 (1978) (“[w]here the trial court reaches a correct decision but on mistaken grounds, [the Supreme] [C]ourt has repeatedly sustained the trial court’s action if proper grounds exist to support it”). *603To evaluate the plaintiffs arguments, we must review the factual record and the procedural history of this case. There is no dispute about either one. The plaintiff was employed by the state of Connecticut state receiving home from December 14, 1990, through 1997. During that time, he injured his right shoulder twice. The first injuiy to his right shoulder, on August 17, 1997, was not work related. It occurred in a flag football game. After sustaining the injury, the plaintiff immediately consulted a physican at New Britain General Hospital to obtain pain relief medication. He did not report for work the following day. The second injury to the same shoulder, on September 18, 1997, occurred on the work site when the plaintiff was trying to fix a hatchway. He consulted a physician one week later. He notified his supervisor of his injury on September 29,1997.1 Despite his injury, he continued to work until October 9, 1997. In December, 1997, the plaintiff underwent surgery to correct the right rotator cuff injuiy that he had sustained, but the surgery was not successful. In the course of workers’ compensation proceedings, the state accepted the plaintiffs claim for workers’ compensation for his work site injury. It signed a voluntary agreement acknowledging that the plaintiff had suffered a 21.5 percent permanent impairment of his right shoulder as the result of his September 18, 1997 injury and that this injuiy arose out of and in the course of his employment. The plaintiff then filed an application for disability retirement benefits under General Statutes § 5-169. His eligibility for such benefits depended on his ability to *604establish that his injury was service connected. General Statutes § 5-192p. The medical board that considered the plaintiffs application for disability retirement benefits found initially and upon reconsideration that the plaintiff had not shown that his injury was service connected. It noted the plaintiffs prior injury at the football game, his delay in informing his supervisor of his injury at the work site and his performance of his work for several days subsequent to the date of his injury. The plaintiff tried unsuccessfully to challenge the medical board’s decision by way of a direct appeal to the Superior Court. The court held that it lacked subject matter jurisdiction of his case because § 5-169 (c) does not require the medical board to hold a hearing. See Bailey v. Medical Examining Board for State Employee Disability Retirement, 75 Conn. App. 215, 223, 815 A.2d 281 (2003). As the court held, without a requirement for a hearing, an administrative decision is not a contested case, as that term is defined by General Statutes § 4-166 (2), and therefore is not appealable. See General Statutes § 4-166 (3) (A) and (C); Lewis v. Gaming Policy Board, 224 Conn. 693, 699-700, 620 A.2d 780 (1993). Without seeking appellate review of that dismissal, the plaintiff petitioned the commission for a declaratory ruling that the doctrine of collateral estoppel required the medical board to find that his injury was service connected. The commission decided that it did not have jurisdiction to review the plaintiffs claim on its merits because, in its view, § 5-192p (f) conferred on the medical board the exclusive authority to determine whether the plaintiffs injury was service connected. Accordingly, it issued a declaratory ruling denying the plaintiffs request for disability retirement benefits. *605The plaintiff then returned to the Superior Court, in the case that is presently before us, to challenge the validity of the declaratory ruling by the commission. This time, the trial court had jurisdiction to entertain the appeal because a declaratory ruling is appealable whether or not it arises in a contested case. General Statutes §§ 4-176 (h) and 4-183. The trial court upheld the commission’s interpretation of the relevant statutes. It held that the commission lacked subject matter jurisdiction to review the merits of the decision of the medical board. Accordingly, it rendered a judgment dismissing the plaintiff’s appeal. I JURISDICTION The plaintiffs principal argument for reversal of the judgment of the trial court is that the court improperly dismissed, on the basis of the commission’s lack of subject matter jurisdiction, his claim that the medical board was required, because of collateral estoppel, to find his injury to have been service connected. The trial court held that “the posture of this case as an appeal from a declaratory ruling does not present the opportunity for the frontal attack on the decision of the medical examining board that the plaintiff attempts.” We disagree with the court’s reasoning. The plaintiff raises two arguments with respect to his jurisdictional claim. He asserts that the trial court should have addressed the merits of his claim of collateral estoppel because the commission (1) acting in response to a petition for a declaratory ruling, has plenaiy statutory authority to determine any pension issue presented therein and (2) acting as the ultimate adjudicator of pension rights, has plenary statutory authority to decide an issue of law. *606A The plaintiffs first and broader argument is that, contrary to the view of the trial court, “the analysis remains the same whether the ultimate responsibility for determining disability retirement eligibility rests with the [commission] or with the [medical board].” For present purposes, he does not challenge the ruling that an administrative decision that is not the result of a contested case is not reviewable directly under § 4-166 (3) (A). He maintains instead that such a ruling is reviewable indirectly under §§ 4-176 (h) and 4-166 (3) (B). In his view, his claim of collateral estoppel is entitled to commission review, and then to judicial review, because the commission has plenary authority to consider the merits of any issue raised in a petition for a declaratory ruling. On its face, this argument is difficult to sustain. If the plaintiff were correct, it would mean that the appeal-ability of an administrative decision would be determined by the manner in which the appeal is packaged. We should not assume that our legislature would have intended such an irrational result. “[W]e read each statute in a manner that will not thwart its intended purpose or lead to absurd results.” (Internal quotation marks omitted.) Cardenas v. Mixcus, 264 Conn. 314, 322-23, 823 A.2d 321 (2003). The plaintiffs argument is premised on the implicit assumption that a petitioner for a declaratoiy ruling may obtain relief for any claim of any kind that he or she may choose to present to an administrative agency. That is not so. Section 4-176 (a) states the ground rules that govern declaratory rulings. It provides in relevant part: “Any person may petition an agency . . . for a declaratory ruling as to the validity of any regulation, or the applicability to specified circumstances of a provision of the general statutes, a regulation, or a final *607decision on a matter within the jurisdiction of the agency.” General Statutes § 4-176 (a). Subsection (h) of § 4-176, on which the plaintiff relies, describes the manner in which a declaratory ruling may be preserved for judicial review, but, in our view, that subsection cannot reasonably be read to enlarge the scope of § 4-176 (a). See Blakeman v. Planning & Zoning Commission, 82 Conn. App. 632, 639, 846 A.2d 950 (2004) (“[a] court must interpret a statute as written . . . and it is to be considered as a whole, with a view toward reconciling its separate parts in order to render a reasonable overall interpretation” [internal quotation marks omitted]). Section 4-183 (j), on which the plaintiff also relies, describes the scope of judicial review of administrative decisions, but does not purport to describe the jurisdiction of the Superior Court to undertake such a review. The plaintiff has not argued that § 4-176 is ambiguous in any respect or that its legislative history suggests that it should not be interpreted literally. The applicable principles of statutory interpretation counsel us, therefore, to apply the terms of the statute literally. See Joyell v. Commissioner of Education, 45 Conn. App. 476, 486, 696 A.2d 1039 (“[w]here, as here, the language of a statute is clear and unambiguous, courts may not by construction supply omissions in a statute merely because the court feels that it has good reasons for doing so and that the statute would thereby be improved”), cert. denied, 243 Conn. 910, 701 A.2d 330 (1997). The plaintiff has not explained how his claim of collateral estoppel presents an issue that falls within the limitations that § 4-176 imposes on the permissible scope of declaratory rulings. He does not allege that he has challenged “the validity of any regulation, or the applicability to specified circumstances of a provision of the general statutes, a regulation, or a final decision . . . .” General Statutes § 4-176 (a). His case is readily *608distinguishable from declaratory rulings that appropriately have addressed matters such as the jurisdictional consequences of statutory time limitations; see Angelsea Productions, Inc. v. Commission on Human Rights & Opportunities, 248 Conn. 392, 397-98, 727 A.2d 1268 (1999); or the applicability of statutory permit requirements. See Cannata v. Dept. of Environmental Protection, 239 Conn. 124, 135, 680 A.2d 1329 (1996). Our research has not uncovered any Connecticut case law discussing the merits of a declaratory ruling that did not involve the interpretation of a statute or a regulation. Our view of the limited scope of declaratory rulings finds support, however, in the judgments of courts in other jurisdictions. These courts have held that an administrative agency’s declaratory ruling provides an occasion for testing the validity or applicability of a statute or regulation, but not for the review of prior administrative decisions. See, e.g., Women Aware v. Reagen, 331 N.W.2d 88, 92 (Iowa 1983); Texas County Irrigation & Water Resources Assn. v. Oklahoma Water Resources Board, 803 P.2d 1119, 1123-24 (Okla. 1990). B The plaintiffs second and narrower jurisdictional argument rests on his contention that, when eligibility for a disability retirement pension turns on a question of law, §§ 5-169 (c) and 5-192p (f) confer independent statutory authority on the commission to determine eligibility. The trial court, however, upheld the commission’s decision that the legislature categorically had assigned exclusive responsibility to the medical board to determine, under any and all circumstances, whether an applicant’s injury was service connected. We agree with the plaintiff. The commission’s declaratory ruling discussed the reasons for its conclusion that it had no jurisdiction to review the decision of the medical board. It compared *609the language of §§ 5-169 (c) and 5-192p (f) with that contained in other statutes describing eligibility for different retirement benefits. It attached significance to the fact that those statutes, in contrast to the statutes governing disability retirement benefits, expressly authorized the commission to determine pension eligibility. See General Statutes §§ 7-432 and 45a-40. The commission further held that the medical board had exclusive jurisdiction to determine eligibility for disability retirement pensions even when the issue raised by the applicant for pension benefits did not contest a medical finding. In a carefully nuanced decision, the commission acknowledged that the medical board did not have all encompassing authority to decide all issues of pension eligibility. It held, for example, that the commission itself, and not the medical board, had the responsibility to determine whether an applicant for pension benefits was a member of a particular pension plan. Nonetheless, it concluded that, under § 5-192p (f), for all purposes, the determination of whether an injury was service connected fell within the exclusive jurisdiction of the medical board. The trial court declined to consider the merits of the plaintiffs collateral estoppel claim because, like the commission, it interpreted § 5-192p (f) to deprive the commission of authority to do so. Without discussing the distinctions enunciated by the commission, the court held that cases such as Briggs v. State Employees Retirement Commission, 210 Conn. 214, 219, 554 A.2d 292 (1989), and Tremblay v. Connecticut State Employees’ Retirement Commission, 170 Conn. 410, 414, 365 A.2d 1125 (1976), had established that the medical board “using its medical judgment, may believe or disbelieve any evidence presented so long as the final decision is supported by the substantial evidence rule.” The court did not address the plaintiffs contention that § 5-192p (f) is inapplicable in cases in which the issue before *610the medical board is one that does not call for the exercise of medical judgment. In his appeal to this court, the plaintiff has raised again the jurisdictional issue of the scope of the authority vested in the medical board by § 5-192p (f). It is fair to say that this issue has been obscured by the lack of specificity with which it has been briefed. We may nonetheless infer from the administrative record, from the plaintiffs oral argument to the trial court and from his appellate brief disputing the relevance of Briggs that he challenges the competency of the medical board to decide an issue of law such as collateral estoppel. We turn then to a consideration of whether § 5-192p (f), despite its sweeping delegation of authority to the medical board, contains a latent ambiguity with respect to its applicability to issues unrelated to the medical board’s professional expertise. “Any latent ambiguity in the statutory language itself is normally resolved by turning for guidance to the legislative history and the purpose the statute is to serve.” (Internal quotation marks omitted.) Nicotra Wieler Investment Management, Inc. v. Grower, 207 Conn. 441, 451, 541 A.2d 1226 (1988). It is logical to assume that the legislature intended to designate the medical board as the sole arbiter of medical eligibility for disability retirement pension benefits so as to take advantage of the board’s medical expertise. See Briggs v. State Employees Retirement Commission, supra, 210 Conn. 219. In our view, it is not logical to assume that the legislature also intended to mandate the same deference with respect to eligibility as a matter of law. Indeed, the commission recognized this distinction when it held that the medical board should not determine an applicant’s membership in the applicable retirement pension program. *611Our appellate courts previously have not considered the scope of the medical board’s authority to resolve an issue that does not implicate the medical board’s professional expertise. We are persuaded, however, that if, as the commission held, the medical board has no relevant expertise with regard to membership status, then it similarly lacks relevant expertise to decide complex issues of law. It is indisputable that applicability of the doctrine of collateral estoppel raises difficult issues on which medical training and practice shed no light. As far as the record shows, the medical board did not seek legal advice to assist it in its deliberations. We conclude, therefore, contrary to the decision of the trial court, that the commission had jurisdiction to decide whether the medical board had exclusive authority to decide the plaintiffs eligibility for a disability retirement pension under the circumstances of this case. Although the plaintiff was not entitled to review by the commission, or by the court, of whether the medical board correctly decided that his injury was not in fact service connected, he was entitled to review of whether the doctrine of collateral estoppel precluded relitigation of this issue in light of the outcome of the earlier workers’ compensation proceedings establishing service connection. II COLLATERAL ESTOPPEL The substantive issue raised by the plaintiff is whether the retirement commission was required to approve his application for a disability retirement pension because the doctrine of collateral estoppel or issue preclusion required the medical board to find his injury to have been service connected. It is undisputed that, in an earlier workers’ compensation proceeding arising out of the same injury, the state signed a voluntary agreement acknowledging that the plaintiff had suffered *612a 21.5 percent permanent impairment of his right shoulder as the result of his September 18, 1997 injury and that this injury arose out of and in the course of his employment. In light of that acknowledgment, the plaintiff maintains that the medical board was precluded from finding that his injury was not service connected. As a result of the trial court’s jurisdictional ruling, it did not reach this issue. We might, therefore, remand this case to the court for further proceedings. In the interests of judicial economy, we have decided, however, to consider the merits of the plaintiffs collateral estoppel claim. If, as the commission argues, the doctrine of collateral estoppel is inapplicable, we can sustain the judgment of the trial court on this alternate ground. See Skuzinski v. Bouchard Fuels, Inc., 240 Conn. 694, 703, 694 A.2d 788 (1997). “ [Collateral estoppel, or issue preclusion, is that aspect of res judicata that prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties or those in privity with them upon a different claim. ... An issue is actually litigated if it is properly raised in the pleadings or otherwise, submitted for determination, and in fact determined. ... 1 Restatement (Second), Judgments § 27, comment (d) (1982).” (Citations omitted; emphasis in original; internal quotation marks omitted.) Efthimiou v. Smith, 268 Conn. 499, 506-507, 846 A.2d 222 (2004); Rinaldi v. Enfield, 82 Conn. App. 505, 516, 844 A.2d 949 (2004). However, “[i]n the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated.” 1 Restatement (Second), supra, § 27, comment (e), p. 257. We agree with the plaintiff that the fact that the prior action occurred in workers’ compensation proceedings does not disqualify that action from having a preclusive *613effect. The doctrine of collateral estoppel is applicable to administrative rulings in general. Lafayette v. General Dynamics Corp., 255 Conn. 762, 773, 770 A.2d 1 (2001). The commission does not argue to the contrary. We disagree, however, with the plaintiffs assumption that the workers’ compensation proceedings in this case demonstrate that his claim of service connection between his injury and his work was actually litigated. The plaintiffs workers’ compensation award arose out of a voluntary agreement in which the state acknowledged that the plaintiffs injury arose out of and in the course of his employment. In other words, the plaintiffs award arose out of a settlement between himself and the state. Under the Restatement (Second), only an issue that has actually been litigated has a preclusive effect on subsequent litigation. An issue that has been resolved by virtue of a settlement agreement has not actually been litigated. 1 Restatement (Second), supra, § 27, comment (e). Although no Connecticut cases have so held, courts in other jurisdictions have declined to give preclusive effect to judgments approving a settlement agreement. See, e.g., JFK Medical Center, Inc. v. Price, 647 So. 2d 833, 834 (Fla. 1994); Burgess v. Consider H. Willett, Inc., 311 Ky. 745, 748-49, 225 S.W.2d 315 (App. 1949); Hentschel v. Smith, 278 Minn. 86, 99-100, 153 N.W.2d 199 (1967); Linder v. Missoula County, 251 Mont. 292, 296-97, 824 P.2d 1004 (1992); Deminsky v. Arlington Plastics Machinery, 259 Wis. 2d 587, 621-22, 657 N.W.2d 411 (2003); Eklund v. PRI Environmental, Inc., 25 P.3d 511, 518 (Wyo. 2001); see also 18A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure (2002) § 4443; but see, e.g., Macheras v. Syrmopoulos, 319 Mass. 485, 486, 66 N.E.2d 351 (1946). On the record before us, we conclude that the plaintiff has not established his alleged right to a disability retire*614ment pension. As a matter of fact, pursuant to § 5-192p (f), the medical board had exclusive authority to decide whether his injury was service connected. As a matter of law, the medical board was not precluded from deciding the issue of service connection because that issue had not actually been litigated in prior workers’ compensation proceedings.2 It follows that the commission’s declaratory ruling properly denied the plaintiffs application for a disability retirement pension. It further follows that the com! properly dismissed the plaintiffs administrative appeal. Ill DUE PROCESS The plaintiffs final argument is that the denial of his application for a disability retirement pension violated his constitutional right to due process. It is undisputed that, if he complies with the governing statutory conditions, he has a constitutionally protected property right to a pension benefit. Pineman v. Oechslin, 195 Conn. 405, 416-17, 488 A.2d 803 (1985); see also C. Reich, “The New Property,” 73 Yale L.J. 733 (1964). He alleges that this property right was impaired by numerous procedurally unconstitutional defects in the manner in which it was adjudicated. He faults the medical board for failing to hold a proper hearing in general and for failing to apply the doctrine of collateral estoppel in particular. He faults the trial court for limiting its review of the commission’s declaratory ruling. We are per*615suaded that the plaintiff was not deprived of his constitutional right to procedural due process. As the commission properly notes, the plaintiff never raised any constitutional issue in the trial court. We need not review the merits of any claim, even a constitutional claim, that is presented for the first time on appeal. Practice Book § 60-5; Lopiano v. Lopiano, 247 Conn. 356, 372-73, 752 A.2d 1000 (1998). Summary review of the plaintiffs constitutional claims demonstrates their lack of merit. It bears remembering that “[j]udicial review of an administrative decision is a creature of statute.” Summit Hydropower Partnership v. Commissioner of Environmental Protection, 226 Conn. 792, 799, 629 A.2d 367 (1993). It is abundantly clear that the plaintiff does not have a constitutional right (1) to challenge the procedural sufficiency of the medical board hearing in the absence of a record of what transpired there, (2) to command acquiescence in his interpretation of the relevant statutes or (3) to disregard common-law limitations on the doctrine of collateral estoppel. We conclude, therefore, that the trial court properly dismissed the plaintiffs administrative appeal from the declaratory ruling by the commission. The judgment is affirmed. In this opinion the other judges concurred.
According to the medical board, this notification did not occur until October 3, 1997.
In light of this conclusion, we need not consider the merits of two other arguments that the commission has proffered in defense of its decision to deny disability retirement benefits to the plaintiff. One is that the record does not establish the identity of the parties, which is another prerequisite to the applicability of collateral estoppel. The other is that the legislature, in enacting § 5-192p (f), made a public policy decision to confer dispositive authority on the medical board regardless of the outcome of related prior proceedings elsewhere. | 09-08-2022 | [
"Opinion PETERS, J. Under specified circumstances, General Statutes § 5-192p authorizes the state employees retirement commission (commission) to grant a disability retirement pension to a person in state service. An applicant who has been in state service for less than ten years is entitled to such a pension only if the applicant has suffered a disability that is service connected. To determine the requisite service connection, the retirement commission is directed by § 5-192p (f) to utilize the expertise of the state medical examining board (medical board).",
"The principal issue in this case is whether a pension applicant who is disappointed by an adverse decision of the medical board has a right to review by the commission to determine whether, as a matter of law, the medical board was precluded from making an independent determination of service connection in light of earlier workers’ compensation proceedings arising out of the same facts. We affirm the judgment of the trial court dismissing the pension applicant’s administrative appeal, but we do so on grounds other than those on which the court relied. The plaintiff, Bruce Hill, filed an appeal in the Superior Court from a declaratory ruling by the defendant commission, which had denied his request for service connected disability retirement benefits. The commission based its ruling on a finding by the medical board that the plaintiff had not established that his injury was service connected.",
"He alleged that he was nonetheless entitled to such benefits because he had been injured in an accident that, in workers’ compensation proceedings, had been determined to be service connected. In light of that determination, the plaintiff maintained that the doctrine of collateral estoppel precluded the medi*602cal board from making a contrary finding and required the commission to grant his application for disability retirement benefits. The trial court upheld the commission’s denial of the plaintiffs pension application. It agreed with the commission that the governing statute conferred exclusive authority on the medical board to determine whether an employee’s injury was service connected, apredicate for entitlement to disability retirement benefits.",
"Concluding that the commission lacked subject matter jurisdiction to review the merits of the medical board’s finding, the court dismissed the plaintiffs appeal. In his appeal to this court, the plaintiff maintains that the trial court improperly failed (1) to overrule the commission’s determination that it lacked jurisdiction to review the medical board’s finding that he failed to prove that his injury was service connected, (2) to apply the doctrine of collateral estoppel and (3) to protect his constitutional right to due process.",
"Because each of these issues raises a question of law, our review is plenary. See, e.g., DaCruz v. State Farm Fire & Casualty Co., 268 Conn. 675, 686, 846 A.2d 849 (2004) (collateral estoppel); State v. Long, 268 Conn. 508, 520-21, 847 A.2d 862 (2004) (due process); Lundborg v. Lawler, 63 Conn. App. 451, 455, 776 A.2d 519 (2001) (subject matter jurisdiction). Although we agree with the plaintiff s jurisdictional claim, we disagree with his collateral estoppel and due process claims. Accordingly, we affirm the judgment of the trial court. See Favorite v. Miller, 176 Conn. 310, 317, 407 A.2d 974 (1978) (“[w]here the trial court reaches a correct decision but on mistaken grounds, [the Supreme] [C]ourt has repeatedly sustained the trial court’s action if proper grounds exist to support it”). *603To evaluate the plaintiffs arguments, we must review the factual record and the procedural history of this case. There is no dispute about either one. The plaintiff was employed by the state of Connecticut state receiving home from December 14, 1990, through 1997.",
"During that time, he injured his right shoulder twice. The first injuiy to his right shoulder, on August 17, 1997, was not work related. It occurred in a flag football game. After sustaining the injury, the plaintiff immediately consulted a physican at New Britain General Hospital to obtain pain relief medication. He did not report for work the following day. The second injury to the same shoulder, on September 18, 1997, occurred on the work site when the plaintiff was trying to fix a hatchway. He consulted a physician one week later. He notified his supervisor of his injury on September 29,1997.1 Despite his injury, he continued to work until October 9, 1997. In December, 1997, the plaintiff underwent surgery to correct the right rotator cuff injuiy that he had sustained, but the surgery was not successful. In the course of workers’ compensation proceedings, the state accepted the plaintiffs claim for workers’ compensation for his work site injury.",
"It signed a voluntary agreement acknowledging that the plaintiff had suffered a 21.5 percent permanent impairment of his right shoulder as the result of his September 18, 1997 injury and that this injuiy arose out of and in the course of his employment. The plaintiff then filed an application for disability retirement benefits under General Statutes § 5-169. His eligibility for such benefits depended on his ability to *604establish that his injury was service connected. General Statutes § 5-192p. The medical board that considered the plaintiffs application for disability retirement benefits found initially and upon reconsideration that the plaintiff had not shown that his injury was service connected. It noted the plaintiffs prior injury at the football game, his delay in informing his supervisor of his injury at the work site and his performance of his work for several days subsequent to the date of his injury. The plaintiff tried unsuccessfully to challenge the medical board’s decision by way of a direct appeal to the Superior Court. The court held that it lacked subject matter jurisdiction of his case because § 5-169 (c) does not require the medical board to hold a hearing. See Bailey v. Medical Examining Board for State Employee Disability Retirement, 75 Conn. App.",
"215, 223, 815 A.2d 281 (2003). As the court held, without a requirement for a hearing, an administrative decision is not a contested case, as that term is defined by General Statutes § 4-166 (2), and therefore is not appealable. See General Statutes § 4-166 (3) (A) and (C); Lewis v. Gaming Policy Board, 224 Conn. 693, 699-700, 620 A.2d 780 (1993). Without seeking appellate review of that dismissal, the plaintiff petitioned the commission for a declaratory ruling that the doctrine of collateral estoppel required the medical board to find that his injury was service connected. The commission decided that it did not have jurisdiction to review the plaintiffs claim on its merits because, in its view, § 5-192p (f) conferred on the medical board the exclusive authority to determine whether the plaintiffs injury was service connected. Accordingly, it issued a declaratory ruling denying the plaintiffs request for disability retirement benefits. *605The plaintiff then returned to the Superior Court, in the case that is presently before us, to challenge the validity of the declaratory ruling by the commission.",
"This time, the trial court had jurisdiction to entertain the appeal because a declaratory ruling is appealable whether or not it arises in a contested case. General Statutes §§ 4-176 (h) and 4-183. The trial court upheld the commission’s interpretation of the relevant statutes. It held that the commission lacked subject matter jurisdiction to review the merits of the decision of the medical board.",
"Accordingly, it rendered a judgment dismissing the plaintiff’s appeal. I JURISDICTION The plaintiffs principal argument for reversal of the judgment of the trial court is that the court improperly dismissed, on the basis of the commission’s lack of subject matter jurisdiction, his claim that the medical board was required, because of collateral estoppel, to find his injury to have been service connected. The trial court held that “the posture of this case as an appeal from a declaratory ruling does not present the opportunity for the frontal attack on the decision of the medical examining board that the plaintiff attempts.” We disagree with the court’s reasoning. The plaintiff raises two arguments with respect to his jurisdictional claim.",
"He asserts that the trial court should have addressed the merits of his claim of collateral estoppel because the commission (1) acting in response to a petition for a declaratory ruling, has plenaiy statutory authority to determine any pension issue presented therein and (2) acting as the ultimate adjudicator of pension rights, has plenary statutory authority to decide an issue of law. *606A The plaintiffs first and broader argument is that, contrary to the view of the trial court, “the analysis remains the same whether the ultimate responsibility for determining disability retirement eligibility rests with the [commission] or with the [medical board].” For present purposes, he does not challenge the ruling that an administrative decision that is not the result of a contested case is not reviewable directly under § 4-166 (3) (A). He maintains instead that such a ruling is reviewable indirectly under §§ 4-176 (h) and 4-166 (3) (B). In his view, his claim of collateral estoppel is entitled to commission review, and then to judicial review, because the commission has plenary authority to consider the merits of any issue raised in a petition for a declaratory ruling.",
"On its face, this argument is difficult to sustain. If the plaintiff were correct, it would mean that the appeal-ability of an administrative decision would be determined by the manner in which the appeal is packaged. We should not assume that our legislature would have intended such an irrational result. “[W]e read each statute in a manner that will not thwart its intended purpose or lead to absurd results.” (Internal quotation marks omitted.)",
"Cardenas v. Mixcus, 264 Conn. 314, 322-23, 823 A.2d 321 (2003). The plaintiffs argument is premised on the implicit assumption that a petitioner for a declaratoiy ruling may obtain relief for any claim of any kind that he or she may choose to present to an administrative agency. That is not so. Section 4-176 (a) states the ground rules that govern declaratory rulings. It provides in relevant part: “Any person may petition an agency . . . for a declaratory ruling as to the validity of any regulation, or the applicability to specified circumstances of a provision of the general statutes, a regulation, or a final *607decision on a matter within the jurisdiction of the agency.” General Statutes § 4-176 (a). Subsection (h) of § 4-176, on which the plaintiff relies, describes the manner in which a declaratory ruling may be preserved for judicial review, but, in our view, that subsection cannot reasonably be read to enlarge the scope of § 4-176 (a). See Blakeman v. Planning & Zoning Commission, 82 Conn. App.",
"632, 639, 846 A.2d 950 (2004) (“[a] court must interpret a statute as written . . . and it is to be considered as a whole, with a view toward reconciling its separate parts in order to render a reasonable overall interpretation” [internal quotation marks omitted]). Section 4-183 (j), on which the plaintiff also relies, describes the scope of judicial review of administrative decisions, but does not purport to describe the jurisdiction of the Superior Court to undertake such a review. The plaintiff has not argued that § 4-176 is ambiguous in any respect or that its legislative history suggests that it should not be interpreted literally. The applicable principles of statutory interpretation counsel us, therefore, to apply the terms of the statute literally.",
"See Joyell v. Commissioner of Education, 45 Conn. App. 476, 486, 696 A.2d 1039 (“[w]here, as here, the language of a statute is clear and unambiguous, courts may not by construction supply omissions in a statute merely because the court feels that it has good reasons for doing so and that the statute would thereby be improved”), cert. denied, 243 Conn. 910, 701 A.2d 330 (1997). The plaintiff has not explained how his claim of collateral estoppel presents an issue that falls within the limitations that § 4-176 imposes on the permissible scope of declaratory rulings. He does not allege that he has challenged “the validity of any regulation, or the applicability to specified circumstances of a provision of the general statutes, a regulation, or a final decision . . . .” General Statutes § 4-176 (a).",
"His case is readily *608distinguishable from declaratory rulings that appropriately have addressed matters such as the jurisdictional consequences of statutory time limitations; see Angelsea Productions, Inc. v. Commission on Human Rights & Opportunities, 248 Conn. 392, 397-98, 727 A.2d 1268 (1999); or the applicability of statutory permit requirements. See Cannata v. Dept. of Environmental Protection, 239 Conn. 124, 135, 680 A.2d 1329 (1996). Our research has not uncovered any Connecticut case law discussing the merits of a declaratory ruling that did not involve the interpretation of a statute or a regulation. Our view of the limited scope of declaratory rulings finds support, however, in the judgments of courts in other jurisdictions. These courts have held that an administrative agency’s declaratory ruling provides an occasion for testing the validity or applicability of a statute or regulation, but not for the review of prior administrative decisions.",
"See, e.g., Women Aware v. Reagen, 331 N.W.2d 88, 92 (Iowa 1983); Texas County Irrigation & Water Resources Assn. v. Oklahoma Water Resources Board, 803 P.2d 1119, 1123-24 (Okla. 1990). B The plaintiffs second and narrower jurisdictional argument rests on his contention that, when eligibility for a disability retirement pension turns on a question of law, §§ 5-169 (c) and 5-192p (f) confer independent statutory authority on the commission to determine eligibility. The trial court, however, upheld the commission’s decision that the legislature categorically had assigned exclusive responsibility to the medical board to determine, under any and all circumstances, whether an applicant’s injury was service connected. We agree with the plaintiff. The commission’s declaratory ruling discussed the reasons for its conclusion that it had no jurisdiction to review the decision of the medical board. It compared *609the language of §§ 5-169 (c) and 5-192p (f) with that contained in other statutes describing eligibility for different retirement benefits. It attached significance to the fact that those statutes, in contrast to the statutes governing disability retirement benefits, expressly authorized the commission to determine pension eligibility. See General Statutes §§ 7-432 and 45a-40. The commission further held that the medical board had exclusive jurisdiction to determine eligibility for disability retirement pensions even when the issue raised by the applicant for pension benefits did not contest a medical finding. In a carefully nuanced decision, the commission acknowledged that the medical board did not have all encompassing authority to decide all issues of pension eligibility.",
"It held, for example, that the commission itself, and not the medical board, had the responsibility to determine whether an applicant for pension benefits was a member of a particular pension plan. Nonetheless, it concluded that, under § 5-192p (f), for all purposes, the determination of whether an injury was service connected fell within the exclusive jurisdiction of the medical board. The trial court declined to consider the merits of the plaintiffs collateral estoppel claim because, like the commission, it interpreted § 5-192p (f) to deprive the commission of authority to do so. Without discussing the distinctions enunciated by the commission, the court held that cases such as Briggs v. State Employees Retirement Commission, 210 Conn. 214, 219, 554 A.2d 292 (1989), and Tremblay v. Connecticut State Employees’ Retirement Commission, 170 Conn. 410, 414, 365 A.2d 1125 (1976), had established that the medical board “using its medical judgment, may believe or disbelieve any evidence presented so long as the final decision is supported by the substantial evidence rule.” The court did not address the plaintiffs contention that § 5-192p (f) is inapplicable in cases in which the issue before *610the medical board is one that does not call for the exercise of medical judgment. In his appeal to this court, the plaintiff has raised again the jurisdictional issue of the scope of the authority vested in the medical board by § 5-192p (f). It is fair to say that this issue has been obscured by the lack of specificity with which it has been briefed.",
"We may nonetheless infer from the administrative record, from the plaintiffs oral argument to the trial court and from his appellate brief disputing the relevance of Briggs that he challenges the competency of the medical board to decide an issue of law such as collateral estoppel. We turn then to a consideration of whether § 5-192p (f), despite its sweeping delegation of authority to the medical board, contains a latent ambiguity with respect to its applicability to issues unrelated to the medical board’s professional expertise.",
"“Any latent ambiguity in the statutory language itself is normally resolved by turning for guidance to the legislative history and the purpose the statute is to serve.” (Internal quotation marks omitted.) Nicotra Wieler Investment Management, Inc. v. Grower, 207 Conn. 441, 451, 541 A.2d 1226 (1988). It is logical to assume that the legislature intended to designate the medical board as the sole arbiter of medical eligibility for disability retirement pension benefits so as to take advantage of the board’s medical expertise. See Briggs v. State Employees Retirement Commission, supra, 210 Conn. 219. In our view, it is not logical to assume that the legislature also intended to mandate the same deference with respect to eligibility as a matter of law. Indeed, the commission recognized this distinction when it held that the medical board should not determine an applicant’s membership in the applicable retirement pension program. *611Our appellate courts previously have not considered the scope of the medical board’s authority to resolve an issue that does not implicate the medical board’s professional expertise.",
"We are persuaded, however, that if, as the commission held, the medical board has no relevant expertise with regard to membership status, then it similarly lacks relevant expertise to decide complex issues of law. It is indisputable that applicability of the doctrine of collateral estoppel raises difficult issues on which medical training and practice shed no light. As far as the record shows, the medical board did not seek legal advice to assist it in its deliberations. We conclude, therefore, contrary to the decision of the trial court, that the commission had jurisdiction to decide whether the medical board had exclusive authority to decide the plaintiffs eligibility for a disability retirement pension under the circumstances of this case. Although the plaintiff was not entitled to review by the commission, or by the court, of whether the medical board correctly decided that his injury was not in fact service connected, he was entitled to review of whether the doctrine of collateral estoppel precluded relitigation of this issue in light of the outcome of the earlier workers’ compensation proceedings establishing service connection.",
"II COLLATERAL ESTOPPEL The substantive issue raised by the plaintiff is whether the retirement commission was required to approve his application for a disability retirement pension because the doctrine of collateral estoppel or issue preclusion required the medical board to find his injury to have been service connected. It is undisputed that, in an earlier workers’ compensation proceeding arising out of the same injury, the state signed a voluntary agreement acknowledging that the plaintiff had suffered *612a 21.5 percent permanent impairment of his right shoulder as the result of his September 18, 1997 injury and that this injury arose out of and in the course of his employment. In light of that acknowledgment, the plaintiff maintains that the medical board was precluded from finding that his injury was not service connected.",
"As a result of the trial court’s jurisdictional ruling, it did not reach this issue. We might, therefore, remand this case to the court for further proceedings. In the interests of judicial economy, we have decided, however, to consider the merits of the plaintiffs collateral estoppel claim. If, as the commission argues, the doctrine of collateral estoppel is inapplicable, we can sustain the judgment of the trial court on this alternate ground. See Skuzinski v. Bouchard Fuels, Inc., 240 Conn. 694, 703, 694 A.2d 788 (1997). “ [Collateral estoppel, or issue preclusion, is that aspect of res judicata that prohibits the relitigation of an issue when that issue was actually litigated and necessarily determined in a prior action between the same parties or those in privity with them upon a different claim. ... An issue is actually litigated if it is properly raised in the pleadings or otherwise, submitted for determination, and in fact determined.",
"... 1 Restatement (Second), Judgments § 27, comment (d) (1982).” (Citations omitted; emphasis in original; internal quotation marks omitted.) Efthimiou v. Smith, 268 Conn. 499, 506-507, 846 A.2d 222 (2004); Rinaldi v. Enfield, 82 Conn. App. 505, 516, 844 A.2d 949 (2004). However, “[i]n the case of a judgment entered by confession, consent, or default, none of the issues is actually litigated.” 1 Restatement (Second), supra, § 27, comment (e), p. 257. We agree with the plaintiff that the fact that the prior action occurred in workers’ compensation proceedings does not disqualify that action from having a preclusive *613effect. The doctrine of collateral estoppel is applicable to administrative rulings in general. Lafayette v. General Dynamics Corp., 255 Conn. 762, 773, 770 A.2d 1 (2001). The commission does not argue to the contrary. We disagree, however, with the plaintiffs assumption that the workers’ compensation proceedings in this case demonstrate that his claim of service connection between his injury and his work was actually litigated. The plaintiffs workers’ compensation award arose out of a voluntary agreement in which the state acknowledged that the plaintiffs injury arose out of and in the course of his employment.",
"In other words, the plaintiffs award arose out of a settlement between himself and the state. Under the Restatement (Second), only an issue that has actually been litigated has a preclusive effect on subsequent litigation. An issue that has been resolved by virtue of a settlement agreement has not actually been litigated. 1 Restatement (Second), supra, § 27, comment (e). Although no Connecticut cases have so held, courts in other jurisdictions have declined to give preclusive effect to judgments approving a settlement agreement. See, e.g., JFK Medical Center, Inc. v. Price, 647 So. 2d 833, 834 (Fla. 1994); Burgess v. Consider H. Willett, Inc., 311 Ky. 745, 748-49, 225 S.W.2d 315 (App. 1949); Hentschel v. Smith, 278 Minn. 86, 99-100, 153 N.W.2d 199 (1967); Linder v. Missoula County, 251 Mont.",
"292, 296-97, 824 P.2d 1004 (1992); Deminsky v. Arlington Plastics Machinery, 259 Wis. 2d 587, 621-22, 657 N.W.2d 411 (2003); Eklund v. PRI Environmental, Inc., 25 P.3d 511, 518 (Wyo. 2001); see also 18A C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure (2002) § 4443; but see, e.g., Macheras v. Syrmopoulos, 319 Mass. 485, 486, 66 N.E.2d 351 (1946). On the record before us, we conclude that the plaintiff has not established his alleged right to a disability retire*614ment pension. As a matter of fact, pursuant to § 5-192p (f), the medical board had exclusive authority to decide whether his injury was service connected. As a matter of law, the medical board was not precluded from deciding the issue of service connection because that issue had not actually been litigated in prior workers’ compensation proceedings.2 It follows that the commission’s declaratory ruling properly denied the plaintiffs application for a disability retirement pension. It further follows that the com!",
"properly dismissed the plaintiffs administrative appeal. Ill DUE PROCESS The plaintiffs final argument is that the denial of his application for a disability retirement pension violated his constitutional right to due process. It is undisputed that, if he complies with the governing statutory conditions, he has a constitutionally protected property right to a pension benefit. Pineman v. Oechslin, 195 Conn. 405, 416-17, 488 A.2d 803 (1985); see also C. Reich, “The New Property,” 73 Yale L.J. 733 (1964).",
"He alleges that this property right was impaired by numerous procedurally unconstitutional defects in the manner in which it was adjudicated. He faults the medical board for failing to hold a proper hearing in general and for failing to apply the doctrine of collateral estoppel in particular. He faults the trial court for limiting its review of the commission’s declaratory ruling. We are per*615suaded that the plaintiff was not deprived of his constitutional right to procedural due process. As the commission properly notes, the plaintiff never raised any constitutional issue in the trial court. We need not review the merits of any claim, even a constitutional claim, that is presented for the first time on appeal. Practice Book § 60-5; Lopiano v. Lopiano, 247 Conn. 356, 372-73, 752 A.2d 1000 (1998). Summary review of the plaintiffs constitutional claims demonstrates their lack of merit.",
"It bears remembering that “[j]udicial review of an administrative decision is a creature of statute.” Summit Hydropower Partnership v. Commissioner of Environmental Protection, 226 Conn. 792, 799, 629 A.2d 367 (1993). It is abundantly clear that the plaintiff does not have a constitutional right (1) to challenge the procedural sufficiency of the medical board hearing in the absence of a record of what transpired there, (2) to command acquiescence in his interpretation of the relevant statutes or (3) to disregard common-law limitations on the doctrine of collateral estoppel. We conclude, therefore, that the trial court properly dismissed the plaintiffs administrative appeal from the declaratory ruling by the commission. The judgment is affirmed. In this opinion the other judges concurred.",
"According to the medical board, this notification did not occur until October 3, 1997. In light of this conclusion, we need not consider the merits of two other arguments that the commission has proffered in defense of its decision to deny disability retirement benefits to the plaintiff. One is that the record does not establish the identity of the parties, which is another prerequisite to the applicability of collateral estoppel. The other is that the legislature, in enacting § 5-192p (f), made a public policy decision to confer dispositive authority on the medical board regardless of the outcome of related prior proceedings elsewhere."
]
| https://www.courtlistener.com/api/rest/v3/opinions/7861762/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Motion for a reargument denied, with ten dollars costs; motion for leave to appeal to the Court of Appeals denied. Order entered January 4, 1935. | 01-08-2022 | [
"Motion for a reargument denied, with ten dollars costs; motion for leave to appeal to the Court of Appeals denied. Order entered January 4, 1935."
]
| https://www.courtlistener.com/api/rest/v3/opinions/5338374/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
DETAILED ACTION The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . The Amendment filed 02 September 2021 has been received and considered. Claims 1-4, 6-9, 15-17, and 19 are pending. This Action is Final.
Information Disclosure Statement The information disclosure statement (IDS) submitted on 02 September 2021 is in compliance with the provisions of 37 CFR 1.97. Accordingly, the information disclosure statement is being considered by the examiner.
Claim Objections The objection to claim 16 is withdrawn based on Applicant’s remarks (see Response page 5).
Claim Rejections - 35 USC § 101 The rejection under 35 U.S.C. 101 is withdrawn based on the filed amendment.
Claim Rejections - 35 USC § 103 In the event the determination of the status of the application as subject to AIA 35 U.S.C. 102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status. The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made.
Claims 1, 6-9, 15-17, and 19 are rejected under 35 U.S.C. 103 as being unpatentable over Chen et al. (US 20140173274) in view of Camenisch (US 20070244833). As per claims 1, 9, 15, 17, and 19, Chen et al. discloses a medium program, target device, system and method for obtaining a credential for attesting to a predetermined property of a target device according to an anonymous attestation cryptographic protocol; the method comprising: requesting authentication of the target device by an issuer in dependence on secret information held by the target device (see paragraph [0020] the issuer providing a challenge to the target device); receiving, at an intermediary device, the credential provided by the issuer when the authentication is successful, wherein the intermediary device is a separate consumer electronics device to the target device (see paragraphs [0020]-[0021] and [0013] where the target device sends the credential to the verifier which is a separate computing device); and validating the credential at the intermediary device according to the anonymous attestation cryptographic protocol (see paragraph [0022]), where the credential or information derived from the credential is used by the target device to generate an attestation message transmitted to a verifier to attest to the verifier that said target device has said predetermined property (see paragraphs [0020]-[0021]). Chen et al. discloses the verifier and the intermediary device being the same entity, but fails to explicitly disclose validating the credential provided by the issuer at the intermediary device according to the anonymous attestation cryptographic protocols wherein responsive to a positive validation of the However, Camenisch teaches a system with an issuer (see paragraph [0039] the issuer 10), an intermediary (see paragraph [0039] the privacy certification authority computer 30), a target device (see paragraph [0039] the user device 20), and a verifier (see paragraph [0040] the verification computer 40) where the intermediary device can be separate from (see Fig. 1) or as a single device together with the verifier (see Fig. 2) and further discloses that the intermediary device validating a credential provided by the issuer (see paragraphs [0022]-[0024] and [0039] where the privacy certification authority computer validates the DAA1 received from the user device where the DAA1 is based on an AV provided by the issuer), and in response to the validation the user device generates a second value (DAA2) which is transmitted to the verifier (see paragraphs [0024]-[0032] and [0039]-[0040]). At a time before the effective filing date of the invention, it would have been obvious to one of ordinary skill in the art to include the structure and message flow of Camenisch in the Chen et al. system. Motivation to do so would have been to provide a trusted third party (TTP), is used to perform the frequency check on the verifiers behalf and, if the check is successful, issues attestation values, e.g., as a token, to the user device and TPM that the user device with the TPM can then use to generate attestation-signature values to provide to the verifier and thereby convince the verifier that it has obtained such attestation values from the TPP (see Camenisch paragraph [0009]). As per claim 6, the modified Chen et al. and Camenisch system discloses the intermediary device has greater processing resource than the target device (see Chen et al. paragraphs [0013]-[0014] where a server has more computing power than a personal device). As per claim 7, the modified Chen et al. and Camenisch system discloses the validation of the credential at the intermediary device comprises at least one elliptic curve pairing computation or comparison (see Chen et al. paragraphs [0047]-[0048] and paragraphs [0024]-[0035]). As per claim 8, the modified Chen et al. and Camenisch system discloses the anonymous attestation cryptographic protocol comprises a Direct Anonymous Attestation protocol (see Chen et al. paragraphs [0020]-[0022]). . Claims 2-4 are rejected under 35 U.S.C. 103 as being unpatentable over the modified Chen et al. and Camenisch system as applied to claim 1 above, in view of Chen (US 20120278628). As per claims 2-4, the modified Chen et al. and Camenisch system fails to explicitly disclose storing a credential attesting to properties of a plurality of different target devices from a plurality of issuers at the intermediary device when the credential is validated. However, Chen teaches storing a credential attesting to properties of a plurality of different target devices from a plurality of issuers at an intermediary device when the credential is validated (see paragraphs [0029]-[0033] where the CSS stores different credentials for the target device). At a time before the effective filing date of the invention, it would have been obvious to one of ordinary skill in the art for the intermediary device of the modified Chen et al. and Camenisch system to store credentials. Motivation, as recognized by one of ordinary skill in the art, to do so would have been to offload the memory resources from the target device to the intermediary device which also allows for flexibility in the system. Response to Arguments Applicant’s arguments with respect to claim(s) 1-4, 6-9, 15-17, and 19 have been considered but are moot because the new ground of rejection does not rely on any reference applied in the prior rejection of record for any teaching or matter specifically challenged in the argument.
Conclusion The prior art made of record and not relied upon is considered pertinent to applicant's disclosure: the remaining references are directed to anonymous attestation. Applicant's amendment necessitated the new ground(s) of rejection presented in this Office action. Accordingly, THIS ACTION IS MADE FINAL. See MPEP § 706.07(a). Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action. In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the date of this final action. Any inquiry concerning this communication or earlier communications from the examiner should be directed to MICHAEL J PYZOCHA whose telephone number is (571)272-3875. The examiner can normally be reached on Monday-Thursday 7:30am-5:00pm. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Hadi Armouche can be reached on (571) 270-3618. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system. Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000.
/Michael Pyzocha/ Primary Examiner, Art Unit 2419 | 2021-10-13T11:52:23 | [
"DETAILED ACTION The present application, filed on or after March 16, 2013, is being examined under the first inventor to file provisions of the AIA . The Amendment filed 02 September 2021 has been received and considered. Claims 1-4, 6-9, 15-17, and 19 are pending. This Action is Final. Information Disclosure Statement The information disclosure statement (IDS) submitted on 02 September 2021 is in compliance with the provisions of 37 CFR 1.97. Accordingly, the information disclosure statement is being considered by the examiner. Claim Objections The objection to claim 16 is withdrawn based on Applicant’s remarks (see Response page 5). Claim Rejections - 35 USC § 101 The rejection under 35 U.S.C. 101 is withdrawn based on the filed amendment. Claim Rejections - 35 USC § 103 In the event the determination of the status of the application as subject to AIA 35 U.S.C.",
"102 and 103 (or as subject to pre-AIA 35 U.S.C. 102 and 103) is incorrect, any correction of the statutory basis for the rejection will not be considered a new ground of rejection if the prior art relied upon, and the rationale supporting the rejection, would be the same under either status. The following is a quotation of 35 U.S.C. 103 which forms the basis for all obviousness rejections set forth in this Office action: A patent for a claimed invention may not be obtained, notwithstanding that the claimed invention is not identically disclosed as set forth in section 102, if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains. Patentability shall not be negated by the manner in which the invention was made. Claims 1, 6-9, 15-17, and 19 are rejected under 35 U.S.C. 103 as being unpatentable over Chen et al.",
"(US 20140173274) in view of Camenisch (US 20070244833). As per claims 1, 9, 15, 17, and 19, Chen et al. discloses a medium program, target device, system and method for obtaining a credential for attesting to a predetermined property of a target device according to an anonymous attestation cryptographic protocol; the method comprising: requesting authentication of the target device by an issuer in dependence on secret information held by the target device (see paragraph [0020] the issuer providing a challenge to the target device); receiving, at an intermediary device, the credential provided by the issuer when the authentication is successful, wherein the intermediary device is a separate consumer electronics device to the target device (see paragraphs [0020]-[0021] and [0013] where the target device sends the credential to the verifier which is a separate computing device); and validating the credential at the intermediary device according to the anonymous attestation cryptographic protocol (see paragraph [0022]), where the credential or information derived from the credential is used by the target device to generate an attestation message transmitted to a verifier to attest to the verifier that said target device has said predetermined property (see paragraphs [0020]-[0021]). Chen et al.",
"discloses the verifier and the intermediary device being the same entity, but fails to explicitly disclose validating the credential provided by the issuer at the intermediary device according to the anonymous attestation cryptographic protocols wherein responsive to a positive validation of the However, Camenisch teaches a system with an issuer (see paragraph [0039] the issuer 10), an intermediary (see paragraph [0039] the privacy certification authority computer 30), a target device (see paragraph [0039] the user device 20), and a verifier (see paragraph [0040] the verification computer 40) where the intermediary device can be separate from (see Fig. 1) or as a single device together with the verifier (see Fig. 2) and further discloses that the intermediary device validating a credential provided by the issuer (see paragraphs [0022]-[0024] and [0039] where the privacy certification authority computer validates the DAA1 received from the user device where the DAA1 is based on an AV provided by the issuer), and in response to the validation the user device generates a second value (DAA2) which is transmitted to the verifier (see paragraphs [0024]-[0032] and [0039]-[0040]).",
"At a time before the effective filing date of the invention, it would have been obvious to one of ordinary skill in the art to include the structure and message flow of Camenisch in the Chen et al. system. Motivation to do so would have been to provide a trusted third party (TTP), is used to perform the frequency check on the verifiers behalf and, if the check is successful, issues attestation values, e.g., as a token, to the user device and TPM that the user device with the TPM can then use to generate attestation-signature values to provide to the verifier and thereby convince the verifier that it has obtained such attestation values from the TPP (see Camenisch paragraph [0009]).",
"As per claim 6, the modified Chen et al. and Camenisch system discloses the intermediary device has greater processing resource than the target device (see Chen et al. paragraphs [0013]-[0014] where a server has more computing power than a personal device). As per claim 7, the modified Chen et al. and Camenisch system discloses the validation of the credential at the intermediary device comprises at least one elliptic curve pairing computation or comparison (see Chen et al.",
"paragraphs [0047]-[0048] and paragraphs [0024]-[0035]). As per claim 8, the modified Chen et al. and Camenisch system discloses the anonymous attestation cryptographic protocol comprises a Direct Anonymous Attestation protocol (see Chen et al. paragraphs [0020]-[0022]). . Claims 2-4 are rejected under 35 U.S.C. 103 as being unpatentable over the modified Chen et al. and Camenisch system as applied to claim 1 above, in view of Chen (US 20120278628). As per claims 2-4, the modified Chen et al. and Camenisch system fails to explicitly disclose storing a credential attesting to properties of a plurality of different target devices from a plurality of issuers at the intermediary device when the credential is validated. However, Chen teaches storing a credential attesting to properties of a plurality of different target devices from a plurality of issuers at an intermediary device when the credential is validated (see paragraphs [0029]-[0033] where the CSS stores different credentials for the target device).",
"At a time before the effective filing date of the invention, it would have been obvious to one of ordinary skill in the art for the intermediary device of the modified Chen et al. and Camenisch system to store credentials. Motivation, as recognized by one of ordinary skill in the art, to do so would have been to offload the memory resources from the target device to the intermediary device which also allows for flexibility in the system. Response to Arguments Applicant’s arguments with respect to claim(s) 1-4, 6-9, 15-17, and 19 have been considered but are moot because the new ground of rejection does not rely on any reference applied in the prior rejection of record for any teaching or matter specifically challenged in the argument. Conclusion The prior art made of record and not relied upon is considered pertinent to applicant's disclosure: the remaining references are directed to anonymous attestation.",
"Applicant's amendment necessitated the new ground(s) of rejection presented in this Office action. Accordingly, THIS ACTION IS MADE FINAL. See MPEP § 706.07(a). Applicant is reminded of the extension of time policy as set forth in 37 CFR 1.136(a). A shortened statutory period for reply to this final action is set to expire THREE MONTHS from the mailing date of this action.",
"In the event a first reply is filed within TWO MONTHS of the mailing date of this final action and the advisory action is not mailed until after the end of the THREE-MONTH shortened statutory period, then the shortened statutory period will expire on the date the advisory action is mailed, and any extension fee pursuant to 37 CFR 1.136(a) will be calculated from the mailing date of the advisory action. In no event, however, will the statutory period for reply expire later than SIX MONTHS from the date of this final action.",
"Any inquiry concerning this communication or earlier communications from the examiner should be directed to MICHAEL J PYZOCHA whose telephone number is (571)272-3875. The examiner can normally be reached on Monday-Thursday 7:30am-5:00pm. Examiner interviews are available via telephone, in-person, and video conferencing using a USPTO supplied web-based collaboration tool. To schedule an interview, applicant is encouraged to use the USPTO Automated Interview Request (AIR) at http://www.uspto.gov/interviewpractice. If attempts to reach the examiner by telephone are unsuccessful, the examiner’s supervisor, Hadi Armouche can be reached on (571) 270-3618. The fax phone number for the organization where this application or proceeding is assigned is 571-273-8300. Information regarding the status of an application may be obtained from the Patent Application Information Retrieval (PAIR) system.",
"Status information for published applications may be obtained from either Private PAIR or Public PAIR. Status information for unpublished applications is available through Private PAIR only. For more information about the PAIR system, see https://ppair-my.uspto.gov/pair/PrivatePair. Should you have questions on access to the Private PAIR system, contact the Electronic Business Center (EBC) at 866-217-9197 (toll-free). If you would like assistance from a USPTO Customer Service Representative or access to the automated information system, call 800-786-9199 (IN USA OR CANADA) or 571-272-1000. /Michael Pyzocha/ Primary Examiner, Art Unit 2419"
]
| https://dh-opendata.s3.amazonaws.com/bdr-oa-bulkdata/weekly/bdr_oa_bulkdata_weekly_2021-10-17.zip | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Taylor, C. A verdict was rendered against defendant for damages on account of personal injuries sustained by plaintiff, and defendant appealed from an order denying its alternative motion for judgment notwithstanding the verdict or for a now trial. Seventh street, one of the principal thoroughfares of the village of Perham, is crossed at a right angle by the railway of defendant. Plaintiff, a young man in his twenty-second year at the time of the accident, was employed in a building on the southerly side of the railway, but resided upon the northerly side thereof. At the noon hour he left his place of employment and proceeded northward along the westerly side of Seventh street on his way to dinner. Before he reached the railway tracks a freight train, coming from the west, pulled across Seventh street and stopped, thereby blocking the crossing. Gates were provided to protect the crossing while trains were passing through, and these gates were closed. After waiting for four or five minutes, he passed through the gates and started to climb across the train between the cars. While he was doing so the train backed up and crushed his foot so that it was necessary to amputate the front portion of it. Ho brought this action to recover damages. It is clear that plaintiff, in attempting to climb between the cars at the time and in the manner that he did, was guilty of contributory negligence, and this is conceded. He bases his claim to recover solely upon the contention that the engineer was guilty of what is usually termed wilful and wanton negligence. One who knows that another *157is in a place of danger and fails to exercise ordinary care to avoid injury to him is liable in damages, although the other is in the position of peril by reason of his own negligence. But to charge a person with liability under such circumstances, it must appear that he had actual knowledge of the peril; and showing merely that he could have discovered it, had he been alert and watchful, is not sufficient. He is not required to keep a lookout for trespassers, nor for those who wrongfully take foolhardy risks. In the present case the'only question for determination is whether the evidence justifies a finding that the engineer knew that plaintiff was attempting to pass between the cars, and with that knowledge backed up the train without affording him a reasonable opportunity to save himself from injury. The train consisted of 51 cars and the conductor and brakemen were in the caboose at the rear eating their lunch. The conductor had directed the engineer to run through Perham without stopping, and to sidetrack at a station 11 miles further on, to permit a passenger train to pass. As they approached Perham the conductor discovered a hot-box upon one of the cars, and, in order to fix it, “pulled the air” and stopped the train. Having stopped, it was necessary to side- ■ track for the passenger which was following them. The engine had run some distance beyond the switch and it was necessary to back up. The engineer gave three short blasts of the whistle, the usual signal to back up, and then looked back toward the rear for the answering signal, in case it should be given from the southerly side of the train. The fireman -watched for it from the other or northerly side. Under the operating rules, the engineer could not back the train until he had received this signal. The rear brakeman alighted from the caboose on the southerly side, and the conductor and head brakeman on the northerly side. The conductor gave the answering signal to back up, which was reported to the engineer by the fireman. The engineer turned to his levers, reversed the engine, and began the backward niovement. He testified that he did not see the plaintiff and did not know that he was attempting to pass between the cars.. Plaintiff and several other persons were waiting for the train to move off the crossing. Plaintiff went up to the train, looked west *158toward the depot, and then east toward the engine. He states that he saw the engineer looking at him, and thereupon took hold of the ladder at the side of the car and got upon the coupling between the cars. The cars began to move and caught his foot. His statement that the engineer was looking at him is clearly his conclusion drawn from the fact that the engineer was looking out of the cab-window toward the rear. The distance between them is in dispute. The conductor testified that the car on which plaintiff was injured was the fifteenth from the engine as shown by the train sheet offered in evidence. Plaintiff did not know how many cars were between him and the engine, but, at a guess, placed the number at four or five. Other portions of his testimony indicate that the distance was, perhaps, greater than this estimate. The exact distance is not important; it was at least 200 feet. While plaintiff was near enough to see that the engineer was facing him, it is clear that he was not near enough to see the engineer’s eyes with such distinctness as to be able to identify the object at which he was gazing. Plaintiff estimates that the injury happened from two to six seconds after he started to pass between the cars. At first he stated, “I presume it did not take me more than two seconds to get in between there.” Subsequently he extended this period to five or six seconds. The length of time which would necessarily elapse after the engineer had started to reverse his engine and before the reverse motion could be imparted by the engine to the car upon which plaintiff was injured, as shown by the only evidence upon the question, would be at least 20 seconds. This would indicate that the engineer turned to his levers and initiated the reverse movement before plaintiff started to go between the cars. Plaintiff looked at the engineer only once. He did not look after taking hold of the ladder, and does not say that the engineer looked at him while he was in the act of climbing upon the car. In Wherry v. Duluth, M. & N. Ry. Co. 64 hlinn. 415, 67 N. W. 223, the plaintiff, Wherry, testified that before starting to go upon the cars he saw the engineer looking back at him out of the cab-window. He then attempted to climb through between the cars and was injured in much the same manner that plaintiff in the instant case was injured. The evidence failed to show that the engineer *159was looking at tbe time Wherry started to climb upon the car, and the court held that it was not sufficient to sustain a finding that the engineer saw him while he was doing so. The present case is within the rule there stated. Common experience teaches that men seldom, knowingly and wantonly, do an act likely to inflict injury upon another. The engineer had no reason to anticipate that plaintiff would take the risk of attempting to pass through a train upon the main track with the gates guarding the crossing closed; and was not required to watch for such attempts. In order to establish the charge that he backed the train in wilful and reckless disregard of the danger to plaintiff, it must be shown with reasonable certainty that he had knowledge of plaintiff’s perilous situation. The evidence is not sufficient to sustain a finding that the engineer had such knowledge, and the order appealed from is reversed and judgment directed for defendant. | 09-09-2022 | [
"Taylor, C. A verdict was rendered against defendant for damages on account of personal injuries sustained by plaintiff, and defendant appealed from an order denying its alternative motion for judgment notwithstanding the verdict or for a now trial. Seventh street, one of the principal thoroughfares of the village of Perham, is crossed at a right angle by the railway of defendant. Plaintiff, a young man in his twenty-second year at the time of the accident, was employed in a building on the southerly side of the railway, but resided upon the northerly side thereof. At the noon hour he left his place of employment and proceeded northward along the westerly side of Seventh street on his way to dinner. Before he reached the railway tracks a freight train, coming from the west, pulled across Seventh street and stopped, thereby blocking the crossing. Gates were provided to protect the crossing while trains were passing through, and these gates were closed. After waiting for four or five minutes, he passed through the gates and started to climb across the train between the cars.",
"While he was doing so the train backed up and crushed his foot so that it was necessary to amputate the front portion of it. Ho brought this action to recover damages. It is clear that plaintiff, in attempting to climb between the cars at the time and in the manner that he did, was guilty of contributory negligence, and this is conceded. He bases his claim to recover solely upon the contention that the engineer was guilty of what is usually termed wilful and wanton negligence. One who knows that another *157is in a place of danger and fails to exercise ordinary care to avoid injury to him is liable in damages, although the other is in the position of peril by reason of his own negligence. But to charge a person with liability under such circumstances, it must appear that he had actual knowledge of the peril; and showing merely that he could have discovered it, had he been alert and watchful, is not sufficient. He is not required to keep a lookout for trespassers, nor for those who wrongfully take foolhardy risks.",
"In the present case the'only question for determination is whether the evidence justifies a finding that the engineer knew that plaintiff was attempting to pass between the cars, and with that knowledge backed up the train without affording him a reasonable opportunity to save himself from injury. The train consisted of 51 cars and the conductor and brakemen were in the caboose at the rear eating their lunch. The conductor had directed the engineer to run through Perham without stopping, and to sidetrack at a station 11 miles further on, to permit a passenger train to pass. As they approached Perham the conductor discovered a hot-box upon one of the cars, and, in order to fix it, “pulled the air” and stopped the train. Having stopped, it was necessary to side- ■ track for the passenger which was following them. The engine had run some distance beyond the switch and it was necessary to back up.",
"The engineer gave three short blasts of the whistle, the usual signal to back up, and then looked back toward the rear for the answering signal, in case it should be given from the southerly side of the train. The fireman -watched for it from the other or northerly side. Under the operating rules, the engineer could not back the train until he had received this signal. The rear brakeman alighted from the caboose on the southerly side, and the conductor and head brakeman on the northerly side. The conductor gave the answering signal to back up, which was reported to the engineer by the fireman. The engineer turned to his levers, reversed the engine, and began the backward niovement.",
"He testified that he did not see the plaintiff and did not know that he was attempting to pass between the cars.. Plaintiff and several other persons were waiting for the train to move off the crossing. Plaintiff went up to the train, looked west *158toward the depot, and then east toward the engine. He states that he saw the engineer looking at him, and thereupon took hold of the ladder at the side of the car and got upon the coupling between the cars. The cars began to move and caught his foot. His statement that the engineer was looking at him is clearly his conclusion drawn from the fact that the engineer was looking out of the cab-window toward the rear.",
"The distance between them is in dispute. The conductor testified that the car on which plaintiff was injured was the fifteenth from the engine as shown by the train sheet offered in evidence. Plaintiff did not know how many cars were between him and the engine, but, at a guess, placed the number at four or five. Other portions of his testimony indicate that the distance was, perhaps, greater than this estimate. The exact distance is not important; it was at least 200 feet. While plaintiff was near enough to see that the engineer was facing him, it is clear that he was not near enough to see the engineer’s eyes with such distinctness as to be able to identify the object at which he was gazing. Plaintiff estimates that the injury happened from two to six seconds after he started to pass between the cars. At first he stated, “I presume it did not take me more than two seconds to get in between there.” Subsequently he extended this period to five or six seconds. The length of time which would necessarily elapse after the engineer had started to reverse his engine and before the reverse motion could be imparted by the engine to the car upon which plaintiff was injured, as shown by the only evidence upon the question, would be at least 20 seconds.",
"This would indicate that the engineer turned to his levers and initiated the reverse movement before plaintiff started to go between the cars. Plaintiff looked at the engineer only once. He did not look after taking hold of the ladder, and does not say that the engineer looked at him while he was in the act of climbing upon the car. In Wherry v. Duluth, M. & N. Ry. Co. 64 hlinn. 415, 67 N. W. 223, the plaintiff, Wherry, testified that before starting to go upon the cars he saw the engineer looking back at him out of the cab-window. He then attempted to climb through between the cars and was injured in much the same manner that plaintiff in the instant case was injured. The evidence failed to show that the engineer *159was looking at tbe time Wherry started to climb upon the car, and the court held that it was not sufficient to sustain a finding that the engineer saw him while he was doing so. The present case is within the rule there stated.",
"Common experience teaches that men seldom, knowingly and wantonly, do an act likely to inflict injury upon another. The engineer had no reason to anticipate that plaintiff would take the risk of attempting to pass through a train upon the main track with the gates guarding the crossing closed; and was not required to watch for such attempts. In order to establish the charge that he backed the train in wilful and reckless disregard of the danger to plaintiff, it must be shown with reasonable certainty that he had knowledge of plaintiff’s perilous situation. The evidence is not sufficient to sustain a finding that the engineer had such knowledge, and the order appealed from is reversed and judgment directed for defendant."
]
| https://www.courtlistener.com/api/rest/v3/opinions/7977036/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
CONTENTdm
Javascript Required
To experience full interactivity, please enable Javascript in your browser. | 10-07-2021 | [
"CONTENTdm Javascript Required To experience full interactivity, please enable Javascript in your browser."
]
| https://www.courtlistener.com/api/rest/v3/opinions/5116875/ | Legal & Government | https://huggingface.co/datasets/pile-of-law/pile-of-law |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.