September 25, 2016

Tenth Circuit: Unpublished Opinions, 8/25/2016

On Thursday, August 25, 2016, the Tenth Circuit Court of Appeals issued no published opinion and three unpublished opinions.

United States v. Frazier

Watson v. State of Missouri

United States v. Franco

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Unpublished Opinions, 8/24/2016

On Wednesday, August 24, 2016, the Tenth Circuit Court of Appeals issued no published opinion and five unpublished opinions.

United States v. Warren

Johnson v. Smith

Jazvin v. Colvin

Rodas v. Lynch

Portwine v. Commissioner of Internal Revenue

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Tenth Circuit: State of Residence Cannot Support Reasonable Suspicion

The Tenth Circuit Court of Appeals issued its opinion in Vasquez v. Lewis on Tuesday, August 23, 2016.

Peter Vasquez was driving eastbound on I-70 through Kansas at 2 a.m., traveling from Colorado to Maryland. Officer Lewis and Officer Jimerson could not read Vasquez’s temporary tag through his car’s tinted windows so they initiated a traffic stop. Jimerson observed blankets and a pillow in the front passenger seat and back seat of the car as he approached, and assumed something was obscured by the blankets in the back seat. Vasquez responded that there was no one else in the car. Jimerson took Vasquez’s license and proof of insurance and returned to the patrol car, where he told Lewis that Vasquez appeared nervous. Jimerson sent Lewis to gauge Vasquez’s nervousness and “get a feel for him.” Upon his return, Lewis responded that Vasquez looked “scared to death.” Jimerson checked the insurance and discovered that Vasquez had insurance for two newer vehicles. Suspecting that Vasquez was transporting illegal drugs, Jimerson called for a drug sniffing dog.

Lewis returned to Vasquez’s vehicle and asked where he worked, why he wasn’t driving the newer car, and why he didn’t have more belongings in his vehicle if he was moving. Eventually, Lewis issued a warning and started to walk away, then walked back and asked Vasquez if he could ask a few more questions. Lewis asked Vasquez if there were any illegal drugs in the vehicle, which Vasquez denied. Lewis then asked to search the vehicle but Vasquez refused. After he refused, Lewis detained Vasquez and searched the vehicle, aided by the drug dog. The search revealed nothing illegal.

Vasquez brought suit against the officers under 42 U.S.C. § 1983, arguing they violated his Fourth Amendment rights by detaining him and searching his car without reasonable suspicion. The district court initially denied the officers’ motion to dismiss, but after discovery, it granted the officers’ motion for summary judgment based on qualified immunity, holding that Vasquez could not show the officers violated a clearly established right. Vasquez timely appealed.

The Tenth Circuit remarked that it has repeatedly admonished that once an officer establishes a temporary tag is valid, the officer should explain the reason for the initial stop and let the motorist continue on his or her way. The officers argue their extended seizure was justified by reasons other than the temporary tag. The Tenth Circuit considered only whether the search and dog sniff were valid based on Vasquez’s challenge.

The officers contended their suspicions were valid because Vasquez was driving alone late at night; he was driving from Colorado, a “drug source area”; he was driving on I-70, a “known drug corridor”; he did not have enough items in his car to support his assertion that he was moving; the items in the backseat were obscured from view; he had a blanket and pillow in his car; he was driving an older car despite owning a newer one; there were fresh fingerprints on his trunk; and he seemed nervous. The Tenth Circuit was troubled by the officers’ justification that because Vasquez was from Colorado it should establish reasonable suspicion. The Tenth Circuit strongly cautioned that

It is wholly improper to assume that an individual is more likely to be engaged in criminal conduct because of his state of residence, and thus any fact that would inculpate every resident of a state cannot support reasonable suspicion. Accordingly, it is time to abandon the pretense that state citizenship is a permissible basis upon which to justify the detention and search of out-of-state motorists, and time to stop the practice of detention of motorists for nothing more than an out-of-state license plate.

The Tenth Circuit continued that the continued use of state of residence as justification is impermissible.

The Tenth Circuit also found that nervousness could not be used as justification, and found that the officers’ reasoning was contradictory at points. The Tenth Circuit similarly disregarded the argument that because Vasquez was driving on I-70 there should be suspicion, noting it would be suspicious if he were driving from Colorado to Maryland and not using I-70. The Tenth Circuit concluded the officers violated Vasquez’s constitutional rights by searching his car.

Turning to whether the right to be free of unconstitutional searches was clearly established at the time of the incident, the Tenth Circuit found precedent to support that it was. In fact, the Tenth Circuit found that the same officer, Officer Jimerson, was the subject of a strikingly similar case in which the Tenth Circuit found no reasonable suspicion for the driver’s detention.

The Tenth Circuit reversed the district court’s summary judgment and remanded for further proceedings. Judge McHugh dissented; he would not have found a constitutional violation and would have distinguished the other case involving Officer Jimerson.

Tenth Circuit: Unpublished Opinions, 8/23/2016

On Tuesday, August 23, 2016, the Tenth Circuit Court of Appeals issued three published opinions and two unpublished opinions.

Panicker v. City of Oklahoma City

O’Neill v. King

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Tenth Circuit: No Error where District Court Granted Summary Judgment Prior to Rule 26(f) Meeting

The Tenth Circuit Court of Appeals issued its opinion in Trans-Western Petroleum, Inc. v. United States Gypsum Co. on Tuesday, July 26, 2016.

United States Gypsum (USG) owns the oil and gas underlying 1,700 acres of land in Utah. USG entered into an oil and gas lease in 1995 that was subsequently assigned to Wolverine Oil & Gas Corp. and extended through August 17, 2004. In 2004, Douglas Isern, the owner and sole officer of Trans-Western, called USG and expressed interest in leasing the oil and gas rights when the Wolverine lease expired. Trans-Western sent USG a proposed five-year lease beginning August 17, 2014, and a check for $32,680. USG executed the lease on September 15, 2004 but did not cash the check.

On October 1, 2004, Wolverine protested the recording of the lease, claiming its lease remained valid. USG then rescinded the Trans-Western lease both orally and in writing. Trans-Western brought suit against Wolverine in 2006, seeking a declaratory judgment that Wolverine’s lease had expired on August 17, 2004. The district court determined that the lease had expired and granted the parties’ joint motion for a Rule 54(b) certification and stay. The Tenth Circuit affirmed on appeal. Thereafter, USG and Trans-Western executed a Ratification and Lease Extension for a primary five-year term beginning December 11, 2009.

In 2010, Trans-Western filed a second amended complaint, seeking a declaratory judgment that its lease with USG was valid and damages for breach of contract and breach of the covenant of quiet enjoyment. Trans-Western moved for partial summary judgment, which USG opposed. The district court granted partial summary judgment but denied attorney fees due to disputed material facts on damages. At a bench trial on damages, Trans-Western contended it was entitled to expectation damages because USG deprived it of the opportunity to assign. The district court disagreed, finding Trans-Western was entitled to only nominal damages based on the contract’s value on the date of the breach. The parties appealed.

The Tenth Circuit certified a question to the Utah Supreme Court regarding how expectation damages should be measured for the breach of an oil and gas lease. The Utah Supreme Court responded that consequential damages are those that are reasonably foreseeable by the parties at the time the contract was made. The court also held that the trial court may exercise its discretion to allow for the use of post-breach evidence to help calculate expectation damages.

The Tenth Circuit first evaluated USG’s cross-appeal, in which it argued that the district court should have granted its Rule 56(d) motion and deferred ruling on its partial summary judgment motion so that USG could conduct discovery. The district court determined that USG had a correct understanding of certain facts and constructive notice of others, thereby allowing the case to be resolved as a matter of law. In the district court, USG argued that extra time would allow it to discover evidence that Trans-Western was aware that USG was under a mistaken impression. On appeal, USG argued that discovery would have shown there was no meeting of the minds due to a lack of consideration from Trans-Western. The Tenth Circuit found these arguments different, and ruled that USG waived its argument. The Tenth Circuit further noted, though, that even if it were to consider the argument, USG did not meet the requirements for Rule 56(d) deferral because its allegations were vague and non-specific.

USG also argued the district court violated a scheduling order by granting summary judgment prior to the Rule 26(f) meeting. The Tenth Circuit found no abuse of discretion, noting that nothing suggested that USG sought to enforce the scheduling order and the order did not preclude motions practice. USG next argued the district court erred by granting Trans-Western’s motion for partial summary judgment because the lease failed for want of mutuality and consideration. The Tenth Circuit again disagreed. Trans-Western issued a bank draft in 2004, and USG had the ability to negotiate the draft from the moment of its delivery. Because the parties exchanged promises with adequate consideration, the district court did not err in granting partial summary judgment.

The Tenth Circuit affirmed the district court but remanded for calculation of damages consistent with the Utah Supreme Court’s opinion.

Tenth Circuit: Unpublished Opinions, 8/22/2016

On Monday, August 22, 2016, the Tenth Circuit Court of Appeals issued one published opinion and three unpublished opinions.

Collins v. Trans Union, LLC

United States v. James

Winkel v. Heimgartner

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Admiralty Law Allows Limitation of Liability in Personal Injury Cases

The Tenth Circuit Court of Appeals issued its opinion in In re Aramark Sports & Entertainment Services, LLC on Monday, August 1, 2016.

Three couples vacationing at Lake Powell rented a boat from an Aramark facility. High winds caused the boat to capsize, and two of the couples died. Anticipating a lawsuit, Aramark filed a petition in admiralty in Utah district court under the Limitation of Liability Act, 46 U.S.C. §§ 30501–12, which permits a boat owner to obtain a ruling exonerating it or limiting its liability based on the capacity or value of the boat and freight. The district court denied the petition and Aramark appealed.

After a brief discussion of admiralty law, the Tenth Circuit evaluated the relevant provisions of the Limitation of Liability Act. The Circuit remarked that there are three possible outcomes from a limitation petition: exoneration, limitation, or no limitation of liability. Exoneration applies where no negligence is shown. Where the claimant demonstrates negligence, the burden shifts to the owner to show lack of privity or knowledge, capping the damages at the value of the vessel or freight if the owner meets this burden. If the owner fails to show privity or knowledge, there is no limitation of liability.

In this case, Aramark filed its admiralty proceeding before any negligence claim had been brought. The estates and heirs of the two deceased couples filed answers and counterclaims for wrongful death. The third couple filed an answer and counterclaim seeking indemnification from Aramark in case it was held liable for the deaths of the other couples. At the bench trial, the district court found that Aramark’s negligence had “at least in part” caused the accident and that the negligence was within Aramark’s privity or knowledge. The court therefore denied Aramark’s petition for limitation.

The Tenth Circuit disagreed with the district court’s methodology. First, the Tenth Circuit determined that Aramark had no duty to determine the weather conditions prior to renting the boat, finding that the boat’s weather radio was sufficient to apprise the boaters of any changes in weather conditions. The Tenth Circuit therefore found that Aramark had no duty to stop renting out boats when the weather would potentially change throughout the day, because claimants had an independent duty of care. However, the Tenth Circuit found a duty of Aramark to warn potential renters of the boat’s limitations. Because the district court did not decide whether Aramark exercised care in warning renters of the boat’s limitations, the Tenth Circuit remanded.

The Tenth Circuit vacated the judgment of the district court and remanded for further proceedings.

Tenth Circuit: Unpublished Opinions, 8/19/2016

On Friday, August 19, 2016, the Tenth Circuit Court of Appeals issued one published opinion and seven unpublished opinions.

Celebrity Attractions, Inc. v. Oklahoma City Public Property Authority

In re Vickery: Diamond v. Vickery

Censke v. Fox

United States v. Lester

Staszak v. Lind

United States v. Moreno

Valles-Diera v. Lynch

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Lower-Rung Participant in RICO Association-in-Fact Enterprise Can Play Part in Carrying Out Affairs

The Tenth Circuit Court of Appeals issued its opinion in George v. Urban Settlement Services on Monday, August 15, 2016.

Plaintiffs Richard George, Steven Leavitt, Sandra Leavitt, and Darrell Dalton asserted claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) against Bank of America (BOA) and Urban Settlement Services, along with a promissory estoppel claim against BOA, based on the defendants’ allegedly fraudulent administration of the Home Affordable Modification Program (HAMP). BOA was required to participate in HAMP and comply with the program guidelines because it received funds pursuant to the Emergency Economic Stabilization Act of 2008. BOA contracted with third parties, including Urban, to administer its HAMP program. Each of the four plaintiffs had a home mortgage through BOA and applied for home loan modifications through HAMP, interacting with BOA and Urban representatives during the application process. Despite various misleading representations from BOA and Urban, the plaintiffs were unable to obtain HAMP relief, depriving them of opportunities to sell their homes or pay off other debts.

Plaintiffs brought RICO claims against BOA and Urban, alleging defendants formed a RICO enterprise with the common goal of wrongfully denying HAMP loan modifications to qualified homeowners by developing a scheme to obstruct and delay borrowers’ HAMP loan modification requests. Plaintiffs also asserted promissory estoppel claims against BOA, alleging BOA made clear promises in Trial Period Plan (TPP) documents and on its website promising permanent loan modifications to qualified borrowers who completed TPPs. BOA and Urban filed Rule 12(b)(6) motions to dismiss. BOA argued the plaintiffs failed to sufficiently allege a RICO enterprise distinct from BOA, while Urban argued they failed to sufficiently allege Urban participated in the enterprise. Both defendants argued plaintiffs failed to sufficiently allege a pattern of racketeering activity. The district court granted both defendants’ motions and dismissed plaintiffs’ claims.

On appeal, plaintiffs argued the factual allegations in their amended complaint state facially plausible RICO claims against BOA and Urban and the district court erred in dismissing the claims. The plaintiffs argued that because they alleged an association-in-fact enterprise consisting of independently owned and operated companies, the alleged enterprise is sufficiently distinct from BOA. The Tenth Circuit agreed. The plaintiffs contend the enterprise’s common purpose was to extend as few HAMP modifications as possible while appearing to comply with program rules. The district court concluded that Urban employees were BOA’s agents, who did nothing more than follow BOA’s instructions, but the Tenth Circuit disagreed. The Tenth Circuit found that plaintiffs sufficiently showed that BOA and Urban formed an association-in-fact enterprise, and that by orchestrating and operating a scheme to deny HAMP modifications, BOA and Urban furthered the enterprise’s scheme to delay modifications.

The district court also concluded that plaintiffs failed to show Urban’s participation in the enterprise. The district court characterized Urban as an outside entity having no participation in BOA’s enterprise. The Tenth Circuit noted that this mischaracterization failed to appreciate that BOA was not the alleged enterprise. Plaintiffs alleged Urban was a lower-rung participant knowingly carrying out BOA’s orders, and the Tenth Circuit agreed, noting that even a bit part participant can play some part in carrying out the enterprise’s affairs.

Defendants alternatively argued that the Tenth Circuit could affirm the district court because plaintiffs failed to show a pattern of racketeering activity. Plaintiffs alleged several acts of mail and wire fraud, but defendants argued plaintiffs failed to show particularity. As to BOA, the Tenth Circuit disagreed, noting that plaintiffs had illustrated several conversations with various BOA employees about their HAMP modifications. As to Urban, the Tenth Circuit found it was a close call. Plaintiffs argued that they were unable to show particularity without further discovery, because Urban employees frequently held themselves out as BOA employees. The Tenth Circuit found this sufficient to survive a motion to dismiss. The Tenth Circuit reversed the district court’s dismissal of plaintiffs’ RICO claims and remanded for further proceedings.

Turning to the promissory estoppel claims against BOA, the Tenth Circuit again found the district court erred. Plaintiffs described BOA’s unambiguous promises to provide permanent HAMP modifications for borrowers who complied with their TPPs. The district court found that BOA made no promise, but the Tenth Circuit determined this to be in error. Screenshots of the BOA website and TPP documents unambiguously promised borrowers permanent modifications if they complied with their TPPs. The Tenth Circuit found this sufficient to satisfy the first step of the promissory estoppel analysis. Because the district court did not address the remaining factors, the Tenth Circuit remanded for further proceedings.

The Tenth Circuit reversed the district court’s dismissal of plaintiffs’ RICO and promissory estoppel claims, and remanded for further proceedings consistent with its opinion.

Tenth Circuit: Unpublished Opinions, 8/18/2016

On Thursday, August 18, 2016, the Tenth Circuit Court of Appeals issued no published opinion and three unpublished opinions.

Wallin v. Miller

Glaser v. Raemisch

United States v. Faure

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Tenth Circuit: No Constitutional Violation Where Court Denied Counsel’s Request for Review of Classified Documents

The Tenth Circuit Court of Appeals issued its opinion in United States v. Lustyik on Monday, August 15, 2016.

Robert Lustyik was an FBI agent who tried to help his friend and business partner, Michael Taylor, with Taylor’s security business, American International Security Corporation (AISC). The Department of Defense offered AISC a contract in 2007 to provide training to Afghan Special Forces, and in 2010 the United States began investigating AISC for fraud and money laundering related to the 2007 DOD contract. The United States filed a civil forfeiture action against AISC’s assets in 2011, resulting in the seizure of more than $5 million from Taylor’s bank account. Lustyik attempted to impede the government’s investigation of Taylor by using his status as an FBI agent, including trying to establish Taylor as a confidential source. Taylor assured Lustyik that he would receive financial compensation for his assistance.

In 2012, a federal grand jury indicted Lustyik, Taylor, and their middle-man on charges of conspiracy, honest services wire fraud, obstruction of justice, and obstruction of agency proceedings. The United States disclosed over one million pages of unclassified discovery, plus 10,000 pages of classified information. Despite revocation of his security clearance, Lustyik was allowed to review nearly 7,000 pages of the classified material. Through his counsel, Lustyik filed a Classified Information Procedures Act (CIPA) motion, identifying which classified information they wished to present at trial. The court denied Lustyik’s motion after an ex parte meeting with defense counsel. During the first few days of Lustyik’s trial, Lustyik pleaded guilty to all eleven counts with no plea agreement. After pleading guilty but before sentencing, Lustyik’s lead counsel withdrew and the court appointed new counsel. Lustyik filed a motion to obtain security clearance for the new attorney, which a magistrate denied.

At sentencing, the court addressed counsel’s inability to access the classified information, noting that it would not add to counsel’s ability to argue for his client. Defense counsel presented significant mitigating evidence and obtained a downward variance from the Guidelines range of 151 to 188 months, and Lustyik was sentenced to 120 years imprisonment. He appealed, arguing his constitutional rights were violated when his counsel was denied access to the confidential materials.

The Tenth Circuit evaluated Lustyik’s claim of a Sixth Amendment violation under de novo review. The Circuit noted that the right to counsel is presumptively violated only where the circumstances are so likely to prejudice the accused that the cost of litigation is unjustified. Lustyik claimed his counsel’s limited ability to review classified materials fatally undercut his effectiveness and prevented him from adequately testing the government’s position. The Tenth Circuit disagreed, finding the presumption of prejudice inapplicable. Because Lustyik failed to show that the district court’s denial created a constitutional violation, the Tenth Circuit reviewed for abuse of discretion and found none. The Tenth Circuit found ample record support for the district court’s conclusions regarding the classified information.

The government conceded on appeal that Lustyik’s sentence may have been illegal, so the Tenth Circuit remanded for sentencing clarification. The Tenth Circuit otherwise affirmed the denial of security clearance.

Tenth Circuit: Unpublished Opinions, 8/17/2016

On Wednesday, August 17, 2016, the Tenth Circuit Court of Appeals issued no published opinion and four unpublished opinions.

United States v. Teague

United States v. Alonzo-Garcia

Retiree, Inc. v. Anspach

Kirk v. Flores

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.