Summaries of selected Tenth Circuit Court of Appeals Opinions appear on a space-available basis. The summaries are prepared for the Colorado Bar Association (CBA) by Katherine Campbell and Frank Gibbard, licensed Colorado attorneys. They are provided as a service by the CBA and are not the official language of this Court. The CBA cannot guarantee the accuracy or completeness of the summaries. Full copies of the Tenth Circuit decisions are accessible from the CBA website: www.cobar.org (click on "Opinions/Rules/Statutes").
No. 07-3298. U.S. v. Orduna-Martinez. 04/03/2009. D.Kan. Judge Henry. Search and Seizure—Probable Cause—Obscured License Plate Decal.
Defendant entered a conditional guilty plea to possession of cocaine with intent to distribute, reserving the right to appeal the district court’s denial of his motion to suppress evidence found during a search of his vehicle. A Kansas state trooper stopped his vehicle after he noticed that an "Ohio State Buckeyes" metal tag bracket had partially obscured the license plate’s annual registration decal. It also covered the top part of the "O" and "h" in the portion of the license plate reading "Ohio." The trooper pulled within fifty feet of defendant’s vehicle, but could not read one of the two digits on the decal stating the expiration year of the plate. Because the plate was from Ohio, not Kansas, the trooper could not determine from the color of the decal whether it was up-to-date. After stopping the vehicle, the trooper moved the bracket to one side and determined that the plate was in fact up-to-date. The stop later led to the discovery of approximately twenty-five kilograms of cocaine, which was hidden in a compartment in the back of the vehicle.
On appeal, defendant argued that the trooper lacked probable cause or reasonable suspicion to stop his vehicle, because obstruction of a registration decal is not a crime under Kansas law and because the state name (Ohio) was too minimally obscured to constitute a violation of Kansas law. He contended that the Kansas statute prescribing standards for the decals did not require them to be legible, or even visible, and that the Kansas statute that requires license plates in general to be clearly legible has been interpreted to mean legible to an officer following at a safe distance. Defendant reasoned that registration decals are too small to be legible even at a safe distance, so the legibility requirement must not apply to decals.
The Tenth Circuit rejected these arguments. It noted that the standard is whether the detaining officer reasonably suspected that the driver had violated the law. The Kansas courts have interpreted its statutes to require that vehicle tags be legible and not obscured, even if vehicles are registered in other states. Read as a whole, the Kansas statutes require the date on the registration sticker to be clearly visible, free from foreign materials, and clearly legible. Under those statutes, a "license plate" includes an annual registration decal. Cases determining that plates were not legible because they could not be read by an officer at a safe distance did not define the outer limits of "legibility." A decal is not "clearly legible," however, where it is obscured by a metal bracket and can be read only by looking behind the frame.
Because the obstruction of the registration decal justified the stop, the court did not need to determine whether the partial obstruction of the state’s name also would have justified it. Accordingly, the Circuit affirmed defendant’s conviction.
No. 07-8086. U.S. v. Serafin. 04/14/2009 D.Wyo. Judge Tymkovich. Crime of Violence—Possession of Unregistered Firearm.
The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) identified defendant as an individual who might be involved in the illegal weapons trade. Accordingly, ATF agents prepared a "sting" operation to arrange a weapons purchase from defendant. Defendant met with an ATF agent and sold him a disassembled assault rifle, after which he was arrested. Agents searched him and found a pistol; after searching his residence, they found another assault rifle and a silencer. He pled guilty to possession of an unregistered firearm. A jury convicted him of possessing a firearm in furtherance of a crime of violence—namely, his possession of the unregistered disassembled assault rifle.
On appeal, defendant argued that possession and transfer of an unregistered weapon did not qualify as a "crime of violence" within the statutory definition. He contended that the possession of the disassembled rifle without a commensurate intent to use the weapon in the course of committing another crime did not raise the requisite statutory risk of force during the course of the possession. The Tenth Circuit agreed. A "crime of violence" is defined as one that by its nature involves a substantial risk of the use of physical force against the person or property of another in the course of committing the offense. The U.S. Supreme Court has interpreted language containing similar provisions to include only offenses where there is a risk that the use of physical force against another might arise during the course of committing the offense.
Mere possession of an unregistered weapon does not "by its nature" involve a substantial risk that physical force will occur in the course of committing the offense. Possession of a firearm can occur in an array of nonviolent circumstances. Even though the rifle involved here had an unlawfully shortened barrel, that did not inherently implicate the use of force against others. Also, it was not inevitable that such unregistered possession would result in violence. Even though a lengthy possession might increase the risk of violence, this does not mean possession is necessarily violent, because the violation can occur even from a momentary possession. Also, the risk of force is not implicated in the possession of the weapon itself, but in the possibility that a defendant might commit another crime to obtain or retain possession of it, which is not the same as mere possession. Accordingly, the Circuit reversed defendant’s conviction.
Nos. 07-4180, 07-4182 & 07-4283. U.S. v. Egbert. 04/14/2009. D.Utah. Judge Seymour. Conspiracy—Relevant Conduct—Grouping of Conspiracy Counts—Serious Bodily Injury—Enhancement for "Organizer of Leader" Role.
Defendants, who were members of a white separatist organization, were convicted of conspiracy to interfere with civil rights and aiding and abetting the interference with a federally protected activity. The first incident occurred at a bar, where defendants punched and kicked a bartender of Mexican descent and used racial slurs against him. The assault lasted approximately one minute and left the bartender bruised and with a bloody nose, for which he did not seek medical attention. The second incident occurred months later, when defendant Massey helped another man beat a Native American man until he stopped moving.
Defendants Egbert and Walker contended that the second assault should not have been considered relevant conduct for purposes of calculating their base offense levels, because they did not participate in it and there was insufficient evidence that the assault was part of the larger conspiracy. The Tenth Circuit disagreed. Defendants were convicted of conspiracy to interfere with civil rights that was ongoing during the time period of the second assault, and they did not challenge this conspiracy conviction. The jury’s general verdict established that they had an agreement to harm "non-white" persons.
The second assault was related to the conspiracy to injure and intimidate non-whites, and it followed the same pattern as the first assault. When told about the second assault the next day, Walker responded "good job," and Egbert laughed. The second assault was a foreseeable part of the conspiracy.
Walker and Massey challenged the district court’s decision to enhance their sentences by treating the overt acts listed in the first count of the indictment as two conspiracy counts. However, the Sentencing Guidelines are clear that a conviction on a count charging conspiracy to commit more than one offense should be treated as if the defendant had been convicted on a separate count of conspiracy for each offense the defendant conspired to commit. The district court properly grouped the conspiracy offense from count I with the underlying substantive offense from count II, because both involved the same act and victim from the first assault. The court properly treated the conspiracy to commit the second assault as a separate count for sentencing purposes.
Walker and Massey also challenged the district court’s finding that the victim of the second assault suffered serious bodily injury, a finding that increased their base offense level by seven levels. The Sentencing Guidelines define "serious bodily injury" as:
injury involving extreme physical pain or the protracted impairment of a function of a bodily member, organ, or mental faculty; or requiring medical intervention such as surgery, hospitalization, or physical rehabilitation.
The victim of the second assault was never located. Testimony at trial stated that the victim appeared to be unconscious after the assault and was bleeding from his head. Nevertheless, the Circuit determined that the showing for serious bodily injury had not been made. Even if the victim lost consciousness, there was no way to determine whether the injury was "protracted." Accordingly, the Circuit reversed the finding of serious bodily injury.
Walker challenged the four-level enhancement he received for his role as an "organizer or leader" in the criminal activity. The Circuit held that the mere fact that Walker was a leader in the white separatist organization did not prove that he was a leader with respect to the criminal enterprise. Also, the fact that he suggested committing the offense did not demonstrate a leadership role. Accordingly, the Circuit reversed the application of the leadership enhancement to Walker.
No. 08-4124. U.S. v. Solis-Aboytes. 04/17/2009. D.Utah. Judge Briscoe. Guideline Sentencing—"Safety Valve" Provision—Eligibility—Prior Probationary Period Modified Nunc Pro Tunc.
Defendant pled guilty to one count of possession with intent to distribute methamphetamine. At sentencing, he hoped to qualify for the "safety valve" sentencing provision available to offenders without an extensive prior criminal history. However, an amendment to his presentence report (PSR) showed that he had a 2002 misdemeanor conviction in California state court, with a thirty-six-month probation sentence. He received one criminal history point for this prior conviction and two more points for having committed the methamphetamine offense while on probation. Three criminal history points placed defendant in criminal history category II, making him ineligible for safety-valve relief.
Following receipt of the PSR addendum, defendant’s counsel obtained the services of a California attorney, who obtained an order from the California court terminating, nunc pro tunc, defendant’s probation prior to the date on which the methamphetamine offense occurred. Defendant believed that this would make him eligible for safety-valve relief. Although the PSR was again amended, removing the two criminal history points for commission of an offense while on probation, the district court denied safety-valve relief, finding that defendant’s actions in shortening his California probationary period for reasons unrelated to his innocence or to a legal error was not a valid basis for not counting the prior sentence for criminal history purposes. Accordingly, it sentenced him to the mandatory minimum sentence under the statute.
On appeal, defendant contended that the nunc pro tunc order terminating his probation should have resulted in his being placed in criminal history category I, making him eligible for safety-valve relief. The Tenth Circuit disagreed. The California sentence had not been expunged, nor had it been set aside because of a finding of innocence or legal error. Instead, it had been set aside solely to allow him to qualify for safety-valve relief. Under federal law, this meant that the conviction continued to "count" for sentencing purposes. The Circuit therefore affirmed defendant’s sentence.
No. 08-9001. Jones v. Comm’r of Internal Revenue. 03/27/2009. U.S. Tax Court. Judge Baldock. Tax—McVeigh Discovery Material—Charitable Donation—Capital Asset.
Petitioner Jones (taxpayer) served as lead defense counsel in the Oklahoma City bombing trial. He took an income tax deduction for a charitable donation of discovery material he had acquired while representing defendant Timothy McVeigh. Taxpayer donated the voluminous material to the Center for American History at the University of Texas, after an expert appraised its value at $294,877. The Internal Revenue Service issued the taxpayer a notice of deficiency after determining that the deduction was improper. Taxpayer filed a petition in the tax court seeking a redetermination. The tax court ruled that taxpayer did not own the donated material, so could not deduct the donation. In the alternative, the tax court held that the discovery material was not a "capital asset," so the amount taxpayer could claim as a deduction was equal to his basis in the donated material, which was zero. Taxpayer appealed.
The Tenth Circuit held that the discovery material was not a capital asset. The value of a charitable donation of property, and thus the value that can be deducted from an income tax return, is reduced by the amount of gain that would not have been long-term capital gain if it had been sold at fair market value. Therefore, unless the property is a capital asset providing long-term capital gain, the property qualifies as ordinary income and a taxpayer’s deduction is limited to his or her cost or basis in the property. Consequently, if the taxpayer has no basis in the property, the gross and net return on the hypothetical sale would be the same—the full sale price. In turn, the deduction for donating that property is reduced by the property’s entire value, leaving the taxpayer with no deduction at all.
To qualify for a deduction for a long-term capital gain, the taxpayer must hold the property for more than one year and the property must meet the statutory definition of a capital asset. The Internal Revenue Code’s definition of a "capital asset" excludes property described as a "letter, memorandum, or similar property" that is "prepared or produced" for a taxpayer. The Circuit held that the discovery material fell within this exclusion. Consequently, taxpayer’s deduction was limited to his basis in the discovery material. Because he had no basis in it, he was precluded from claiming any income tax deduction for his charitable donation. The tax court’s judgment was affirmed.
Nos. 07-6063 & 07-6119. Whittenburg v. Werner Enterprises Inc. 04/03/2009. W.D.Okla. Judge Gorsuch. Improper Closing Argument—Personal Injury Case—Fictitious Admissions—Vituperative and Unprovoked Attacks on Defendant and Counsel—No Curative Instructions—Large Jury Verdict.
Plaintiff was injured when his pickup truck collided with a stalled tractor-trailer owned by defendant. Plaintiff sued. A jury ultimately returned a verdict assessing defendant’s negligence at 75 percent and plaintiff’s damages at $3.2 million. Defendant appealed.
The Tenth Circuit reversed and remanded for a new trial because of the pervasive and improper remarks by plaintiff’s counsel in his closing argument to the jury. The bulk of the argument asked the jury to imagine a letter plaintiff’s daughters might have received following the accident. The imaginary letter placed before the jury fictitious admissions never uttered by defendant, such as: "Once stuck on the highway, our drivers will ignore the law, and they will ignore our company procedures, and recklessly set a trap for your dad."
Plaintiff’s attorney also launched vituperative and unprovoked attacks on defendant and its counsel for defending the lawsuit by including in the hypothetical letter such remarks as:
[W]e will try to avoid full responsibility for what happened. We will make excuses, and our lawyers will try to blame the collision on your dad. . . . We will hire our own lawyers who will try to take your dad’s life apart.
Even though defendant’s attorney lodged contemporaneous objections to this argument, it went unrebuked. In addition, the size of the verdict indicated that the jury was swayed by the improper argument. The Circuit held that the permissible limits of closing argument were exceeded, and reversed and remanded for a new trial.
No. 07-1440. Haynes Trane Service Agency, Inc. v. American Standard, Inc. 04/07/2009. D.Colo. Judge Hartz. Damages—Fraud—Determining Amount Not Too Complicated for Jury—Liability Issues Affected Damages Amount—New Trial Required.
Plaintiff operated a Denver-based franchise of defendant company, Trane, which manufactured heating and air conditioning products. A dispute arose when plaintiff cheated Trane by abusing a rebate program under which Trane would reduce the price it charged retailers. Plaintiff sued, claiming Trane illegally terminated his franchise and breached fiduciary duties. Trane filed counterclaims alleging fraud based on abuse of the rebate program and unjust enrichment. Trane also sought an equitable accounting. Eventually, after a second jury trial and disposition of some claims by the district court, judgment was entered for Trane on its fraud claim. The district court appointed a special master for an accounting to determine damages, finding that the calculation of damages was too complicated for a jury. Before the special master heard any evidence, however, the parties stipulated that Trane’s damages were $1.77 million. Both parties appealed.
The Tenth Circuit affirmed the judgment, except for the order appointing a special master to calculate Trane’s damages on its fraud claim. This claim was based on Trane’s evidence that plaintiff knowingly submitted false claims for rebates and then schemed to cover up those submissions by creating phony invoices. The Circuit held that the Seventh Amendment right to a jury precluded having a special master determine damages. Moreover, the data could be summarized for the jury’s consideration. The Circuit then concluded that the damages issue could not be separated from the merits of the liability claim, because Trane claimed damages in four categories and plaintiff made distinct arguments as to why each category was not fraudulent. The jury’s finding of fraud did not identify which categories were fraudulent, so a new jury could not calculate damages without resolving which categories were fraudulent and which, if any, were not. Therefore, a new trial was required on Trane’s entire fraud claim. The district court’s judgment was affirmed in part and reversed in part, and the case was remanded.