Petition for Writ of Certiorari — Zehner v. Smith, 118 S. Ct. 1513 (1998) (No. 97-1286)
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IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1997
In Re: Joseph Smith & Sons, Inc., Debtor.
FRED G. ZEHNER,
Petitioner,
Vv.
ROBERT PAUL SMITH, ET AL
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
Fred G. Zehner
Pro Se
1990 Holland Cliff Road
Huntingtown, MD 20639
(410) 257-3751
i
QUESTION(S) PRESENTED
I. SPECIAL CASE & STRICT LIABILITY
The proceedings in this matter have so far departed from
the accepted and usual course of judicial proceedings, and
sanctioned such a departure by the lower court, as to call for an
exercise of this Court’s supervisory power. All parties involved
are in the business of recycling and shipping/disposal of
dangerous, toxic and hazardous materials. Because the handling
of toxic hazardous waste is involved, strict liability is an issue
where utmost care is required because of the great risk to the
public.
Il. ABUSE OF PROCESS
A. Did the U.S. Court of Appeals for the Fourth Circuit
err in its determination that the facts material to resolution of this
appeal are not in dispute?
B. Did the U.S. Court of Appeals for the Fourth Circuit
err in its determination that the Appellant failed to meet his
burden of proof supporting his claim as to abuse of process?
Ill. DENIAL OF DUE PROCESS
A. Did the Judge err in his determination to conclude the
bankruptcy hearing prior to allowing the testimony of all
witnesses and experts present as indicated by counsel would be
called at such hearing, thereby denying Appeliant due process?
B. Was the appellant denied due process by the fact that:
(i) he has been and continues to be denied a copy of the tape of
the bankruptcy hearing, even though the Fourth Circuit made
ii
their hearing tapes available immediately without question, yet
bankruptcy court continues to refuse tapes, and (ii) that the court
record has been altered in a major way?
C. Was the appellant denied due process by the fact that
he lost his jury trial because of Smith and his attorney’s clear
perjury to the trial court to delay this case until Smith found a
vehicle to evade the set jury trial?
IV. PERJURY/FRAUD UPON THE COURT
A. Did the Judge err when he referred to Appellant’s
lack of pursuit of discovery sanctions remedies at the lower court
level, when the record clearly reflects such remedies were in fact
pursued by Appellant?
B. Did the Trial Court err in its determination to deny
appellant’s requests for discovery sanctions for Appellee’s refusal
to cooperate with discovery based upon Appellee’s perjury and
fraud upon the court by falsely indicating that the all important
non-existing documents had been provided to Appellant?
V. UNCLEAN HANDS
A. Did the court err in its decision in not finding against
the Appellee based upon the doctrine of unclean hands, in that
there was fraud in the possession of Smith’s main witness false
manufactured evidence dated 47 days before the lawsuit was filed
and that Appellee was dismissed from a mutual business
association for attempting to involve Appellant Zehner in a
mutually beneficial and illegal enterprise?
— er
iii
LIST OF PARTIES
All parties do not appear in the caption of the case on the
cover page. A list of all parties to the proceeding in the court
whose judgment is the subject of this petition is as follows:
ROBERT PAUL SMITH
2001 Kenilworth Avenue
Beaver Heights, MD 20743
JOSEPH SMITH & SONS, INC.
2001 Kenilworth Avenue
Beaver Heights, MD 20743
RICHARD R. PAGE WYROUGH, ESQUIRE
Cain & Wyrough, P.C.
14336 Old Marlboro Pike
Upper Marlboro, MD 20772
FRED G. ZEHNER
1990 Holland Cliff Road
Huntingtown, MD 20639
Contaminated Soil Consultants, Inc.
c/o BRUCE M. MARSHALL, ESQUIRE
Durrette, Irvin & Bradshaw, P.C.
600 East Main Street, 20th Floor
Richmond, VA 23219
CLAUDE B. SHAFFER
10504 Belmont Blvd.
Lorton, VA 22079
iv
TABLE OF CONTENTS
PAGE
CR Re > 6 Ges FE SS 2
Te ic ae Bei CAS 2
CONSTITUTIONAL AND STATUTORY
Pe ee Eee i oc a a bn eh wk ORR 2
SEAT eee Gh RTE «ong cv ncccc ee teen es 3
REASONS FOR GRANTING THE WRIT .......... 19
NS 8 os uc ce 8 eae hoes oa 30
INDEX TO APPENDICES
APPENDIX A: Decision of the United States Court of
Appeals for the Fourth Circuit (August 5, 1997) A-1
APPENDIX B: Decision of the United States District
Court for the District of Maryland, Baltimore Division
(October 15, 1996) A-7
APPENDIX C: Decision of the United States Bankruptcy
Court for the District of Maryland (October 24, 1995) A-17
APPENDIX D: Order of United States Court of Appeals
for the Fourth Circuit Denying Rehearing
(September 17, 1997) A-20
Vv
APPENDIX E: EPA Project Summary -- PCB, Lead,
and Cadmium Levels in Shredder Waste Materials:
A Pilot Study
APPENDIX F: William Taylor Deposition
APPENDIX G: Smith Answers to Interrogatories
APPENDIX H: Smith’s Opposition to Motion for
Sanctions
APPENDIX I: Transcript of Motions Hearing,
Circuit Court for Prince George’s County
(June 11, 1993)
APPENDIX J: Docket Entries, Circuit Court for
Prince George’s County, Maryland
APPENDIX K: Deposition of Robert Paul Smith
(October 13, 1995)
APPENDIX L: United States Bankruptcy Court
Hearing, October 17, 1995 (References to
bifurcation)
A-32
A-34
A-43
A-56
vi
TABLE OF AUTHORITIES CITED
227 Md. 8, 174 A.2d 768 (1961) 27
STATUTES AND RULES
U.S. CONST., amend. V 18, 24, 25
U.S. CONST., amend. VII 26
U.S. CONST., amend. XIV, Section 1 18, 24, 25, 26
MD. ANN. CODE of 1957, Rules of Professional
Conduct, §§ 1.6, 1.16, 3.3, 3.4, and 4.1 28
OTHER
None
No.
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1997
In Re: Joseph Smith & Sons, Inc., Debtor.
FRED G. ZEHNER,
Petitioner,
ROBERT PAUL SMITH, ET AL,
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
Petitioner respectfully prays that a writ of certiorari issue to
review the judgment below.
2
OPINIONS BELOW
The opinion of the United States Court of Appeals appears at
Appendix A to the petition and is unpublished. The opinion of
the United States District Court appears at Appendix B to the
petition and is unpublished.
JURISDICTION
The date on which the United States Court of Appeals
decided by case was August 5, 1997. A timely petition for
rehearing was denied by the United States Court of Appeals on
the following date: September 17, 1997, and a copy of the order
denying rehearing appears at Appendix D.
The jurisdiction of this Court is invoked under 28 U.S.C. §
1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
THE CONSTITUTION OF THE UNITED STATES OF
AMERICA, Amendment V
The Fifth Amendment to the United States Constitution
provides in pertinent part:
No person shall be ... deprived of life, liberty,
or property, without due process of law ...
THE CONSTITUTION OF THE UNITED STATES OF
AMERICA, Amendment VII
The Seventh Amendment of the United States Constitution
provides in pertinent part:
3
In suits at common law, where the value in
controversy shall exceed twenty dollars, the
right of trial by jury shall be preserved ...
THE CONSTITUTION OF THE UNITED STATES OF
AMERICA, Amendment XIV, Section 1
Section 1 of the Fourteenth Amendment of the United States
Constitution provides in pertinent part:
Section 1. ... No State shall make or enforce any
law which shall abridge the privileges or
immunities of citizens of the United States; nor
shall any State deprive any person of life,
liberty, or property, without due process of
law; mor deny to any person within its
jurisdiction the equal protection of the laws....
STATEMENT OF THE CASE
I. BACKGROUND
Petitioner, Fred G. Zehner (hereinafter referred to as
"Zehner"), has incurred substantial damages as a result of the
lawsuit initiated against him by Respondents, Joseph Smith &
Sons, Inc. and Paul Smith (hereinafter referred to as "Smith"),
and his attempts to defend the same. The initial Complaint was
filed in the Circuit Court for Prince George’s County, Maryland
(hereinafter referred to as "trial court") on June 8, 1992. The
parties in this case are involved in various aspects of the
recycling and disposal of toxic hazardous waste business, where
strict liability applies. See Appendix E for an EPA Project
Summary containing further information regarding
polychlorinated biphenyls (PCBs), etc.
4
Fred G. Zehner is a permanently disabled Korean War
Veteran, a life-long resident of the State of Maryland, and an
outstanding and recognized man in his community. Mr. Zehner
has received numerous awards for business and farming, has an
untainted reputation, and was considered a "pillar of the
community."
Contaminated Soil Consultants, Inc. (hereinafter referred to
as "CSCI"), begun in 1991 by Fred G. Zehner, was a full service
recycling company with four divisions (including fluff,
contaminated earth, pump and tank, and an asphalt and
environmental assessment division). CSCI was operated by Fred
Zehner for the benefit of the public, in that Zehner took nothing
as owner from CSCI for running the business, even when the
company was showing substantial profit. Zehner was the owner,
sole stockholder and holder of all offices of the corporation.
CSCI’s purpose was to dispose of fluff at the lowest possible
cost, and help clean up the environment as and when needed in
numerous fields, as to EPA specifications so that Zehner’s fellow
man did not have to live with toxic hazardous waste and out of
harm’s way.
Fluff, a by-product of recycling, is a hazardous waste product
with up to 760 parts per million ("ppm") PCB’s. See the EPA
Project Summary (App. E) where the conclusion states that "PCB
concentrations in fluff ranged from 0.67 to 760 ppm" (over 15
times the allowable limit). Per government specifications, over
50 ppm is hazardous, including other extremely hazardous
substances, such as lead, cadmium, arsenic, chromium,
elevated levels of hydrocarbons (petroleum), PCBs, and
many others, placing it under the EPA strict liability laws.
iesineeienaeaaitiaiia
5
In his lawsuit, Smith knowingly referred to a certain PCB
test with test results of "700 parts per million" rather than "700
parts per billion," as the test result showed and as discussed in
the deposition testimony of Joseph Smith. During his
deposition, Smith admitted that the test he had referred to in
his lawsuit was only .7 parts per million PCBs, and was not
harmful to Joseph Smith & Son, nor was it hazardous as he had
claimed with over 50 parts per million when it becomes
hazardous. (App. K). Therefore, the whole basis for his
lawsuit never existed.
From January 1991 until November 1991, CSCI had Smith’s
fluff approved as requested by Smith into CSCI air space at
Browning-Ferris Industries, a cooperative business arrangement.
That is where the 700 parts per billion honest PCB test
originated. However, Smith falsely stated the test to be 700
"parts per million" (or 1,000 times larger) rather than "parts per
billion" to knowingly destroy his competitor, Zehner. Smith
knew that the "700 ppm" test did not exist, as evidenced by
his own deposition testimony. (App. K).
In November 1991, Zehner terminated his business agreement
with Smith because Smith tried to get Zehner into an illegal deal
involving contaminated tanks which would have allowed
hazardous materials into Smith’s plant, where fluff was being
generated, thereby violating his approval agreement as to the
quality of the fluff. This action changed Smith and CSCI from
cooperators into direct competitors. Subsequently, CSCI
(directly and through other recyclers such as Davis and
Conservit) outbid Smith and was awarded landfill site contracts,
thereby confirming that CSCI/Zehner were direct competitors
with Smith (the first element of abuse of process).
But Smith still pressed the lawsuit for thirty-five (35)
months while Zehner vigorously fought to defend CSCI.
Smith refused to respond to discovery and continued to press the
case by perverted means such as repeated perjury and fraud upon
the court by and through his officer of the court, attorney
Wyrough.
ll. HISTORY OF CASE
A. Circuit Court for P.G. County, Maryland
On June 8, 1992, Smith recklessly (because in his deposition
he clearly admitted that he misread the PCB test which is the
basis for this lawsuit) filed suit in the Circuit Court for Prince
George’s County, Maryland against Fred Zehner (hereinafter
referred to as "Zehner") and numerous other defendants, claiming
multi-billion dollar ($4,550,000,000) damages resulting from
alleged acts of conspiracy, fraud, loss of business, etc. by Zehner
and the other defendants in the Complaint (which was introduced
as evidence and in which Smith stated 30 times that he was a
competitor of Zehner). The Complaint contained numerous
100% false statements and allegations. Smith has continually
and consistently committed perjury and fraud upon the court, as
is clearly documented in this case. Even while he was pressing
the false charges against Zehner, Smith was covertly shipping
hazardous PCB capacitors out of his plant through third
parties, which in his Complaint he certified to the court he does
not take into his facility. This is clear fraud upon the court.
Smith, in his answers to interrogatories, admitted he had lost no
customers or business, despite his active pursuit of this $4.5
billion lawsuit against Zehner and others. As a result of Smith’s
7
fraudulent use of the legal system, this case was dragged out over
a period 35 months. Discovery has never been completed. The
trial court specially set the case for a two-week jury trial,
which was reduced to a two-hour hearing in Bankruptcy
Court. Zehner has been repeatedly denied due process as a
direct result of Smith’s perjury and fraud upon the court to delay
this case.
Smith and his counsel completely frustrated the discovery
process by refusing to file answers to interrogatories and refusing
to produce requested documents. Smith and his counsel went so
far as to misrepresent to the court that documents that do not
even exist had been provided to Zehner under oath, when in
fact, no documents were provided.
Zehner filed Interrogatories requiring Smith to file answers
with documents, and supplement those responses if necessary.
On September 28, 1992, Smith filed a motion requesting a time
extension of thirty (30) days to respond to discovery. Zehner
objected and opposed Smith’s motion because Zehner was
incurring substantial daily personal and business damages. On
October 28, 1992, an Order was issued granting Smith’s Motion
and ordering Smith to respond to Zehner’s discovery by or before
November 12, 1992. The Court awarded only an additional
fifteen (15) days to respond, due to the objections of Zehner
based upon the substantial daily damages being incurred by
Zehner and his business. Smith’s extended response time
elapsed, but again no answers were filed and the documents were
not produced. At this point, the case would have been
dismissed, sanctions granted, and the lawsuit, if Smith had
not committed perjury to the court.
8
On January 4, 1993, Zehner filed a motion for sanctions
(with appropriate affidavit and exhibits), again advising the court
of Smith’s repeated failures to respond to discovery. On January
18, 1993, Smith and his attorney filed an opposition to Zehner’s
motion for sanctions stating that the requested discovery had
been provided to Zehner, and therefore the request for
sanctions was moot. On January 25, 1993, Zehner’s motion for |
sanctions was denied by Judge Martin, based upon the perjury
and fraudulent representations of Smith and his attorney
(Wyrough) to the court under oath that the requested discovery
had been provided, thereby perverting the legai system after the
filing, which surely provides the second element of abuse of
process after filing. On March 26, 1993, Zehner again filed a
motion to compel discovery. (App. J).
There was a hearing before Judge Missouri on June 11, 1993,
at which time Smith and his attorney admitted that they had not
provided any of the twelve (12) requested documents to Zehner,
which proves beyond any doubt that Smith committed perjury
before Judge Martin and in his Answers to Interrogatories signed
under oath, which caused Zehner’s sanctions to be denied. After
prior statements under oath to Judge Martin at the first sanctions
hearing that the requested documents had been provided, now
in front of Judge Missouri, Smith and his attorneys stated to
Judge Missouri at *»- second sanctions hearing that the requested
documents were mi. ‘leged because they involved customer lists
and trade secrets, which was not true; they further stated that
Smith and Zehner were "serious competitors" and, therefore,
Zehner was not entitled to the requested documents, which again
clearly proves the first element of abuse of process by
Smith’s own testimony, i.e. competition. (App. I). None of
the interrogatory questions or documents requested involved
9
customer lists or trade secrets, so the court was again
deceived by the perjury and fraud upon the court by Smith
and his attorneys, and Zehner was again denied appropriate
sanctions. This again is the second element of abuse of
process, i.e. perverting the legal process after filing. Because
of the known false claims of Smith, Judge Missouri made no
ruling at that hearing because Smith again falsely stated he
would furnish the requested documents, which were to include
the 700 ppm PCB test in response to Interrogatory No. 14
(which he clearly knew did not exist). (App. K). The
fictitious PCB test fabricated by Smith is the basis of his
Complaint and this whole case. This again proves the second
element of abuse of process, i.e. perverting the legal process
after filing.
On September 30, 1993, a Scheduling Order was issued by
the court requiring that discovery be complete by April 1, 1994
and that the trial was specially set for two weeks before Judge
Salmon to begin on September 26, 1994. (App. J).
On June 9, 1994, Smith filed a Suggestion of Bankruptcy,
thereby staying all pending litigation in the trial court. (App. J).
Smith was able to find yet another means to further delay
proceedings in this case. After constant delays due to his
perjury, Smith used bankruptcy court as a vehicle to escape
the jury trial and the ultimate outcome that obviously would
have been in favor of Zehner. Just prior to Smith’s filing
bankruptcy, Smith was found liable for an award of
approximately $5 million by a jury in a similar trial in the same
jurisdiction (his reason for filing bankruptcy).
10
When he got to bankruptcy court, Smith dropped his suit
before the hearing so Zehner did not have the chance to
challenge Smith’s witness and prove Smith’s case one hundred
percent (100%) false. Smith has been constantly and falsely
demonizing his innocent opponent for exactly what he
himself has actually been doing, and using the courts to do
so. This is clearly one hundred percent (100%) documented.
B. Bankruptcy Court
On September 8, 1994, Zehner filed a Proof of Claim (with
numerous supporting documents attached) with the United States
Bankruptcy Court. A hearing was held on October 17 and 18,
1997 before Judge Schiff, sitting by designation who,
therefore, was not familiar with the case. Judge Schiff stated
that the case was "bare bones, with no attachments” despite the
fact that the record reflects supporting documents were attached
when the Proof of Claim was filed, and a hearing was held
over Smith’s objection and the Proof of Claim was
submitted as ordered by Judge Kier. Also, the transfer
documents from trial court to bankruptcy court (requested and
submitted by Smith) were not provided, which included: trial
court docket, Complaint, and co-defendant Davis’ Fourth
Affirmative Defense (which stated that Smith filed with unclean
hands). Judge Schiff indicated that the Clerk was getting him the
claim file, but did not wait for it before proceeding. Judge
Schiff stated that he had reviewed the original Complaint and
immediately proceeded with the hearing without having reviewed
the claim file or other extremely relevant documents, such as the
trial court docket, the Davis answer to complaint (defense of
unclean hands) and the Taylor deposition. Both testimony and
documentation in this case provide overwhelming uncontested
11
prima facie evidence to prove Zehner’s claim, but this evidence
was totally ignored by Judge Schiff because he did not review all
pertinent documents and, therefore, did not fully understand the
issues at hand.
The case docket, original complaint, amended complaint,
answers (including the Davis answer with unclean hands
defense), deposition of William Taylor, interrogatories, answers
to interrogatories, etc. from the trial court should have been
transferred by the trial court clerk to the bankruptcy court clerk
when the Suggestion of Bankruptcy was filed. This was not
done and detrimentally affected Zehner and his ability to
properly present and defend his case.
Both counsel advised the judge of the witnesses for each side,
and Judge Schiff stated that there would be more testimony than
time available that afternoon, but that “all day tomorrow is
available to conclude this matter." Zehner and Widmer testified,
however, the hearing was cut short by the judge following
Widmer’s testimony and no other testimony was allowed.
Further, because the hearing was bifurcated, Zehner was not
allowed to testify or enter any evidence as to the substantial
damages he sustained, both personally and through CSCI, as a
result of Smith’s acts and filing of this lawsuit. (App. L).
Judge Schiff stated that the burden was upon Zehner to prove
the elements of his abuse of process claim, that being Smith’s
ulterior motive in pursuing his cause of action and secondly, to
that end, use of the legal system in an improper, unwarranted and
perverted manner. The judge further stated that "there must be
a subsequent use of the process after the institution of the lawsuit
and that particular use must be improper."
12
There was clear evidence and testimony that Zehner and
Smith were competitors. There was clear evidence of Smith’s
entering the case with unclean hands, as this was the fourth
affirmative defense in the Davis answer to the complaint. There
was further evidence of Smith’s unclean hands by Zehner’s
testimony regarding the illegal offer Smith made to Zehner
concerning shipping of contaminated tanks. Furthermore, Smith
continued to deal with unclean hands with the court, as to his
secret shipping of hazardous PCB-laden materials, which he
certified in his Complaint he did not do.
Judge Schiff clearly erroneously indicated that Zehner should
have filed for sanctions during the discovery problems in trial
court, totally unaware that Zehner had in fact filed for sanctions.
Because Judge Schiff did not review the trial court record, he
ignored material facts in this case, which detrimentally affected
Zehner’s ability to receive a fair and judicial ruling. Judge
Schiff was clearly erroneous in his decision in stating that Zehner
should have filed for sanctions, when in fact, sanctions had been
filed more than once.
Judge Schiff was confused by the testimony of Widmer (third
party claimant) as to competition between Smith and Zehner.
Widmer in his confused testimony clearly also testified of his
competitive activities on behalf of CSCI at both the Anne
Arundel County Landfill and Charles County Landfill. This
testimony as to competition was corroborated in the deposition of
William Taylor (Smith’s witness), who worked at the Anne
Arundel County Landfill, when he testified that Widmer
delivered to him a sales package on behalf of CSCI; Taylor
further testified in deposition that he couldn’t give the fluff
business to CSCI because they were already doing fluff business
13
with Smith. In fact, in his deposition, Taylor clearly stated that
Widmer requested that Taylor "just cut back on loads that Smith
delivers so that I could take loads from him." (App. F). This
clearly documents that Smith and Zehner were competitors, and
that Judge Schiff clearly did not consider the relevant facts of
CSCI employee Widmer’s confused testimony as to
competition between Smith and Zehner.
Following Widmer’s testimony, both counsel had a bench
conference with off-the-record discussion, and the hearing was
concluded. Judge Schiff indicated that he would make a decision
the next morning as to whether or not the case would proceed.
At the hearing the next day, no further testimony of the
additional witnesses and experts was allowed, despite the fact that
both sides had numerous witnesses and experts that had not yet
testified, and the fact that Judge Schiff indicated at the beginning
of the hearing that “all day tomorrow is available to conclude this
matter." As such, Zehner was assured by both the court and
Smith’s counsel that there would be sufficient time available
for all witnesses, including Smith, to testify. At that time,
Zehner’s counsel indicated his witnesses were Zehner and
Widmer, as well as three (3) experts (two as to monetary
damages and one as tc ~“%sychological evaluation). Smith’s
counsel stated the witnesses he would call were Smith, Nathanial
Exum and Edgar Johnsu... In front of the court, Zehner was
promised by Smith’s attorney Wyrough that he "would be calling
Paul Smith" as a witness and that led Zehner to believe that the
court would require Wyrough to keep his word to have Smith
testify, so as to afford Zehner’s counsel an opportunity to
question Smith. Zehner was misled and deceived by Smith’s
counsel Wyrough in front of the court, in that Wyrough stated
Smith would be called as a witness but was not. This limited
14
Zehner’s testimony because Zehner would have provided much
more elaborate testimony had he not been misled that Smith
would testify; Zehner did not want to divulge in his testimony
the areas of questioning of Smith prior to Smith’s actual
testimony. Further, that if Zehner had known that Smith would
not testify, the deposition of Smith would surely have been
introduced into evidence in lieu of Smith’s actual court
testimony. As such, Zehner was misled and denied the
appearance of a fair trial, and was again denied due process.
Judge Schiff rendered his opinion and ruled that Zehner had
not met the burden of proof and disallowed Zehner’s claim. This
decision is clearly erroneous, in that Zehner clearly proved the
necessary elements of his abuse of process claim. Judge Schiff
made his decision without reviewing any testimony of Smith and
his main witness Taylor, either in court or in deposition, but
rather, based his decision solely on the confused testimony of a
former employee of Zehner/CSCI (Widmer).
C. U.S. District Court
Zehner noted an appeal of the bankruptcy court decision to
the U.S. District Court. However, unknown to Zehner, the
transmission of record was incomplete and altered, and the
original Complaint (filed by Smith against Zehner) was not
included in the appeal documents to the U.S. District Court.
Zehner was under the impression that the total lower court record
had been automatically provided, when in fact, it had not. The
transfer documents from lower court were not available to the
U.S. District Court, because the documents were never received
by the Bankruptcy Court. By letter dated April 3, 1997, Judge |
Kier of the Bankruptcy Court notified Zehner that there was an
ee
15
error in the designated record to the U.S. District Court Clerk,
in that the Complaint was not transferred with the Notice of
Appeal.
Judge Nickerson found Zehner’s testimony was inadequate,
in that he did not prove an element of the abuse of process claim,
and Zehner was asked what if anything Smith did after the
filing. Zehner’s testimony was precise on that issue, in that he
testified that Smith "lied in court"; however, the transcript was
altered before it reached Judge Nickerson because that specific
question and statement are not in the transcript. There are
available Affidavits of persons who were present at that hearing
and recall Zehner’s specific testimony that is missing from the
transcript.
It is clear that Zehner listed the original Complaint as
document number 1 on his designation of items to be included in
appeal, and that said pleading was altered by someone in the
court system with a big "X" to eliminate said Complaint from
being forwarded to the Judge. Thereby, the U.S. District Court
was denied crucial information necessary to sufficiently evaluate
this case.
The defense of unclean hands by co-defendant Davis did not
make it to Judge Nickerson, and Wyrough falsely and clearly
argued to Nickerson that said defense was not in evidence:
however, said defense was clearly documented as "in evidence"
because it was part of the lower court record (which Wyrough
himself submitted) and should have been part of the transfer
documents. Also, Judge Nickerson did not even receive the
bankruptcy court transcript, as it was also part of the missing
transfer documents. As such, at least 90% of the documentation
16
that should have been transferred to Judge Nickerson was in fact
never properly and timely transferred to or received for review
by the judge.
D. U.S. Court of Appeals for the Fourth Circuit
Following Judge Nickerson’s decision of October 15, 1996,
an appeal to the U.S. Court of Appeals for the Fourth Circuit
was noted and timely filed by Zehner. After oral argument on
July 7, 1997, a decision was rendered August 5, 1997 affirming
the District Court’s decision, on the basis that Zehner had failed
to meet the third element of the tort of abuse of process (i.e.,
damages resulting from arrest or seizure of property).
The Fourth Circuit opinion states that "The facts material to
resolution of this appeal are not in dispute." This is totally
false, in that the facts have been consistently disputed by Zehner
throughout this case. The opinion goes on to state that Smith’s
initial Complaint stated that Zehner had accused Smith of selling
contaminated fluff and filing false test results, when in fact,
Smith was never accused of selling contaminated fluff. The
deposition testimony of William Taylor confirms this fact and
confirms that the court is in error. (App. F).
The Fourth Circuit opinion’s incorrect statement of facts
indicates that Smith’s Complaint alleged that Zehner conspired
with Smith’s formerly discharged disgruntled employee, Sidney
Shores, by delivering a letter to the Prince George’s County
Council regarding lab test results/analysis showing hazardous
PCB levels. This was totally discredited by both Zehner’s
testimony and Smith’s own testimony. Smith himself stated in
his deposition that he had misread the test results and that there
17
was no "700 parts per million" PCB test as charged, but rather
the result was "700 parts per billion" which equates to .7 or less
than one part per million (ppm) and is non-hazardous; the result
must be at least 50 parts per million to be hazardous. (App. K).
Therefore, all of Smith’s charges as to said test result/analysis are
knowingly false, as he had knowledge of that prior to and
during the entire course of this case. Thereby, the statement of
fact as described in the Fourth Circuit opinion is totally
erroneous.
Zehner then filed a Petition for Rehearing and furnished the
Fourth Circuit Court with the numerous documents previously
not transferred to the Judges for their review, arguing that the
Court had confused abuse of process with malicious abuse of
process, and further argued that the issue of damages was not
(and never had been) before the Court. Damages were not
addressed by the Bankruptcy Court or the U.S. District Court, as
the bankruptcy hearing was bifurcated. As a result, Zehner was
unable to present any testimony or enter any evidence as to the
amount or type of damages actually sustained and being sought,
which damages included seizure of property. The Petition for
Rehearing was erroneously denied by the U.S. Court of Appeals
on September 17, 1997.
Clearly and factually, Zehner was not allowed to enter any
evidence to support the third element of abuse of process, i.e.
damages. Although Zehner had incurred substantial personal and
business damages (monetary loss and seizure of property),
because the case was bifurcated Zehner was not allowed to enter
any such evidence.
Ill. SUMMARY
18
This case should have been resolved by the trial court.
Smith’s intent and motive since he initiated this litigation over
five (5) years ago has been to destroy Zehner and his business,
due to the competition between them. A complete and thorough
review of this case will show that Smith is guilty of perjury and
fraud upon the court. Zehner is totally innocent of all charges
by Smith. Smith is secretly shipping out of his pliant through
third parties hazardous PCB capacitors, despite the fact that he
stated in his Complaint such materials are not allowed in his
plant. Zehner has proof and physical evidence of Smith’s
surreptitious business dealings (i.e. copy of cancelled checks
payable to CSCI for fees for referring companies to Smith for
receiving and shipping out of his plant such extremely hazardous
PCB capacitors, etc.; said checks were discovered after the
hearing with Judge Schiff, and which he has forwarded to
the courts).
As such, this case should be reversed and remanded to allow
Zehner an opportunity to properly defend this matter and present
his entire case, which rights are guaranteed to him by due
process of law. U.S. CONST., amend. V; U.S. CONST.,
amend. XIV, § 1.
19
REASONS FOR GRANTING THE PETITION
I. SPECIAL CASE & STRICT LIABILITY
The proceedings in this matter have so far departed from the
accepted and usual course of judicial proceedings, and sanctioned
such a departure by the lower court, as to call for an exercise of
this Court’s supervisory power.
This is a very special case because it is so far out of the
ordinary that we have found no precedent setting case that comes
close to the many conditions of this case.
All parties involved are in the business of recycling and
shipping/disposal of dangerous, toxic and hazardous materials.
Because the handling of toxic hazardous waste is involved, strict
liability is an issue where utmost care is required. The strict
liability statute imposes criminal sanction for an unlawful act
without requiring a showing of criminal intent. (Black’s Law
Dictionary, Abridged Fifth Edition, 1983). Strict liability crimes
are unlawful acts whose elements do not contain the need for
criminal intent and are usually acts that endanger the public
welfare, such as illegal dumping of toxic wastes. (Black’s Law
Dictionary, Sixth Edition, 1990). Therefore, Smith, as a
professional, should have used utmost care before he filed the
100% false lawsuit.
Il. ABUSE OF PROCESS
A. Did the U.S. Court of Appeals for the Fourth Circuit err in
its determination that the facts material to resolution of this
appeal are not in dispute?
20
The Fourth Circuit opinion states that "The facts material to
resolution of this appeal are not in dispute." This is totally false
and is clearly documented by the record, in addition to the fact
that Zehner has continually disputed the facts as alleged by
Smith. Further, Smith has made numerous inconsistent
Statements as to his competition and business dealings with
Zehner. Smith was never accused of selling contaminated fluff.
Taylor’s deposition testimony confirms this fact and confirms that
the court is clearly in error. (App. F).
The opinion goes on to incorrectly state that Smith’s
Complaint alleged that Zehner conspired with Sidney Shores in
connection with a certain lab test showing unfavorable results
being delivered to P.G. County officials. This is totally
discredited by testimony of Zehner, Smith and Taylor. Zehner
testified that he had never heard of Sidney Shores prior to
receiving this lawsuit, and thus could not have conspired with
someone he did not know of. Smith himself admitted during his
deposition testimony that he had misread the test results, which
were in fact not harmful. (App. K). Therefore, the whole basis
for this lawsuit that Smith filed because of falsified laboratory
tests or analyses is 100% false and without foundation, which
could not have been delivered to anybody because they do not
exist and never existed. Therefore, the Fourth Circuit opinion
indicating that the statement of facts were undisputed is
totally erroneous.
B. Did the U.S. Court of Appeals for the Fourth Circuit err in
its determination that the Appellant failed to meet his burden
of proof supporting his claim as to the three elements of
abuse of process (i.e. competition and ulterior motive,
perverted use of legal system after filing, and damages)?
21
An abuse of process claim is based upon an improper use or
perversion of process after it has been issued, and rests upon
improper use of regularly issued process. (Black’s Law
Dictionary, Sixth Edition, 1995). The necessary elements of an
abuse of process claim are ulterior motive, perverted use of legal
system after filing, and damages (arrest of person or seizure of
property).
The Fourth Circuit opinion states, in pertinent part, that,
Here, we need not consider whether the
Creditors’ claims meet the first and second
elements of an abuse of civil process claim under
Maryland law, because they obviously fail to meet
the third element. Rather than alleging damages
in the form of arrest of the person or seizure of
property, the Creditors have only alleged damages
in the form of loss of business and loss of
investment. ..."
Smith and his attorneys stated in the initial Complaint
approximately thirty (30) times that Smith and Zehner were
competitors, which was introduced as evidence. At the sanctions
hearing before Judge Missouri, Smith’s attorney (Farrington)
Stated that the reason they did not produce the requested
discovery documents to Zehner was "on the basis that they are
serious competitors ... and we’re saying to them that they are
competitors in the area of fluff ....". (App. 1).
Smith’s main witness, William Taylor, Clearly testified as
to competition between Zehner and Smith. Taylor testified at
length that Widmer delivered a sales package to Taylor on behalf
of Zehner/CSCI, and that Widmer tried to persuade Taylor to do
22
business with Zehner. Widmer went so far as to suggest that
Taylor reduce loads of fluff to Smith so that Taylor could give
those loads to Zehner/CSCI. (App. F). This clearly verifies
business competition between Zehner and Smith, as well as
Smith’s ulterior motive in filing the lawsuit was to destroy
his principal competitor Zehner, and proves the first element
of abuse of process.
Smith is absolutely guilty of the second element of abuse of
process, perverted use of the legal system after filing. Smith is
obviously guilty of perjury and fraud upon the court, as
evidenced by his many documented inconsistent statements.
Smith clearly perverted the legal system by his repeated
failure to cooperate or respond in trial court discovery. Smith
refused to answer interrogatories and produce requested
documents. In an opposition to Zehner’s motion for sanctions,
Smith committed perjury by stating under oath that documents
had been provided to Zehner when in fact no documents were
provided (App. H). Smith continued to refuse to provide
discovery, even after being ordered to do so by the court. Smith
purposely prolonged the discovery for sixteen (16) months before
he filed bankruptcy, by lies and perjury, until he later found and
used bankruptcy as vehicle to escape responding to discovery and
the specially set jury trial. Smith has repeatedly committed
perjury and intentionally misled the court to prolong the court’s
actions, all to prevent Zehner from proceeding with the specially
set jury trial. These acts, and others referred to in the
Statement of Case, clearly prove Smith’s perverted use of
the legal system and the second element of abuse of process.
23
Zehner has sustained substantial damages as a result of
defending this lawsuit and the false allegations of Smith.
Zehner’s health was detrimentally affected, due to the tremendous
amount of stress of both defending this lawsuit and trying to clear
his good name and reputation in the business community.
Zehner’s businesses suffered substantial financial loss. In fact,
the asphalt division of CSCI, a separate registered corporate
entity, was completely destroyed and its property (thousands of
tons of asphalt, stone, etc.) was seized by clients due to CSCI’s
inability to complete business contracts and jobs. The fluff
division of CSCI was slowly destroyed and finally collapsed in
January of 1996. Further, because the hearing was bifurcated,
Zehner was not allowed to testify or enter any evidence as to the
damages he sustained, both personally and through CSCI, as a
result of Smith’s acts and filing of this lawsuit. (App. L).
Zehner has incurred substantial damages and seizure of
property, which proves the third element of abuse of
process. Further, Smith has achieved his goal of destroying his
principal competitor (Zehner), and suffered no actual out-of-
pocket expenses in the process. Smith, after filing a $4.5 billion
lawsuit, admitted in his response to document requests that he
lost no business or customers.
fil. DENIAL OF DUE PROCESS
A. Did the Judge err in his determination to conclude the
bankruptcy hearing prior to allowing the testimony of all
witnesses and experts present as indicated by counsel would
be called at such hearing, thereby denying Appellant due
process?
24
Zehner has been denied his Constitutional right of procedural
due process in this case, including but not limited to denial of
complete discovery, lack of jury trial, and inability to enter
evidence of damages sustained. U.S. CONST., amend. V; U.S.
CONST., amend. XIV, § 1.
Judge Schiff, sitting in by designation, was unfamiliar with
the history of this very complicated case. Although the Judge
was aware that he did not have all relevant documents necessary
to properly assess this case, Judge Schiff immediately proceeded
to begin the hearing without proper preparation and knowledge
of the case. Even in his decision, Judge Schiff recognized that
there were discovery problems in the trial court, as testified to by
Zehner. Judge Schiff, because of the missing documents that he
did not review, was totally unaware of Zehner’s vigorous pursuits
to obtain discovery from Smith and Smith’s obvious perjury to
evade discovery and sanctions, and he held only a two (2) hour
hearing in place of a two (2) week jury trial.
Judge Schiff did not have the documents necessary to
properly evaluate this case and make a fair judicial ruling.
Rather, Judge Schiff made his ruling without benefit of: the trial
court docket, Complaint, Davis defense of unclean hands, and
the copy of business cards which was _ fabricated
manufactured proof placing Zehner at the scene of the
alleged crime.
B. Was the appe'llant denied due process by the fact that he has
been and continues to be denied a copy of the tape of the
bankruptcy hearing, even though tihe Fourth Circuit made
their hearing tapes available immediately without question,
25
yet bankruptcy court continues to refuse tapes, and that the
court record has been altered in a major way?
Zehner has already proved that the court record was
significantly altered by someone within the court system by
removing the Complaint from Zehner’s Notice of Appeal, as
more fully elaborated in the Statement of Claim (by Judge Kier’s
correction of the record), which clearly denied Zehner due
process.
Zehner requested a transcript of the bankruptcy hearing,
which revealed that this record had also been altered by deletions
of certain testimony. Zehner then requested a copy of the actual
tape so that he could have it analyzed. Zehner was first denied
the tapes by the court reporter. Second, Zehner was denied the
tape by Judge Kier. Third, Zehner again requested the tape by
letter to Judge Kier with Affidavits of persons who were present
at the hearing and attested to the missing testimony; Judge Kier
forwarded Zehner’s request to the Department of Justice.
Fifth, Zehner was denied the tape by the Fourth Circuit. Sixth
and most recently in this ongoing request, Zehner’s attorney
Thomas is filing a Subpoena requesting the tape, so that the court
may have the total record which to this date no one has been able
to provide because of the altered records.
Despite his many requests and explanations, Zehner has
repeatedly been denied a copy of the bankruptcy hearing tape,
and was thereby denied due process.
C. Was the appellant denied due process by the fact that he lost
his jury trial because of Smith and his attorney's clear
26
perjury to the trial court to delay this case until Smith found
a vehicle to evade the set jury trial?
This matter was specially set for a two-week jury trial in the
trial court. (App. J). However, because of the clearly
documented perjury and misrepresentations to the court by Smith
and his attorneys, particularly throughout discovery, the case was
delayed and prolonged until Smith used bankruptcy as a vehicle
to escape the set jury trial. To this day, discovery has never
been completed and no jury trial has occurred, despite five and
one-half (5'4) years of litigation.
As such, Zehner has been denied his Constitutional right of
procedural due process in this case by his lack of jury trial. U.S.
CONST., amend. VII.
IV. PERJURY/FRAUD UPON THE COURT
A. Did the Judge err when he referred to Appellant’s lack of
pursuit of discovery sanctions remedies at the lower court
level, when the record clearly reflects such remedies were in
fact pursued by Appellant?
Court records were missing, which adversely affected
Appellant’s case in that extremely important evidence necessary
to prove the Appellant’s claim was not available for the court’s
review and consideration. The missing documents included the
trial court docket, which clearly verified that Zehner in fact filed
more than once for sanctions, and was denied each time due to
Smith and his attorney’s lies and misrepresentations to the court.
27
B. Did the Trial Court err in its determination to deny
Appellant's requests for discovery sanctions for Appellee’s
refusal to cooperate with discovery based upon Appellee’s
perjury and fraud upon the court by falsely indicating that
documents had been provided to Appellant.
"Discovery rules are broad and comprehensive in scope and
one of their fundamental objectives is to require disclosure of
facts by party to all of its adversaries and thereby eliminate, as
far as possible, necessity of any party going to trial while
confused as to facts that gave rise to litigation." Maryland
Rules, Rules 410, 417, as cited in Baltimore Transit Company v.
Mezzanotti, 227 Md. 8, 174 A.2d 768 (1961).
Smith and his attorney have repeatedly and consistently
refused to cooperate in the discovery process of this case. Smith
and his attorney misled the court by stating under oath that they
had provided discovery documents to Zehner when in fact no
documents were provided (App. G & H), which caused the
denial of Zehner’s first sanctions request. Then, after stating
under oath that they had provided the requested documents,
Smith and his attorney stated under oath that the documents were
privileged because customer lists and trade secrets were requested
and that Zehner, as a competitor, and was not entitled to such
documents. (App. I). However, the documents Zehner requested
did not include customer lists or trade secrets, as evidenced by
the Interrogatories and Answers thereto, which left the second
sanctions hearing undecided.
Because of perjury and misrepresentations to the court by
Smith and his attorney, Zehner has been completely denied his
legitimate requests for sanctions for Smith and his attorney’s
28
failure to cooperate with discovery. A thorough review of the
record clearly documents and verifies that Zehner was denied
discovery sanctions as a direct result of Smith’s perjury and fraud
upon the court. As such, Zehner has been detrimentally affected
in that the granting of sanctions would have brought about a
quick resolution of this case in 1992.
The Constitutional provisions of due process require that "an
advocate must disclose the existence of perjury with respect to a
material fact, even that of a client ....". Rule 3.3, Maryland
Lawyers’ Rules of Professional Conduct, Annotated Code of
Maryland.
As to a lawyer’s obligation of fairness to opposing party and
counsel, Rule 3.4 states,
A lawyer shall not:
(a) unlawfully obstruct another party’s access to
evidence or unlawfully destroy or conceal a
document or other material having potential
evidentiary value. A lawyer shall not counsel or
assist another person to do any such act;
(b) falsify evidence, counsel or assist a witness
to testify falsely, or offer an inducement to a
witness that is prohibited by law;
* * *
(d) in pretrial procedure make a frivolous
discovery request or fail to make reasonably
diligent effort to comply with a legally proper
discovery request by an opposing party;
29
V. UNCLEAN HANDS
A. Did the court err in its decision in not finding against the
Appellee based upon the doctrine of unclean hands, in that
there was fraud in the possession of Smith’s main witness
false manufactured evidence dated 47 days before the lawsuit
was filed and that Appellee was dismissed from a mutual
business association for attempting to involve Appellant
Zehner in a mutually beneficial and illegal enterprise?
This case has been clouded by outright lies and
misrepresentations, including fraud upon the Court, as evidenced
by Smith’s numerous and repeated inconsistent statements and
allegations about Zehner, their businesses and competition, types
of tests and test results, business associates, and more.
Smith was guilty of the very thing that he accused Zehner of
doing and used the court as a weapon against Zehner.
Knowingly and simultaneously while he was prosecuting
CSCI/Zehner, Smith was receiving and shipping toxic
hazardous waste through third parties, as evidenced by checks
paid to CSCI/Zehner as finder’s fees for referring Environmental
Services, Inc. to Smith for hauling out of Smith’s plant materials
containing substantial amounts of toxic hazardous PCB capacitors
and transformers, which places these actions under the strict
liability laws where utmost care is required, and which Smith
thereby recklessly disregarded.
Contrary to what was actually happening, Smith certified to
the State of Maryland, to the courts, and to the general public
that no unacceptable materials (such as toxic hazardous PCB-
laden capacitors) were allowed to enter his plant); Smith further
30
certified and verified that all materials processed through his
plant would be recycled for some useful purpose.
At oral argument on August 5, 1997 in the U.S. Court of
Appeals for the Fourth Circuit, the court indicated that this case
should have been resolved by the lower court due to its
familiarity with the case and availability of the pleadings.
"The RICO suit Judge knew the action. He was
familiar with the parties. He had the filings. He
had the pleadings before him. And that whole
matter should have been wrapped up there, rather
than asking a bankruptcy judge to start from
scratch, with all the start-up costs in an abuse of
process action and with a hundred other things to
do."
(Oral Argument Transcript, p.26 lines 19-25 and p.26 lines 1-2).
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted,
FRED G. ZEHNERL”
Date:__|—-Q9- 4%
APPENDIX
A-1
APPENDIX A
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
|
In Re: Joseph Smith & Sons, |
Incorporated; In Re: Richard |
Wybrough, |
Debtors. |
|
Fred G. Zehner; Contaminated
Soil Consultants, Incorporated,
Claimants-Appellants ,
and
Benedict A. Widmer,
Claimant, |
Claude B. Shaffer, |
Party in Interest, |
¥.
Joseph Smith & Sons,
Incorporated,
Debtor-Appellee.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
William M. Nickerson, District Judge.
(CA-96-137-WMN, BK-94-12947)
Argued: July 7, 1997
A-2
Decided: August 5, 1997
Before WILKINSON, Chief Judge, and WILKINS and
HAMILTON, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Bruce Montgomery Marshall, DURRETTE, IRVIN &
BRADSHAW, P.C., Richmond, Virginia, for Appellants. Richard
R. Page Wyrough, CAIN & WYROUGH, Upper Marlboro,
Maryland, for Appellee. ON BRIEF: Douglas Scott, DURRETTE,
IRVIN & BRADSHAW, P.C., Richmond, Virginia; Martin B. Ellis,
SCHULMAN, TREEM, KAMINKOW & GILDEN, P.A.,
Baltimore, Maryland, for Appellants.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Contaminated Soil Consultants, Inc. (CSC) and its president and
primary shareholder, Fred G. Zehner (Zehner) (collectively the
Creditors), appeal the district court’s affirmance of the bankruptcy
court’s order disallowing their claims against the bankruptcy estate
of Joseph Smith & Sons, Inc. (JSS) for damages flowing from JSS’s
alleged abuse of civil process. The bankruptcy court disallowed the
Creditors’ claims on the basis that they could not establish all the
A-3
elements of the tort of abuse of civil process under Maryland law.
The district court agreed. We affirm.
I.
The facts material to resolution of this appeal are not in dispute.
At all times relevant to this case, CSC and JSS were both
participants in the waste management industry in the State of
Maryland. Specifically, both companies sold a product known as
“fluff,” a byproduct of the process of recycling scrap metal. Fluff
is used to cover up refuse in landfills. After JSS was generally
accused of selling contaminated fluff and falsifying lab reports, it
filed suit against the Creditors in Maryland state court, alleging
various causes of action, including, among others, fraud, conspiracy
to commit fraud, defamation and intentional interference with
business relations (the Tort Action). The complaint alleged in part
that the Creditors conspired with a former disgruntled employee of
JSS to harm JSS by delivering a letter to every member of the Prince
George’s County Council that contained false statements about JSS
and by delivering to the same persons copies of false laboratory
analyses that were alleged to be from fluff manufactured by JSS.
While the Tort Action was pending, JSS filed for bankruptcy in
the United States Bankruptcy Court for the District of Maryland.
Thereafter, JSS removed the Tort Action to the bankruptcy court.
Following extensive discovery between JSS amd the Creditors, JSS
made a motion to voluntarily dismiss the Tort Action. The
bankruptcy court granted the motion.
Each creditor subsequently filed a proof of claim in the JSS
bankruptcy case for $2.5 million. The proofs of claim listed the tort
A-4
of abuse of civil process as their basis. According to the proofs of
claims, JSS’s filing and subsequent maintenance of the Tort Action
"caused [them] severe financial damages ... in the form of loss of
business and loss of financial investment." (J.A. 41, 44).
JSS objected to the Creditors’ claims on the basis that they did
not allege facts necessary to establish the tort of abuse of civil
process under Maryland law. After conducting a hearing on the
matter, the bankruptcy court sustained JSS’s objections and
disallowed the Creditors’ claims. The Creditors appealed to the
district court, alleging various points of error, including that the
bankruptcy court had improperly allocated the burden of proof
between the parties. The district court affirmed the bankruptcy
court, and the Creditors noted a timely appeal.
II.
As do district courts, we review the factual findings of a
bankruptcy court for clear error and its conclusions of law de novo.
See In re Johnson, 960 F.2d 396, 399 (4th Cir. 1992). Here, our
review reveals that the bankruptcy court did not err in sustaining
JSS’s objections and disallowing the Creditors’ claims.
The parties agree that the Creditors’ claims must be tested under
Maryland law. As most recently articulated by the Court of Appeals
of Maryland, the elements of the tort of abuse of civil process in
Maryland are: (1) a willful use of civil process on the part of the
defendant after the process has issued in a manner not contemplated
by law; (2) an ulterior motive; and (3) damages resulting from the
defendant’s abuse of process in the form of arrest of the person or
seizure of property of the plaintiff. See One Thousand Fleet Ltd.
Aa-5S
Partnership v. Guerriero, 1997 WL 324389, at *4, *9 (Md. June 12,
1997). In elaborating on the last element, the court in One
Thousand Fleet, Ltd. quoted the following passage from Bartlett y.
Christhilf, 14 A. 518 (Md. 1888), with approval:
All the cases upon this subject depend either upon the arrest
of the person or seizure of his property; and we have been
referred to none where this action was sustained for an injury
to the plaintiff's business or good name. Any unfounded suit
may result in such injury; but it will hardly be seriously
contended that where there has been no wrongful deprivation
of liberty or no illegal seizure of property, that each
unfounded suit is to be treated s such an abuse of process of
the law as will sustain action against the one who instituted
it.
One Thousand Fleet Ltd. , 1997 WL 324389, at *9 (quoting Bartlett,
14 A. at 522).
In accord with this statement of Maryland law, the court in One
Thousand Fleet, Ltd. affirmed a trial court’s dismissal of an abuse
of process claim, because the plaintiff, a Maryland limited
partnership engaged in real estate development in Baltimore City,
Maryland, only alleged that it "lost money, suffered a delay of [one
of] its project[s], and faced increased construction, legal and
financing costs" as a result of the defendant’s alleged abuse of
process. Jd. at *9-10. The plaintiff did not allege arrest of the
person or seizure of its property. Jd. at *10.
Here, were need not consider whether the Creditors’ claims meet
the first and second elements of an abuse of civil process claim under
A-6
Maryland law, because they obviously fail to meet the third element.
Rather than alleging damages in the form of arrest of the person or
seizure of property, the Creditors have only alleged damages in the
form of loss of business and loss of investment. Under Maryland
law as most recently articulated in One Thousand Fleet, Ltd., such
allegations, even if proven to be true, cannot meet the third element.
Accordingly, we affirm the district court’s decision affirming the
bankruptcy court’s order sustaining JSS’s objections and disallowing
the Creditors’ claims.
AFFIRMED
A-7
APPENDIX B
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BENEDICT A. WIDMER, -
et al.
*
Vv. Civil Action No. WMN-96-137
*
JOSEPH SMITH AND
SONS, INC. *
MEMORANDUM
Pending before this Court is an appeal from a decision of the
United States Bankruptcy Court for the District of Maryland
(Bankruptcy Case No. 94-12947-DK), the Honorable Gerald H.
Schiff, sitting by designation. Upon a review of the briefs,' the
record and the applicable case law, the Court determines that no
hearing is necessary (Bankruptcy Rule 8012), and that the decision
of the Bankruptcy Court will be affirmed.
; Claude B. Shaffer, a former employee of
Appellant Contaminated Soil Consultants, Inc. , obtained leave of
Court to file an amicus curiae brief. Appellee opposed the
Amicus brief claiming it was an improper "Amicus petitor" brief
that should be disregarded by the Court. The Court does not
need to resolve this dispute between the parties because the Court
did not find that Mr. Shaffer’s brief changed the outcome in the
present appeal.
L_BACKGROUND
Appellant Contaminated Soil Consultants, Inc. ("CSCI"),? and
Appellee Joseph Smith and Sons, Inc., are both participants in the
waste management industry, although whether they are direct
competitors is a disputed issue between the parties. Both businesses
are involved in the sale of "fluff," a byproduct of scrap metal
recycling, which is used to cover up refuse placed in local landfills.
After being accused of selling contaminated fluff and falsifying
lab reports, in June of 1992, Appellee filed a lawsuit against
Appellants and others in the Circuit Court for Prince George’s
County.’ Appellee subsequently filed its Chapter 11 petition on June
6, 1994. Appellants then filed proofs of claim in the bankruptcy
proceeding alleging abuse of process against Appellee based upon
Appellee’s filing and prosecution of the Prince George’s County
action. Appellee filed a motion to estimate Appellant’s claims as
well as objections to those claims.
2 The other two appellants are Fred Zehner, owner
of CSCI, and Benedict A. Widmer, a former employee of CSCI.
. This Court was not provided by Appellants with
Appellee’s original complaint, although it appears to have been
admitted into evidence during the October 17, 1995 hearing.
Therefore, it is not clear what was alleged in that lawsuit.
Appellants state that there were nine (9) counts, Appellants’ Brief
at 4, and Judge Schiff referred to fraud and misrepresentation
claims as well as claims under RICO, Oct. 17 Transcript at 4.
A-9
A hearing was held on October 17, 1995 before Judge Schiff.
The parties agreed that the matter would be bifurcated to address
first whether Appellants had a valid claim and then to address the
amount of damages. After Appellants presented their case on
_ liability, the hearing was recessed, and the court gave counsel an
opportunity to provide further authority on the issue of liability. The
hearing was resumed on the following day, and the court ruled from
the bench that Appellants had not stated a cause of action for abuse
of process under Maryland law.
IL, LEGAL STANDARD
Factual findings of the Bankruptcy Court are reviewed under a
clearly erroneous standard. Lubrizol Enterprises v. Richmond Metal
Finishers, 756 F.2d 1043 (4th Cir. 1985), cert. denied, 475 U.S.
1057 (1986). Conclusions of law are reviewed de novo. Caswell v.
Jeffrey Lang, 757 F.2d 609 (4th Cir. 1985). Decisions committed
to the discretion of the trial court are reviewed under an abuse of
discretion standard. In re Southmark Corp., 88 F.3d 311, 314 (Sth
Cir. 1996).
II |
AE f hifi inion
Appellants complain that Judge Schiff did not comply with Fed.
R. Civ. P. 52 because he did not specifically identify findings of fact
and conclusions of law. From its review of the hearing transcript,
this Court disagrees. The record clearly shows that Judge Schiff
stated his findings of fact with regard to each element of Appellants’
A-10
claim of abuse of process, albeit briefly. See Oct. 18 Transcript at
p.4 lines 12-22, p.5 lines 8-11.
B. Burden of Proof
Appellants also argue that Judge Schiff’s conclusion of law that
the burden of proof was on Appellants is clearly erroneous.
Appellants explain that Judge Schiff stated that the debtor must rebut
the initial presumption that a claim is valid,‘ but that in this case
there was no rebuttal because Judge Schiff adjourned the hearing
before the debtor put on any evidence. Appellants’ Brief at 16.
The bankruptcy code makes clear that a proof of claim is allowed
unless an objection to it is raised. 11 U.S.C. § 502(a). In the
interest of judicial economy, only those claims which are contested
have to be proved. It is the debtor’s objection, supported by
probative evidence where necessary,’ which rebuts the presumption
4 Judge Schiff stated at the pegransn of the nag
that where "there’s been an objection filed b upon the lac
of substantiation of a claim, then I think the burden of going
forward rests on upon the claimant." Oct. 17 Transcript at 6-7.
. Appellee’s objection to Appellant’s proofs of claim
challenged Appellants’ right as a matter of law to recover on the
basis of an abuse of process claim. See Joint Objection to
Claims of Fred G. Zehner, Contaminated Soil Consultants, Inc.
and Benedict A. Widmer, Paper No. 1, at 5 ("The Zehner Claim
provides no allegations which would support a claim based on
abuse of process.") Therefore, Appellee would not have a
burden to produce probative evidence but rather would have met
A-11
of validity of the claim and shifts the burden of production back to
the claimant. In re Harrison, 987 F.2d 677, 680 (10th Cir. 1993).
Because Appellee rebutted the presumption of validity of the claim
in its objection, Judge Schiff’s conclusion that the burden of proof
rested with Appellants was correct.
C, Abuse of Process
On the substantive issue in the case, Appellants argue that the
court erred in its determination that Appellants had failed to show
that Appellee had engaged in the abuse of process. The tort of abuse
of process in Maryland focuses on the purpose for which the process
is used once it has been properly issues in a case. Palmer Ford, Inc.
vy. Wood, 298 Md. 484, 511, 471 A.2d 797 (1984). The essential
elements of the cause of action are (1) an ulterior motive, (2) a
wilful act in the use of the process not proper in the regular conduct
of the proceeding, and (3) damages resulting from the perverted use
of the process. Berman v. Karvounis, 308 Md. 259, 262, 518 A.2d
726, 727 (1987). "Some definite act or threat not authorized by the
process, or aimed at an objective not legitimate in the use of the
process, is required." Palmer Ford, Inc., supra, quoting from
Prosser, Law of Torts 857 (4th ed. 1971). There is no liability
where the defendant has done nothing more than carry out the
process to its authorized conclusion, even though with bad intentions.
its burden of production merely by raising the legal objection to
the claims. See World Savings and Loan Ass’n v, Lenz, 110
B.R. 523, 525 (D. Colo. 1990) (where objection made as a
matter of law, burden of going forward shifted back to claimant
to prove legitimacy of its claim).
A-12
Herring v, Citizens Bank & Trust Co., 21 Md. App. 517, 535, 321
A.2d 182, 192 (1973), (quoting from, Prosser, supra, at 857), cert.
denied, 272 Md. 742 (1974).
Appellants argue in the present case that Appellee filed the multi-
count lawsuit with the ulterior motive of injuring Appellants’
competitive position in the industry. Appellants further argue that
Appellee acted improperly post-filing by prolonging the lawsuit
unnecessarily, by failing to cooperate in discovery, and by neglecting
to reduce the ad damnum request.*®
Appellee correctly counters that Appellants argument essentially
goes to Appellee’s allegedly improper motives in filing the lawsuit
in the first place. What motivated the initial filing of the lawsuit is
immaterial to an abuse of process claim. Herring, 21 Md. App. at
532.
Appellee also denies that it failed to cooperate in discovery or
otherwise unnecessarily prolonged the litigation in order to vex
Appellants. Judge Schiff did not make a specific factual finding in
this regard, but simply stated that to the extent that the failure to
complete discovery or to dismiss the lawsuit was the basis for the
‘ The parties are in disagreement as to what this
amount was and, again, because the Court does not have a copy
of the Complaint, it is difficult to resolve this question.
Appellees claim that it was fifty-five million dollars including
compensatory and punitive damages, but Appellants argue that
amount was for just one of the nine counts and that the total for
all the amounts was $1.365 billion.
A-13
claim of abuse of process, these actions do not equate to the
improper, unwarranted and perverted use of process required for this
tort. Oct. 18 Transcript at 5.
In Palmer Ford, the Court of Appeals found that there was
sufficient evidence to create a reasonable inference that the defendant
had used criminal proceedings to collect a debt from the plaintiff
where the defendant had told the plaintiff's mother that unless her
son’s debt was paid, her son would be arrested and sent to jail. 298
Md. at 489-90. The court stated that a creditor cannot use the
State’s criminal courts as a private collection agency. Id. at 511-12.
By contrast in Berman, the court held that there were no facts to
Show how the process was used for any purpose other than the
normal one of obtaining personal jurisdiction. 308 Md. at 265. The
court suggested that for this tort to have occurred, the defendant
must have used process in some abnormal fashion to coerce or extort
money or property from the plaintiff. Id.
It is clear, then, that the facts alleged by Appellants in the
present action do not rise to the level of the perverse use of process
required for the abuse of process tort. If delaying or other
uncooperative behavior in discovery and litigation was sufficient to
make out this claim, unfortunately the courts would be flooded with
these actions. Therefore, this Court affirms the bankruptcy court’s
conclusion of law that Appellants failed to show that an abuse of
process had occurred.
D._ Ulterior Moti
Because this court affirms the finding that there was no act which
amounted to an improper or perverse use of process proper when
A-14
issued, it does not need to reach the question of whether such act
was committed with an ulterior motive. Judge Schiff found as a
factual matter that the evidence presented did not support the
conclusion that there was an improper motive. Oct. 18 Transcript
at 4. His factual finding is not clearly erroneous and would not be
disturbed on appeal even were the Court to reach this issue.
E. Appellants’ Remedies at Lower Court Level
Finally Judge Schiff stated that to the extent that Appellee had
filed a complaint in bad faith or was uncooperative in discovery,
Appellants had remedies in the state court trial such as a motion for
sanctions. Id, Indeed, a court may impose sanctions upon a finding
that a part acted in bad faith or lacked substantial justification for
filing a complaint or upon certain failures of discovery or refusals to
comply with orders compelling discovery. Md. Rules 1-343, 2-433
(1996). Judge Schiff’s comment regarding Appellants’ possible
remedies below was not dispositive of Appellants’ claim. Rather,
taken in context, Judge Schiff was merely suggesting that the
problems complained of by Appellants were more properly addressed
through such motions during the trial of the Prince George’s County
action than through a subsequent abuse of process claim.
Appellants argue that the court’s remarks were improper because
Appellants had in fact pursued these remedies but to no avail.
Appellant Zehner’s testimony does not make explicit that Appellants
had already pursued their remedies in this regard at the trial level,
however. In the pertinent portion of his testimony, Zehner stated
only that Appellee had responded falsely to interrogatories and had
argued falsely in court in Prince George’s County alleging that they
OER RON HR a I ORF foe fe 4
¢
A-15
had provided information in discovery which they had not. Oct. 17
Transcript at 51.
To the extent that Appellants were arguing to Judge Schiff that
their motion for sanctions was improperly denied by the state trial
court, they did so in an impermissibly obtuse way. But Appellee is
incorrect that such an argument would be an improper collateral
attack on a lower court judgment. After Appellee filed bankruptcy,
the proceedings in the state court, as well as any appeal of those
proceedings, were stayed pursuant to 11 U.S.C. § 362. Therefore,
Appellants did not have an opportunity to raise this issue other than
in the bankruptcy case. But, because Appellants did not raise this
issue in a sufficiently clear manner so that it could be ruled on by
the bankruptcy court, the issue is not properly raised for the first
time in this appeal.
IV, CONCLUSION
For all the above-stated reasons, the decision of the United States
Bankruptcy Court for the District of Maryland is affirmed. A
separate Order will issue.
s/_ William N. Nickerson
William M. Nickerson
United States District Judge
October 15, 1996
A-16
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
BENEDICT A. WIDMER, °
tal. *
v. ? Civil Action No. WMN-96-137
JOSEPH SMITH AND
SONS, INC. *
ORDER
Upon consideration of the briefs filed, and of the record below
in this appeal of the decision of the United States Bankruptcy Court
for the District of Maryland, it is this 15th day of October, 1996, by
the United States District Court for the District of Maryland hereby
ordered:
1. That the judgment of the United States Bankruptcy Court is
AFFIRMED;
2. That this case is hereby CLOSED; and
3. That the Clerk of the Court shall mail copies of the foregoing
Memorandum and this Order to all counsel of record.
s/_ William N. Nickerson
William M. Nickerson
United States District Judge
A-17
APPENDIX C
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MARYLAND
(Southern Division)
In re:
JOSEPH SMITH & SONS, INC. : Case No. 94-1-2947 DK
: Chapter 11
Debtor. :
ENTERED OCT. 24, 1995
ORDER SUSTAINING OBJECTION TO CLAIMS
OF FRED G. ZEHNER, CONTAMINATED SOIL
M
Upon consideration of the Joint Objection Joseph Smith & Sons,
Inc., debtor and debtor-in-possession herein, and R. Paul Smith,
debtor and debtor-in-possession in related case styled In re R. Paul
Smith, Case No. 94-1-2948 DK, requesting the Court to disallow in
their entirety the claims of Fred G. Zehner, Contaminated Soil
Consultants, Inc. and Benedict and Widmer (the "Objection"), on the
basis that such claims are contingent, unliquidated and disputed, and
appropriate notice having been given to the claimants and all other
parties in interest, and based upon any response filed by the
claimants, and for other reasons more particularly set forth in the
Objection, it is hereby
ORDERED, that the Debtor’s Objection be, and the same hereby
is, SUSTAINED; and it is further
A-18
ORDERED, that Claim No. 34 asserted by Fred G. Zehner be,
and the same hereby is, DISALLOWED in its entirety; and it is
further
ORDERED, that Claim No. 35 asserted by Contaminated Soil
Consultants, Inc. be, and the same hereby is, DISALLOWED in its
entirety; and it is further
ORDERED, that Claim No. 38 asserted by Benedict A. Widmer
be, and the same hereby is, DISALLOWED in its entirety.
Dated: s/_Gerald H. Schiff
United States Bankruptcy Judge
Copies to:
Barbara Crammer Morgan, Esq.
Virginia Anne Whitehill, Esq.
Zukerman, Spaeder, Goldstein,
Taylor & Kolker
1201 Connecticut Avenue, N.W.
Washington, DC 20036
Office of the U.S. Trustee
Suite 600
6305 Ivy Lane
Greenbelt, MD 20770
A-19
Lewis S. Goodman, Esq.
Mark H. Berman, Esq.
Shaw, Pittman, Potts
& Trowbridge
2300 N Street, N.W.
Washington, DC 20037
Paul Bennett Bran, Esq.
Reed P. Sexter, Esq.
Dickstein, Shapiro & Morin, L.L. P.
2101 L Street, N.W.
Washington, DC 20037-1526
Fred G. Zehner
c/o Douglas R. Thomas, Esq.
10601 Baltimore Avenue
Beltsville, MD 20705
Contaminated Soil Consultants, Inc.
c/o Douglas R. Thomas, Esq.
10601 Baltimore Avenue
Beltsville, MD 20705
| Benedict A. Widmer
) c/o Douglas R. Thomas, Esq.
| 10601 Baltimore Avenue
: Beltsville, MD 20705
Douglas R. Thomas, Esq.
10601 Baltimore Avenue
Beltsville, MD 20705
Thomas D. Renda, Esq.
Siskind, Grady, Rosen & Hoover
Sixth Floor
2 East Fayette Street
Baltimore, MD 21202
A-20
APPENDIX D
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
FILED
September 17, 1997
No. 96-2744
CA-96-137-WMN
BK-94- 12947
In Re: JOSEPH SMITH & SONS, INCORPORATED; In Re:
RICHARD WYBROUGH
Debtors
FRED G. ZEHNER; CONTAMINATED SOIL CONSULTANTS,
INCORPORATED
Claimants - Appellants
and
BENEDICT A. WIDMER
Claimant
CLAUDE B. SHAFFER
Party in Interest
we
JOSEPH SMITH & SONS, INCORPORATED
Debtor - Appellee
A-21
' ORDER
The appellants have filed a petition for rehearing.
The Court denies the petition for rehearing.
Pa OY SANT TG AMR HO As) Mtr
For the Court,
s/_ Patricia S. Connor
_—. —-- w~emrin Fs ee Ff en ae 2 eee =
te RO ae eee Be SS beet eee | *
TO eae 2 3 as See mene ae a a ial meeD
A-22
APPENDIX E
EPA PROJECT SUMMARY
PCB, Lead, and Cadmium Levels in Shredder
Waste Materials: A Pilot Study
Authors and Research Team
Principal authors included Dan Reinhart, John Scalera, Brach
Schultz, Cindy Stroup, and Joe Breen of the Exposure Evaluation
Division, Office of Toxic Substances. This project summary was
abstracted from a report on the Fluff Pilot Study written by Westat.
Field work was conducted by Westat, Midwest Research Institute, and
Battelle Columbus Laboratories. Chemcisal analyses were performed
at Midwest Research Institute, EPA’s National Enforcement
Investigation Center, and EPA’s Environmental Systems Laboratory
in Las Vegas, Nevada.
EPA’s Office of Solid Waste, Characterization and Assessment
Division co-sponsored the efforts and provided design, sampling, and
analysis consultation for lead and cadmium portion of the pilot study.
Alexander McBride was the principal contributor.
aK * *
A-23
Table 3. Summary of Total Lead Concentrations (ppm) by Sample
Type
Sample Input Standard No. of No. of
Type Type Mean Deviation Median Minimum Maximum Samples Sites
Fresh flaff Auto 2,700 2,200 2,400 570 12,000 28 7
Fresh fluff White Goods 3,100 3,200 1,800 1,300 14,000 15 5
Fresh fluff Mixed Input 4,600 3,500 3,600 1,100 12,000 13 3
Stored fluff 3,900 3,500 2,600 1,300 13,000 20 4
Spillover 6,100 5,600 4,300 2.800 21,000 9 5
Soil 2,200 3,900 1,100 8.1 16,000 16 5
Table 4. Summary of Total Cadmium Concentrations (ppm) by
Sample Type
Sample Input Standard No. of No. of
Type Type Mean Deviation Median Minimum Maximum Samples Sites
Presh fluff Auto 47 6 40 14 200 28 7
Fresh fluff White Goods 48 19 47 23 87 15 5
Fresh fluff Mixed Input 46 14 de 29 70 12 3
Stored fluff 35 13 35 16 59 20 5
Spillover 32 1 33 18 59 9 5
A-24
CONCLUSIONS
In this pilot study, EPA’s research team:
e Determined that PCBs were present in all sampled materials at all
seven pilot study sites and that over 98% of the PCBs in all
shredder output were associated with fluff; PCB concentrations
in fluff ranged from 0.67 to 760 ppm. (emphasis added)
¢ Determined that in the "worst case" scenario of leachability, a
hot water extraction, only .0073% of the PCBs present leached
from the sample on average. In a situation more closely
resembling "real world" conditions, room temperature water
extraction leached .0050% of the PCBs, on average, from the
fluff. In both cases, the observed leachability of PCBs from fluff
was lower than usually found in a wide range of soils.
e Could not conclude that any particular input material was the
source of the PCBs, lead and cadmium found in shredder
outputs. Cross-contamination of samples within sites may have
masked the relationship between input material and contamination
of resulting output materials.
For example, if PCBs were released onto shredder surfaces
during the shredding of PCB-containing items, fluff produced for
some time after the initial release may have been contaminated
as it came into contact with parts of the shredder apparatus,
although no PCBs existed in the input materials associated with
this fluff;
* * *
———Ee
A-25
APPENDIX F
IN THE CIRCUIT COURT FOR P.G. COUNTY, MARYLAND
JOSEPH SMITH AND SONS, *
INC., et al.
*
Plaintiffs
VS. CAL 92-10285
DAVIS INDUSTRIES,
et al *
Defendants °
i, oo, oe ee ee ee a a cee * * *
The deposition of WILLIAM J. TAYLOR was taken on March
23, 1994 commencing at 10:00 a.m. at the of Offices of Bel Air
Reporting Associates, 510 South Main Street, Bel Air, Maryland
before Penny L. Comeau, Notary Public.
19-21; lines _1-
A Okay. On this date, a gentleman by the name of, | think, Ben
Widmer -- my handwriting wasn’t any better then than it is now --
he just stopped in the office. His office manager was with him. It
was a woman, but I didn’t get her name. He game me some
brochures and some printed material, some copies of newspaper
A-26
clippings and stuff like that. He said he represented a Virginia scrap
dealer, and he wanted to bring fluff to the Millersville Landfill and
he would be willing to pay two dollars per ton.
Page 53, lines 13-21
Q How long did that meeting take place?
A_ No longer than a half hour.
Q And how many people were present besides yourself?
A It was -- there was me and Mr. Widmer and a woman who he
introduced as his office manager, but I did not get her name. I don’t
recall what her name was at the time.
Q What were the discussions during that meeting?
A Well, he said he wanted to bring fluff in. He would pay two
dollars per ton. I said I was getting fluff from Smith under a State-
approved test period; that I was getting as much as I needed. I
didn’t need any more.
Page 55, lines 6-14
Q Were there any further discussions that day at that meeting?
PETE OR ORE RL OID APNEA ST DEH
A-27
A Yeah. He said: Well, you ought to just cut back on the loads
that Smith delivers so that I could take loads from him. Basically
what 1 said to him was: Smith got here first...
2 * *
Page G2, lines 19-21: Paee 63, line 1
Q Were there any discussions at this meeting, Mr. Taylor, about
Smith’s test results to the best of your knowledge?
A No, not from him.
-2]: ines 1-
Q Do you recall ever accumulating business cards from
Contaminated Soil Consultants, Inc.?
A I never got -- the only card I ever had was a card from Mr.
Widmer which is why I called him back. I never -- I am assuming
Fred G. Zehner is the guy I wrote on the memo as Mr. Zaines. |
am assuming that is the same guy. I have never seen Zehner’s card.
I have never seen V.J. McPhatter’s card. V_J. McPhatter, the name
sounds familiar. That might be something else. I don’t know who
Claude Shaffer is.
Q You have no idea why those cards are in the file?
A No.
A-28
Page 80, lines 6-12
Q Now, other than this meeting that took place with the office
manager and Mr. Widmer from CSCI and the two subsequent phone
calls you referred to from Mr. Zehner or Zaines and Widmer, did
you ever have any other contact with anyone from CSCI?
A Not that I know of. Not from anybody who identified themselves
as being from Contaminated Soils.
Q So, to the best of your knowledge, did anyone from CSCI ever
discuss with you any of Smith’s test results and whether or not they
had been misrepresented to the State and/or County? Do you have
any actual knowledge?
A No. I don’t think Mr. Widmer said that. No, I don’t think they
did.
A-29
APPENDIX G
IN THE CIRCUIT COURT FOR P.G. COUNTY, MARYLAND
JOSEPH SMITH AND SONS, *
INC., et al. — p
Plaintiffs .
VS. : CAL 92-10285
DAVIS INDUSTRIES,
et al *
Defendants ”
~~ = 2 eS © eS 4 6S SS ba * * x
JOSEPH SMITH & SONS, INC. and R. PAUL SMITH, in
answer to the Interrogatories propounded herein by Defendant, Fred
G. Zehner, states as follows:
* * *
8. Identify those documents or permits that reflect authorization
for Plaintiff to deposit their shredder residue in the three (3) above
Stated landfills.
ANSWER: See attached.
A-30
9. In reference to Paragraph 36 of the Complaint, state the
factual basis for Plaintiff's allegation that Mr. Sidney Shore
conspired with Fred Zehner to defraud and unlawfully interfere with
Plaintiffs’ business and in your answer identify the time and place
such actions occurred. In addition, identify all persons who
participated or witnessed such actions.
ANSWER: Upon information and belief, Sidney Shore provided
the information which was used in the letters, copies of which are
attached.
10. In reference to Paragraph 38 of the Complaint, state the
factual basis for Plaintiff's allegation that Fred Zehner schemed or
conspired to attempt to sop Plaintiff from depositing it’s shredder
residue at the Brown Station Landfill; specifically identifying any
person(s) who participated or witnessed such actions involving Fred
Zehner.
ANSWER: See attached.
11. State the factual basis supporting Plaintiffs’ allegations that
a letter was sent to members of the Prince George’s County Council
and other officials containing false and fraudulent statements
including a false laboratory analysis allegedly pertaining to Plaintiffs’
shredder residue; and, in your answer identify all documents
involved, in whose possession they exist and identify all persons who
participated or witnessed such actions.
ANSWER: See attached.
* x *x
14. In reference to Paragraph 38 of the Complaint, identify the
alleged test results that reflected Plaintiffs’ levels at 700 parts per
Le
A-31
million; specifically identify the test result document, the date
thereof, the type of test, the testing laboratory and whether the test
was based upon a request by Plaintiff for testing of Plaintiffs’
materials.
ANSWER: See attached. The test was not based upon a request
by the Plaintiff.
1 HEREBY SWEAR AND AFFIRM under the penalties of
perjury that the matters and facts contained in the foregoing Answers
to Interrogatories are true, accurate and correct to the best of my
personal knowledge, information and belief.
JOSEPH SMITH & SONS, INC.
s/_Michael Price
MICHAEL PRICE, Vice President
Respectfully submitted,
CAIN & WYROUGH., P.C.
s/_Richard R. Wyrough
RICHARD R. PAGE WYROUGH
14336 Old Marlboro Pike
Upper Marlboro, Maryland 20772
(301) 627-4600
* *K *
A-32
APPENDIX H
IN THE CIRCUIT COURT FOR P.G. COUNTY, MARYLAND
JOSEPH SMITH AND SONS, *
INC., et al.
=
Plaintiffs
*
VS. CAL 92-10285
*
DAVIS INDUSTRIES,
et al °
Defendants *
* * * * * *&* *£* * *€* Fe KF *F KE KH HK * *x* *« *
JOSEPH SMITH & SONS, INC. and PAUL SMITH, by and
through counsel, Richard R. Page Wyrough and the Law Offices of
Cain and Wyrough, in opposition to Defendant, Fred G. Zehner’s
Motion for Sanctions, states as follows:
1. Defendant’s counsel has moved for sanctions pursuant to rule
2-432.
* * *
6. Those documents have been supplied to counsel for
Zehner and the objections are moot. (emphasis added)
6. [sic] With respect to the alleged deficiencies identified in the
answers to Interrogatories 15, 16, 17, 19, 22 and 23, the information
requested is available in the documents supplied to counsel.
(emphasis added)
—————————E7~~
VV von ae eee
A-33
7. [sic] With respect to the demand that the answer to
Interrogatory numer 26 be supplemented, the answer will be
Supplemented when the information becomes available.
WHEREFORE, as a Motion for Sanctions is not available to the
Defendant as this time: as the motion is not in proper form; and as
the information demanded has been Supplied, the Plaintiffs
respectfully request this honorable Court to deny Defendant’s Motion
for Sanctions.
Respectfully submitted,
CAIN & WYROUGH, P.C.
s/_ Richard R. Wyrough
RICHARD R. PAGE WYROUGH
14336 Old Marlboro Pike
Upper Marlboro, Maryland 20772
(301) 627-4600
A-34
APPENDIX I
IN THE CIRCUIT COURT FOR P.G. COUNTY, MARYLAND
JOSEPH SMITH AND SONS, *
INC., et al.
_
Plaintiffs
—
VS. CAL 92-10285
x
DAVIS INDUSTRIES,
et al *
Defendants °
x* * * *£* &* & *£* £* Fe KH KF KF HE KF K * * *
REPORTER’S OFFICIAL TRANSCRIPT OF PROCEEDINGS
Motions Hearing
Upper Marlboro, Maryland
Friday, June 11, 1993
BEFORE:
THE HONORABLE WILLIAM D. MISSOURI, Associate Judge
* * *
THE COURT: I had Mr. Thomas’ motion to dismiss. I don’t
recall the other. But with respect to the motion to dismiss, Mr.
Wyrough there is a motion pending to dismiss the amended count
one.
MR. THOMAS: There is. It’s my motion.
A-35
Page H-4, lines 4-12
THE COURT: Are we sure that the other party is not going to
be prejudiced?
MR. THOMAS: Your Honor, I talked to him. It’s Gary
Stanley out of Mr. Mullenholz’ office for Ettleman and Davis
Industries. And he was just here observing today. He said, Doug,
I’m not here to testify or make any proffers or anything else other
than what you want to tell the Court.
-4, lines 17-25: -5, lines 1-
THE COURT: Okay. You’re here today on defendant Fred
Zehner’s motion for motion to compel or in the alternative?
MR. THOMAS: We’re here on our motion to compel, Your
Honor. It’s a very simple issue before the Court. And it basically
is that we have filed certain interrogatories that go back all the way
to August, 1992 upon the plaintiff. And he had supplied some of the
answers to those interrogatories. And some of the answers that he
supplied to referred to certain documents to be attached hereto.
Page H-5, lines 16-25; Page H-6, lines 1-25; Page H-7, lines 1-25:
- = -25: -9. li
Page H-8, lines 1-25; Page H-9, lines 1-9
(By Mr. Thomas)
A-36
Your Honor, I think it’s important to note that we have not filed
a motion to produce documents. We’re only dealing with
interrogatories so far. That’s as far as we’ve gotten so far.
There are 12 interrogatories that have not been fully explained.
THE COURT: Would you list them for me, sir?
MR. THOMAS: Yes, sir, Your Honor.
THE COURT: Tell me what your basis of complaint is with
respect to each.
MR. THOMAS: Yes, I will, Your Honor.
The first one, Your Honor, is question number eight, identify
those documents or permits that reflect authorization for plaintiff to
deposit their shredder residue in the three above stated landfills.
The answer we received was see attached documents. There
were no attached documents to the answers, Your Honor. In the
documents that were supplemented later, nothing indicated as to
which questions the particular documents pertain to.
And Your Honor, in all honesty, reviewing the documents, they
had very little relationship to each one of those questions. So, under
the rules, certainly counsel has the right to supplement his answer
with business documents kept in the ordinary course of business.
However, Rule 2-421(c) specifically states that he must do so
with specificity. He must specify the answer -- from where the
a
A-37
answer may be of. So, basically, the rule, Your Honor, under (c)
States that the burden is on him to specify which documents are
answering which interrogatories. And that’s all we’ve asked him to
do, Your Honor.
THE COURT: Okay, we’re going to take this one at a time. I
want to maybe sure -- Mr. Wyrough, do you have any response to
that?
He’s talking about his interrogatory number eight, sir.
MR. WYROUGH: I’ve not got a response to that at this time.
THE COURT: Okay, go ahead.
MR. THOMAS: Your Honor, the next interrogatory -- and there
is 12 altogether.
THE COURT: Yes, sir. I understand.
MR. THOMAS: The next one is interrogatory number nine, and
it is exactly the same Situation, Your Honor. It SayS, see attached
documents. There were no attached letters that refer to the --
attached on the interrogatories.
THE COURT: Mr. Thomas, forgive me for interrupting you.
I don’t like to do that, but have you and Mr. Wyrough had any
conversation about these things? Have you all talked to each other?
A-38
MR. THOMAS: Yes, Your Honor. We've talked. I’ve sent
several letters to him requesting information. Nothing has been
forthcoming.
THE COURT: Okay, go ahead, sir.
MR. THOMAS: Number nine, Your Honor, is exactly the same
thing requesting the documents where he said see attached.
THE COURT: Okay. Yes, sir, go ahead.
MR. THOMAS: And number ten, exactly the same situation.
No attached documents.
Number 11, Your Honor, the same situation.
Number 14, Your Honor, the same situation.
And question number 15, ... We received no response to that,
Your Honor.
THE COURT: Okay.
THE COURT: We’re on number 16.
MR. THOMAS: Your Honor, the next question interrogatory is
number 17.
A-39
THE COURT: And what was the response to that?
MR. THOMAS: Nothing, Your Honor.
THE COURT: Okay.
MR. THOMAS: Interrogatory number 19, ....
We did not receive an answer on that, Your Honor a sufficient
answer.
Interrogatory number 22, ....
(By Mr. Thomas)
We did not receive an answer.
Interrogatory number 23, Your Honor, ...
Did not receive an answer.
Interrogatory number 26, ...
Supplemental answers have not followed.
A-40
Interrogatory number 27, ...
... We did not receive an answer to that.
THE COURT: I read as I was going through the file that there
was a dispute about cataloging here.
Mr. Thomas, what say you about that?
(By Mr. Thomas)
But Your Honor, I’m not even dealing with that. I’m still at the
interrogatory stage, and he elected in his answers in interrogatories
to refer to documents and say see attached. And the rule is clear
under (c). Under 2-421 that he has to specify which of those
documents pertain to which answer, and he has not done that.
2-421(c), Your Honor.
THE COURT: Just had the wrong volume, sir.
Okay, Mr. Wyrough, what say you to that? That rule seems to
say what he said.
THE COURT: Well, I’m just a country boy, but it says, a
specification shall be in sufficient detail to permit the interrogating
party to locate and to identify.
_ — —<
A-41
And that tells me you have to have some specification there.
Otherwise, we get ‘ato a situation of Class Action, and I don’t want
to bring the movies in here, but you saw that and you saw how they
buried documents there.
So, I don’t want that to happen in this case. So, but I will issue
a fiat. I suggest you cooperate. I don’t want to do that.
MR. FARRINGTON: There is some material. We are arguing
with his clients on the basis that they are serious competitors. And
when we argue against them and we’re Saying to them that they are
competitors in the area of fluff and they are saying to us, oh, yeah,
give me all your names of your client lists and give me all of the
businesses we’re going to be in, there is serious fussing.
THE COURT: Oh, I know you will be. and you consider that
to be a trade secret. I understand that.
MR. THOMAS: .... They ask him simply to identify what
documents is it that support or would answer these interrogatories.
-22, lines 4-24
(By Mr. Thomas)
All I’m asking -- but I don’t want, as he has done as to give me
two stacks of documents and say see attached. And somewhere in
there -- because what’s going to happen -- and I’ve been down this
A-42
road so many times before is that there are going to be some
documents later on that come up, and he will say, well, it’s in that
stack that you had.
And I’m saying the -- my client is going to ream me out because
he’s going to say, you have asked the question. Why didn’t you get
the answer?
THE COURT: Mr. Thomas, you will get your answer. I’m
going to take Mr. Farrington’s suggestion, because it ones that you
asked right from the beginning. See if that will work by you are
going across the street. I’m not expecting you to react as the movie
Class Action did, because I know that’s something I was hoping only
happened in Hollywood. Obviously not.
(By Mr. Wyrough)
We're not talking about as in Class Action boxes and boxes and
boxes where it is, you know, patently -- somebody is trying to hide
something. It’s not even close to that.
A-43
APPENDIX J
IN THE CIRCUIT COURT FOR P.G. COUNTY, MARYLAND
KRKEKKKAKK
CASE ASSIGNED TO JUDGE JAMES P SALMON
KK KKK KKK
Joseph Smith & Sons vs. Smith Case No: CAL 92-10285
DOCKET INFORMATION
DATE: NUMBER: DOCKET ENTRY:
06/08/92 001
01/04/93 050
01/18/93 056
01/26/93 059
03/26/93 073
04/15/93 076
Complaint and Lines, FD.
* _
Motion for Sanctions, Certificate and Affidavit of
Counsel, and Exhibits, Filed.JC
~ x ~x
Opp to Motion for Sanctions, Filed.GE
* « *
Order dated 012593, Judge Martin. Ordered that
the Defendant’s Motion for Sanctions be denied.
CC mailed by court. FD.DMS
* x *
Motion to Compel Discovery, Request for
Hearing, Points and Authorities, Certificate and
Affidavit of Counsel, Exhibits. Filed.JC
x * *
Opp to Motion to Compel. FD.GE
06/14/93 089
06/30/93 090
08/12/93 092
10/8/93 100
1/11/94 106
A-44
Daily Sheet dated 6/11/93 Judge Missouri,
Defendant Fred C. Zehner Motion to Compel
Discovery argued Miss Miller reporter motion not
ruled on this date reset 6/30/93 for further hearing
on motion, parties notified. FD.
Daily Sheet dated 6/30/93 Judge Missouri,
continue Mr. Rogers reporter reset 8/10/93 on
issue discovery before Judge Missouri, case to be
specially set before a judge for trial 2 weeks, case
not to be set before Judge Missouri for trial. FD.
Daily Sheet dated 8/10/93 Judge Missouri ... Line
to be filed with answers complete, reset 8/26/94,
settlement conference 9/26/94 ...
Scheduling Order, dated 9/29/93, ordered that
discovery will be complete by 4/1/94, motions for
summary judgment will be filed by 6/15/94, oral
arguments and ail other pending motions will be
heard on 7/7/94, all motions in limine will be
filed by 9/5/94, proposed voir dire will be filed by
9/12/94, jury instructions will be filed by 9/17/94,
trial will begin 9/26/94, Judge Salmon, cc sent by
court. FD.
x * x
Daily Sheet dated 1/6/94 Judge Salmon,
Defendant's Zehner’s motion to compel discovery
argued ...
x x x
A-45
01/31/94 108 Order granting motion to compel discovery, dated
1/11/94, Judge Salmon, ordered that plaintiffs
Shall produce ... material pursuant to Defendant’s
first request for production of documents ...
01/31/94 109 Order dated 1/10/94, Judge Salmon, ordered ...
that Plaintiff submit its supplemental answers to
interrogatories propounded by defendant to
counsel for defendant within fifteen days ...
* * x
06/09/94 129 Suggestion of Bankruptcy. FD. (JSALMON)
7~ * ~
A-46
APPENDIX K
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
X
In Re: :
Joseph Smith & Sons, Inc. - Case No. 94-1-2947DK
Debtor. :
X
October 13, 1995
Upper Marlboro, Maryland
Deposition of
ROBERT PAUL SMITH
a witness in the above-entitled cause, was called for examination by
counsel for Contaminated Soil Consultants, Inc., pursuant to notice
of deposition and to agreement of counsel as to time and place, in
the offices of Cain & Wyrough, ...
* *x *
EXAMINATION BY COUNSEL FOR CONTAMINATED SOIL
CONSULTANTS, INC.
BY MR. THOMAS:
Q Mr. Smith, would you state your full name and current business
address for the record.
A-47
A My name is Robert Paul Smith. My business address is 2001
Kenilworth Avenue, Beaver Heights, Maryland.
Page 9, lines 12-13
A_ I became the general manager of all the companies.
Page 12, lines 12-14
Q So you still oversee the whole operation, you’re chief executive
Officer; is that a fair statement?
A That’s a fair statement.
Page 15, lines 17-18
THE WITNESS: ... The second closest competitor would have
been Davis Industries....
Page 18, lines 17-18
... I just remember there were tow or three gentlemen from
Contaminated Soils.
Page 19, lines 17-22
Q You stated you thought you met Mr. Zehner at that time. You’re
not positive of that; is that correct?
A-48
A | assume this is Mr. Zehner right here (indicating)?
Q This is Fred Zehner right here.
A_ I don’t recognize him right now.
Page 20, lines 4-6
Q Do you recall ever meeting Mr. Zehner face to face?
A No.
| Page 20, lines 10-13
Q Did they leave any card with you or any documents?
A lI remember them leaving business cards. I usually ask for them.
Page 20, lines 16-18
Q You don’t recall the names on those business cards?
A_ I think one of them said Zehner.
Page 21, lines 4-12
Q Any communications with them after that?
——— Ll
A-49
A I don’t remember any.
Q Any contacts with any of their representatives or agents after that
initial recollection?
A I kind of remember McPhatter coming in, who worked for them,
periodically to see where we were going with our auto fluff and
seeing if he couldn’t broker our auto fluff into various locations, and
I kind of remember him giving us prices to do that.
Page 22, lines 15-19
A Just through his involvement with Contaminated Soils.
Q Did he ever try to sell anything or act as your agent or broker?
A Not to my knowledge.
Page 23, lines 2-4
THE WITNESS: Yes. I remember he came in and wanted the
ability to broker our auto fluff as waste into certain landfills.
Page 23, lines 10-15
Q And do you recall if he was specifically representing himself as
an agent for CSCI?
A-50
MR. WYROUGH: Objection to the form. Go ahead and
answer.
THE WITNESS: Yes. He handed me his business card and
that’s who he represented.
p 33. lines 17-22: Pave 34. lines 1-18
Q What was the test result of?
A_ It was a test result of auto fluff.
Q Was there anything damaging in that test result?
A It implied that it was damaging and when you first read it it
looked damaging, but when you read it very carefully the end result
was it wasn’t damaging, the way I remember it. It was implied that
it was a test of auto fluff that failed and the numbers had been
altered, but the letters were not altered and because the letters
weren’t altered and they were, as I remember it, parts per billion
instead of parts per million, if it had gotten to an expert they would
have known that it wasn’t damaging. But it was easy to miss.
Q When you say it was implied, how do you mean implied?
A Most everybody knows that PCBs fail the test at 50, 50 parts per
million. Most lab reports on auto fluff are reported in parts per
million, so anybody who is used to typically looking at a report they
see the number as above or below 50, they don’t look any farther
than that. I remember this number being well, well, well above 50
A-51
and as I recall it it was a long time before somebody pointed out that
somebody didn’t change the letters either.
Page 35, lines 10-15
Q Now why do you believe that someone from CSCI had something
to do with that second letter, the Alex Williams letter?
A Because the people from CSCI delivered to Mr. Taylor at Anne
Arundel County a package trying to sell the benefits of using Davis’
auto fluff as daily cover and gave a complete package as to why it
was better, and as part of that package that lab report in its unaltered
State was part of that package.
Page 37, lines 7-14
Q Which means that it wouldn’t have been detrimental to Joseph
Smith & Sons if in fact that had been their test result?
A That’s the way I remember it.
Q And is it your testimony that your understanding was that that
was presented to Mr. Taylor in Anne Arundel County in its
unaltered state?
A Correct.
A-52
Q How do you know that?
A Because Mr. Taylor called me up and said he had a package that
was delivered from Contaminated Soils showing the benefits of their
auto fluff and if I would like to take a look at it he’d be glad to
show it to me.
Q And did you in fact take him up on that offer?
A_ | in fact took him up on that offer.
Q And what did he provide to you?
A The package that was given to him by Contaminated Soils.
Page 41, lines 1-19
Q What was the substance of that conversation?
A When I read through the packet and saw the test result I called
him up because I had given him a copy of the Prince George’s
County Alex Williams letter and the lab test because our style of
doing business is we prefer to tell everybody anything we know so
that nobody ever gets surprised by anything that goes on in the
marketplace. So he had already seen and had a copy of the letter to
my knowledge. I think I said, guess what’s in this packet that came
from Contaminated Soils. He said, I don’t know. I said, the lab
report that was attached to that Prince George’s County Alex
ee eee ta |
A-53
Williams letter in its unaltered state, with every number other than
the altered numbers right down to the part per billion, exactly the
same. His comment was, unbelievable.
Q This test result, as you stated earlier, you believe was a Davis
Industries test result?
A_ It was checked out to be a Davis Industries test result.
p 19. lines 11-22: F 50. lines 1-10
Q During this period of time were you concerned that CSCI was
becoming a competitor of Joseph Smith & Sons?
A Absolutely not.
Q_ Did you feel that they were any threat to your volume of business
at that time?
A Absolutely not. They’re not in the same business as I am.
Q What was it that they were trying to get into Anne Arundel
County Landfill then?
A They were trying to move all the fluff into Anne Arundel County
Landfill.
Q And were you sending auto fluff into Anne Arundel County
Landfill at the time?
A-54
A Yes.
Q Would you not characterize that as a competitor?
A No.
Q Why not?
A Because I could have gone to any other number of landfills,
okay, if Anne Arundel didn’t want it. They product is something
that Anne Arundel County wanted and needed and so did many
others.
<0. lines 21-22: Page 70. line }
Q_ Did you ever consider dropping the litigation against Mr. Zehner
prior to the filing of bankruptcy?
A No.
Page 74, lines 10-14
(By Mr. Thomas)
Did Mr. McPhatter ever ask you if he could market your cover
material, to the best of your recollection?
A I don’t ever remember McPhatter coming in and asking us to
market our material as cover anywhere.
A-55
Page 74, lines 18-22: Page 75. line |
Q Did he ever try to get you approved at any of the landfills?
A_ As cover or for disposal?
Q Either one.
A I think he tried to get us approved somewhere for disposal and
gave us a price for disposal.
Page 75, lines 16-22: Page 76. lines 1-3
Q Was Conservit ever a competitor of your’s, of Joseph Smith’s?
A_ In what area?
Q I cover material?
A_ The only time we ever bumped into Conservit on cover material
was when Howard County put out a solicitation for -- I think the
solicitation read auto fluff for daily cover. They tied it with a bid
for the sale of metals from the landfill. They bid on that: we bid on
that; they were the successful bidder.
x * x
A-56
APPENDIX L
(References to Bifurcatic.2)
UNITED STATES BANKRUPTCY COURT
DISTRICT OF MARYLAND
(Southern Division)
In re:
JOSEPH SMITH & SONS, INC.
Case No. 94-1-2947 DK (11)
and
R. PAUL SMITH
Case No. 94-1-2948DK(11)
Debtors.
October 17, 1995
U.S. Bankruptcy Court
Greenbelt, Maryland
HEARING
Page 60, lines 18-20
MR. THOMAS: Your Honor, pursuant to the agreement that we
have with respect to the damages, I have no further questions for
Mr. Zehner at this time.
THE COURT: This again is subject to the agreement and
stipulation on damages?
MR. WYROUGH: Yes, it is, Your Honor.
MR. THOMAS: Yes, Your Honor.
* * *
Page 89, lines 8-13
THE COURT: Ladies and gentlemen, we’ve had a bench
conference regarding the legal position taken by both parties with
respect to the issue of whether or not sufficient evidence is in the
record to support an abuse of process claim under the jurisprudence
of Maryland, at least at the state in which we find it.
* * *
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.