In Re: Oracle Oil, LLC, No. 2:2018cv03674 - Document 104 (E.D. La. 2019)

Court Description: ORDER AND REASONS granting 100 Motion for Summary Judgment. Signed by Judge Susie Morgan on 6/6/2019. (sbs)
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In Re: Oracle Oil, LLC Doc. 104 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A ORACLE OIL, LLC, Plain tiff CIVIL ACTION VERSU S N O. 18 -3 6 74 EPI CON SU LTAN TS, D e fe n d an t SECTION : “E” ORD ER AN D REAS ON S Before the Court is a Motion for Sum m ary J udgm ent 1 filed by Defendant EPI Consultants (“EPI”). Plaintiff Oracle Oil, LLC (“Oracle”) opposes the m otion. 2 EPI filed a reply. 3 For the following reasons, the m otion is GRAN TED . BACKGROU N D Oracle, a com pany owned solely by Robert Brooks, 4 was the operator of the Lucille Broussard, et al. No. 1 well (“the well”) located in Verm illion Parish. 5 Oracle alleges it contracted with EPI for EPI to provide consulting engin eering services, on-site supervision, and other services in connection with the reworking of the well. 6 Oracle alleges that, in connection with the contracted work, EPI used rusty, scaly pipe and failed to properly inspect or clean the pipe before running it in the well. 7 Oracle further alleges that EPI set retain ers, bridge plugs, and/ or pokers near joints in the casing, causing a split in the casing. 8 1 R. Doc. 10 0 . R. Doc. 91; R. Doc. 92. 3 R. Doc. 10 1. 4 R. Doc. 26-2 at ¶ 1; R. Doc. 42-1 at ¶ 1. 5 R. Doc. 1-7 at ¶ 2. 6 Id. at ¶ 3. 7 Id. at ¶ 5. 8 Id. at ¶¶ 22-24. 2 1 Dockets.Justia.com On May 24, 20 19, EPI filed the instant m otion for sum m ary judgm ent. 9 EPI argues there is no evidence in the record to support an essential elem ent of Oracle’s claim for dam ages and, as a result, EPI is entitled to judgm ent as a m atter of law. LEGAL STAN D ARD “One of the principal purposes of the sum mary judgm ent rule is to isolate and dispose of factually unsupported claim s or defenses.”10 Sum m ary judgm ent is appropriate only “if the m ovant shows that there is no genuine dispute as to any m aterial fact and the m ovant is entitled to judgm ent as a m atter of law.”11 “An issue is m aterial if its resolution could affect the outcom e of the action.”12 When assessing whether a m aterial factual dispute exists, the Court considers “all of the eviden ce in the record but refrains from m aking credibility determ inations or weighin g the eviden ce.”13 All reasonable inferen ces are drawn in favor of the nonm oving party. 14 There is no genuin e issue of m aterial fact if, even viewing the evidence in the light m ost favorable to the nonm oving party, no reasonable trier of fact could find for the nonm oving party, thus entitling the m oving party to judgm ent as a m atter of law. 15 If the dispositive issue is on e on which the m oving party will bear the burden of persuasion at trial, the m oving party “m ust com e forward with evidence which would ‘entitle it to a directed verdict if the evidence went uncontroverted at trial.’”16 If the m oving party fails to carry this burden, the m otion m ust be denied. If the m oving party 9 R. Doc. 10 0 . Celotex Corp. v. Catrett, 477 U.S. 317, 323– 24 (1986). 11 F ED . R. CIV. P. 56; see also Celotex Corp., 477 U.S. at 322– 23. 12 DIRECTV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 20 0 5). 13 Delta & Pine Land Co. v. N ationw ide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 20 0 8); see also Reeves v . Sanderson Plum bing Prods., Inc., 530 U.S. 133, 150 – 51 (20 0 0 ). 14 Little v. Liquid Air Corp., 37 F.3d 10 69, 10 75 (5th Cir. 1994). 15 Sm ith v. Am edisy s, Inc., 298 F.3d 434, 440 (5th Cir. 20 0 2). 16 Int’l Shortstop, Inc. v. Rally ’s, Inc., 939 F.2d 1257, 1263– 64 (5th Cir. 1991) (quoting Golden Rule Ins. Co. v. Lease, 755 F. Supp. 948, 951 (D. Colo. 1991)). 10 2 successfully carries this burden, the burden of production then shifts to the nonm oving party to direct the Court’s attention to som ething in the pleadings or other evidence in the record setting forth specific facts sufficient to establish that a genuine issue of m aterial fact does indeed exist. 17 If the dispositive issue is one on which the nonm oving party will bear the burden of persuasion at trial, the m oving party m ay satisfy its burden of production by either (1) subm itting affirm ative eviden ce that negates an essential elem ent of the nonm ovant’s claim , or (2) dem onstrating there is no evidence in the record to establish an essential elem ent of the nonm ovant’s claim . 18 When proceeding under the first option, if the nonm oving party cannot m uster sufficient eviden ce to dispute the m ovant’s contention that there are no disputed facts, a trial would be useless, and the m oving party is entitled to sum m ary judgm ent as a m atter of law. 19 When, however, the m ovant is proceeding under the second option and is seeking sum m ary judgm ent on the ground that the nonm ovant has no evidence to establish an essential elem ent of the claim , the nonm oving party m ay defeat a m otion for sum m ary judgm ent by “calling the Court’s attention to supporting eviden ce already in the record that was overlooked or ignored by the m oving party.”20 If the nonm oving party fails draw the Court’s attention to overlooked eviden ce, 17 Celotex, 477 U.S. at 322– 24. Id. at 331– 32 (Brennan, J ., dissenting); see also St. Am ant v. Benoit, 80 6 F.2d 1294, 1297 (5th Cir. 1987) (citing J ustice Brennan’s statem ent of the sum m ary judgm ent standard in Celotex, 477 U.S. at 322– 24, and requirin g the m ovants to subm it affirm ative evidence to negate an essential elem ent of the nonm ovant’s claim or, alternatively, dem onstrate the non m ovant’s evidence is insufficient to establish an essential elem ent); Fano v. O’N eill, 80 6 F.2d 1262, 1266 (citing J ustice Brennan’s dissent in Celotex, and requirin g the m ovant to m ake an affirm ative presentation to negate the nonm ovant’s claim s on sum m ary judgm ent); 10 A CHARLES ALAN W RIGHT, ARTHUR R. M ILLER & M ARY KAY KANE , F EDERAL P RACTICE AND P ROCEDURE §2727.1 (20 16) (“Although the Court issued a five-to-four decision, the m ajority an d dissent both agreed as to how the sum m ary-judgm ent burden of proof operates; they disagreed as to how the standard was applied to the facts of the case.” (internal citations om itted)). 19 First N ational Bank of Arizona v. Cities Service Co., 391 U.S. 253, 28 8– 89 (1980 ); Anderson v. Liberty Lobby , Inc., 477 U.S. 242, 249– 50 (1986). 20 Celotex, 477 U.S. at 332– 33. 18 3 there is no genuin e issue as to any m aterial fact, “since a com plete failure of proof concern ing an essential elem ent of the nonm oving party's case necessarily renders all other facts im m aterial.”21 “Sum m ary judgm ent should be granted if the nonm oving party fails to respond in one or m ore of these ways, or if, after the nonm oving party responds, the court determ ines that the m oving party has m et its ultim ate burden of persuading the court that there is no genuine issue of m aterial fact for trial.”22 LAW AN D AN ALYSIS To determ ine whether EPI is entitled to sum m ary judgm ent, the Court m ust determ ine the n ature and basis of Oracle’s claim against EPI and, based on that decision, identify the elem ents of the cause of action. Oracle alleges EPI’s liability is based on EPI’s: (1) defective perform ance in the discharge of its contractual duties; (2) negligence in the discharge of its contractual duties and breach of contract; and (3) breach of EPI’s contractual duty to provide services in a good and workm anlike m anner. 23 It appears that, in the past, Oracle took the position in a Louisiana state court action that it asserts a breach of contract action against EPI. 24 By way of explanation, this action com m enced in state court in 20 0 9 and proceeded there until Oracle filed a Chapter 11 bankruptcy in this district in 20 17. 25 The reference of this action to the bankruptcy court was withdrawn in 20 18 due to Oracle’s jury trial dem and. 26 Before the bankruptcy, while this case was pending in state court, Oracle appealed the state trial court’s finding that Oracle’s claim s had prescribed. According to the Louisiana First Circuit Court of 21 Celotex, 477 U.S. at 323. Id.; see also First N ational Bank of Arizona, 391 U.S. at 289. 23 Id. at ¶ 32. 24 Oracle Oil, LLC v. EPI Consultants, Div. of Cudd Pressure Control, Inc., 20 11-0 151 (La. App. 1 Cir. 9/ 14/ 11), 77 So. 3d 64, 68 . 25 R. Doc. 1; see also In Re Oracle Oil, case no. 17-12391 (Bankr. E.D. La.). 26 R. Doc. 5 (withdrawing the reference). 22 4 Appeal opinion, Oracle asserted its claim s are contractual or quasi-contractual and, as a result, have not prescribed. 27 The First Circuit found Oracle’s claim s have not prescribed, whether the claim s were contractual or delictual. 28 In connection with a m otion for judgm ent on the pleadings based on prescription filed before this Court, 29 Oracle appears to have changed its position and now argues that it is bringing contractual and negligence causes of action against EPI. 30 This Court noted in its denial of the m otion that a party dam aged by conduct arising out of contract m ay have a right to seek dam ages in tort and for breach of contract. Nevertheless, the Court found Oracle’s cause of action is for breach of contract as, “Oracle’s Petition alleges it contracted with EPI and seeks dam ages as a result of defective perform ance, negligent discharge, and breach of EPI’s contractual duties. Oracle alleges a breach of an obligation contractually assum ed by EPI.”31 The Court now reaffirm s its finding that Oracle’s claim against EPI is for breach of contract. 32 As the Plaintiff, Oracle bears the burden of proving each elem ent of its breach of contract claim by a preponderance of the evidence. 33 Because Oracle has the burden of persuasion at trial, EPI m ay satisfy its burden on sum m ary judgm ent by dem onstrating there is no evidence in the record to establish an essential elem ent of Oracle’s claim . In 27 Oracle Oil, LLC, 77 So. 3d at 68. The Louisiana First Circuit concluded Oracle did not have actual or constructive knowledge of the dam age to the well until J uly of 20 0 8 and, as a result, prescription did not begin to run until that date. 28 Id. 29 R. Doc. 25. 30 R. Doc. 28 . 31 R. Doc. 68 (internal citations om itted). 32 Even if Oracle brin gs a negligence cause of action , and assum ing that cause of action has not prescribed, Oracle still m ust dem onstrate it sustained dam ages. Dam age is an essential elem ent of both a claim for breach of contract and a claim for negligence. Roberts v. Benoit, 60 5 So. 2d 10 32, 10 51 (La. 1991), on reh'g (May 28, 1992). For the reasons explained herein , Oracle is unable to m eet its burden on sum m ary judgm ent to call the Court’s attention to evidence in the record to support an essential elem ent of its claim — that it sustained dam ages— regardless of whether that claim is for breach of contract or for negligence. 33 Sam 's Sty le Shop v. Cosm os Broad. Corp., 694 F.2d 998, 10 0 4 (5th Cir. 1982). 5 order to recover for breach of contract under Louisiana law at trial, Oracle m ust prove: (1) EPI undertook an obligation to perform ; (2) EPI failed to perform the obligation (i.e. breach); and (3) the breach resulted in dam ages to Oracle. 34 EPI argues the essential elem ent Oracle has no eviden ce to establish is whether the breach resulted in dam ages to Oracle. Originally, Oracle sought direct and consequential dam ages from EPI as a result of the breach of contract, including (1) the costs and expenses incurred by Oracle, (2) the loss of reserves and revenue, and (3) and the cost of drilling a replacem ent well. 35 In its opposition to this m otion for sum m ary judgm ent, Oracle concedes it cannot recover costs associated with reworking the well (or drilling a replacem ent well) as it no longer has the leases n ecessary to en ter the land and explore m inerals. 36 The Court has determ in ed Oracle is not entitled to dam ages for the loss of reserves and revenue. 37 Accordingly, the only rem aining dam ages Oracle seeks related to the breach of contract are the costs an d expen ses incurred by Oracle related to the well. The Court m ust exam ine whether Oracle has called the Court’s attention to evidence already in the record that was overlooked or ignored by the m oving party showing Oracle has sustained dam ages in the form of the costs and expenses related to the well. Pursuant to Louisiana Civil Code article 1995, dam ages in a breach of contract action, “are m easured by the loss sustained by the obligee and the profit of which he has 34 See, e.g., Regions Bank v. C.H.W . Rest., LLC, No. 17-870 8 , 20 18 WL 31360 0 3, at *6 (E.D. La. J une 27, 20 18); Arthur J. Gallagher & Co. v. O'N eill, No. 17-2825, 20 17 WL 25740 0 6, at *3 (E.D. La. J une 14, 20 17). 35 R. Doc. 1-7. 36 R. Doc. 91 at 5 n . 5. 37 See R. Doc. 98 (precludin g Oracle from offerin g expert testim ony regarding the loss of reserves and revenue because such testim ony does not reflect the correct dam ages m odel and is speculative). 6 been deprived.”38 In this case, Oracle argues it has sustained dam ages in the form of a loss. An obligee who seeks dam ages because it has sustained a loss as a result of a breach of contract m ust show actual dam age, m eanin g “a loss or injury to the obligee's interest.”39 “Put another way: ‘[t]he m easure of dam ages for a breach of contract is the sum that will place plaintiff in the sam e position as if the obligation had been fulfilled.’”40 EPI argues it is entitled to judgm ent as a m atter of law because there is no evidence in the record to establish an essential elem ent of Oracle’s breach of contract claim , nam ely, that Oracle sustained dam ages. EPI argues that, because Oracle did not directly pay the expenses related to the well and is not obligated to repay the expenses related to the well paid by Delphi and Doerr, EPI is entitled to judgm ent as a m atter of law. The parties do not dispute that Delphi Oil, Inc. (“Delphi”) and Doerr Operating, LLC (“Doerr”) paid the expen ses related to the well. 41 Like Oracle, these com panies are solely owned by Robert Brooks. 42 The parties also do not dispute that, at his re-deposition, Mr. Brooks did not produce or identify any docum ent to show the paym ent of any am ount by Oracle to an unrelated third party for goods or services provided to the well. 43 Oracle concedes it did not write checks to Delphi or Doerr, entities owned by Mr. Brooks, for expenses 38 LA. CIV. CODE ART. 1995. The Court has determ ined Oracle is not entitled to dam ages for loss of profits in this action. See R. Doc. 98 (precludin g Oracle from offering expert testim ony regarding the loss of reserves and revenue because such testim ony does not reflect the correct dam ages m odel and is speculative). 39 6 LOUISIANA CIVIL LAW TREATISE , LAW OF O BLIGATIONS § 3.5. Required circum stan ces (2d ed.). 40 LAD Servs. of La., L.L.C. v . Superior Derrick Servs., L.L.C., 20 13-163 (La. App. 1 Cir. 11/ 7/ 14) 20 14 WL 579460 6 at *19-20 (quotin g Dixie Roofing Co. of Pineville, Inc. v . Allen Par. Sch. Bd., 95– 1526 (La. App. 3 Cir. 5/ 8/ 96), 690 So.2d 49, 56); Ducote v. City of Alexandria, 70 6 So.2d 673, 675 (La. Ct. App. 1998 ). 41 R. Doc. 10 0 -2 at ¶ 3; R. Doc. 92 at ¶ 3. 42 The parties do not include this as a statem ent of uncontested m aterial fact. Nevertheless, it is clear the parties agree that Doerr an d Delphi are solely owned by Mr. Brooks. See R. Doc. 10 0 -1 at 9; R. Doc. 91 at 1. At deposition , Mr. Brooks confirm ed he is the sole own er of Doerr and Delphi. 43 R. Doc. 10 0 -2 at ¶ 2; R. Doc. 92 at ¶ 2. The invoices produced m erely dem onstrate Delphi and Doerr received a bill for the expenses. The in voices do not dem onstrate that Delphi an d Doerr actually paid the invoices. Plaintiff did not provide any cancelled checks or other evidence, beyon d the “paid” notation on som e of the in voices, that Delphi and Doerr paid the expenses. 7 related to the well. 44 At his re-deposition, Mr. Brooks adm itted (1) there is no docum ent to show that Oracle paid any of the expenses related to the well, (2) there is no written contract between Oracle and Delphi or between Oracle and Doerr for the paym ent of expen ses related to the well, and (3) there is no written docum ent to show the Court that Oracle reim bursed Delphi or Doerr for the expenses of the well. 45 To defeat EPI’s m otion for sum m ary judgm ent, Oracle m ust call “the Court’s attention to supporting evidence already in the record that was overlooked or ignored by [EPI]” to show that Oracle did sustain dam ages. 46 Oracle argues it has m et this burden and calls the Court’s attention to evidence that Delphi and Doerr paid the expenses on behalf of, and for the benefit of, Oracle pursuant to an oral contract between Oracle and them . Oracle points to Mr. Brooks’ deposition testim ony that Delphi and Doerr, Brooks’ other solely owned entities, paid the expenses pursuant to “verbal contracts between m e and m yself.”47 Oracle also points to Mr. Brooks’ affidavit, in which he swears: (1) he directed the solely owned entities to conduct business on behalf of and for the benefit of Oracle, (2) he directed Delphi and Doerr to pay debts associated with the well on behalf of and for the benefit of Oracle, and (3) he bound his com panies via oral contracts to pay bills and conduct operations, all for the exclusive benefit of Oracle. 48 Notably, Mr. Brooks’ affidavit does not state that Oracle actually has reim bursed Delphi and Doerr for the expen ses Oracle alleges they paid from April 20 0 8 until October 20 14. 49 There is no 44 R. Doc. 92 at ¶ 1. R. Doc. 10 0 -3 at 13-15. 46 Celotex, 477 U.S. at 332– 33. 47 R. Doc. 91-1 at 2. 48 R. Doc. 91-4 at 1. 49 Id. 45 8 eviden ce, other than Mr. Brooks’ testim ony, that there is an oral contract between Oracle and Delphi or between Oracle and Doerr. Evidence of paym ent of expenses by an entity other than the plaintiff is not sufficient to prove the plaintiff sustained dam ages, absent a showing that the plaintiff is legally obligated to reim burse the other entity. For exam ple, in Koncinsky v. Sm ith, cancelled checks on the account of George Koncinsky Realtor Builder were insufficient to prove George Koncin sky, Inc. suffered dam ages. 50 As a result, the court found the plaintiff, George Kon cinsky, Inc., was unable to prove it had sustained dam ages. Sim ilarly, in this case, the Brooks deposition testim ony and affidavit state that Delphi and Doerr have paid the expenses, not Oracle. This evidence does not show Oracle sustained dam ages. Oracle argues it has produced evidence to show it sustained dam ages because Mr. Brooks testified at deposition and swore in his affidavit that there is an oral agreem ent for Oracle to pay Delphi and Doerr the expenses they incurred. 51 The evidence from Mr. Brooks alone is not sufficient to show Oracle sustained a loss. Pursuant to Louisiana Civil Code article 1846, a contract in excess of $ 50 0 “m ust be proved by at least one witness and other corroborating circum stances.”52 The am ount claim ed by Oracle by virtue of its oral agreem ent with Delphi and Doerr is well in excess of $ 50 0 . 53 A party to an action m ay serve as a witness to establish the existence of an oral contract in excess of $ 50 0 , but the other corroborating circum stances m ust com e from a source other than the party 50 Koncinsky v. Sm ith, 390 So.2d 1377, 138 2 (La. App. 3 Cir. 1980 ). Doc. 91-1 at 2; R. Doc. 91-4 at 1. 52 LA. CIV. CODE art. 1846. 53 R. Doc. 91-3. 51 R. 9 claim ing the agreem en t. 54 For exam ple, in Bourg v. Bourg, a husband’s uncontroverted testim ony, alone, was insufficient to support the jury’s determ ination that the husband m ade a $ 7,0 0 0 loan to his fam ily corporation. 55 Sim ilarly, in United States v. Arm strong, the court concluded a party failed to dem onstrate the existence of a $ 22,0 0 0 loan by a preponderance of the eviden ce because there was no written note or docum entary eviden ce of the loan, no evidence that the debtor m ade paym ents towards the satisfaction of the debt in seven years, and no other testim ony or corroborating evidence dem onstrating the existence of the loan. 56 In this case, in order to find the existence of an oral contract obligating Oracle to reim burse Delphi and Doerr for costs and expenses related to the well, there m ust be evidence to corroborate the testim ony of Mr. Brooks that there is an oral contract. No such corroborating eviden ce has been pointed to by Oracle. Based solely on the Brooks affidavit and deposition testim ony, no reasonable trier of fact could find sufficient evidence to prove the existence of an oral obligation for Oracle to reim burse Delphi and Doerr for costs and expenses related to the well. 57 A court m ay grant sum m ary judgm ent when the plaintiff fails to present corroborating evidence dem onstrating the existence of a contract and when the existence of a contract is essential to an elem ent of the plaintiff’s claim . 58 For exam ple, in First Bank and Trust v. Trem e, the plaintiff attem pted to dem onstrate the existence of a contract with his own affidavit and the affidavit of a third person. 59 The affidavit of the third person 54 Double N RJ Trucking, Inc. v. Johnson, 17-667 (La. App. 5 Cir. 5/ 16/ 18) 247 So.3d 1125, 1131; Harris v. Olivier's Contractors, 20 14-765 (La. App. 3 Cir. 12/ 10 / 14), 155 So.3d 652, 659. 55 Bourg v. Bourg, 1997-20 67 (La. App. 1 Cir. 9/ 25/ 98), 720 So.2d 59, 61. 56 U.S. v. Arm strong, 20 0 7 WL 7335173 at *4 (E.D. La. J une 1, 20 0 7) (ruling on a forfeiture hearing). 57 Sm ith, 298 F.3d at 440 . 58 Suire v. Lafay ette City -Par. Consol. Gov't, 20 0 4-1459 (La. 4/ 12/ 0 5), 90 7 So. 2d 37, 58 (upholding grant of sum m ary judgm ent when Plaintiff failed to produce “other corroboratin g evidence,” beyond his own deposition testim ony, dem onstrating the existence of the contract). 59 First Bank & Tr. v. Trem e, 13-168 (La. App. 5 Cir. 10 / 30 / 13), 129 So. 3d 60 5, 611-12. 10 relied only on inform ation derived from the plaintiff and, as a result, did not constitute “other corroborating evidence.” The court entered judgm ent in favor of the defen dant, finding the plaintiff could not dem onstrate the existence of the contract and, as a result could not support an essential elem ent of his claim for breach of contract. 60 In this case, the existen ce of an oral contract between Oracle and Delphi or between Oracle and Doerr is an essential elem ent of Oracle’s claim for dam ages. Oracle contends it suffered dam ages because Delphi and Doerr paid expenses on behalf of Oracle, pursuant to oral contracts between the entities. To support the existen ce of the agreem ent, Oracle subm its only the self-serving testim ony of its principal, Robert Brooks; 61 Oracle does not draw the Court’s attention to any corroborating eviden ce dem onstrating the existen ce of an agreem ent between Oracle and Delphi or between Oracle and Doerr. Even considering the facts in the light m ost favorable to Oracle, there is no eviden ce that Oracle sustained a loss, as required by article 1995, because there is no eviden ce that Oracle paid any costs or expenses related to the well. Further, no reasonable jury could conclude an oral agreem ent exists which obligates Oracle to reim burse Delphi and Doerr for the expenses they in curred. Because Oracle incurred no dam ages, no sum is required to put Oracle in the sam e position it would have been if EPI had perform ed its obligation. As a result, Oracle cannot establish an essential elem ent of its claim —that it sustained dam ages. Accordingly, a trial would be useless; there is no genuine issue as to any m aterial fact, “since [Oracle’s] com plete failure of proof concerning an essential elem ent of [its] case necessarily renders all other facts im m aterial.”62 EPI is entitled to judgm ent as a m atter of law. 60 Id. 61 See 62 R. Doc. 91-1; R. Doc. 91-4. Celotex, 477 U.S. at 323. 11 CON CLU SION IT IS ORD ERED that the Motion for Summ ary J udgm ent 63 filed by Defendant EPI Consultants is GRAN TED . N e w Orle a n s , Lo u is ian a o n th is 6 th d ay o f Ju n e , 2 0 19 . ______________________________ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 63 R. Doc. 10 0 . 12