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United States v. American Home Assurance Co.

argued submitted san francisco california: September 2, 1993.


Appeal from the United States District Court for the Northern District of California. D.C. No. CV-90-03679-SAW. Stanley A. Weigel, District Judge, Presiding

Before: Reavley,*fn** Pregerson, and Fernandez, Circuit Judges.


Kingston Constructors, Inc. appeals the district court's summary judgment that Okonite Company's sale of a submarine power-transmission cable to Kingston was a taxable transaction under CAL. REV. & TAX CODE § 6384. We agree with the district court's determination that Kingston presented insufficient evidence to survive summary judgment.

California law explicitly places the burden on Kingston to establish that the cable was not taxable. CAL. REV. & TAX CODE § 6091, 6241. California courts have consistently held that electric transmission lines are taxable improvements to real property. See Fischbach & Moore, Inc. v. State Bd. of Equalization, 117 Cal. App. 3d 627, 631, 172 Cal. Rptr. 923 (1981); Chula Vista Electric Co. v. State Board of Equalization, 53 Cal. App. 3d 445, 450, 125 Cal. Rptr. 827 (1975); A.S. Schulman Elec. Co. v. State Bd. of Equalization, 49 Cal. App. 3d 180, 184 (1975); C.R. Fedrick, Inc. v. State Bd. of Equalization, 38 Cal. App. 3d 385, 399-400, 120 Cal. Rptr. 434 (1974); King v. State Bd. of Equalization, 22 Cal. App. 3d 1006, 1014, 99 Cal. Rptr. 802 (1972). We disagree with Kingston's characterization of the cable as an extension cord rather than an electric transmission line. The cable was part of a power distribution system to fixed real estate, and required infrastructure to perform its distribution function. Moreover, the Navy powered the cable minimally to preserve it. None of these are characteristics of an extension cord, and they all befit an electric transmission line.

Had the Navy intended to move the cable upon leaving Treasure Island, a fact issue may have existed as to whether the cable is a fixture or machinery. Kingston knew throughout the summary judgment proceedings that the Navy's intent was an issue, but Kingston offered no specific indication of how it could or would prove that the Navy intended to move the cable. Absent evidence on this crucial point in Kingston's case on which Kingston had the burden of proof, the district court correctly entered summary judgment against Kingston. See Celotex Corp. v. Catrett, prejudice result is not sufficiently developed for a review of the effectiveness of counsel's assistance to Stout.

The Government concedes that Stout's sentence should be vacated and remanded to the district court for resentencing. The district court did not comply strictly with the requirements of Rule 32. First, Stout claims that he was prejudiced by the court's failure to inquire as to whether he had received and reviewed the report, which contained errors. One of the grounds of his claim of ineffective assistance of counsel is that his attorney did not provide him with the presentence report. Rule 32(a)(1)(A) requires that the court determine whether or not the defendant and his counsel have had the opportunity to read and discuss the report. United States v. Sustaita, Nos. 91-10495, 91-10582, slip opinion (9th Cir. August 10, 1993). The record does not indicate that Stout had read the report. Moreover, Stout's counsel at sentencing did not object to the errors asserted on appeal. The court's compliance with Rule 32(a)(1)(C) does not cure the potential prejudice caused by failure to comply with Rule 32(a)(1)(A). As in Sustaita, if Stout had been given an opportunity to read or discuss the presentence report, he could have tried to contradict the report's factual finding that Stout played a managerial role under U.S.S.G. § 3B1.1, which was the basis of a four-level increase in base offense level.

Mistakes also exist in the calculation of Stout's base offense level and his criminal history category. In converting the methamphetamine to a cocaine equivalency, the Probation Officer used 37 kilograms of methamphetamine potential from ephedrine. In fact, the methamphetamine potential from ephedrine was 37 pounds, or 16.8 kilograms. When doubled under the Guidelines, the error resulted in an increase of two levels.

Stout's criminal history was overstated because the presentence report scored two of his prior state court convictions separately, pursuant to United States v. Gross, 897 F.2d 414 (9th Cir. 1990). Gross was subsequently overruled, and now all prosecutions combined for trial or sentencing count as a single conviction for purposes of calculating criminal history. United States v. Smith, 991 F.2d 1468, 1473 (9th Cir. 1993). As a result, Stout's criminal history would fall in Category III.

If Stout were to succeed in establishing that the Government had not proved by a preponderance of the evidence that Stout played a managerial role, see United States v. Howard, 894 F.2d 1085, 1089-90 (9th Cir. 1990), then, including the corrections in criminal history category and in quantity of methamphetamine, his sentencing range for offense level 34 could be 188-235 months. His original range was 360 months to life, and he received the statutory maximum of 240 months.

The conviction is AFFIRMED and the case is REMANDED for RESENTENCING.


The conviction is AFFIRMED and the case is REMANDED ...

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