                                COURT OF APPEALS
                                       SECOND
DISTRICT OF TEXAS
                                                   FORT
WORTH

                                        NO.
2-06-270-CV

STATE AND COUNTY MUTUAL                                             APPELLANT
FIRE INSURANCE COMPANY
THROUGH SOUTHERN UNITED
GENERAL
AGENCY OF TEXAS

                                                   V.

MARY VIRGINIA WALKER,                                                       APPELLEE
INDEPENDENT EXECUTRIX OF
THE ESTATES OF WILLIAM
LOUIE
OLTORF, DECEASED AND
VIRGINIA
OLTORF, DECEASED

                                              ------------

           FROM THE 342ND
DISTRICT COURT OF TARRANT COUNTY

                                              ------------

                                             OPINION

                                              ------------

Appellant State and County Mutual Fire Insurance
Company (AState and County@)
appeals from an award of attorney=s fees
and mediation costs awarded to Appellee Mary Virginia Walker.  In two issues, State and County argues that
the evidence is legally and factually insufficient to prove (1) that the
awarded attorney=s fees were reasonable and
necessary and (2) that the award was equitable and just.  Because we hold that the evidence is legally
and factually sufficient to support the award and that the award is not
inequitable or unjust, we affirm.
Facts and Procedural
History
Walker, Independent Executrix of her parents=
estates, brought a wrongful death action against Keith Williams for the death
of her parents.  Initially, State and
County defended Williams, their insured, under the terms of the policy, subject
to a reservation of rights.  While that
suit was pending, State and County brought a declaratory judgment action
against Williams, seeking a declaration that the insurance policy issued to
Williams was null and void and that it had no duty to defend or to indemnify
Williams.  State and County also joined
Walker as a defendant in the suit, naming her as a person potentially having an
interest or claiming an interest in the insurance policy.  State and County then filed a motion for
summary judgment, and Walker filed objections and a response.

Walker subsequently added Williams=s wife
Tracy as a defendant in the underlying tort action.  State and County amended its pleadings in the
declaratory judgment action and supplemented its summary judgment motion to
seek a declaration that the insurance policy was also null and void against
Tracy.  Keith Williams=s
attorney subsequently withdrew as Williams=s
attorney of record.  Walker then filed a
response to the supplemental summary judgment motion.  Although the Williamses filed an answer to
the original declaratory judgment action, they did not file a response to the
summary judgment motion.
The trial court ordered the parties to attend
mediation.  The mediation was
unsuccessful, and the trial court later signed an order denying the motion for
summary judgment.  State and County
subsequently nonsuited Walker, and the trial court withdrew its previous order
and granted summary judgment to State and County against the Williamses.
Walker then filed an application for an award of
attorney=s fees,
as well as mediation costs of $900, plus appellate attorney=s
fees.  The trial court held a hearing on
the application, at which Walker=s
attorney testified, and the court awarded the requested attorney=s fees
for services performed in the trial court.
The court also awarded the requested contingent appellate fees, but it
awarded only half of the requested mediation costsCbecause
the mediation had also included the tort actionCand half
of the requested mediation fees.

Standard of Review

In a declaratory judgment action, the trial Acourt
may award costs and reasonable and necessary attorney's fees as are equitable
and just.@[1]  Whether the fees are reasonable and necessary
are questions of fact; whether awarding the fees and costs is equitable and
just is a question of law.[2]  We review the trial court=s
decision of whether costs and attorney=s fees
are equitable for an abuse of discretion.[3]  To determine whether a trial court abused its
discretion, we must decide whether the trial court acted without reference to
any guiding rules or principles; in other words, we must decide whether the act
was arbitrary or unreasonable.[4]  A court of appeals will determine that the
trial court abused its discretion in granting attorney=s fees
in a declaratory judgment action if Athe
award was inequitable or unjust as a matter of law.@[5]  We review reasonableness and necessity of
attorney=s fees
for sufficiency of the evidence.[6]
Analysis
In its first issue, State and County argues that
the evidence of attorney's fees is legally insufficient to support the award
because the testimony regarding the reasonableness and necessity of attorney=s fees,
including the appellate attorney=s fees,
was conclusory and cannot be considered as competent evidence.  It also argues that there was no evidence
that the award of fees was equitable and just.
In its second issue, State and County argues that the evidence is
factually insufficient to support the award.
It contends that the fees were not reasonable and necessary because
Walker improperly responded to State and County=s
motions for summary judgment and because the mediation costs and subsequent
fees would not have been incurred if State and County=s motion
for summary judgment had been granted.
State and County also argues that as there is no evidence of reasonable
and necessary attorney=s fees, the trial court=s award
was not equitable and just.

Reasonable and Necessary
We first turn to the reasonableness and necessity
of the awarded attorney=s fees.  Texas courts consider eight factors when
determining the reasonableness of attorney=s fees,
including awards made under the Uniform Declaratory Judgment Act:
(1) the time and labor
required, the novelty and difficulty of the questions involved, and the skill
required to perform the legal service properly;

(2) the likelihood . . .
that the acceptance of the particular employment will preclude other employment
by the lawyer;

(3) the fee customarily
charged in the locality for similar legal services;

(4) the amount involved
and the results obtained;

(5) the time limitations
imposed by the client or by the circumstances;

(6) the nature and length
of the professional relationship with the client;

(7) the experience,
reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent on
results obtained or uncertainty of collection before the legal services have
been rendered.[7]
A court is not required to receive evidence on each of these factors.[8]

In the hearing on Walker=s
application for an award of attorney=s fees,
Walker=s
attorney testified that he has been a licensed attorney for thirty years, that
during that time he has practiced law continuously in Tarrant County, and that
he is familiar with the reasonable charges for attorney=s fees
in that county.  He further testified
that he had reviewed his time records and that since May of 2005 when he began
representing Walker, he had expended 51.2 hours in his representation of Walker
in the declaratory judgment action, plus another two hours for his time on the
day of the hearing.  A partner at his
firm spent 5.3 hours representing Walker in mediation, and another lawyer
working with them on the case spent four-tenths of an hour.  He stated that his hourly billing rate is
$250 and that with regard to the other two attorneys, the hourly billing rate
of one is $495, and the other=s is
$275.  He stated that in his opinion, all
of those rates are reasonable and customary within Tarrant County, based upon
their experience, knowledge, and reputations.
He also testified that in his opinion, in the event of an appeal,
$15,000 would be a reasonable and necessary fee.

On cross-examination, he stated that in
preparation for the hearing, he had reviewed the firm=s time
records concerning its representation of Walker.  He said that all of the time for which he was
requesting an award of fees was spent on the declaratory judgment action and
that none of the time was spent on the personal injury action.  He did spend some time searching for
Williams, and he estimated that he spent less than two to three hours on that,
although he could not say precisely.
Time was not included in the total hours used to compute the requested
award if, in his review of the time records, he could not tell from the billing
records whether he had spent the time on the declaratory judgment action or the
tort action.  He stated that except for a
few hours spent trying to locate Williams, the hours for which he sought fees
were spent communicating with his client, responding to State and County=s
filings, and researching.  Walker=s
attorney also stated that of the time he spent on this case, about sixty
percent of the time was spent analyzing, researching, and responding to the
summary judgment motions.  He further
testified that in his opinion this case involved a unique circumstance of an
insurance company agent with authority to bind the company being the party
charged with fraud.  Although he did not
bring his time records to the hearing with him, he testified that if needed, he
could get the records for opposing counsel and the court to actually see the
breakdown of the hours.
State and County argues that the testimony of
Walker=s
attorney was conclusory and therefore constitutes no evidence.  A statement is conclusory if it does not
provide the underlying facts to support its conclusion.[9]  Walker=s
attorney testified about his professional experience and background and
described the work he had performed and the amount of time spent on the
case.  Thus his statement that the fees
were reasonable and necessary was not conclusory.  We therefore hold that the evidence presented
by Walker=s attorney was more than a
scintilla of evidence as to the reasonableness and necessity of the awarded
trial attorney=s fees and thus the evidence was
legally sufficient to support award of those fees.

State and County also contends that the award of
appellate attorney=s fees is not supported by
legally sufficient evidence and that Walker=s
attorney never described what work, if any, would be involved in an
appeal.  A trial court=s award
of attorney=s fees may include appellate
attorney=s fees,
but Athere
must be evidence of the reasonableness of the fees pertaining to the appellate
work, and the trial court must condition the award of attorneys' fees to an
appellee upon the appellant's unsuccessful appeal.@[10]  In this case, having already testified as to
his familiarity with the reasonable charges for attorney=s fees
in Tarrant County and to his own hourly rate, Walker=s
attorney testified as to his opinion of what a reasonable attorney=s fee
would be for the services that would Anecessarily
need to be rendered@ in the event of an appeal.  His testimony was uncontroverted.  The evidence was thus legally sufficient to
support the award of appellate attorney=s fees.

We now consider State and County=s
arguments with respect to the factual sufficiency of the evidence as to the
reasonableness and necessity of the awarded fees.  State and County claims that the trial court
acknowledged that no relief was sought against Walker in the summary judgment
motion and that the attorney=s fees
incurred were unnecessary, and that because sixty percent of the requested
award was on the summary judgment response, sixty percent of the fees were
unnecessary.  We hold that the evidence
supporting the trial court=s
finding as to the reasonableness and necessity of this portion of the fee was
not so weak, nor the evidence to the contrary so overwhelming, that the finding
should be set aside.[11]  We therefore hold that the evidence was
factually sufficient to support that percentage of the awarded fees based on
Walker=s
response to State and County=s motion
for summary judgment.        We next
consider State and County=s argument that the evidence was
factually insufficient as to the remaining forty percent of the awarded
fees.  As stated above, the evidence
shows that one of Walker=s attorneys testified about,
among other things, the background, experience, and reputation of Walker=s
counsel; the amount involved; the time involved in responding to State and
County=s
declaratory judgment action; and the usual and customary fees in Tarrant
County.  We cannot say that the evidence
supporting the trial court=s
finding is so weak or the evidence to the contrary so overwhelming that the
finding should be set aside.[12]  We therefore hold that the evidence was
factually sufficient to support the remaining forty percent of the award.
Equitable and Just

State and County argues that there was no
evidence that the award of attorney=s fees
was equitable and just.  In support of
this argument, State and County first contends that there was no evidence on
the eight factors Texas courts consider when determining the reasonableness of
attorney=s fees
under the UDJA.  Having discussed above
the testimony of Walker=s attorney as to these factors,
we disagree with State and County=s
contention.  State and County next contends
that, taking the totality of circumstances into account, the award was not
equitable and just.  Its reasoning is
based on the statement of the trial court that it based its decision to award
the fees on the ground that Athere
was no relief sought against [Walker] in the summary judgment; therefore, there
was no need to have filed against her.
She was an unnecessary party and all of those expenses were unnecessary.@  From this statement, State and County
concludes that the trial court had no basis to make the award because either
(1) Walker was an unnecessary party and therefore the only Areasonable@ course
of action would have been for her to seek dismissal from the action, Arather
than incurring unnecessary fees and expenses,@ or (2)
the work done by Walker=s counsel was necessary and the
trial court=s analysis of the equity of the
situation was misplaced.  We disagree
with State and County=s analysis.  The trial court did not find that State and
County did not seek relief against Walker in its summary judgment motion and
therefore Walker=s attorney engaged in
unnecessary work; rather, it found that State and County unnecessarily joined
Walker as a party in the declaratory action, causing her to incur fees that she
otherwise would not have had to incur.
Having found that Walker should not have been brought into the suit in
the first place, the trial court had the discretion to also find that, once
joined, equity did not preclude her from taking action to protect her rights as
a third party beneficiary of the insurance policy.[13]  And any such action, be it a response to a
motion for summary judgment or a motion to dismiss, would cause her to incur
attorney=s fees.

State and County contends that summary judgment
relief was sought only against Williams (and that the trial court acknowledged
this fact) and that Walker=s
counsel had no reasonable basis for his belief that the summary judgment motion
was sought against Walker.  It reasons
that the awarding of the fees based on the time Walker=s
counsel spent in responding to the summary judgment motion was thus not
equitable and just.  We agree with Walker=s
argument that State and County did not indicate that the motion was a motion
for partial summary judgment or that the judgment it sought would be effective
only against Williams and not against Walker.

In an action by an injured third party claimant
against an insurer, the injured third party is not barred by res judicata or
collateral estoppel by a prior declaratory judgment action solely between an
insurer and an insured.[14]
 Despite the possibility of a
subsequent inconsistent judgment, in Texas injured third parties have not been
considered proper parties to an insurer=s
declaratory judgment action brought against its insured to determine coverage.[15]  Language from Texas Supreme Court opinions in
the last decade suggests that injured parties may now be considered proper
parties to such declaratory judgment actions,[16]
but the supreme court has not expressly so held.

For purposes of this appeal, a determination of
whether Walker was properly joined is irrelevant because whether Walker was a
proper party or not, the trial court could have determined that an award of
attorney=s fees
was equitable and just.  If Walker was a
proper party to the declaratory judgment action, then she had an interest in
helping to adjudicate coverage.[17]  If she was not a proper party, then she would
still have had to incur attorney=s fees
in protecting her rights, either by responding to the summary judgment motion
or filing a motion to dismiss.  As we
discussed above, the trial court did not abuse its discretion in deciding to
award the fees.
State and County also argues that the award of
mediation costs and all fees incurred subsequent to the court-ordered mediation
was not equitable and just.  It reasons
that Walker filed a response to its motion on behalf of Williams, which she had
no standing to do, and that this response resulted in court-ordered
mediation.  Had she not Aimproperly
meddled@ by
responding, it claims, the trial court would have had to grant its summary
judgment motion and Walker would not have incurred any fees after the cause was
ordered to mediation.

We disagree with State and County=s
arguments.  First, we disagree with its
characterization of Walker=s
response.  Walker=s
parents were parties injured in an automobile accident and thus were legally
intended beneficiaries of any statutorily required automobile liability
insurance that the Williamses had.[18]  It is therefore unsurprising that the
executrix of their estates would argue that the insurance policy providing
liability coverage was not null and void.
The fact that she made such an argument does not indicate that she filed
her response on the Williamses= behalf,
and nothing in the record indicates that she filed her response on anyone=s behalf
but her own.
Second, by joining her in the declaratory
judgment action, State and County waived any argument that she did not have
standing to challenge its claims.[19]  We further note that it is disingenuous for
State and County to make Walker a party in the declaratory action, the judgment
from which she would therefore be bound, and then accuse her of Aimproper
meddling@ when
she attempted to ensure that the judgment to which she would be bound was
favorable.  We overrule State and County=s
argument that the award of costs and fees was not equitable and just on this
ground.

The trial court was in the best position to
determine from all the circumstances of the case whether allowing Walker to
recover attorney=s fees was equitable.  Based on the evidence and the record, we
cannot say that the trial court=s
decision was arbitrary or unreasonable, and State and County did not point to
any evidence showing that the trial court abused its discretion by awarding
attorney=s fees
as requested by Walker.  We therefore
hold that the trial court did not abuse its discretion in deciding to award
attorney=s fees
to Walker.
Finally, we consider State and County=s
argument that because the awarded fees were not reasonable and necessary,
awarding the fees was not equitable and just.
Because we hold that the evidence is legally and factually sufficient to
support the trial court=s determination as to
reasonableness and necessity, we overrule this argument.
Because we hold that the trial court did not
abuse its discretion in deciding to award attorney=s fees
to Walker and that the evidence was legally sufficient to support the trial
court=s
finding that the awarded fees were reasonable and necessary, we overrule State
and County=s first issue.  Because we also hold that the evidence was
factually sufficient to support the award, we overrule State and County=s second
issue.
Conclusion
Having overruled both of State and County=s
issues, we affirm the trial court=s
judgment.

LEE
ANN DAUPHINOT
JUSTICE
PANEL B:   DAUPHINOT, HOLMAN, and MCCOY, JJ.

DELIVERED:  May 31, 2007

[1]Tex. Civ. Prac. & Rem.
Code Ann. ' 37.009 (Vernon 1997); see also Cotten v.
Weatherford Bancshares, Inc., 187 S.W.3d 687, 709 (Tex. App.CFort
Worth 2006, pet. denied).

[2]GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305, 311‑12 (Tex. 2006).

[3]Doncaster v. Hernaiz, 161 S.W.3d 594, 606 (Tex. App.CSan Antonio 2005, no pet.).

[4]Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985), cert.
denied, 476 U.S. 1159 (1986).

[5]Santa Fe Petroleum, L.L.C. v. Star Canyon Corp., 156 S.W.3d 630, 641 (Tex.
App.CTyler 2004, no pet.).

[6]Doncaster,
161 S.W.3d at 606.

[7]Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex. 1997) (quoting Tex. Disciplinary R. Prof=l Conduct 1.04(b), reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A, State Bar Rules, art. X, ' 9
(Vernon 2005 & Supp. 2006)); City of Weatherford v. Catron, 83
S.W.3d 261, 272-73 (Tex. App.CFort Worth 2002, no pet.)

[8]Hagedorn v. Tisdale, 73 S.W.3d 341, 353 (Tex. App.CAmarillo 2002, no pet.); see also Hays & Martin,
L.L.P. v. Ubinas‑Brache, 192 S.W.3d 631, 636 (Tex. App.CDallas
2006, pet. denied), and Burnside Air Conditioning & Heating, Inc.
v. T.S. Young Corp., 113 S.W.3d 889, 897‑98 (Tex. App.CDallas
2003, no pet.).

[9]Residential Dynamics, LLC v. Loveless, 186 S.W.3d 192, 198 (Tex. App.CFort
Worth 2006, no pet.); Haynes v. City of Beaumont, 35 S.W.3d 166, 178
(Tex. App.CTexarkana 2000, no pet.).

[10]Jones v. American Airlines, Inc., 131 S.W.3d 261, 271 (Tex. App.CFort
Worth 2004, no pet.).

[11]See Columbia
Rio Grande Reg=l Hosp. v. Stover, 17 S.W.3d 387, 397‑98 (Tex. App.CCorpus Christi 2000, no pet.) (holding evidence, which
was similar to the evidence offered here, to be factually sufficient to support
an award of attorney=s fees); see also Farley v. Farley, 731
S.W.2d 733, 737 (Tex. App.CDallas 1987, no writ) (holding that awarded fees were
reasonable, and that A[p]roof that attorneys' fees are necessary, apart from
testimony as to the reasonableness of the fee, is not required@).

[12]See Stover,
17 S.W.3d at 397‑98.

[13]See S. County Mut. Ins. Co. v. Ochoa, 19 S.W.3d 452, 465 (Tex. App.CCorpus
Christi 2000, no pet.) (stating that Athe statutory requirement in Texas for all drivers to
carry liability insurance implies that all potential claimants for damages
resulting from automobile accidents are intended as beneficiaries,@ and as
such Athe injured party is a third‑party beneficiary
of the liability insurance contract and has rights which may not be precluded
by the prior action solely between the insured and the insurer@).

[14]Dairyland County Mut. Ins. Co. of Texas v. Childress, 650 S.W.2d 770, 774-76 (Tex. 1983); see also
Ochoa, 19 S.W.3d at 465 (citing Dairyland).

[15]See Safeway Managing Gen. Agency for State and County
Mut. Fire Ins. Co. v. Cooper, 952
S.W.2d 861, 868-69 (Tex. App.CAmarillo 1997, no writ); Providence Lloyds v.
Blevins, 741 S.W.2d 604, 606 (Tex. App.CAustin 1987, no writ); Nat=l
Sav. Ins. Co. v. Gaskins, 572 S.W.2d
573 (Tex. Civ. App.CFort Worth 1978, no writ).

[16]See State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996) (stating that A[a]
plaintiff who thinks a defendant should be covered by insurance may be willing
to . . . assist in obtaining an adjudication of the insurer's responsibility@); see
also Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex.
1997) (stating that AGandy
requires an insurer to either accept coverage or make a good faith effort to
resolve coverage before adjudication of the plaintiff's claim, and also suggests
that the plaintiff may wish to participate in that litigation@)
(emphasis added); see Spruiell v. Lincoln Ins. Co., No. 07-97-0336-CV,
1998 WL 174722, at *1 (Tex. App.CAmarillo Apr. 13, 1998, pet. denied) (not designated
for publication) (resolving standing question in favor of injured third party
and noting that Athe Supreme Court has suggested that third parties may
wish to participate in declaratory judgment actions involving the insured=s duty
to defend).

[17]See Gandy,
925 S.W.2d at 714.

[18]Dairyland,
650 S.W.2d at 774-76; see also Ochoa, 19 S.W.3d at 465  (citing Dairyland and stating that Athe
statutory requirement in Texas for all drivers to carry liability insurance
implies that all potential claimants for damages resulting from automobile
accidents are intended as beneficiaries,@ and as such Athe injured party is a third‑party beneficiary
of the liability insurance contract and has rights which may not be precluded
by the prior action solely between the insured and the insurer@).

[19]See Spruiell,
1998 WL 174722, at *1 (noting that by suing the injured party, the insurer gave
the injured party standing to contest the judgment on appeal and that the
doctrine of invited error precluded insurer from challenging standing on
appeal).


948 F.2d 1294
NOTICE:  Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties.  See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.
Robert H. KETCHUM, Plaintiff-Appellant,v.SPANISH PEAKS MENTAL HEALTH CENTER, United States PostalServices, Defendants-Appellees.
No. 91-1206.
United States Court of Appeals, Tenth Circuit.
Nov. 15, 1991.

Before STEPHEN H. ANDERSON, TACHA and BRORBY, Circuit Judges.
ORDER AND JUDGMENT*
TACHA, Circuit Judge.

1
After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal.   See Fed.R.App.P. 34(a);  10th Cir.R. 34.1.9.   The case is therefore ordered submitted without oral argument.

2
Plaintiff-appellant Robert Ketchum appeals an order of the district court dismissing his complaint for failure to state a claim upon which relief can be granted.   The district court held that the United States Postal Service was immune from suit and that Ketchum failed to allege that defendant Spanish Peaks acted under color of state law or violated the plaintiff's constitutional rights.   On appeal, Ketchum contends that appellees acted under color of state law and acted in active concert or participation with persons clothed with authority of law.   We exercise jurisdiction under 28 U.S.C. § 1291 and AFFIRM for substantially the reasons given by the district court.   The mandate shall issue forthwith.

*
 This order and judgment has no precedential value and shall not be cited, or used by any court within the Tenth Circuit, except for purposes of establishing the doctrines of the law of the case, res judicata, or collateral estoppel.   10th Cir.R. 36.3


948 F.Supp. 62 (1996)
Lori Goolsby CLEVELAND, Plaintiff,
v.
KFC NATIONAL MANAGEMENT COMPANY, d/b/a KFC, Defendant.
Civil Action No. 1:94-CV-1971-WLH.
United States District Court, N.D. Georgia, Atlanta Division.
October 29, 1996.
*63 Joseph C. Nelson, III, Nelson & Hill, Athens, GA, Michael G. Kam, Kam & Ebersbach, Newnan, GA, for Lori Goolsby Cleveland.
Robert Carl Cannon, Rosemary C. Lumpkins, Constangy Brooks & Smith, Atlanta, GA, Vicki J. Larson, Anthony Herman, Covington & Burling, Washington, DC, pro hac *64 vice, for KFC National Management Company.

MAGISTRATE JUDGE'S ORDER
HARPER, United States Magistrate Judge.
Defendant has moved, under seal, that plaintiff be precluded from entering any evidence or allegations of prior sexual misconduct perpetrated by plaintiff's former manager, Ghassam Hamadany. Defendant claims that under Fed.R.Evid. 403, the prejudice of such evidence substantially outweighs any probative value to the jury. Defendant also claims that the still-new Rule 415 does not apply to the facts and cannot provide for admission here. While defendant is mistaken, the undersigned still ORDERS that the motion be GRANTED IN PART and DENIED IN PART.
Effective in 1995, Fed.R.Evid. 415 as it is currently worded has been under consideration by Congress since 1991. It is part of a packet of new rules that materially impacts the admissibility of prior sexual acts for victims and defendants in sexual assault or harassment cases. Though mainly focusing on criminal conduct, Rule 415 provides a vehicle for such evidence to be admitted in a civil case.
Rule 415 reads as follows:
(a) In a civil case in which a claim for damages or other relief is predicated on a party's alleged commission of conduct constituting an offense of sexual assault or child molestation, evidence of that party's commission of another offense or offenses of sexual assault or child molestation is admissible and may be considered as provided in Rule 413 and Rule 414 of these rules.
(b) A party who intends to offer evidence under this Rule shall disclose the evidence to the party against whom it will be offered, including statements of witnesses or a summary of the substance of any testimony that is expected to be offered, at least fifteen days before the scheduled date of trial or at such later time as the court may allow for good cause.
Fed.R.Evid. 415.
In this case, there are ample allegations of sexual harassment that includes the touching of plaintiff's body in a overt sexual manner. If plaintiff wants to enter evidence of past sexual misconduct, it would corroborate her story and thus be probative. However, as defendant points out, Mr. Ghassam Hamadany is not a party  the employer is. This raises a question unanswered in this or any Circuit: does the rule of respondeat superior inherent in Title VII cases apply to Fed. R.Evid. 415? After a review of the legislative history, the one other case that has interpreted this provision, and a fair reading of the Rule's language the undersigned is convinced that to accept defendant's argument would put employees who are the victims of sexual misconduct on a disparate ground from other victims of sexual misconduct. Congress could not have intended such a consequence.

1. RULE 415 IS DESIGNED TO ADMIT CHARACTER EVIDENCE OF THE OFFENDER  ALLOWING THE VICTIM TO BOLSTER THE CREDIBILITY OF HER STORY

In 1991, the package of new rules was initially introduced within the Woman's Equal Opportunity Act of 1991, S. 472, 102d Cong., 1st Sess. (1991). They remained proposals until adopted in the Violent Crime Control and Law Enforcement Act of 1994, Pub.L. No. 103-322, 108 Stat. 2137 (1994). However, the most detailed legislative discussion of these proposals took place in 1991, and provides valuable insight into the purposes of the new evidentiary rules.
Prior to the passage of Rules 412-415, a sexual offender could avoid character evidence from seeing the light of day  including past sexual misconduct. With the plaintiff or prosecutor unable to present a background tapestry of these similar acts, a defendant could claim consent or dispute the accusations of the victim with little worry that past acts would haunt him. The new evidentiary rules were specifically adopted to prevent *65 such a lopsided swearing contest of plausibility and credibility.
One major effect of the new rules is to dispel an image that the victim's story is improbable. As the Congressional Record reveals:
Another ground for consideration is probability. For example, consider a rape case in which the defense attacks the victim's assertion that she did not consent, or represents that the whole incident was made up by the victim. If there is conclusive evidence that the defendant has previously engaged in similar acts  such as a prior conviction of the defendant for rape  then the defense's claim of consent or fabrication would normally amount to a contention that the victim made up a false charge of rape against a person who just happened to be a rapist. The inherent improbability of such a coincidence gives similar crimes evidence a high degree of probative value, and supports its admission in such a case.
137 Cong.Rec. S4925, 4928 (daily ed. April 24, 1991); see also, 137 Cong.Rec. S3191, 3240 (daily ed. March 13, 1991).
Thus, under Rule 415, evidence of past misconduct that supports plaintiff's story should be admitted. For this purpose, congressional debate has accorded such evidence great probative weight. However, under the vagaries of Title VII law plaintiff does not have to simply prove that she was the victim of offensive sexual contact. As there is no individual liability under Title VII, the sole defendant is the employer, KFC. In order to assert full liability, she must prove that the offensive behavior occurred and that the employer "knew or should have known" of the harassment yet failed to take prompt remedial action. Henson v. City of Dundee, 682 F.2d 897, 905 (11th Cir.1982). See also, Steele v. Offshore Shipbuilding, 867 F.2d 1311, 1316 (11th Cir. 1989); Vance v. Southern Bell Tel. and Tel. Co., 863 F.2d 1503, 1512 (11th Cir.1989). See also, Hirase-Doi v. U.S. W. Communications, 61 F.3d 777, 784 (10th Cir.1995) (finding constructive knowledge as arising from knowledge of harasser's conduct toward other employees "that is similar in nature and near in time" to the harassment of plaintiff).

2. TITLE VII DOES NOT PERMIT INDIVIDUAL LIABILITY; THE SWEARING CONTEST THAT CONGRESS INTENDED TO PREVENT WOULD OCCUR IF KFC COULD AVOID RULE 415

Persons such as supervisors and co-employees who do not otherwise qualify as employers may not be held individually liable for violations of Title VII, the ADEA, or the ADA. See, e.g., Cross v. Alabama, 49 F.3d 1490, 1504 (11th Cir.1995); Smith v. Lomax, 45 F.3d 402, 404 n. 4 (11th Cir.1995); Simon v. Morehouse Sch. of Medicine, 908 F.Supp. 959, 963 n. 2 (N.D.Ga.1995); Clark v. City of Macon, 860 F.Supp. 1545, 1550 (M.D.Ga. 1994). See also, Tomka v. Seiler Corp., 66 F.3d 1295, 1313 (2d Cir.1995); EEOC v. AIC Sec. Investigations, 55 F.3d 1276, 1280-81 (7th Cir.1995) (ADA); Birkbeck v. Marvel Lighting Corp., 30 F.3d 507 (4th Cir.), cert. denied, ___ U.S. ___, 115 S.Ct. 666, 130 L.Ed.2d 600 (1994) (ADEA); Grant v. Lone Star Co., 21 F.3d 649, 651-52 (5th Cir.), cert. denied, ___ U.S. ___, 115 S.Ct. 574, 130 L.Ed.2d 491 (1994); Prescott v. Indep. Life & Accident Ins. Co., 878 F.Supp. 1545, 1551 (M.D.Ala.1995). The use of the term "agents" in the definition of employer in these statutes is merely "an unremarkable expression of respondeat superior  that discriminatory personnel actions taken by an employer's agent may create liability for the employer." Birkbeck, 30 F.3d at 510. See also, Conley v. Bostic, 1993 U.S. Dist. LEXIS 20260 at *38-39, 1993 WL 741854 at *12 (N.D.Ga.1993).
Some courts allow suit against an individual in his official or representative capacity only, which results in only the employing business, rather than the individual, facing liability. See Edwards v. Wallace Community College, 49 F.3d 1517, 1520 n. 3 (11th Cir.1995); Sauers v. Salt Lake Cty., 1 F.3d 1122, 1125 (10th Cir.1993); Busby v. City of Orlando, 931 F.2d 764, 772 (11th Cir.1991). See also, Garrett v. Clarke Cty. Bd. of Educ., 857 F.Supp. 949, 952 (S.D.Ala.1994) (holding that this interpretation is unaffected by the *66 passage of the Civil Rights Act of 1991); Saville v. Houston Cty. Healthcare Auth., 852 F.Supp. 1512, 1523 (M.D.Ala.1994) (same). Where the employer has been sued directly, however, the naming of individual employees in their official capacity is unnecessary and duplicative. See, e.g., Lynn v. United Technologies Corp., 916 F.Supp. 1217, 1219 (M.D.Ala.1996); Redpath v. City of Overland Park, 857 F.Supp. 1448, 1456 (D.Kan. 1994). Had plaintiff sued Hamadany under Title VII along with KFC, the resulting scheme of liability would be the same and Rule 415 would clearly apply. However, since Hamadany cannot face individual Title VII liability, the mere fact that he is not represented in this action cannot shield the employer from the valid, supportive evidence of his prior acts.

3. PLAINTIFF WILL HAVE TO PROVE THAT KFC KNEW OF THE MISCONDUCT; EVIDENCE THAT CAME TO KFC'S ATTENTION AFTER PLAINTIFF'S EMPLOYMENT ENDED IS NOT PROBATIVE ENOUGH TO OVERCOME THE RESULTING PREJUDICE

As part of the sealed motion, defendant submitted a letter with affidavits that would be very inflammatory to defendant if introduced before a jury. ("PX-42"). While supportive of plaintiff's version of events, it goes far beyond supportive evidence and describes other, unrelated events that would unfairly prejudice defendant. Since it was sent to defendant after plaintiff's employment ended, it does not show that defendant knew of its supervisor's misconduct. Since exhibit PX-42 lacks that element of probative value, and introduces an inflammatory, prejudicial, and unrelated topic, it will not be allowed in.
Since Rule 403 operates in concert with Rule 415, it is proper for the undersigned to weigh the probative value against the prejudiciality of evidence that would otherwise be admissible under Rule 415. See, Frank v. County of Hudson, 924 F.Supp. 620, 626 (D.N.J.1996) (Preventing past crimes evidence of child abuse from entering into a Title VII sexual harassment suit, since the evidence was too prejudicial despite Rule 415's passage).
However, other evidence of past misconduct may have reached the ears of plaintiff's employer before her alleged constructive discharge. Even though defendant claims that, as a corporation it was not the "party" who allegedly committed the sexually offensive touching or the past sexual misconduct, the undersigned holds that if Rule 415 is to act a civil equivalent to Rule 413 and 414, Title VII's sexual harassment law must have been contemplated as one arena in which Rule 415 would need to be effective. To allow defendant corporation to shield itself from character evidence and disadvantage the victims of corporate sexual misconduct would be to emasculate the force of Rule 415.
Thus, defendant KFC is to be considered a "party" under Rule 415 since Title VII prohibits liability from attaching to the actual "party." As part of this analysis, however, Rule 415 is tempered by Rule 403: evidence of defendant's agent's misconduct must be both probative in that it proves corporate knowledge of similar misconduct and it must corroborate plaintiff's story; otherwise, the prejudicial effect on the jury is not substantially outweighed.
In accordance with this new evidentiary rule, if plaintiff intends to introduce evidence of past misconduct of Mr. Hamadany, she must follow the procedures detailed in Fed. R.Evid. 415(b). Any evidence so tendered must satisfy both Rule 415 and Rule 403, as discussed above. The parties are advised that a stipulation of facts could avoid a lengthy evidentiary battle.
IT IS SO ORDERED.


Court of Appeals
of the State of Georgia

                                                              ATLANTA, March 15, 2017

The Court of Appeals hereby passes the following order

A17D0317. DARRELL BROWN v. THE STATE.

     Upon consideration of the Application for Discretionary Appeal, it is ordered that it be

hereby DENIED.

LC NUMBERS:

03B2003

                                      Court of Appeals of the State of Georgia
                                           Clerk's Office, Atlanta, March 15, 2017.

                                           I certify that the above is a true extract from the minutes
                                      of the Court of Appeals of Georgia.

                                           Witness my signature and the seal of said court hereto
                                      affixed the day and year last above written.

                                                                         , Clerk.


                                                                           FILED
                            NOT FOR PUBLICATION                             MAR 12 2014

                                                                        MOLLY C. DWYER, CLERK
                     UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 12-10630

              Plaintiff - Appellee,              D.C. No. 1:12-cr-00642-LEK-1

  v.
                                                 MEMORANDUM*
ALVAR GANTE TOLEDO,

              Defendant - Appellant.

                   Appeal from the United States District Court
                              for the District of Hawaii
                   Leslie E. Kobayashi, District Judge, Presiding

                      Argued and Submitted February 20, 2014
                           University of Hawaii, Manoa

Before: HAWKINS, McKEOWN, and BEA, Circuit Judges.

       Alvar Toledo appeals the sentence entered in his case by the district court.

Because there was no objection at sentencing to breach of the plea agreement

between Toledo and the government, we review for plain error. Puckett v. United

States, 556 U.S. 129, 134–35 (2009). We affirm the district court.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      The information about Toledo’s long-term drug trafficking of approximately

38 pounds of methamphetamine was not protected by any agreement; there was

sufficient evidence that Toledo revealed the information shortly after his arrest.1

See U.S.S.G. § 1B1.8(b)(1). Nor did the government breach the plea agreement by

mentioning the 38 pounds of methamphetamine at sentencing; the plea agreement

clearly stated that Toledo was responsible for “not less than” 723.69 grams of

methamphetamine. Finally, given the other substantial information of drug

quantity provided the district court in the presentence report, any breach arising

from the prosecutor’s failure to argue that the correct starting point for sentence

calculation was Level 36, as the plea agreement provided, did not affect Toledo’s

“substantial rights” under plain error review. United States v. Olano, 507 U.S.

725, 734 (1993) (quoting Fed. R. Crim. P. 52(b)). The record shows that the court

was influenced by these considerations such that there was no “reasonable

probability that the error affected the outcome of the [sentencing].” United States

v. Whitney, 673 F.3d 965, 972 (9th Cir. 2012) (quoting United States v. Marcus,

560 U.S. 258, 262 (2010) (alteration in original); see also Puckett, 556 U.S. at

134–35.

      AFFIRMED.

      1
      The panel declines to take judicial notice of the proffer letter dated
December 1, 2011.


309 B.R. 330 (2004)
In re Anthony T. TRAN, Debtor.
Amrane Cohen, Chapter 13 Trustee, Appellant,
v.
Anthony T. Tran, Appellee.
BAP No. CC-03-1521-BMAJ. Bankruptcy No. SA 01-12262-RA.
United States Bankruptcy Appellate Panel of the Ninth Circuit.
Argued and Submitted March 18, 2004.
Filed April 29, 2004.
*332 Misty Perry Isaacson, Dreyfuss, Ryan & Weifenbach, Santa Ana, CA, for Amrane Cohen, Chapter 13 Trustee.
Before: BRANDT, MARLAR, and JAROSLOVSKY,[1] Bankruptcy Judges.

OPINION
BRANDT, Bankruptcy Judge.
In this case the chapter 13[2] debtor represented in his post-confirmation motion to refinance his house that the net proceeds would be used to pay 100% to unsecured creditors. The court granted the motion, and after the proceeds had been remitted to the trustee but before he could distribute the proceeds, debtor dismissed his case. Who gets the money?
The bankruptcy court held that the funds revested in debtor upon dismissal, and ordered the Trustee to turn over the proceeds to him, in accordance with In re Nash, 765 F.2d 1410 (9th Cir.1985). We conclude that the holding of Nash was not disturbed by an amendment to the operative Code section, and AFFIRM.

I. FACTS
Debtor Anthony Tran filed his chapter 13 petition and plan, which called for 42 monthly payments and provided for a 16% dividend to unsecured creditors.
Approximately two years after his plan was confirmed, Tran moved for permission to refinance his home mortgage. The Trustee received the motion, filed under LBR 3015-1 (p), and recommended approval, provided the proceeds be used to:
pay only the liens ... and usual and customary escrow fees and charges. Pursuant to Motion, the percentage to unsecured creditors increases to 100%. The Chapter 13 trustee will make demand for all net proceeds to be disbursed to Debtor(s)' creditors pursuant to Debtor(s)' confirmed plan. Upon the Trustee's final audit of Debtor's case, all remaining funds, if any, will be refunded to the Debtor(s). The Chapter 13 trustee reserves the right to demand additional *333 funds as necessary upon review of the Claims Register on file with the Clerk of the Bankruptcy Court.
The bankruptcy court granted the motion "as modified by the Trustee's comments" ("Refinance Order"). The refinance closed, and the Trustee received proceeds of $26,057.83, but before he made any distributions, debtor dismissed his case under § 1307(b).[3]
The Trustee then noticed his motion to distribute the funds on hand pro rata to debtor's unsecured creditors, after payment of the Trustee's administrative fee and secured claims, as contemplated in the Refinance Order. Debtor objected. After a hearing, the court sustained debtor's objection and ordered the Trustee to remit the funds to debtor once the order became final. The Trustee timely appealed.
The Trustee requested a stay pending appeal, which the bankruptcy court denied. We granted a temporary stay which expired. At oral argument the Trustee advised that the proceeds were disbursed to debtor; nevertheless, this appeal is not moot because although he has neither briefed or argued, debtor is a party to the appeal. See In re Spirtos, 992 F.2d 1004, 1006-07 (9th Cir.1993).

II. JURISDICTION
The bankruptcy court had jurisdiction via 28 U.S.C. § 1334 and § 157(b)(1) and (b)(2)(A) and (O), and we do under 28 U.S.C. § 158(c).

III. ISSUES
A. Did the bankruptcy court err in ruling that debtor was entitled to receive the proceeds of the refinance under § 349(b)(3)?
B. Did the bankruptcy court abuse its discretion in not "ordering otherwise" with respect to the revesting of the proceeds of the refinance?

IV. STANDARD OF REVIEW
We review issues of statutory construction and conclusions of law, including interpretation of the Bankruptcy Code, de novo. In re Staffer, 262 B.R. 80, 82 (9th Cir. BAP 2001), affd, 306 F.3d 967 (9th Cir.2002).
We review discretionary rulings pursuant to the Code for abuse of discretion. In re Gonic Realty Trust, 909 F.2d 624, 626 (1st Cir.1990). A bankruptcy court necessarily abuses its discretion if it bases its decision on an erroneous view of the law or clearly erroneous factual findings. Cooter & Gell v. HaHmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990).

V. DISCUSSION
Section 349 governs the effect of the dismissal of a bankruptcy case. Subsection (b) of that section provides that dismissal reinstates certain proceedings, voided liens, avoided transfers, and vacates various orders. Dismissal also revests estate property in the entity in which it was vested immediately prior to filing.[4] The *334 bankruptcy court has discretion to "order otherwise" for cause.
Section 349(b)'s basic purpose is to "undo the bankruptcy case, as far as practicable, and to restore all property rights to the position in which they were found at the commencement of the case." Nash, 765 F.2d at 1414 (citing S.Rep. No. 95-989, at 49, reprinted in 1978 U.S.C.C.A.N. 5787, 5835). The debtors in Nash dismissed their confirmed chapter 13 case, as § 1307(b) allows. At the time, the chapter 13 trustee held roughly $900, which he paid to an unsecured creditor in accordance with the confirmed plan. The bankruptcy court overruled debtors' challenge to the distribution, but the Ninth Circuit reversed, holding that the trustee should have distributed the funds to the debtors.
The Nash court reasoned that (1) dismissal of the chapter 13 effectively vacated the confirmed plan; (2) the funds held by the trustee at the time of dismissal were property of the estate; and (3) dismissal revested property of the estate in debtors. The court also noted that under § 1327(b)[5], confirmation vests ownership of property of the estate in the debtors (perhaps redundantly, given the revesting provision of § 349). Nash, 765 F.2d at 1414. In our case, the form chapter 13 plan used by the debtor provided that estate property would not revest in the debtor until discharge or dismissal.
Following Nash, the bankruptcy court concluded that the funds held by the Trustee revested in the debtor upon dismissal and should be turned over to him. The court also found that the Trustee had not shown cause for ordering otherwise.

A. Does the Code Mandate Refund to Debtor?

1. Section 349(b)(3)

The Trustee argues that dismissal did not vacate either the Refinance Order or the confirmation order, as neither type of order is included in the list of orders vacated by a dismissal under § 349(b), and the bankruptcy court did not "order otherwise." But "the omission of an order from the list in § 349(b) ordinarily means that dismissal does not affect the omitted order." In re Pavelich, 229 B.R. 777, 780 (9th Cir. BAP 1999) (citations omitted). At the same time, dismissal implicitly revokes, or at least modifies, some orders not enumerated in § 349(b). As Nash teaches, dismissal effectively vacates a chapter 13 plan confirmation order. 765 F.2d at 1413.
The Trustee argues that In re Witte, 279 B.R. 585 (Bankr.E.D.Cal.2002), supports his contention that the Refinance Order should be given effect despite dismissal. In Witte, debtor dismissed his unconfirmed chapter 13 case shortly after a court-approved sale of his real property which provided that liens on the real property would attach to the proceeds, and were to be held by the chapter 13 trustee until lien priorities were determined. After dismissal, the debtor and the IRS, which had levied on the funds, claimed rights in the funds held by the trustee.
The Witte court ordered the funds to be distributed in accordance with the sale order, for three reasons: first, the lienholders as well as the debtor had held interests in the real property prior to filing. Second, § 349(b) gave the court discretion to determine how property of the estate should be distributed upon dismissal, and *335 the court had expressly retained jurisdiction over the funds in the sale order. Finally, the sale order provided lienholders with adequate protection in the form of a replacement lien, which was not affected by dismissal. Accordingly, distribution should be made in the order that priorities attached to the proceeds, and a distribution made to the debtor only if there were a surplus. The court concluded, "[t]he dismissal of the case did not abrogate the sale order or the rights of the lien holders in the account." Witte, 279 B.R. at 588.
Witte neither deviates from the Ninth Circuit's holding in Nash, nor does it help the Trustee. Here, the secured claims have been paid, there was no reservation of jurisdiction, and the debtor is the only party with a pre-petition interest in the proceeds, while the Trustee proposes to distribute the proceeds only to unsecured creditors.

2. Section 1326(a)(2)

The Trustee next argues that § 1326(a)(2) requires him to distribute the refinancing proceeds in accordance with the plan, despite dismissal. That section provides, in relevant part, "[if] a plan is confirmed, the trustee shall distribute any such payment in accordance with the plan as soon as practicable...." The Trustee points out, first, that the section contains no exception for funds held at dismissal, and second, argues that Nash is no longer good law, as it was decided under the pre-1984 version of § 1326, which did not contain this language.[6]
The Trustee cites In re Parrish, 275 B.R. 424 (Bankr.D.D.C.2002), which held that upon dismissal of a chapter 13 case, § 349(b)(3)'s revesting language does not relieve the chapter 13 trustee of his statutory duty to distribute funds in accordance with a confirmed plan under § 1326(a)(2). Id. at 426. The Parrish court went on to hold:
[A] debtor's title, under § 349(b)(3)'s revesting provisions, to funds that were paid pre-dismissal to a trustee under a confirmed plan is irrelevant: unless dismissal vacates the effectiveness of a confirmed plan (and nothing in the Bankruptcy Code says it does), § 1326(a)(2) requires the trustee to disburse the funds in accordance with the confirmed plan without regard to who holds title.
Id. at 429 (emphasis added). According to that court, interpreting these statutes otherwise would lead to an absurd and inequitable result that a debtor could "take the money that was earmarked for creditors and run after tying creditors' hands by reason of the confirmed plan having been in place." Id.
The Parrish court discounted Nash, as it had been decided under the prior version of § 1326. It also rejected the Ninth Circuit's conclusion that a dismissal order effectively vacates the confirmation order as to payments already made to the trustee, because extending that reasoning could theoretically require creditors to return to debtor all payments received under the plan. Parrish, 275 B.R. at 433. We, of course, are not free to reject Nash if it still applies, and no one is attempting to * recover payments from creditors.
We think Nash still applies. In our view, § 1326(a)(2) was not intended to address the disposition of funds received by a chapter 13 trustee after confirmation:

*336 A payment made under this subsection shall be retained by the trustee until confirmation or denial of confirmation of a plan. If a plan is confirmed, the trustee shall distribute any such payment in accordance with the plan as soon as practicable. If a plan is not confirmed, the trustee shall return any such payment to the debtor, after deducting any unpaid claim allowed under section 503(b) of this title.
§ 1326(a)(2) (emphasis added). The preceding paragraph of subsection (a) requires the debtor to begin making plan payments within 30 days of filing a plan that is, pre-confirmation.
"By its terms, § 1326(a)(2) does not pertain to funds received by a trustee after confirmation of a Chapter 13 plan." In re Boggs, 137 B.R. 408, 410 (Bankr. W.D.Wash.1992) (emphasis in original). See also 8 Alan N. Resnick & Henry J. Sommer, Collier on Bankruptcy If 1326.02[2] (15th ed. Rev.2004) ("Subsection 1326(a)(2) sets forth the trustee's duties, both before and after the confirmation decision, regarding payments made before the confirmation decision.") (emphasis added). The section does not purport to address distribution of funds received post-confirmation or the impact of dismissal on the trustee's duty to distribute funds.
Finally, the Trustee cites In re Redick, 81 B.R. 881 (Bankr.E.D.Mich.1987), which decided that chapter 13 plan payments being held at the time of conversion to chapter 7 do not become property of the chapter 7 estate and should be distributed to creditors in accordance with the confirmed plan. The court reasoned that once a debtor makes a plan payment to the trustee, creditors have a vested right to receive those funds, and the trustee holds those plan payments as an agent for the creditors even if the case is converted or dismissed. According to the court, this obviates the need for creditors to insist on daily distributions to avoid an unfair windfall to the debtor upon dismissal or conversion.
But even if there is an unfair windfall to debtor (about which more later), there is no statutory support, nor any in the legislative history, for the trust theory espoused in Redick:
rather, Congress was apparently dealing with the questions of when plan payments are to begin, the disposition of funds in the event no plan is confirmed, and who is to handle the funds.
...
[T]he cases appear to hold that creditors' rights to payments are vested upon the Chapter 13 Trustee's disbursement to them.
Boggs, 137 B.R. at 410-411 (citations and footnotes omitted).[7]
The Trustee also contends that even if Nash still governs, the proceeds of the refinance were not plan payments, as a refinance was not contemplated in the plan or confirmation order. But, as the bankruptcy court observed in ruling, the Refinance Order was in essence a plan modification. The Trustee offers no authority for treating it otherwise, not citing Massachusetts Housing Finance Agency v. Evora, 255 B.R. 336 (D.Mass.2000), which held the refinancing motion there considered was not a plan modification. The debtors there proposed to use some of the refinancing proceeds to pay the remaining balance of their plan early, and did so, retaining for themselves the excess proceeds (the fight was over whether the lender's secured claim should be increased *337 because of post-petition appreciation in collateral value). Evora's facts are not ours; here the amount to be paid to creditors, a fundamental aspect of the plan, would change.
Whether or not the Refinance Order was a plan modification, we reject the conclusion that § 1326(a) mandates distribution of Tran's refinance proceeds to creditors: nothing in Parrish or Redick justifies our disregarding the Ninth Circuit's holding in Nash.
Two other points: first, the plan itself provides that estate property revests in debtor on dismissal. The trustee has not even argued that that provision was somehow excised by the Refinance Orderit is not referenced, even indirectlyand the only aspects of the plan necessarily affected by the Refinance Order are the source of the plan's funding and the percentage to be paid to unsecured creditors.
Finally, were we to adopt the Trustee's construction of § 1326(a)(2), we would necessarily read "such" out of the language chosen by Congress, for it refers directly back to the preceding clause regarding payments received by the Trustee before confirmation (or denial of confirmation). Such is not our prerogative: we must "give effect, if possible, to every clause and word of a statute." Williams v. Taylor, 529 U.S. 362, 404, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000).

B. Did Trustee Show Cause for Ordering Otherwise?

The Trustee argues that he showed substantial cause to "order otherwise," because, in approving the motion, he and creditors relied on debtor's representation that he intended to pay off his unsecured creditors with the proceeds of the refinance. He asserts that debtor's dismissal only three days after the Trustee received the refinance proceeds is inequitable, and evidences that debtor never intended to pay his creditors.
For equitable estoppel, the Trustee must prove four elements:
(1) the party to be estopped must know the facts; (2) he must intend that his conduct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the conduct to his injury.
In re Kelley, 199 B.R. 698, 705 (9th Cir. BAP 1996); see also Lehman v. United States, 154 F.3d 1010, 1016-17 (9th Cir. 1998). But the Trustee has proffered no evidence that he or anyone else relied on debtor's representation, or thereby suffered injury.
Although not explicitly invoking the doctrine, the Trustee also argues that debtor should be judicially estopped from receiving the refinance proceeds. Judicial estoppel is an equitable doctrine which the court may invoke at its discretion, Yanez v. United States, 989 F.2d 323, 326 (9th Cir. 1993), and precludes a party from taking inconsistent positions in the same litigation, where the court has relied on the party's previously inconsistent statement. Interstate Fire & Cas. Co. v. Underwriters at Lloyd's, London, 139 F.3d 1234, 1239 (9th Cir.1998). In deciding if the doctrine applies, the court may consider whether doing so will prevent the party asserting the inconsistent position from gaining an unfair advantage. New Hampshire v. Maine, 532 U.S. 742, 750-51, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001). See also In re Cheng, 308 B.R. 448, 451-54 (9th Cir. BAP 2004) (elaborating on judicial estoppel); Hamilton v. State Farm Fire & Cas., 270 F.3d 778, 782 (9th Cir.2001) (judicial estoppel is invoked to "protect against a *338 litigant playing fast and loose with the courts.").
Application of judicial estoppel is not warranted here. Debtor became entitled to the refinance proceeds by invoking his absolute right to dismiss under § 1307(b), and the result is not inequitable. The real property was debtor's homestead, and the net proceeds turned over to the Trustee were within debtor's homestead exemption.
The Trustee challenges debtor's right to an exemption, citing Cal.Civ.Proc.Code § 704.720, which exempts the proceeds of a sale of homestead property but does not address the proceeds of a refinance. But Tran never committed the equity in his house to the plan, nor could he have been required to: § 1322(a) requires only the commitment of future earnings or income to the plan which excludes the refinance proceeds. See In re Burgle, 239 B.R. 406, 410-12 (9th Cir. BAP 1999). Moreover, the Trustee misconstrues the role of exemptions in chapter 13, in which they are significant primarily in determining whether the plan meets the best interests test of § 1325(a)(4). In re Winchester, 46 B.R. 492, 495 (9th Cir. BAP 1984). See also 1 & 2 Keith M. Lundin, Chapter 13 Bankruptcy, 3rd Ed. §§ 49.1 and 161.1 (2000 & Supp.2002). The Trustee's argument would make sense only if the case had been converted rather than dismissed. And, of course, were this a chapter 7, debtor would be entitled to the exemption. § 522.
Debtor obtained no unfair advantage, and there is no evidentiary (or logical) basis for the Trustee's theory that creditors somehow relied on debtor's refinancing motion or were prejudiced by it.[8] The record discloses only that none responded. Dismissal restored creditors' ability to pursue collection, albeit after significant time had passed. That delay was not caused by the refinancing motion: rather, it resulted from debtor's petition and then the confirmation of his plan. Notwithstanding any reliance on those, Congress (in § 1307) and the Ninth Circuit (in Nash) permit dismissal.

VI. CONCLUSION
Given the continued authority of Nash, and the Trustee's failure to show reliance on or damages from debtor's representation in the refinance motion, the bankruptcy court did not abuse its discretion in declining to "order otherwise."
Nor did the bankruptcy court erred in concluding that the debtor was entitled to the proceeds of the refinance upon dismissal. We AFFIRM.
JAROSLOVSKY, Bankruptcy Judge, concurring.
I agree completely with my brethren that In re Nash is still good law and is controlling in this case. I write separately only to express my concern over the Trustee's argument that Tran's conduct amounted to a fraud on the court. The record reflects that Tran's rights under the Bankruptcy Code were considerably curtailed by procedures set forth in the court's local rules, and that what the Trustee calls "fraud" was nothing more than working within those procedures to exercise *339 rights that were Tran's under the Code to begin with.
As the Trustee pointed out during argument, the form of plan used by Tran was mandatory pursuant to local rules. Indeed, each page of the plan states: "This form is mandatory by Order of the United States Bankruptcy Court for the Central District of California." Setting aside questions as to the legitimacy of any courtmandated form,[9] the form in this case crossed over the line from facilitating Chapter 13 administration to dictating Chapter 13 terms.
Part VIII of the mandatory plan provides:

REVESTMENT OF PROPERTY

Property of the estate shall not revest in the debtor until such time as a discharge is granted or the case is dismissed. Revestment shall be subject to all liens and encumbrances in existence when the case was filed, except those liens avoided by court order or extinguished by operation of law. In the event the case is converted to a case under chapter 7, 11, or 12 of the Bankruptcy Code, the property of the estate shall vest in accordance with applicable law. After confirmation of the plan, the chapter 13 trustee shall have no further authority or fiduciary duty regarding the use, sale, or refinance of property of the estate, except to respond to any motion for proposed use, sale, or refinance as required by the Chapter 13 General Order of this court. Prior to any discharge or dismissal, the debtor must seek approval of the court to purchase, sell, or refinance real property. (Emphasis added)
The mandatory plan does not give a debtor any other choice regarding revesting, even though § 1322(b) of the Bankruptcy Code provides that a plan may "provide for the vesting of property of the estate, on confirmation or at a later time, in the debtor or in any other entity...."
The Trustee argues that Tran could have sought variance from the terms of the mandatory plan and did not do so. However, given the practical realities of plan confirmation Tran had little choice except to adopt the dictated language of the mandatory plan even though under the Bankruptcy Code he had a right to provide that his home revested in him on confirmation. Had he been completely free to exercise his rights under the Bankruptcy Code from the beginning, he would not have needed the consent of the Trustee or the court to refinance his home, nor would the Trustee have any rights to the proceeds.
I believe that the bankruptcy court in this case understood that Tran had little practical ability to deviate from the language of the mandatory plan and therefore did not commit fraud when he dismissed his case after obtaining the refinancing order. Tran was merely working as best he could within a restrictive system to obtain those rights which were granted to him by Congress in the Bankruptcy Code. I therefore fully concur in affirming the decision of the bankruptcy court that Tran is entitled to the proceeds of his refinance.
NOTES
[1]  Hon. Alan Jaroslovsky, Bankruptcy Judge for the Northern District of California, sitting by designation.
[2]  Absent contrary indication, all section and chapter references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330. References to "LBR" are to the Local Bankruptcy Rules for the Central District of California.
[3]  That sub-section provides in pertinent part:

On request of the debtor at any time, if the case has not been converted ..., the court shall dismiss a case under this chapter.
[4]  Section 349(b) provides, in relevant part:

Unless the court, for cause, orders otherwise, a dismissal of a case other than under section 742 of this title
...
(3) revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case under this title (emphasis added).
[5]  Which provides:

Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.
[6]  The Nash court construed former § 1326(b) (now § 1326(c)), which provides: "Except as otherwise provided in the plan or in the order confirming the plan, the trustee shall make payments to creditors under the plan." The court concluded that this provision simply designated the trustee as the disbursing agent. 765 F.2d at 1413 n. 1.
[7]  Interestingly, Boggs is not cited by the Trustee in his brief, although it is from within this circuit, critiques Redick, and applies Nash in a post-§ 1326(a) amendment context.
[8]  Nothing in the record suggests the Trustee (or anyone else) incurred significant expense in considering and commenting on the refinance motion. Were that the case, it would certainly have been appropriate to request the court to "order otherwise" to the extent necessary to make the Trustee (and perhaps other parties) whole. See, for an analogy, In re Arnold, 252 B.R. 778, 788-789 (9th Cir. BAP 2000) (conditioning allowance of amended exemption on payment of trustee's fees and costs in pursuing exempted cause of action).
[9]  Section 1325(a) of the Bankruptcy Code provides that the court shall confirm a Chapter 13 plan if six conditions are met. Being on a court-approved form is not one of the conditions.


105 F.3d 770
79 A.F.T.R.2d 97-804, 97-1 USTC  P 50,208,46 Fed. R. Evid. Serv. 404
UNITED STATES of America, Appellee,v.Richard GOLDBERG, Defendant, Appellant.
No. 96-1132.
United States Court of Appeals,First Circuit.
Argued Sept. 6, 1996.Decided Feb. 3, 1997.Rehearing and Suggestion for Rehearing En Banc Denied Feb. 26, 1997.

Morris M. Goldings with whom David R. Kerrigan and Mahoney, Hawkes & Goldings were on brief, Boston, MA, for appellant.
Michael Kendall, Assistant United States Attorney, with whom Donald K. Stern, United States Attorney, Boston, MA, and Kevin J. Cloherty, Assistant United States Attorney, was on brief, Washington, D.C., for the United States.
Before BOUDIN, Circuit Judge, BOWNES, Senior Circuit Judge, and LYNCH, Circuit Judge.
BOUDIN, Circuit Judge.

1
Richard Goldberg was convicted of two counts of conspiracy to defraud the Internal Revenue Service, 18 U.S.C. § 371, and eight counts of aiding and assisting the filing of false income tax returns, 26 U.S.C. § 7206(2).  Goldberg's appeal is now before us.  We begin by describing the factual background and proceedings in the district court.

2
In the years prior to his indictment in 1995, Goldberg was involved in several businesses in and around Boston.  His ventures included a billboard company, Logan Communications, and a partial interest in a "Park 'N Fly" lot located in East Boston near Logan Airport.  Goldberg also owned and operated Liverpool Lumber, Inc., which Goldberg used as a management company for various of his other enterprises.

3
In or around 1988, Goldberg became aware that the Commonwealth of Massachusetts planned to take all or part of the East Boston Park 'N Fly lot by eminent domain as part of its Third Harbor Tunnel project.  The planned taking not only threatened Goldberg's profitable parking business, but also his billboard company, since many of its signs were located on the parking lot's land.  Goldberg began an intense lobbying effort against the proposal in 1988, eventually spending over $1 million of his and his partners' money to oppose the tunnel plans.

4
Two of those hired to oppose the project--community activist Robert A. Scopa and consultant Vernon Clark--were named as co-conspirators in the two separate conspiracies for which Goldberg was ultimately convicted.  Taking the evidence most favorable to the verdict, the facts pertaining to the two different conspiracies were as follows.

5
Scopa Conspiracy.   From 1990 to 1995, Goldberg employed Scopa to help organize the East Boston community against the tunnel project and to perform other services.  But Goldberg never paid Scopa in Scopa's own name.  Instead, Goldberg had his Liverpool Lumber company issue paychecks to three successive "straw" employees, none of whom worked for Goldberg and all of whom agreed to hand the money over to Scopa.

6
To reflect the "wages" of the straw employees, Goldberg directed his bookkeeper at Liverpool Lumber to prepare various W-2, W-3, and W-4 reporting statements, which were then filed with the IRS.  These documents falsely described wage payments to straws who had performed no work for Liverpool Lumber.  The straws, in turn, falsely included the phantom wages from Liverpool on their own individual returns.  Reporting the money on the straws' returns instead of Scopa's resulted in a loss of about $150 to the Internal Revenue Service.

7
The government claimed at trial that the scheme was devised so that Scopa would seem to be unemployed and thus could continue to collect monthly benefits under a disability insurance policy.  Evidence also indicated that Scopa sought to hide the payments in order to preserve his status as an "independent" activist in the East Boston community and to prevent an extramarital affair from being discovered by his wife.  The district court later found that Scopa, but not Goldberg, was motivated by all of these objectives.

8
Clark Conspiracy.   In the course of opposing the Third Harbor Tunnel project, Goldberg also retained Vernon Clark, a lobbyist in Washington, D.C., who performed various services to this end.  Goldberg's companies owed Clark a substantial sum of money in 1991 for work performed in opposition to the tunnel project.  Rather than pay the bill directly, the two men agreed with others to a more complicated method for Goldberg to discharge his debt to Clark.

9
At the time, Clark was having a secret affair with a woman named Patricia McNally.  The pair occasionally spent time in a Maine beach house of which McNally was part owner.  Clark sought to fund an expansion of the beach house without his wife's knowledge.  Goldberg agreed to pay the money he owed to Clark to a landscaping company owned by John Lango, McNally's brother-in-law, who would in turn construct the beach house expansion.

10
Goldberg arranged for the preparation of two separate $10,000 invoices to Park 'N Fly from Lango, dated October 15, 1991 and January 1, 1992, respectively.  The invoices were ostensibly for landscaping services, although Lango performed no work for any of Goldberg's companies.  At Goldberg's direction, the invoices were paid by Park 'N Fly.  Lango testified at trial that the payments were structured in two installments so as to reduce his taxes on the transaction.

11
The triangular flow of money and services involved the plainly foreseeable preparation and filing of several false tax documents.  In due course, Park 'N Fly sent forms 1099-MISC, one for each $10,000 payment, to the IRS and to Lango.  The forms falsely listed the payments as non-employee compensation to Lango.  Lango in turn reported the payments as income on his own income tax returns in 1991 and 1992.  Clark did not report the money.  The foreseeable tax loss to the IRS based on this scheme was about $3,000.

12
A federal grand jury indicted Goldberg on April 6, 1995 for offenses relating to the above activities.  The indictment charged Goldberg with two counts of conspiring to defraud the United States government, 18 U.S.C. § 371, several counts of aiding and assisting the filing of false income tax returns, 26 U.S.C. § 7206(2), and several counts of mail fraud based on his alleged efforts to conceal his employment of Scopa from the latter's disability insurer.  18 U.S.C. § 1341.

13
After moving unsuccessfully to dismiss the indictment, Goldberg waived his right to a trial by jury.  Goldberg's trial before the district judge took eight days, and on September 6, 1995, the court announced its findings.  The court found Goldberg guilty of conspiring to defraud the government and of aiding and assisting in the preparation of false tax returns, but acquitted him on the mail fraud charges on the ground that his motive to help defraud the insurer had not been proved beyond a reasonable doubt.

14
At Goldberg's sentencing in December 1995, the district court made guideline calculations (described below) but then departed downward two levels and sentenced Goldberg at the bottom of the range.  The result was a ten-month sentence--five months to be served in prison and five in community confinement--as well as three years of supervised release and a $20,000 fine.  Goldberg now appeals, challenging his convictions and sentence.

15
The most important and difficult issues on appeal relate to Goldberg's conviction for conspiracy under 18 U.S.C. § 371 to defraud the IRS.  This type of conspiracy is known as a Klein conspiracy, taking its name from an earlier case involving a complex scheme designed to escape taxes.  United States v. Klein, 247 F.2d 908 (2d Cir.1957).  Goldberg argues that the district court misunderstood the crime's "purpose" element and that the evidence did not support a conviction.

16
The defraud clause of Section 371 criminalizes any conspiracy "to defraud the United States, or any agency thereof in any manner or for any purpose."  18 U.S.C. § 371.  Such conspiracies to defraud are not limited to those aiming to deprive the government of money or property, but include conspiracy to interfere with government functions.  See, e.g., United States v. Tarvers, 833 F.2d 1068, 1075 (1st Cir.1987).  The crime with which Goldberg was charged, therefore, was that he conspired to interfere with the proper functioning of the IRS, through the filing of false tax documents.

17
It is commonly said that in such a conspiracy the fraud has to be a purpose or object of the conspiracy, and not merely a foreseeable consequence of the conspiratorial scheme.  Dennis v. United States, 384 U.S. 855, 861, 86 S.Ct. 1840, 1844, 16 L.Ed.2d 973 (1966);  1 Sand et al., Modern Federal Jury Instructions § 19.02 (1990).  Consider, for example, the case of a band of bank robbers.  All know that the agreed-upon robbery will generate "income" that none of the robbers will report.  Yet it would be straining to describe interference with the IRS as a purpose or object of the conspiracy.  E.g., United States v. Vogt, 910 F.2d 1184, 1202 (4th Cir.1990).

18
This requirement of purpose accords generally with conspiracy doctrine, United States v. Alvarez, 610 F.2d 1250, 1256 (5th Cir.1980), but it is especially important under the defraud clause of section 371.  There are not many financial crimes without some implications for false reporting in someone's tax filings, if not for tax liability itself.  If section 371 embraced every foreseeable consequence of a conspiracy, many joint financial crimes having no other federal nexus--and perhaps many non-criminal acts as well--would automatically become federal conspiracies to defraud the IRS.

19
The "purpose" requirement, however, is easier to state than to apply.  The laundering of drug money, for example, normally involves the deliberate concealment of the money's origin.  The primary purpose is almost always to avoid detection of the underlying crime;  but can a jury also find an implied secondary objective to conceal income from the IRS?  We have held, on specific facts, that a jury could draw such an inference and also find a violation of section 371.  E.g., United States v. Cambara, 902 F.2d 144, 147 (1st Cir.1990);  Tarvers, 833 F.2d at 1075-76.

20
Such cases are the source of Goldberg's first argument on this issue.  He argues, inventively, that the conspirators either must have as their primary purpose the aim of frustrating the IRS or must be agreeing to undertake the conduct in question to conceal some other crime.  An example of the first alternative (primary purpose) is Klein itself where a web of shell companies and deceptive arrangements was devised to evade taxes;  the second alternative (concealment of crime) captures the money laundering precedents.

21
This view of section 371 might explain a number of cases and create a barrier against overreaching by prosecutors.  But it makes no doctrinal sense.  A conspiracy can have multiple objects, Ingram v. United States, 360 U.S. 672, 679-80, 79 S.Ct. 1314, 1320, 3 L.Ed.2d 1503 (1959), and any agreed-upon object can be a purpose of the conspiracy and used to define its character.  The central problem, which ought not be shirked, is to distinguish rationally between cases where interfering with government functions is a purpose and those where it is merely a foreseeable effect of joint action taken for other reasons.

22
This effort poses subtle problems in discriminating "purpose" from "knowledge" and in separating the objects of a conspiracy from its more remote consequences.  Volumes could be written on these subjects but--for cases like ours--a more compact solution is at hand:  where the conspirators have effectively agreed to falsify IRS documents to misstate or misattribute income, we think that (depending upon the circumstances) the factfinder may infer a purpose to defraud the government by interfering with IRS functions in the sense endorsed by the Supreme Court in Dennis.

23
It may well be that the conspirators in this case had no subjective desire--primary or secondary--to throw sand in the wheels of the IRS, let alone a subjective aim to reduce tax liability.  Goldberg's argument on this point, with one qualification as to the Clark conspiracy, may be plausible.  But filing a number of false tax documents misattributing income can interfere so clearly and proximately with IRS functions--or at least a factfinder could (but need not) so find--that we see no sharp distinction under section 371 between a purpose to file such documents and a purpose to interfere.

24
In permitting a factfinder to equate the two purposes, we leave untouched the general precept, namely, that mere collateral effects of jointly agreed-to activity, even if generally foreseeable, are not mechanically to be treated as an object of the conspiracy.  This would be a different case if, without filing false tax documents, Goldberg had agreed with his partners to pay Jones under the table, knowing that Jones had no intention of reporting the money to the IRS.  If the difference is in degree, then here the degree matters.

25
This brings us to the evidentiary question raised by Goldberg which we rephrase to accord with our just-stated view of the law:  does the evidence in this case show that Goldberg and at least one other conspirator shared a purpose to interfere with IRS functions by the filing of false income reports with the IRS?   This question must be asked and answered separately as to each conspiracy, as Goldberg was convicted of two separate conspiracies under section 371 and each conviction involves a separate assessment.

26
In each conspiracy, the illicit purpose that gives rise to section 371 violation must be shared by two or more conspirators.  Although the government's brief stresses the evidence pertaining to Goldberg's own role and knowledge, a conspiracy to defraud requires at least two who share that aim.  Innocent third parties may be the unwitting instruments of a conspiracy.  But when it comes to characterizing the purposes or objects of the conspiracy, it is those that are shared by at least two co-conspirators that make up the illegal agreement between them.  United States v. Krasovich, 819 F.2d 253, 255 (9th Cir.1987).

27
Here, the district court found that a purpose of the conspirators, in each conspiracy, was to interfere with the IRS.  As we have said, such a purpose can be inferred, depending upon the facts, where the very acts agreed to by the conspirators included the filing of false income-related tax documents.  This purpose can fairly be imputed to Goldberg who arranged for the creation of several or more false tax documents in each scheme.  The duration and complexity of the schemes, and Goldberg's own sophistication, add to the inference.

28
There is no evidence that Goldberg discussed the filing of false tax documents with other conspirators.  Yet we think that such conduct was an integral and self-evident part of each conspiracy, permitting the inference that other co-conspirators shared in that purpose.  In the case of the Scopa conspiracy, false W-2s were given to the straws, who were participants in the scheme, over an extended period.  Scopa himself signed a tax return with his wife, who was one of the straws, that incorporated a false W-2.

29
As to the Clark conspiracy, Lango received the false form 1099s, and he in turn reported the false figures to the IRS.  Indeed, Lango asked that the amount be divided so that it could be reported in two different years, testifying later that Clark had made the suggestion.  This indicates a tax motive but, in addition, shows that both men knew that the filing of false tax documents was an integral part of the scheme, and both shared in this purpose with Goldberg.  In sum, the evidence supports the trial court's findings of a common purpose to interfere with IRS functions.

30
In addition to "the danger [of injustice] inherent in a criminal conspiracy charge," Dennis, 384 U.S. at 860, 86 S.Ct. at 1843, the defraud clause of section 371 has a special capacity for abuse because of the vagueness of the concept of interfering with a proper government function.  For that reason, we have examined with special care both the concept and the evidence in this case.  But having done so, we conclude that the conduct and purpose of the defendants, although markedly less sinister than in Klein, could properly be found to fall within the outer bounds of section 371.

31
Goldberg next challenges the admission at trial of two out-of-court conversations between Lango and Clark, in which they discussed the false landscaping invoices and the solicitation of Goldberg's participation in the scheme.  These statements were admitted, over Goldberg's objection at trial, pursuant to Fed.R.Evid. 801(d)(2)(E), which provides that "a statement by a co-conspirator of a party during the course and in furtherance of the conspiracy" is not considered hearsay.

32
Goldberg does not dispute that Lango and Clark made the challenged statements during and in furtherance of the conspiracy, but he argues that the statements were not admissible against him because they were made before he joined.  He relies heavily on our opinion in United States v. Petrozziello, 548 F.2d 20 (1st Cir.1977), where we said that "if it is more likely than not that the declarant and the defendant were members of a conspiracy when the hearsay statement was made, and that the statement was in furtherance of the conspiracy, the hearsay is admissible."  Id. at 23.

33
Although this language has been cited with approval in a few later cases, e.g., United States v. McCarthy, 961 F.2d 972, 976-77 (1st Cir.1992), it conflicts with United States v. Baines, 812 F.2d 41 (1st Cir.1987).  Baines expressed the traditional notion that--insofar as hearsay is concerned--a late-joining conspirator takes the conspiracy as he finds it:  "a conspiracy is like a train," and "when a party steps aboard, he is part of the crew, and assumes conspirator's responsibility for the existing freight...."  Id. at 42;  accord United States v. Saccoccia, 58 F.3d 754, 778 (1st Cir.1995).

34
Frankly, the underlying co-conspirator exception to the hearsay rule makes little sense as a matter of evidence policy.  No special guarantee of reliability attends such statements, save to the extent that they resemble declarations against interest.  The exception derives from agency law, an analogy that is useful in some contexts but (as the Advisory Committee noted) is "at best a fiction" here.  The most that can be said is that the co-conspirator exception to hearsay is of long standing and makes a difficult-to-detect crime easier to prove.  United States v. Gil, 604 F.2d 546, 549 (7th Cir.1979).

35
If starting afresh, one might argue that the narrow Petrozziello version of the exception should be preferred, if only because it accords better with the companion rule imposing substantive liability for other crimes committed during the conspiracy;  a co-conspirator is held liable for foreseeable acts of others done in furtherance of the conspiracy but only if committed during the defendant's period of membership.  United States v. O'Campo, 973 F.2d 1015, 1021 (1st Cir.1992).  Symmetry is at least convenient.

36
But we are not starting afresh.  The broader Baines test describes the traditional approach, United States v. United States Gypsum Co., 333 U.S. 364, 393, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948), presumptively adopted by the Federal Rules of Evidence.  It is followed in most circuits.  See 2 Saltzburg, et al., Federal Rules of Evidence Manual 219-22 (5th ed. 1990) (collecting cases).  Most important, it is the test in most of our own recent cases, including Saccoccia, decided only 19 months ago.1  This panel is arguably not free, but is in any event not inclined, to depart from Saccoccia.

37
Goldberg's next claim on appeal is based on his motion filed prior to trial asking the district court to dismiss the indictment on the ground of selective prosecution.  The district court denied the motion without holding a full evidentiary hearing.  Goldberg claims that he alleged facts sufficient to require a hearing on his complaint, and he now asks this court to remand the case so that he may have such a hearing.

38
The government is allowed "broad discretion" in deciding whom to prosecute, Wayte v. United States, 470 U.S. 598, 607, 105 S.Ct. 1524, 1530, 84 L.Ed.2d 547 (1985), but there are some limitations.  It is said that the government may not base its decision to prosecute on an "unjustifiable standard," including the defendant's exercise of protected statutory and constitutional rights.  Wayte, 470 U.S. at 608, 105 S.Ct. at 1531.   Goldberg bases his selective prosecution claim on the theory that he was targeted by the government in response to his vigorous--and constitutionally protected--lobbying activities in opposition to the Third Harbor Tunnel project.

39
In seeking an evidentiary hearing, a defendant need only allege "some facts (a) tending to show that he has been selectively prosecuted and (b) raising a reasonable doubt about the propriety of the prosecution's purpose."  United States v. Saade, 652 F.2d 1126, 1135 (1st Cir.1981).  But the court may refuse to grant a hearing if the government puts forward adequate "countervailing reasons" to refute the charge, id., and if the court is persuaded that the hearing will not be fruitful.  Review on appeal is for abuse of discretion.  United States v. Gary, 74 F.3d 304, 313 (1st Cir.1996).

40
Here, Goldberg alleged that one of the prosecutors on the case made a comment to Goldberg's counsel during a preindictment meeting to the effect that Goldberg "should not have won" his fight with Frederick Salvucci, Massachusetts' secretary of transportation during the tunnel planning stage.  Goldberg also claimed that the initials "D.D." on a prosecution file reflect the complicity in the investigation of David Davis, executive director of MassPort.  Finally, he pointed to the fact that several of his coconspirators in the two schemes, including Clark and Lango, were never indicted.

41
The government filed several affidavits to rebut the claim.  It denied that the prosecutor in question made the alleged statement to Goldberg's attorney.  It explained that the initials "D.D." on the file that raised Goldberg's suspicion in fact referred not to David Davis but to Denise Doherty, an FBI agent assigned to the case.  In another district court paper, the government described the origins of its investigation into Goldberg's activities and gave examples of other recent prosecutions for mail fraud and Klein conspiracies.

42
The district court ultimately denied a hearing, saying that Goldberg's claims were "close to conclusory."   We have reviewed the complete filings of both sides and the district court's explanation.  What is involved is a judgment call--tempered on appeal by the deferential standard of review--as to the force and specificity of the allegations, the strength of the response, and the likelihood that a hearing would be helpful.  United States v. Lopez, 71 F.3d 954, 963-64 (1st Cir.1995).  Here, the district court did not abuse its discretion.

43
The claim of selectivity was quite weak;  the government largely explained its choice mainly to pursue Goldberg and Scopa.  And the rather modest evidence of wrongful motive also melted away, leaving only a single dispute.  As to this, four prosecutors denied under oath that the alleged remark had been made.  But it is in any event too thin a reed to require an evidentiary hearing, given the lack of surrounding evidence to support a selective prosecution claim.

44
Even less need be said about Goldberg's later new trial motion, whose summary denial is also cited as error.  In substance Goldberg complained that the government did not follow its own internal rules for tax prosecutions or reveal to him information about this decision.  The government's procedures do not create substantive rights, United States v. Michaud, 860 F.2d 495, 499 (1st Cir.1988), and there is no substantial basis for believing that the government withheld Brady material, Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), let alone that its actions were prejudicial.

45
Goldberg's last claim of error concerns his sentencing.  In fixing the sentence, the district court enhanced Goldberg's base offense level of 10, by four levels--two levels for his role in the offense, U.S.S.G. § 3B1.1(c), and two more levels for obstruction of justice, id.  §  3C1.1--to arrive at an adjusted offense level of 14.  (All citations are to the November 1995 edition of the guidelines).  However, the court departed downward two levels to 12 because it thought Goldberg's conduct was outside the "heartland" contemplated by the Klein conspiracy sentencing guideline.  Id. § 2T1.9.

46
The district judge stated that although Goldberg's conduct "as a matter of law constitutes a Klein conspiracy, as a matter of sentencing law, it seems to me inappropriate to apply the Klein conspiracy guidelines."   He chose to depart downward two levels because he thought the guideline section for aiding and assisting tax fraud, § 2T1.4, with a base offense level of 8 (when the tax loss is $3,001 to $5,000), was more reflective of Goldberg's conduct than the Klein conspiracy guideline, § 2T1.9, which has a base offense level of 10.2

47
The government, sensibly in our view, has chosen not to pursue an appeal from the downward departure.  But Goldberg, as is his right, challenges the district court's decision to impose a two-level enhancement for his managerial or supervisory role in the Scopa and Clark conspiracies.  The applicable guideline calls for an increase if "the defendant was an organizer, leader, manager, or supervisor in any criminal activity."  U.S.S.G. § 3B1.1(c).  In such a case, a two-level increase applies to joint criminal activity that involved fewer than five participants and was not otherwise extensive.  Id.

48
Goldberg says that the only person he managed or supervised was his bookkeeper, Arlene Meucci.  Meucci, he argues, does not count under the guideline because she was not a culpable participant.  See United States v. Morillo, 8 F.3d 864, 872 & n. 13 (1st Cir.1993);  U.S.S.G. § 3B1.1, comment n. 1.  However, at the sentencing hearing, the district court found that Goldberg "had a management role" in connection with false payroll and tax documentation directed to the straw employees in the Scopa conspiracy.

49
We review a district court's factfinding at sentencing under a clearly erroneous standard.  United States v. Thompson, 32 F.3d 1, 4 (1st Cir.1994).  On the record before us, ample evidence shows that Goldberg superintended the straws' receipt of false tax documents.  Goldberg says that Scopa and Clark were the true leaders of the two conspiracies.  But a defendant need not be at the top of a criminal scheme to be a manager or supervisor.  United States v. Savoie, 985 F.2d 612, 616 (1st Cir.1993).  Here, Goldberg's role was sufficient for the enhancement even if we assume that Scopa conceived of the payroll scheme and may have exercised primary supervision over the straws.

50
Affirmed.

1
 See Saccoccia, 58 F.3d at 778;  O'Campo, 973 F.2d at 1023 n. 5;  United States v. Fields, 871 F.2d 188, 194 (1st Cir.1989);  United States v. Murphy, 852 F.2d 1, 8 (1st Cir.1988);  United States v. Angiulo, 847 F.2d 956, 969 (1st Cir.1988);  United States v. Reynolds, 828 F.2d 46, 47-48 (1st Cir.1987);  United States v. Cintolo, 818 F.2d 980, 997 (1st Cir.1987)

2
 The ten-month sentence--five months to be served in prison and five in community confinement--was the minimum end of the resulting guideline range of 12.  U.S.S.G. ch. 5, pt. A (10-16 months at offense level 12)