Post on 04-Apr-2018
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DISTRICT COURT, CITY AND COUNTY OF
DENVER, COLORADO
1437 Bannock Street
Denver, Colorado 80202
__________________________________________
DANIEL WEST, an individual,Plaintiff,
v.
ANATOLY PORTNOY, an individual and
GREEN CROSS, LLC, a Colorado Limited
Liability Company,
Defendants.__________________________________________
Attorneys for Defendant:Robert J. Corry, Jr. #32705
Travis B. Simpson #43858
600 Seventeenth Street
Suite 2800 South Tower
Denver, Colorado 80202
303-634-2244 telephone
720-420-9084 facsimile
Robert.Corry@comcast.net
Travis@RobCorry.com
COURT USE ONLY _______________________
Case Number: 12CV5636
Courtroom 376
DEFENDANTS MOTION TO DISMISS PURSUANT TO C.R.C.P. 12(b)(6) ORIN THE ALTERNATIVE FOR A MORE DEFINITE STATEMENT PURSUANT
TO C.R.C.P. 12(e)
Defendants Anatoly Portnoy and Green Cross, LLC, through undersigned
counsel, hereby respectfully submit this motion to dismiss Plaintiffs Complaint
pursuant to C.R.C.P. 12(b)(5)(failure to state a claim upon which relief can be
granted), or in the alternative, for a more definite statement pursuant to C.R.C.P.
12(e), and as grounds states as follows:
C.R.C.P. 121 1-15 8 Certification: On September 26, 2012 and on
October 3, 2012, Robert J. Corry, Jr., counsel for defendants, contacted Adam C.
EFILED Document
CO Denver County District Court 2nd JD
Filing Date: Oct 03 2012 10:33PM MDT
Filing ID: 46796554
Review Clerk: Annie Keirnes
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Foster, counsel for Plaintiff, to confer regarding this motion, and Mr. Foster
responded via electronic mail on September 27, 2012 and on October 3, 2012 that
he opposed the motions to dismiss and for a more definite statement.
STANDARD OF REVIEW
When evaluating a motion to dismiss, the court should only consider
matters stated in the complaint and should not look beyond the confines of the
pleadings. Hewitt v. Rice, 119 P.3d 541, 544 (Colo. App. 2004). Furthermore, the
court must accept all averments of material fact as true. Id. However, the court is
not required to accept legal conclusions as true, even where they are couched as
factual allegations. Western Innovations, Inc. v. Sonitrol Corporation, 187 P.3d
1155, 1157-1158 (Colo. App. 2008). The complaint must set forth factual
allegations sufficient to raise a right to relief above the speculative level. Id.
citingBell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 1968-
1969, 167 L.Ed.2d 929 (2007).
ARGUMENT
I. PLAINTIFFS COMPLAINT FAILS TO STATE CLAIMS UPON
WHICH RELIEF CAN BE GRANTED
A. Plaintiffs First Claim for Breach of Implied Contract and
Second Claim for Failure to Pay Wages Fail to State a Claim
Upon Which Relief May Be Granted in General Contract Terms
The court should dismiss Plaintiffs first claim of breach of contract and
Plaintiffs second claim for failure to pay wages for failure to state a claim upon
which relief may be granted pursuant to C.R.C.P. 12(b)(5).
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Plaintiff, in his Complaint, alleges that Green Cross is a medical marijuana
center (MMC) authorized to produce medical marijuana (MMJ) and dispense it
to patients pursuant to Colorado state law. See Complaint at 5. Plaintiff further
alleges that [i]n the summer of 2010 Mr. Portnoy and Green Cross hired Mr.
West to cultivate MMJ at Green Cross optional cultivation facility located at 505
Bryant Street in Denver (the OPC). See Complaint at 6.
Plaintiff alleges that he was registered and badged as an employee
with the Medical Marijuana Enforcement Division of the Colorado Department of
Revenue (see Complaint at 8), and that Plaintiff engaged in the cultivation of
marijuana as part of this putative employment and conferred benefits upon
Green Cross and Mr. Portnoy. See Complaint at 10, 18, 26, 31.
Thus, the Complaint alleges that Plaintiff was engaged in the cultivation of
medical marijuana, and Defendant was engaged in the business of retail medical
marijuana sales. Plaintiff argues that he had valid contracts with Defendants to
cultivate medical marijuana for compensation and wages. Contracts require an
offer, acceptance, supported by consideration. For an enforceable contract to
exist, there must be mutual assent to an exchange between competent parties, legal
consideration, and sufficient certainty with respect to the subject matter and
essential terms of the agreement. Denver Truck Exch. v. Perryman, 307 P.2d 805
(Colo. 1957) Industrial Prods. Intl, Inc. v. Emos Trans, Inc., 962 P.2d 983(Colo.
App. 1997), cert. denied(Colo. 1998).
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The Complaint fails to allege any of these requirements of a contract, fails
to state the parameters and provisions of the alleged contract, and fails to state the
provisions of the alleged employment or wage agreement, and hence fails to state
a claim on this basis.
However, even if the precise provisions of the contract or wage agreement
were stated, these alleged contracts are void as against public policy because
marijuana remains illegal under federal law and any contract for the sale,
manufacture, and/or cultivation of marijuana is unenforceable in a court of law.
B. All Three Claims Should be Dismissed as They are Void for
Public Policy and Illegality Reasons
1. Cultivation and Possession of Marijuana Remain Illegal
Under Federal Law.
All three claims of Plaintiff relate to the production and for-profit sale of
marijuana. Marijuana remains an illegal substance under federal law. People v.
Watkins, 2012 COA 15, at 20, cert. denied, No. 12SC179, 2012 WL 1940753
(Colo. May 29, 2012)see also, Benoir v. Indus. Claims Appeals Office, 262 P.3d
970, 977 (Colo. App. 2011), cert denied, No. 11SC676, 2012 WL 1940833 (Colo.
May 29, 2012). In 1970, Congress enacted the Comprehensive Drug Abuse
Prevention and Control Act (CSA) in an effort to consolidate the growing
number of piecemeal drug laws and to enhance federal drug enforcement powers.
21 U.S.C.A. 801-971 (West 2011) Gonzales v. Raich, 545 U.S. 1, 12 (2005).
The CSA created a comprehensive regime to combat the international and
interstate traffic in illicit drugs. Gonzales, 545 U.S. at 12. The CSA makes it
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unlawful to manufacture, distribute, dispense, or possess any controlled substance
except in a manner authorized by the CSA. Gonzales, 545 U.S. at 13 (citing 21
U.S.C.A. 841(a)(1), 844(a)).
Controlled substances are categorized into five schedules according to
accepted medical uses, the potential for abuse, and their psychological and
physical effects on the body. Gonzales, 545 U.S. at 13 (citing 21 U.S.C.A.
811, 812). Congress classified marijuana as a Schedule I drug. Gonzales, 545
U.S. at 14 (citing 21 U.S.C.A. 812(c)). Drugs are categorized under Schedule I
because of their high potential for abuse, lack of any accepted medical use, and
absence of any accepted safety for use in medically supervised treatment.
Gonzales, 545 U.S. at 14 (citing 21 U.S.C.A. 812(b)(1)). When Congress
categorized marijuana as a Schedule I drug, the manufacture, distribution, or
possession of marijuana became a criminal offense. Id. citing21 U.S.C.A.
823(f), 841(a)(1), 844(a)).
Notwithstanding the prohibition of marijuana under the CSA, numerous
states, including Colorado, have enacted medical marijuana laws, creating some
conflicting uncertainty regarding the status of marijuanas legality. See Gonzales,
545 U.S. at 5 Colorado Constitution, Article XVIII 14 C.R.S. 18-18-406.3
C.R.S. 12-43.3-101 et seq. C.R.S. 25-1.5-106. Colorado courts recognize that
authorization to use medical marijuana is not limitless. Benior, 262 P.3d 970, 976
(citing People v. Clendenin, 232 P.3d 210, 212, 214 (Colo. App. 2009) In re
Marriage of Parr, 240 P.3d 509, 511 (Colo. App. 2010)).
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In response to a challenge relevant to Californias medical marijuana laws,
the United States Supreme Court held that there is no medical necessity exception
to the prohibitions contained within the CSA. United States v. Oakland Cannabis
Buyers Co-op., 532 U.S. 483, 486, 494 (2001).
Furthermore, Colorados medical marijuana provision may protect
claimant from prosecution under Colorados criminal laws, but the Amendment
has no effect on federal laws. Watkins, 2012 COA at 20. In Gonzales, the
United States Supreme Court held that application of the CSA to intrastate
growers and users of medical marijuana did not violate the Commerce Clause of
the United States Constitution, thus affirming Congresss power to
comprehensively regulate, and in some cases prohibit, intrastate and interstate
drug activity. See Gonzales, 545 U.S. at 9.
Finally, the Colorado Court of Appeals has found that medical marijuana
laws continue to violate federal public policy. Benoir, 262 P.3d at 974 (citing the
Office of National Drug Policys notice mandating that enforcement of federal
drug laws would remain in effect despite state passage of medical marijuana
provisions).
2. Federal law regarding marijuana preempts state law
because Colorado state law creates an obstacle to the full
enforcement of federal law.
The Supremacy Clause of the United States Constitution provides that the
Constitution and laws of the United States shall be the supreme Law of the
Land. U.S. Const. art. VI, cl. 2Maryland v. Louisiana, 451 U.S. 725, 746
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(1981). It is fundamental to this constitutional command that all conflicting state
provisions be without effect. Maryland, 451 U.S. at 746. However, a federal act
cannot supersede the States historic police power unless that is the clear
purpose of Congress. Medtronic, Inc. v. Lohr, 518 U.S. 470, 471 (1996).
Therefore, interpretation of a statutes preemptive scope must focus on the fair
understanding of Congressional purpose. Id.
Congress may indicate its preemptive intent through explicit statutory
language or implicitly through its structure and purpose. Jones v. Rath Packing
Co., 430 U.S. 519, 525 (1977). A federal statute may implicitly supersede a state
statute when a statutes scope indicates that Congress intended federal law to
occupy a field exclusively, or when the state law is in actual conflict with
federal law. Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995).The CSAs
central objective is to conquer drug abuse and to control the legitimate and
illegitimate traffic in controlled substances. Gonzales, 545 U.S. at12. Congress
created a comprehensive framework for regulating the production, distribution,
and possession of five classes of controlled substances. Id. at 24.
Congress classified marijuana as a Schedule I drug partly for its lack of
any accepted medical use. Id. at 14. Despite considerable efforts to reschedule
marijuana, Congress has refused to classify marijuana under any lesser schedules.
Id. at 15. Further, the United States Supreme Court held that there is no medical
necessity exemption available under the CSA, thus foreclosing any conclusion that
Colorados marijuana law can create any such exemption under federal drug law.
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See Oakland Cannabis, 532 U.S. at 483, 486, 494. Since Congress has not
indicated any intent to occupy the field of drug law exclusively, the Court must
consider the existence of an actual conflict between state and federal law. Actual
conflict may exist when it is physically impossible to comply with both state and
federal law or when state law stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress. Freightliner, 514 U.S.
at 287. Historically, the Court has applied the physical impossibility standard very
narrowly. See Wyeth v. Levine, 555 U.S. 555, 590 (2009).
Here, it is not physically impossible to comply with both state and federal
law because a person can simply refrain from using marijuana, medical
or otherwise. In Emerald Steel Fabricators, Inc. v. Bureau of Labor & Indus. (230
P.3d 518, 528 (Or. 2010)), the Oregon Supreme Court applied similar reasoning
and concluded that it is not physically impossible for Oregon residents to comply
with both federal law and Oregons medical marijuana law because residents can
refrain from using marijuana altogether. Similarly, it is not physically impossible
for Colorado residents to comply with both federal and state law. Therefore,
the physical impossibility standard of preemption is not satisfied.
Finally, the Court must consider whether the state law stands as an
obstacle to the accomplishment and execution of the full purposes and objectives
of Congress. Hines v. Davidowitz, 312 U.S. 52, 67 (1941). I n Michigan Canners
& Freezers Assn, Inc. v. Agric. Mktg. & Bargaining Bd . (467 U.S. 461, 478
(1984)), the United Supreme Court held that state law was preempted when state
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law authorized associations of farmers and other producers of agricultural
commodities to engage in conduct forbidden by federal law. The Court held that
federal law preempted state law because it stood as an obstacle to the
accomplishment and execution of the full purposes and objectives of
Congress.Id.
InEmerald, the Oregon Supreme Court found that Oregon law
affirmatively authorizes the use of medical marijuana whereas the CSA
prohibits marijuana regardless of any medical purpose. 230 P.3d at 529. Similarly,
Colorado law authorizes certain individuals to use marijuana for medical purposes,
whereas federal law forbids any use of marijuana. Ultimately, the CSA prohibits
the manufacture, distribution, or possession of marijuana, and any state
authorization to engage in the manufacture, distribution, or possession of
marijuana creates an obstacle to the full execution of the federal CSA. Therefore,
Colorados marijuana laws are preempted by the CSAs prohibition of marijuana.
Similarly, inEmerald, the Oregon Supreme Court held that Oregon marijuana law
is without effect because Oregons marijuana laws are preempted by federal law.
230 P.3d at 529.
3. Contracts in Contravention of Public Policy are Void and
Unenforceable.
[C]ontracts in contravention of public policy are void and unenforceable.
Pierce v. St. Vrain Valley School Dist. RE-1J, 981 P.2d 600, 604 (Colo. 1999).
Parties to illegal contracts generally cannot recover damages for breach of
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contract.Bd. of Cnty. Commrs of Pitkin Cnty. v. Pfeifer, 546 P.2d 946, 950
(Colo. 1976). Although parties have the freedom to agree to whatever terms they
see fit, such terms cannot violate statutory prohibitions affecting public policy of
the state. Fox v. I-10 Ltd, 957 P.2d 1018,1022 (Colo. 1998) see also City of
Colorado Springs v. Mountain View Electric Assn, Inc., 925 P.2d 1378, 1386
(Colo. App. 1995) (It is a fundamental principle of contract law that parties
cannot by private contract abrogate the statutory requirements or conditions
affecting the public policy of the state.) Above all else, no one can lawfully do
that which tends to injury the public, or is detrimental to the public good. Russell
v. Courier Printing & Publg Co., 95 P. 936 (Colo.1908). As a result, a defendant
may not be forced to perform on a contract to which he agreed and received a
benefit. See Id. However, it is not for his sake, or for his protection, that the
objection is allowed, but for the protection of the public.Id.
Furthermore, Colorado law does not suggest that a public policy analysis
should be limited to violations of public policy only as defined by Colorado law.
See Pierce, 981 P.2d at 604Fox, 957 P.2d at 1022Pfeifer, 546 P.2d at
950Mountain View, 925 P.2d at 1386. Instead, the concept of public policy
includes both thestate of Colorado and the state as defined as a politically
organized body of people [usually] occupying a definite territory. Websters
Dictionary 1151 (9th
ed. 1989). Colorado courts are responsible for upholding the
public policy of thestate of Coloradoand the state of the nation. InRussell, the
Supreme Court of Colorado held that a contract was void as against public policy
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because it violateda ruling by the United States Supreme Court declaring that
agreements forgovernment contracts are void as against public policy when
compensation iscontingent upon the success of the promisees efforts. 95 P. at
938. Therefore, ifthe disputed contract violates federal law, it would be against
public policy andwould be void and unenforceable.
Though not binding precedent, on August 8, 2012, following a bench trial
in which the plaintiff brought a breach of contract action, the Arapahoe District
Court voided an otherwise-valid and existing contract for the sale of medical
marijuana under similar rationale. In Arapahoe District Court Case No. 11CV709,
District Court Judge Charles M. Pratt concluded that contracts for the sale of
marijuana are void as they are against public policy. Accordingly the contract
here is void and unenforceable. See Haeberle v. Blue Sky Care Connection,
LLC, Arapahoe District Court Case No. 11CV709, August 8, 2012 ORDER,
attached hereto and incorporated herein by reference as Defendants Exhibit 1.
Here, the contracts, as alleged, are illegal under federal law. Therefore,
neither law nor equity will aid either toenforce, revoke, or rescind. Baker v.
Couch, 221 P. 1089, 1090 (Colo. 1923) (emphasis added). The contracts are void
as against public policy because they violate federal law prohibiting the cultivation
and sale of marijuana.
Moreover, as Baker v. Couch explains, there can be no equitable claim for
illegal activity in violation of the law. In order to prevail on a claim for unjust
enrichment, the plaintiff must show that she conferred a benefit on the defendant
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under circumstances that would make it unjust for defendant to retain the benefit
without paying. Lewis v. Lewis, 189 P.3d 1134, 1145 (Colo. 2008) quoting
DCB Constr. Co. v. Cent. City Dev. Co., 965 P.2d 115, 119-20 (Colo. 1998). It
would be unjust for the Court to compensate Plaintiff for his illegal acts.
Defendants recognize this is a somewhat unsettled area of the law, and that
various attorneys and courts have taken a variety of positions about the legality of
medical marijuana in light of federal law. However, pursuant to the Colorado
Rules of Professional Conduct, licensed practicing attorneys are ethically required
to raise and advance arguments on behalf of clients that could potentially benefit
the lawyers clients, notwithstanding the lawyers personal interest or political
views. See Colo. R. Prof. C. 1.1 (Competence) 3.1 (Meritorious Claims and
Defenses The advocate has a duty to use legal procedure for the fullest benefit of
the client's cause...) 3.2 (Expediting Litigation). Even if lawyers may personally
believe that federal law related to marijuana is antiquated or irrational, said law
remains valid and binding, and eliminates all claims alleged here.
Additionally, pursuant to Colo. R. Prof. C. 3.3 (Candor Toward the
Tribunal), counsel for Defendants believe they are ethically obligated to advise
this Court of contrary authority as to the above federal illegality argument. The
following controlling legal authority may fit in this category: Colorado
Constitution, Article XVIII 14(2)(d) (constitutional right to the medical use of
marijuana includes acquisition, possession, manufacture, production, sale,
distribution, dispensing, or transportation of marijuana) In re Marriage of Parr,
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240 P.3d 509, 511 (Colo. App. 2010) (discussing fathers constitutional right to
use medical marijuana throughout Court of Appeals opinion) 21 U.S.C. 903
(no Congressional intent to occupy the field on subject matter of controlled
substances which would otherwise be within the authority of the State) 21
U.S.C. 885(d) CFR 1301.24 (federal immunity for state or local government
official who shall be lawfully engaged in the enforcement of any law or
municipal ordinance relating to controlled substances) C.R.S. 12-43.3-901
(deputizing Center licensees and employees as badged state and local government
officials empowered to confiscate fraudulent documentation and pursue all
violations of State law) U.S. Patent No. 6,630,507 (patent held by United States
of America, as represented by the Department of Health and Human Services, for
the use of cannabinoids for medical purposes) National Institute of Drug Abuse,
Compassionate Use Protocol (federal program growing, transporting, and
distributing marijuana to U.S. citizens throughout the states for medical purposes)
District of Columbia Medical Marijuana Program, D.C. Stat. 7-1671 et seq.
D.C. Law 13-315 57 DCR 3360 (federal medical marijuana program passed by
U.S. Congress and signed into law by President of the United States).
II. PLAINTIFFS THIRD CLAIM FOR QUANTUM MERUIT/UNJUST
ENRICHMENT FAILS TO STATE A CLAIM UPON WHICH
RELIEF CAN BE GRANTED
In addition to, and separately from, the federal rationale set forth above, the
court should dismiss Plaintiffs third claim for relief through the equitable doctrine
of unjust enrichment. As detailed above, Plaintiff alleges that he entered into an
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enforceable contract and an employment agreement providing for wages with
Defendants, which are allegations taken as true at this stage and for purposes of
this motion.
Therefore, since legal remedies exist, an equitable one is automatically
precluded. Plaintiff is not entitled to assert a claim for unjust enrichment, the
survival of which as a claim requires the non-existence of a contract, i.e. a legal
remedy. Unjust enrichment is available as a remedy only in the absence of an
otherwise enforceable contract. Scott Co. v. MK-Ferguson Co., 832 P.2d 1000
(Colo.App.1991)see also Gilmore v. Ute City Mortgage Co., 660 F.Supp. 437
(D.Colo.1986). It is long-standing precedent that equitable claims can exist where
there is no adequate remedy at law. Patterson v. People ex rel. Parr, 130 P. 138
(Colo. 1913) Blitz v. Moran, 67 P. 1020 (Colo. 1902). If there has been mutual
agreement between the parties forming a contract, as is alleged here, the remedy of
unjust enrichment is not available. Vigoda v. Denver Urban Renewal Authority,
646 P.2d 900 (Colo.1982).
Plaintiff asserts that there were numerous express agreements entered into
with Defendant. (Plaintiffs Complaint 9). Accepting these assertions as true,
Plaintiff is precluded from asserting the claim of unjust enrichment, which
depends on the non-existence of a contract, and the Court should dismiss this
claim.
Plaintiff cannot have it both ways, even at this stage. Legal and equitable
remedies are mutually exclusive. If Plaintiff descends into the world of equity,
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such claims depend on the lackof remedies at law. Since Plaintiff alleges
remedies exist at law, and these allegations are taken as true, then the equitable
claims must fail.
III. IF THE MOTION TO DISMISS IS DENIED, THEN IN THE
ALTERNATIVE PLAINTIFF SHOULD PROVIDE A MORE
DEFINITE STATEMENT
The Complaint does not set forth the terms of the alleged contract and wage
agreement, and it should do so, in order to advance the litigation so that parties
need not aim at a moving target and increase their expenses and impact the
Courts limited resources. C.R.C.P. 12(e) allows this Court, in its discretion, to
order Plaintiff to provide a more definite statement:
Before responding to a pleading or, if no responsive pleading is
permitted by these rules, within 21 days after the service of the
pleading upon him, a party may file a motion for a statement in
separate counts or defenses, or for a more definite statement of any
matter which is not averred with sufficient definiteness or
particularity to enable him properly to prepare his responsivepleading.
C.R.C.P. 12(e).
In a contracts case such as this, Plaintiff should be required to state at the
outset the precise terms of the alleged contracts. It is expected that Plaintiff will
resist, at this stage and throughout the litigation, ever actually setting forth the
terms of these alleged contracts or the putative wages supposedly due.
PRAYER FOR RELIEF
Wherefore, for the reasons stated herein, the Court should dismiss
Plaintiffs claims forthwith and with prejudice, or in the alternative, should order
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Plaintiff to provide a more definite statement detailing the alleged specifics of the
contracts, and for all other relief just and proper.
Date: October 3, 2012 Respectfully Submitted,
/s/ Robert J. Corry, Jr.
(original signature on file)
____________________________
Robert J. Corry, Jr.
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Certificate of Service
Above designated counsel hereby certifies that on the above date he served via
LexisNexis File & Serve a true and complete copy of the foregoing to:
Adam C. Foster
Hoban & Feola, LLC
1626 Wazee Street Suite 2A
Denver, Colorado 80202
303-674-7000
adam@hobanandfeola.com
/s/ Robert J. Corry, Jr.
(original signature on file)
____________________________Robert J. Corry, Jr.