The opinion of the court was delivered by: WILLIAM C. CONNER
Defendant Terence W. Rufer ("Rufer") moves for judgment notwithstanding the verdict entered in this action on October 28, 1991 following a three-day jury trial.
Plaintiff Posadas de Mexico, S.A. de C.V. ("Posadas"), which owns and operates hotels in Mexico, brought the action against Terence W. Rufer Associates, Inc. ("Rufer Associates"), a New York corporation which acted as its booking agent, and against Rufer, its president and sole stockholder, and Gerald D. Dukes ("Dukes") its manager, charging fraud and conversion of checks received by Rufer Associates as deposits against such reservations. Rufer claims a setoff for commissions allegedly due to Rufer Associates from Posadas.
The following facts were established at the trial or are undisputed: The contract between Posadas and Rufer Associates provided (1) that the reservation checks were to be deposited in an account in a New York bank to which Posadas had sole signatory authority; (2) that Rufer Associates would be paid a 10% commission on the reservations actually used; and (3) that Posadas would advance sufficient money to pay the operating expenses of Rufer Associates including the salaries of Rufer and Dukes.
The contract expired by its terms on October 31, 1986 and Posadas gave Rufer Associates timely advance notice that it would not be renewed. Negotiations for its renewal continued after October 31, 1986, but were formally terminated by a letter from Posadas to Rufer Associates dated November 13, 1986 which expressly terminated all authority of Rufer Associates as agent of Posadas.
After October 31, 1986, Rufer Associates continued to receive deposit checks on reservations it had made prior to that date. Because Rufer Associates was concerned about collecting commissions it believed were due to it, it consulted its attorney, Edwin A. Howe, who advised it not to deposit these checks in the bank account of Posadas but in an escrow account to which it had the sole signatory authority. Rufer Associates accordingly opened in a different bank an account entitled "Terence W. Rufer Associates, as agent for Posadas de Mexico" and deposited into it Posadas reservation checks totalling $ 224,122.31. During the ensuing months, this entire amount was withdrawn and used to finance the continuing operations of Rufer Associates.
Rufer Associates, having lost its only major client, soon failed and filed for bankruptcy protection under Chapter 11, this proceeding ultimately being converted to a liquidation. Posadas filed a claim in the bankruptcy court stating that its records had been destroyed by an earthquake, but submitting a statement of account prepared by Rufer Associates showing, inter alia, that Posadas owed Rufer Associates $ 303,597.84 in commissions.
At the trial, after all the evidence had been presented, defendant Rufer moved under Rule 50(b), Fed. R. Civ. P. for a directed verdict dismissing the claim of fraud. The Court granted this motion, stating, "I am inclined not to charge the jury on the issue of fraud . . . I don't think the essential concept of fraud [willful misrepresentation or concealment and detrimental reliance thereon] is satisfied here. If it is, it is satisfied in every case [of] embezzlement. . . . I think [this] is a pure case of conversion and not a case of fraud."
The jury, in response to special interrogatories, found: (1) that Rufer had personally converted $ 224,122.31 of funds belonging to Posadas; (2) that the evidence did not establish that Rufer Associates was owed any commissions by Posadas; and (3) that Posadas was entitled to punitive damages against Rufer in the amount of $ 75,000. Judgment was entered on this verdict on November 13, 1991.
On November 21, 1991 Rufer filed the present motion "for a judgment notwithstanding the verdict pursuant to Rule 50." However, as Posadas correctly pointed out after receiving the transcript of the relevant part of the trial proceedings, Rufer had not moved at the close of the evidence for a directed verdict on the conversion claim, as required by Rule 50(b).
Thereupon, Rufer asked that his motion be deemed as one for relief from the judgment pursuant to Rule 60(b)(6), Fed.R.Civ.P.
As previously mentioned, Rule 50(b) can furnish no basis for the pending motion because of Rufer's failure to move for directed verdict on the conversion claim. Moreover, a motion for relief from the judgment pursuant to Rule 60(b) would not extend the time for appeal nor prevent the notice of appeal from depriving this Court of jurisdiction to rule on the motion. However, if the motion is deemed as one seeking a new trial pursuant to Rule 59, Fed. R. Civ. P., it will nullify the ...