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BINGHAM v. ZOLT

June 16, 1993

J. REID BINGHAM, as Ancillary Administrator of the ESTATE OF ROBERT NESTA MARLEY, Plaintiff,
v.
MARVIN ZOLT; ZOLT & LOOMIS, P.C.; DAVID J. STEINBERG; BLUESTEIN, RUTSTEIN & MIRARCHI, P.C.; GREENSTEIN, GORELICK, PRICE, SILVERMAN & LAVESON; MARTIN OLINER; MARTIN OLINER, P.C.; and COUDERT BROTHERS, Defendants. COUDERT BROTHERS; MARTIN OLINER; MARTIN OLINER, P.C.; and BLUESTEIN, RUTSTEIN & MIRARCHI, P.C., Third-Party Plaintiffs, v. RITA MARLEY and MUTUAL SECURITY MERCHANT BANK AND TRUST COMPANY, Third-Party Defendants.



The opinion of the court was delivered by: KENNETH CONBOY

 KENNETH CONBOY, DISTRICT JUDGE:

 This case was tried over a period of twelve weeks before a jury, which returned a verdict in favor of the plaintiff, J. Reid Bingham, and against two of the defendants, Marvin Zolt and David J. Steinberg. Currently before the Court are several post-trial motions from different parties to the litigation. This Order addresses the motions of David J. Steinberg and Marvin Zolt, the plaintiff's request to order the registration of this Judgment in the district of Pennsylvania, and the plaintiff's application for attorneys' fees and disbursements. *fn1"

 A. Statute of Limitations

 1. RICO Claims:

 Defendants claim that plaintiff's RICO claims are barred by the statute of limitations because the jury found that the Estate had actual knowledge of the defendants' wrongful acts by December 10, 1982. Defendants' argument, however, ignores the fact that under applicable Second Circuit law, the Estate's RICO claims are timely as to all RICO injuries suffered by the Estate within the four-year limitation period. See Bankers Trust Co. v. Rhoades, 859 F.2d 1096 (2d Cir. 1988) ("a plaintiff may sue for any injury he discovers or should have discovered within four years of the commencement of his suit, regardless when the RICO violation causing such injury occurred." Id. at 1103), cert. denied, 490 U.S. 1007, 104 L. Ed. 2d 158, 109 S. Ct. 1642 (1989). Since the jury expressly found that all of the RICO damages occurred after December 31, 1982, the Court finds that all of the separate RICO injuries found by the jury occurred within four years of the commencement of the suit on December 10, 1986.

 The Court observes that the fact that the plaintiff had actual knowledge of the wrongful acts by December 10, 1982 does not bar the RICO claims. The Second Circuit has made clear that the separate accrual rule is discrete from the issue of plaintiff's knowledge of the underlying RICO violations. For example, in Bankers Trust, the Court held that plaintiff could "recover for any injury it discovered or should have discovered on or after August 24, 1978" [four years prior to the suit], despite the fact that plaintiff first became aware of defendants' fraud in September 1976. 859 F.2d at 1099, 1105. See also Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, 808 F. Supp. 213 (S.D.N.Y. 1992) ("because a civil RICO action to recover damages for an injury does not exist until that injury has been suffered, Plaintiffs have an action for each injury sustained after May 14, 1987, notwithstanding the fact that Plaintiffs already knew of Defendants' fraudulent activity and might have anticipated further harm. Plaintiffs sustained actionable injury every time they lost money as a result of Defendants' RICO scheme." Id. at 226). Accordingly, the Court finds that the plaintiff's RICO claims are not barred by the statute of limitations. *fn2"

 2. Common Law Claims:

 Defendants also maintain that plaintiff's common law claims for fraud and breach of fiduciary duty are barred by the applicable statute of limitations. *fn3" We disagree. We have already held that New York law governs the resolution of this dispute, and that, accordingly, the six-year New York statute of limitations applies to plaintiff's fraud and breach of fiduciary claims. See Trial Tr. 8015-16, 8499-8500. We do not believe that either the fraud or breach of fiduciary duty claim is barred by its six-year statute of limitations.

 Defendants' also argue that plaintiff's "actual knowledge" of defendants' wrongful acts by December 10, 1982 negates plaintiff's RICO and fraud claims. We have already rejected this argument with respect to the RICO claims and do so here for the fraud claim as well. The Court recognizes that justifiable reliance is an essential element of a fraud claim (See Jury Charge, Instruction No. 64, at 71), and that there is an inconsistency between a finding that the plaintiff had actual knowledge of defendants' wrongdoing and that plaintiff justifiably relied on a false representation made by defendants. However, the Court also recognizes that the jury found that plaintiff had actual knowledge of defendants' wrongdoing by December 10, 1982, four years prior to the commencement of the suit, and there remains a two-year window in which defendants could have committed the fraud unbeknownst to the plaintiff.

 Defendants argue that since the jury found that the plaintiff had actual knowledge of defendants' wrongdoing on the earliest date upon which they could have, it is very possible that the plaintiff acquired actual knowledge of defendants' wrongdoing well before December 10, 1982, and that therefore there was never a justifiable reliance by the plaintiff within the applicable six-year statute of limitations for fraud. We disagree. Where there is an alleged inconsistency in the jury's verdict, "'it is the duty of the court to attempt to harmonize the answers, if it is possible under a fair reading of them.'" Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d 884, 891 (2d Cir. 1988), citing, C. Wright & A. Miller, Federal Practice and Procedure ยง 2510, at 515 (2d ed. 1971). The jury was properly instructed on the elements of the Estate's claims against defendants and all of their defenses to these claims. There is a strong presumption that the jury properly followed these instructions. See United States v. Casamento, 887 F.2d 1141, 1151 (2d Cir. 1989), cert. denied, 493 U.S. 1081, 107 L. Ed. 2d 1043, 110 S. Ct. 1138 (1990).

 Accordingly, a court must uphold the verdict of a properly-instructed jury if there is any "plausible" explanation for the purported inconsistency in their verdict. See United States Football v. National Football League, 644 F. Supp. 1040 (S.D.N.Y. 1986) ("the Seventh Amendment imposes upon the courts a constitutional obligation to search for an interpretation of the case which reconciles the verdicts, . . . and which respects the principle that 'juries are not bound by what seems inescapable logic to judges'" Id. at 1046 (citations omitted)), aff'd, 842 F.2d 1335 (2d Cir. 1988).

 In this case, the jury could have easily found that the Estate "justifiably relied" on Mr. Steinberg's and Mr. Zolt's misrepresentations through 1981 and up to December 10, 1982. Mindful of the fact that the jury was properly instructed on the elements of the fraud claim, including its six-year statute of limitations, the Court will accept this highly plausible interpretation of the jury's verdict. Accordingly, we find that the plaintiff's fraud claim is not barred by the six-year statute of limitations. *fn4"

 Defendants argue that plaintiff's claims are barred by the doctrines of waiver and estoppel. We disagree. Plaintiff's claims are not barred by waiver or estoppel, because defendants have failed to plead, prove, or submit to the jury the elements of either of these affirmative defenses. See Steinberg v. Columbia Pictures Industries, Inc., 663 F. Supp. 706, 715 (S.D.N.Y. 1987); Galvez v. Local 804 Welfare Trust Fund, 543 F. Supp. 316, 317 (E.D.N.Y. 1982). Both waiver and estoppel require a showing not only of knowledge on the part of the plaintiff, but also an intent element which is separate and distinct from a finding of actual knowledge. See Christian Dior-New York, Inc. v. Koret, Inc., 792 F.2d 34, 40 (2d Cir. 1986); Voest-Alpine International Corp. v. Chase Manhattan Bank, N.A., 707 F.2d 680, 685 (2d Cir. 1983); Rosenthal v. National Life Insurance Co., 486 F. Supp. 1018, 1023 (S.D.N.Y. 1980). Thus, the jury's finding that the Estate had actual knowledge as of December 10, 1982, does not establish the intent element of either waiver or estoppel. Since there was no finding by the jury of the requisite intent to satisfy either waiver or estoppel, Mr. Steinberg and Mr. Zolt have failed to carry their burden of establishing the elements of either of these affirmative defenses.

 C. Ratification

 Defendants argue that plaintiff's claims are barred by the doctrine of ratification, because the Estate ratified defendants' unauthorized acts by not disaffirming the Coudert tax structure. We disagree. First of all, there is evidence that the Estate did not retain the Coudert tax structure. See "Plaintiff's Memorandum in Opposition to Defendants' Post-Trial Motions" ("Plaintiff's Memorandum"), Feb. 12, 1993, at 42-43 (and accompanying cites to Trial Transcript). More importantly, though, even had the Estate affirmed the tax structure by failing to repudiate it, such conduct would not constitute a ratification. Ratification does not occur where a principal must affirm a transaction to protect his own interests. Delano v. Kitch, 663 F.2d 990, 999 (10th Cir. 1981), cert. denied, 456 U.S. 946, 72 L. Ed. 2d 468, 102 S. Ct. 2012 (1982). In this case, there is ample evidence that any action taken by the Estate with respect to the Netherlands and Netherlands Antilles after 1986 was necessary to protect its interests and avoid further loss. In any case, defendants have not ...


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