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Hallinan v. Republic Bank & Trust Co.

September 7, 2007

CHARLES M. HALLINAN, PLAINTIFF,
v.
REPUBLIC BANK & TRUST COMPANY, DEFENDANT.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge

OPINION AND ORDER

Defendant Republic Bank & Trust Company ("Defendant" or "Republic") moves for a post-trial judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b), or in the alternative, for a new trial pursuant to Fed. R. Civ. P. 59.

For the reasons detailed more fully below, Republic's motion for judgment as a matter of law is denied as to all parts but one. Republic's motion for a new trial is denied in its entirety.

I. BACKGROUND

A short recounting of the proceedings at trial will be provided here at the outset. Additional facts will be provided as they relate to Republic's particular post-trial motions.

The case arose following disputes between Defendant Republic Bank & Trust Co. and the company Benefits Express, LLC ("Benefits"). Benefits was in the business of providing banking services to "underserved" individuals, and was later the subject of an acquisition by Republic. Thereafter, Plaintiff Charles Hallinan ("Plaintiff" or "Hallinan") brought this breach of contract claim against Republic.*fn1 Hallinan's breach claim stemmed from a 2001 contract signed by Hallinan, Republic, and Benefits pursuant to which Hallinan loaned money to Benefits that was then paid directly to Republic. See generally Hallinan v. Republic Bank & Trust Co., 2007 U.S. Dist. LEXIS 503, at *3-8 (S.D.N.Y. 2007) (denying summary judgment to Republic on Hallinan's breach of contract claim). Hallinan produced evidence at trial that showed that he ultimately paid $359,577.31 to Benefits pursuant to the 2001 contract. See Plaintiff's Trial Exhibit ("Pl. Ex.") 10.

In 2003, Benefits brought claims against Republic that were resolved by arbitration on March 24, 2006. See Def. Ex. I; see generally Hallinan v. Republic Bank & Trust Co., 2007 U.S. Dist. LEXIS 503, at *20 (S.D.N.Y. 2007). Hallinan, on behalf of Benefits, paid by his own account a total of $83,195.45 towards Benefits' litigation costs against Republic.*fn2 According to evidence proffered by Republic at trial of this action (and not disputed by Hallinan), Hallinan in fact paid a total of $97,689.45 towards Benefits' litigation costs.*fn3

The Benefits-Republic arbitrator, inter alia, awarded Benefits $275,624 (excluding interest) as a result of Republic's breach of the 2001 contract vis-à-vis Republic. Def. Ex. I. In my January 8, 2007 Opinion, I held that the arbitrator's decision collaterally estopped Republic from arguing that it did not breach the 2001 contract vis-àvis Hallinan. Hallinan v. Republic Bank & Trust Co., 2007 U.S. Dist. LEXIS 503, at *41-42.

Accordingly, I conducted a jury trial, from January 29 through January 31, 2007, to determine two questions: 1) whether privity existed between Hallinan and Benefits at the time of the Benefits-Republic arbitration;*fn4 and if not, 2) the damages Hallinan was separately owed by Republic, if any, because of Republic's breach of the 2001 contract.*fn5

Republic argued strenuously at trial that Hallinan was a shareholder of Benefits, rather than a creditor, that Benefits accordingly owed Hallinan a fiduciary duty, and thus that privity existed between Hallinan and Benefits at the time of the prior arbitration.

Regarding the first question of privity, the jury, on its verdict sheet, was asked, "Do you find by a preponderance of the evidence that privity existed between Plaintiff Charles Hallinan and Benefits Express, LLC at the prior arbitration between Benefits and Defendant Republic Bank?" The jury answered, "No." See Judgment, Feb. 2, 2007, Docket Entry #80, 06-cv-185 (S.D.N.Y.) ("Judgment").

The second question on the verdict sheet asked, "Do you find by a preponderance of the evidence that Defendant Republic Bank owes damages to Plaintiff Charles Hallinan for its breach of the 2001 contract?" The jury answered, "Yes." See Judgment. The jury found that Republic owed Hallinan $456,272.76 in resultant damages. Id. Regarding prejudgment interest, the jury foreperson handwrote on the verdict sheet that "[p]rejudgment interest shall be calculated based on each amount stated from each payment date stated on Plaintiffs' exhibit 10 and [D]efendants' exhibit R." Id.; see also Trial Transcript ("Tr.") 483:20-22. Plaintiffs' Exhibit 10 listed the payments that Hallinan had made to Benefits pursuant to the 2001 contract, totaling $359,577.31, and the respective dates of payment. See Pl. Ex. 10. Defendants' Exhibit R showed copies of several, but not all, of the checks that Hallinan had paid in support of Benefits' arbitration.*fn6 See Def. Ex. R. The total amount of the checks listed in Exhibit R is either $57,854.69 (if one counts the duplicate copy provided by Defendant of the December 30, 2004 check for $6,000), or $51,854.69 (not counting the duplicate $6,000 check). The Clerk of the Court, in the final judgment, computed prejudgment interest on both the $6,000 check and its duplicate copy -- thus computing prejudgment interest on a total amount of $57,854.69 (regarding the monies listed in Defendant's Exhibit R).*fn7 See Judgment.

Republic timely filed their post-trial motion for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(b), or in the alternative, for a new trial pursuant to Fed. R. Civ. P. 59, on various grounds. Regarding Republic's motion for judgment as a matter of law, Republic specifically argues, despite the jury verdict, that a) Hallinan and Benefits were in privity, and thus Hallinan is precluded by res judicata from recovering against Republic; b) Hallinan waived his right to bring this action under the doctrine of "election of remedies" and c) regarding the portion of the judgment that compensated Hallinan for the legal fees he paid on behalf of Benefits, such fees are not recoverable as a matter of law in a breach of contract action. Regarding Republic's motion for a new trial, Republic specifically argues that a) various charges provided by the Court relating to privity were erroneous or prejudical; b) Hallinan's closing argument improperly referred to matters outside the evidence; and c) the Court's exclusion of certain testimony improperly prejudiced Republic's efforts to pursue their defenses of "waiver" or "election of remedies."

II. STANDARD OF REVIEW

A. Standard for Judgment as a Matter of Law Pursuant to Rule 50(b)

Defendant's Exhibit R included as its sixth check a duplicate copy of the December 30, 2004 check for $6,000 that Hallinan paid to the American Arbitration Association. (Although the duplicate copy has additional handwriting in the "Memo" section, it is clear that it is the same check, because the check number is the same.)

Defendant's Exhibit R omitted, however, the final check that Hallinan listed on his Plaintiff's Exhibit 14 as paid January 27, 2006, for $31,340.76, by Hallinan Capital Corp. to Bartels & Feureisen LLP. (A copy of that check was, however, included in Defendant's Exhibit EE, although the jury did not refer to Defendant's Exhibit EE in its verdict.)

Rule 50(b) states, in pertinent part, that "the movant may renew its request for judgment as a matter of law by filing a motion no later than 10 days after entry of judgment. [and] may alternatively request a new trial or join a motion for a new trial under Rule 59. In ruling on a renewed motion, the court may: (1) if a verdict was returned: (A) allow the judgment to stand, (B) order a new trial, or (C) direct entry of judgment as a matter of law." See generally Remee Prods. Corp. v. Sho-Me Power Elec. Coop., 2003 U.S. Dist. LEXIS 494, at *5 (S.D.N.Y. 2003) (Baer, J.), quoting Fed. R. Civ. P. 50(b).

To decide whether judgment as a matter of law is warranted, the Court must decide "whether the evidence is such that, without weighing the credibility of witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable [people] could have reached." Mallis v. Bankers Trust Co., 717 F.2d 683, 688 (2d Cir. 1983) (internal citations and quotations omitted). The trial court should grant judgment as a matter of law only when: (1) there is such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture; or (2) there is such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded people could not arrive at a verdict against the movant. Lambert v. Genesee Hosp., 10 F.3d 46, 56 (2d Cir. 1993), cert. denied, 511 U.S. 1052, 128 L.Ed. 2d 339, 114 S.Ct. 1612 (1994). On a motion for judgment as a matter of law, the district court "must view the evidence in the light most favorable to the party against which the motion was made . . . making all credibility assessments and drawing all inferences in favor of the non-movant." EEOC v. Ethan Allen, Inc., 44 F.3d 116, 119 (2d Cir. 1994) (internal citations omitted).

B. Standard for Motion for a New Trial Pursuant to Rule 59(a)

Rule 59(a) states, in pertinent part, that "[a] new trial may be granted to all or any of the parties and on all or part of the issues . . . in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States." See generally Remee Prods. Corp. v. Sho-Me Power Elec. Coop., 2003 U.S. Dist. LEXIS 494, at *7, quoting Fed. R. Civ. P. 50(b).

The decision whether to grant a new trial following a jury trial under Rule 59 is "committed to the sound discretion of the trial judge." Metromedia Co. v. Fugazy, 983 F.2d 350, 363 (2d Cir. 1992), cert. denied, 508 U.S. 952, 124 L.Ed. 2d 662, 113 S.Ct. 2445 (1993). However, the trial judge should exercise such discretion only in "the most extraordinary circumstances." United States v. Locascio, 6 F.3d 924, 949 (2d Cir. 1993). Further, the power of a district court to grant a new trial based on the weight of the evidence is limited to instances in which the court is "convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice." Ishay v. City of New York, 158 F. Supp. 2d 261, 263 (E.D.N.Y. 2001), quoting Hugo Boss Fashions, Inc. v. Fed. Ins. Co., 252 F.3d 608, 623 (2d Cir. 2001). In considering whether a verdict is so "seriously erroneous" as to justify a new trial, the district court "is free to weigh the evidence and 'need not view [the evidence] in the light most favorable to the verdict winner.'" Farrier v. Waterford Bd. of Educ., 277 F.3d 633, 634 (2d Cir. 2002), quoting DCL Mgmt. Corp. v. Town of Hyde Park, 163 F.3d 124, 134 (2d Cir. 1998). In addition, "before a [district] court may set aside a special verdict as inconsistent and remand the case for a new trial, it must make every attempt 'to reconcile the jury's findings, by exegesis if necessary.'" The Cayuga Indian Nation of New York v. Pataki, 165 F. Supp. 2d 266, 281 (N.D.N.Y. 2001), quoting Turley v. Police Dep't of N.Y.,167 F.3d 757, 760 (2d Cir. 1999) (other citation omitted). In assessing whether a given verdict is ...


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