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Mayer v. Angelica

May 14, 1986

DAVID P. MAYER, PLAINTIFF-APPELLEE,
v.
STEVE ANGELICA, DEFENDANT-APPELLANT



Appeals from the United States District Court for the Northern District of Illinois, Eastern Division, No. 83-C-3873--Nicholas J. Bua, Judge.

Author: Wyatt

Before WOOD and FLAUM, Circuit Judges, and WYATT, Senior District Judge.*fn*

WYATT, Senior District Judge.

Defendant-appellant Steve Angelica appeals from orders directing judgments against him by the district court after jury trial of this civil action. The verdict was in favor of plaintiff-appellee David P. Mayer, but, as will be seen, was ambiguous and raised a number of questions. The claims made by Mayer were for damages for violation of the "Racketeer Influenced and Corrupt Organizations Act" ("RICO"; 18 U.S.C. §§ 1961-1968), for violation of an Illinois Statute, and for common law fraud.

Whatever the differing legal theories of the several claims, the factual basis alleged for each was the same: that defendant Kimberly International Gem Corporation ("Kimberly"), acting through defendant Rene Dupont, intended to deceive plaintiff and as part of a scheme to defraud him, knowingly made false representations to plaintiff and induced him to buy from Kimberly a number of gemstones for about $90,000; that the false representations so made were as to the quality, value, resale possibilities, and otherwise, of such gemstones; that the individual defendants conducted and participated in Kimberly's business and affairs through wire and mail fraud acts which constituted a pattern of racketeering activity; and that plaintiff was greatly damaged by the acts of defendants.

The judgments against Angelica were in the aggregate for nearly $900,000.

The argument for Angelica to this court is principally that prejudicial evidence was erroneously admitted against him, and that acceptance of the verdict by the trial court was also error because that verdict was inconsistent, uncertain, and ambiguous.

Because evidence prejudicial to appellant Angelica was erroneously admitted, we reverse the judgment appealed from and remand the action to the district court for a new trial as to the claims against Angelica. Further, we do not approve of the procedure followed by the trial court in accepting the verdict, nor of the verdict forms used and the instructions as to punitive damages in that connection, nor of the failure to instruct the jury on one of the four claims submitted to it, nor of the judgments entered on the verdict. Whether these further matters would themselves require reversal need not be decided because the erroneous admission of prejudicial evidence itself requires a new trial.

The nature of the litigation and the complexity of the proceedings below call for an explanation of some length.

1.

The action was commenced on June 6, 1983, in the United States District Court for the Northern District of Illinois at Chicago. There were five claims stated in the five counts of the complaint. Each claim was based on the same alleged facts, these being set out as paragraphs 16 through 55 of Count I and simply being realleged in the other four counts. Jurisdiction was said to be based on 18 U.S.C. § 1964(c) (a part of RICO, as will appear) and on 28 U.S.C. §§ 1331 (federal question) and 1332 (diversity of citizenship).

Plaintiff David P. Mayer was alleged to be a resident of Chicago (and presumably domiciled in and a citizen of Illinois).

The named defendants are two alleged California corporations and eleven individuals.

The two alleged California corporations are Kimberly International Gem Corporation ("Kimberly") and International Gemological Society ("IGS"). It may be doubted that IGS is a corporation. An affidavit of defendant Harvey B. Levitt, sworn to July 22, 1983, states that he is "an individual doing business as" IGS in Orange County, California.

The eleven individual defendants are each alleged to be a resident of California (and presumably domiciled in and a citizen of California). Two of the named defendants are Alan Babs and Bill Burns; these turn out to be pseudonyms for appellant Angelica, also named as a defendant. One of the named defendants is Rene Dupont; that is a pseudonym for Rene Small, but as Rene Small is usually referred to in the record as "Rene Dupont," he will be so referred to here. One of the named defendants was Marsha Keane; this is a pseudonym for Marsha Zvonkin, who will be referred to as "Zvonkin." There were thus nine individual defendants in the complaint as filed, disregarding the two pseudonyms for the also named Angelica. These nine individual defendants, in the order named, were Anita Kimball, Steve Angelica, Rene Dupont (Rene Small), Marsha Keane ("Zvonkin"), Steve Small, Harvey B. Levitt, Henry O. Terry, Robert MacAllum, and Frank Kimball.

2.

Count I is a claim for damages under 18 U.S.C. §§ 1962(c) and 1964(c), part of RICO, which in turn is part of the Organized Crime Control Act of 1970. Count I is described in the complaint as the "Rico Violation."

Six transactions are alleged as the basis for Count I. They all are stated in the complaint as involving false representations to Mayer in the sale to him by Kimberly of gems by telephone and by mail. The time of the six transactions was between August 1982 and January 1983. The person alleged to have made the representations was Dupont, except that as to one transaction the representations are alleged (para. 43) to have been made by Bill Burns (Angelica), Steve Small, and Dupont.

According to the complaint, Mayer, by the telephoned oral representations of Dupont (with the one exception noted), was induced to buy gems from Kimberly and to pay prices for them as follows:

five natural sapphires $3,575.00

one natural sapphire $10,000.00

one natural Malaya garnet $3,442.50

one natural tourmaline $30,000.00

one golden sapphire $30,000.00

one green peridot $14,430.00

So far as appears from the complaint, Mayer never knew any of the defendants, nor even saw them, nor ever talked to them face to face. Everything was done by telephone and by mail, the defendants never came to Chicago; Mayer never went to California.

The averments as to the six transactions contained in paragraphs 16 through 55 of Count I are alleged as the basis also for Counts II through V, presented as separate claims under separate and different legal theories.

Count II, described in the complaint as "Rico Conspiracy," is a claim for damages under 18 U.S.C. §§ 1962(d) and 1964(c). There are no dates given in the complaint for the claimed conspiracy. The dates in the complaint for the purchases are August and September 1982 (para. 18) through January 1983 (paras. 47, 50). These dates are given in Count I, the Rico Violation count. In Count II, the Rico Conspiracy count, there are no dates alleged for the beginning and end of the claimed conspiracy. The earlier paragraphs are merely realleged, after which it is averred that each defendant "conspired to conduct and participate in conducting Kimberly's business and affairs through the aforesaid pattern of racketeering activity" (Complaint, Count II, para. 41). The relevant dates for the conspiracy alleged are thus from August 1982 through January 1983.

Count III, described in the complaint as "common law fraud," is a claim for damages as so described.

Count IV, described in the complaint as "breach of contracts" is a claim for damages as so described. The averment is (para. 42) that "Kimberly breached its agreements," but judgment is demanded against "the Defendants."

Count V, described in the complaint as "Illinois Consumer Fraud and Deceptive Business Practices Act" is a claim for damages under Section 2 of the Illinois Act as so described (Ill. Rev. Stat. ch. 121 1/2, § 262).

Damages were asked separately on each count and were asked with great particularity, distinguishing between "actual damages" and "punitive damages."

The damages on Counts I and II were asked in the same words and were in those words as follows:

a) $90,000 actual damages increased threefold to $270,000;

b) Lost profits of $20,000 increased threefold to $60,000;

c) Equitable relief; and

d) The cost of the lawsuit and reasonable attorney's fees.

The damages on Count III were asked in these words:

a) $90,000 actual damages;

b) Lost profits of $20,000;

c) Punitive damages in the amount of $1,200,000; and

d) The cost of the lawsuit and reasonable attorney's fees.

The damages on Counts IV and V were asked in the same words and were in those words as follows:

a) $90,000 actual damages;

b) Lost profits of $20,000;

c) Equitable relief; and

d) The cost of the lawsuit and reasonable attorney's fees.

In Count V, a subparagraph (e) was added in which it was asked in the usual form for "such order and further relief," etc.

It is important for this appeal to note that no punitive damages are asked on Counts I, II, IV and V; only "actual damages" are asked on those counts and in those exact words. Punitive damages are asked only on Count III, and on Count III "actual damages" are also asked and in those exact words.

3.

Motions were made by several of the defendants to dismiss the action for want of jurisdiction or to transfer the action to the Southern District of California under 28 U.S.C. § 1404(a) for the convenience of parties and witnesses. In opposition to the motion, an affidavit of Mayer, sworn to August 17, 1983, was submitted. In this affidavit, Mayer purports to state under oath how the gem purchases by him from Kimberly were initiated, induced and carried out. Considering that subsequently, after a jury verdict, an order had been made directing judgment against Angelica for actual damages, as trebled, of $309,000 and punitive damages of $500,000, it would be supposed that Mayer would have named Angelica as the most active of those causing his loss. On the contrary, according to the Mayer affidavit, the transactions were with Rene Dupont; the only mention by Mayer of the name Angelica is (para. 12): "In May or June 1983, Steve Angelica called my home and left a message that he was an employee of Kimberly and that he wanted me to call him. I never returned the call." In contrast, Mayer states (para. 5): "In September, 1982 I agreed in a telephone conversation with Mr. Dupont to purchase five sapphires from Kimberly for $3,575.00." Mayer then states (para. 6): "Subsequent to my purchase of five (5) sapphires, I received numerous other telephone calls at my residence from Mr. Dupont between September 1982 and January 1983 in which he attempted to sell me additional gemstones." As a result of Mr. Dupont's calls, Mayer purchased the following stones which were alleged to have been represented to be:

one blue sapphire $10,000.00

one Malaya garnet $3,442.50

one natural tourmaline $30,000.00

one golden sapphire $30,000.00

one green peridot $14,430.00

Mayer further states: "Each transaction was substantially similar to my first purchase described in paragraph 5. In all these purchases, I dealt with Mr. Dupont over the telephone."

By orders dated October 21, 1983, and entered in the docket October 24, 1983, the district court denied the motions to dismiss or transfer the action.

4.

By order dated December 7, 1983, and docketed December 8, 1983, the trial judge set the trial for May 15, 1984.

It will appear that when trial of the action did begin on May 15, 1984--less than a year after the action had been commenced on June 6, 1983--only two individual defendants, appellant Angelica and Marsha Zvonkin, remained in the action out of the two corporations and nine individual defendants named in the complaint as filed. It should be explained how this came to be.

a.

Plaintiff filed on January 13, 1984, a motion to enter judgment of default in favor of plaintiff and against Harvey B. Levitt and IGS. This motion was granted by the trial judge by order dated January 13, 1984 and entered on the docket January 17, 1984. So far as appears, no judgment was then entered against either Levitt or IGS.

On January 20, 1984, there was filed a notice from the Bankruptcy Court for the Central District of California staying the action as to Harvey B. Levitt, who on December 20, 1983, had filed a petition in bankruptcy.

After trial an order was made by the trial judge as to Harvey B. Levitt which "dismissed [him] without prejudice with leave to reinstate when bankruptcy stay order has been lifted." The order was dated May 22, 1984, and was docketed May 23, 1984.

An order of the trial judge made after trial, dated May 22, 1984, and docketed May 23, 1984, recited: "Court enters default judgment in favor of plaintiff and against each of the defendants . . . International Gemological Society in the amount of $103,000 actual damages, trebled to $309,000 plus punitive damages in the amount of $500,000."

b.

On February 17, 1984, plaintiff filed a motion to dismiss defendant Henry O. Terry without prejudice. This was said in the motion papers to be "pursuant to a Settlement Agreement and Convenant Not to Sue . . . ." The terms of settlement were not given in the motion papers or anywhere else. It appears in the stenographic transcript (p. 516) that Terry paid $7,500 in settlement and agreed to testify for plaintiff.

An order was made by the trial judge dated February 22, 1984, docketed the same date, which, among other things, recites: "On plaintiff's motion, defendant Henry O. Terry is dismissed without prejudice."

On May 30, 1984, plaintiff filed a motion to dismiss Henry O. Terry with prejudice. No explanation was given for the motion.

The trial judge made an order, dated May 30, 1984, docketed May 31, 1984, which recites: "Defendant Henry O. Terry is dismissed with prejudice."

c.

On motion of plaintiff, the district court, by order dated and docketed March 14, 1984, imposed sanctions on certain defendants for failure to comply with discovery. The order recited: "Answers of defendants Kimberly International Gem Corp., Steve Angelica, Rene Small, Steve Small and Robert MacAllum are stricken, and default judgment as to liability entered against each of said defendants."

Thereafter, Kimberly, Angelica, and Steve Small moved to set aside their defaults and to reinstate their respective answers. By order dated April 26, 1984, and docketed April 30, 1984, this motion was granted.

Rene Small (Rene Dupont) and Robert MacAllum did not move to set aside their defaults.

After trial an order was made dated May 22, 1984, and docketed May 23, 1984, which recited: "Complaint is amended on its face to correct the name of defendant Rene Small to Rene Small a/k/a Rene Dupont. Court enters default judgment in favor of plaintiff and against each of defendants, Rene Small a/k/a Rene Dupont, Robert MacAllum . . . in the amount of $103,000 actual damages, trebled to $309,000 plus punitive damages in the amount of $500,000."

d.

On May 14, 1984, in the afternoon, Kimberly filed a bankruptcy petition in the Central District of California. This appears to have been disclosed to the Court in a motion filed by Angelica on May 15, 1984, seeking a continuance of the trial. The filing of the bankruptcy petition was said in the motion papers to cause an automatic stay of this action as against Kimberly, "a primary defendant in this case" (para. 10).

Under date of May 15, 1984, the district judge made a written order which, among other things, recited: "Defendant Kimberly International Gem Corp. dismissed without prejudice with leave to reinstate when bankruptcy stay as been lifted." This order was entered in the docket on May 17, 1984.

e.

On May 2, 1984, at the end of a pretrial conference with the district court, counsel for Steve Small reported to those present that Steve Small had been in an automobile accident in Texas and that his condition was unknown. Earlier in the same pretrial conference, the court had ordered Steve Small to appear in Chicago for his deposition "sometime before the trial" on May 15, 1984 (T 13; "T" references are to pages of the stenographic transcript).

On May 10, 1984, an "emergency" motion was made to the district court for Steve Small. The motion was to modify the order directing Steve Small to appear in Chicago for his deposition before trial on May 15, and for a continuance of the trial. The ground of the motion was that Steve Small was in a hospital in El Paso because of injuries in the auto accident. The motion for a continuance was denied. An oral motion (apparently by plaintiff) to sever Steve Small was granted. An order with this effect was dated May 10 and entered in the docket May 11, 1984.

At the opening of trial on May 15, in the robing room, counsel for all interested parties being present, there was further discussion of the situation as to Steve Small. Counsel for plaintiff agreed to accept a "voluntary nonsuit" as to Steve Small, the court retaining jurisdiction for six months to reinstate the claims against him (T 30).

A written order, dated May 15, 1984, was then signed by the district court and entered in the docket on May 17, 1984. This order among other things recited: "Defendant Steve Small dismissed without prejudice, and court retains jurisdiction for 6 months."

f.

It remains to consider the dismissal after settlement of Frank and Anita Kimball, who were the last defendants to be dismissed before the trial against Angelica and Zvonkin commenced on May 15, 1984. The dismissal of the Kimballs and the commencement of the trial took place at the same time and the two proceedings were intertwined.

The background of the Kimballs is difficult to trace in this record; they have never testified. It would appear, however, that Frank Kimball founded and had the longest connection with the Kimberly gem selling operation, had the greatest knowledge of and experience in the gem business, and had the largest financial interest in the Kimberly operations.

Frank Kimball played a part in the critical error involved on this appeal--the admission into evidence (T 531) of Plaintiff Exhibits 66, 67, 68, and 69. These are four letters purporting to have been written by Frank Kimball, three to Angelica and Steve Small, and one to Kimball's attorney, at about the time Mayer was buying gems from Kimberly. They were admitted without any authentication whatever and counsel for Angelica were denied any opportunity to question Frank Kimball about them.

Frank Kimball founded and was the owner of all the capital stock of two California corporations, Kimberly Gems, Ltd. ("Kimberly Gems") and Kimberly International Gem Corp. ("Kimberly"). Anita Kimball is his wife. Apparently for reasons advantageous to Kimball, Kimberly Gems sold to Kimberly the gems which Kimberly in turn sold to the public. Kimberly seems to have acted as a selling agent for Kimberly Gems, which was the supplier and the principal.

On May 5, 1982, Frank Kimball sold all of the capital stock of Kimberly to Steve Angelica (appellant here) and Steve Small. The purchase price was $41,000, payable $5,000 at the closing, and $3,000 each month thereafter until the total of $41,000 had been paid. An important provision of the contract, executed May 5, 1982, was that for two years (subject to extension by either party to five years) from May 5, 1982, Kimberly Gems would sell to Kimberly all of the latter's requirements of gems "at the prices at which, for the immediately preceding six (6) month period from the date of the execution of this agreement, KIGC [Kimberly] has paid to KG [Kimberly Gems] for the stones purchased by KIGC . . . ." A copy of the contract of sale was made part of a motion by the Kimballs, filed May 9, 1984, for a continuance of the trial. The contract does not explicitly provide that Kimberly must buy all its gem requirements from Kimberly Gems, but this is implicit from the contract itself. Indeed, the same motion of the Kimballs for a continuance discloses that all the gems sold to plaintiff were brought by Kimberly from Kimberly Gems, wholly owned by Frank Kimball (see para. 13 of the motion).

Thus, the sale by Frank Kimball of the stock of Kimberly charged nothing of substance. Kimberly Gems, wholly owned by Frank Kimball, continued to supply Kimberly with all its gems, including those sold to plaintiff, and at the same prices as had obtained when Kimball owned the stock of both corporations. Kimberly continued to function in substance as the sales of agent of Kimberly Gems.

An affidavit of Frank Kimball, sworn to in Los Angeles on August 12, 1983 states: "I am not now, nor have I been since May 5, 1982, an officer, director, shareholder or employee of Kimberly International Gem Corp." This affidavit was filed September 9, 1983.

In their answer filed December 8, 1983, Frank and Anita Kimball pleaded as an affirmative defense: "As of May 5, 1982, the defendants terminated any and all association with Kimberly International Gem Corp." Since Kimberly Gems, wholly owned by Frank Kimball, supplied Kimberly with all the gems it sold, including those sold to plaintiff, this affirmative defense seems disingenuous to say the least. While literally true, the affidavit is in substance meaningless because Kimball was the owner of Kimberly Gems, the supplier of all the gems sold by Kimberly.

On March 21 and 22, 1984, the plaintiff attempted to take the deposition of Frank Kimball in Los Angeles. At the outset, an attorney for Frank Kimball stated that he would assert his privilege against self-discrimination "based on the fact that as counsel for Mr. Kimball, we have been advised that there is on ongoing criminal investigation which concerns matters relating to Kimberly International Gem Corporation which I understand to be the same matters which are the subject of this civil action. We have been advised that Mr. Kimball at this time is regarded as a subject of that investigation." (Ex. 154, p. 3).

Despite the notice that Frank Kimball would not answer questions at his deposition, counsel for plaintiff propounded many questions to him, to all of which he asserted the privilege against self-incrimination. Among the questions asked and not answered (Ex. 154, pp. 32-34) were questions designed to authenticate what were then marked Exhibits 64, 74, 75, and 76--the four letters purporting to have been written by Frank Kimball--which as Exhibits 66, 67, 68, and 69 were erroneously admitted in evidence at the trial without any authentication (T 531). During a pretrial conference with the court on Wednesday, May 2, 1984, counsel for the Kimballs moved that the matter "be stayed pending completion of the criminal proceedings ongoing in California so that my clients . . . will be able to appear and testify in this case without asserting their Fifth Amendment privilege" (T 13). The motion was summarily denied.

On "late" Friday, May 11, 1984, Chicago counsel for Frank and Anita Kimball caused to be delivered by hand to counsel for Angelica a letter advising that the Kimballs "intend to testify at the trial" and "will be available in Chicago on Monday, May 14, 1984, and thereafter for purposes of giving their deposition should you decide to depose them prior to their testimony at trial." The letter continued: "Please advise me as soon as possible if and when you would like to conduct these depositions" (T 558).

On the morning of Tuesday, May 15, the trial was called to commence before the district court. Present were (a) counsel for plaintiff Mayer (Homeyer and Pugh); (b) counsel for defendants Frank and Anita Kimball (Bollow and Talcott); (c) counsel for defendants Kimberly, Angelica, and Steve Small (Reed and Lucas); (d) counsel for Angelica (Nelson and Smith); and defendant Marsha Zvonkin, acting for herself.

In chambers, the trial judge first explained the jury selection procedure (T 17-18).

The "primary motion" (T 18) for plaintiff was then made; it was based on a settlement with the Kimballs, revealed for the first time, and was a "motion to dismiss them" (T 18). Without discussion, the trial judge granted the motion. Counsel for Angelica asked "to be informed of the terms of the settlement" (T 19). Counsel for Mayer protested that Mayer and the Kimballs "have agreed to keep it confidential." There was argument about the disclosure of the Kimballs' settlement terms. The court reserved its ruling on disclosure (T 23).

A motion for Angelica to continue the trial was denied (T 30).

A jury was then selected (T 33).

In the absence of the jury and after a luncheon recess, the court returned to the subject of a disclosure of the terms of the settlement between plaintiff and the Kimballs.

By then it had been learned that, while counsel for Angelica were in the Court House at the morning session of the trial and other proceedings, at "approximately 11:45 this morning" counsel for the Kimballs (Mr. Bollow, who was himself at the trial and other proceedings in the morning and could easily have handed a copy to counsel for Angelica) had caused to be hand delivered to the office of counsel for Angelica a "Response to Requests for Admissions of Frank Kimball" (T 36). This procedure seems designed to cover up, or divert attention from, the fact that the "Response" of Frank Kimball was being served after Frank Kimball had been dismissed from the action. The fact seems nevertheless to be established by the record. According to the transcript, the proceedings at the Court House began at 10 a.m. The first page of the transcript for that day is 15; the motion to dismiss Frank Kimball was granted on page 18, which could not have been more than a few minutes after 10 a.m. The "Response" was not served at the office of counsel for Angelica until "approximately 11:45," or quite a bit after Frank Kimball had been dismissed from the action.

Soon after returning from the luncheon recess, counsel for Angelica reported to the court the fact that the "Response" had been served at his office (T 36). At about the same time, it was reported to the court by counsel for plaintiff that no copy of the settlement agreement with the Kimballs, the principal subject of the discussion before the lunch break, was available in court (T 36).

The trial judge asked to see the "Response" of Frank Kimball, and counsel for Angelica (Mr. Reed) handed it to him (T 37). Mr. Reed stated (T 37) that the document had been "handed to me by a messenger from my office this morning while jury selection was ongoing." The document, the "Response" (Ex. 158), bears a certificate of service executed by Chicago counsel for the Kimballs, which recites that he had caused a copy of the "foregoing Response" to be "hand delivered" to counsel for plaintiff and to counsel for Angelica at their Chicago offices "this 15th day of May, 1984, before 12:00 noon." In other words, the "Response," which could easily have been served on counsel for Angelica at the Court House on the morning of Tuesday, May 15, was instead served at the office of counsel for Angelica, who were thus kept in ignorance of the "Response" until after the Kimballs had been dismissed from the action.

With the "Response" before him, the Court asked for a copy of the "Requests for Admissions" (T 37). Counsel for plaintiff stated that he had no copy, and it seems reasonably clear that there never was any "Request for Admission" as provided in Fed. R. Civ. P. 36(a). No such paper is noted in the docket sheet and nothing of the sort is contained in the record on appeal. It would appear that, in order to authenticate purported letters sent by Frank Kimball, a procedure was agreed upon by counsel for plaintiff and counsel for the Kimballs to combine a "Request" and a "Response" in one document which could be executed by Frank Kimball as part of the consideration for the settlement with him.

The original document "Response to Request for Admissions" carries a yellow sticker "Plaintiff's Exhibit 158," but it does not appear in the transcript that it was ever received in evidence. It purports to have been signed (not sworn to) by Frank Kimball on Saturday, May 12, 1984, in Los Angeles (a deduction from the fact that it is on stationery of a Los Angeles law firm). The document recites that Kimball "hereby responds to the Requests for Admissions propounded by the plaintiff herein . . . ." (emphasis supplied). The requests for admissions and the admissions are combined in one document. The requests ask that Kimball admit, among other things, that he "authored and signed Kimball Exhibits 69, 74, 75 and 76 attached hereto" and that he sent them by mail to Kimberly. Frank Kimball made the admissions requested.

The four Kimball Exhibits are on stationery of Kimberly Gems Ltd. All are signed "Frank." Exhibit 69 is dated July 10, 1982, and addressed to "Steves," Exhibit 74 is dated September 28, 1982, and addressed to "Steves," Exhibit 75 is dated October 3, 1982, and addressed to "Steves," and Exhibit 76 is dated October 3, 1982, and addressed to "Dave" (Kimball's lawyer).

It was then represented by counsel for plaintiff to the court that the purported Kimball letters were "produced by the Kimballs in the course of discovery" and that they had been "produced some time ago" (T 38).

Counsel for Angelica then asked for a continuance of the trial so that he could take the deposition of Frank Kimball as to the letters sought to be authenticated by the "Response." The motion was denied without discussion (T 39).

Counsel for Angelica then moved that the "Response" be excluded "against any party remaining in this case" (T 40). The court ruled: "If the plaintiff in this case demonstrates that there is a conspiracy, it will be used in this case. Okay?" (T 40).

The trial judge then invited counsel for plaintiff and the court reporter, but not counsel for Angelica, to meet privately with him and "let's put on the record what the terms of the settlement between the Kimballs and the plaintiff provide" (T 40).

In camera, it was noted by counsel for plaintiff that they had no copy of the Settlement Agreement. It next appeared that Kimberly Gems, the corporation wholly owned by Frank Kimball, was a party to the settlement agreement even though not a defendant in the action.

The terms of the settlement as stated by counsel for plaintiff in camera, were as follows:

The primary terms are simply that we gave them a covenant not to sue; would dismiss them from this lawsuit; and in return they would pay our client a $35,000.00 fee by personal check, which they did; and in addition, that they would answer our interrogatories--not our interrogatories, but our request for admissions, which they did; and thirdly, that neither party could sue each other and that it was settled for all time. Basically that is it.

Counsel for plaintiff also emphasized in camera that "there is another provision in the agreement that the terms will be kept confidential, unless ordered by [the] Court."

So far as appears, no information was given to counsel for Angelica as to the terms of settlement with the Kimballs.

After the in camera proceedings, counsel for Angelica moved in limine to "bar any use" of the Response (T 41), on the ground that Frank Kimball as a setting defendant and as part of the settlement agreement was "attempting to offer affirmative evidence for the benefit of the plaintiff against the remaining defendants" (T 42), and that it could not be an admission against interest when served after the Kimballs "have been dismissed and a settlement agreement has been reached with the plaintiff" (T 45).

On this motion the trial judge attached great significance to the fact that the admissions in the "Response" were not under oath (T 42). The trial judge understood that counsel for plaintiff intended to offer the "Response" in evidence and asked on what basis. The reply of counsel for plaintiff was that "they were a party to the lawsuit, that it was pursuant to discovery, the Court's order . . ." (T 42-43). Counsel for plaintiff then added that the admissions in the "Response" were given "so that we would have no foundation problems" (T 43). The trial judge expressed the opinion as to the admissions: "They are exculpatory in nature, aren't they, rather than admissions" (T 44), to which counsel for plaintiff replied (T 45) that "the admissions only go to the foundation."

The motion in limine was then decided by the trial judge "provided the plaintiff can establish a conspiracy existed . . ." (T 45). In so ruling, the trial judge overlooked that the four Kimball letters had never been properly authenticated, whatever might be their situation under other rules of "conspiracy" evidence.

The trial itself then began, the trial judge having ruled, that even without proof that Kimball wrote the four letters and mailed them and even without an opportunity to Angelica counsel to cross-examine Frank Kimball as to the circumstances under which those letters were written, they would be received in ...


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