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Marcus & Millichap Real Estate Investment Services Inc. v. Sekulovski

January 12, 2010

MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES INC., AND MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES OF CHICAGO, PLAINTIFFS,
v.
TONY SEKULOVSKI, DEFENDANT.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

Before the Court are various post-trial motions filed by the parties after the jury rendered a verdict in favor of Plaintiff Marcus & Millichap Real Estate Investment Services of Chicago, Inc. (hereinafter, "M&M"), on all of its claims and against Defendant Tony Sekulovski (hereinafter, "Sekulovski") on all of his counterclaims. The pending motions include Defendant Sekulovski's Motion for Judgment as a Matter of Law and Request for a New Trial and Plaintiff M&M's Motion to Alter Judgment for Prejudgment Interest. Also pending before the Court is M&M's Bill of Costs. For the reasons below, Sekulovski's motion is denied, M&M's motion is granted, and M&M is awarded a portion of its costs.

I. BACKGROUND

Plaintiff Marcus & Millichap ("M&M") is a real estate investment services corporation and Defendant Tony Sekulovski ("Sekulovski") worked as a sales agent on its behalf until he terminated their relationship on June 15, 2007. Following the parties' separation, M&M brought multiple claims against Sekulovski for breach of contract, unjust enrichment, conversion, fraud, tortious interference with contractual relations, and tortious interference with existing business relations and prospective economic advantage. Sekulovski brought several counterclaims against M&M for breach of contract, unjust enrichment, and tortious interference with contractual relations.

On October 13, 2009, after a four-day trial, the jury returned a verdict in favor of M&M on all of its claims and awarded M&M $924,138.00 in total damages. The jury found against Sekulovski on all of his counterclaims. Specifically, the jury found that Sekulovski owed M&M: (1) $105,000.00 for misappropriating two real estate deals (Paxton Street Commons and Shoppes of Honey Creek) that commenced while he was still M&M's sales agent but closed after his separation, (2) $105,002.00 for misappropriating from escrow commissions on two deals (Arby's and Bradley Place) rightfully due to M&M, (3) $669,930.00 for fraudulently inducing M&M to overpay him commissions on 17 separate deals he worked on with fellow M&M sales agent Mark Luttner, and (4) $44,206.00 for failing to reimburse M&M for certain expenses it advanced on his behalf.

II. SEKULOVSKI'S MOTION FOR JUDGMENT OR A NEW TRIAL

After the jury rendered its verdict, Sekulovski filed the instant motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) or, in the alternative, for a new trial pursuant to Federal Rule of Civil Procedure Rule 59. In support of his motion, Sekulovski challenges the sufficiency of the evidence presented by M&M at trial, certain of the Court's evidentiary rulings, and a portion of the damages award.

A. Standard of Review

A party seeking to avoid a jury's verdict, either through a new trial or a judgment directed by the Court in its favor, faces a heavy burden. In ruling on a motion for judgment as a matter of law following a jury verdict, the Court does not reweigh evidence or make determinations about the credibility of witnesses. See Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150 (2000). Rather, considering the totality of the evidence, the Court determines whether the jury was presented with a "legally sufficient amount of evidence from which it could reasonably derive its verdict," in other words, whether any rational jury could have found for plaintiff. Massey v. Blue Cross-Blue Shield of Illinois, 226 F.3d 922, 924 (7th Cir., 2000); see Harvey v. Office of Banks and Real Estate, 377 F.3d 698 (7th Cir., 2004). In considering a Rule 50(b) motion for judgment as a matter of law, the Court views the evidence and all reasonable inferences in the light most favorable to the prevailing party. Reeves, 530 U.S. at 150-51.

A party moving for a new trial pursuant to Rule 59(a) faces a similarly heavy burden and must show that the verdict is against the manifest weight of the evidence, the damages are excessive, or for some other reason the trial was not fair to the moving party. Kapelanski v. Johnson, 390 F.3d 525 (7th Cir., 2004). "New trials granted because the verdict is against the manifest weight of the evidence are proper only when the record shows that the jury's verdict resulted in a miscarriage of justice or where the verdict, on the record, cries out to be overturned or shocks the conscience." Latino v. Kaizer, 58 F.3d 310, 315 (7th Cir., 1995). If seeking a new trial based on newly discovered evidence, a party must show (1) the evidence was discovered after trial, (2) due diligence on the part of the movant to discover the new evidence, (3) the evidence is not merely cumulative or impeaching, (4) the evidence is material, and (5) the evidence is such that a new trial would probably produce a new result. Jones v. Lincoln Elec. Co., 188 F.3d 709, 732 (7th Cir. 1999). It is against the backdrop that the Court evaluates Sekulovski's motion.

B. Discussion

1. The Jury's Verdict in Favor of M&M on its Fraud Claim

Sekulovski seeks judgment in his favor or a new trial M&M's fraud claim. Specifically, Sekulovski argues that there was insufficient evidence of a fraudulent scheme between Mark Luttner ("Luttner") and himself. Sekulovski further argues that a new trial is warranted because of certain newly discovered evidence and the Court's erroneous exclusion of other evidence. Finally, Sekulovski argues that the jury awarded M&M excessive damages on this claim.

a. The Existence of a Fraudulent Scheme

In support of his argument that there was insufficient evidence of a fraudulent scheme between Luttner and himself, Sekulovski asserts that there was evidence at trial that M&M permitted sales agents to split commissions however they saw fit, so long as M&M approved. Further, Sekulovski argues, M&M approved the commission booking statements that it now claims are fraudulent.

Sekulovski's argument is a nonstarter because there was documentary and testimonial evidence presented at trial that the fee splits Sekulovski included in the booking statements were false because they did not accurately reflect the amount of work he and Luttner performed on the deals. Instead, Sekulovski skewed the fee splits in his favor so Sekulovski could collect at his higher commission percentage and then he and Luttner could split the inflated commission payment between themselves on the back end. Just because M&M relied on Sekulovski's statements in the commission booking statements and approved the commission splits therein does not make Sekulovski's statements true or cure Sekulovski's underlying fraud.

b. Luttner's E-mails

Sekulovski further argues that even if he is not entitled to judgment in his favor, the Court should order a new trial on M&M's fraud claim because that claim rested on the testimony of Mark Luttner and certain documents, some excluded by the Court and another recently created, undermine Luttner's credibility. Specifically, Sekulovski seeks a new trial at which he could introduce (1) a March 18, 2008 e-mail in which Luttner told Sekulovski that during Luttner's deposition testimony he had told M&M "what they wanted to hear," (2) an October 13, 2008, e-mail in which Luttner told Sekulovski that M&M was paying Luttner's legal bills in connection with his separate lawsuit against Sekulovski and that M&M had told Luttner it was going to drive Sekulovski to bankruptcy, and (3) an October 15, 2009, e-mail sent by Luttner to Sekulovski after the jury's verdict in which Luttner tells Sekulovski that M&M reneged on its promise to pay Luttner's legal bills and Luttner offers to help Sekulovski by "tell[ing] everyone the truth and that [he] lied" at his deposition.

The March 2008 e-mail plainly is hearsay because Sekulovski sought to introduce it to prove the matter asserted therein: that Luttner lied during his deposition. The October 2009 e-mail, the authenticity of which the parties dispute, is too little too late.

First, Sekulovski seeks to introduce the e-mail merely to impeach Luttner which is not grounds upon which newly discovered evidence may warrant a new trial. See Jones, 188 F.3d 709. Moreover, the e-mail is inadmissible because Luttner's statement therein that he lied at his deposition is hearsay and his statements about M&M reneging on paying his legal bills are irrelevant.

The October 2008 e-mail is a closer call. Luttner's statement in that document that M&M had told him it was going to drive Sekulovski to bankruptcy is hearsay because Sekulovski seeks to introduce that statement to show M&M's state of mind, not Luttner's. However, Sekulovski argues that Luttner's other statement, that M&M is paying his legal bills in a separate lawsuit, is not hearsay because Sekulovski sought to introduce it to show that Luttner is biased in favor of M&M and, therefore, was not truthful during his deposition.

Even if Luttner's statement does show he was biased, it is unlikely the statement would have had any effect on the jury's verdict and therefore a new trial is unwarranted. Luttner's credibility was at issue during the entire trial as his deposition testimony centered around his admission that he and Sekulovski had defrauded M&M. It is highly unlikely that any juror would have considered Luttner's truthfulness untarnished in the absence of the October 2008 e-mail. Moreover, there was substantial evidence of Sekulovski and Luttner's fraudulent scheme beyond Luttner's testimony including Sekulovski's own e-mails. Accordingly, the jury's verdict in favor of M&M on its fraud claim stands.

c. Fraud Damages

The jury awarded M&M damages on all 17 transactions contained in its fraud claim in an amount equal to the amount of money it paid Sekulovski on these transactions minus the amount Sekulovski was actually due in commissions. Sekulovski argues that he worked on these deals with Luttner so the amount M&M would have paid Luttner in commissions, absent the fraud, should also have been deducted from the damages award. In support, Sekulovski points out that the proper measure of fraud damages is that amount which puts the injured party in the position it would have been had the fraud not occurred.

The evidence at trial showed that M&M receives commission payments from sellers after the close of a deal and then pays its agents their commissions individually according to the terms of M&M's Independent Contractor Policy Manual. Indeed, this payment arrangement was the reason for Sekulovski and Luttner's fraudulent scheme in the first place. The jury found that Sekulovski's fraud caused M&M to overpay commissions to Sekulovski and it awarded M&M the amount of that overpayment. What M&M would have done with those funds after paying Sekulovski his rightful commission share is totally irrelevant. Sekulovski does not get to keep the money he fraudulently stole merely because, absent the fraud, M&M would have paid that money to someone else. Sekulovski's argument is nonsensical and unjust and the Court rejects it.

2. The Jury's Verdict in Favor of M&M on its Breach of Contract, Tortious Interference, and Conversion Claims

The jury found in favor of M&M on its breach of contract, tortious interference, and conversion claims. These claims required M&M to prove that it had a contractual relationship with Sekulovski entitling it to commissions on transactions which commenced before Sekulovski terminated his relationship with M&M on June 15, 2007. Sekulovski argues that the evidence presented at trial was insufficient to establish ...


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