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Client Funding Solutions Corp. v. Crim

United States District Court, Seventh Circuit

June 19, 2013

Client Funding Solutions Corp.,


ROBERT M. DOW, Jr., Magistrate Judge.

1. Presentation of evidence relating to jury and non-jury claims in the case

In its May 6 ruling, the Court determined that although some of Plaintiff's claims must be tried to a jury, one of her claims - for breach of fiduciary duty - is equitable in nature and must be resolved by the Court. [See 275, at 5-11.]

As the Court noted, this is not an uncommon situation, for "[a] jury trial does not have to include all or nothing" and courts have an array of options for accommodating dual decisionmakers in a single case. See, e.g., Int'l Fin. Servs. Corp. v. Chromas Techs. Canada, Inc., 356 F.3d 731, 737-39 (7th Cir. 2004). As a leading treatise has explained, "Because the Federal Rules of Civil Procedure allow legal, equitable, and maritime claims to be joined in a single action, and because the right to a jury trial under Rule 38 extends to individual issues in a case rather than to an entire action, combined trials in which the legal claims are submitted to a jury while the equitable or maritime claims are submitted to the court are almost inevitable." 8 MOORE'S FEDERAL PRACTICE ยง 39.14[1], at 39-27 (3d ed. 2008). In combined jury and non-jury trials, the Supreme Court has held that common questions must be tried first to a jury, for its factual findings will bind the Court. See Beacon Theatres v. Westover, 359 U.S. 500, 510 (1959); Allen v. Int'l Truck & Engine Corp., 358 F.3d 469, 471 (7th Cir. 2004). However, apart from the "jury first" rule, "[w]hen certain of the issues are to be tried by jury and others by the court, the court may determine the sequence in which such issues shall be tried." Advisory Committee Note to Fed.R.Civ.P. 39 (citing Liberty Oil Co. v. Condon Nat. Bank, 260 U.S. 235 (1922)).

Several of the Federal Rules of Evidence bear on the scope of the Court's discretion and its exercise. To begin with, Rule 611 states that the Court "should exercise reasonable control over the mode and order of examining witnesses and presenting evidence so as to: (1) make those procedures effective for determining the truth; (2) avoid wasting time; and (3) protect witnesses from harassment or undue embarrassment." And Rules 103, 104, and 105 together advance the purposes of "trial efficiency, the admission of relevant and reliable evidence, considered rulings, and rational decisions by the trier of fact, uncluttered by lengthy interruptions and admonitions to jurors to disregard that which they have heard or seen." Thomas A. Mauet & Warren D. Wolfson, TRIAL EVIDENCE 15 (5th ed. 2012).

Given (1) that the trial in this matter will involve dual decision makers and (2) the Court's discretion to manage the sequence of issues and presentation of evidence in these circumstances, the Court solicited the parties' input in regard to the order and presentation of evidence at trial.

Plaintiff takes the position that the parties should present all of their evidence in the case to both triers of fact. According to Plaintiff, "[t]his presentation of evidence will allow the flow of the trial to occur naturally and save the parties and the Court from having to accommodate a separate trial." Plaintiff proposes that the Court instruct the jurors that they will not be deciding the breach of fiduciary duty claim and tailor the jury instructions and verdict forms "to not include breach of fiduciary duty related information."

Defendant contends that the breach of fiduciary duty claim to be tried to the Court is sufficiently distinct from the other claims for the jury to decide that at least some of the evidence - primarily the expert testimony that goes only to that claim - should not be presented to the jury. In Defendant's view, the expert testimony of Mr. Collins (for the Defendant) and Ms. Robinson (for the Plaintiff) is irrelevant to the jury issues and its presentation to the jury would result in prejudice to Defendant and confusion for the jurors. Defendant's preferred approach would be to present all of the evidence on the claims that will be determined by the jury "first and completely." Then, once the jurors have been instructed and have begun their deliberations, the parties may present to the Court the expert opinion testimony on the fiduciary duty issues. In the alternative, Defendant proposes the same sequence, but with a trial recess after the testimony on the jury issues is complete, during which time the evidence on the breach of fiduciary duty claim would be presented to the Court alone, followed by the jury instructions and deliberations.

Having reviewed the record of this case as a whole, including the operative second amended third party complaint [140], the Court's prior opinions [225, 275], and the pre-trial order [280], and with particular attention paid to the proposed testimony of Mr. Collins and Ms. Robinson and the pre-trial rulings on the scope of their testimony [see 275, at 11-20], the Court concludes that the evidence at trial should be presented in two phases. Given that (1) both Collins and Robinson intend to present Rule 702 opinion testimony on matters relating to the breach of fiduciary duty claim and (2) neither of them has been identified or disclosed as a fact witness on any issue, the Court sees no reason for the jury to be present to hear their testimony. Not only would the testimony consume juror time listening to somewhat complicated and esoteric opinions on, for example, the standard of care for attorneys and matters of legal ethics, but it also would require the Court to fashion - and the jurors to comprehend and follow - instructions telling them to disregard some of what they heard in rendering their verdict. All of that would add considerably to the burden placed on jurors to resolve what otherwise should be relatively straightforward claims. Accordingly, Collins's and Robinson's testimony will be presented only to the Court in the second phase of the evidentiary presentations at trial.

In the first phase, all of the fact witnesses and the other experts, Dr. Merriman and Dr. Neri, will testify in the presence of the jury (and obviously the Court). The Court is cognizant that some of the fact testimony will be relevant to all of the issues in the case - both jury and non-jury - and it does not make any sense for the Court to parse out the testimony of fact witnesses on an issue-by-issue basis, nor has either party suggested that it do so. Once the first phase testimony is complete, the Court will allow counsel to present closing arguments on issues to be determined by the jurors, who will then begin their deliberations after receiving their instructions from the Court. As the jurors are deliberating, the parties will present the expert testimony on the breach of fiduciary issues, after which time counsel will be afforded closing arguments to the Court on those issues. Regardless of when the jury returns its verdict - that is, during or after the close of evidence and arguments on the non-jury claim - the Court will have the benefit of the jury's decision (thus honoring the "jury first" rule) well before issuing its own findings and conclusions as required under Federal Rule of Civil Procedure 52.

In sum, after considering the circumstances of this case in light of the Rules of Civil Procedure and Evidence cited above, the Court concludes that proceeding in two phases as set forth best accommodates the full range of interests of the parties, the jurors, and the Court at stake.

2. Whether Plaintiff's conversion and conspiracy claims are duplicative

The remaining question is whether Count IV (conversion) and Count VIII (conspiracy) are duplicative. The Court raised this issue, but did not decide it, in its May 6, 2013 order [see 275, at 29-30]. With the benefit of the parties' additional briefing, the Court will now issue a ruling.

In Count IV, Crim claims that she sustained damages when VLG converted funds belonging to Crim by refusing to turn the funds over to her after she properly requested them. In Count VIII, Crim seeks damages for a conspiracy between VLG and an entity called Client Funding Solutions, ...

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