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Federal Deposit Insurance Corp. v. Chicago Title Insurance Co.

United States District Court, N.D. Illinois

May 22, 2018

Federal Deposit Insurance Corporation as Receiver for Founders Bank, Plaintiff,
v.
Chicago Title Insurance Company, et al., Defendants.

          PLAINTIFF'S COMBINED MOTION AND SUPPORTING BRIEF REQUESTING ENTRY OF JUDGMENT IN THE AMOUNT OF $3, 790, 695 PLUS PRE-JUDGMENT INTEREST

          HONORABLE JUDGE ANDREA R. WOOD JUDGE.

         Pursuant to Federal Rule of Civil Procedure 50(b), Plaintiff Federal Deposit Insurance Corporation as Receiver for Founders Bank (“Plaintiff” or “FDIC-R”) respectfully moves this Court for judgment as a matter of law in favor of FDIC-R and against Defendant Chicago Title Insurance Company (“Defendant” or “Chicago Title”) with respect to the damages sustained by FDIC-R, in the amount of $3, 790, 695. In the alternative, pursuant to Federal Rule of Civil Procedure 59(e) (which may be invoked prior to entry of judgment, see infra), FDIC-R respectfully requests an adjustment of the jury's damages award on each of FDIC-R's claims to $3, 790, 695.[1] In addition, in conjunction with this Court's ultimate entry of judgment under Rule 58(d), FDIC-R respectfully requests an award of pre-judgment interest on FDIC-R's damages, which is mandated by 12 U.S.C. § 1821(l), and also is independently available under state law.

         FDIC-R's motion should be granted. First, the only damage amount that can be reasonably drawn from the evidence introduced at trial and the jury instructions is $3, 790, 695. Thus, this Court may properly enter judgment as a matter of law or make an upward adjustment to the damages award when entering judgment. Second, under both federal and Illinois law, FDIC-R is entitled to pre-judgment interest. Under 12 U.S.C. § 1821(l), an appropriate pre-judgment interest award to FDIC-R is mandatory. In addition, Illinois law provides an independent basis for pre-judgment interest with respect to FDIC-R's breach of fiduciary duty claim, and the equities of this case strongly support such an award.

         I. BACKGROUND

         Before trial, over FDIC-R's objections, this Court concluded that under Illinois law, FDIC-R's damages were “limited to the amounts of the deficiency judgments that Founders obtained at the foreclosure sales of the Subject Properties, ” or $3, 880, 686.91, despite actual losses of more than $6 million. See Mem. Op. (Dkt. 183) at 18. Specifically, in response to Chicago Title's motion for partial summary judgment, this Court held that the Illinois credit bid rule limited the amount of damages that FDIC-R could seek against Chicago Title, concluding that “[i]f the FDIC establishes liability, the FDIC's recovery from the Chicago Entities will be limited to the sum of the deficiency judgments that Founders obtained at the foreclosure sales of the subject properties.” See Dkt. 183 at 1. In doing so, this Court reduced the amount of FDIC-R's potential recovery to only $3, 880, 686.91. Id. at 7. Later, ruling on motions in limine, this Court carefully defined the evidence that the parties could introduce at trial on damages. With respect to FDIC-R, this Court declined to take judicial notice of the loss amounts reflected on the face of the deficiency judgments and precluded the deficiency judgments from being introduced as evidence. See Mem. Op. on Motions In Limine (Dkt. 352) at 17-18. At the same time, this Court held that “[b]ecause the Chicago Title Entities have not yet had the opportunity to fully litigate the accuracy of the credit bids, it will be given this chance at trial.” Id. at 18. Both of these rulings are reflected in pre-trial orders that the parties submitted and the Court entered (specifically, each party's damage itemization). See Proposed Joint Final Pretrial Order (Dkt. 287) at 31-35. Thus, the accuracy of Founders Bank's credit bids was the sole basis at trial on which Chicago Title could challenge the amount of loss sustained by FDIC-R.

         Consistent with this Court's pre-trial rulings and the pre-trial order, FDIC-R presented evidence at trial proving the actual amount of loss sustained on the subject loans, as reflected in the deficiency judgments. See, e.g., Ex. 1 (transcript excerpts), Trial Tr. Vol. 3B, Aug. 24, 2017, 591:20-602:9. On the basis of this evidence, FDIC-R sought $3, 790, 695 in damages.[2] Chicago Title, in contrast, failed to offer any evidence at trial challenging the sufficiency of Founders Bank's credit bids, nor did it otherwise dispute the amounts of the deficiency judgments on the subject loans. Instead, Chicago Title attempted to prove that its conduct was not a proximate cause of the losses - an argument the jury rejected - and that Founders Bank was contributorily negligent - an argument that, as a matter of law, does not decrease Chicago Title's liability to FDIC-R. Chicago Title presented no other evidence on the amount of actual loss sustained by FDIC-R. Thus, the only damage evidence submitted to the jury demonstrated total losses of $3, 790, 695.

         On September 14, 2017, the jury found that FDIC-R proved all of the required elements for each of its claims for breach of contract, breach of fiduciary duty, negligence, and negligent misrepresentation, and that FDIC-R had sustained damages of $1, 450, 000 on each of these claims. See generally Verdict Form (Dkt. 376).[3]

         II. LEGAL STANDARD

         FDIC-R moves for judgment as a matter of law pursuant to Rule 50(b). The Seventh Circuit has recognized that the court may consider such a Rule 50(b) motion, even in the absence of a prior Rule 50(a) motion, “when the failure to review a sufficiency-of-the-evidence argument would result in ‘manifest injustice.'” SEC v. Yang, 795 F.3d 674, 680 (7th Cir. 2015) (citing Hudak v. Jepsen of Ill., 982 F.2d 250, 250-51 (7th Cir. 1992)). In such instances, the trial court's review “is limited to determining ‘whether there was any evidence to support the jury's verdict, irrespective of its sufficiency, or whether plain error was committed which, if not noticed, would result in a manifest miscarriage of justice.” Id. (emphasis in original).

         In the alternative, FDIC-R moves this Court to alter or amend the jury's damages award pursuant to Federal Rule of Civil Procedure 59(e). “Altering or amending a judgment under Rule 59(e) is permissible when there is newly discovered evidence or there has been a manifest error of law or fact.” Harrington v. City of Chicago, 433 F.3d 542, 546 (7th Cir. 2006) (citing Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 529 (7th Cir. 2000)). Such motions may be filed prior to entry of judgment. See, e.g., Hilst v. Bowen, 874 F.2d 725, 726 (10th Cir. 1989) (per curiam) (collecting cases and concluding “Rule 59(e) motion was timely even though it was made before the separate judgment was entered”).

         It is well-accepted that under Rule 59(e), a judgment may be properly amended or adjusted upward where, as here, “the jury has found the underlying liability and there is no genuine issue as to the correct amount of damages.” EEOC v. Massey Yardley Chrysler Plymouth, Inc., 117 F.3d 1244, 1252-53 (11th Cir. 1997) (“Massey”). In Massey, the Eleventh Circuit agreed with the EEOC that because “the jury lacked any rational basis” for awarding less than the full amount of back pay to which the employee was entitled under federal law, the district court should have granted the EEOC's Rule 59(e) “motion to alter or amend judgment by ‘conform[ing] the damages to the evidence'-i.e., by increasing the $10, 513.86 [jury award] to the sum needed to compensate [plaintiff] for back pay.” Id. (emphasis added); see also Liriano v. Hobart Corp., 170 F.3d 264, 272-73 (2d Cir. 1999) (where jury neglected to include hospital bill in damages award, district court properly “adjusted the jury award to account for a discrete item that manifestly should have been part of the damage calculations and as to whose amount there was no dispute”). This Court's power to make such an adjustment is not affected by the amount of damages at issue. “[W]here there is no rational basis for the jury's verdict, . . . a trial court may impose the only damages award that reasonably can be drawn from the evidence.” Heller Fin., Inc. v. Grammco Computer Sales, 71 F.3d 518, 527 (5th Cir. 1996) (affirming district court's decision to increase the jury's award from $1 million to $4.7 million where record provided no evidence supporting a lesser award).

         For the reasons discussed in Part III, infra, FDIC-R is entitled to a damages award in the amount of $3, 790, 695, regardless of whether Rule 50(b) or Rule 59(e) is applied. Depriving FDIC-R of the full damages to which it is entitled by law, in favor of a lesser jury award that has no evidentiary basis whatsoever, would constitute a “manifest injustice” under Rule 50(b) and a “manifest error of law or fact” under Rule 59(e). Accordingly, this Court should enter judgment in favor of FDIC-R with respect to damages in the principal amount of $3, 790, 695.

         III. ARGUMENT

         A. The undisputed evidence shows that FDIC-R sustained $3, 790, 695 in losses.

         Through its pre-trial rulings, as reflected in the pre-trial order, this Court provided a clear road map for the parties to follow at trial, and set the evidentiary parameters within which Chicago Title could challenge the FDIC-R's losses on the subject loans. See Jonasson v. Lutheran Child & Family Servs., 115 F.3d 436, 440 (7th Cir. 1997) (identifying purpose of in limine motion to focus trial preparations and proceedings for a jury trial); see also Lovejoy Elecs. v. O'Berto, 616 F.Supp. 1464, 1473 (N.D. Ill. 1985) (discussing purpose of partial summary judgment to “frame and narrow the triable issues”) (quoting Capitol Records, Inc. v. Progress Record Distrib., 106 F.R.D. 25, 29 (N.D. Ill. 1985)). FDIC-R met its burden of proving at trial the losses on the loans as reflected in the deficiency judgments, whereas Chicago Title failed to introduce any evidence whatsoever challenging the sufficiency of Founders Bank's credit bids or the amounts of the deficiency judgments. See Part II, supra. In fact, Chicago Title did not attack the amount of loss at all, but instead focused its proof on blaming others for the loss. As a result, the evidence introduced at trial supports only one damages number - i.e., $3, 790, 695.

         B. This Court's instructions to the jury were consistent with applicable law, and required the jury to award $3, 790, ...


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