The Federal Deposit Insurance Corporation v. Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A. et al
Filing
69
ORDER: The FDIC's Request for Judicial Notice 34 is GRANTED. The Court takes judicial notice of the Amended Complaint and Defendants' Answer in the state court proceeding for the limited purposes discussed above. Defendants' Motion in Limine to Exclude Evidence of, and Reference to, Other Lawsuit and Settlement 36 is DENIED WITHOUT PREJUDICE consistent with the foregoing. The parties are encouraged to reach a stipulation regarding the prior proceeding to be read to the jury. Signed by Judge Virginia M. Hernandez Covington on 5/9/2013. (KAK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
THE FEDERAL DEPOSIT INSURANCE
CORPORATION, as Receiver for
First Priority Bank, Bradenton,
Florida,
Plaintiff,
v.
Case No. 8:11-cv-2831-T-33MAP
ICARD, MERRILL, CULLIS, TIMM,
FUREN & GINSBURG, P.A., and
ROBERT E. MESSICK,
Defendants.
_______________________________/
ORDER
This cause is before the Court pursuant to the FDIC’s
Request for Judicial Notice (Doc. # 34), filed on April 9,
2013, and Defendants’ Response in Opposition (Doc. # 43),
filed on April 24, 2013. Also before the Court is Defendants’
Motion in Limine to Exclude Evidence of, and Reference to,
Other Lawsuit and Settlement (Doc. # 36), filed on April 15,
2013.
The FDIC filed a Response in Opposition to the Motion
in Limine (Doc. # 41) on April 24, 2013.
The Court grants the
FDIC’s Request for Judicial Notice and denies Defendants’
Motion in Limine without prejudice.
I.
Background
This case is set for a jury trial during the Court’s May
2013, trial term.
As the parties indicate in their joint
statement of the case:
The FDIC alleges that Icard Merrill and Bob Messick
committed legal malpractice and breached their
fiduciary duties when representing First Priority
Bank in connection with the March 2006 closing of a
$5.3
million
real
estate
acquisition
and
development loan to River Meadows Development, LLC.
Icard Merrill and Mr. Messick deny all of the
FDIC’s allegations of legal malpractice and breach
of fiduciary duties, and maintain that they
properly represented First Priority Bank in
connection with the Loan and that they caused no
harm to First Priority Bank or the FDIC.
(Doc. # 46).
The
FDIC
has
evidence
that
expressed
River
Meadows
its
intention
Development,
to
LLC
introduce
filed
suit
against Icard Merrill and Messick in state court (Case No.
2007CA012915NC), and that the state court action concluded in
a settlement.
In the state court action, River Meadows
Development, LLC sued Icard Merrill and Messick for legal
malpractice, breach of fiduciary duty, aiding and abetting
breach
of
fiduciary
duty,
and
fraud.
River
Meadows
Development, LLC also sought an accounting.
River Meadows Development, LLC’s state court Amended
Complaint arrays allegations similar to the contentions of the
FDIC in this case, such as “Defendant, Messick, had multiple
roles in those transactions: Settlement Agent and Escrow Agent
and counsel to RMD [River Meadows Development, LLC], counsel
to RMD’s Managing Member, MB River and John Murray, and
counsel to Brivik, individually.” (Doc. # 34-1 at ¶ 50).
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Pertinent
to
the
present
action,
River
Meadows
Development, LLC’s state court Amended Complaint alleges:
On March 21st of 2006, Brivik obtained a loan from
First Priority Bank on behalf of [River Meadows
Development, LLC] for $5,300,000 to acquire Parcel
1 and used $4,300,000 of the proceeds to benefit
Manatee River Resort, a company he wholly-owned and
controlled, by paying a debt it owed in the amount
of $4,378,617.71 to the Defendants’ client U.S.
Funding Group. . . . After these closings, the
Investors learned that no “option” was available on
the other parcel needed to develop the project . .
. Therefore, RMD was never able to obtain the
critical property it needed for the project. . .
[B]ecause of the Defendants’ conduct, RMD’s capital
was
lost
and
the
Investor’s
entire
cash
contributions totaling approximately $4,000,000.00
was lost.
(Id. at ¶¶ 54-56).
The FDIC has requested judicial notice of River Meadows
Development, LLC’s state court Amended Complaint and Icard
Merrill and Messick’s state court Answer. (Doc. # 34). These
documents exceed 200 pages.
In addition, in response to the Motion in Limine, the
FDIC indicates that it “should be permitted to use the
Defendants’ pleadings, deposition transcripts, and submissions
in the prior case as impeachment and/or as an admission
against interest to show the jury the inconsistencies in the
Defendants’ positions on key facts.” (Doc. # 41 at 6).
-3-
II.
Judicial Notice
Rule 201(c)(2) of the Federal Rules of Evidence states
that a court “must take judicial notice if a party requests it
and the court is supplied with the necessary information.” In
this case, the FDIC has supplied the Court with a copy of the
relevant state court Amended Complaint and Defendants’ Answer
thereto.
“It is recognized that a court may take judicial notice
of a document filed in another court not for the truth of the
matters asserted in the other litigation, but rather to
establish the fact of such litigation and related filings.”
United
States
v.
Jones,
29
F.3d
1549,
1553
(11th
Cir.
1994)(internal citations omitted). Although Defendants oppose
the Motion, the Court finds their arguments unavailing.
It
cannot be disputed that the Amended Complaint and Answer were
indeed filed in state court. The FDIC does not seek a finding
from this Court that the allegations contained within the
state court pleadings are true.
Rather, the FDIC seeks
judicial notice of the filing of these pleadings “to establish
the fact of the litigation and the admissions that were made.”
(Doc. # 34 at 2).
The Court takes judicial notice of the state court
Amended Complaint and Answer “for the limited purpose of
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recognizing . . . the subject matter of the litigation”
Jones, 29 F.3d at 1553.1 The Court does not take judicial
notice of accuracy of the factual allegations contained within
the state court pleadings.
In addition, the Court’s decision
to take judicial notice of the state court pleadings does not
constitute a determination regarding the admissibility of such
pleadings.
III. Motion in Limine
A.
Evidentiary Rules
Defendants
seek
an
Order
barring
the
FDIC
from
introducing any evidence of, or making any reference to, the
aforementioned state court action, including the fact that the
1
As stated in Jones, 29 F.3d at 1553:
In order for a fact to be judicially noticed under
Rule 201(b), indisputability is a prerequisite. 21
C. Wright & K. Graham, Federal Practice and
Procedure: Evidence § 5104 at 485 (1977 & Supp.
1994). Since the effect of taking judicial notice
under Rule 201 is to preclude a party from
introducing contrary evidence and in effect,
directing a verdict against him as to the fact
noticed, the fact must be one that only an
unreasonable person would insist on disputing. Id.
If it were permissible for a court to take judicial
notice of a fact merely because it has been found
to be true in some other action, the doctrine of
collateral estoppel would be superfluous. Id.
Moreover, to deprive a party of the right to go to
the jury with his evidence where the fact was not
indisputable would violate the constitutional
guarantee of trial by jury.
-5-
state court action ended in a settlement. (Doc. # 36).
Defendants contend that such evidence should be excluded
pursuant to Rules 401 through 404 of the Federal Rules of
Evidence.
Rule 401 provides the “Test for Relevant Evidence” and
explains that “evidence is relevant” if “it has any tendency
to make a fact more or less probable than it would be without
the evidence; and the fact is of consequence in determining
the action.” Fed. R. Evid. 401.
Regarding the general admissibility of evidence, Rule 402
provides that “[r]elevant evidence is admissible” except as
otherwise provided by “the United States Constitution; a
federal statute; [the Federal Rules of Evidence]; or other
rules prescribed by the Supreme Court. Irrelevant evidence is
not admissible.”
Fed. R. Evid. 402.
Rule 403 sets forth the following balancing test for
relevant evidence: “The court may exclude relevant evidence if
its probative value is substantially outweighed by a danger of
one or more of the following: unfair prejudice, confusing the
issues, misleading the jury, undue delay, wasting time, or
needlessly presenting cumulative evidence.”
403.
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Fed. R. Evid.
Finally,
regarding
character
evidence,
Rule
404(b)
provides, “Evidence of a crime, wrong, or other act is not
admissible to prove a person’s character in order to show that
on a particular occasion the person acted in accordance with
the character.”
B.
Analysis
The FDIC plans to present several components of the state
court litigation to the jury in this case.
For instance, the
FDIC seeks to introduce deposition testimony from the state
court case as well as state court pleadings and evidence that
the state court litigation ended in a settlement. Defendants,
on the other hand, seek an Order barring reference to the
state court proceeding entirely.
As explained below, the Court denies the Motion in Limine
without prejudice because Defendants, as the movants, failed
to
demonstrate
that
any
particular
item
of
evidence
irrelevant, unduly prejudicial, or otherwise improper.
addition,
the
Court
instructs
the
parties
to
reach
is
In
a
stipulation regarding the state court proceeding to be read to
the jury.
1.
Relevance
As identified by the FDIC, the state court litigation
contains
relevant
statements
-7-
by
Defendants
regarding
Defendants’
alleged
simultaneous
representation
Meadows Development, LLC and others.
of
River
As argued by the FDIC,
“Defendants would like to exclude all references to the prior
litigation because of the key admissions against interest that
the Defendants made in that case and because the Defendants’
testimony in that case expressly conflicts with the testimony
which is being offered in the instant case.” (Doc. # 41 at 4).
In the present case, the FDIC alleges that First Priority
Bank
was
injured
due
to
Defendants’
simultaneous
representation of parties with adverse interests.
In the
state court action, River Meadows Development, LLC claimed to
be harmed by Defendants’ alleged conflict of interest, and
Messick gave testimony and made admissions regarding his
representation of First Priority Bank and other parties.
Thus, the Court rejects Defendants’ assertion that “the prior
lawsuit amounts to nothing more than some other parties’
accusations and belief that they were harmed under their view
of disputed facts.” (Doc. # 36 at 6).
The FDIC also correctly points out that Defendants may be
subject to impeachment based on prior testimony given in the
state
court
proceeding.
Particularly,
Messick
provided
deposition testimony in the state court action regarding whom
Defendants represented and when the representation occurred.
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Messick has provided testimony on the same subject in this
action.
The Federal Rules of Evidence provide that the prior
testimony may be used for impeachment purposes. In addition,
Messick’s sworn statements may qualify as statements against
interest.
As
such,
Defendants
have
failed
to
identify
particular item of evidence that is irrelevant.
any
Of course,
during trial, the parties may assert relevance arguments when
specific items of evidence are tendered.
2.
Rule 403
In addition, Defendants have failed to demonstrate that
any particular item of relevant evidence should be excluded
based on a finding that the probative value of such evidence
is substantially outweighed by any factor listed in Rule 403
of the Federal Rules of Evidence.
Neither
party
has
itemized
the
challenged on the basis of Rule 403.
particular
evidence
From reading the Motion
in Limine, the Court surmises that Defendants’ primary concern
is the impact of evidence that Defendants settled with River
Meadows
Development,
Defendants
assert
LLC
that
in
the
evidence
state
of
unfairly prejudicial and misleading.
court
their
action.
settlement
is
Defendants rely upon
United States v. Hays, 872 F.2d 582, 589 (5th Cir. 1989) for
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the
proposition
regarding
a
that
“the
settlement
potential
agreement
impact
with
determination of liability is profound.
of
evidence
regard
to
a
It does not tax the
imagination to envision the juror who retires to deliberate
with the notion that if the defendants had done nothing wrong,
they would not have paid the money . . . .”
The Court agrees with Defendants that evidence of a
settlement agreement could be substantially prejudicial to
Defendants and misleading to the jury. See Mills v. Foremost
Ins. Co., No. 8:06-cv-986, 2010 U.S. Dist. LEXIS 98254, at *8
(M.D.
Fla.
Sept.
2,
2010)(finding
“settlement
documents
factually irrelevant, potentially burdensome, and tending to
lead jurors astray.”).
In addition, the Court tends to agree
with Defendants that the presentation of evidence regarding
the state court litigation has the potential to lead to
confusion and prejudice. See e.g. Royal Bahamian Ass’n v. QBE
Ins.
Corp.,
745
F.
Supp.
2d
1380,
1384
(S.D.
Fla.
2010)(“Without question, if evidence of other claims were
allowed by the court, there would be, in effect, a mini-trial
on each such claim.
That is wholly unacceptable where the
only claims that are material are the claims of the plaintiffs
in this litigation.
In sum, the admission of such evidence
would be unduly time-consuming, unfairly prejudicial and
-10-
unnecessarily confusing and will not be permitted.”)(internal
citation omitted); Williams v. Asplundh Tree Expert Co.,
No.
3:05-cv-479, 2006 WL 2868923 (M.D. Fla. Oct. 6, 2006)(barring
admission of evidence in an employment discrimination case
that other employees of the defendant company had also filed
employment discrimination actions).
Nevertheless, the FDIC has identified certain items of
evidence from the state court action, such as impeachment
evidence, that is likely to be introduced and must be placed
into context to avoid juror confusion.
The Court accordingly
encourages the parties to reach a stipulation regarding how
evidence of the prior lawsuit should be presented to the jury,
if at all. For instance, the parties could stipulate that, in
a “prior proceeding,” River Meadows Development, LLC sued
Defendants for malpractice, breach of fiduciary duty, and
other claims, and that the prior proceeding has been resolved.
A stipulation regarding the prior proceeding would serve the
interests of justice and the interests of the parties by
expediting the presentation of evidence, saving time and
money,
reducing
the
possibility
of
juror
confusion,
and
minimizing prejudice while allowing relevant and probative
evidence to reach the jury.
-11-
If the parties are unable to come to an agreement, the
Court will give further consideration to the parties’ dispute
regarding the admissibility of various aspects of the prior
proceeding. However, the Court warns the parties that it will
not allow a wholesale reiteration of the prior proceeding
during the instant trial; nor will the Court waste the jurors’
time by allowing the parties to needlessly explore the state
court record. The Court will only permit a greatly summarized
and truncated discussion of the state court proceeding, if at
all.2
In addition, the parties should be mindful of the
requirements of Rule 408 of the Federal Rules of Evidence. See
e.g. Barker v. Niles Bolton Assocs., 316 F. App’x 933 (11th
Cir. 2009).
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)
The FDIC’s Request for Judicial Notice (Doc. # 34) is
GRANTED.
The Court takes judicial notice of the Amended
2
The Court finds as moot Defendants’ assertion that
evidence of the prior state court proceeding falls within the
ambit of Rule 404(b) character evidence. The FDIC indicates
that it “is not seeking to use the prior litigation as
character evidence.” (Doc. # 41 at 9). In addition, it should
be noted that the Federal Rules of Evidence recognize that
evidence may be admissible for one purpose but not admissible
for another purpose. See Fed. R. Evid. 105.
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Complaint and Defendants’ Answer in the state court
proceeding for the limited purposes discussed above.
(2)
Defendants’ Motion in Limine to Exclude Evidence of, and
Reference to, Other Lawsuit and Settlement (Doc. # 36) is
DENIED WITHOUT PREJUDICE consistent with the foregoing.
(3)
The
parties
are
encouraged
to
reach
a
stipulation
regarding the prior proceeding to be read to the jury.
DONE and ORDERED in Chambers in Tampa, Florida, this 9th
day of May, 2013.
Copies:
All Counsel of Record
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