Clark et al v. Podesta et al
Filing
73
MEMORANDUM DECISION AND ORDER. IT IS HEREBY ORDERED that: Defendants' Motion 48 is DENIED. Plaintiffs' Motion 47 is GRANTED. Plaintiffs' Motion for Judicial Notice is GRANTED. Plaintiffs' Motion 44 is GRANTED but whether s uch claim will be submitted to the jury is reserved until the Plaintiffs rest at trial. Plaintiffs shall file the Amended Complaint within 7 days of receipt of this Order. Pretrial deadlines are set forth in the Court's Scheduling Order 19 . (Jury Trial set for 11/29/2016 09:30 AM in Boise - Courtroom 2 before Judge Edward J. Lodge.). Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
Case No. 1:15-CV-0008-EJL-CWD
ERIC R. CLARK, attorney at law; and
CLARK & ASSOCIATES, PLLC,
Plaintiffs,
MEMORANDUM DECISION AND
ORDER
v.
JEFFERY J. PODESTA, individually
and as the agent of Street Search, LLC;
and STREET SERACH, LLC, a New
Jersey limited liability company,
Defendants.
INTRODUCTION
Pending before the Court in the above-entitled matter are Plaintiffs’ Motion
for Partial Summary Judgment and Defendants’ Motion for Summary Judgment.
The parties have filed their responsive briefing and the matter is now ripe for the
Court’s review. Having fully reviewed the record herein, the Court finds that the
facts and legal arguments are adequately presented in the briefs and record.
Accordingly, in the interest of avoiding further delay, and because the Court
conclusively finds that the decisional process would not be significantly aided by
oral argument, these motions shall be decided on the record before this Court
without oral argument.
1
FACTUAL AND PROCEDURAL BACKGROUND
The complete procedural background and facts of this case are established in
the Report and Recommendation (“Report”) issued by Magistrate Judge Candy W.
Dale relating to Defendants’ Motion to Dismiss. (Dkt. 27.) The Report adopts the
record in the light most favorable to Plaintiffs, and this Court incorporates the
same in this order, with the exception of those additional facts relevant to the
parties’ motions for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986) (weighing the evidence and drawing inferences from the facts “are
jury functions, not those of a judge, whether he is ruling on a motion for summary
judgment or for a directed verdict. The evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his favor.”). See also
Hughes v. U.S., 953 F.2d 531, 541 (9th Cir. 1992).
Plaintiffs Eric Clark and his law firm, Clark & Associates, PLLC
(collectively “Clark”) initiated this lawsuit against Jeffery Podesta—both
individually and as the agent of Street Search, LLC, which is also a named
defendant (collectively “Podesta”)—on claims of fraud and breach of contract.
The claims arise out of Podesta’s alleged failure to pay Clark attorney fees
pursuant to an Idaho state court action in which Clark represented Podesta.1 In
1
See Profits Plus Capital Management, LLC, et al v. Podesta, et al, Case No. CV OC 1014540,
filed July 22, 2010 in the District Court of the Fourth Judicial District of the State of Idaho.
2
September of 2010, Podesta contacted Clark regarding representation. In the initial
interview between Clark and Podesta, prior to signing any agreement, Podesta
described the case to Clark. Podesta contended he had an arrangement with Robert
Coleman, a plaintiff in the state court action, regarding fifty percent ownership of a
hedge fund, describing the value of his share of the hedge fund as approximately
five million dollars. The state court had entered a default judgment in favor of
Coleman. Podesta sought Clark’s representation to set aside the default judgment,
and if default was set aside, to pursue a defense and file counterclaims against
Coleman in the state court action.
In September 2010, the initial attorney client agreement was for Podesta to
pay a retainer of $2,500 and $200 an hour for Clark’s attorney time. Later in
November 2010, the parties agreed to a partial contingency fee, and Clark alleges
Podesta (1) stated he did not have funds to pay an hourly fee, (2) estimated the
value of his share of the hedge fund to exceed five million dollars, and (3) claimed
to have never been involved in any prior criminal or civil proceeding. (Dkt. 1-4, ¶
9.) Based on this information, Clark agreed to represent Podesta on a partial
contingency fee basis. The Attorney Representation Agreement-Partial
3
Contingency Fee Agreement (“Agreement 1”) signed on January 10, 2011,2
included the following language:
Prior to settlement or completion of trial, Attorney may either withdraw with
Clients’ consent or upon reasonable notice to Clients, for good cause,
including, but not limited to, breach of Clients’ obligation to timely pay
attorney fees or Clients’ failure to cooperate with Attorney regarding a
material issue in this case.
(Dkt. 22-1.)
The parties were scheduled to mediate in January of 2012. Just prior to
mediation, plaintiffs in the state lawsuit requested financial records of Podesta’s
past earnings. Upon inspection of Podesta’s financial records, Clark discovered
that Podesta was earning a substantial monthly income. He also learned that the
value of the hedge fund in question was likely closer to the one or two million
dollar range, rather than the five million dollar range Podesta previously
represented at the time Clark was first retained.
During the mediation, Coleman offered to settle the case notwithstanding
there was no written agreement that existed between Podesta and Coleman
regarding the hedge fund. Clark, Podesta’s co-counsel,3 and the mediator all
advised Podesta it would be wise to accept the settlement offer, but Podesta
rejected the offer. During this time, Clark indicated to Podesta that he was
2
It is not clear in the record why the parties waited until January of 2011 to sign the initial partial
contingency fee agreement.
3
Podesta was represented by two attorneys in the state lawsuit. Clark served as Podesta’s local
Idaho counsel; the other attorney, Gary Schafkopf, was admitted pro hac vice in the litigation.
4
considering withdrawing as counsel because he found Podesta’s rejection of the
settlement offer unwise. Clark also expressed his concerns to Podesta that the
value of the hedge fund was substantially less than Podesta initially represented.
In response, Clark alleges Podesta made a promise to Clark to pay his
accumulated hourly fees regardless of the outcome of trial, orally modifying the
initial written partial contingency fee agreement. Clark maintains he and Podesta
agreed to the modification of Agreement 1 such that Clark would continue to
represent Podesta and he would bill his time at the hourly rate of $200. Podesta
maintains that there was no modification to Agreement 1 and that Clark’s trial
representation was pursuant to the partial contingency fee due upon recovery
expressly state in Agreement . Podesta also submitted emails from Clark that
arguably acknowledge the trial representation was based on Agreement 1.4
On February 6, 2012, the case went to trial. Over Clark’s objections, the
court admitted evidence offered by plaintiffs of complaints and a consent judgment
from two fraud cases in which Podesta was a named defendant.5 This was the first
4
Strangely, this fact was found in Podesta’s Affidavit filed with his response to Clark’s partial
motion for summary judgment on Count III. (Dkt. 69.) The evidence was not timely filed by
Podesta for consideration on Defendants’ Motion for Summary Judgment as any reply was due
14 days after Plaintiffs’ response was filed. Loc. Civ. R. 7.1(b). The Court acknowledges this
evidence as it clearly supports the denial of the Defendants’ Motion for Summary Judgment as
material facts are disputed.
5
In MLS Enterprises v. Street Search, et al, filed March 26, 2003 in United States District Court
for the Southern District of New York, plaintiffs alleged fraud and misrepresentations in the sale
of securities. A consent judgment was entered, which obligated Podesta and his companies to
pay plaintiff $360,000.00 plus statutory interest. In A&R Investment Associates, L.P. et al v.
5
time Clark learned of these other proceedings. The jury’s verdict was adverse to
Podesta. The total hourly attorney’s fees due to Clark after trial and post-trial
motions equaled $129,576.76, which included deductions for payments previously
made to Clark by Podesta.
Clark agreed to represent Podesta through his appeal of the state lawsuit, and
billed Podesta an hourly fee for this representation pursuant to a new written fee
agreement, Modification of Attorney Representation (“Agreement 2”). (Dkt. 69-1,
Ex. C.)6 In a June 2012 email, Clark offered a flat fee of $40,000 for the appeal.
(Dkt. 69-1, Ex. D.) Clark claims Podesta agreed to the flat fee and made regular
payments. The balance due on the appeal flat fee is the $3,000 Clarks seeks to
recover in Count III.7
Upon completion of the appeal, Clark demanded payment for his
accumulated attorney’s fees from trial based on the oral modification of Agreement
1 in addition to the remaining $3,000 fees owed pursuant to Agreement 2. Podesta
refused to respond to Clark’s demands.
Street Search Advisors, LLC, et al, filed on March 19, 2004, in the United States District Court
for the District of New Jersey, plaintiffs alleged Podesta committed fraud in the sale of securities
and common law fraud conversion. Podesta agreed to entry of a consent judgment for
$881,332.14.
6
The Court notes the copy submitted by Podesta is not signed by Podesta, but Podesta does not
appear to challenge that Agreement 2 was executed by the parties.
7
The Court notes while Clark provided the billing records for his trial representation, no billing
records for the appeal representation were submitted with Clark’s Motion for Partial Summary
Judgment.
6
Clark filed this lawsuit on October 31, 2014, in the District Court of the
Fourth Judicial District of the State of Idaho to recover his accumulated attorney’s
fees, prejudgment interest, and attorney’s fees and costs in this matter. Clark
asserts three state-law causes of action: (1) fraud in the inducement (“Count I”); (2)
breach of the oral modification to Agreement 1 (“Count II”); and (3) breach of
Agreement 2 (“Count III”). On January 8, 2015,8 Podesta filed a motion to dismiss
under both Rule 12(b)(2) and Rule 12(b)(6) of the Federal Rules of Civil
Procedure. On September 29, 2015, this Court adopted the Magistrate Judge’s
Report, denying Podesta’s Motion to Dismiss. Clark thereafter filed a Motion to
Amend the Complaint to add a claim for punitive damages. On February 2, 2016,
Clark filed a Motion for Partial Summary Judgment as to Count III of the
Complaint. On February 9, 2016, Podesta filed a Motion for Summary Judgment
as to all counts of the Complaint.
STANDARD OF REVIEW
Motions for summary judgment are governed by Rule 56 of the Federal
Rules of Civil Procedure. Rule 56 provides that the court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material
fact and that the movant is entitled to judgment as a matter of law.
8
Podesta was served by notice of publication and did not receive notice of the Complaint until
January 2, 2015.
7
The Supreme Court has made it clear that under Rule 56 summary judgment
is mandated if the non-moving party fails to make a showing sufficient to establish
the existence of an element which is essential to the non-moving party’s case and
upon which the non-moving party will bear the burden of proof at trial. See
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the non-moving party fails
to make such a showing on any essential element, “there can be no ‘genuine issue
of material fact,’ since a complete failure of proof concerning an essential element
of the nonmoving party’s case necessarily renders all other facts immaterial.” Id.
at 323.
Moreover, under Rule 56, it is clear that an issue, in order to preclude entry
of summary judgment, must be both “material” and “genuine.” An issue is
“material” if it affects the outcome of the litigation. S.E.C. v. Seaboard Corp., 677
F.2d 1289, 1293 (9th Cir. 1982). An issue, before it may be considered “genuine,”
must be established by “sufficient evidence supporting the claimed factual dispute
... to require a jury or judge to resolve the parties’ differing versions of the truth at
trial.” Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir. 1975) (quoting First Nat’l
Bank of Arizona v. Cities Serv. Co., Inc., 391 U.S. 253, 289 (1968)). The Ninth
Circuit cases are in accord. See, e.g., British Motor Car Distrib. v. San Francisco
Automotive Indus. Welfare Fund, 882 F.2d 371, 374 (9th Cir.1989).
8
According to the Ninth Circuit, in order to withstand a motion for summary
judgment, a party:
(1) must make a showing sufficient to establish a genuine issue of fact with
respect to any element for which it bears the burden of proof; (2) must show
that there is an issue that may reasonably be resolved in favor of either party;
and (3) must come forward with more persuasive evidence than would
otherwise be necessary when the factual context makes the non-moving
party’s claim implausible.
Id. at 374 (citation omitted).
Of course, when applying the above standard, the court must view all of the
evidence in the light most favorable to the non-moving party. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 255 (1986); Hughes v. U.S., 953 F.2d 531, 541 (9th
Cir.1992).
ANALYSIS
1. Defendants’ Motion for Summary Judgment
Podesta’s motion for summary judgment seeks dismissal of all claims raised
against Defendants in the Complaint. (Dkt. 48-2.) Podesta first argues Clark has
not provided any record support of his claims and contentions. (Id. at p. 2.)
Alternatively, Podesta argues the parol evidence rule and public policy should
preclude the admission of Clark’s assertions. (Id.) Lastly, Podesta argues Clark’s
damages are speculative.
9
Clark counters: (1) he has offered facts in his declarations that establish a
prima facie case for each of the three claims, (2) Podesta has misstated the parol
evidence rule and the Court has already rejected Podesta’s public policy argument,
(3) Clark’s failure to conduct discovery is irrelevant, and (4) Clark is competent to
testify to his billings.9 (Dkt. 53.)
a. Record Support of Clark’s Claims
Podesta cites Federal Rule of Civil Procedure 56(e), stating that in order to
survive summary judgment, a “[p]laintiff must offer specific material facts that
would be admissible at trial and that contradict a Movant’s assertion that no
genuine issue is in dispute.” (Dkt. 48-1, p. 2.) A party can do this by “citing to
particular parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations, stipulations (including
those made for purposes of the motion only), admissions, interrogatory answers, or
other materials.” Fed. R. Civ. P. 56(c)(1)(A).
Podesta alleges Clark has fallen short of the Rule 56 standard by pointing to
his deposition of Clark, wherein Clark reaffirmed his claims that Podesta verbally
agreed to convert Agreement 1 to a billable hour contract. Podesta argues Clark
falls short of the standard by failing to produce further evidence of the alleged oral
9
Podesta did not file a reply to Clark’s response.
10
modification.10 In making that argument, however, Podesta apparently overlooks
the declarations that Clark has filed with the Court. Most notably, Clark’s
declaration in support of his motion to add punitive damages clearly asserts facts to
support each element of his claims. (Dkt. 44-3.) Clark has also submitted as
exhibits his time sheets for trial services rendered and a copy of the email dated
July 14, 2014 to Podesta and Podesta’s former counsel, in an attempt to negotiate
payment of services for the trial and post-trial motions. See Exhibits 3 and 4 of
Clark’s Declaration, (Dkts. 53-6 and 53-7.) Podesta now takes issue regarding
whether there was an oral modification or any promise to pay Clark if Podesta was
not successful at trial.
Clark also testified in his deposition and declarations regarding
misrepresentations and omissions Podesta made to Clark to induce Clark to
represent Podesta. Podesta has not rebutted Clark’s evidence that he was
untruthful to Clark or exaggerated the value of his intent in the state court action,
or that Podesta was unable to afford Clark’s hourly rate. Thus, in viewing the
evidence in the light most favorable to the non-moving party, Clark’s admissible
evidence is sufficient to support genuine issues of material fact exist as to the
claims of fraudulent inducement and breach of contracts by Podesta.
b. The Parol Evidence Rule and Public Policy
10
It is unclear to the Court what “further evidence” needs to be provided to establish an oral
contract modification than the testimony of one of the parties to the oral agreement.
11
Podesta’s alternative argument suggesting Clark’s claims are barred by the
parol evidence rule and public policy also fails to prove Podesta is entitled to
judgment as a matter of law. Podesta specifically alleges “[t]he parol evidence rule
precludes any verbal agreement to modify the terms of the memorialized and
intended integrated contingent fee agreement,” and “public policy precludes an
attorney from orally modifying a written fee agreement.” (Dkt. 48-2, p. 3.)
The only authority Podesta cites in support of his parol evidence argument is
Valley Bank v. Christensen, 808 P.2d 415 (Idaho 1991). Podesta alleges the
decision in Valley Bank precludes Clark’s claim that he and Podesta orally
modified Agreement 1 at the state suit mediation. (Dkt. 48-2, p.3.) In Valley
Bank, the Supreme Court of Idaho determined “that the parol evidence rule
prevents the admission of oral testimony relating to the alleged express conditions
precedent.” 808 P.2d at 416. The Valley Bank facts are distinguishable from the
facts before this Court. Specifically, in Valley Bank the defendant tried to
introduce extrinsic evidence of negotiations and conversations that had occurred
prior and/or contemporaneously to the signing of the contract. The court explained
that “[w]here preliminary negotiations are consummated by written agreement, the
writing supercedes [sic] all previous understandings and the intent of the parties
must be ascertained from the writing.” Id. at 417 (internal quotation and citations
omitted). Here, however, Clark seeks to introduce evidence of a verbal
12
modification made a year after the signing of the existing written contract. As
Clark notes, “parties to an unperformed contract may, by mutual consent, modify
the contract by altering, excising or adding provisions, and such modification may
be by parol agreement though the contract is in writing.” Great Plains Equipment,
Inc. v. Northwest Pipeline Corp., 979 P.2d 627, 642 (Idaho 1999) (internal
quotation and citation omitted). Thus, the parol evidence rule does not prevent
consideration of the alleged verbal agreement between Clark and Podesta to
modify Agreement 1.
Like in his motion for default judgment, here too Podesta invokes public
policy in support of his motion for summary judgment. (See Dkt. 20, p. 7; Dkt. 482, p. 3.) In both instances, Podesta argues “the Complaint, if allowed to proceed,
contravenes Idaho Rule of Professional Conduct 1.2(a), which states that the client
(rather than the attorney) is the sole determinator in the acceptance or rejection of a
settlement offer.” (Dkt. 27, p. 24.) This argument misses the point. Paragraph 6
of Agreement 1 states Clark cannot settle the case without Podesta’s approval.
Clark claims Podesta has not paid his agreed upon fees pursuant to their
modification. An attorney seeking payment for services rendered is not in
contravention of public policy or the Idaho Rules of Professional Conduct.
This Court has already denied Podesta’s public policy claims, adopting the
Report’s recommendation that “[a]lthough Podesta may be able to develop and
13
present facts and law to support this contention as a defense, his argument
regarding the rules of professional conduct is not ripe for the Court’s
determination.” (Id. at p. 25.) No new evidence has been provided, and Podesta
wastes judicial resources by reasserting the same argument without developing or
presenting any facts or law to support his contention as a defense. Accordingly,
Podesta’s motion for summary judgment on parol evidence or public policy
grounds is denied.
c.
Clark’s Damages
Podesta further argues that because Clark has not conducted discovery, his
damages are merely speculative and therefore cannot survive summary judgment.11
In support of this argument, Podesta cites Melaleuca, Inc. v. Foeller, in which the
Supreme Court of Idaho determined “[d]amages must be proven with reasonable
certainty.” 318 P.3d 910, 914 (Idaho 2014) (quoting Gen. Auto Parts Co., Inc. v.
Genuine Parts Co., 979 P.2d 1207, 1217 (Idaho 1999). Melaleuca, however, does
not support Podesta’s motion for summary judgment. In fact, the Melaleuca court
concluded that where damages are not proven with reasonable certainty, there
exists a genuine issue of material fact that ultimately precludes summary judgment.
Id. at 916.
11
Podesta fails to cite, and the Court has failed to locate, any authority that requires a Plaintiff to
conduct discovery when he or she feels no discovery is needed. Clark explained in his response
memorandum why he did not depose Podesta. (Dkt. 53, pp. 5-6.) Based on the record before
this Court, the Court agrees extensive discovery is not necessary for the claims presented.
14
Moreover, while Clark has not provided third-party testimony in support of
his claimed damages, he has provided a complete and detailed record of his hourly
billings along with declarations explaining his oral contract with Podesta. (Dkt.
53-7.) At trial, Clark can testify to his services provided and fees, and the question
of the validity of those damages will be determined by the factfinder. Clark has
therefore created a genuine issue of material fact as to his damages, and Podesta’s
motion for summary judgment is denied.
2. Plaintiffs’ Motion for Summary Judgment on Count III
Clark’s motion for partial summary judgment seeks an affirmative ruling on
Count III of the Complaint. Count III alleges Podesta owes Clark a balance of
three thousand dollars as per Agreement 2. Clark contends summary judgment is
appropriate primarily because Podesta has twice admitted to owing Clark that
money. Podesta counters that Clark has not provided sufficient evidence to
support the motion for summary judgment.
As Clark notes, “Rule 56(e)(3) authorizes the Court to grant summary
judgment for the moving party ‘if the motion and supporting materials—including
the facts considered undisputed—show that the movant is entitled to it.’” Brown v.
Dobler, 2015 WL 7185432 at *3 (Idaho 2015).
15
In reviewing the record, the Court notes two separate instances in which
Podesta admitted to owing the $3,000 at issue in Count III. In the first instance,
Clark’s Complaint alleges
28. The parties had a written attorney fee agreement for Clark to represent
Podesta during the appeal and during the motion for rehearing. 29. Podesta
paid all but $3,000.00 of Clark’s fees. However, after Podesta’s petition for
rehearing was denied, Podesta refused to pay the Clark [sic] the outstanding
balance of $3,000.00.
(Dkt. 1-4, ¶¶ 28-29.) Podesta then responded in his answer to the complaint, “28.
Admitted. 29. Denied. Mr. Podesta was willing to pay $3,000.00, the only portion
of Plaintiff’s claim which is valid.” (Dkt. 31, ¶¶ 28-29.) In the second instance, in
response to Clark’s claim for attorney fees, Podesta answered “[i]t is admitted that
Mr. Podesta is only responsible for the remaining $3,000.00. It is deenied [sic]
that Mr. Podesta owes $129,576.76 in attorney fees.” (Id. at ¶ 31.)
Although Podesta’s response to Clark’s partial motion for summary
judgment alleges these were “out-of-context admissions,” it is difficult to see how
a different context might alter these admissions to the extent that Podesta no longer
admits liability for the $3,000.00. (Dkt. 69-2, n. 1.) The Court has failed to locate,
and Podesta fails to cite, any authority supporting his argument that his affirmative
answer and admission to this allegation in the Complaint is insufficient for
summary judgment purposes. Podesta also acknowledges Agreement 2 wherein he
agreed to pay Clarke $200 per hour to handle the appeal. (Dkt. 69-1, Ex. C.)
16
Therefore, there is no genuine issue of material fact that remains and Clark’s
motion for summary judgment is granted on Count III.
3. Plaintiffs’ Motion to Take Judicial Notice
In his motion for judicial notice,12 Clark requests the Court, pursuant to
Federal Rule of Evidence 201, to take judicial notice of two documents attached as
exhibits to his declaration filed in opposition to Podesta’s motion for summary
judgment: (1) the Complaint filed in A&R Investment Associates, L.P. et al v.
Street Search Advisors, LLC, Street Search Partners, L.P. and Jeffrey J. Podesta,
filed March 19, 2004 in the United States District Court for the District of New
Jersey; and (2) the Complaint filed in MLS Enterprises v. Street Search, et al, filed
March 26, 2003 in the United States District Court for the Southern District of
New York.
Federal Rule of Evidence 201 authorizes a court to take judicial notice of
adjudicative facts so long as any such fact is “not subject to reasonable dispute
because it (1) is generally known within the trial court’s territorial jurisdiction, or
(2) can be accurately and readily determined from sources whose accuracy cannot
reasonably be questioned.” Fed. R. Evid. 201.
The Court finds the complaints meet the criteria for judicial notice. The fact
that the complaints were filed can be readily determined from the source—the New
12
In the future, Clark should file a Motion for Judicial Notice separately, not as an exhibit to his
memorandum.
17
Jersey and Southern District of New York’s trial dockets—whose accuracy cannot
be reasonably questioned. Federal courts may take judicial notice of proceedings
in other courts when those proceedings have a direct relation to matters at issue.
See, e.g., Green v. Warden, U.S. Penitentiary, 699 F.2d 364, 369 (7th Cir. 1983);
Rothman v. Gregor, 220 F.3d 81, 92 (2d Cir. 2000). Thus, this Court may take
judicial notice of the complaints to the extent that they support Clark’s assertion in
his declaration that Podesta has been involved in other lawsuits alleging securities
fraud. While the Court cannot make determinations as to the truthfulness of the
allegations put forth in either complaint, the Court will take judicial notice of both
complaints as matters of public record for purposes of the motion for summary
judgment. The relevancy and admissibility of the Complaints at trial is reserved by
the Court.
4. Plaintiffs’ Motion for Punitive Damages
The decision of whether to submit the question of punitive damages to a jury
rests within the sound discretion of the trial court. Manning v. Twin Falls Clinic &
Hospital., 122 Idaho 47, 52, 830 P.2d 1185, 1190 (Idaho 1992). Therefore, this
Court must determine if the record contains substantial evidence to support the
reasonable likelihood of the award of punitive damages to allow the pleadings to
be amended. In considering the motion to amend for punitive damages, the Court
views the facts and inferences in a light most favorable to the Plaintiffs.
18
The Court begins its analysis by noting that punitive damages are generally
disfavored in Idaho. Cheney v. Palos Verdes Inv. Corp. 104 Idaho 897, 665 P.2d
661 (1983). An award of punitive damages requires the plaintiff to show that the
defendant “acted in a manner that was an ‘extreme deviation from reasonable
standards of conduct, and that the act was performed by the defendant with an
understanding or disregard for its likely consequences.’” Manning at 122 Idaho at
52, 830 P.2d at 1190 (citing Cheney). The Idaho Supreme Court went on to hold
that “justification for punitive damages must be that the defendant acted with an
extremely harmful state of mind, whether that state be termed ‘malice, oppression,
fraud or gross negligence;’ ‘malice, oppression, wantonness;’ or simply ‘deliberate
or willful.’” Id.
In support of his motion to amend, Clark highlights the following language
in the Idaho Code: “[i]n any action seeking recovery of punitive damages, the
claimant must prove, by clear and convincing evidence, oppressive, fraudulent,
malicious or outrageous conduct by the party against whom the claim for punitive
damages is asserted.” Idaho Code § 6-1604(1).
The Court acknowledges that in Idaho, “punitive damages may be awarded
when the defendant has committed fraud.” Umphrey v. Sprinkle, 682 P.2d 1247,
1257 (Idaho 1983) (citations omitted). Clark stated in his deposition and
declarations that Podesta acted intentionally and arguably willfully in
19
misrepresenting or omitting material facts and his financial situation in order to
convince Clark to continue representing him at trial. (Dkt. 44-3.)
It is premature for the Court to make a binding decision on punitive damages
until the close of evidence. Only then can the Court determine if evidence has
been presented that Podesta acted with the requisite state of mind to allow punitive
damages to be considered by the jury. Accordingly, the Court will allow the
motion to amend the Complaint but will reserve ruling on whether such claim will
be decided by the jury.
ORDER
IT IS HEREBY ORDERED that:
1) Defendants’ Motion for Summary Judgment (Dkt. 48) is DENIED.
2) Plaintiffs’ Motion for Summary Judgment on the Third Cause of Action
(Dkt. 47) is GRANTED.
3) Plaintiffs’ Motion for Judicial Notice is GRANTED.
4) Plaintiffs’ Motion to Amend Complaint to Include Punitive Damages
(Dkt. 44) is GRANTED but whether such claim will be submitted to the
jury is reserved until the Plaintiffs rest at trial. Plaintiffs shall file the
Amended Complaint with the Court within seven (7) days of receipt of
this Order.
20
5) The trial on Counts I and II is set for November 29, 2016 at 9:30 am at
the James McClure Federal Courthouse in Boise, ID. Pretrial deadlines
are set forth in the Court’s Scheduling Order (Dkt. 19).
DATED: August 5, 2016
_________________________
Edward J. Lodge
United States District Judge
21
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