Cayne et al v. Washington Trust Bank et al

Filing 457

MEMORANDUM DECISION AND ORDER ON PLAINTIFFS RULE 50 AND RULE 59 MOTIONS -The Court has carefully considered all of the argument advanced by both sides and the relevant portions of the underlying record. In the exercise of the Courts discretion and co nsistent with the applicable law, the Court hereby ORDERS that Plaintiffs Renewed Motion for Judgment as a Matter of Law,20 or in the alternative, Motion for New Trial (Dkt. 415 ) isDENIED, for the reasons described herein. Signed by Judge Ronald E. Bush. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
DISTRICT OF IDAHO

ROBERT CAYNE, RONNIE RIVERA, SEAN
RIVERA, KEN McELROY, and the same on behalf
of themselves and on behalf of all others similarly
situated,
Plaintiffs,

Case No.: 2:12-cv-000584-REB

MEMORANDUM DECISION
AND ORDER ON PLAINTIFFS’
RULE 50 AND RULE 59 MOTIONS

vs.
WASHINGTON TRUST BANK, a Washington
corporation; and WEST SPRAGUE AVENUE
HOLDINGS, LLC, a Washington limited liability
company,
Defendants.

This decision and order addresses the issues raised in Plaintiffs’ Renewed Motion for
Judgment as a Matter of Law (Fed. R. Civ. P. 50(b)), or in the alternative, Motion for New Trial
(Fed. R. Civ. P. 59) (Dkt. 415). The first motion renews Plaintiffs’ Rule 50(a) motion for
judgment as a matter of law, which was made at the close of evidence. The second motion seeks
alternative relief, in the form of a new trial.
INTRODUCTION
Following several years of litigation, this case culminated in a multi-week jury trial. On
March 21, 2016, the jury returned a unanimous verdict in favor of Defendants Washington Trust
DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 1

Bank (“the Bank”) and West Sprague Avenue Holdings, LLC (“West Sprague”). Subsequently,
Plaintiffs filed the referenced motions, supported by a brief in support of their combined Rule
50(b) renewed motion for judgment as a matter of law and Rule 59 motion for new trial. See
Dkt. 416. Defendants filed a response, which was followed by a reply brief from Plaintiffs. See
Dkts. 448, 452. The record underlying the motions contains over 1600 pages of attachments to
the briefing (including trial and other exhibits) and approximately 2300 pages of trial transcript.
See Dkts. 418-446.
First, the Court will address the renewed Rule 50 motion for judgment as a matter of law,
and then the motion for a new trial. The particular issues, evidence details, witnesses, and
related particulars are already well-known to the parties and largely have been discussed at
length in prior orders of the Court. Therefore, the Court will not attempt an exhaustive
background here.
JUDGMENT AS A MATTER OF LAW / Fed. R. Civ. P. 50(a) and (b)
A.

Standard
Fed. R. Civ. P. 50(a)(1) provides:
If a party has been fully heard on an issue during a jury trial and
the court finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party on that issue, the
court may: (A) resolve the issue against the party; and (B) grant a
motion for judgment as a matter of law against the party on a claim
or defense that, under the controlling law, can be maintained or
defeated only with a favorable finding on that issue.
Relevant here, Rule 50(b) permits renewed motions for judgment as a matter of law made

under Rule 50(a) and provides that the court may: “(1) allow judgment on the verdict, if the jury
returned a verdict; (2) order a new trial; or (3) direct the entry of judgment as a matter of law.”
Fed. R. Civ. P. 50(b). A Rule 50(b) motion for judgment as a matter of law is not treated as a
DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 2

separate motion; instead, it is a renewed 50(a) motion. EEOC v. Go Daddy Software, Inc., 581
F.3d 951, 961 (9th Cir. 2009). A Rule 50(a) motion is made before the case is submitted to the
jury. If the court defers or denies the motion, and if the jury then returns a verdict against the
movant, the movant may renew the motion under Rule 50(b).1 Id. However, because the 50(b)
motion is a renewed motion, the grounds for the motion are limited to the same as those asserted
in the prior Rule 50(a) motion. “A party cannot properly raise arguments in its post-trial motion
for judgment as a matter of law under Rule 50(b) that it did not raise in its preverdict Rule 50(a)
motion.” Id. (internal quotation marks omitted). Accordingly, this decision addresses and
resolves both the Rule 50(a) and Rule 50(b) motions as one Rule 50 motion.
In considering a Rule 50 motion, the court must view the evidence in the light most
favorable to the prevailing party and must draw all reasonable inferences in favor of the nonmoving party. First Nat. Mortgage Co. v. Federal Realty Inv. Trust, 631 F.3d 1058, 1067 (9th
Cir. 2011); Lakeside-Scott v. Multonomah County, 556 F.3d 797, 802 (9th Cir. 2009); Josephs v.
Pac. Bell, 443 F.3d 1050, 1062 (9th Cir. 2006). Further, the court shall “give significant
deference to the jury’s verdict and to the nonmoving part[y] . . . .” A.D. v. Cal. Highway Patrol,
712 F.3d 446, 453 (9th Cir. 2013).
Under such constraints, a jury verdict can be set aside and judgment granted as a matter
of law in favor of the moving party “only if, under governing law, there can be but one
reasonable conclusion as to the verdict and only if there is no legally sufficient basis for a
reasonable jury to find for [the non-moving] party on that issue.” Jules Jordan Video, Inc. v.

1

Plaintiffs made a Rule 50(a) motion at the close of evidence as to which the Court
deferred ruling at the time. See Dkt. 420-2, pp. 223-227.
DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 3

144942 Canada Inc., 617 F.3d 1146, 1155 (9th Cir. 2010) (internal quotation and citations
omitted); see also A.D., 712 F.3d at 453 (“judgment is proper if the evidence construed in the
light most favorable to the nonmoving party, permits only one reasonable conclusion [...]
contrary to the jury’s verdict.” (quoting Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002)));
First Nat. Mortgage, 631 F.3d at 1067-68 (verdict upheld if supported by substantial evidence,
“even if it is also possible to draw a contrary conclusion[,]” and court “must disregard evidence
favorable to the moving party that the jury is not required to believe, and may not substitute its
view of the evidence for that of the jury[ ]” (internal citation and quotation omitted)). Further, a
jury’s factual findings must be upheld if there is substantial evidence in support of the jury’s
verdict. Microsoft Corp. v. Motorola, Inc., 795 F.3d 1024, 1045 (9th Cir. 2015).
Plaintiffs argue that the proof at trial permits only one reasonable conclusion – in their
favor. Therefore, Plaintiffs contend the Court should have granted judgment in their favor at the
close of evidence, and that the jury verdict in favor of the Defendants is untenable. More
specifically, Plaintiffs seek judgment as a matter of law because: (1) in the period after the Deed
in Lieu Agreement, the Club’s staff became the Bank’s employees or agents and the jury should
have been instructed as such as a matter of law; (2) West Sprague was the alter ego of the Bank;
and (3) the Court erroneously instructed the jury on the law of assumption of a contract liability
by implication. The Court will consider such arguments in turn.
B.

The Court Properly Did Not Instruct the Jury that the Club Staff Were
Employees/Agents of the Bank
Plaintiffs contend that after execution of the Deed in Lieu agreement (“DIL”), the Club’s

staff became the employees or agents of Washington Trust Bank (“the Bank”). Plaintiffs argue
that every asset was stripped out of the Club at Black Rock, LLC and became the Bank’s assets,
DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 4

including the Club’s checking account.2 Plaintiffs contend the Club’s staff were paid by checks
drawn on the Club’s checking account and the Bank had the right to control the employees’
work, and therefore, it is indisputable that the staff members became the Bank’s employees or
agents. Pls.’ Mem., Dkt. 416, p. 20.
The Bank, on other hand, says that Plaintiffs failed to prove that the Bank or West
Sprague exercised any control over the Club’s management team or employees during the
relevant post-DIL time frame and therefore, there was not a sufficient basis for an instruction as
a matter of law that the Club’s staff were the employees and/or agents of the Bank or West
Sprague. Defs.’ Mem., Dkt. 448, p. 22.
Idaho law describes an agency relationship as one that arises from “the manifestation of
consent by one to another that the other shall act on his behalf and subject to his control and
consent by the other so to act.” Thornton v. Budge, 257 P.2d 238, 240 (Idaho 1953). The party
alleging the existence of an agency relationship carries the burden of proof and where the
existence of an agency relationship is disputed, it is a question for the trier of fact to resolve from
the evidence. Gissel v. State of Idaho, 727 P.2d 1153, 1157 (Idaho 1986).3

2

As was done in prior rulings, the Court uses the term “LLC” to refer to the “Club at
Black Rock, LLC,” the legal entity that was owned by Marshall Chesrown. The Court uses the
term “the Club” to refer to the golf course, improvements, equipment, and related facilities that
were the primary assets of the LLC.
3

The status of the Club staff members in relation to the Bank or West Sprague was the
subject of two instructions. Jury Instruction No. 30 drew upon Idaho Civil Jury Instructions
6.40.1 (“Agency Defined”) and 6.40.5 (“Agency Defined”) (of which Plaintiffs proposed a
modified version in their proposed jury instructions). See Dkt. 411 at 27. Jury Instruction No.
31 (“Burden of Proof - Agency”) was proposed by Defendants and states that the burden of
proving agency rests with the party asserting it.
DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 5

The trial evidence showed that after the DIL, the Club’s existing general manager (Andy
Gorton) continued to make hiring and work schedule decisions, the employees continued to have
state and federal income taxes withheld, and the employees received all the same benefits as they
had before the execution of the DIL. As part of the DIL, assets were transferred to the Bank (and
later to West Sprague), including accounts such as the bank accounts.4 Plaintiffs contend that the
LLC was a “barren corporate shell” with nothing that it could operate, including the Club, and
that it was the Bank’s money paying the employees and such that they were inescapably
employees/agents of the Bank.
Such evidence is significant, and supports Plaintiffs’ theory. However, there was other
evidence that did not. Mr. Gorton testified that the Bank and West Sprague did not exercise any
control over the Club’s employees. Among other things, Gorton said that even after the DIL, if
the Bank or West Sprague said one thing to him and Marshall Chesrown told him to do
something else, he would do what Mr. Chesrown instructed. See, e.g., Gorton Testimony, Dkt.
418-3, 69:6-11. There was repeated, and consistent, testimony from the staff members of the
Club and from Bank employees that after the execution of the DIL, the Club was to be and
would be operated exactly as it had been operated previously (and therefore, by inference, in the
same hands that had been running the show prior to the DIL) for various reasons, including the
fact that the Bank “wasn’t in the business of running a golf course” and didn’t know how to run
a golf course.5

4

There was special treatment of the transfer of the liquor license owned by the LLC and
used at the Club because of the fact that the Bank could not own a liquor license. However, that
discrete aspect of the larger DIL transaction does not change the analysis under Rule 50.
5

Bank officials testified that the Bank did not want to own or run a golf course. See,
e.g., Heath Testimony, Dkt. 419-3, 108:18, 150:8-9; Oberst Testimony, Dkt. 420, 151:24-152:4.
DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 6

The sum of all of the evidence could be argued to support either side of the dispute.
Further, there was conflicting evidence as to what role, if any, Chesrown may have played in the
operation of the Club after the DIL, i.e., was he involved in some manner – whether directly or
as a figurehead – or was he not? Further, even if he was involved, what was his motivation for
any continuing involvement with the Club? Was he involved to keep the Club running as is,
with an intact membership base, so as to help the Bank peddle the Club to some other entity as a
going-concern (and make a windfall as a result, as Plaintiffs theorized)? Was he involved
because of his purported loyalty to the Club members, wanting to keep the Club operating for
their benefit? Or was he entirely self-serving, acting only to sweeten what Plaintiffs contended
was an already sweet deal when it came to removing him from personal liability for any of the
enormous unpaid liability owed to the Bank prior to the DIL?
There was evidence put forward on this issue from which Plaintiffs could, and did,
strongly argue that such agency existed. However, that conclusion was not the only reasonable
conclusion that could be drawn. Against that standard, Plaintiffs’ contention that the jury should
have been instructed as a matter of law that the Club’s staff were employees or agents of the
Bank and/or West Sprague cannot prevail. The Court concluded that the evidence presented
could result in more than one reasonable conclusion and instructed the jury in that manner,
leaving the issue to be resolved by the jury. The Court is not persuaded of a different result on
the renewed motion and denies Plaintiffs’ Rule 50 motion on this issue.
C.

The Court Properly Did Not Instruct that West Sprague was the Alter Ego of the
Bank
Plaintiffs contend that, as a matter of law, West Sprague was the alter ego of Washington

Trust Bank. Plaintiffs emphasize several pieces of evidence – the Bank owned all of West
DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 7

Sprague; that there were officers of West Sprague who were common to the officers of the Bank;
that West Sprague’s only assets were those conveyed to it by the Bank; that the Bank owned the
building where West Sprague’s business was conducted; that all decision-making for West
Sprague was made by the Bank’s officers; that the Bank paid all of the Club’s operating
expenses and funded the Club’s checking account, and that the Bank paid expenses and salaries
(if any) related to West Sprague. See Pls.’ Mem., Dkt. 416, pp. 22-23.
Defendants disagree that such evidence establishes alter ego status as a matter of law,
contending that such facts simply describe West Sprague’s “mere subsidiary status.” Such
“mere control and even total ownership,” according to Defendants, do not warrant the disregard
of a separate corporate entity, must less a determination as a matter of law that West Sprague
was the alter ego of the Bank. See Defs.’ Mem., Dkt. 448, p. 23.
Under Idaho law, two elements must combine to justify disregarding the legal status of
distinct business entity existence. First, there must be such a “unity of interest” between the two
entities that there are not separate personalities between the two. Second, it must appear from
the facts that the observance of the fiction or separate existence of two separate entities would,
under the circumstances, sanction a fraud or promote injustice. Bailey v. Price Manufacturing
Co., LLC, 2015 WL 12681370, *6 (D. Idaho Jan. 23, 2015); Hayhurst v. Boyd, 300 P. 895, 89899 (Idaho 1931); see also Tolman v. American Red Cross, 874 F. Supp. 2d 928, 936 (D. Idaho
2012) (discussing that proof of alter ego status is required to pierce corporate veil of even parent
and subsidiary companies); Hutchison v. Anderson, 950 P.2d 1275, 1279 (Idaho Ct. App. 1997)
(party asserting alter ego must put forward “sufficient evidence such that there is no distinction”
between the two entities).

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 8

Various factors guide the assessment of whether an alter ego relationship exists,
including the level of control that the shareholder exercises over the corporation, whether
separate business formalities are observed, whether the entities are operated separately and keep
separate books, and the decision-making process of the entities. E.g., Wandering Trails, LLC v.
Big Bite Excavation, Inc., 329 P.3d 368, 376 (Idaho 2014). In Wandering Trails, a land
development limited liability company and its managing member brought breach of contract and
related claims against a paving company known as Piper Ranch, LLC (“Piper Ranch”), and its
only members, husband and wife Tim and Julie Schelhorn (“the Schelhorns”).6 The claims arose
in part from an assignment agreement between the plaintiff developer and Piper Ranch. Id. at
371.7 The plaintiff sought to impose liability against the Schelhorns on the theory that Piper
Ranch was their alter ego, arguing that Piper Ranch was undercapitalized, was controlled
exclusively by the Schelhorns, and acted only as a financial conduit for the Schelhorns. Id. at
375-76.
The Idaho Supreme Court ruled that such facts were insufficient to establish “a unity of
interest” to support a finding of an alter ego status. Id. Instead, the court held that such evidence
demonstrated “a distinction between the personalities of the Schelhorns and Piper Ranch
[LLC].” Id. at 377. (Emphasis supplied.) Among other things, the Piper Ranch bank account

6

The action was brought by the developer, Wandering Trail, LLC, and its managing
member, Liquid Realty Company. For ease of discussion, the plaintiffs will be referred to in the
singular, as the “developer” or “plaintiff.”
7

The assignment agreement detailed that Piper Ranch, LLC would perform paving work
for the Wandering Trails development in exchange for a 25% ownership interest in Wandering
Trails, LLC. Id. at 372, n.1.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 9

had checks in only Piper Ranch’s name, there was no evidence that the Schelhorns deposited
their own money into that account other than to meet capital obligations, and there was no
evidence that either of the Schelhorns used Piper Ranch money to pay their own obligations.8 Id.
Further, the Schelhorns had insisted that the assignment agreement run between the developer
and Piper Ranch - not between the developer and the Schelhorns individually. Id.
As to the instant case, Plaintiffs rely on facts very similar to those which fell short in
Wandering Trails. Here, Plaintiffs rely upon the fact that the Bank was the only member of
West Sprague, LLC, and they contend that the Bank exercised full control over West Sprague.
But, under Idaho law, the fact that a separate entity is the only member of an LLC entity and
exercises full control of the LLC is “not a relevant inquiry” for determining alter ego. Id. at
377.9 Indeed, the court went on to say the plaintiffs’ “argument, if accepted, would effectively
eviscerate the legislative intent that member-managed and individual LLCs are separate legal
entities.” Id. Significantly, in the trial of this case, Defendants put on evidence that West
Sprague had separate financial statements, separate income statements, its own general ledger
accounts, and a separate federal tax ID number. See Oberst Testimony, Dkt. 420, 81:1-82:4.

8

The state trial court in the underlying action had also emphasized that the Schelhorns
maintained a separate bank account for the LLC, the LLC filed its tax returns in a manner
acceptable to the IRS, and the Schelhorns and the LLC kept separate accounts. Id. at 375.
9

The Wandering Trails decision also described that Idaho statutory law provides that the
debts, obligations, or other liabilities of a limited liability company are solely the debts,
obligations or liabilities of the company and do not become the debts, obligations, or liabilities of
a member or manager solely by reason of the member acting as a member or manager acting as a
manager. Idaho Code § 30-6-304 (emphasis added). Id. at 376-77.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 10

Such factual indicia of economic separateness are identical in all relevant manner to the facts
relied upon by the court in Wandering Trails. Id. at 375.
Moreover, in order to establish an alter ego there must be an inequitable result that would
follow if the entities were not treated as the same. In general terms, this means that observing
the separate entities would “sanction a fraud or promote injustice.” See Maroun v. Wyreless
Sys., Inc., 114 P.3d 974, 986-87 (Idaho 2005). The fact a creditor may be unsatisfied is not proof
alone of an injustice warranting piercing the corporate veil. United States v. Standard Beauty
Supply Stores, Inc., 561 F.2d 774, 777 (9th Cir. 1977). Relatedly, “[i]t is a general principle of
corporate law deeply ingrained in our economic and legal systems that a parent corporation (socalled because of control through ownership of another corporation’s stock) is not liable for the
acts of its subsidiaries.” United States v. Bestfoods, 524 U.S. 51, 61 (1998) (internal quotation
and citation omitted). Only in exceptional cases do such bright lines give way, such as if fraud
or injustice would result if the corporate form was not disregarded. Seymour v. Hull & Moreland
Engineering, 605 F.2d 1105, 1111 (9th Cir. 1979). “To warrant casting aside the legal fiction of
distinct corporate existence . . . it must [ ] be shown that there is such a unity of interest and
ownership that the individuality of such corporation and such person had ceased; and it must
further appear from the facts that the observance of the fiction of separate existence would, under
the circumstances, sanction a fraud or promote injustice.” Hayhurst v. Boyd, 300 P. 895, 897
(Idaho 1931).
Accordingly, in keeping with these general principles measured against the facts
presented in this case, and construing the facts most favorable to the non-moving party under
Rule 50, Plaintiffs’ motion for judgment as a matter of law on the issue of alter ego is denied.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 11

D.

Jury Instruction No. 37 Is a Correct Statement of Applicable Law on Assumption
by Implication of a Contract Liability.
Plaintiffs contend that Jury Instruction No. 37 erroneously instructed on the law

applicable to Plaintiffs’ claim of assumption by implication. In particular, Plaintiffs complain of
the language which reads “assumption by implication occurs when the assignee’s conduct
manifests an intent to be bound to such duty or obligation.” Jury Instruction No. 37, Dkt. 382,
p. 18. Plaintiffs argue the language should be: “the assignee of an executory contract is not
liable on the contract in the absence of an express assumption of the obligations of the contract.”
Pls.’ Mem., Dkt. 416, p. 13 (emphasis in original).
Plaintiffs argue that without the words “of the contract,” the instruction was ambiguous
because the jury would have been required to decide whether “Defendants intended to assume
the membership deposit refund liability, rather than requiring the jury to determine if the
Defendants’ conduct showed an intent to assume the assigned Membership Agreement.” Id. at
13-14.
Plaintiffs draw upon Hardinger v. Fullerton, 5 P.2d 987, 989 (Wash. 1931), which held
that “the assignee of an executory contract is not liable on the contract in the absence of an
express assumption of the obligations of the contract . . .” Pls.’ Mem., Dkt. 416, p. 13; see also
Summary Judgment Decision, Dkt. 177, p. 28. Hardinger draws upon a treatise for the
proposition that a “purchaser is not liable for the payment of an encumbrance unless he has
expressly or impliedly agreed to pay the same, and a mere recital that the property is sold subject
to an encumbrance is not sufficient to create a personal liability.” Hardinger, 5 P.2d at 990
(internal quotation omitted). The focus of Hardinger, however, was upon a particular liability

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 12

(as would sensibly be so), and the Washington Supreme Court specifically affirmed the trial
court’s ruling that the evidence of an “assumption of the indebtedness” was not sufficiently
strong and convincing and that there was no implied assumption established. Id. (Emphasis
added). The Court’s instruction here was entirely consistent with this holding, in that
assumption by implication of a particular duty or obligation requires that the conduct show an
intent to be bound to such a duty or obligation.
Hence, the Court is not persuaded by Plaintiffs’ contention. The Court extensively
examined the applicable law on this subject (which, as with many other issues, was the subject of
widely divergent positions from the parties10) prior to instructing the jury and the instruction was
carefully and precisely framed to state the applicable law. Additionally, this Court relied upon
Northern Pac. Ry. Co. v. Sunnyside Val. Irrigation Dist., 527 P.2d 693, 695 (Wash. App. 1974)
(reversed on other grounds) (“Sunnyside”) and Dahlhjelm Garages v. Mercantile Ins. Co. of
Am., 270 P. 434 (Wash. 1928). The Sunnyside court spells out the particulars of the claim in
holding that a third person to the original contract may:
[A]ssume the obligation expressly in writing, or he may do so by implication where his
conduct manifests an intent to become bound . . . In the latter event all the circumstances
must be considered, such as the subject matter of the contract, the third person’s acts and
words, whether he acquiesced in the terms of the contract, performed its obligations, or
accepted its benefits.

10

By way of example, see, e.g., Plaintiffs’ Proposed Jury Instructions, Dkt. 304, pp. 3435; Defendants’ Proposed Jury Instructions, Dkt. 297, p. 19. See also Defendants’ Supplemental
Proposed Jury Instructions, Dkt. 351, pp. 2-3, 12-13. Indeed, Defendants proposed not just one,
but two (different in form), instructions on this subject.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 13

Sunnyside, 527 P.2d at 695 (emphasis added). Consistent with the Washington court’s holding
years earlier in Hardinger, the Sunnyside decision makes clear that the assignee’s conduct must
show an intent to be bound by the obligation.
Additionally, the decision in Dahlhjelm Garages traces the same template, in describing
“the general rule . . . that the assignment of a contract does not cast upon the assignee the
liabilities imposed by the contract on the assignor. But the rule is not absolute. The assignee
cannot enforce the contract against the other party thereto without performing, or showing a
performance, of the obligations which the contract imposes.” 270 P. at 436 (emphasis added).
Accord, McGill v. Baker, 266 P. 138, 139, 141 (Wash. 1928) (assignment alone does not bind
assignee to carry out contract).
Plaintiffs argue that the Court ignored purported black letter law that “an assignee stands
in the shoes of the assignor,” pointing to Paullus v. Fowler, 367 P.2d 130, 135 (Wash. 1961).
The Court did indeed draw upon this decision in its order on the cross-motions for summary
judgment (Dkt. 177 at 27 citing Paullus v. Fowler, 367 P.2d 130 (Wash. 1961)), but did so in
considering the complete holding, which contains this additional language Plaintiffs fail to
mention: “For executory contracts, such as the Membership Agreement, the general rule
includes the proviso that the assignee is only liable on the underlying obligations if there is an
express assumption of those obligations.” Dkt. 177, p. 28 (citing to Hardinger v. Fullerton, 5
P.2d 987, 989 (Wash. 1931) (internal footnotes omitted)).11 This fuller statement of the correct

11

The Ninth Circuit recognized that this “standing in the shoes” statement alone from
Paullus is not a complete statement of Washington law. After citing this “black letter law” from
Paullus, the Ninth Circuit went on to state: “[t]rue, but under Washington law ‘an assignee in an
executory contract is not liable on the underlying obligations absent an express assumption of

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 14

law further undergirds the Court’s drafting of Jury Instruction No. 37, related jury instructions,
and the special verdict form.
Plaintiffs also invoke the decision in Fiberchem v. General Plastics Corp., 495 F.2d 737
(9th Cir. 1974), but that effort is clearly misplaced. Fiberchem, an unjust enrichment case, does
not rely on Washington law for the propositions claimed by Plaintiffs. See Pls.’ Mem., Dkt. 416,
pp. 16-17. Plaintiffs quote that “an assignee takes his claim subject to the equities of third
persons against the assigned right where he has knowledge of such equities.” Id. at 738. That
statement, however, was not drawn from Washington law. Rather, the Fiberchem court drew
upon a Pennsylvania case, several treatises, and a law review article, all in wrestling with an
unjust enrichment claim. See id. This Court, therefore, did not ignore Fiberchem. Instead, as
the Court has described in prior decisions in this case, the Fiberchem decision is inapposite to
this case and, regardless, the Fiberchem court was not relying upon Washington law.
Lastly, Plaintiffs contend the Court should not have used the word “and” in the list of
factors contained at the end of Jury Instruction No. 37. Plaintiffs contend that by using “and” the
Court created a “misleading super-standard of proof.” See Pls.’ Mem., Dkt. 416, p. 16.
This particular section of Instruction No. 37 reads:
In deciding whether an assignee’s conduct manifests an intent to be bound by
such duty or obligation, you are to consider the conduct of the assignee in totality,
including:
•
•

all circumstances surrounding the assignment of the contract;
the events occurring in relation to the assigned contract;

those obligations.’” Johnson v. Fed. Home Loan Mortgage Corp., 793 F.3d 1005, 1008 (9th Cir.
2015) (discussing Paullus v. Fowler and citing to Lewis v. Boehm, 947 P.2d 1265, 1270 (Wash.
App. 1997)).

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 15

•
•
•
•
•

the subject matter of the contract;
the assignee’s acts and words;
whether the assignee acquiesced in the terms of the assigned contract;
whether the assignee performed its obligations; and
whether the assignee accepted its benefits.

Dkt. 382, p. 18.
Plaintiffs contend that proof of any of the last three of the listed items (acquiesce in terms
of contract, perform its obligations, accept its benefits) creates liability under an express
assumption by implication theory. See Pls.’ Mem., Dkt. 416, p. 16. However, that is an inexact
and incorrect statement of what the law requires the jury to consider. It bears repeating here the
language of Sunnyside, which describes the circumstances by which the assignee can be said to
have assumed a contract obligation – whereby the assignee may:
[A]ssume the obligation expressly in writing, or he may do so by implication where his
conduct manifests an intent to become bound . . . In the latter event all the circumstances
must be considered, such as the subject matter of the contract, the third person’s acts and
words, whether he acquiesced in the terms of the contract, performed its obligations, or
accepted its benefits.
Sunnyside, 527 P.2d at 695 (emphasis added).
Accordingly, the list of items contained as part of the larger whole of Jury Instruction 37
is not a list of elements to be satisfied. Rather, it is a list of different types of conduct for the
jury to examine in “considering the conduct of the assignee in totality.” There is nothing of a
“super standard” of proof in that language, or in the use of the word “and.” Nor is there any
impediment to the party seeking to prove an assumption by implication claim, through whatever
measure of those various subjects the party may seek to emphasize. The applicable law requires
the jury to consider the conduct of the assignee in totality, and the instruction given by the Court
is the mot juste called for by the applicable law.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 16

Further, and importantly, the correct statement of the applicable law as contained in Jury
Instruction No. 37 did not preclude Plaintiffs from arguing their position that proof of any of the
last three elements would support a verdict in their favor. It was, of course, Plaintiffs’ burden to
persuade the jury that Plaintiffs’ view of the totality of the conduct supported Plaintiffs’ theory
of assumption by implication. The manner in which the jury was correctly instructed did not
interfere in any way with Plaintiffs’ ability to emphasize certain factors, ask the jury to discount
or disregard other of the factors, or otherwise argue the persuasiveness of the relevant evidence
as to any or all of the listed factors. Hence, the Plaintiffs’ argument in this regard is not well
made. The Court correctly instructed the jury on the applicable law pertaining to the theory of
an assumption by implication.12
Accordingly, Plaintiffs’ renewed motion for judgment as a matter of law on the issue of
liability is denied. In the exercise of the Court’s discretion consistent with the standards
imposed by Rule 50, the Court concludes that the evidence during trial left more than one
reasonable conclusion. Therefore, the Court should not and will not conclude that it would have

12

Plaintiffs also take issue with the special verdict form but do not make a specific
argument as to how it is erroneous other than to loosely contend that the verdict form “overly
misstate[s] the law by requiring the jury to specifically find that Defendants expressly assumed
the membership deposit refund liability.” Pls.’ Mem., Dkt. 416, p. 15. Likewise, Plaintiffs’
Formal Objection to the Court’s Final Jury Instructions, filed on the stipulated date of March 31,
2016, states that the special verdict is in error because it: (1) improperly states the law and is
misleading and unnecessarily confusing; (2) does not track what a correct set of jury instructions
would include; (3) requires decisions on issues previously decided as a matter of law or for
which no proof was presented during trial; and (4) mishandles the issue of stipulated damages,
mitigation, and setoff. See Plaintiffs’ Formal Objections to Final Jury Instructions, Dkt. 391, p.
22. Such arguments are more vague and conclusory than not, and the Court’s denial of the
motion to the extent that it is premised upon the arguments set out in the “Formal Objection”
regarding the special verdict form is made upon the reasons set out elsewhere in this decision, as
they are part and parcel.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 17

been proper to take the case away from the jury prior to deliberations, or to instruct as a matter of
law upon the specific issues raised by Plaintiffs here, or to enter judgment in favor of Plaintiffs
before giving the case to the jury, or to do so after the verdict was returned. The Court should
not and will not undo the jury’s ultimate verdict in favor of Defendants.13
MOTION FOR NEW TRIAL/Fed. R. Civ. P. 59
A.

Standard
Rule 59(a) permits a new trial on all or some of the issues, and to any party, “after a jury

trial, for any reason for which a new trial has heretofore been granted in an action at law in
federal court.” Fed. R. Civ. P. 59(a). Rule 59 is not specific as to the grounds on which a new
trial may be granted; instead “the court is bound by those grounds that have been historically
recognized.” Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007) (internal citation and
quotation omitted). In the Ninth Circuit, such “grounds include, but are not limited to, claims
that the verdict is against the weight of evidence, that the damages are excessive or that, for other
reasons, the trial was not fair to the party moving” Id. (Internal quotation and citation omitted).
Thus, “[u]pon the Rule 59 motion of the party against whom a verdict has been returned,
the district court has the duty . . . to weigh the evidence as [the court] saw it, and to set aside the
verdict of the jury, even though supported by substantial evidence, where in [the court’s]
conscientious opinion, the verdict is contrary to the clear weight of evidence.” Id. (Brackets in
original, internal quotation marks and citation omitted.) The decision as to whether to grant a
new trial is discretionary. MHW Financing Ltd. Partnership v. City of San Rafael, 714 F.3d

13

Because of the Court’s rulings on the issue of liability, arguments made by Plaintiffs
regarding damages and set-off are moot. See Pls.’ Mem., Dkt. 416, pp. 19-20.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 18

1118, 1132 (9th Cir. 2013). Further, “because determining the clear weight of evidence is a
fact-specific endeavor, appeals courts are reluctant to second-guess district courts’ conclusions.”
Molski, 481 F.3d at 729 (internal quotation and citation omitted). However, a new trial may be
granted “only if the verdict is contrary to the clear weight of the evidence, is based upon false or
perjurious evidence, or to prevent a miscarriage of justice.” Id.
B.

The Jury’s Verdict Was Not Against the Clear Weight of Evidence
Plaintiffs contend that the jury’s verdict was contrary to the clear weight of evidence and

that, “given the erroneous jury instructions[,] it was not possible for the jury to ever come to the
correct decision on the assumption issue.” Pls.’ Mem., Dkt. 416, p. 25, n.55. The Court has
already addressed Plaintiffs’ contentions in regard to Jury Instruction No. 37, and those issues
will not be repeated here other than to say the Court’s ruling in the context of a Rule 59 motion
would be the same as on the Rule 50 motion.14 The Court properly instructed on the law of
assumption by implication.
As to Plaintiffs’ argument that the jury’s verdict was contrary to the clear weight of
evidence, the Court has made its own conscientious assessment of the proof and arguments
offered at trial, as well as the briefing and related materials filed in connection with the post-trial
motions. The assessment of whether a jury’s verdict is “contrary to the clear weight of
evidence” is inescapably a “fact-specific endeavor.” Molski, 481 F.3d at 729. The evidence and
testimony during trial described a series of events and inferences that could be drawn from the

14

Plaintiffs spend little time on this aspect of their motion other than to state that
“[e]rroneous jury instructions, as well as failure to give adequate instructions, are grounds for a
new trial unless the error is harmless . . . [t]he errors made at trial here were not harmless so a
new trial is warranted.” Pls.’ Mem., Dkt. 416, p. 26.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 19

actions and inactions leading up to the DIL, the DIL itself, and events subsequent to the DIL
(including the termination of membership agreements) which could be viewed a number of ways
depending on the weight and credibility given to the document evidence and testimony of the
witnesses.
The parties presented remarkably different cases to the jury. Although at most times, the
mien of counsel was professional and courteous, the litigation and trial of this case also was
marked by contention and acrimony. The manner in which the evidence came in and the
arguments were made was often antagonistic. Lead counsel spent an extraordinary amount of
time and effort during trial attempting to demonize the opposing parties and sometimes each
other. Mr. Springel’s examination of Bank witnesses and arguments about their actions sought
to cast the Defendants and their officers as bad, even criminal, actors in making multiple loans to
Marshall Chesrown because the Bank purportedly knew the Club operated at a loss and was
never going to make a profit. See, e.g., Perko Testimony, Dkt. 419-2, 110:15-22, 111:1-4,
112:1-23. In his closing argument, Mr. Springel characterized the relationship between
Chesrown and the Bank as akin to a criminal conspiracy and stated that the Bank was out for
itself because “banks aren’t very nice.” Pls.’ Closing, Dkt. 420-3, 25:25, 27:15-17, 28:1-4. Mr.
Springel also analogized the actions of the Bank in foreclosing on the Club and its impact upon
the Plaintiffs as equivalent to a person driving under the influence and killing someone. See
Oberst Testimony, Dkt. 420, 202:19-206:18; Pls.’ Closing, Dkt. 420-3, 29:12-22. Defendants’
counsel Mr. Dunn likewise spent considerable time during trial disparaging and demonizing
Plaintiffs. He labeled Plaintiffs as arrogant, rich “country club golfer gamblers,” motivated by
greed and trying to avoid any personal responsibility for their decisions. See, e.g., Defs.’

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 20

Closing, Dkt. 420-3, 65:19-24, 66:3-20, 76:14-21; Defs.’ Opening, Dkt. 418-1, 179:13-16,
179:23-26, 182:9-19. During the examination of the Plaintiffs, Defendants’ counsel focused on
the Plaintiffs’ purported wealth, claimed that they lived in gated communities in other states, and
flew on private planes. See, e.g., Sean Rivera Testimony, Dkt. 420-1, 80:7-12; Cayne
Testimony, Dkt. 420-1, 121:18-122:8, 141:11-15, 148:7-12; Ronnie Rivera Testimony, Dkt. 4201, 235:12-236:2, 237:15-238:4, 239:25-240:24.
The palpable disdain between Mr. Springel and Mr. Dunn, and of various of the Bank’s
officers toward Plaintiffs and Plaintiffs’ counsel (and vice versa), as reflected in the presentation
of the evidence, testimony of witnesses, cross examination of opposing witnesses, and the
arguments, often overshadowed and arguably shortchanged the presentation of evidence on the
most significant issue for trial - i.e., whether there had been an assumption by implication. The
resulting contentious contours of the case might well have been the result of the trial strategies of
the respective parties, each seeking somehow to make the jury believe that its verdict should
favor one side over the other based on moral compulsion or culpability, or lack of integrity and
character.
Ultimately, however, it is the case as presented in the courtroom, not the case as it might
have been presented, that the Court must consider. In that lens, the Court concludes that the
jury’s verdict was not contrary to the clear weight of evidence. Over the course of the two-week
trial, the vast and varied evidence which was introduced did not funnel into a conclusion that the
jury arrived at a “seriously erroneous result.” See Johnson, 251 F.3d at 1229. For instance, Club
Manager Andy Gorton testified that, following the DIL, he continued to work in the same
manner as he always had, seldom conversed with Bank employees, and that in his view the Bank

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 21

appeared to have no intention of running the golf course. Gorton Testimony, Dkt. 418-3, 38:1619, 86:17-87:6; Dkt. 418-2, 93:22-94:2. The Club at Black Rock, LLC’s Chief Financial
Officer, Chad Rountree, testified that after the DIL he did not believe he was working for either
the Bank or West Sprague in continuing to do his duties. Rountree Testimony, Dkt. 419-1,
75:23-76:5. Ms. Shiflett, the consultant hired by West Sprague to advise on how to manage
cash flow to “preserv[e] the asset,” testified that she only met with Club manager Gorton once or
twice during the months that she was working with West Sprague. Shiflett Testimony, Dkt. 4182, 269:3-14 She was never authorized to cut checks or negotiate payments with vendors. Id. at
270:16-22. She had no authority to hire or fire employees and did not have any involvement in
club memberships, such as billing club members for their dues or suspending them if they did
not pay their dues. Id. at 270:24-271:6, 272:8-273:9. Bank officers who testified at trial,
including Bank President Jack Heath and Dean Oberst, testified that the Bank absolutely did not
intend to take on any liabilities, but rather was only taking the real estate and associated assets of
the Club. Heath Testimony, Dkt. 419-3, 115: 10-14, 122:15-16; Oberst Testimony, Dkt. 420,
17:2-4. Marshall Chesrown, the managing member of the Club at Black Rock, LLC, testified
that he believed the Bank was acquiring only the “assets that secured the note” and was aware
that he “still had the liability via the Club at Black Rock, LLC.” Chesrown Testimony, Dkt.
420-2, 125:22-126:3, 184:14-15.
While there was certainly a basis and an opportunity to conclude that such evidence
should not be accepted over the counter evidence and arguments presented by Plaintiffs, that is
not the choice the jury made. In this space, Plaintiffs’ arguments are the same arguments made
in pretrial motions and at trial. Whether Defendants, through their actions, assumed the

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 22

membership deposit refund liability was disputed and the jury’s decision was drawn from the
weight and credibility given by the jurors to the evidence and testimony at trial. The decision
was highly fact-intensive. Ultimately, the verdict revealed that the jury gave more persuasive
weight to the Defendants’ evidence and arguments, than to Plaintiffs’ evidence and arguments.
While there were facts and inferences to be drawn from such facts that supported both
sides, the jury favored Defendants. The Court finds, in the exercise of its discretion, that the
verdict was not contrary to the clear weight of evidence and thus, will not disturb the verdict.
C.

There Were No Errors in the Jury Instructions
Plaintiffs contend errors in the jury instructions warrant a new trial. Here again,

Plaintiffs attack Jury Instruction No. 37 which the Court has already addressed and the Court
will not do so again here.15 In addition, Plaintiffs complain about the time line of the jury
instructions, including when jury instructions were submitted by the parties, the Court’s
discussion at pretrial conferences concerning the jury instructions, the jury instruction
conference, and the Court’s contact with counsel regarding the final jury instructions the evening
before and the morning of closing arguments. See Pls. Mem., Dkt. 416, pp. 26-31.
Plaintiffs contend that had they received final jury instructions at an earlier date,
particularly what became Jury Instruction No. 37, they would have the chance to “timely brief
the errors . . . and may have completely avoided the necessity of these motions.” Pls.’ Mem.,
Dkt. 416, p. 27. To the extent that Plaintiffs’ counsel implies that the Court was sitting idly by
during the course of trial, they know better. During the course of trial, counsel for both sides

15

This also goes for any argument regarding the special verdict form. See, supra, note

12.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 23

filed numerous bench briefs and trial briefs.16 Additionally, during trial and particularly toward
the close of trial, both sides continued to file proposed jury instructions for the Court to
consider.17 Ultimately, Plaintiffs submitted 38 proposed jury instructions and Defendants
submitted 59. The Court worked diligently to consider and resolve everything that needed to be
addressed during the course of the trial, including consideration of the parties’ seriatim ongoing
efforts to buttress the written record on various continuing disagreements about the applicable
law and as to proposed jury instructions.
Further, Plaintiffs mischaracterize the relevant events of what transpired during the trial.
Plaintiffs say that Mr. Springel “advis[ed] the Court that a reasonable time period to object to,
and get the jury instructions right, would have been over the weekend . . .” Pls.’ Mem., Dkt.
416, p. 30. From that, one might assume that Plaintiffs objected to going forward with closing
arguments on the last day set for trial – Friday, March 18, 2016. But Plaintiffs never made such
a request. Instead, the record referenced by Plaintiffs describes the Court’s willingness to allow

16

Specifically, Plaintiffs filed nine motions/trial briefs during the trial (Dkts. 331, 345,
346, 348, 350, 367, 369, 375, 377) and Defendants filed ten briefs/motions of their own or
responses/objections to Plaintiffs’ trial briefs (Dkts. 336, 353, 354, 355, 356, 357, 358, 368, 376,
378). The parties also filed multiple supplemental jury instructions and objections to jury
instructions during the course of trial (Dkts. 330, 340, 341, 347, 349, 351, 366, 371).
17

In weighing Plaintiffs’ complaint about being aggrieved over the timing of when they
received the Court’s final jury instructions, the Court is mindful that there is no pattern jury
instruction on the issue of implied assumption. The jury instructions on implied assumption
proposed by the parties prior to trial were in stark contrast to one another – skewed, as one
would expect, to the divergent views each side had about what the law required for proof of such
a claim. See, e.g., Plaintiffs’ Proposed Jury Instructions, Dkt. 304, pp. 34-35; Defendants’
Proposed Jury Instructions, Dkt. 297, p. 19. Defendants later submitted supplemental proposed
jury instructions, including ones on implied assumption, but this occurred during trial (March 13,
2016). See Defendants’ Supplemental Proposed Jury Instructions, Dkt. 351, pp. 2-3, 12-13.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 24

the parties to make their on-the-record objections to the final jury instructions after, rather than
before, closing arguments, so that counsel could focus on preparing for their closings later on
that Friday date. The complete transcript of that hearing (Dkt. 421) shows that it is that later
deadline – after closing arguments – for counsel to file written objections to the jury instructions
in order to preserve any objections, that was being discussed by the Court and counsel. See Dkt.
421, 17:17-22, 18:12-19, 19:1:24, 21:5-25. The Court asked if the parties preferred to stipulate
“that a written set of objections could be filed after trial.” Defense counsel agreed to stipulate to
formalizing written objections in that manner, and the Court then inquired about what might be a
reasonable deadline for such objections to be filed, after trial. Mr. Springel said, “I think it could
be done over the weekend. I would like to take my vacation if it’s not a race, we could
do....Until the end of the month.” Dkt. 421, 19:4-11. Counsel then stipulated to a deadline of
March 31, 2016, for submission of written objections, and the Court then inquired of counsel
whether counsel had any “particular things” regarding the jury instructions that they were
“concerned about of immediacy,” that is, that same Friday morning, before the jury was
instructed later that same day. Id. at 19:21-24. Mr. Springel then raised his concern about Jury
Instruction No. 37, which the Court heard at that time. After noting this objection, Mr. Springel,
more generally, stated that: “I believe it’s 37 and I don’t have any other concerns.” Dkt. 421,
21:21-22.
There was no objection from Plaintiffs about going forward that day, or any request to
seek to delay closing arguments until the following week. As noted in the reference to the record
set out above, Plaintiffs’ counsel had a family vacation already in place for the following week.
Plaintiffs’ arguments for a new trial on these grounds – Jury Instruction No. 37 and the timeline

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 25

of jury instructions – do not warrant a new trial under Rule 59, and Plaintiffs’ motion on these
grounds is denied.
D.

The Conduct of Defendants’ Counsel, Mr. Dunn, Does Not Warrant a New Trial
Plaintiffs contend that Mr. Dunn engaged in misconduct that requires a new trial.

Plaintiffs contend Mr. Dunn’s “continuous, improper and prejudicial references to the Plaintiffs’
economic status, e.g., constant references to the members as ‘country club golfers,’ thoroughly
permeated the trial from the outset in an improper attempt to distract from the overwhelming
relevant evidence demonstrating Defendants’ liability by characterizing Plaintiffs as wealthy
individuals not deserving of having their contracts honored.” Pls.’ Mem., Dkt. 416, p. 34.
It is correct that misconduct by trial counsel may justify a new trial if the “‘flavor of
misconduct sufficiently permeate[s] an entire proceeding to provide conviction that the jury was
influenced by passion and prejudice in reaching its verdict.’” Hemmings v. Tidyman’s Inc., 285
F.3d 1174, 1192 (9th Cir. 2002) (quoting Kehr v. Smith Barney, 736 F.2d 1283, 1286 (9th Cir.
1984)); see also Settlegoode v. Portland Public Schools, 371 F.3d 503, 517 (9th Cir. 2004). In
evaluating any possible prejudice from attorney conduct, the Court considers “the totality of the
circumstances including the nature of the comments, their frequency, their possible relevancy to
the real issues before the jury, the manner in which the parties and the court treated the
comments, the strength of the case, and verdict itself.” Hemmings, 285 F.3d at 1193 (citation
omitted). “[T]he trial judge is in a superior position to evaluate the likely effect of the alleged
misconduct and to fashion an appropriate remedy.” Id.
In the Kehr case, defendants objected to “prejudicial acts of misconduct” by plaintiff’s
attorney that included (1) indulging in criminal imagery; (2) commenting on financial disparity

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 26

between the parties; (3) dwelling upon irrelevant subjects; (4) conducting himself with a lack of
decorum; and (5) making unsubstantiated accusations of tampering with documents against
defendant and its counsel. Kehr, 736 F.2d at 1285. The court found that the such comments
were improper, but the district court properly denied a new trial because the offending remarks
occurred mostly during opening statement and closing argument, opposing counsel never
objected during closing argument or moved for a mistrial and the jury’s award of damages was
not excessive. Id. at 1286. “[G]iven that the trial court is in a far better position to gauge the
prejudicial effect of improper comments than an appellate court which reviews only the cold
record, we conclude that the district court did not abuse its discretion in refusing to grant a new
trial.” Id.
In contrast, in Bird v. Glacier Elec. Coop., Inc., 255 F.3d 1136 (9th Cir. 2001), closing
arguments did offend fundamental fairness where counsel: (1) argued in inflammatory terms; (2)
linked the defendant to white racism in the exploitation of Indians; (3) appealed to historical
racial prejudice of, or against, the white race; and (4) used incendiary racial and nationalistic
terms to encourage the all-tribal member jury to award against the non-Indian defendants. Id. at
1152.
Plaintiffs contend that Mr. Dunn made 34 improper references during his opening
statement. Pls.’ Mem., Dkt. 416, p. 36. Plaintiffs objected to these statements following opening
statement and the Court heard argument at the end of the trial day. After doing so, the Court
issued a written order and gave a curative jury instruction to the jury later in the trial that stated,
in part:

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 27

There was reference in Defendants’ opening statement to ‘country
club golfers’ and other references which may have been intended
to leave an inference as to the economic status of one or more of
the Plaintiffs. There has been other reference, by both parties,
during the trial presentation in the first several days as to other
subjects which may have been intended to leave an inference to the
economic status of one or more of the Plaintiffs, and to one or
more of the Bank’s officers. The court has previously instructed
you in Instruction No. 16, which reads: ‘All parties are equal
before the law and a corporation or limited liability company is
entitled to the same fair and conscientious consideration by you as
any party. The statement that ‘all parties are equal before the law’
means just that.
Jury Instruction No. 20, Dkt. 342.
As referenced in the Court’s curative instruction, the jury was instructed at the start of the
trial in pre-proof Jury Instruction No. 16, that: “All parties are equal under the law and a
corporation or limited liability company is entitled to the same fair and conscientious
consideration by you as any party.” Dkt. 343, p. 21. The jury was also instructed that
“[a]rgument and statements by lawyers are not evidence. The lawyers are not witnesses. What
they have said in their opening statements, [will say in their] closing arguments, and at other
times is intended to help you interpret the evidence, but it is not evidence.” Id. at p. 10. These
instructions provided the jury the framework for what is, and what is not, evidence.
Next, Plaintiffs argue that despite these jury instructions and despite the Court’s pretrial
ruling regarding the Golden Rule,18 Mr. Dunn continuously made prejudicial comments
throughout the course of the trial. Plaintiffs especially take issue with the “personal, ad

18

In ruling on one of Defendants’ motions in limine, the Court ruled that “[t]he general
admonition against an attorney, for whatever party, asking jurors to put themselves in the shoes
of any of the parties to the case, in whatever form that might take, applies to this case in the same
measure as it would in any other trial . .” Order, Dkt. 294.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 28

hominem” attacks on Plaintiffs made during closing argument, including that Plaintiffs were
“rich country club golfer gamblers” “with an attitude of arrogant entitlement” “that bet on the
economy” “who obviously have a lot of disposable income to spend” and “decided to gang up on
a community business and do so in a fashion that wasn’t keeping with the rules of the sandbox.”
See Pls.’ Mem., Dkt. 416, p. 37 (citing Defendants’ closing argument). Plaintiffs contend that
Mr. Dunn’s “rampage” continued for 91 minutes and the “Court did not stop [it] or give any
further curative instruction after closing arguments or before the jury deliberated.” Id.
In response, Defendants point out that Plaintiffs asserted only one objection during
closing argument and that objection was unrelated to the arguments that Plaintiffs now claim
were misconduct. Additionally, Defendants point out that Plaintiffs (and Defendants) were
given the opportunity to raise any additional and/or remaining issues with the Court after closing
arguments, outside the presence of the jury, and Plaintiffs failed to raise any objections to the
misconduct of which it now complains. See Defs.’ Resp., Dkt. 448, p. 30.
Federal courts “erect a ‘high threshold’ to claims of improper closing arguments in civil
cases raised for the first time after trial.” Hemmings, 285 F.3d at 1193 (quoting Kaiser Steel
Corp. v. Frank Coluccio Constr. Co., 785 F.2d 656, 658 (9th Cir. 1986)). “The rationale for this
high threshold is two-fold. First, raising an objection before the jury begins deliberations
permits the judge to examine the alleged prejudice and to admonish . . . counsel or issue a
curative instruction, if warranted” and “[t]he second rationale stems from the courts’ concern

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 29

that allowing a party to wait to raise the error until after the negative verdict encourages that
party to sit silent in the face of claimed error.” Id. (internal citation and quotation omitted).19
The Plaintiffs did complain of defense counsel’s characterization of Plaintiffs as “rich
country club golfers” following opening statements, but the Plaintiffs made no mention or
objection to these statements during Defendants’ closing statement, or immediately thereafter, or
outside the presence of the jury. The Court responded to Plaintiffs’ objection following opening
statement and gave the jury a curative instruction, similar to a pre-proof instruction, that all
persons are equal before the law, regardless of economic status. However, Plaintiffs likewise
sought to pull an emotional lever of wealth and privilege in this case, as Plaintiffs’ entire case
was steeped with the theme that an arrogant, enormously wealthy banking institution cared only
about its profits to the great detriment of Plaintiffs. In his closing rebuttal argument, Mr.
Springel flipped Mr. Dunn’s closing around, saying, “I think we all know where the arrogance
lies in this room and where the impunity lies in this room,” then asking rhetorically of the jury as
to where was the “personal accountability for Washington Trust Bank” who “took a lousy loan
[and] took it out on innocent people here.” Pls.’ Closing, Dkt. 420-3, 116:20-21, 121:10-14.
Mr. Dunn spent very little time in his closing argument discussing the evidence of the

19

In Hemmings, defendants objected to several statements of plaintiffs’ attorney made
during closing arguments. Id. at 1192. These included a statement that defendant (Tidyman’s)
had been sued before for discriminatory policies in the past, including by plaintiffs’ attorney
himself. Id. at 1192. Plaintiffs’ counsel also stated that the defendants’ case was a “jack rabbit
defense,” that a verbal assault on an employee was “rape of her mind,” and that a female board
member and a paralegal sitting at counsel table were mere “tokens.” Id. at 1192, n.21. The court
upheld the district court’s denial of a new trial because the misconduct was not prejudicial or
fundamentally unfair. Id. at 1193. The court also noted that defense counsel had made similar
statements, e.g., referring to plaintiffs’ case as a “bag of rabbits” because their case had no merit.
Id. at 1192, n.21.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 30

case, and much more time talking about Plaintiffs as wealthy, out-of-towners who didn’t deserve
a verdict in their favor. His arguments were clearly intended to urge the jurors to chose sides,
and view the evidence with that choice in mind. Whether such a trial strategy is successful is not
capable of precise measurement. One could say as easily that such a strategy was fraught with
the risk of leaving behind an emphasis upon the evidence most favorable to the defense of
Plaintiffs’ claims, and thus exposing his client to a greater risk of an adverse verdict. However,
the Court places a great deal of trust in the jurors’ ability to focus on the evidence, as opposed to
the hyperbole and sometimes inflammatory rhetoric of the attorneys, when reaching their verdict.
In that regard, it may well be that the jury reached its verdict in favor of Defendants despite the
disconnected nature of Mr. Dunn’s closing argument, not because of it.
In this case, there were instances of conduct and argument from both sides which ran
afield from a pure focus on the evidence. There is no doubt that such actions by counsel were
intended to color the jury’s view of the evidence in some way to suggest that the equities of their
decision ought to rest with one side or the other. That is nothing new in the trial arena, although
it was of a particularly heightened and sometimes abrasive nature in this case, from both camps.
However, the Court carefully observed the jury throughout the trial, and is confident that the
jurors were attentive to their responsibilities and were not deterred from those responsibilities
because of high-pitched exhortations of counsel to think poorly of one party or the other. The
Court remains convinced that the jury reached its verdict because of the evidence, in spite of and
not because of any passion or prejudice sought to be ignited by any attorney’s conduct. The
Court’s perspective in that regard also would be true if the jury had returned a verdict in favor of
Plaintiffs.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 31

Ultimately, “the moving party must demonstrate [that] adverse counsel’s misconduct . . .
‘substantially interfered’ with the moving party’s interest.” S.E.C. v. Jasper, 678 F.3d 1116,
1129 (9th Cir. 2012) (citing Cal. Sansome Co. v. U.S. Gypsum, 55 F.3d 1402, 1405 (9th Cir.
1995)). In this case, the trial was not so tainted with misconduct that the jury was unduly
influenced by passion and prejudice in reaching its verdict. The jury was instructed in pre-proof
Jury Instruction No. 6 that “arguments and statements by lawyers are not evidence.” The jury
could determine that the arguments of counsel were just that. The jurors had before them
evidence upon which they could base the verdict reached in this case. Moreover, the Court does
not find the verdict itself yields any indication that the jury was improperly prejudiced by any
misconduct by Defendants’ counsel. Accordingly, the Court finds that any misconduct at trial
did not so permeate the entire proceeding such that the jury was influenced by passion and
prejudice in reaching its verdict in favor of Defendants.
//
//
//
//
//
//
//
//
//
//

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 32

ORDER
The Court has carefully considered all of the argument advanced by both sides and the
relevant portions of the underlying record. In the exercise of the Court’s discretion and
consistent with the applicable law, the Court hereby ORDERS that Plaintiffs’ Renewed Motion
for Judgment as a Matter of Law,20 or in the alternative, Motion for New Trial (Dkt. 415) is
DENIED, for the reasons described herein.

DATED: January 20, 2017

Honorable Ronald E. Bush
Chief U. S. Magistrate Judge

20

This includes Plaintiffs’ motion for judgment as a matter of law made during trial as
discussed supra, p. 3.

DECISION AND ORDER ON RULE 50 AND 59 MOTIONS - 33