Swendsen et al v. Corey et al

Filing 185

MEMORANDUM DECISION AND ORDER denying 170 Motion to Amend Pleadings to Conform to Evidence and to Alter or Amend or for New Trial; denying 175 Motion to Alter Judgment; granting 176 Motion for Attorney Fees. corey shall pay Plaintiffs' attorney fees in the amount of $177,592.26. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

SEAN MICHAEL SWENDSEN; and
NORMAN G. REECE, JR. in his
capacity as trustee of the RICHARD C.
SWENDSEN TRUST,

Case No. 4:09-cv-229-BLW
MEMORANDUM DECISION AND
ORDER

Plaintiffs,
v.
RICHARD I. COREY,
Defendant.

INTRODUCTION
The Court has before it Richard Corey’s Motion to Amend Pleadings to Conform
to Evidence and to Alter or Amend or For New Trial (Dkt. 170), Plaintiffs’ Motion for
Altering or Amending Judgment on Jury Verdict ($150,000 Additur Request) (Dkt. 175),
and Plaintiffs’ Motion for Allowance of Attorney Fees (Dkt. 176). The motions are fully
briefed. For the reasons expressed below, the Court will (1) deny Defendant’s motion to
amend the pleadings or for a new trial; (2) deny Plaintiffs’ motion to alter or amend the
judgment; and (3) grant Plaintiffs’ motion for attorney fees.
PROCEDURAL BACKGROUND
Plaintiffs filed this lawsuit in May 2009 alleging breach of trust and fiduciary duty
against defendant Richard Corey in his role as trustee of the Richard Swendsen Trust. In
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February 2012 a jury found in favor of Plaintiffs on two claims for breach of fiduciary
duty, awarding Plaintiffs $532,776.77 in damages.
ANALYSIS
1.

Defendant’s Motion to Amend
One month before trial, Defendant Richard Corey asked the Court for leave to

amend his Answer to add affirmative defenses, including a statute of limitations defense.
See Dkt. 135. The Court denied the motion as untimely. (Dkt. 135). Now, Corey wants to
try again. He asks the Court to amend the pleadings to add the statute of limitations
defense pursuant to Federal Rule of Civil Procedure 15(b)(2). In turn, he wants the Court
to amend the Judgment to conform with the amended pleading.
Rule 15(b)(2) provides that “[w]hen an issue not raised by the pleadings is tried by
the parties’ express or implied consent, it must be treated in all respects as if raised in the
pleadings.” Fed. R. Civ. P. 15(b)(2). Corey argues that evidence on the statute of
limitations defense was raised throughout the course of the trial without objection from
Plaintiffs. That simply is not true.
First of all, the Court made it clear in denying Defendant’s pre-trial motion that
the statute of limitations defense could not be asserted at trial. Second, although Plaintiffs
were forced to respond to some statute of limitations arguments during trial because of
Corey’s counsel’s persistence, Plaintiffs never consented to trying the issue. Trial is
often a fluid process, where the purpose of counsel’s questions is not always clear to the
other party. Plaintiffs’ counsel cannot be said to have consented to trying the statute of
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limitations issue simply because he may not have consistently objected to a question
which was somehow related to the statute of limitations. Plaintiffs’ counsel made it clear
on the record during trial, and in his filings in opposition to Corey’s motion to amend,
that Plaintiffs did not consent to trying the statute of limitations issue. Furthermore, when
the issue did arise at trial, the Court ruled that even if the statute of limitations was before
the Court, it did not apply in this case because it did not begin to run until Corey resigned
in late 2010. Under these circumstances, the Court will deny Corey’s motion. In turn, the
Court will deny his request to alter the judgment.
Finally, the Court will also deny Corey’s alternative request for a new trial where
he could present the statute of limitations issue. As the Court noted in its earlier decision,
Corey should have asserted the statute of limitations defense when the Amended
Complaint was filed over a year and a half before trial, or at the very least when he
“joined” in Clayne Corey’s motion for summary judgment. (Dkt. 135). Corey’s failure to
timely assert the statute of limitations defense does not justify putting the parties to the
expense and delay of retrying this case.
2.

Plaintiffs’ Motion to Alter Judgment
A judgment notwithstanding the verdict “is proper if the evidence, construed in the

light most favorable to the nonmoving party, permits only one reasonable conclusion, and
that conclusion is contrary to the jury’s verdict.” Pavao v. Pagay, 307 F.3d 915, 918 (9th
Cir. 2002). “Although the court’s ruling on an alternative motion for a new trial involves
the exercise of some discretion, a stringent standard applies when the motion is based on
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insufficiency of the evidence.” E.E.O.C. v. Pape Lift, Inc., 115 F.3d 676, 680 (9th Cir.
1997). A motion will be granted on this ground only if the verdict “is against the great
weight of the evidence, or it is quite clear that the jury has reached a seriously erroneous
result.” Id.
A jury’s verdict must be upheld if it is supported by substantial evidence. Wallace
v City of San Diego, 479 F.3d 616 (9th Cir. 2007). “Substantial evidence is evidence
adequate to support the jury’s conclusion, even if it is also possible to draw a contrary
conclusion from the same evidence.” Id. at 624. In making this determination, the Court
must not weigh the evidence, but should simply ask whether the party has presented
sufficient evidence to support the jury’s conclusion. Id. While the Court must review the
entire evidentiary record, it must disregard all evidence favorable to the moving party that
the jury is not required to believe. Id. The evidence must be viewed in the light most
favorable to the nonmoving party, and all reasonable inferences must be drawn in favor
of that party. Id.
Although Plaintiffs argued at trial that Corey was unfettered in the exercise of his
discretion regarding the use of the $150,000.00 of trust principal to pay Beth Swendsen,
the jury acted well within its discretion when it awarded Swendsen the amount they
believed was appropriate. Plaintiffs focus their argument on a line of questions posed to
Corey by Plaintiffs’ counsel during trial, where Corey ultimately admitted that it was not
prudent for him not to have gathered certain information necessary to properly administer
the trust. Trial Transcript, Feb. 27, 2012, p. 37, Dkt. 166. However, the jury was not
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asked simply whether Corey acted prudently – or more precisely whether Corey believed
he acted prudently.
The jury was instructed about Corey’s fiduciary duties, his duty of loyalty, and the
prudent investor rule among other instructions. Jury Instructions, Dkt. 168. Those
instructions asked the jury to weigh many factors, including an instruction that
“[c]ompliance with the prudent investor rule is determined in light of the facts and
circumstances existing at the time of a trustee’s decision or action and not by hindsight.”
Jury Instructions, No. 13, Dkt. 168. The jury could have easily interpreted Corey’s
testimony to be a hindsight observation of his earlier actions. Although the Court believes
the jury could have reasonably found that Corey breached his duty by distributing the
$150,000.00 to Beth Swendsen, that is not the standard for deciding a motion for
judgment notwithstanding the verdict. The jury’s conclusion that Corey did not breach
his fiduciary duty in distributing the $150,000.00 to Beth Swendsen was quite reasonable
and supported by substantial evidence at trial. Accordingly, the Court will deny the
motion.
3.

Plaintiffs’ Motion for Attorney Fees
Plaintiff also filed a motion for attorney fees. See Dkt. 176. In “action[s]

involving state law claims, [federal courts] apply the law of the forum state to determine
whether a party is entitled to attorneys’ fees, unless it conflicts with a valid statute of
procedural rule.” MRO Commc’ns, Inc. v. AT&T Co., 197 F.3d 1276, 1282 (9th Cir.
1990). Idaho Code 15-8-208, which applies to all proceedings related to judicial
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resolution under the Trust and Estate Dispute Resolution Act, provides that the district
court may, “in its discretion, order costs, including reasonable attorney’s fees, to be
awarded to any party.” I.C. § 15-8-208 (2012).
The Court finds in its discretion that an award of Plaintiffs’ attorney fees is
appropriate in this case. Idaho Code § 15-8-208 does not require the award be given only
when there is a prevailing party. However, the Court is cognizant that Plaintiffs were
successful on two of three claims for breach of fiduciary duty. Most notably, the jury
determined that that Richard Corey breached his fiduciary duty regarding the loans he
caused the Trust to make to his son, Clayne Corey, which was by all accounts the most
serious claim. The jury also found that Richard Corey breached his fiduciary duty
regarding principal payments to Beth Swendsen, although the award of damages on that
claim was minimal. Under these circumstances, the Court finds that Plaintiffs are entitled
to an award of attorney fees.
As for the amount of fees requested, Plaintiffs ask the Court to award them an
amount equal to the one-third contingent fee charged by their attorney. Based on the
Judgment amount, the fee equals $177,592.26. Plaintiffs also ask for an additional
$10,160.00 for hourly fees incurred after trial was concluded.
In support of their motion, Plaintiffs submitted their attorney’s affidavit, which
includes an invoice listing professional services, the dates when the services were
rendered, and the hours and rate for such services. See Exhibits (Dkt. 176). The affidavit
explains that Plaintiffs’ attorney, Jon Simmons, received his J.D. almost 30 years ago,
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and received an L.L.M. in tax law more than 25 years ago. Simmons Aff., Dkt. 176-2. He
also has extensive experience in trust law, and his hourly rate in this case was between
$165.00 and $200.00 per hour for out of court time, and $280.00 for in court time. Based
on this Court’s experience, these rates are reasonable for the relevant community where
this Court sits. See Schwarz v. Secretary of Health and Human Services, 73 F.3d 895, 906
(9th Cir. 1995).
A review of the services rendered by Plaintiffs’ counsel shows that his services
were reasonable. Simmons Aff., Ex. 1, Dkt. 176-4. Considering the factors listed in Idaho
Rule of Civil Procedure 54(e)(3), the Court finds that Mr. Simmons was particularly
skilled to handle this case, which dealt primarily with trust law. Mr. Simmons’
performance at trial and throughout the case demonstrated a clear understanding of Idaho
trust law. Moreover, the Court is cognizant that Mr. Simmons represented plaintiffs on a
contingency fee basis. Based on the information submitted by counsel, the total amount
Mr. Simmons would have charged had the case been billed on an hourly rate was
somewhere in the neighborhood of $150,000.00. This is not too far below the
$177,592.26 contingency fee being charged. Considering the risk involved in
contingency fee cases, the Court finds that the contingency fee amount is reasonable.
Finally, none of the additional factors listed in I.R.C.P. 54(e)(3) suggest Mr. Simmons’
fee was unreasonable. Accordingly the Court will award Plaintiffs their attorney fees in
the amount of $177,592.26.

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The Court will not, however, add the additional $10,160 for hourly services
rendered after trial. It is not altogether clear to which post-trial motions the fees apply.
Given the Court’s denial of Plaintiffs’ motion to alter judgment, the fees are
inappropriate. Moreover, the Court believes the post-trial fees should simply be
considered part of the contingency fee award.
ORDER
IT IS ORDERED:
1.

Defendant’s Motion to Amend Pleadings to Conform to Evidence and to
Alter or Amend or For New Trial (Dkt. 170) is DENIED.

2.

Plaintiff’s Motion to Alter Judgment (Dkt. 175) is DENIED.

3.

Plaintiff’s Motion for Allowance of Attorney Fees (Dkt. 176) is
GRANTED. Corey shall pay Plaintiffs’ attorney fees in the amount of
$177,592.26.

DATED: June 6, 2012

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

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