BOKF, N.A. v. BCP Land Company et al
Filing
299
ORDER denying 252 motion in limine; denying 254 motion in limine; denying 258 motion for partial summary judgment; denying 260 motion for summary judgment; denying 262 motion for partial summary judgment; denying 264 motion for summary judgment. Signed on 3/9/2016 by District Judge M. Douglas Harpool. (Hance, Breanna)
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION
BOKF, N.A.,
Plaintiff,
v.
BCP LAND COMPANY, LLC, et al.,
Defendants.
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Case No. 6:14-cv-03025-MDH
ORDER
Before the Court are the parties’ various motions for summary judgment (Docs. 258, 260,
262, 264) and motions to exclude expert testimony (Docs. 252, 254). Upon careful review of the
issues raised and arguments provided, the Court hereby DENIES all motions for summary
judgment and DENIES all motions to exclude expert testimony.
I. BACKGROUND
Plaintiff BOKF commenced the present action against Defendants BCP Land Company,
LLC (“BCP Land”), Jack Redwine, and various companies hereinafter referred to as “Buyer
Defendants” or “purchasing entities” in January of 2014 seeking a declaratory judgment
regarding the interpretation of a trust indenture and bringing claims for unjust enrichment against
Redwine and negligent misrepresentation against BCP Land.
Defendant Redwine filed
counterclaims against BOKF for breach of contract and money had and received.
In January of 2015, with leave of Court, Plaintiff filed an amended complaint that added
new parties and claims. Plaintiff added the organizational and individual members of BCP Land
as defendants, as well as Jack Kynion II (“Jack Kynion”), and two additional companies added to
the group of “Buyer Defendants.” The Amended Complaint asserted a new claim under the
Racketeer Influenced and Corrupt Organizations Act (“RICO”) against all Defendants and
changed Plaintiff’s negligent misrepresentation claim to a fraudulent misrepresentation claim.
Defendant Redwine filed amended counterclaims for declaratory judgment, breach of contract,
and money had and received.1
Following the close of discovery, Plaintiff and BCP Land Defendants2 filed motions for
summary judgment and motions to exclude expert testimony, which all are now before the
Court.3 The Court held oral arguments on the motions on January 7, 2016 and allowed the
parties to provide additional briefing.
The motions are now fully briefed and ready for
disposition.
II. MOTIONS FOR SUMMARY JUDGMENT
Both Plaintiff and the BCP Land Defendants argue they are entitled to summary
judgment on Plaintiff’s declaratory judgment and unjust enrichment claims (Docs. 260, 264).
The BCP Land Defendants further argue they are entitled to summary judgment on Plaintiff’s
RICO and fraudulent misrepresentation claims (Docs. 258, 260). Defendant Redwine argues he
is entitled to summary judgment on his declaratory judgment counterclaim (Doc. 262). Plaintiff
argues it is entitled to summary judgment on all of Redwine’s counterclaims (Doc. 264).
1
BCP Land and its members also asserted various counterclaims against Plaintiff and third parties but those
counterclaims dismissed on or about May 15, 2015 (Doc. 189).
2
Throughout the course of this litigation, BCP Land and its various members have been represented by the same
attorneys and have filed most, if not all, of their pleadings and motions jointly. The Court refers to these Defendants
collectively as the “BCP Land Defendants.” The “BCP Land Defendants” include BCP Land Company, LLC, Jack
Redwine, Timothy Jury, Phil Lopez, Jury Industries, LLC, and Zepol Industries, LLC.
3
Neither Jack Kynion nor any of the Buyer Defendants filed any such motions. The Court notes that Jack Kynion
and the Buyer Defendants which are directly associated with Kynion (i.e. Grace Properties Branson, LLC, SJ
Legacy, LLC, Parkway Enterprises, LLC, and JH Branson, LLC) are currently unrepresented by counsel. Another
Buyer Defendant, Business Advisors, LC, is currently represented by counsel but has taken no action before the
Court other than filing an answer. The final Buyer Defendant, Appliance Center of the Ozarks, LLC, was served in
this action but has never filed an answer or other responsive pleading.
2
A. Standard
Summary judgment is proper where, viewing the evidence in the light most favorable to
the non-moving party, there is no genuine issue of material fact and the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(a); Reich v. ConAgra, Inc., 987 F.2d 1357,
1359 (8th Cir. 1993). In other words, “[w]here there is no dispute of material fact and reasonable
fact finders could not find in favor of the nonmoving party, summary judgment is appropriate.”
Quinn v. St. Louis County, 653 F.3d 745, 750 (8th Cir. 2011). Initially, the moving party bears
the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). If the movant meets the initial step, the burden shifts to the
nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
To satisfy this burden, the
nonmoving party must “do more than simply show there is some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
B. Undisputed Material Facts
Creation of the District
The Community Improvement District (“District”) is a political subdivision of the State
of Missouri within the City of Branson, Missouri created on or about September 11, 2006 by
Ordinance No. 2006-125, enacted by the City of Branson pursuant to the Missouri Community
Improvement District Act. The District is comprised of approximately 345 acres of land in
Branson, Missouri. At the time the District was created, all of the property in the District was
owned by Branson Commerce Park, LLC and four related entities that intended to develop the
property for commercial and residential purposes (the “Special Assessment Property”). To
finance the development of the Special Assessment Property, on or about June 27, 2007, the
3
District authorized the issuance of $13,590,000 Branson Commerce Park Community
Improvement District Special Assessment Bonds, Series 2007A, and $3,150,000 Branson
Commerce Park Community Improvement District Subordinate Special Assessment Revenue
Bonds, Series 2007B (collectively, “the Bonds”). In general, the District pays interest and
principal due under the Bonds to the bondholders by imposing special assessments against the
owners of the Special Assessment Property.
The terms of the Bonds and the District’s
obligations to the bondholders are set forth in the Trust Indenture, which was entered into on or
about July 1, 2007 between the District and the Trustee.4
The Development Period Reserve Fund (“DPRF”) and the Replenishment Covenant
Under Section 401(a) of the Trust Indenture, a Development Period Reserve Fund
(“DPRF”) was created and established with the Trustee. The DPRF was funded by the original
“Developer” of the property, Branson Commerce Park, LLC, which deposited $1,424,768.75
with the Trustee. Under Section 406 of the Trust Indenture, the moneys in the DPRF are to be
used by the Trustee to pay any defaulted special assessments on Special Assessment Property
owned by the Developer (“Developer Owned Special Assessment Property”). In such an event,
the Trustee will pay the DPRF funds to the County Collector and the County Collector will then
pay those moneys into a separate fund to pay interest and principle to the bondholders. Section
406(c) of the Trust Indenture provides:
The amount on deposit in the [DPRF] will be reduced on or after June 2 of each
year if and to the extent that (a) the Developer provides the Trustee with
documents evidencing that the Developer has transferred a portion of the
Developer Owned Special Assessment Property to third parties not controlling,
controlled by or under common control with the Developer, and (b) the District
gives the Trustee written notice that all Special Assessments, penalties and/or
interest on said parcel, if any, currently due and payable on such property have
been paid through the date of the proposed reduction. Upon satisfaction of such
4
Southwest Trust Company, N.A. was the original Trustee who entered into the Trust Indenture. Plaintiff BOKF,
N.A. is a successor by merger to Southwest Trust Company, N.A. and is the current Trustee.
4
requirements, the Trustee shall release to the Developer a pro-rata amount of the
[DPRF]. That amount shall be determined by dividing the square footage of the
Developer Owned Special Assessment Property transferred by the Developer by
the aggregate square footage of the Developer Owned Special Assessment
Property immediately prior to such transfer and multiplying the resulting ratio by
the amount then on deposit in the [DPRF].
Trust Indenture, Am. Compl., Ex. 1, at p. 26. The Trust Indenture defines “Developer” as
“Branson Commerce Park, L.L.C., and affiliates or successors thereof.” Id. at p. 4.
In connection with the Trust Indenture, Branson Commerce Park, LLC, as the original
Developer, also entered into a Replenishment Covenant. Under the terms of the Replenishment
Covenant, Branson Commerce Park, LLC agreed that “in the event [the Trustee] . . . is required
to withdraw funds from the [DPRF] to pay Special Assessments . . . on any or all Developer
Owned Special Assessment Property, [the Developer] will, within twenty (20) days after written
notice from the Trustee, replenish the [DPRF] in an amount equal to 110% of the withdrawal
amount[.]” The Replenishment Covenant states it is binding on Branson Commerce Park, LLC
and its successors and assigns.
Under the terms of the Replenishment Covenant, certain
individuals (collectively “Guarantors”), one of whom is Jack Redwine, agreed to
“unconditionally, jointly and severally, and irrevocably guarantee” the replenishment obligations
of Branson Commerce Park, LLC and its successors and assigns. The Guarantors’ liability under
the Replenishment Covenant continues until there ceases to be any Developer Owned Special
Assessment Property and all Special Assessments with respect to that property have been paid.
Sale to BCP Land and Prior Litigation
On May 12, 2009, BCP Land was formed as a Missouri limited liability company. BCP
Land has three members, each of whom holds own a one-third membership interest in the
company: (1) Jack Redwine, Trustee of the Jack J. Redwine Trust; (2) Jury Industries, LLC; and
(3) Zepol Industries, LLC. Jury Industries, LLC is a Kansas limited liability company with
5
Timothy Jury as Trustee U/T/A of Timothy G. Jury as the sole member. Zepol Industries, LLC
is a Kansas limited liability company with Phil Lopez and his wife, Kimberley Lopez, as the sole
members.
On May 13, 2009, Branson Commerce Park, LLC – which had a membership
consisting of Jack Redwine, Jury Industries, LLC, and Zepol Industries, LLC, and one other
individual – sold all of its right, title, and interest in the Developer Owned Special Assessment
Property to BCP Land and assigned all of its right, title, and interest with respect to the DPRF
funds, including the right to receive all distributions of the proceeds from the DPRF under
Section 406 of the Trust Indenture, to Redwine. On May 28, 2009, Branson Commerce Park,
LLC notified the Trustee of the sale and assignment and further notified the Trustee that all
currently due and owing special assessments had been paid in full. On July 7, 2009, Redwine
demanded that the Trustee terminate the DPRF and release the funds in the DPRF to Redwine.
On August 21, 2009, the Trustee rejected Redwine’s demand to release the funds.
Redwine subsequently initiated suit against the Trustee in the Western District of
Missouri claiming all conditions for release of the DPRF had been satisfied under Section 406(c)
and the Trustee should be required to release the funds. On September 30, 2011, United States
Magistrate Judge Sarah W. Hays granted summary judgment in favor of the Trustee and held that
Redwine was not entitled to disbursement of the funds in the DPRF as of the date of the sale of
the property in May of 2009. Judge Hays held that BCP Land was a “successor” to Branson
Commerce Park, LLC under the terms of the Trust Indenture and “[b]ecause the property was
sold to a successor of the developer, the requirements of Sections 406(c) and (e) of the Trust
Indenture were not satisfied.”
In interpreting the Trust Indenture, Judge Hays defined
“successor” as “one who takes the place of another” and explained that:
Reading the Trust Indenture as a whole, it is clear that the DPRF was set up to
protect the District in case the Developer failed to make the required special
6
assessment payments on the property. . . . If this Court were to adopt Redwine’s
interpretation of the meaning of the Trust Indenture, the protection afforded the
District by Section 406 of the Trust Indenture would be illusory. Under
Redwine’s interpretation, the developer could simply sell all of the property to a
new company and, as long as the special assessments were current at the time of
this sale, claim any funds remaining in the DPRF. At this point the DPRF would
be at an end along with the requirement for the developer and the guarantors to
replenish the DPRF.
Order, Pl’s Mot. Summ J., Ex. 4. Redwine did not appeal.
2012 and 2013 Sales and Disbursement of DPRF Funds to Redwine
In 2012, following an auction at which various parcels of BCP Land’s property were
offered for sale, BCP Land sold and transferred certain parcels of Developer Owned Special
Assessment Property to certain purchasing entities. BCP Land sold Lots 9C-12C and Lot 40MF
to Grace Properties Branson, LLC for $2,200 and $1,100, respectively. BCP Land sold Lots
30C-35C and Lots 36MF-37MF to SJ Legacy, LLC for $3,300 and $2,200, respectively.5 BCP
Land sold Lots 13C-19C to Parkway Enterprises, LLC for $3,850. Finally, BCP Land sold Lots
27C-29C to JH Branson, LLC for $452,000, with a $2,000 down payment and the remainder of
the purchase price financed by BCP Land with the buyer’s agreement “to use future net proceeds
from the sale of the Property to satisfy the Note.” The purchase agreement between BCP Land
and JH Branson, LLC further specified that:
Should the total of net proceeds exceed the value of the Note, Buyer agrees to pay
a percentage of the excess to Seller. The specific percentage and amount shall be
determined by mutual agreement of Buyer and Seller. Should the total of net
proceeds be less than the value of the Note, Seller agrees to accept the lesser
amount as full satisfaction of the Note. These provisions shall remain in effect for
a period of two years from the Effective Date of this Agreement unless extended
by mutual agreement of Buyer and Seller.
5
Lots 30C-35C were originally sold to Country Meadows Estates, LLC and then Country Meadow Estates, LLC
assigned its rights in Lots 30C-35C to SJ Legacy, LLC. Jack Kynion is the principal member of Country Meadow
Estates, LLC. After the assignment, BCP Land transferred both lots 30C-35C and 36M-37M to SJ Legacy, LLC.
7
See Am. Compl., Ex. 17, at ¶ 4. To date, JH Branson, LLC has not sold the property and has
made no further payments to BCP Land to repay the portion of the purchase price financed by
BCP Land. Following each of the sales outlined above, Lopez requested that the Trustee release
a pro rate portion of the DPRF to Redwine. The Trustee complied and incrementally released a
sum of $962,646.61 from the DPRF to Redwine in 2012. Since the 2012 sales took place, none
of the purchasing entities have paid any of the special assessments that have become due and
owing on their properties.
In 2013, following another auction at which various parcels of BCP Land’s property were
offered for sale, BCP Land sold and transferred two additional parcels of Developer Owned
Special Assessment Property. Specifically, BCP Land sold Lot 39MF to Business Advisors, LC
for $220 and sold Lot 39MF to Appliance Center of the Ozarks, LLC for $330. At the time of
those sales and transfers, all Special Assessments due and owing on the properties were paid in
full. Following the sales, Lopez again requested that the Trustee release a pro rata portion of the
DPRF to Redwine. This time, the Trustee refused. Since the 2013 sales took place, the 2013
purchasing entities have not paid any of the special assessments that have become due and owing
on their properties. With regard to the unpaid special assessments, one of the owners of Business
Advisors, LC, stated during his deposition that “[w]e always knew that we would not be paying
them . . . [b]ecause we had no intention of ever paying them.” See Pl.’s Mot. Summ. J., Ex. 8, at
74.
The following chart outlines the e-mails sent from Lopez to the Trustee requesting the
release of DPRF funds to Redwine. At the time Lopez sent the e-mails, Lopez served as both the
Managing Member of BCP Land and as the Executive Director, Treasurer, and Secretary of the
District. The chart further reflects the Trustee’s releases of the DPRF funds.
8
Lots
E-mail
9C-12C
30C-35C
13C-19C
27C-29C
36MF37MF
and
40MF
38-39MF
Release
August 24, 2012:
“Some great news. BCP Land Company has closed on 4 Commercial Lots
today as a result of the Auction Sales. These lots are 9C, 10C, 11C & 12C.
I have attached the Spread Sheet that you and I have been using to identify
which lots sold and their corresponding Public Improvement Assessment
amount which then needs to be released from the Developers Reserve
Fund. In addition, her [sic] are the wiring instructions to send the funds to
Mr. Jack Redwine: [bank account information omitted]. If you have any
questions, please feel free to give me a call. If you would, please let me
know when the funds will be transferred to Mr. Redwine.”
September 13, 2012:
“We have been informed that 6 Commercial Lots were sold and closed
yesterday at Branson Commerce Park. They are Lots 30C thru 35C. I
have attached our ongoing spreadsheet which shows which lots and their
respective Special Assessment values. I have also color coded the Lots to
show which ones the Developers Reserve Fund has already been released
and which ones are now due to be released. If you have any questions
please feel free to contact me.”
November 12, 2012:
“Per my last email of 10/15 the folks at BCP Land Co did sell lots 13C
thru 19C at Branson Commerce Park. Attached is our working
spreadsheet showing which lots have been sold. As always any monies to
be wired should be sent to Mr. Jack Redwine’s account. Please let me
know when the wire has been completed.”
December 4, 2012:
“Attached is the Spreadsheet showing another group of Lots at Branson
Commerce Park that were sold last month. Lots 27C, 28C, & 29C. Please
feel free to send the appropriate Special Assessment amounts to Mr Jack
Redwine. Let me know when the funds has been sent, so I can notify Mr.
Redwine.”
December 27, 2012:
“Attached is the Spreadsheet showing another group of Lots at Branson
Commerce Park that were just sold. Lots 36MF 37MF & 40 MF. Please
feel free to send the appropriate Special Assessment amounts to Mr Jack
Redwine. Please let me know when the funds have been sent, so I can
notify Mr. Redwine.”
January 6, 2014:
“We have learned that in addition to Lot 167r that sold this past October
Lots 38MF and 39MF have also sold at Branson Commerce Park in 2013.
I have attached all the information with regards to each sale as well as the
working spreadsheet showing the Special Assessment amounts for each
lot. Please review and send the appropriate amounts to Mr. Jack Redwine
from the Developers Reserve fund.”
$170,794.65
released August
24, 2012
$239,517.00
released
September 14,
2012
$303,772.80
released
November 13,
2012
$67,678.35
released
December 4,
2012
$180,883.81
released
December 27,
2012
(refused to
release)
Relationship Between BCP Land and Buyer Defendants
The sole and/or principal owner of all four of the 2012 purchasing entities was and is
Jack Kynion. Three of those four entities – Grace Properties, LLC, Parkway Enterprises, LLC,
9
and JH Branson, LLC – were formed in 2012, conducted no business prior to that, and the only
business they have engaged in since then is purchasing the Special Assessment Property and
activities related to the ownership of that property.
Kynion also served as the financial planner or financial advisor for Redwine and Jury for
approximately the past fifteen years. Between 2010 and 2015, Kynion derived on average 5.4%
of his total annual income from managing the assets of Redwine and 4.1% of his total annual
income from managing the assets of Jury. Kynion has provided advice to Redwine regarding
Redwine’s investment in the Branson Commerce Park project since approximately 2009 and
Kynion was previously designated by Redwine as a non-testifying expert in the prior litigation.
In April of 2010, prior to the decision issued by Judge Hays, Kynion sent a letter to both
Redwine and Jury outlining his thoughts and advice concerning the release of the DPRF funds
and Redwine’s exposure under the Replenishment Covenant. In that letter, Kynion questioned
whether the Trustee would be required to release DPRF funds in various scenarios, including
scenarios where the land was sold to companies partially owned by BCP Land members, where
the land was sold and members of BCP Land maintained a right to share in profits, and where
Kynion purchased the land. In the letter, Kynion also inquired about potential consequences if
the property owners refused to pay special assessments in order to put pressure on the
bondholders. On April 22, 2010, the attorney representing BCP Land and the District responded
to Kynion’s questions in a memo sent to Redwine, Jury, Lopez, and Kynion, and stated that “I
think that [Trustee] would not release the DPRF if it knew, or finds out, that Jack is connected
with TP&J.”
E-mails dating back to 2011 indicate Kynion has been involved in various efforts to
market and sell the lots owned by BCP Land. In September of 2011, Kynion sent an e-mail to
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Redwine discussing his call to check-in with a commercial realtor retained by BCP Land to sell
the property. In October of 2011, Jury forwarded a proposal from an auctioneer retained by BCP
Land to Kynion and asked Kynion to “give us your thoughts.” Around April of 2012, Kynion
was involved in the negotiation of a sale of property on BCP Land’s behalf and Jury noted in an
e-mail to Redwine, Lopez, and Kynion that “Mr. Kynion gets all the credit for coming up with
this idea and working with McSpadden on it” and “we need to leave room in the pricing for his
compensation.” In July of 2012, Redwine sent an e-mail to Walter Koschnitzke, a person
engaged by BCP Land to assist with marketing efforts, which referred to Kynion as a member of
“The Team” and described Kynion as the “[f]inancial planner and counselor helping the three of
us navigate the [Branson] Commerce Park financial challenges.” At some point, Kynion also
had a conversation with Rush Harding, a representative of the boldholders, where stated he might
be able to offer, on behalf of BCP Land Company, LLC, a purchase of the bonds for 65 cents on
the dollar.
On April 18, 2012, Jury sent an e-mail to Redwine and Lopez that stated he spoke to
counsel regarding the upcoming auction and the fact that “Kynion might be putting together an
independent ownership group to bid on the Commercial and MFR lots that we plan to sell
regardless of price” and “given that this group might acquire some lots at a very low price, they
might decide not pay future property taxes and assessments when due.” In that e-mail, Jury
stated the attorney “saw no issue with this as long as Jack’s group is completely independent of
the three of us” and “advised that we should have no involvement with this venture and it’s [sic]
activities going forward.” In June of 2012, Kynion ordered his attorney to place bids on certain
parcels of BCP Land using the name Grace Properties Branson, LLC and instructed his attorney
that he wanted to ensure his name never showed up on any of the bid documents. In July of
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2012, Jury re-circulated the 2010 memo and stated it was “worth reading in its entirety again.”
On August 5, 2012, Jury sent a timeline to Lopez, Kynion, and Redwine detailing target dates for
closing on BCP Land’s ten auction lots, receiving offers on and closing the other thirteen lots,
and requesting release of the DPRF from the Trustee.
The two 2013 purchasing entities were Business Advisors, LC and Appliance Center of
the Ozarks, LLC. Business Advisors, LC has two members: John Gilliford and Keith Hanson.
Gilliford is an attorney who Kynion engaged as legal counsel prior to 2012 to provide general
business and corporate counsel work. Gilliford was the attorney who assisted Kynion with
organizing Grace Properties Branson, LLC and with preparing bid forms for the properties
purchased by Grace Properties Branson, LLC. Hanson is a financial planner who shares office
space with Kynion and who has provided joint financial services with Kynion in the past.
Hanson considers Kynion a personal friend and mentor and he stated he heard about the auction
when Kynion asked if he would be interested in buying a lot in that auction. Appliance Center of
the Ozarks, LLC, has two members: Charles Engram and Mary Engram. Charles Engram was
retained by BCP Land in the fall of 2013 as a consultant to “create energy and excitement” about
Branson Commerce Park and to sell lots owned by BCP Land. Engram holds himself out to the
public as “Sr. Director of Business Development” of Branson Commerce Park and Redwine,
Jury, and/or Lopez approved of Engram using that title. BCP Land pays Engram’s LLC $1,000
per month for Engram’s services plus a commission for sales that he generates.
C. Analysis
The Court finds there are genuine issues of material fact that preclude summary
judgment, as described below.
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1. Declaratory Judgment and Unjust Enrichment Claims
Plaintiff’s declaratory judgment and unjust enrichment claims and Defendant Redwine’s
declaratory judgment, breach of contract, and money had and received counterclaims all turn on
whether the purchasing entities are “controlling, controlled by, or under common control” with
BCP Land and/or whether the purchasing entities are “successors” or “affiliates” of BCP Land
such that the release (or non-release) of the DPRF funds to Redwine was proper under Section
406(c) of the Trust Indenture.6
It is well established that the “cardinal principle for contract interpretation is to ascertain
the intention of the parties and to give effect to that intent.” Butler v. Mitchell-Hugeback, Inc.,
895 S.W.2d 15, 21 (Mo. 1995). To determine the intent of the parties, the court should “use the
plain, ordinary and usual meaning of the contract’s words and consider the document as a
whole.” SD Investments, Inc. v. Michael-Paul, L.L.C., 90 S.W.3d 75, 81 (Mo. Ct. App. 2002).
The court should glean the intent of the parties from the contract alone unless the contract is
ambiguous.
Ethridge v. TierOne Bank, 226 S.W.3d 127, 131 (Mo. 2007).
A contract is
ambiguous when “its terms are susceptible to fair and honest differences.” Dunn Indus. Group,
Inc. v. City of Sugar Creek, 112 S.W.3d 421, 428 (Mo. 2003). Such is the case “when there is
duplicity, indistinctness, or uncertainty in the meaning of the language in the policy.” Gulf Ins.
Co. v. Noble Broadcast, 936 S.W.2d 810, 814 (Mo. 1997). A contract is not ambiguous simply
because the parties disagree as to the meaning of the terms. State ex rel. Vincent v. Schneider,
194 S.W.3d 853, 860 (Mo. 2006). “The dictionary is a good source for finding the plain and
ordinary meaning of contract language; but the contract’s context must be considered in applying
6
Plaintiff also argues that subsection (b) of Section 406(c) of the Trust Indenture was not satisfied with respect to
the 2013 purchases and that “Defendants are unable to satisfy another separate condition” to justify the release of the
DPRF funds to Redwine. The Court does not address that issue at this time because it was neither pleaded in the
Amended Complaint nor is it necessary to decide in denying the parties’ motions for summary judgment.
13
the appropriate dictionary definition.” Schler v. Coves N. Homes Ass'n, 426 S.W.3d 720, 723
(Mo. Ct. App. 2014).
Here, Plaintiff argues the purchasing entities were “affiliates” of BCP Land and/or
“controlling, controlled by or under common control” with BCP Land.7 The parties agree that
the terms “affiliate” and “control” are not defined in the Trust Indenture and that the Court
should look to the common and ordinary meaning of those words.
Both parties cite various
dictionary definitions, albeit different ones, to suggest the common and ordinary meaning of the
terms. In general, Plaintiff argues broader definitions are more appropriate based on the spirit
and purpose of the DPRF and the Trust Indenture as a whole, whereas the BCP Land Defendants
argue narrower definitions are more appropriate based on the highly specialized nature of the
Trust Indenture, the sophistication of the parties, and the intent of the drafters. After reviewing
the various definitions and resources cited by the parties and after considering the parties’
arguments regarding the purpose of the DPRF, the nature and scope of the Trust Indenture, and
the relationship of the parties, the Court finds the following definitions most accurately reflect
the meaning of the words as used in the Trust Indenture.
With regard to the term “affiliate” the Court finds the intended meaning of that term as
used in the Trust Indenture is the meaning ascribed in Black’s Law Dictionary – “A corporation
that is related to another corporation by shareholdings or other means of control; a subsidiary,
7
The BCP Land Defendants argue Plaintiff “waived” any argument that the buyers qualify as “control entities” of
BCP Land by not specifically raising an argument regarding the “controlled, controlled by or under common control
with the Developer” language in response to Defendants’ motion for summary judgment. The Court rejects
Defendants’ argument. Plaintiff acknowledged at oral argument and in its supplemental brief that Plaintiff’s initial
briefing analyzed the buyers’ connections to BCP Land using definitions of the term “affiliate”; however, both
parties agree that an analysis of the term “affiliate” necessarily involves an analysis of degree of control. The BCP
Land Defendants actually state in their supplemental briefing that “the ‘affiliate’ analysis is virtually the same as the
‘control’ analysis” and that, under Defendants’ suggested definitions, “an affiliate is an entity that controls, is
controlled by, or is under common control with, some other entity” such that the questions “are, effectively, one and
the same.” The Court allowed supplemental briefing on the issues discussed at oral argument and Defendants were
in no way prejudiced because all parties were permitted to submit supplemental and responsive supplemental briefs.
14
parent, or sibling corporation.” BLACK’S LAW DICTIONARY 63 (8th ed. 2004). As an initial
matter, the Court notes the Trust Indenture uses the word “affiliate” as a noun – i.e. “Branson
Commerce Park, L.L.C., and affiliates or successors thereof” – and, therefore, a noun definition
is the most appropriate under the circumstances.
Although Plaintiff argues the plain and
ordinary meaning of the term “affiliate” essentially means a member of a team, the Court is more
persuaded by Defendants’ argument that the term “affiliate” requires more than simple
association, relationship, or connection, and necessarily involves an element of control. Such an
interpretation is more consistent with noun definitions provided for the term “affiliate”8 and is
more consistent with the purposes of the DPRF and Trust Indenture as a whole.9 Based on the
nature of the contract involved here – a heavily negotiated Trust Indenture involving
sophisticated parties – and the purposes and circumstances of the contract, the Court finds the
legal definition of “affiliate” as provided in Black’s Law Dictionary is the most appropriate
definition under the circumstances. See generally Schler, 426 S.W.3d at 723 (“the contract’s
context must be considered in applying the appropriate dictionary definition”).
8
For example, the American Heritage Dictionary defines “affiliate” as “[a] person, organization, or establishment
associated with another as a subordinate, subsidiary, or member: network affiliates.” Affiliate Definition,
AHDICTIONARY.COM, https://ahdictionary.com/word/search.html?q=affiliate (last visited March 9, 2016).
The
Merriam-Webster’s Dictionary defines “affiliate” as “an organization (such as a television station) that is a member
of a larger organization (such as a national network).”
Affiliate Definition, MERRIAM-WEBSTER.COM,
http://www.merriam-webster.com/dictionary/affiliate (last visited March 9, 2016). The Dictionary.Com definition
– which is based on Random House Dictionary definition – for “affiliate” is “a branch organization” or “a business
concern owned or controlled in whole or in part by another concern” or “a subsidiary” or “a person who is affiliated;
associate; auxiliary.” Affiliate Definition, DICTIONARY.COM, http://www.dictionary.com/browse/affiliate?s=t (last
visited March 9, 2016). The Business Dictionary states that “[t]wo parties are affiliates if either party has the power
to control the other, or a third party controls or has the power to control both.” Affiliate Definition,
BUSINESSDICTIONARY.COM, http://www.businessdictionary.com/definition/affiliate.html (last visited March 9, 2016).
9
While the DPRF was established to provide security to the bondholders in the event the Developer failed to pay
special assessments, the DPRF was never intended to continue in perpetuity and the goal under the Trust Indenture
was always to develop the property, sell the property, and pass the special assessments along to third party buyers.
To hold that DPRF funds cannot be released back to the Developer (in this case Redwine, due to the assignment)
simply because a third party buyer has some sort of relationship or association with the Developer (or its members)
without any element of control between the two clearly goes beyond the purpose of the DPRF and is surely not what
was contemplated by the parties.
15
With regard to the term “control” as used in the definition of “affiliate” and as used in the
“controlling, controlled by or under common control” language in the Trust Indenture, the Court
finds the appropriate definition again comes from Black’s Law Dictionary.
Black’s Law
Dictionary defines “control” as “[t]he direct or indirect power to govern the management and
policies of a person or entity, whether through ownership of voting securities, by contract, or
otherwise; the power or authority to direct, manage, or oversee.” BLACK’S LAW DICTIONARY
353 (8th ed. 2004). This legal definition is consistent with the nature and context of the Trust
Indenture and the parties agree that Black’s Law Dictionary provides the appropriate definition.
See Pl.’s Supp. Sugg. at 13; BCP Land Defs’ Supp. Sugg. at 6. Moreover, when the term
“control” is used as a verb, as opposed to a noun, Black’s Law Dictionary defines control as “[t]o
exercise power or influence over” and “to regulate or govern.” BLACK’S LAW DICTIONARY 353
(8th ed. 2004). That broader definition of control is relevant to the “controlling, controlled by,
and under common control” language.
Despite citing to the above definition for control, the BCP Land Defendants stated at oral
argument that “the question is really whether there’s actual legal enforceable control” and in a
footnote of supplemental briefing argued “‘[i]ndirect’ control does not mean, as BOKF seems to
argue, the potential to influence, without any facts supporting the conclusion that this potential to
influence was coupled with the legal ability to compel some conduct.’” Hrg. Tr. 91; Defs.’ Resp.
Pl.’s Supp. Sugg. at 7 n.6. Defendants’ arguments attempting to narrow the definition of
“control” and/or diverge from the definitions cited above are unpersuasive. The BCP Land
Defendants cite no legal authority10 for such a limited interpretation of the above definition and
10
The BCP Land Defendants attached to their supplemental suggestions a declaration by Douglas Stone, an attorney
who drafted and revised the bond documents at issue here, wherein Mr. Stone explains that he changed the prior
language in Section 406(c) from “affiliated with” to “controlling, controlled by or under common control with” in
order to (1) specify the meaning of affiliate, and (2) to narrow the concept of affiliation to reflect the common
16
the Trust Indenture makes no mention of “corporate” or “actual legal enforceable” control. See
generally The Renco Grp., Inc. v. Certain Underwriters at Lloyd's, London, 362 S.W.3d 472,
479 (Mo. Ct. App. 2012) (“Respondents’ interpretation adds limiting language into the policy
provision that is not there, materially altering it. An interpretation that inserts language into a
contract is forbidden.”).
Applying the above definitions for “affiliate” and “control” to the facts presented in this
case, the Court finds there are genuine issues of material fact regarding whether the 2012
purchasers qualify as “affiliates” of BCP Land or are considered “controlling, controlled by or
under common control” with BCP Land or its affiliates. The BCP Land Defendants argue
Plaintiff has presented facts that merely indicate Kynion was an advisor, expert, consultant,
representative, and agent of BCP Land but Plaintiff has failed to present any facts that show the
2012 purchasing entities were “affiliates” of BCP Land or in a “control” relationship with BCP
Land. The BCP Land Defendants point out that there is no overlapping ownership between BCP
Land and the 2012 purchasing entities and there are no agreements, written or otherwise, that
give BCP Land the power or authority to direct the policy or management of the 2012 purchasing
entities, or vice versa. The Court disagrees with Defendants’ analysis and finds a jury could find
BCP Land and/or Kynion’s entities had indirect power to govern the management, policies, and
actions of the other or had the power or authority to direct, manage, or oversee the other. While
Defendants correctly state that there is no evidence of direct power through common ownership,
corporate concept of affiliate, which involves actual control over an entity. Defs’ Supp. Sugg., Ex. 1, at ¶¶ 6-7. As
an initial matter, the Court notes there is no evidence in the record indicating the Trustee or Bond Counsel knew Mr.
Stone’s subjective intentions in making the modifications cited above or that the bondholders were aware of such
revisions. Moreover, the Court finds it inappropriate to consider Mr. Stones’ declaration because the term “control”
is not ambiguous as used in the Trust Indenture. Dunn Indus. Grp., Inc. v. City of Sugar Creek, 112 S.W.3d 421,
429 (Mo. 2003) (“Extrinsic evidence may not be introduced to vary or contradict the terms of an unambiguous
agreement or to create an ambiguity.”). Furthermore, courts are to give a term its ordinary and plain meaning
“unless it plainly appears that a technical meaning was intended.” Farmland Indus., Inc. v. Republic Ins. Co., 941
S.W.2d 505, 508 (Mo. 1997).
17
ownership of voting securities, or an express written contract, the definition of control is not so
limited; rather, the definition states the power may be “indirect” and may come from something
other than ownership or a contract. Upon review, viewing the evidence in the light most
favorable to Plaintiff, the Court finds Plaintiff has presented sufficient circumstantial evidence
regarding the ties and relationship between the 2012 purchasing entities and BCP Land to create
a jury question regarding whether such “control” existed.11
Defendant Redwine makes similar arguments as to the 2013 purchasing entities. As to
Appliance Center of the Ozarks, LLC, the undisputed facts show the owner of that entity,
Engram, was employed as a sales consultant for BCP Land in the fall of 2013 and BCP Land
paid Engram’s LLC $1,000 per month for Engram’s services plus a commission for sales that he
generated. Engram held himself out as the “Sr. Director of Business Development” of Branson
Commerce Park. At or around that same time, Engram, acting on behalf of Appliance Center of
the Ozarks, LLC, purchased Lot 38MF from BCP Land. As to Business Advisors, LC, the
undisputed facts show the two owners of that entity – Hanson and Gilliford – had a prior
relationship with Kynion. Gilliford served as Kynion’s legal counsel and helped Kynion create
and prepare the bid forms for Grace Properties Branson, LLC when it purchased land from BCP
Land and was directed by Kynion to ensure Kynion’s name never showed up on any of the bid
documents. Hanson had a close personal and business relationship with Kynion and learned of
the auction where Business Advisors, LC purchased land from BCP Land through Kynion. With
11
See generally Mo. Rev. Stat. § 527.090 (“When a proceeding under sections 527.010 to 527.130 involves the
determination of an issue of fact, such issue may be tried and determined in the same manner as issues of fact are
tried and determined in other civil actions in the court in which the proceeding is pending.”); see, e.g., Turnbull v.
Car Wash Specialties, LLC, 272 S.W.3d 871, 874 (Mo. Ct. App. 2008) (“[I]n order to determine the rights of the
parties under the Lease, the court must determine whether there was an implied easement to the Tract, and if so,
whether such easement may be terminated. Both determinations require specific factual findings. Pursuant to section
527.090, Car Wash Specialties is entitled to have such factual questions submitted to the jury for its determination.
After the jury has made the necessary findings of fact, the trial court can properly determine the rights of the parties
under the Lease, and enter declaratory judgment accordingly.”)
18
regard to the unpaid special assessments, Gilliford admitted at his deposition that “we had no
intention of ever paying them.” Again, based on the circumstantial evidence and viewing the
evidence before the Court in the light most favorable to Plaintiff, the Court finds there is
sufficient evidence to create a jury question regarding whether the necessary “control”
relationship – i.e. “[t]he direct or indirect power to govern the management and policies of a
person or entity” or “the power or authority to direct, manage, or oversee” – existed in this case
between the 2013 purchasing entities and BCP Land or BCP Land’s successors or affiliates.
2. RICO and Fraudulent Misrepresentation Claims
The BCP Land Defendants argue they are entitled to judgment as a matter of law on
Plaintiff’s RICO and fraudulent misrepresentation claims because: (1) those claims are barred by
the economic loss doctrine, (2) the alleged conduct does not amount to “racketeering activity”
under RICO, and (3) the alleged false representations were not false or representations of fact.
The Court finds each of these arguments is unavailing.
First, the BCP Land Defendants argue they are entitled to judgment on Plaintiff’s RICO
and fraudulent misrepresentation claims because those claims are barred by the economic loss
doctrine. Defendants argue the claims are barred because they “stem solely from a determination
of whether BCP Land’s sales of property in 2012 and 2013 satisfied the requirements of Section
406(c) of the Trust Indenture” and “BOKF’s actual damages for fraud are the same damages it
seeks in its declaratory judgment and unjust enrichment claims.” Plaintiff argues in response
that there is no authority for application of the common law economic loss doctrine to RICO
claims, that Missouri courts allow liability in tort to co-exist with liability in contract, that the
economic loss doctrine is inapplicable because the losses at issue do not result from a breach of
19
contractual duty owned by BCP Land Defendants, and that Plaintiff’s fraud-based claims seek
damages beyond what is provided in their declaratory judgment and unjust enrichment claims.
The economic loss doctrine generally prohibits a plaintiff from seeking to recover in tort
for economic losses that are contractual in nature. Autry Morlan Chevrolet Cadillac, Inc. v. RJF
Agencies, Inc., 332 S.W.3d 184, 192 (Mo. Ct. App. 2010). “The doctrine was judicially created
to protect the integrity of the U.C.C. bargaining process; it prevents tort law from altering the
allocation of costs and risks negotiated by the parties.” Marvin Lumber & Cedar Co. v. PPG
Indus., Inc., 223 F.3d 873, 882 (8th Cir. 2000). In Missouri, “the economic loss doctrine grew
out of claims of tort which were alleged against builders of homes, or instances where a plaintiff
sought to hold a manufacturer or distributor of a product liable in tort[.]”
Autry Morlan
Chevrolet Cadillac, 332 S.W.3d at 194. Missouri courts have recognized exceptions to the
economic loss doctrine in cases involving a fiduciary relationship, negligence in providing
professional services, the breach of a public duty, and in some cases involving real property
rights. See generally Trademark Med., LLC v. Birchwood Labs., Inc., 22 F. Supp. 3d 998, 1002
(E.D. Mo. 2014); Bruce Martin Const., Inc. v. CTB, Inc., No. 1:10CV205 SNLJ, 2012 WL
718624, at *3 (E.D. Mo. Mar. 6, 2012) aff'd, 735 F.3d 750 (8th Cir. 2013).
Upon review, the Court cannot say as a matter of law that Plaintiff’s claims are barred by
the economic loss doctrine. As noted by Plaintiff, this suit involves a declaratory judgment
action rather than a breach of contract action and Plaintiff asks the Court to interpret the terms of
the Trust Indenture to which Defendants are a direct party.12 Defendant cites no case law
indicating the economic loss doctrine applies in such an instance. See contra. Jo Ann Howard &
12
The Developer made no binding promises in the Trust Indenture nor did the Developer sign the Trust Indenture.
Although Section 406(c) mentions the Developer in the context of the DPRF, that section generally discusses when
the Trustee is obligated to release DPRF funds. Unlike the Replenishment Covenant, Section 406(c) and the Trust
Indenture document itself contain no explicit covenants by the Developer.
20
Associates, P.C. v. Cassity, No. 4:09CV01252 ERW, 2014 WL 7408884, at *9 (E.D. Mo. Dec.
31, 2014) (“The economic loss doctrine does not apply here because the consumers and funeral
homes were not in contract with Comerica and could not have brought breaches of contract
claims.”).
Even assuming the economic loss doctrine does apply in the above scenario,
Defendants have not established the doctrine applies in the trust/bond securities context as
opposed to the commercial and real estate context.13 Furthermore, Plaintiff seeks attorney fees
and trustee fees that are not otherwise recoverable in declaratory judgment and unjust enrichment
claims. See Trademark Med., 22 F. Supp. 3d at 1003 (noting one “key” factor to consider in
determining whether fraud claim is independent of contract claim is whether plaintiff suffered
additional damages outside the contract as a result of the alleged fraud).14
Second, the BCP Land Defendants argue that “[e]ven if the Court were to find that the
economic loss doctrine does not apply to Plaintiff’s RICO claim, the Court should nevertheless
grant summary judgment in BCP Land Defendants’ favor because the alleged conduct of BCP
Land Defendants does not amount to ‘racketeering activity’ under RICO.” Defendants argue the
type of conduct at issue in this case does not qualify as “racketeering activity” as a matter of law
because “Plaintiff’s RICO claim amounts to nothing more than an allegation that on multiple
occasions over a two year period, the BCP Land Defendants failed to satisfy Section 406(c)’s
13
The Court’s independent research revealed one Missouri case involving an indenture trustee/bond issuer
relationship. Higher Educ. Loan Auth. of the State of Missouri v. Wells Fargo Bank, N.A., No. 4:10CV01230 AGF,
2011 WL 6010683 (E.D. Mo. Dec. 2, 2011). In that case, the court held the plaintiff’s tort claims were not barred by
the economic loss doctrine as a matter of law based on the professional services exception. Id. at *6-8. While that
case is clearly distinguishable because the defendant there was the trustee under the trust indenture, the Court finds it
is informative in the context at issue here.
14
Attorney fees are only recoverable if authorized by statute or contract. Lucas Stucco & EIFS Design, LLC v.
Landau, 324 S.W.3d 444, 445 (Mo. 2010). The BCP Land Defendants point to Section 802 of the Trust Indenture
for the proposition that attorney fees and trustee fees are recoverable under the contract. However, the provision
cited by Defendants is the general provision allowing the Trustee to be paid by the District for its ordinary and
extraordinary services and counsel fees; that provision does not provide for attorney fees to be awarded in litigation.
21
requirements” and there is no support for the argument that “multiple breaches of contract can
act as the foundation for a RICO claim.”
This argument misses the mark. In the Amended Complaint, Plaintiff alleges predicate
acts of bank fraud and wire fraud. Those offenses are specifically enumerated within the
statutory definition of “racketeering activity[.]”
See 18 U.S.C. § 1961(1) (“‘racketeering
activity’ means . . . (B) any act which is indictable under any of the following provisions of title
18, United States Code: . . . section 1341 (relating to mail fraud), section 1343 (relating to wire
fraud)”).15 The BCP Land Defendants do not argue that Plaintiff failed to present sufficient
evidence as to any particular element of bank fraud or wire fraud such that Plaintiff has failed to
meet its burden to prove the alleged racketeering activity.16 Therefore, Defendants have not met
their burden to show they are entitled to judgment as a matter of law. To the extent the BCP
Land Defendants intended to argue that Plaintiff has failed to prove a “pattern” of racketeering
activity due to the type and nature of the transactions involved, the Defendants failed to provide
any new argument or binding or persuasive authority that commands the Court to reconsider its
prior ruling on that issue. See Order, Doc. 104, at 13-17.
Third, the BCP Land Defendants argue Plaintiff’s fraud-based claims should fail because
the false misrepresentations pled in the Amended Complaint are neither false nor representations
of fact.
Plaintiff argues in response that the BCP Land Defendants failed to disclose the
15
This case is clearly distinguishable from Annulli v. Panikkar, cited by Defendants, where the plaintiff alleged
“theft by deception” as the predicate act of racketeering activity and the Third Circuit held “theft by deception, like a
simple breach of contract or intentional interference with contract, is not a predicate act of racketeering activity
enumerated in § 1961(1).” 200 F.3d 189, 199 (3d Cir. 1999). Similarly, in Stangel v. A-1 Freeman N. Am., Inc.,
cited by Defendants, the plaintiff “listed no actions in their Complaint that constitute racketeering activity under this
[Section 1961(1)].” No. CIV.A. 3:01-CV-2198M, 2001 WL 1669387, at *1 (N.D. Tex. Dec. 27, 2001).
16
Again, compare to Annulli v. Panikkar, cited by Defendants, where the Third Circuit held that the plaintiff
sufficiently pled the elements of mail and wire fraud to survive a motion for judgment on the pleadings, but later the
plaintiff’s RICO claim failed because the plaintiff failed to introduce any evidence into the record showing the
defendant mailed anything to plaintiff or had phone communications across state lines with plaintiff within the
statutory time period. 200 F.3d at 200.
22
relationship and degree of control between BCP Land and the purchasing entities, which Lopez
was required to do based on the relationship of confidence and trust between the parties and BCP
Land’s superior knowledge of material facts not within the reasonable reach of Plaintiff.
To the extent the BCP Land Defendants argue Plaintiff failed to show the representations
at issue were false, the Court has already determined that issue is for the jury to decide.17 To the
extent the BCP Land Defendants argue the representations do not amount to representations of
fact, the Court agrees; Lopez’s allegedly false representations – i.e. that DPRF funds should be
released to Redwine – do not convey a specific fact but, instead, convey Lopez’s
opinion/expectation that the criteria of Section 406(c) were satisfied and that the funds should be
released. See Watkins v. Gross, 772 S.W.2d 22, 24 (Mo. Ct. App. 1989) (“Mere statements of
opinion, expectations and predictions for the future are insufficient to authorize a recovery for
fraudulent misrepresentation.”). However, the Court finds Plaintiff has presented sufficient
evidence and argument regarding failure to disclose to submit that issue to the jury.18 Under
Missouri law, a party has a duty to disclose “where there is a relationship of trust and confidence
between the parties or where one party has superior knowledge or information of a material fact
that is not within the fair and reasonable reach of the other party.” White v. Bowman, 304
S.W.3d 141, 149 (Mo. Ct. App. 2009). Here, Plaintiff argues Lopez had a duty to disclose based
on his special relationship of trust and confidence with the Trustee and/or because he had
superior knowledge of the relationship between BCP Land and the purchasing entities as
17
See discussion supra at Section II.C.1.
18
The BCP Land Defendants argue Plaintiff failed to plead fraudulent omission and cannot raise that claim now.
Under Missouri law, there is no separate tort for “fraudulent nondisclosure”; rather, “in such cases, a party's silence
in the face of a legal duty to speak replaces the first element [of fraudulent misrepresentation]: the existence of a
representation.” Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 765 (Mo. 2007). Plaintiff argues that
“[t]he omissions arise from the same statements alleged in the Amended Complaint – those statements omitted
material facts regarding BCP Land’s relationship with the purchasers, which Mr. Lopez had a duty to disclose.” The
Court finds the BCP Land Defendants were sufficiently notified of Plaintiff’s failure to disclose argument
throughout the pleadings, discovery, and otherwise.
23
compared to the Trustee and the Trustee could not discover such information with reasonable
diligence. Whether Plaintiff can satisfy the elements of fraudulent misrepresentation is an issue
for the jury.19
III. MOTIONS TO EXCLUDE EXPERT TESTIMONY
Plaintiff and the BCP Land Defendants filed motions to exclude expert testimony under
Daubert and/or the Federal Rules of Evidence. These motions are both denied and the parties
are invited to raise more specific objections to specific testimony through motions in limine.
A. Standard
The standard to admit expert testimony is stated in Federal Rule of Evidence 702 as
amended in 2000 to conform with Daubert v. Merell Dow Pharmaceuticals, Inc., 509 U.S. 479
(1993). The Rule states:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized knowledge will help the
trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the
case.
Fed. R. Evid. 702. “The proponent of the expert testimony must prove its admissibility by a
preponderance of the evidence.” Lauzon v. Senco Products, Inc., 270 F.3d 681 (8th Cir. 2001).
B. Application
1. Plaintiff’s Motion to Exclude Expert Testimony of Aaron March
The BCP Land Defendants designated Aaron March, an attorney who concentrates his
practice on economic development, zoning, and land use matters, to testify as an expert
19
With regard to both the declaratory judgment/unjust enrichment claims and fraudulent misrepresentation/RICO
claims, the Court notes this order finds only that, based on the evidence clearly presented to the Court thus far and
the standards relevant to summary judgment, Plaintiff is able to survive summary judgment. The sufficiency of the
evidence on each of these claims, of course, will be revisited at trial.
24
regarding “the terms and conditions under which monies on deposit in the [DPRF] are to be
released and returned by the Trustee to the Developer.” Plaintiff moves to exclude the reports
and testimony of Mr. March on grounds that: (1) he lacks sufficient experience to be qualified to
testify as an expert because “[a]lthough Mr. March has experience related to certain aspects of
Missouri’s economic development laws, he has no experience representing a trustee and has
never been involved in a bond transaction in which there has been a default”; and (2) his
testimony includes information regarding Section 406(e) of the Trust Indenture and other types
of release provisions not included in the Trust Indenture, both of which are not relevant to any
material issue in this case.
The Court agrees with Defendants that Plaintiff’s objection to Mr. March’s expertise goes
to the weight of his testimony rather than its admissibility. See generally Robinson v. GEICO
Gen. Ins. Co., 447 F.3d 1096, 1100 (8th Cir. 2006) (“Gaps in an expert witness’s qualifications
or knowledge generally go to the weight of the witness's testimony, not its admissibility.”).
Plaintiff’s objection to the relevancy of certain portions of Mr. March’s testimony will be more
appropriately addressed either at the pre-trial conference or during trial. Accordingly, Plaintiff’s
motion to exclude the expert opinion of Mr. March is DENIED at this time.
2. BCP Land Defendants’ Motion to Exclude Expert Testimony of James E. Spiotto
Plaintiff designated James Spiotto, a licensed attorney and managing director at Stratman
Strategic Advisors, LLC, as a rebuttal expert who will testify regarding whether Plaintiff “(a)
properly declined to release the moneys on deposit in the [DPRF] to the Developer in 2013
subject to obtaining a court ruling regarding the right to such moneys and (b) [a]cted properly in
filing a lawsuit to determine if the moneys released to the Developer in 2012 from the DPRF
should be returned to [Plaintiff].” The BCP Land Defendants argue the Court should strike the
25
report of Mr. Spiotto and exclude his testimony because: (1) his opinions are inadmissible legal
conclusions regarding the interpretation of the Trust Indenture and the parties’ duties under the
Trust Indenture; (2) his opinions will not assist the trier of fact in understanding the evidence or
determining any fact in issue because they focus entirely on whether Plaintiff acted appropriately
in filing suit and in seeking guidance from the Court, which are not at issue in this case; and (3)
his opinions are not reliable because they attempt to insert additional implied terms into Section
406, which is an unambiguous contract.
The Court agrees with Plaintiff that “[t]o the extent the BCP Defendants’ expert is
permitted to testify regarding the Trustee’s duties and the impact of the terms of the Trust
Indenture, the Trustee should be able to rebut those opinions with its own expert.” See generally
Sancom, Inc. v. Qwest Commc'ns Corp., 683 F. Supp. 2d 1043, 1056 (D.S.D. 2010) (“Expert
testimony on the meaning of a contract containing technical terms may be admissible. . . . Here,
Owens’ proposed testimony would identify the relevant terms of Sancom’s contracts with Free
Conference and Ocean Bay, identify the topics that were not covered by these contracts, and
explain how the terms (and the issues not covered in the contracts) affect the issues before the
jury. This testimony would be helpful to the finder of fact[.]”). To the extent that Defendants
seek to exclude a specific legal conclusion, they may specifically bring that specific part of the
report to the Court’s attention. See Cowden v. BNSF Ry. Co., 980 F. Supp. 2d 1106, 1118 (E.D.
Mo. 2013) (“although expert witnesses may ‘embrace’ an ultimate issue in their testimony, they
may not state legal standards or draw legal conclusions by applying law to the facts”). Plaintiff
argues Mr. Spiotto’s testimony will assist the jury because it rebuts Mr. March’s opinion that the
Trustee had no discretion under the Trust Indenture to determine whether to release portions of
the DPRF. The Court cannot rule on this issue until the Court hears what Mr. March testifies to
26
at trial. Finally, as to the additional implied terms, the parties apparently agree that the duty of
good faith and fair dealing applies to the Trust Indenture. To the extent Defendants disagree
with Mr. Spiotto’s application of that implied term, Defendants may cross-examine Mr. Spiotto
and/or present rebuttal testimony.20
III. DECISION
Based on the foregoing discussion, Plaintiff’s Motion for Summary Judgment (Doc. 264)
is hereby DENIED, BCP Land Defendants’ Motions for Summary Judgment (Doc. 258, 260) are
hereby DENIED, Defendant Redwine’s Motion for Summary Judgment (Doc. 262) is DENIED,
and the parties’ motions to exclude expert testimony (Docs. 252, 254) are DENIED.
IT IS SO ORDERED.
Date: March 9, 2016
/s/ Douglas Harpool_______________
DOUGLAS HARPOOL
UNITED STATES DISTRICT JUDGE
20
The Court notes that neither expert will not be permitted to testify in a way that is inconsistent the Court’s
findings and interpretations as stated in this order or as hereafter determined through jury instructions, etc.
27
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