Owner Operator Independent Drivers Association Inc et al v. Comerica Bank
Filing
152
ORDER DENYING 145 Notice, Defendant Comerica's offer of proof and request that the Plaintiffs be required to prove damages filed by Comerica Bank. Signed by Judge Algenon L. Marbley on 12/1/2011. (cw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
OWNER-OPERATOR INDEPENDENT
DRIVERS ASSOCIATION, CARL HARP
and MICHAEL WISE, as Representatives
of the Class and THE CERTIFIED CLASS
OF OWNER-OPERATORS, Case No.
C2-97-740 United States District Court
for the Southern District of Ohio,
Plaintiffs,
v.
COMERICA BANK,
Defendant.
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Case No. 05-CV-0056
JUDGE ALGENON L. MARBLEY
Magistrate Judge King
OPINION AND ORDER
I. INTRODUCTION
Proof Related to Damages, which seeks an Order from this Court requiring Plaintiffs’ to
prove their damages in this case. On October 31, 2011, at the close of trial, the Court granted
Defendant leave to file a written proffer in light of new evidence on the issue of Plaintiffs’
damages, which had been established prior to trial and were therefore not at issue in the trial.
The matter is now fully briefed and ripe for decision. For the reasons stated below, Defendant’s
request that Plaintiffs be required to prove the amount of their damages recoverable from
Defendant Comerica Bank is DENIED.
II. BACKGROUND
The essential facts concerning the amount of Plaintiffs’ damages in this case are as
follows. Plaintiffs seek to enforce the final judgment entered by this Court on July 16, 2004, in
OOIDA v. Arctic Express, Inc., No. 97-750 (the “Arctic Litigation”) against Defendant Comerica
Bank, Arctic’s creditor, for the return of maintenance escrow funds owed to the plaintiff class of
owner-operators.
In October 2003, Arctic and D & A filed a voluntary petition for bankruptcy in the
United States Bankruptcy Court for the Southern District of Ohio, thus halting the Arctic
Litigation. In January 2004, Plaintiffs commenced an adversary proceeding against Arctic, D &
A, and Comerica in the bankruptcy court, seeking return of the escrow funds owed to the Arctic
Litigation class members. In May 2004, Plaintiffs entered into a $5.5 million settlement
agreement with Arctic and D & A, which was approved by this Court in July 2004. After entry
of the judgment and finalization of Arctic’s plan of reorganization, the Plaintiffs then sought to
satisfy their judgment against Comerica.
On May 27, 2005, Plaintiffs filed their First Amended Complaint against Comerica,
seeking restitution or disgorgement of “the full amount in maintenance escrow funds plus
interest in an amount equal to that awarded in Judgment entered in the Arctic Litigation.” (Dkt.
7). Comerica filed a motion to dismiss Plaintiffs’ claims, arguing, inter alia, that Comerica
could not be bound by the judgment against Arctic because Comerica was not a party to the prior
lawsuit. (Dkt. 10). This Court denied that basis for dismissal in its May 16, 2006, Order, ruling
that “the Class may continue to seek restitution from Defendant for the return of Plaintiffs’
escrow funds.” Owner Operator Indep. Drivers Ass’n v. Comerica Inc., Case No. 05-cv-056,
2006 U.S. Dist. LEXIS 29756, at *23 (S.D. Ohio 2006).
Plaintiffs amended their Complaint once more, seeking the same recovery for the full
amount of the Arctic Litigation judgment. (Dkt. 26). On April 11, 2007, Comerica moved to
dismiss the Second Amended Complaint, but did not again raise the issue of whether Comerica
could be bound to the judgment from the Arctic Litigation. (Dkt. 28). The Court denied
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Comerica’s motion, opining that the funds held in escrow were subject to a statutory trust for
Plaintiffs’ benefit, and Plaintiffs were entitled to pursue a common law claim against Comerica
for restitution. See Owner Operator Indep. Drivers Ass’n, Inc. v. Comerica Inc., No. 2:05-CV00056, 2006 U.S. Dist. LEXIS 29756, at *4 (S.D. Ohio May 16, 2006) (unpublished).
The parties filed cross-motions for summary judgment. Comerica disputed the amount of
damages Plaintiffs could prove against it, arguing that “Plaintiff must be able to prove that all of
the [maintenance escrow] funds are somehow in the hands of Comerica.” (Dkt. 54). In its March
16, 2009, Order granting Comerica’s motion for summary judgment and denying Plaintiffs’
cross-motion, the Court disagreed, finding that, “[r]egardless of Comerica’s lack of participation
in the damages calculation in the Arctic Litigation, Plaintiffs can seek restitution of the judgment
amount from Comerica.” Owner Operator Indep. Drivers Ass’n, Inc. v. Comerica Bank, 615 F.
Supp. 2d 692, 703 (S.D. Ohio 2009). Plaintiffs appealed that order to the Sixth Circuit.
On March 3, 2011, the Sixth Circuit affirmed the Court’s ruling on summary judgment in
part and reversed in part. With respect to the damages issue, the panel found that “the particulars
of Arctic’s banking relationship with Comerica were accurately explained by the district court,”
Owner Operator Indep. Drivers Ass’n v. Comerica Bank (In re Arctic Express), 636 F.3d 781,
788 (6th Cir. 2011), and thus Comerica “must therefore disgorge the trust property received in
breach of trust unless it can establish a viable defense.” Id. at 801.
On remand, this Court ordered pretrial briefing from parties on the issues of whether
extraordinary discovery should be allowed and whether damages should be an issue at trial.
Comerica once again took the opportunity to contest the amount of damages and argued it should
be proved by Plaintiffs at trial. (Dkt. 80). In its August 11, 2011, Order this Court found that the
Sixth Circuit’s holding conclusively established the issue of recoverable damages against
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Comerica at $5,583,084, and that the only issue at trial would be the viability of Comerica’s
statute of limitations defense. (Dkt. 84). Trial commenced on October 3, 2011, and on October
5, 2011, the Court stayed proceedings and ordered Plaintiffs to produce materials in their
possession that were responsive to Defendant’s extraordinary discovery requests and the Court’s
prior orders.
Defendant now claims that documents produced by Plaintiffs pursuant to the Court’s
October 5, 2011, Order provide new evidence that shows Plaintiffs and Arctic colluded together
in the damages amount reached at settlement, and therefore Plaintiffs should have to prove their
damages against Comerica.
III.
A.
LAW AND ANALYSIS
Defendant’s Claim that Plaintiffs Be Required to Prove their Damages
Defendant’s Proffer to the Court can be divided into two separate requests: First,
Defendant argues that the judgment reached against Arctic through settlement in the amount of
$5,583,084 reflects Plaintiffs’ damages against Arctic, not Comerica, and therefore Plaintiffs
should be required to prove the amount of restitution Comerica owes under their statutory trust
theory of recovery. Second, Defendant offers new documents produced by Plaintiffs during the
October 2011 trial which, they argue, show that the amount of the damages in this case was
inflated by Plaintiffs and Arctic during settlement, as both parties had an incentive to agree to a
higher amount. Plaintiffs, Defendant argues, should therefore have to prove the accurate amount
of damages for which Comerica is liable, which they have not done. The Court will treat each
argument in turn.
Defendant’s first argument, that it should not be held liable for the amount of damages
reached in the Arctic Litigation, is essentially a motion for reconsideration of this Court’s August
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19, 2011, Order which, in interpreting the Sixth Circuit’s prior opinion, held that “the question of
the amount of damages that the Defendant owes to Plaintiffs has therefore already been
determined” in the amount of $5,583,084. (Dkt. 84). The judgment of the Court determining the
damages in this case will stand, therefore, unless Defendant could not have discovered the
current theory for reconsideration at the time even with the exercise of due diligence:
The purpose of a motion to alter or amend judgment is to correct manifest errors
of fact or law. It is not ordinarily the function of a motion to reconsider either to
renew arguments already considered and rejected by a court or to proffer a new
legal theory or new evidence to support a prior argument when the legal theory or
argument could, with due diligence, have been discovered and offered during the
initial consideration of the issue. If a party disagrees with the Court’s decision on
a legal issue, its “proper recourse” is not by way of a motion for reconsideration
“but appeal to the Sixth Circuit.”
Jones v. Brunsman, Case No. 2:08-cv-0026, 2009 U.S. Dist. LEXIS 108241, at *1 (S.D. Ohio
2009) (citing McConocha v. Blue Cross and Blue Shield Mut. of Ohio, 930 F. Supp. 1182, 1184
(N.D. Ohio 1996); see also Am. Marietta Corp. v. Essroc Cement Corp., 59 F. App’x 668, 671
(6th Cir. 2003) (“[A] motion to reconsider should not be used to re-litigate issues previously
considered.”).
Defendant argues that the most recent production of documents from Plaintiffs “bears
directly on the accuracy and applicability [of] the amount Plaintiffs are seeking in restitution
from Comerica,” (Proffer at 2); however, with respect to this first issue—the applicability—
Defendant does not point to anything within the new production that supports its claim. Rather,
Defendant argues that the trial record now demonstrates that Plaintiffs have not “tied the
maintenance funds to an amount of restitution against Comerica” and therefore “it is imperative
that Plaintiffs prove their damages against Comerica” (Proffer at 3).
This argument is the same one Defendant made in pre-trial briefing which the Court
rejected in its August 19, 2011, Order. In Defendant’s pre-trial brief, it similarly argued that
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“Plaintiffs should be required to prove their damages against Comerica to establish their claim
for breach of trust,” making more or less identical arguments regarding the nature of Plaintiffs’
theory of recovery against Comerica. (Dkt. 80). The Court did not require further evidence, or a
trial, to interpret the Sixth Circuit’s holding as establishing the amount of damages against
Comerica. (Dkt. 84) (citing In re Arctic Express, Inc., 636 F.3d at 801). Defendant’s renewed
argument on the same grounds post-trial is likewise dismissed.
B.
Defendant’s Proffered Evidence Undermining the Accuracy of Damages
Second, Defendant offers certain documents produced in Plaintiffs’ latest set of
disclosures as new evidence that the amount of Plaintiffs’ damages in this case is inaccurate.
The documents include (i) letters between Plaintiffs’ counsel, Ms. Joyce Mayers, and Arctic’s
counsel discussing their understanding that Plaintiffs would be pursuing Comerica for the full
amount of damages; (ii) a letter from Ms. Mayers to Arctic’s counsel which Defendant alleges
indicates improper interest compounding in calculating the interest portion of the damages
figure, contrary to the Court’s explicit instructions; and (iii) Plaintiffs’ attorney billing statements
with time entries indicating research into binding Comerica to the judgment reached against
Arctic under the doctrine of offensive collateral estoppel. These documents, argues Defendant,
“confirm suspicions” that the established settlement amount of damages from the Arctic
Litigation is arbitrary and the result of collusion between Plaintiffs and Arctic.
1.
Settlement discussions between Plaintiffs and Arctic regarding damages
Defendant offers copies of letters between Ms. Mayers and Arctic’s counsel discussing
their agreement to limit Arctic’s liability to a fraction of the full amount, and Arctic’s
cooperation in Plaintiffs’ pursuit of the full amount against Comerica as evidence that Plaintiffs
and Arctic colluded during settlement negotiations in reaching the total amount of damages.
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Specifically, Defendant argues that these documents show that the agreement between Plaintiffs
and Arctic during settlement was a collusive arrangement to inflate the total damages sum with
the understanding that it would be Comerica, not Arctic, which would be held liable for the full
amount. Neither of the settling parties had an incentive to “negotiate down” the dollar amount,
and, in fact, once Arctic knew its damages were capped at $900,000, both Plaintiffs and Arctic
had an incentive to drive up the total amount.
The flaw in the Defendant’s position is that while these particular documents may be new
to its attorneys’ eyes, what they show about the structure of the settlement reached in the Arctic
Litigation most certainly is not. That Arctic would only be liable for a portion of the settlement
amount, and that Plaintiffs would be pursuing Defendant in the district court for the full amount
of the judgment was well-known to all parties, including Defendant, when the settlement was
approved. The letters from Ms. Mayers merely shed light on particular negotiations about the
terms of the settlement as approved on the record by this Court, of which Defendant has had
ample notice, and to which Defendant had opportunities to object and to litigate prior to trial.
As Plaintiffs point out in their counter-proffer, Plaintiffs’ Adversary Complaint filed
against Comerica during Arctic’s bankruptcy proceedings, which preceded their settlement with
Arctic, plainly states Plaintiffs’ intent to seek satisfaction from Comerica for the final judgment
to be reached in the Arctic Litigation. See Adversary Complaint, Adv. Pro. No. 04-2022, U.S.
Bankruptcy Court, Case No. 03-66797, p.10, ¶ E. Additionally, the Court’s May 28, 2004,
Provisional Order Approving Class Settlement1 (a public record) documents the methodology
used in calculating the damages and interest, see Prov. Order Approving Settlement, Case No.
97-750, Dkt. 204, ¶¶ B-D, and the agreement that the lump sum of $900,000 paid from Arctic’s
bankruptcy proceedings would satisfy Arctic’s liability to Plaintiffs, id. at ¶ G.
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As made final by the Court’s July 16, 2004, Confirmation of Order Approving Class Settlement.
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a. Standard for Reopening a Final Approved Settlement Agreement
The Court having re-affirmed today, as in its previous August 17, 2011, Order, that
Comerica is liable for the full damages amount established in the Arctic Litigation, see Section
III(A), supra, granting Defendant’s present request to force Plaintiffs to prove damages would
therefore entail reopening the final approved settlement reached in 2004 between Plaintiffs and
Arctic. It is well-settled that “[o]nce concluded, a settlement agreement is as binding,
conclusive, and final as if it had been incorporated into a judgment.” Clinton St. Greater
Bethlehem Church v. City of Detroit, 484 F.2d 185, 189 (6th Cir. 1973). The settlement amount
in the Arctic Litigation was in fact approved and incorporated into a final judgment, after being
found “appropriate based upon the records maintained by Arctic and D&A,” (Dkt. 209, 97-cv750), but not before notice of the settlement and fairness hearings were held to hear any
objections to the terms (Dkt. 205, 97-cv-750).
The Sixth Circuit’s standard to vacate a settlement agreement is stiff, as “a district court
must ‘find facts sufficient to justify setting aside the settlement, and that such a setting aside
normally would require extraordinary or exceptional circumstances sufficient to warrant Rule
60(b)(6) relief.’” G. G. Marck & Assocs. v. Peng, No. 05-cv-7391, 2009 U.S. Dist. LEXIS
98142, at *8 (N.D. Ohio 2009) (quoting G.G. Marck and Assocs., Inc. v. Peng, 309 F. App’x
928, 935 (6th Cir. 2009)). Rule 60(b) states:
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On
motion and just terms, the court may relieve a party or its legal representative
from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not
have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
(4) the judgment is void;
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(5) the judgment has been satisfied, released, or discharged; it is based
on an earlier judgment that has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. § 60(b).
Defendant’s proffered evidence of Ms. Mayers’s letters to Arctic during settlement
showing the parties’ understanding that Arctic’s final liability would be limited and that the
Plaintiffs would be pursuing satisfaction of the full amount against Comerica can hardly be said
to constitute “newly discovered evidence that, with reasonable diligence, could not have been
discovered” prior to the judgment. Id. As stated above, although the letters from Ms. Mayers do
indeed show that Arctic’s liability was limited to 20% (or $900,000), and the parties’
“cooperation” in Plaintiffs’ recovering the full amount from Defendant Comerica, all of these
facts were known to Comerica long before Plaintiffs’ last set of productions during trial.
More importantly, contrary to Defendant’s conclusions, the proffered letters do not
“show that the agreement was a collusive arrangement where the parties set an inflated and
arbitrary dollar figure.” (Proffer at 4.) The statements from Ms. Mayers highlighted by
Defendant merely seek confirmation from Arctic of the agreed terms of settlement. Defendant
understandably does not agree to those terms, as they are now liable under them for millions of
dollars. Nevertheless, in no way do Ms. Mayers’s communications demonstrate signs of “fraud
or duress” to warrant reopening the settlement. See RE/MAX Int'l, Inc. v. Realty One, Inc., 271
F.3d 633, 650 (6th Cir. 2001) (“Summary enforcement of a settlement agreement for which there
is no dispute as to the terms of the agreement is the only appropriate judicial response, absent
proof of fraud or duress.”). In those very same communications, Ms. Mayers reiterated that the
amount of damages was “calculated applying a specific methodology to maintenance accounts
for each class member,” (Proffer, Exh. A, TCLF004420), a method which the Court approved
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and the Sixth Circuit affirmed over Comerica’s objections. See Owner Operator Indep. Drivers
Ass’n, Inc., 615 F. Supp. 2d at 703; In re Arctic, 636 F.3d at 789.
b. Disputes over the Substance and Methodology of Damages were Fully Litigated
Comerica had ample opportunities to contest the damages award in this lawsuit. After
the Plaintiffs amended their Complaint against Comerica, the methodology of how the Plaintiffs’
damages were calculated was subsequently discussed at length by the parties’ pleadings and the
respective courts, and was actually litigated by Defendant. In its motion for summary judgment
in this case, Comerica disputed the Plaintiffs’ damages against it. This Court found that, “[t]he
measure of damages was calculated by matching lease terms for individual class members to
maintenance expenses by truck unit and date. (Arctic Order dated March 15, 2004 at 3-4).”
Owner Operator Indep. Drivers Ass’n, Inc., 615 F. Supp. 2d at 703, FN3. The Court continued,
finding the following:
The Arctic Litigation resolved issues regarding the rights and obligations relating
to the maintenance escrows as between Arctic and the Class. In approving the
settlement in the Arctic Litigation, this Court determined that the methodology
used to calculate the Judgment Amount was appropriate based upon the records
maintained by Arctic and D&A. 3 (Prov. Order Approving Stmnt., May 28,
2004). Interest was calculated in accordance with the mandated rates set forth in
the truth-in-leasing regulations. (Id.) The net balance in maintenance escrows and
interest for each Class Member was calculated based upon the methodology
approved by this Order. (Id.) On this basis, the total maintenance escrows
awarded to the Class was $ 4,070,190, the total interest awarded was $ 1,512,894,
and the total damages awarded was $ 5,583,084. (Id.) Therefore, the judgment
awarded reflected the amount in unused maintenance escrows which Arctic failed
to return to the Class in violation of the Truth-in-Leasing regulations.
Owner Operator Indep. Drivers Ass’n, Inc. v. Comerica Bank, 615 F. Supp. 2d at 703. The Sixth
Circuit affirmed that “[t]he settlement equaled the total amount of maintenance escrow funds,
plus interest, owed by Arctic and D & A to the owner-operators,” In re Arctic, 636 F.3d at 789,
and held that Comerica would be liable for the amount, id. at 801. The Sixth Circuit’s holding
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was confirmed by this Court in its August 17, 2011, Order, stating “the question of the amount of
damages that the Defendant owes to Plaintiffs has therefore already been determined.” (Dkt. 84.)
In sum, Defendant not only had actual notice of the terms of the settlement between
Plaintiffs and Arctic, but it also contested the issue of the accuracy of Plaintiffs’ recoverable
damages against it. The time for disputing the amount of damages in this case has passed.
Defendant is correct that Plaintiffs have not been required to prove their damages against
Comerica as an evidentiary matter in this case; however, that is a ruling the parties fully litigated
and Plaintiffs won in both this Court and the Sixth Circuit. The letters sent during settlement
negotiations proffered by Defendant, therefore, do not warrant vacating the settled amount of
Plaintiffs’ damages or the Court’s ruling establishing those damages against Defendant.
2.
Alleged Improper Interest Compounding
Defendant alleges, additionally, that new evidence shows Plaintiffs improperly
compounded the interest when calculating the class members’ interest accumulated over the
course of the recovery period. The specific document Defendant offers to prove this claim is a
February 25, 2004, letter sent by Ms. Mayers to Arctic’s counsel during settlement, which states
that the interest on the maintenance escrow balance to be returned to Plaintiffs was calculated,
computed, and “compounded quarterly for the recovery period.” (Proffer, Exh. A,
TCLF004364.) Defendant claims this statement is hard evidence that Plaintiffs directly
contravened the Court’s order in the Arctic Litigation denying summary judgment on the issue of
damages, where the Court stated that “Plaintiffs incorrectly compound[ed] interest.” OwnerOperator Indep. Drivers Ass’n v. Arctic Express, Inc., 288 F. Supp. 2d 895, 906 (S.D. Ohio
2003).
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Defendant’s allegation, however, is baseless. The damages figure, including the interest
calculated, went through multiple revisions after the Court denied the Plaintiffs’ proposed figure
in its 2003 Order denying summary judgment on damages. Plaintiffs had originally sought
damages in the amount of $16,464,876, plus interest in the amount of $5,922,386. Id. at 899.
This figure was oversized due to a number of errors and miscalculations, but was subsequently
corrected. The final figure the parties arrived at in settlement of $5,583,084, including
$1,512,894 in interest, was based upon the revised methodology approved by the Court as being
“in accordance with the mandated rates set forth in the truth-in-leasing regulations, 49 C.F.R. §
376.12(k).” (Prov. Order Approving Settlement, Case No. 97-750, Dkt. 204, ¶ C.) 49 C.F.R. §
376(k)(5) requires that “the carrier shall pay interest on the escrow fund on at least a quarterly
basis,” which is precisely what Plaintiffs proposed in the document Defendant now proffers as
evidence of impropriety. The interest awarded was correct.
C.
Evidence of Plaintiffs’ Attorneys Researching Offensive Collateral Estoppel
Finally, Defendant offers excerpts from Plaintiffs’ produced attorney billing sheets which
document Plaintiffs’ attorneys’ time spent researching issues of offensive collateral estoppel and
issue preclusion with regard to binding Comerica to the damages amount reached in the Arctic
Litigation. Defendant alleges that this further shows Plaintiffs’ desire to avoid having to prove
their damages against Comerica. Defendant’s assessment of Plaintiffs’ strategy seems accurate;
however, the Court finds no basis for vacating the approved settlement simply because Plaintiffs
were already researching how to hold Comerica liable for the damages they secured. Plaintiffs
had every right to begin researching issue preclusion on damages, and through protracted
litigation, they ultimately secured that very result. That Comerica finds that outcome unfair does
not, without more, create a basis for re-litigating the issue.
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IV. CONCLUSION
For the reasons stated above, Defendant Comerica’s offer of proof and request that the
Plaintiffs be required to prove damages is DENIED.
IT IS SO ORDERED.
s/Algenon L. Marbley
ALGENON L. MARBLEY
UNITED STATES DISTRICT JUDGE
DATED: December 1, 2011
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