Free Motion in Limine - District Court of Colorado - Colorado

Case 1:03-cv-01041-PSF-BNB

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Filed 09/13/2005

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03-F-1041(BNB) UNITED STATES OF AMERICA, Plaintiff, v. DAVID B. ST. GERMAIN, and RANDY OVERLEY, Defendants.

Defendant Overley's Motion in Limine to Exclude Evidence of Alleged "Fraud" and "Conspiracy"

Defendant Randy Overley, through his attorneys Haddon, Morgan, Mueller, Jordan, Mackey & Foreman, P.C., moves in limine to exclude evidence of alleged "fraud" and "conspiracy," on the ground that such evidence is irrelevant to the controlling questions set forth in the Court's April 4 Order: Whether Defendant St. Germain acquired an interest in the Franktown property and, if so, what is the extent of the interest? 1. The Amended Complaint alleges all manner of alleged misconduct by Mr. Overley, including that he lied to probation officers and engaged in "fraud"

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and a "conspiracy" to help Mr. St. Germain conceal assets from the probation officers. 2. However, as this Court suggested in its April 4, 2005, Order, the controlling question is not whether Mr. Overley engaged in "fraud," "conspiracy" or other misconduct, all of which are irrelevant to the decision to impose or not impose a constructive trust. See, e.g., Harris Trust & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 251 (2000) ("[t]he constructive trust is based on property, not wrongs") (internal quotations omitted); Tull v. United States, 481 U.S. 412, 422 (1987) ("Remedies intended to punish culpable individuals . . . [a]re issued by courts of law, not courts of equity.") 3. As the Tenth Circuit held in In re Amdura Corp., 75 F.3d 1447, 1451 (1996), "A constructive trust is an equitable remedy devised to prevent unjust enrichment and compel restitution of property that in equity and good conscience does not belong to the Defendant." (Emphasis supplied.) This accords with the Court's description of the proper role of constructive trust: a constructive trust is an equitable device used to compel one who unfairly holds a property interest to convey that interest to another to whom it justly belongs. When property has been acquired in such circumstances that the holder of legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee. . . . The purpose of placing property in a constructive trust is not to
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impose personal liability on the defendant, but instead to restore the particular funds to the plaintiff. United States v. St. Germain, 363 F. Supp. 2d 1293, 1297-98 (D. Colo. 2005) (citations, brackets and internal quotations omitted; emphasis supplied). 4. Plaintiff has endorsed 12 witnesses: Mike Wilson, St. Germain's former probation officer; Kathy Keenan, St. Germain's former probation officer; Max Coleman, a log-home-kit salesman; Mr. Overley; Mr. St. Germain; Scott Lambert, Mr. St. Germain's former business associate; Nadine Overley, Mr. Overley's mother; Kim Brack, his sister; Larry Overley, his brother; Leslie Parker, his friend; Shane Hand, the log home builder; and Sean Nixon, the FirstBank loan officer who supervised the construction loan for the log home. 5. Of these 12, seven will be called to testify almost exclusively about plaintiff's theories of "fraud" and "conspiracy"--namely, Wilson, Keenan, Lambert, Nadine Overley, Kim Brack, Larry Overley, Parker. Of the remaining five, one (Coleman) has no knowledge of any "fraud" or "conspiracy" or any interest Mr. St. Germain may have in the Franktown Property, since he simply sold a log kit to Mr. St. Germain; and the bulk of the testimony of another (St. Germain) will center on supporting plaintiff's theories of "fraud" and "conspiracy." All of this can be seen from plaintiff's summary of its witnesses' testimony contained in the Amended Final Pretrial Order (Docket #105).
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6. Undersigned counsel estimates that more than 75 percent of the testimony plaintiff has planned for presentation to the Court will center exclusively on its theories of "fraud" and "conspiracy." Moreover, plaintiff has endorsed hundreds of pages of trial exhibits that relate only to these theories of "fraud" and "conspiracy." This testimony and documentary evidence ill-uses the Court's time and the parties' resources. 7. In the April 4 Order, this Court denied Mr. Overley's motion to dismiss the constructive-trust and declaratory-judgment claims, holding: The United States amply detailed St. Germain's alleged noncompliance with the restitution order through allegations referring to his undisclosed assets and substantial investment in the Franktown property, and Overley's alleged complicity in causing the Franktown property to be placed in his name. Further, the Court notes that the United States' allegations that St. Germain is either a full or 50% owner of the property sufficiently avers that money that should have been paid to the victim in restitution may now be invested in the house.[1] 363 F. Supp. 2d at 1298. 8. It is undisputed that in 1999 Mr. Overley and Mr. St. Germain agreed to build a log home together and that each would have a 50 percent interest in the

The basis for plaintiff's request for "a full or 50%" ownership is inexplicable. It will be undisputed at trial that M r. Overley has invested more than $580,000 in loan and cash proceeds in the Franktown property; all that M r. St. Germain is claiming to have invested in the log home is $104,000. 4

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equity of the Franktown property. It is also undisputed that, notwithstanding this agreement, legal title to the property was placed exclusively in Mr. Overley's name and presently is in Mr. Overley's name. 9. Since the unenforceable agreement is irrelevant in this equitable action,2 the factual question before the Court is whether there are "undisclosed assets" of Mr. St. Germain in the Franktown property and whether he made a "substantial investment" in the property that resulted in Mr. Overley's "unjust enrichment," Amdura, 75 F.3d at1451, such that a constructive trust should be imposed over those monies.3 10. Assuming arguendo the Court were to find Mr. Overley engaged in "fraud" and "conspiracy" to help St. Germain conceal assets, that finding simply has no bearing on whether Mr. St. Germain acquired an interest in the Franktown

Harding v. Heritage Health Prod. Co., 98 P.3d 945, 949 (Colo. Ct. App. 2004) ("[E]quitable doctrines may not be used to enforce an illegal or void agreement."); see generally Potter v. Swinehart, 117 Colo. 23, 26, 184 P.2d 149, 151 (1947) ("Where the contract or transaction in question is illegal, fraudulent, or immoral, and there is mutual misconduct of the parties with respect thereto, neither law nor equity will aid either to enforce, revoke, or rescind. To such disputes the courts will not listen, and the parties thereto they will leave in the exact position in which they have placed themselves."). We suggest that, if a plaintiff is entitled to less than 100 percent of property, it is not entitled to a constructive trust, only an equitable lien. See, e.g., In re Marriage of Allen, 724 P.2d 651, 658 (Colo. 1986). Here, it will be undisputed at trial that M r. Overley invested no less than $580,000 in loan and cash proceeds into the Franktown property. 5
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property with "undisclosed assets" or by making a "substantial investment" in the property. 11. The hours of testimony plaintiff intends to elicit on "fraud" and "conspiracy" would be irrelevant to the legal issues. The testimony should be excluded. 12. Even if the Court were inclined to hear evidence of "fraud" and "conspiracy," it should require the parties "to present evidence early in the trial with respect to a manageable issue"4 --namely, the extent of Mr. St. Germain's investment in the property that is alleged to have unjustly enriched Mr. Overley--that "could be the basis for a judgment as a matter of law."5 Dated: September 13, 2005. Respectfully submitted, HADDON, M ORGAN, M UELLER, JORDAN, M ACKEY & FOREMAN, P.C.

s/ Ty Gee Ty Gee 150 East 10th Avenue Denver, CO 80203 (303) 831-7364 facsimile (303) 832-2628
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Fed. R. Civ. P. 16(c)(14). Id. 6

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Attorneys for Defendant Randy Overley Certificate of Service I hereby certify that on September 13, 2005, I electronically filed the foregoing Motion in Limine to Exclude Evidence of Alleged "Fraud" and "Conspiracy" with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following: Christopher Alberto, Esq. Special Attorney for the United States United States Attorney's Office 1 Courthouse Way, Suite 9200 Boston, MA 02210 [email protected] And I hereby certify that I have served the Motion in Limine to Exclude Evidence of Alleged "Fraud" and "Conspiracy" to the following non-CM/ECF participant via U.S. Mail: David B. St. Germain 16300 Ledgemont Lane, Unit 2504 Addison, TX 75001 / s/Cynthia Pantelis /

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