Free Reply - District Court of Arizona - Arizona

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Burton M. Bentley, Esq. (Bar No. 00980) THE BENTLEY LAW FIRM, P.C. 5343 North 16th Street, Suite 480 Phoenix, Arizona 85016 (602) 861-3055 (602) 861-3230 fax IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

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LAWRENCE J. WARFIELD, RECEIVER, Plaintiff, vs. MICHAEL ALANIZ, et al. Defendants.

CAUSE NO. CV 03-2390 PHX JAT DEFENDANT RICHARD'S REPLY TO PLAINTIFF'S RESPONSE TO DEFENDANT RICHARD'S MOTION TO ALTER JUDGMENT PURSUANT TO FRCVP RULES 59(e) and 60(a)(5)

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Defendant Paul E. Richard ("Richard"), by and through undersigned counsel hereby files his Reply to Plaintiff's Response to Defendant Richard's Motion to Alter Judgment. Richard's accompanying Memorandum of Points and Authorities supports Richard's Motion and illustrates why Plaintiff's Response fails to quote reliable authorities and fails to correctly define the parameters of the Final Joint Pretrial Order. MEMORANDUM OF POINTS AND AUTHORITIES DEFINING THE ISSUE Defendant Richard seeks to decrease the $64,700.00 Judgment against him, by deducting the $23.000.00 paid by him to the State of Maine Administrator as
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the result of a Stipulated Judgment. Monthly installment payments had been made directly to the Maine Administrator, and the Judgment had been paid in full at Phoenix trial time. An Amended Judgment was later filed only to provide that Smith Theimann receive the full $23,000.00 as "restitution". The original Judgment was admitted into evidence pursuant to the Pretrial Order. The Amended Judgment was objected to on the questionable ground that it had not been included as part of the List of Exhibits attached to the Joint Final Pretrial Order. Given that the Amended Judgment did not change a single phrase of the original Maine Judgment that had been stipulated, by the Judge, into evidence in the instant case, and merely evidenced an ancillary and perfunctory administrative act following entry of the original Judgment, Mr. Anderson's objection on behalf of the Plaintiff Receiver should have been overruled. In fact, Plaintiff's objection to Richard's initial testimony (Reporters Transcript, day 6, p. 24, lines 8-16) respecting "restitution" on direct examination was overruled, and Richard was able to testify as follows: Q. (by Bentley) And as a result of that amendment the court held that the judgment to Thiemann was restitution -- that is, the judgment of the court to act as restitution to the -- to Mr. Thiemann. Mr. Anderson: Objection, Your Honor. Relevance. Q. Is that correct? The Court: Overruled. By Mr. Bentley: Q. Is that correct, sir? A. Yes, sir." The Amended Judgment did not alter the amount of the original Judgment ($23,000.00), or any of its other specific provisions, but only ensured that the full

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amount paid by Richard would be paid in turn to Thiemann, without deduction for collection fees expended by the State. Maine actually treated Thiemann better than our own district court, because the costs of collection were not shunted over to the Annuitant as is the custom here in Arizona when a court receiver is federally appointed. Studies have shown that receivers actually distribute on the average only 15% of what is collected in such situations. FAULTY AUTHORITY CITED The cases cited by Plaintiff are not 9th Circuit cases, are not factually consonant with the case at hand, and do not stand for the proposition that the party who neglects to include demonstrative evidence is always counted "Out." Plaintiff is unable to cite a single 9th Circuit case to support his position. Fed. Deposit Ins. Corp. v. World Univ., 978 F.2d 10, (1st Cir 1992) is cited by Warfield for the proposition that arguments must be raised in the first instance when a Motion for Summary Judgment is filed. This case is from Puerto Rico, and Plaintiff has inexplicably failed to reveal that Fed. Deposit revolves around a Motion for Summary Judgment, not a trial on the merits where a pretrial Order explicitly contains reference to a Maine Judgment and "restitution." In Fed. Deposit the court refused to hear additional arguments after the Motion had been finally decided. The instant case, of course, revolves around a trial on the merits where the matter of Richard's payment to Maine of $23,000.00 was raised directly in the Joint Final Pretrial Order at page 13, lines 1-4. Sussman v. Salem, Saxon & Nielsen, P.A., 153 F.R.D. 689 (FL 1994), cited by Plaintiff, is another example of a case that has no relation to the one at hand as it too revolves around a Motion For Summary Judgment. In Sussman, the

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Defendant's failed to disclose information that had become known to Defendants prior to entry of an order resolving the Motion. Nevertheless, Defendants failed to disclose same to the court until the Motion had been ruled upon. The court properly held that to be too late. 9TH CIRCUIT CASES DIRECTLY ON POINT D. Sauers v. Alaska Barge, 600 F.2d 238 (9th Cir. 1979) concerns moving munitions up the Mekong Delta in l979, and the injury of a seaman. After a full trial on the merits, the Court awarded damages to the seaman and the government appealed on the basis that its findings were based partly on theories not stated in the pleadings or the Joint Final Pretrial Order. On appeal the Court held that the pleadings and the Pretrial Order may be considered to have been amended to conform to the evidence, all in accordance with Rule 15(b), FRCVP, citing Dering v. Williams, 378 F.2d 417 (9th Cir. 1961). Frank Music Corp v. Metro-Goldwyn Mayer, 772 F.2d 505, 515 (9th Cir. 1985) illustrates that "the Pretrial Order may be deemed to have been amended by the consent of the parties" when the issue was litigated at trial. In Frank Music Corp., MGM's indirect costs had not been cited as being at issue in the pretrial order, yet the issue was litigated without objection nevertheless. It is Richard's position that the Court erroneously refused to permit Richard's counsel to inquire further into Richard's payment of $23,000.00 so that the Court (not the jury) could deduct that amount from whatever dollar amount the jury ultimately awarded the Receiver in this case. Our position is supported by the original Maine Judgment that describes the $23,000.00 paid by Richard to Thiemann, as well as the following from Mr. Anderson's cross examination of Richard, which we include to evidence that Anderson opened the door to this line

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of questioning in Anderson's cross examination. Nevertheless, the Court later excluded further inquiry when Richard's counsel attempted to reopen this question: Reporter's Transcript, Day 6, p. 63, ls 23-254, and p. 64, ls 1-5 inclusive: "Q (cross examination by Anderson) And you're to pay ­ can you please read Number 4 to the jury? A. Richard shall pay $23,000 to the Securities Administrator according to the following schedule: A. $5000 within... B. $500 on or before the last day of each succeeding month until the entire $23,000 has been paid." Reporter's Transcript, Day 6, p. 75, ls 11-25:

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"Q. (re-direct by Bentley) Now, we think that on cross-examination you were asked about the payments that you were making in compliance with this judgment, meaning the payment to the Theimanns. Have you been making those payments in compliance with the consent order? Mr. Anderson: Objection, Your Honor. Relevance. Mr. Bentley: The door was opened on cross-examination. The Court: Sustained. Mr. Bentley: May we be heard on that, Your Honor? The Court: You may. Mr. Bentley: We believe... The Court: The ruling stands." Had Richard been permitted to fully testify, we believe that the fuller explanation would have preserved Richard's right to a set-off by the jury. That having been withheld form the jury, the Judgment finally rendered by this Court against Richard must be amended by the Court.
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MANIFEST INJUSTICE It is now perfectly clear that Richard has already paid $23,000.00 to Mr. Thiemann, as evidenced by: (i) the Maine Judgment; (ii) the Amended Judgment; (iii) Richard's testimony on direct examination: (iv) Richard's testimony on crossexamination; and, (v) Richard's testimony on re-direct examination, all of which is now before the Court. The payment did not go to a Receiver or to the State of Maine, but went directly to Mr. Thiemann or his estate as restitution. Any amount awarded in this cased goes to be Receiver to pay him, his attorney, his accountants and his up keep. The balance, if any goes to Mr. Thiemann on a pro rata basis. To permit the jury to render a verdict that does not take into account the payment of $23,000 is manifest injustice. For the Court to ignore the prior payment is also manifest injustice. Rule 60(a)(5) expressly provides for this type of relief and ought to be controlling when evidence of prior payment has come before the Court in a trial on the merits. It was error for the Court not to so instruct the jury in the first instance as to the relevance of the $23,000.00 payment by Richard to Theimann. And when the Court overruled Richard's counsel's attempt on re-direct, then it was useless for Richard's counsel to attempt to interpose a jury instruction to cure the error, for the Court had already indicated its aversion to allow such evidence to go before the jury. Also, this Court should take into account that Maine only awarded $23,000.00 against commissions paid to Richard of five (5) times that amount, an indication of how the Maine Court thought about Richard's role in the MidAmerica fiasco.

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CONCLUSION For the reasons cited above, we ask that the Court grant a remitter of $23,000.00 by amending the Judgment filed against Richard. RESPECTFULLY SUBMITTED this ____ day of April, 2007. THE BENTLEY LAW OFFICE, P.C.

/s/ Burton M. Bentley ________ Burton M. Bentley Attorney for Defendants

PROOF OF SERVICE This is to certify that a true copy of the foregoing Defendant Richard's

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Reply to Plaintiff's Response to Defendant Richard's Motion to Alter Judgment has been filed electronically with the Court and that the persons on the attached service list designated as "CM/ECF Registered" will be served with same by the

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Court's CM/ECF system. _/s/___Burton M. Bentley Burton M. Bentley Ryan W. Anderson, Esq. Guttilla & Murphy, PC Attorneys for the Receiver CM/ECF Registered ____

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