Free Response in Opposition to Motion - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8
Guttilla Murphy Anderson, P.C.

Guttilla Murphy Anderson, P.C.
Ariz. Firm No. 00133300

Ryan W. Anderson (Ariz. No. 020974) Alisan M.B. Patten (Ariz. No. 009795)
4150 West Northern Avenue Phoenix, Arizona 85051 Email: [email protected] Phone: (623) 937-2795 Fax: (623) 937-6897

Attorneys for the Receiver

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Lawrence J. Warfield, Receiver, Plaintiff, v. Michael Alaniz, et al. ) ) Cause No. CV 03-2390 PHX JAT ) ) ) RESPONSE TO DEFENDANT PAUL ) RICHARD'S MOTION TO ALTER ) JUDGMENT PURSUANT TO FEDERAL ) ) RULES OF CIVIL PROCEDURE 59(e) AND 60(a)(5) ) )

9
4150 West Northern Ave. Phoenix, Arizona 85051 (623) 937-2795

10 11 12 13 14 15 16 17 18 19 20 21 22 23

Defendants.

Receiver Lawrence J. Warfield, by and through counsel undersigned, hereby submits his Response to Defendant Paul Richard's Motion to Alter Judgment Pursuant to Federal Rules of Civil Procedure 59(e) and 60(a)(5). Defendant Richard moves this Court to alter the judgment entered by the Clerk of the Court following a jury verdict against him. In his motion, he seeks a reduction of the judgment in the sum of $23,000.00 based upon his allegation that he had previously paid $23,000.00 to his underlying victim, Mr. Smith Theimann. Defendant Richard seeks this

Case 2:03-cv-02390-JAT

Document 587

Filed 03/28/2007

Page 1 of 6

1 2 3 4 5 6 7 8
Guttilla Murphy Anderson, P.C.

relief under Fed R. Civ P. 59(e) or, alternatively, Fed. R. Civ. P., 60(a)(5).1 For all of the following reasons Defendant Richard's Motion should be denied. Background On February 26, 2007, the Jury returned five verdicts against Defendant Richard for the following amounts on the corresponding claims: 1) 2) 3) 4) 5) $1,400.00 $14,300.00 $64,700.00 $14,300.00 $1,400.00 Federal Securities Fraud Constructive Fraud Negligence Per Se Arizona Securities Fraud Unjust Enrichment

9
4150 West Northern Ave. Phoenix, Arizona 85051 (623) 937-2795

10 11 12 13 14 15 16 17 18 19 20 21 22

The cumulative amount of the verdicts awarded by the jury against Defendant Richard was $96,100.00. The Court determined that the highest individual amount of damages awarded to the Receiver, by the jury, would be the amount of damages awarded to the Receiver in the judgment. Accordingly, the Clerk subsequently entered a judgment in favor of the Receiver, and against Defendant Richard, for $64,700.00. As the undisputed evidence in the trial proved, Defendant Richard was responsible for facilitating the sale of nine fraudulent Mid America Foundation Charitable Gift Annuities totaling $2,210,933.93 to 79 year-old Smith Theimann. (See, Plaintiff's trial exhibit 169, attached hereto.) Defendant Richard did not contest that he was paid a total of $143,866.94 in commissions by the Mid America Foundation from these sales. (See, Joint Final Pretrial Order dated November 6, 2006, 11:12-15.)
1

Defendant Richard's reliance upon rule 60(a)(5), F.R. Civ. P. appears to be in error. 23 Rule 60(a), does not have a subsection (5); however, rule 60(b) does have a subsection (5). Case 2:03-cv-02390-JAT Document 587 2 Filed 03/28/2007 Page 2 of 6

1 2 3 4 5 6 7 8
Guttilla Murphy Anderson, P.C.

Applicable Law A motion under Fed. R. Civ. P. 59 may not be used to raise arguments, or present evidence, that could have been raised prior to entry of judgment. See e.g. Fed. Deposit Ins. Agency v. World Univ., 978 F.2d 10, 16 (1st Cir. 1992). Additionally, while "manifest injustice" is a basis for altering a judgment under rule 59(e), F. R. Civ. P., it has no application to the defendant's position, as discussed infra. Argument On November 26, 2003, Defendant Richard entered into a consent order with the State of Maine which required him to pay $23,000.00 to the Maine Securities Administrator relating to Defendant Richard's sale of the Mid-America charitable gift annuities to Smith Theimann. (See, Plaintiff's trial exhibit 51, attached hereto.) The Defendant now states that a later order, dated January 20, 2004, required the State of Maine to direct any payments made by Defendant Richard to the Securities Administrator to be distributed subsequently to Smith Theimann. However, this document was not part of the evidence admitted at trial; accordingly, it should not now be considered by this Court. The time to introduce this material was at trial. A motion to amend, or alter, a judgment is not to be used as an opportunity for a "second bite at the apple" to do after trial that which should have been done at trial. (Cf., Sussman v. Salem, Saxon & Nielsen, 153 F.R. D. 689, 695 (D.C. Fla. 1994) holding that, in reference to a motion for reconsideration from the entry of summary judgment based upon rule 59(e), F. R. Civ. P., "[e]vidence which was available to a party during the pendency of a motion for summary judgment may not later be introduced on a motion to reconsider." ) (Additionally, this

9
4150 West Northern Ave. Phoenix, Arizona 85051 (623) 937-2795

10 11 12 13 14 15 16 17 18 19 20 21 22 23

Case 2:03-cv-02390-JAT

Document 587

3 Filed 03/28/2007

Page 3 of 6

1 2 3 4 5 6 7 8
Guttilla Murphy Anderson, P.C.

document was not identified as a trial exhibit by Defendant Richard in the parties' Joint Final Pretrial Order dated November 26, 2003.) The Defendant also states in his motion that "[a]ll funds have been paid by Defendant Richard pursuant to the Consent Judgment dated November 26, 2003 pursuant to its terms, and accordingly, Thiemann (sp.) has been paid in full." (Defendant's motion, 2:14-17.) However, the defendant fails to cite to any evidence in the record supporting this assertion.2 It is Defendant Richard's burden to support his motion with the evidence necessary for its support. Here, Defendant Richard has failed to direct the Court to any portions of the trial transcript, or trial exhibits admitted at trial, showing that Defendant Richard actually paid all, or part, of the $23,000.00 ordered by the State of Maine. Further, Defendant Richard additionally failed to cite to any evidence admitted at trial showing that all such payments, if any, were subsequently received in full by Mr. Theimann. If this failure is due to the fact that such evidence was not introduced, or admitted, at trial then Defendant Richard may not present this evidence now. A Rule 59 motion is not an appropriate vehicle by which to present evidence that, if admissible, should have been previously presented to the jury.

9
4150 West Northern Ave. Phoenix, Arizona 85051 (623) 937-2795

10 11 12 13 14 15 16 17 18 19 20

Had Defendant provided this Court with references to the trial transcript showing Defendant Richard's testimony regarding any alleged payments made under the Maine 22 Consent Order, it is believed that the transcript would show that the Receiver's counsel objected to such testimony since the issue of the alleged offset had not been preserved in 23 the parties' joint pretrial statement and, it is also believed, the transcript would show that this objection was sustained by the Court. Case 2:03-cv-02390-JAT Document 587 4 Filed 03/28/2007 Page 4 of 6 21

2

1 2 3 4 5 6 7 8
Guttilla Murphy Anderson, P.C.

If the Defendant properly introduced evidence of the alleged offset to the jury (over objection of the Receiver), he cannot plausibly claim that the jury did not consider this evidence. Under this scenario, the jury either rejected the veracity of the evidence and, therefore, did not include an "offset" in its judgment or it may have accepted the evidence as true and, thus, included the "offset" in its jury verdict since the amount awarded to the Receiver did not include the full amount of the commission payments sought by the Receiver, i.e., $143,866.94. In either event, there is no showing of "manifest injustice" as argued by the Defendant. Last, there also is no basis for granting the defendant's motion based upon rule 60(b)(5), F. R. Civ. P.3 Defendant Richard is not claiming that he fully satisfied the judgment in this case and, therefore, should be relieved from the judgment. Instead, the Defendant is arguing that an offset that allegedly occurred prior to the time this case was turned over to the jury was not reflected in the judgment rendered against him. Under the literal language of rule 60(b)(5), F. R.Civ.P., the Defendant's argument does not meet the parameters of a proper rule 60(b)(5), F. R. Civ. P. motion. The judgment in this matter has not been satisfied and, therefore, there is no basis to grant the relief requested under rule 60(b)(5), F.R.Civ. P. (Even if rule 60(b)(5), F. R. Civ. P., somehow applied, no evidence admitted at trial was cited in support of the motion as discussed supra.)
3

9
4150 West Northern Ave. Phoenix, Arizona 85051 (623) 937-2795

10 11 12 13 14 15 16 17 18 19 20 21 22 23

Rule 60(b)(5), F.R.Civ.P. states: On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application.

(Emphasis added.)
Case 2:03-cv-02390-JAT Document 587

5 Filed 03/28/2007

Page 5 of 6

1 2 3 4 5 6 7 8
Guttilla Murphy Anderson, P.C.

Summary For all the foregoing reasons, this Court should not alter, or amend, the current judgment to reflect Defendant Richard's alleged payment of $23,000.00 to Mr. Smith Theimann. Respectfully submitted this 28th day of March, 2007. GUTTILLA MURPHY ANDERSON, P.C.

9
4150 West Northern Ave. Phoenix, Arizona 85051 (623) 937-2795

_s/Ryan W. Anderson_________________ Ryan W. Anderson Alisan M.B. Patten Attorneys for the Receiver

10 11 12 13 14 15 16 17 18 19 20 21 22 23 Steve A. Bryant Steve Bryant & Associates 3618 Mt. Vernon Street, Suite A Houston, TX 77006 Attorneys for Dwight Lankford
0758-011(60754)

PROOF OF SERVICE This is to certify that on this 28th day of March, 2007, I electronically transmitted the foregoing document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the CM/ECF registrants listed below; and that the persons listed below who are not registered participants of the CM/ECF System have been served with a copy of the foregoing document by first class mail this date. s/Ryan W. Anderson Ryan W. Anderson Burton M. Bentley ECF Registered [email protected] Attorney for Defendants Leonard and Elizabeth Bestgen, Robert Carroll, Rudy and Mary Crosswell, Charles Davis, Richard Derk, Orville Frazier, Ronald Kerher, Dwight Lankford, John and Candes Rada, Paul Richards, and Patrick and Andrea Wehrly

Case 2:03-cv-02390-JAT

Document 587

6 Filed 03/28/2007

Page 6 of 6