Dover Limited v. T.J. Morrow, T.J. Morrow P.C. ( 2013 )

12-3136-cv
Dover Limited v. T.J. Morrow, T.J. Morrow P.C.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1,
2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Thurgood Marshall United
3 States Courthouse, 40 Foley Square, in the City of New York,
4 on the 23rd day of August, two thousand thirteen.
5
6 PRESENT: RICHARD C. WESLEY,
7 PETER W. HALL,
8 SUSAN L. CARNEY,
9 Circuit Judges.
10
11
12
13 DOVER LIMITED,
14
15 Plaintiff-Appellee,
16
17 -v.- 12-3136-cv
18
19 T.J. MORROW, T.J. MORROW P.C.,
20
21 Defendants-Appellants.
22
23
24 FOR APPELLANTS: (Pro Se Attorney) T.J. Morrow,
25 Morrow & Co., New York, NY
26
27 FOR APPELLEE: No Appearance; No Opposition brief;
28 expressly waived
29
30 Appeal from the United States District Court for the
31 Southern District of New York (Swain, J.).
32
33
1 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
2 AND DECREED that the judgment of the United States District
3 Court for the Southern District of New York is AFFIRMED.
4 Defendants-Appellants T.J. Morrow and T.J. Morrow P.C.
5 appeal from a judgment following a jury trial held May 14-
6 16, 2012, before the United States District Court for the
7 Southern District of New York (Swain, J.) and an order
8 denying Defendants’ motion for new trial and renewed motion
9 for judgment as a matter of law. We assume the parties’
10 familiarity with the underlying facts, the procedural
11 history, and the issues presented for review.
12 Defendant Morrow is an attorney in private practice in
13 New York. At the time of the events in question, Morrow
14 practiced through a professional corporation bearing his
15 name. That entity, T.J. Morrow P.C., is a separate
16 defendant in this action. Plaintiff Dover Limited is a Hong
17 Kong investment management company. In 2006, Morrow traveled
18 to Singapore with Thomas Begley to propose a joint business
19 deal to Dover’s board of directors. The parties agreed, and
20 following this meeting, Dover transferred $900,000 to
21 Morrow’s attorney escrow account as a loan to Begley to
22 complete the proposed deal.
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2
1 Ultimately the venture never materialized. Nonetheless,
2 the $900,000 was disbursed to Begley, Morrow, and other
3 entities. Morrow received $300,000 as a “structuring fee”
4 and an additional $100,000 as a “legal fee,” for his role in
5 the abortive transaction. Afterwards Dover brought claims
6 against Morrow and T.J. Morrow P.C. (collectively,
7 "defendants") for fraud, breach of fiduciary duty, breach of
8 contract, unjust enrichment, violations of the Securities
9 Exchange Act, and conversion. The district court dismissed
10 the securities fraud claim before trial. At trial, the jury
11 found neither defendant liable for breach of contract or
12 fraud. The jury found Morrow, as an individual, liable for
13 conversion and breach of fiduciary duty, and both Morrow and
14 T.J. Morrow P.C. liable for unjust enrichment. The district
15 court, however, granted Morrow’s post-trial motion to
16 dismiss the conversion claim. Dover did not file a cross-
17 appeal.
18 On appeal, defendants make three arguments. First,
19 Morrow contends that the district court improperly charged
20 the jury on the breach of fiduciary duty claim. Second,
21 Morrow argues that the district court should have dismissed
22 the fiduciary duty claim as a matter of law, and both
23 defendants argue that the district court should have
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1 dismissed the unjust enrichment claim as a matter of law.
2 Finally, for reasons that are not clear, an exhibit that was
3 never introduced as evidence was assertedly available to the
4 jury during its deliberations. Defendants contend that, as a
5 consequence of the first and third errors, they are entitled
6 to a new trial. For the reasons stated below, we reject
7 each of these arguments.
8 Jury Instructions:
9 Morrow argues that in order to find him liable for
10 breach of a fiduciary duty, his actions must have been a
11 “substantial factor” in causing Dover's loss. Since the
12 district court did not instruct the jury on the “substantial
13 factor” test, Morrow claims, he is entitled to a new trial.
14 Morrow misapprehends the law.
15 As an initial matter, Morrow concedes that he did not
16 preserve this objection and that we review for plain error.
17 Consequently, we will not reverse unless “taken as a whole,
18 the jury instructions gave a misleading impression or
19 inadequate understanding of the law.” Luciano v. Olsten
20 Corp., 110 F.3d 210, 218 (2d Cir. 1997).
21 In arguing for the “substantial factor” jury
22 instruction, Morrow seems to suggest that it is a more
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1 stringent causation standard than ordinary proximate cause.
2 That is incorrect. New York courts have two “substantial
3 factor” tests for proximate causation. When there are
4 intervening, superceding, or multiple causes creating tort
5 damages, New York applies a “substantial factor” test to
6 determine ordinary proximate causation. In unjust enrichment
7 or restitution cases, however, New York courts have also
8 used a “substantial factor” test for proximate causation
9 that is more generous to plaintiffs. Am. Fed. Grp., Ltd. v.
10 Rothenberg, 136 F.3d 897, 907 n. 7 (2d Cir. 1998).
11 In this case, the district court instructed the jury to
12 determine whether the plaintiff’s loss was a “direct result
13 of” Morrow’s breach of fiduciary duty and the jury awarded
14 Dover only what Morrow allegedly misappropriated.
15 Accordingly, the district court applied the more stringent
16 standard; Morrow's rights were not affected.
17 Fiduciary Duty and Unjust Enrichment:
18 Defendants argues that the district court erred in
19 failing to dismiss the fiduciary duty and unjust enrichment
20 claims against them after dismissing the conversion claim.
21 Specifically, Morrow contends that the money he took was
22 funds loaned by Dover to Begley. Since a creditor ceases to
5
1 have an ownership interest in loan proceeds once they are
2 distributed to the debtor, Morrow argues, even if his taking
3 was wrongful, it was not a wrong against Dover.
4 This argument lacks merit. It is true, as Morrow points
5 out, that a conversion claim requires that the plaintiff
6 have a possessory interest in the converted property.
7 Citadel Mgt. Inc. v. Telesis Trust, Inc., 123 F. Supp. 2d
8 133, 147 (S.D.N.Y. 2000). The district court, however,
9 dismissed Dover’s conversion claim, and Dover does not
10 challenge that ruling.
11 Breach of fiduciary duty, on the other hand, does not
12 have such exacting requirements. It is a broad claim, based
13 on damage resulting from a breach of trust, not the
14 ownership of specific property. Penato v. George, 52 A.D.2d
15 939, 942 (2d Dept. 1976). Unjust enrichment is similarly
16 based on “broad considerations of right, justice and
17 morality.” New York v. Int'l Asset Recovery Corp., 56 A.D.3d
18 849, 852-53(3d Dept. 2008). New York courts have found that
19 a defendant may be liable for unjust enrichment even though
20 the plaintiff technically did not have legal title to the
21 misappropriated property. Id. The jury concluded that Morrow
22 created a relationship of trust with Dover and abused that
6
1 relationship for his own gain. The record supports such a
2 finding and we will not disturb it here.
3 Erroneously Admitted Evidence:
4 Sometime following the trial, Morrow claims to have
5 found a two-page email exchange between one of Dover’s
6 directors, Tom Begley, and several other persons in a box
7 that purportedly contained all the evidence that had been
8 before the jury during its deliberations. The email exchange
9 was pre-marked as plaintiff’s exhibit 38, but was never
10 admitted into evidence. It may be that the email was given
11 to the jury in place of the properly admitted exhibit 38.
12 Whether or how this happened is unclear. Morrow contends
13 that opposing counsel intentionally switched the exhibits,
14 that the email prejudiced him, and that he is therefore
15 entitled to a new trial.
16 We need not address how, or for that matter whether, at
17 the time of the jury’s deliberations, the exhibits were
18 switched to determine that Morrow is not entitled to a new
19 trial. For the purposes of our analysis only, we will assume
20 that the email in question was before the jury during their
21 deliberations. That fact is of no import. “[E]ven an
22 erroneous evidentiary ruling will not lead to reversal
7
1 unless affirmance would be inconsistent with substantial
2 justice. . . . We will not conclude that a substantial
3 right was affected unless it is likely that in some material
4 respect the factfinder's judgment was swayed by the error.”
5 Perry v. Ethan Allen, Inc., 115 F.3d 143, 150 (2d Cir. 1997)
6 (quotations omitted).
7 Here, Morrow was neither a sender, a recipient, nor
8 even mentioned in what Morrow claims was the email.
9 Moreover, the email exchange took place in 2005, before
10 Morrow’s earliest contact with Dover. The email does,
11 however, criticize Tom Begley. This actually bolsters
12 Morrow's theory at trial that Begley was responsible for the
13 misappropriation of Dover’s money. Since the erroneously
14 admitted email did not prejudice Morrow, he is not entitled
15 to a new trial.
16 For the foregoing reasons, the judgment of the district
17 court is hereby AFFIRMED.
18 FOR THE COURT:
19 Catherine O’Hagan Wolfe, Clerk
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