Olivier Family Interests v. Doris Wright

United States Court of Appeals
For the Eighth Circuit
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No. 12-2573
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Olivier Family Interests, LTD; GBS International, L.L.C.
lllllllllllllllllllll Plaintiffs - Appellees
v.
Russell Wright, Deceased; Michael Bogart
lllllllllllllllllllll Defendants - Appellants
Doris Wright, Personal representative of Russell Wright
lllllllllllllllllllllAppellant
Robert Feeney; Stoam Holding, LLC; Doris Wright; Certain Other Unnamed
Defendants; KMA Trust; Russell Wright; JJA Trust; Patrick Clawson; Russell
Wright, doing business as MLO Consulting; Russell Wright, doing business as
Bluegrass Holdings; Russell Wright, doing business as Penny Investments; Doris
Wright, Trustee of the Doris E. Wright Living Trust; Joseph P. Wright; Don
Wood; Elana Bogart; Jerry Lahr, doing business as Penny Investments; Jerry Lahr,
Trustee of the KMA Trust; Jacqueline Demer; Stoam Industries, LLC;
Development Systems, LLC; Financial Freedom Associates, LLC; Michael David
Beiter; Donna Beiter; Joel Ceballos; Jason Peterson; G. D. Jalil; Bank of America,
NA; Wild Rose Estates, LLC; BGI Limited Company, LLC
lllllllllllllllllllll Defendants
___________________________
No. 12-3021
___________________________
Olivier Family Interests, LTD; GBS International, L.L.C.
lllllllllllllllllllll Plaintiffs - Appellees
v.
Russell Wright; Michael Bogart; Robert Feeney; Stoam Holding, LLC; Doris
Wright; Certain Other Unnamed Defendants; KMA Trust; Russell Wright; JJA
Trust; Patrick Clawson; Russell Wright, doing business as MLO Consulting;
Russell Wright, doing business as Bluegrass Holdings; Russell Wright, doing
business as Penny Investments; Doris Wright, Trustee of the Doris E. Wright
Living Trust
lllllllllllllllllllll Defendants
Joseph P. Wright
lllllllllllllllllllll Defendant - Appellant
Don Wood; Elana Bogart; Jerry Lahr, doing business as Penny Investments; Jerry
Lahr, Trustee of the KMA Trust; Jacqueline Demer; Stoam Industries, LLC;
Development Systems, LLC; Financial Freedom Associates, LLC; Michael David
Beiter; Donna Beiter; Joel Ceballos; Jason Peterson; G. D. Jalil; Bank of America,
NA; Wild Rose Estates, LLC; BGI Limited Company, LLC
lllllllllllllllllllll Defendants
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___________________________
No. 12-3024
___________________________
Olivier Family Interests, LTD; GBS International, L.L.C.
lllllllllllllllllllll Plaintiffs - Appellees
v.
Russell Wright; Michael Bogart; Robert Feeney; Stoam Holding, LLC; Doris
Wright; Certain Other Unnamed Defendants; KMA Trust; Russell Wright; JJA
Trust; Patrick Clawson; Russell Wright, doing business as MLO Consulting;
Russell Wright, doing business as Bluegrass Holdings; Russell Wright, doing
business as Penny Investments; Doris Wright, Trustee of the Doris E. Wright
Living Trust; Joseph P. Wright
lllllllllllllllllllll Defendants
Don Wood
lllllllllllllllllllll Defendant - Appellant
Elana Bogart; Jerry Lahr, doing business as Penny Investments; Jerry Lahr,
Trustee of the KMA Trust; Jacqueline Demer; Stoam Industries, LLC;
Development Systems, LLC; Financial Freedom Associates, LLC; Michael David
Beiter; Donna Beiter; Joel Ceballos; Jason Peterson; G. D. Jalil; Bank of America,
NA; Wild Rose Estates, LLC; BGI Limited Company, LLC
lllllllllllllllllllll Defendants
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Appeal from United States District Court
for the Western District of Missouri - Springfield
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Submitted: August 7, 2013
Filed: August 27, 2013
[Unpublished]
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Before SMITH, BOWMAN, and SHEPHERD, Circuit Judges.
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PER CURIAM.
In Appeal No. 12-2573, Michael Bogart and Doris Wright, as the personal
representative of the estate of Russell Wright (who died during the pendency of this
proceeding), appeal the judgment of the District Court1 awarding damages of
$12,900,000 in accordance with a jury verdict in favor of Olivier Family Interests,
Ltd. (OFI), and GBS International, LLC, on their state-law claims of
misrepresentation and breach of fiduciary duty, and federal-law claim under the
Racketeer Influenced Corrupt Organization Act (RICO), 18 U.S.C. §§ 1961–1968.
In Appeal No. 12-3021, Joseph Wright appeals the misrepresentation and RICO
verdicts; in Appeal No. 12-3024, Donald Wood appeals those verdicts as well. For
the reasons that follow, we affirm.
First, we decline to consider the appellants’ argument, newly raised on appeal,
that the Private Securities Litigation Reform Act (PSLRA), Public. L. No. 104-67,
109 Stat. 737 (codified as amended in scattered sections of 15 U.S.C.), bars the civil
RICO claim under § 1964(c), see Orr v. Wal-Mart Stores, Inc., 297 F.3d 720, 725 (8th
Cir. 2002) (noting that appellate court ordinarily does not consider an argument raised
1
The Honorable Dean Whipple, United States District Judge for the Western
District of Missouri.
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for the first time on appeal; the court will consider a newly raised argument only if
it is purely legal and requires no additional factual development or if manifest
injustice would otherwise result), cert. denied, 541 U.S. 1070 (2004). The possible
applicability of the PSLRA to this case is not a purely legal question, and appellants
have not established that a manifest injustice would result if this court does not
consider its applicability in the first instance. As to appellants’ challenge to the
sufficiency of the evidence supporting the jury’s RICO verdict, see Craig Outdoor
Adver., Inc. v. Viacom Outdoor, Inc., 528 F.3d 1001, 1009 (8th Cir. 2008) (stating
standard of review and noting that a jury verdict is entitled to extreme deference),
cert. denied, 555 U.S. 1136 (2009), we conclude that the evidence was adequate to
support the jury’s finding that (1) appellants committed racketeering activity or
predicate acts consisting of a scheme to defraud OFI and GBS through wire fraud, as
well as acts of misrepresentation; (2) appellants committed a pattern of racketeering
activity that spanned a substantial period of time or was ongoing; and (3) OFI’s and
GBS’s injuries were proximately caused by appellants’ fraudulent activity, see United
HealthCare Corp. v. Am. Trade Ins. Co., 88 F.3d 563, 570 (8th Cir. 1996) (noting that
to prove a RICO violation, a plaintiff must establish (1) the existence of an enterprise,
(2) defendant’s association with the enterprise, (3) defendant’s participation in
predicate acts of racketeering, (4) that defendant’s actions constitute a pattern of
racketeering activity, and (5) that plaintiff’s business or property was injured by
conduct constituting a violation).
The evidence was likewise sufficient for the jury to find that all of the
appellants made negligent misrepresentations to Lorrie Olivier, OFI’s representative,
during the establishment and operation of GBS International, LLC, resulting in OFI’s
and GBS’s pecuniary losses. See Lafarge N. Am., Inc. v. Discovery Group LLC, 574
F.3d 973, 981 (8th Cir. 2009) (noting that a claim for negligent misrepresentation in
Missouri requires proof that (1) the speaker supplied information in the course of his
business; (2) because of the speaker’s failure to exercise reasonable care, the supplied
information was false; (3) information was intentionally provided by the speaker for
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the guidance of a limited group of persons in a particular business transaction; (4) the
listener justifiably relied on the supplied information; and (5) due to that reliance, the
listener suffered pecuniary loss; a negligent misrepresentation does not require that
the information be knowingly or recklessly supplied, but information must be
supplied in the course of the speaker’s business). In addition, although the issue
appears moot in light of the merged damages judgment, we conclude that the
evidence supported the punitive-damages awards. See Alack v. Vic Tanny Int’l of
Mo., 923 S.W.2d 330, 339 (Mo. 1996) (noting that under Missouri law, punitive
damages require conscious disregard or complete indifference to the rights of others).
As to appellant Michael Bogart’s challenge to the breach-of-fiduciary-duty
verdict against him, we conclude that the jury instruction in this case complied with
Missouri law and, alternatively, that any error did not result in prejudice to Bogart.
See Zebley v. Heartland Indus. of Dawson, Inc., 625 F.3d 449, 455 (8th Cir. 2010)
(stating standard of review); Sutherland v. Sutherland, 348 S.W.3d 84, 89–90 (Mo.
Ct. App. 2011) (noting that officers of a limited liability company shall not be liable
for business decisions that they believe in good faith are in the company’s best
interests and that the business-judgment rule precludes courts from interfering with
the decisions of corporate officers and directors absent showing of fraud, illegal
conduct, ultra vires act, or irrational business judgment).
Appellants’ remaining arguments involve discretionary evidentiary rulings, a
meritless challenge to the District Court’s subject matter jurisdiction, or contentions
that have no bearing on the challenged portions of the jury verdicts.
For the foregoing reasons, we affirm the judgment of the District Court.
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