Park W. Galleries, Inc. v. Hochman

• Decision Date: 05 September 2012
• Docket Number: No. 11–1175.,11–1175.
• Citation: 692 F.3d 539
• Parties: PARK WEST GALLERIES, INC., Plaintiff–Appellee, v. Bruce HOCHMAN; Fine Art Registry; Salvador Dali Gallery, Inc., Defendants, Theresa Franks; Global Fine Art Registry, LLC; David Charles Phillips, Defendants–Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

692 F.3d 539

PARK WEST GALLERIES, INC., Plaintiff–Appellee,

v.Bruce HOCHMAN; Fine Art Registry; Salvador Dali Gallery, Inc., Defendants,Theresa Franks; Global Fine Art Registry, LLC; David Charles Phillips, Defendants–Appellants.

No. 11–1175.

United States Court of Appeals,Sixth Circuit.

Sept. 5, 2012.

ON BRIEF:Donald L. Payton, Kaufman, Payton & Chapa, Farmington Hills, Michigan, for Appellants. Rodger D. Young, Terry Milne Osgood, Jaye Quadrozzi, Young & Associates, Farmington Hills, Michigan, for Appellee.

Before: MOORE, GIBBONS, and ALARCÓN, Circuit Judges.^*

GIBBONS, J., delivered the opinion of the court in which ALARCÓN, J., joined, and MOORE, J., joined only in the judgment. MOORE, J. (pp. 549–50), delivered a separate opinion concurring in the judgment.

OPINION

JULIA SMITH GIBBONS, Circuit Judge.

Defendants-appellants Theresa Franks, Global Fine Art Registry, LLC, and David Charles Phillips appeal the district court's denial of their motion to reinstate the jury verdict. Defendants-appellants filed the motion after the district court granted the motion for a new trial filed by Park West Galleries, Inc. (“Park West”). In denying the motion, the district court found that it was unclear whether this court's waiver doctrine as enunciated in Jones v. Illinois Central Railroad Co., 617 F.3d 843 (6th Cir.2010), extended to requests for a new trial brought under Federal Rule of Civil Procedure 59. The district court certified for interlocutory appeal the issue of whether Park West waived its right to a Rule 59(a) motion for a new trial by failing to move for a mistrial, before the case was submitted to the jury, on the basis of the known misconduct in which Franks and counsel for defendants engaged during the course of the entire trial. For the following reasons, we conclude that Park West's failure to move for a mistrial based on misconduct occurring during the trial did not waive its right to seek a new trial under Federal Rule of Civil Procedure 59, and we affirm the district court's order denying the motion to reinstate the jury verdict.

I.

Park West is an independently owned gallery and art dealer headquartered in Southfield, Michigan. Park West sells art from its Southfield gallery, over the internet, through its catalog, and over the phone, and also conducts art auctions in different cities in North America and on cruise ships around the world. Among the works sold by Park West are works by Salvador Dalí.

In May 2007, Theresa Franks, who is the CEO of Global Fine Art Registry (“GFAR”), began publishing articles on Fine Art Registry (“FAR”), the website run by GFAR, which alleged that Park West engaged in suspect business practices in running its auctions aboard cruise ships and that Park West sold inauthentic or fake works of art to unsuspecting customers—particularly citing the works by Dalí as an example. David Phillips, a FAR employee, authored several of the articles published on the FAR website which described alleged cruise ship art auction scams run by Park West and conducted several interviews with alleged victims, all of which were published on the FAR website. Bruce Hochman, who runs the Salvador Dalí Gallery, agreed to be interviewed and quoted by Phillips on behalf of FAR regarding his view that the Dalí prints purchased by Park West customers in the auctions at sea did not contain authentic artist signatures.

In April 2008, Park West filed a complaint in Michigan state court against Franks, Hochman, and GFAR alleging defamation, tortious interference, interference with prospective business advantage, and civil conspiracy to destroy Park West's goodwill and reputation. The action was removed to federal court. Park West had also filed a similar defamation case against Phillips, and the cases were consolidated.

The consolidated case was tried before a jury between March 15, 2010 and April 19, 2010. During trial, Park West frequently objected to what it viewed as misconduct on the part of Franks and counsel for the defendants. The district court gave several warnings to defense counsel regarding the misconduct and sanctioned Franks's defense counsel Jonathan Schwartz for his failure to honor the court's rulings regarding improper lines of questioning. Despite the repeated instances of misconduct, Park West did not request a mistrial and the case was submitted to the jury on April 19. On April 21, the jury returned a verdict in favor of defendants Franks, Phillips, Hochman, and GFAR on the defamation, tortious interference with business expectancies, and civil conspiracy claims. However, the jury did not find in favor of the defendants on their counterclaims of defamation, tortious interference with business expectancies, and conspiracy to tortiously interfere with business expectancies. Nonetheless, the jury did find in favor of defendant GFAR on its Lanham Act counterclaim against Park West and awarded $500,000.00 in damages.

On May 11, 2010, Park West filed a motion for judgment as a matter of law and/or for a new trial. Park West's motion requested several forms of post-trial relief, including a new trial under Federal Rule of Civil Procedure 59 on Park West's defamation, tortious interference with business expectancies, and civil conspiracy claims as well as GFAR's counterclaim for a violation of the Lanham Act. Park West argued that the district court should set aside the verdict and grant a new trial in light of the “persistent and insidious misconduct of the defendants and their counsel [which] deprived Park West of a fair trial, and caused the jury to reach a seriously erroneous result that is against the weight of the (admissible) evidence.” Park West argued that Franks and defense counsel persistently violated the district court's orders resolving the motions in limine and the district court's evidentiary rulings, and that defense counsel made inappropriate and inflammatory remarks throughout trial, posed improper and objectionable questions to witnesses, and failed to control their clients.

On August 16, 2010, the district court found that Franks and counsel for the defendants engaged in contumacious conduct. After considering the factors enumerated in City of Cleveland v. Peter Kiewit Sons' Co., 624 F.2d 749, 756 (6th Cir.1980), for determining whether there is a reasonable probability that the jury's verdict was influenced by the improper conduct and a grant of the motion for a new trial is therefore warranted, the district court decided that the misconduct engaged in by Franks and defense counsel was serious enough and permeated the entire trial to such an extent that there was at least a reasonable probability that the verdict was influenced by the misconduct. The district court granted Park West's motion for a new trial as to GFAR, Franks, and Phillips.¹

On October 7, 2010, GFAR, Franks, and Phillips (collectively, the “defendants”) filed a Motion to Reinstate the Unanimous Jury Verdict, Based Upon the Recent 6th Circuit Published Decision in Jones v. Illinois Central Railroad Company, 617 F.3d 843 (6th Cir.2010).² The defendants' motion to reinstate argued that under Jones, Park West waived its right to seek a new trial when it failed to seek a mistrial before the jury rendered its verdict despite the fact that the alleged misconduct or instances of potential or actual prejudice were known to Park West prior to jury deliberations. As a result, the defendants requested that the district court grant them relief by reversing its decision to grant a new trial and reinstating the jury's verdict in light of Jones.

The district court denied the motion to reinstate on December 8, 2010. The district court considered whether Jones, which involved a Rule 60 motion, should be read to create a broad waiver rule encompassing the case where a party fails to move for a mistrial when the misconduct was known to the party prior to jury deliberations. The district court concluded that Jones did not create such a broad waiver rule, because it found that the opinion “clearly and expressly rested its analysis and holding on the plaintiff's Rule 60 motion.” Because Park West moved for a new trial under Rule 59(a), the district court declined to extend the waiver rule from Jones to Park West's motion for a new trial. However, the district court stayed the proceedings and certified its decision for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). We granted permission to appeal the issue of “whether the plaintiff waived its right to seek a new trial under Federal Rule of Civil Procedure 59 based on misconduct occurring during the trial by failing to move for a mistrial before the case was submitted to the jury.”

II.

On interlocutory appeal, we do not review the district court's findings of fact, and instead “consider only pure questions of law.” Bates v. Dura Auto. Sys., Inc., 625 F.3d 283, 285 (6th Cir.2010). We review district court's conclusions of law de novo. Id.

II.

The defendants argue that the district court improperly ordered a new trial and erred in denying their motion to reinstate the jury verdict because Park West waived its right to a new trial by failing to request a mistrial based on known misconduct at trial before the case was submitted to the jury. They contend that Jones demonstrates that a party waives its right to a new trial when it fails to seek a mistrial before the jury renders its verdict. We disagree and conclude that Jones does not extend to motions for a new trial made pursuant to Rule 59.

A.

Pursuant to Federal Rule of Civil Procedure 59, “[t]he court may, on motion, grant a new trial on all or some of the issues—and to any party ... (A) after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court....” Fed.R.Civ.P. 59(a)(1). Motions for a new trial “must be filed no later than twenty-eight days after the entry of judgment.” Fed.R.Civ.P. 59(b). A district court may also order a new trial on...