Kelso v. Butler

• Decision Date: 13 August 2018
• Docket Number: No. 15-30169,15-30169
• Citation: 899 F.3d 420
• Parties: Malcolm KELSO, doing business as Irontree Group, Plaintiff–Appellant, v. Christine A. BUTLER; Christine A. Butler, P.A. ; Humble Holdings, L.L.C.; Margaret Humble Lantz Family, L.L.C.; Hebert Family Holdings, L.L.C.; Humble Woods, L.L.C. ; Velma Humble Hebert, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

899 F.3d 420

Malcolm KELSO, doing business as Irontree Group, Plaintiff–Appellant,

v.Christine A. BUTLER; Christine A. Butler, P.A. ; Humble Holdings, L.L.C.; Margaret Humble Lantz Family, L.L.C.; Hebert Family Holdings, L.L.C.; Humble Woods, L.L.C. ; Velma Humble Hebert, Defendants–Appellees.

No. 15-30169

United States Court of Appeals, Fifth Circuit.

FILED August 13, 2018

James Allen Moseley, Esq., Charles Wilfred Sartain, Gray Reed & McGraw, L.L.P., Suite 4600, 1601 Elm Street, Dallas, TX 75201, for Plaintiff–Appellant.

Steven G. Durio, Daniel Josef Phillips, Esq., Durio, McGoffin, Stagg & Ackermann, 220 Heymann Boulevard, Lafayette, LA 70503, for Defendants–Appellees.

Before HIGGINBOTHAM, OWEN, and ELROD, Circuit Judges.

PRISCILLA R. OWEN, Circuit Judge:

After plaintiff Malcolm Kelso rested his case, opposing counsel moved for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50. The district court granted the motion. Kelso requests that we reverse and remand, contending that the motion did not "specify ... the law and facts that entitle[d] the movant to the judgment."¹ We affirm the district court’s judgment.

I

This suit asserting breach of contract arises from Kelso’s consulting work for Christine Butler, a Florida attorney and accountant, who managed certain real property in Vermilion Parish, Louisiana. Butler’s mother and aunts owned that property and, acting through a number of limited liability companies (the Humble family entities) created to manage various interests in the property, authorized Butler to act on their behalf.

According to uncontroverted trial testimony, Butler agreed in 2005 to pay Kelso $400 per hour for a maximum of fifty hours per month as a "litigation consultant" to assist the family in reclaiming mineral servitudes in the property. There was also uncontroverted testimony that Kelso falsely represented to Butler that he had degrees from Stanford University and the University of California at Berkeley.² At Kelso’s urging, Butler agreed to file a number of lawsuits against various parties. She later agreed to grant Kelso an option to purchase a twenty-five percent interest in certain mineral rights. The association between Butler and Kelso was a tumultuous one, but it largely ended when Kelso was imprisoned for tax evasion in November 2008. By the time Kelso’s work for Butler and the Humble family entities was complete, Butler had paid Kelso approximately $766,000, in addition to granting the option.

Kelso sued Butler and the Humble family entities in 2012, asserting a number of claims.³ First, Kelso alleged that the defendants breached the consulting agreement by failing to compensate him fully for his work and breached a side agreement regarding the division of certain litigation expenses. Second, Kelso alleged that the defendants breached the option agreement, contending that their transfer of the twenty-five percent mineral interest was invalid and was improperly subject to a mortgage that greatly diminished its value. Finally, Kelso alleged that the defendants breached an agreement to lease the property to a developer.⁴ The district court denied cross-motions for summary judgment and set the matter for trial.

After obtaining two continuances, Kelso’s counsel withdrew for health reasons. The district court denied Kelso a third continuance, and although he had months to obtain new counsel, he did not do so.

As a result, Kelso represented himself at the trial. His first witness was James Hardwick, a geologist who testified only that the Vermilion Parish property "would be a reasonable place to look for additional hydrocarbons." The second, and only other, witness was Butler. Kelso’s meandering examination of Butler consumed over six hours; the district court judge repeatedly admonished him to avoid irrelevant lines of questioning and to refrain from testifying while posing questions to Butler. Kelso declined to call further witnesses and rested his case. In the exchange that followed, Butler’s attorney moved for judgment as a matter of law:

THE COURT: Motion?

MR. DURIO: Yes, Your Honor.

THE COURT: All right.

MR. DURIO: We'd like to move for judgment as a matter of law.

THE COURT: Under Rule 50 ?

MR. DURIO: Right.

There followed a brief colloquy regarding Butler’s counterclaim and a recess. The exchange regarding the counterclaim continued after the recess, and when the discussion concluded, the district court then announced its ruling: "I'm going to grant the Rule 50. I have really no choice. Mr. Kelso has never been sworn, never put on any evidence from himself. The Rule 50 is granted." Kelso did not seek to be heard, object or otherwise oppose the Rule 50 motion at any point during the proceedings. After another recess, the district court granted a Rule 50 motion with regard to Butler’s counterclaim—a ruling not at issue here—and the proceedings were adjourned. Kelso timely appealed.

II

Kelso presents three issues in this appeal. He contends that there was evidence on each element of his breach of contract and specific performance claims and therefore that the district court erred in granting the Rule 50 motion; the district court should not have granted the Rule 50 motion because it did not meet Rule 50 ’s requirement of specificity; and the district court erred in failing to grant a continuance. Butler contends that our review of whether the district court erred in granting the Rule 50 motion should be for plain error since Kelso did not object in the district court. For the reasons considered below, we do not resolve this issue because under either standard of review, Kelso does not prevail.

A

"Judgment as a matter of law may be granted when a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue."⁵ Federal Rule of Civil Procedure 50(a) requires that motions for judgment as a matter of law "specify the judgment sought and the law and facts that entitle the movant to the judgment."⁶ The most basic purpose of a Rule 50(a) motion is to "alert the opposing party to [any] insufficiency before the case is submitted to the factfinder, thereby affording [the non-moving party] an opportunity to cure any defects in proof should the motion have merit."⁷

Assuming, without deciding, that Butler’s motion did not sufficiently apprise Kelso of deficiencies in proof and that the district court therefore erred in granting Butler’s Rule 50 motion, under a de novo standard of review, Kelso must nevertheless establish that the error was harmful. Generally, and in a case like the present one, 28 U.S.C. § 2111 requires appellate courts to "give judgment ... without regard to errors or defects which do not affect the substantial rights of the parties."⁸ Reversal is not automatic upon recognition of error.⁹ Even in the criminal law, "[o]nly the rare type of error—in general, one that ‘infect[s] the entire trial process’ and ‘necessarily render[s] [it] fundamentally unfair’—requires automatic reversal."¹⁰ In civil cases, we have conducted a harmless error analysis when errors such as the sua sponte issuance of summary judgment without notice,¹¹ the mistaken denial of a jury trial,¹² and the imposition of an incorrect burden of proof¹³ were committed by the district court.

To the extent our review is for plain error, Kelso "must show that the district court committed an error that was clear or obvious and that affected [Kelso’s] substantial rights."¹⁴ We will correct such an error only if Kelso can "show that the error has a serious effect on the fairness, integrity, or public reputation of judicial proceedings."¹⁵

When the deficiencies in the non-movant’s case are insurmountable, the movant’s failure to "specify ... the law and facts that entitle the movant to the judgment"¹⁶ does not impair the achievement of Rule 50 ’s purposes. Alerting an opposing party to an insufficiency in its case only serves a purpose of Rule 50 when it is an insufficiency that the party can remedy.

B

The question is whether Kelso could have presented additional evidence from which a reasonable jury would have a legally sufficient basis to find for him.¹⁷ For purposes of this inquiry, as well as whether the evidence that Kelso did present was sufficient to require submission to the jury, we consider the evidence in the light most favorable to Kelso, drawing all factual inferences in his favor and "leaving credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts to the jury."¹⁸

Kelso contends that the district court erred by concluding that his evidence was insufficient to support a jury verdict. He insists he presented or could have presented sufficient evidence on three claims.

First, Kelso argues that judgment as a matter of law was inappropriate with respect to his claim that the defendants breached their consulting agreement with him. The evidence presented at trial, in the form of testimony by Butler, suggested that the agreement was for a fee of $400 per hour with a cap of $20,000 per month. Kelso contends, to the contrary, that the agreement was simply for $20,000 per month. There is also a potential factual disagreement about the extent to which the defendants’ debt to Kelso was satisfied. Butler, in uncontroverted trial testimony, stated that the debts she acknowledged in various letters to Kelso were subject to various offsets she discovered when re-examining the books. Kelso, relying primarily on an affidavit he executed and correspondence from Butler, now contends that the defendants still owe him $117,600 and that if apprised of deficiencies in his case, he could have presented evidence that would have provided a legally sufficient basis for the jury to find for him on this claim.

We agree with Butler that Kelso’s claims are claims on an "open account" under Louisiana law and that Kelso filed his suit after the...