Hanover Am. Ins. Co. v. Tattooed Millionaire Entm't, LLC

• Decision Date: 11 September 2020
• Docket Number: Nos. 19-5483/5550/5551/5562,s. 19-5483/5550/5551/5562
• Citation: 974 F.3d 767
• Parties: HANOVER AMERICAN INSURANCE COMPANY, Plaintiff-Appellee, v. TATTOOED MILLIONAIRE ENTERTAINMENT, LLC and Christopher C. Brown; John Falls; Daniel R. Mott, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

974 F.3d 767

HANOVER AMERICAN INSURANCE COMPANY, Plaintiff-Appellee,

v.TATTOOED MILLIONAIRE ENTERTAINMENT, LLC and Christopher C. Brown; John Falls; Daniel R. Mott, Defendants-Appellants.

Nos. 19-5483/5550/5551/5562

United States Court of Appeals, Sixth Circuit.

Argued: July 28, 2020^*

Decided and Filed: September 11, 2020

Rehearing En Banc Denied November 13, 2020

ARGUED: Malcolm B. Futhey III, FUTHEY LAW FIRM PLC, Memphis, Tennessee, for Appellant in 19-5483. Jeremy T. Grabill, PHELPS DUNBAR LLP, New Orleans, Louisiana, for Appellee. ON BRIEF: Malcolm B. Futhey, III, FUTHEY LAW FIRM, Memphis, Tennessee, for Appellant in 19-5483. John W. Christopher, CHRISTOPHER LAW OFFICE, PLLC, Jackson, Mississippi, Charles Waldman, Memphis, Tennessee, for Appellants in 19-5550 and 19-5551. Jeremy T. Grabill, Mark C. Dodart, Pablo Gonzalez, Jeffrey A. Clayman, PHELPS DUNBAR LLP, New Orleans, Louisiana, John E. Anderson, Sr., DICKINSON WRIGHT PLLC, Nashville, Tennessee, for Appellee. Daniel R. Mott, Humboldt, Tennessee, pro se.

Before: GUY, BOGGS, and WHITE, Circuit Judges.

BOGGS, Circuit Judge.

The House of Blues music studio in Memphis suffered a burglary and arson in November 2015. Chris Brown owned the House of Blues through Tattooed Millionaire Enterprises (TME). He and two tenants, John Falls and Daniel Mott, submitted insurance claims for the loss. But Brown submitted fraudulent documents in connection with this claim. That led to an insurance-fraud lawsuit and, eventually, this trio of appeals.

Two of the appeals are straightforward to resolve. Brown was found liable by a jury after admitting on the stand that he had forged documents submitted in his insurance claim. He now makes three weak arguments about the judge's management of the trial and the admission of evidence. Mott lodges a two-line pro se brief that raises no issues on which relief can be granted. In each of these cases, we affirm the court below.

Falls's case is different. Falls prevailed before the jury, only to have the judge set aside the verdict and direct a judgment for the insurance company under Federal Rule of Civil Procedure 50(b). Rule 50 is structured in two parts: (a) provides for the making of a motion for judgment as a matter of law at trial, and (b) provides for "Renewing the [50(a) ] Motion after Trial." But Hanover had failed to make a motion at trial for a directed verdict as to Falls under Federal Rule of Civil Procedure 50(a). Somewhat surprisingly, we have not expressly decided whether a party can make a Rule 50(b) motion if it has not previously made a Rule 50(a) motion. For the reasons discussed below, we now hold that this is impermissible. Therefore, Hanover forfeited its ability to "renew" a motion for a directed verdict after trial under Rule 50(b). We thus reverse the district court and remand with orders to reinstate the jury verdict as to Falls.

FACTUAL AND PROCEDURAL HISTORY

In November 2014, Christopher C. Brown bought the historic House of Blues studio in Memphis through his newly formed production company, Tattooed Millionaire Entertainment, LLC (TME). The House of Blues had been built for a band, the Bar-Kays, by the same architect who designed the Abbey Road studio of Beatles fame. Brown was a rock musician and music producer. Around the same time that he purchased the studio, Brown founded not only TME but also a new record label, Tattooed Millionaire Records (TMR).¹ After acquiring the studio building, Brown secured a policy in the name of TME with Hanover American that insured the studio premises for $4.65 million, Brown's Business Personal Property (BPP) (i.e., instruments and studio equipment² ) for $5.5 million, and lost business income (BI) for $600,000.

House of Blues has three studios within the building: Studio A, Studio B, and Studio C. Brown operated Studio A himself, and leased Studio B to John Falls. Falls had spent 2000–2011 as the lead singer of Egypt Central, a successful rock band. During that period, Egypt Central had had five singles on Billboard Top 20 charts, averaged 250 shows per year, and licensed its music extensively to movies and video games. Falls estimated that the group's average yearly gross, as a band, was $3 million, with a peak year of $4 million. After 2011, Falls moved to Florida. In 2014, he returned to Memphis. Chris Brown had reached out to him about launching a record label (TMR) around a promising new band that Brown had found. Falls described his relationship with Brown prior to this point as "not buddies" and "cordial rivals." But in working together to produce the band's music, Falls and Brown felt they had struck up a "spectacular" working relationship.

Therefore, Falls bought into TMR (but not TME) for $1 million, to be financed through earnings over time. As a basis for his own music production career, meanwhile, Falls arranged to lease Studio B at House of Blues for $500/month and the equipment in it for $1,000/month for two years each, renewable indefinitely at Falls's option. Falls would later testify that he had asked Brown where the former had obtained his insurance, then gone to the same agent to acquire insurance for himself. The policy he obtained, also from Hanover, had a limit of $2.5 million for the gear in Brown's studio (BPP) and $500,000 for BI. During Brown's management of Studio B, nationally and locally prominent artists recorded there.

The policy also provided commercial general liability (CGL) coverage with a limit of $2,000,000. Falls was the sole named insured under the policy, but an endorsement provided that TME was an additional insured. That endorsement stated that it "modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART," and also stated that the endorsement amended "Section II – Who is an Insured" "to include as an additional insured [TME], but only with respect to liability for ‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’ caused ... by your acts or omissions or the actions or omissions of those acting on your behalf" "in the performance of your ongoing operations" or "in connection with your premises owned by or rented to you."

In a section entitled "Commercial Property Conditions," the policy provides:

This Coverage Part is void in any case of fraud by you as it relates to this Coverage Part at any time. It is also void if you or any other insured, at any time, intentionally conceal or misrepresent a material fact concerning:

1. This Coverage Part;

2. The Covered Property;

3. Your interest in the Covered Property; or

4. A claim under this Coverage Part.

Brown leased House of Blues's Studio C to Daniel Mott. Mott had met Brown when Mott was a boy and Brown was a performing musician. By his own account, Mott was a "merch girl" [sic] (a low-level merchandise salesman) and lighting technician before Brown inexplicably set him up in Studio C as a producer. He would later admit on the stand to never having "earned a dollar producing music before 2015." Mott also obtained insurance from Hanover, for the same amount as Falls had.

On November 5, 2015, when Brown was out of town with his family on vacation in Arkansas, persons unknown broke into the studio, committed arson using gasoline, and vandalized and burgled it. This resulted in just over $2 million in damage to the building itself. When Hanover began investigating, it was under the impression that only a mild amount of theft had accompanied the arson, but when the claims were filed, it became clear that the theft had greatly exceeded the arson. The combined BPP claims eventually reached $10.5 million. It is unclear whether the thefts occurred at the time of the fire and were initially underestimated or whether there was a significant second round of theft after the fire, during times when the building was imperfectly guarded.³ Brown/TME, Mott, and Falls hired a public adjustor, Goodman-Gable-Gould, who compiled their claims into one document that was then submitted to Hanover. This document, later labeled Exhibit 32, contained lists of the gear in each studio claimed as either damaged or lost, as well as receipts for the original purchase of the gear, provided by Brown. Each defendant signed a (separate) sworn proof of loss. Each submitted claims up to the policy limits, and Hanover made an initial advance payment of $2.7 million in total: $2,208,898.49 to Brown/TME and $250,000 each to Mott and Falls.

When Hanover began to investigate the claims, however, it discovered that all of the receipts that Brown had submitted, and which formed part of the combined packet submitted on behalf of all three claims, were fake. Hanover also discovered that this was not the first time Brown had been the unfortunate victim of an arson leading to an insurance claim for lost musical equipment: in fact, in just the previous calendar year, he had suffered a remarkably similar loss to arson (which he had not had to report on his insurance application only because the policy for House of Blues was in the name of TME), and the latest loss was the third suspicious loss in four years. Hanover filed suit seeking recovery of the funds it had advanced and a declaratory judgment that it did not owe any of the three the balance of their claims. Brown, TME, Mott, and Falls counter-sued.

The dispute was tried in the Western District of Tennessee, in a diversity action under Tennessee law, over five days in November 2018. At trial, Brown, Mott, and Falls each testified, and each presented very different personae and stories to the jury. Brown unabashedly admitted on the stand that he had faked the receipts. The forgery was on a grand scale: Using a combination of internet "novelty" receipt generators and old-fashioned do-it-yourself forgery, Brown faked invoices, credit card receipts, and bank statements, for six- and seven-figure expenditures. Brown suggested then and now that he did all this because, with his computer stolen, he was unable to produce the originals and had...