In re Wedtech Corp.
| Decision Date | 07 June 1996 |
| Docket Number | Bankruptcy No. 86 B 12366 (JHG). Adv. No. 92-8472A. |
| Citation | 196 BR 274 |
| Parties | In re WEDTECH CORP. f/k/a Welbilt Electronics Die Corp., Debtor. CEPA CONSULTING LTD., as Liquidating Trustee for the Liquidating Trust of Wedtech Corp., Plaintiff, v. NEW YORK NATIONAL BANK, INC., Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
Angel & Frankel by John H. Drucker and Laurence May, New York City, for CEPA Consulting Ltd.
Hahn & Hessen by Gabriel B. Schwartz and David Posner, New York City, for New York National Bank.
Plaintiff, CEPA Consulting, Ltd., as liquidating Trustee for the Liquidating Trust of Wedtech Corp. ("Plaintiff" or "CEPA"), sued Defendant, New York National Bank ("Defendant" or "NYNB"), to recover the amount paid on a certain loan, as a preference, pursuant to 11 U.S.C. § 547. NYNB asserted, inter alia, the affirmative defense that the repayment was in the ordinary course of business under 11 U.S.C. § 547(c)(2).
The adversary proceeding was tried before a jury. At the close of the trial, the jury rendered a special verdict on interrogatories. The jury found for the Plaintiff and rejected NYNB's ordinary course of business defense. A judgment has been entered on the verdict.
Defendant moves1 pursuant to FED. R.Civ.P. 49(a), 50 and 59 for an order: (a) vacating the jury's special verdict answers to questions 2, 3, 4, 5 and 6 on the grounds that no judgment may be entered in favor of either party; and (b) directing either a new trial of its affirmative defense under 11 U.S.C. § 547(c)(2) or the entry of judgment in its favor, as a matter of law, upon additional findings to be made by this court. As an initial matter, I am deeming this a motion to set aside a judgment2 since judgment was entered prior to this motion being heard, even though the motion was made before the judgment was entered.
Plaintiff opposes the motion on the grounds that the special verdict form, as well as the jury's answers, were faithful to the statutory elements of the ordinary course defense, and that NYNB had ample opportunity to review and raise objections to the special verdict, but it did not do so.
Prior to the end of testimony, each party submitted proposed jury charges and special verdict interrogatories. I held an informal conference with counsel after receiving them.
On the day before I charged the jury, NYNB submitted revised proposed jury instructions and a revised proposed special verdict form, almost identical to the one previously submitted.3
Later that morning, counsel for the parties attempted to draft a joint charge on the ordinary course defense, but were unable to do so.
On the morning of the day I charged the jury, after testimony had ended and counsel had summed up, and after reviewing the parties' submissions, I drafted my own jury instructions and special verdict questions.
Before charging, I submitted a copy of my jury instructions and special verdict questions to counsel for comment. NYNB did not object to the questions, but did object generally to the ordinary course charge. NYNB and CEPA each wanted me to add language to the charge mirroring the language in the In re Roblin Indus., Inc.4 case. I added that language to the charge. In addition, in response to plaintiff's objection that the instructions unfairly emphasized the timeliness aspect of the payments, I further revised the instruction on the ordinary course defense.
In terms of any further objection, NYNB's counsel stated:
Each counsel had comments on the wording of the questions and they were revised to reflect those comments. I then asked counsel:
NYNB's counsel raised no objection at that time, nor did he raise the objection he puts forth in this motion at any time that day.
The special verdict form, with minor grammatical changes, was submitted to the jury after it was charged.
After I charged the jury, NYNB renewed its objection to certain portions of the charge. However, it did not object to the ordinary course defense charge or to the special verdict form.
On April 16, 1996, the jury returned a verdict for CEPA. NYNB now prays for an order setting that verdict aside.
NYNB had an affirmative obligation to bring its objection to me, either immediately prior to the charge or at the conference after the charge, before the jury retired. Pettus v. Grace Line, Inc., 305 F.2d 151, 156 (2d Cir.1962) (Dissenting Opinion). It failed to meet that obligation.
In sum NYNB argues:
CEPA argues that I may not consider any of NYNB's legal arguments because it waived its right to object to the special verdict form.
As an initial matter, NYNB argues that it did properly object. In support of this argument, it relies on FED.R.Civ.P. 46, which states:
Formal exceptions to rulings or orders of the court are unnecessary; but for all purposes for which an exception has heretofore been necessary it is sufficient that a party, at the time the ruling or order of the court is made or sought, makes known to the court the action which the party desires the court to take or the party\'s objection to the action of the court and the grounds therefor; and, if a party has no opportunity to object to a ruling or order at the time it is made, the absence of an objection does not thereafter prejudice the party.
NYNB believes it made appropriate and timely objections, and, therefore, did not waive them. Specifically, NYNB relies on its proposed special verdict forms, filed April 7, 1996 and the resubmission of essentially the same set of interrogatories, filed the day before the jury was charged, to satisfy the requirement of Rule 46. It did not object to the interrogatories thereafter.
Our system of lay juries requires that we call on our citizens, often at great personal or business inconvenience, to lay aside all other commitments and serve as jurors. So that their time is well used, we have devised a system that requires that all issues bearing on jury verdicts be put squarely before the court, and decided, before the jury deliberates or is discharged. Issues not placed before the court prior to discharge of the jury are deemed waived. Manes v. Metro-North Commuter R.R., 801 F.Supp. 954 (D.Conn.), aff'd 990 F.2d 622 (2d Cir.1993); Cote v. Butler's Estate, 518 F.2d 157 (2d Cir.1975).
NYNB argues that when I did not use its three submitted interrogatories, I ruled against it on the contested issue, relieving NYNB of the requirement of making further objections in order to preserve its exception to the questions finally used. FED.R.CIV.P. 46. In Salzmann v. Sciccitano, 782 F.Supp. 195 (E.D.N.Y.1991), the court held that ". . . a submission before trial of written charge requests is no substitute for satisfying the requirements of Rule 51." Id., at 198. See also, Morse/Diesel v. Trinity Indus., Inc., 875 F.Supp. 165 (S.D.N.Y.1994).6
Although, these two cases refer to an objection to a jury charge, the reasoning is applicable to special verdict questions. A timely objection by NYNB would have given me the opportunity to correct any error it perceived existed. Cohen v. Franchard Corp., 478 F.2d 115, 122 (2d Cir.1973), cert. denied 414 U.S. 857, 94 S.Ct. 161, 38 L.Ed.2d 106 (1973). Indeed, NYNB objected to a portion of the jury charge and I revised the charge accordingly.
What NYNB fails to note is that the issues of the charge and the special verdict questions remained open until the jury retired to deliberate. Changes were made to both the charge and the questions immediately prior to my charging the jury. Indeed, the parties had additional opportunity to object to the questions after the charge and before the jury retired to deliberate. The questions ultimately used were not extant when NYNB submitted its proposed questions.
NYNB did not satisfy Rule 46 because its claimed objection was not sufficient to make me aware that it was still before me. Indeed, at no time, not even after the jury rendered it verdict, did NYNB raise the issue of the verdict form or claim that the answers to the interrogatories were internally inconsistent. Moreover, NYNB did not ask me to resubmit the issue to the jury.
Under FED.R.CIV.P. 46, an exception is sufficient if the party makes known to the court his objection to any action and the reasons for the objection. Since the function of the exception is notice to the court, the test of sufficiency of an exception is whether from the circumstances it was clear to the court that the objector disagreed with its actions.
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