Jesselson v. OUTLET ASSOCIATES

• Decision Date: 16 December 1991
• Docket Number: Civ. A. No. 90-1-NN.
• Citation: 784 F. Supp. 1223
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Ludwig JESSELSON, Erica Jesselson, and Lucy Lang, Trustees of the Jesselson 1983 Charitable Trust, Plaintiffs, v. OUTLET ASSOCIATES OF WILLIAMSBURG, LIMITED PARTNERSHIP, and Williamsburg Outlet Realty Corp., Defendants.

784 F. Supp. 1223

Ludwig JESSELSON, Erica Jesselson, and Lucy Lang, Trustees of the Jesselson 1983 Charitable Trust, Plaintiffs, v. OUTLET ASSOCIATES OF WILLIAMSBURG, LIMITED PARTNERSHIP, and Williamsburg Outlet Realty Corp., Defendants.

Civ. A. No. 90-1-NN.

United States District Court, E.D. Virginia, Newport News Division.

Nunc Pro Tunc December 16, 1991.

COPYRIGHT MATERIAL OMITTED

C. Vance Beck and Stephen E. Story, Kaufman & Canoles, P.C., Norfolk, Va., for plaintiffs.

Pamela Posey, S. Miles Dumville, Stephen C. Hall, Hazel, Thomas, Fiske, Weiner, Beckhorn & Hanes, P.C., Richmond, Va., for defendants.

AMENDED MEMORANDUM OPINION AND ORDER

CLARKE, District Judge.

Plaintiffs Ludwig Jesselson, Erica Jesselson and Lucy Lang, Trustees of the Jesselson 1983 Charitable Trust ("Trust" or "Plaintiffs"), pursuant to Rule 72 of the Federal Rules of Civil Procedure, object to the Recommendation of the Magistrate Judge that the ruling on Defendants' Motion in Limine to exclude certain testimony and documents from evidence not be treated as dispositive. For the reasons set out more fully below, Plaintiffs' Objections to the Recommendation of the Magistrate Judge are OVERRULED, and Plaintiffs' Motion that the ruling on Defendants' Motion in Limine be treated as dispositive is DENIED. Furthermore, the Court finds that the Magistrate's ruling on the Motion in Limine is not clearly erroneous or contrary to law, and therefore is AFFIRMED.

FACTS

The Trust seeks to recover from the Defendants, Outlet Associates of Williamsburg, Limited Partnership ("Outlet Associates") and Williamsburg Outlet Realty Corp. ("Williamsburg Corp."), the proceeds of a loan allegedly made by the Trust to partially fund Outlet Associates' acquisition of the Outlets Ltd. Mall ("Mall") in Williamsburg, Virginia. In support of their claims, Plaintiffs proffered three contract documents: (1) a letter agreement dated November 4, 1988 to the Trust in care of Ludwig Jesselson from Lawrence Rezak, who, at the time these documents were executed, was the President and sole shareholder of Williamsburg Corp., which in turn was 99% owner and general partner of Outlet Associates ("Letter Agreement"); (2) a promissory note dated November 4, 1988, payable to the Trust in the amount of $715,000.00, and executed by Leibel Lederman, a business associate ("Note"); and (3) a guarantee by Lawrence Rezak, also dated November 4, 1988, guaranteeing to the Trust payment of all amounts due from Leibel Lederman on the Note ("Guarantee"). These documents are referred to by the Plaintiffs as Proposed Joint Exhibits 10, 19 and 20, respectively.

Rezak intended to syndicate ownership of the Mall by the sale of limited partnership interests in the entity which ultimately purchased the Mall. Rezak's ownership and control of both Defendants is not disputed, however, he signed the Letter Agreement and Guarantee in his individual capacity. Plaintiffs admit that Rezak and Lederman individually are obligated to repay the loan under the Letter Agreement, Guarantee and Note. However they also contend that the "principal source" of repayment was to be the proceeds or return of capital received by any Rezak-owned or controlled entity from syndication of the Mall. See Letter Agreement.

Defendant Outlet Associates purchased the Mall in November 1988. But instead of syndicating its ownership of the Mall, Outlet Associates sold the Mall outright, realizing a profit of $3 million. The Trust attached $1 million incident to this proceeding. The balance of the sales proceeds passed from the limited partnership to a liquidating trust for Rezak and Lederman's creditors, as they, as well as both Defendants, have filed petitions in bankruptcy.

Two days prior to the Final Pretrial Conference, the Defendants filed a Motion for Summary Judgment. The following day, the Defendants filed a Motion in Limine which incorporated Defendants' Memorandum in Support of their Motion for Summary Judgment. The Motion in Limine sought the exclusion of Proposed Joint Exhibits 10, 19 and 20, as well as any related testimony, from evidence on the grounds that they were inadmissible under the parol evidence rule.

At the Final Pretrial Conference, Defendants' Motion for Summary Judgment was denied as untimely filed. The District Court then referred all objections and the Motion and Limine to a Magistrate Judge for hearing and determination.

At a hearing held on August 26, 1991, the Magistrate Judge granted the Motion in Limine filed by the Defendants in general and specifically held that Proposed Joint Exhibits 10, 19 and 20, which the Trust contends evidenced the overall loan agreement and the Defendants' repayment obligations, were inadmissible under the parol evidence rule. All testimony offered to bind the Defendants to pay the Trust was also excluded on the same grounds. See Memorandum of Magistrate Judge's Hearing Held August 26, 1991, dated August 29, 1991, p. 1 ("Memorandum of Magistrate's Hearing"). Plaintiffs then filed a motion asking that the Magistrate Judge find the granting of the Defendants' Motion in Limine dispositive of a claim or claims of the Trust, pursuant to Federal Rule of Civil Procedure 72(b). In his Memorandum of Magistrate Judge's Hearings and Report and Recommendation or Order ("Magistrate's Recommendation or Order"), dated October 3, 1991, the Magistrate Judge recommended¹ to the District Court that the Motion to treat the ruling on the Motion in Limine as dispositive be denied. The Plaintiffs now seek review of the Magistrate's Recommendation by this Court.

PROCEDURAL ISSUES

Federal Rule of Civil Procedure 72 provides for review by a district judge of the parties' objections to a magistrate's rulings on pretrial matters. However, the standard of review differs according to whether the magistrate's decision was a dispositive one. Rule 72(a)² states:

A magistrate to whom a pretrial matter not dispositive of a claim or defense of a party is referred to hear and determine shall promptly conduct such proceedings as are required and when appropriate enter into the record a written order setting forth the disposition of the matter. The district judge to whom the case is assigned shall consider objections made by the parties ... and shall modify or set aside any portion of the magistrate's order found to be clearly erroneous or contrary to law. (emphasis added).

Rule 72(b) reads:

A magistrate assigned without consent of the parties to hear a pretrial matter dispositive of a claim or defense of a party ... shall promptly conduct such proceedings as are required.... The magistrate shall enter into the record a recommendation for disposition of the matter, including proposed findings of fact when appropriate....

.... Within 10 days after being served with a copy of the recommended disposition, a party may serve and file specific, written objections to the proposed findings and recommendations.... The district judge to whom the case is assigned shall make a de novo determination upon the record, or after additional evidence, of any portion of the magistrate's disposition to which specific written objection has been made in accordance with this rule. The district judge may accept, reject, or modify the recommended decision, receive further evidence, or recommit the matter to the magistrate with instructions. (emphasis added).

Although the Magistrate characterized his decision as "specifically evidentiary and not dispositive", see Magistrate's Recommendation or Order, p. 8, the Trust contends that the Magistrate's ruling on the Motion in Limine effectively dismissed its case and granted Summary Judgment, which was previously denied by the District Court Judge, under the guise of an evidentiary ruling. Plaintiffs argue that since summary judgment is among the list of dispositive matters found in 28 U.S.C. § 636(b)(1)(A) of the Magistrates Act, the Magistrate's ruling should be treated as dispositive pursuant to Rule 72(b).

The Trust emphasizes the ruling's "dispositive effect" in that the exclusion of the three documents disposes of all of the Trust's contract claims³, stating that Rule 72(b) requires only that the ruling be dispositive of a single claim or defense, not an entire case. Moreover, the list of dispositive matters found in § 636(b)(1)(A) is not exhaustive; other motions in a particular case may be in fact dispositive of a claim.

However, Plaintiffs' arguments are not persuasive. As is advanced by the Defendants, the issue here is simple. Advance rulings on the admissibility of evidence are allowed at final pretrial conferences pursuant to Federal Rule of Civil Procedure 16(c)(3). Defendants' Motion in Limine merely sought the exclusion of specific items of Plaintiffs' evidence as inadmissible under the parol evidence rule. It is true that, as in this case, the exclusion of certain evidence can substantially effect a party's ability to present its case. The "dispositive" nature of Plaintiffs' case is simply a function of the case itself. It only appears dispositive because Plaintiffs do not have any additional admissible evidence to present. Plaintiffs have based their case on evidence that the Magistrate Judge found inadmissible and now, according to their own statements, have no evidence by which to prove their case and cannot expect to prevail. This does not mean, however, that Plaintiffs are barred from continuing with the action. Magistrate did not reach the merits of Plaintiffs' case, but merely made evidentiary rulings without regard to the effect of the rulings on the outcome of the litigation.

Moreover, the Magistrate Judge's ruling on Defendants' Motion in Limine cannot be analogized to a Motion for Summary Judgment. Again, the subject of the Motion in Limine was the admissibility of evidence. A motion for summary judgment requires that the Court determine that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment...