Kent v. United of Omaha Life Ins. Co.

• Decision Date: 28 April 2006
• Docket Number: No. Civ. 02-4214.,Civ. 02-4214.
• Citation: 430 F.Supp.2d 946,2006 DSD 7
• Parties: Eugene P. KENT, Plaintiff, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, a Nebraska corporation with its principal office at Mutual of Omaha Plaza, Nebraska, Defendant.
• Court: U.S. District Court — District of South Dakota

Page 946

430 F.Supp.2d 946

2006 DSD 7

Eugene P. KENT, Plaintiff, v. UNITED OF OMAHA LIFE INSURANCE COMPANY, a Nebraska corporation with its principal office at Mutual of Omaha Plaza, Nebraska, Defendant.

No. Civ. 02-4214.

United States District Court, D. South Dakota, Southern Division.

April 28, 2006.

Nancy J. Turbak, Turbak Law Office, P.C., Watertown, SD, for Plaintiff.

Steven W. Sanford, Shawn M. Nichols, Cadwell, Sanford, Deibert & Garry, LLP, Sioux Falls, SD, for Defendant.

MEMORANDUM OPINION AND ORDER

KORNMANN, District Judge.

PROCEDURAL HISTORY

[¶ 1] On September 26, 2002, Eugene P. Kent ("Kent") filed this diversity action against the United Of Omaha Life Insurance Company ("Omaha"), alleging fraud and deceit, breach of fiduciary duty, and unfair trade practices, all under South Dakota law. On February 6, 2003, Omaha, pursuant to Fed.R.Civ.P. 56, filed a motion for summary judgment (Doc. 13), arguing that the legal doctrines of res judicata and collateral estoppel, in pari delicto, and various other public policy considerations barred all of Kent's claims. The Court denied that motion on June 6, 2003 (Doc. 31). On October 31, 2003, Omaha filed a second motion for summary judgment (Doc. 35), claiming, inter alia, that it generally owed Kent no duty, that it had no duty to disclose matters of law or matters protected by the attorney-client privilege, that Kent's claims were barred by the statute of limitations and a release that Kent signed, and that Kent had no cause of action for alleged unfair trade practices. This motion was denied, except as to Kent's unfair trade practices claim, which claim was dismissed (Doc. 70).

[¶ 2] A jury trial was held August 29, 2005, through September 7, 2005. The jury returned its verdict on September 7, 2005, finding that Omaha was liable for damages for committing deceit toward Kent and for breaching a fiduciary duty it owed Kent. The damages awarded to Kent included $500,000 for his claimed loss of income prior to the verdict, while he was incarcerated, $1,500,000 for Kent's claimed loss of income prior to the verdict, excluding any loss of income while he was in prison, $900,000 for Kent's claimed loss of future income, $7,000,000 for Kent's loss of liberty because of Omaha's refusal to produce shipping documents without a subpoena, $10,000,000 for punitive damages in connection with Kent's loss of liberty, and $7,500,000 for punitive damages in connection with Kent's loss of insurance license and loss of income. In addition to these amounts, prior to the submission of the case to the jury, the parties stipulated to a prejudgment interest formula as to any damages for Kent's loss of income prior to verdict. A judgment to this effect was filed on September 16, 2005 (Doc. 124).

[¶ 3] Omaha has timely filed various motions for post-trial relief. First, it filed a motion to stay the enforcement of the judgment (Doc. 125). The Court granted this motion (Doc. 141). It also filed a renewed motion for judgment as a matter of law, a motion for new trial, and a motion for remittitur (Doc. 129).¹

JUDGMENT AS A MATTER OF LAW

[¶ 4] Fed.R.Civ.P. 50(b) provides that "[i]f, for any reason, the court does not grant a motion for judgment as a matter of law made at the close of all the evidence, the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion." Judgment as a matter of law under Fed.R.Civ.P. 50 is proper "only when there is a complete absence of probative facts to support the conclusion reached" by the jury. Hathaway v. Runyon, 132 F.3d 1214, 1220 (8th Cir.1997). In considering a Rule 50 motion, the court is to view the evidence in the light most favorable to the verdict. Denesha v. Farmers Ins., 161 F.3d 491, 496 (8th Cir. 1998). The prevailing party is to receive the benefit of all reasonable inferences. Ryther v. KARE 11, 108 F.3d 832, 844 (8th Cir.1997) (en banc). In addition, the court is to assume that all conflicts in the evidence were resolved in favor of the prevailing party and assume that the prevailing party proved all the facts that the prevailing party's evidence tended to prove. Id. To succeed on such a motion, the defendant must demonstrate that no reasonable juror could have found for the plaintiff. Curtis v. Electronics & Space Corp., 113 F.3d 1498, 1502 (8th Cir.1997). A trial court may not usurp the jury's function by re-weighing the evidence or the credibility of witnesses. McGee v. South Pemiscot School Dist. R-V, 712 F.2d 339, 344 (8th Cir.1983). A judge must be "reluctant to set aside a jury's verdict and will not do so lightly." Kelly v. Armstrong, 206 F.3d 794, 797 (8th Cir. 2000).

I. Shipping Documents Claim

[¶ 5] Omaha argues first that the Court erred in submitting Kent's "shipping documents" claim to the jury because, as a matter of law, Omaha had no duty—fiduciary or otherwise—to produce documents voluntarily without a subpoena five years after the agency relationship between Omaha and Kent ended.² Omaha argues that there is no statute, case, or common law principle that created a duty upon Omaha to produce the shipping documents voluntarily without a subpoena. Accordingly, at a very minimum, Omaha claims it is entitled to judgment as a matter of law on Kent's loss of liberty claim and vacatur as to damage items 1, 4 and 5 of the jury's verdict.

[¶ 6] On January 11, 1996, Kent was indicted by a federal grand jury on sixty-one counts. These counts were related to his operation of the self-insured Independent Community Banker's Association ("ICB") group health plan during 1991. Among these counts were two counts of mail fraud, in which it was alleged that Kent had received, through the U.S. Mail, a $150,000 check sent by Omaha on January 24, 1991, and a $183,910 check sent by Omaha on May 13, 1991.³ Kent was convicted by a jury of these two counts on October 25, 1996. Kent's lawyer, a nonresident of South Dakota, failed to raise the issue of whether, in fact, the U.S. Mail was used to send the checks.

[¶ 7] The testimony at this trial showed that, as Kent stood convicted, he realized there was evidence that these checks were not sent through the U.S. Mail, but through the United Parcel Service ("UPS").⁴ He hired another attorney, Jim Volling ("Volling"), a Minnesota attorney, who attempted to get the shipping documents from the Omaha office in Minnesota. Omaha executives, Dick Norberg ("Norberg") and Steve Fisher ("Fisher"), refused to turn over the shipping documents requested without being served with a subpoena. Volling's attempts at obtaining a subpoena and retrieving the shipping documents were rebuffed, as explained below. Without the exonerating information at his disposal, Kent proceeded to be sentenced to 24 months. After serving his sentence and filing a motion for relief pursuant to 28 U.S.C. § 2255, Kent was able to obtain a subpoena and retrieve both shipping documents. His conviction was vacated by U.S. District Judge John Jones on the basis that Kent's original criminal lawyer failed to adequately defend Kent by not looking into the question regarding the method of transmission of the checks before or during the criminal trial and not requiring the government to prove that the U.S. Mail was used.

[¶ 8] One of Kent's claims at this civil trial was that Omaha knew, and had documents in its possession which verified, that neither of these checks had been sent by the U.S. Mail but refused to voluntarily turn over these documents. The question with which this Court has wrestled is whether, as a matter of law, Omaha did anything unlawful by requiring that the documents be subpoenaed. There is no question that exculpatory evidence in the possession of third parties is subject to a subpoena duces tecum. See e.g. United States v. Cuthbertson, 651 F.2d 189, 195 (3rd Cir.), cert denied, 454 U.S. 1056, 102 S.Ct. 604, 70 L.Ed.2d 594 (1981). "A subpoena duces tecum is the vehicle for securing production of documents and things at a specified time and place either before or after the time of trial." United States v. Beckford, 964 F.Supp. 1010, 1017 (E.D.Va. 1997). Documents may be produced at court proceedings other than trials. 2 Wright, Federal Practice and Procedure: Criminal 2d § 271 at 134 ("[Rule 17] is not limited to Subpoena for the trial. A subpoena may be issued for a preliminary examination, a grand jury investigation, a deposition, for determination of an issue of fact raised by a pretrial motion, or for posttrial motions."). See also United States v. Winner, 641 F.2d 825 (10th Cir. 1981) ("Although Rule 17 subpoenas are generally employed in advance of trial, we see no reason why their use should not be available for post-trial motions and sentencing.").

[¶ 9] The crux of Kent's claim centers around Omaha's refusal to turn over the documents after he was convicted but before he was sentenced. It was at this time that Kent hired Volling, who filed a motion for new trial based upon newly discovered evidence (Doc. 77 in CR 96-40002). A party is generally not provided with an evidentiary hearing in connection with a motion for new trial. The civil trial testimony revealed that Volling requested that Judge Jones conduct a hearing as to the shipping documents issue and sought the court's permission to serve a subpoena on Omaha, requiring that it produce the shipping documents and that its Minnesota officials appear in Sioux Falls and give testimony at a hearing. I have wondered for some time why Mr. Volling, an attorney with an excellent reputation and from a prestigious national law firm, did not simply obtain two subpoenas duces tecum from the clerk of courts (as permitted by Fed.R.Crim.P. 17(a)) and cause service to be made on the Minneapolis officials. The rule itself seems to be clear in authorizing that. We know also that Fed.R.Crim.P. 17(e) permits service of a subpoena in connection with a "hearing" to be made at any place...