Pearson v. Deutsche Bank AG
| Docket Number | 21-cv-22437-BLOOM/Otazo-Reyes |
| Decision Date | 11 September 2023 |
| Parties | MICHAEL PEARSON, et al., Plaintiffs, v. DEUTSCHE BANK AG, et al., Defendants. |
| Court | U.S. District Court — Southern District of Florida |
OMNIBUS ORDER ON POST TRIAL MOTIONS
THIS CAUSE is before the Court on Plaintiffs Michael Pearson, Andrew Childe, and Anna Silver's (“Plaintiffs”) Motion to Amend Judgment and Request for Prejudgment Interest, ECF No. [259] (“Plaintiffs' Motion”); and Defendant Deutsche Bank AG's (“Defendant” or “Deutsche Bank”) Renewed Motion for Judgment as a Matter of Law or, in the Alternative, Motion for New Trial. ECF No. [262] (“Defendant's Motion”). Regarding Plaintiffs' Motion, Defendants filed a Response in Opposition, ECF No. [263], and Plaintiffs filed a Reply ECF No. [272]. Regarding Defendant's Motion, Plaintiffs filed a Response in Opposition, ECF No. [273], and Defendant filed a Reply, ECF No. [280]. The Court has reviewed the Motions, the Responses, the Replies, the record in this case and the applicable law. For the following reasons Defendant's Motion is denied, and Plaintiffs' Motion is granted in part and denied in part.
Id. ¶ 14. As described more fully in the Court's March 23, 2023 Order, Carlos Trujillo, the principal of Madison Asset, LLC (“Madison”), played an integral role in the Individual Wrongdoers' scheme, namely by opening custody sub-accounts at Deutsche Bank New York. See ECF No. [184] at 22.
Plaintiffs are foreign representatives[2]and liquidators of thirteen (13) companies currently undergoing liquidation in the Cayman Islands (“Companies”), including the Note Issuers, who filed an Amended Complaint in which they assert eight Counts-including as relevant here Count VI: Negligence-against Defendants Deutsche Bank (“Defendant”), a global financial institution with branches in the United States and abroad, and three of its subsidiaries: Deutsche Trust, Deutsche Bank Luxembourg S.A., and Deutsche Bank Switzerland. Id. ¶¶ 18, 28-29, 373-461. Of relevance to the issues presented in Defendant's Motion, SGG was an entity that served as an independent director for the Note Issuers, and Herman Oosten (“Oosten”) acted as SGG's agent for that purpose. ECF No. [184] at 17. Plaintiffs, on behalf of the Note Issuers only, and Defendant proceeded to an eight-day jury trial,[3]which commenced on April 10, 2023. ECF Nos. [223], [224], [230], [231], [232], [234], [246], and [247]. The jury returned a verdict for Plaintiffs in the amount of $95,000,000.00, finding Defendant liable on Count VI, the claim for Negligence. See ECF No. [252]. Accordingly, the Court entered Final Judgment in favor of Plaintiffs on Count VI and in favor or Defendant on all other Counts. ECF No. [254].
Defendant argues that it is entitled to judgment as a matter of law pursuant to Rule 50(b) of the Federal Rules of Civil Procedure or to a new trial under Rule 59. ECF No. [262] at 31. In Defendant's view, the jury verdict is unsupported by the evidence and manifestly contrary to law. Id. at 8. In support, Defendant marshals seven primary arguments.
First, the jury verdict is barred by the independent tort doctrine. To the extent the jury relied on evidence that Defendant transferred the Notes, that doctrine bars recovery because those transfers were subject to certain contractual agreements (“Agency Agreements”) between the Note Issuers and Defendant and Plaintiffs failed to prove the existence of a duty of care separate from those set forth in the Agency Agreements. Id. at 11-14. Because the jury verdict may be premised on Note transfers, a new trial is required. Id. at 18.
Second, the Negligence claim fails because the Agency Agreements expressly disclaim a duty of care. Id. at 14-15.
Third, Florida law bars the Negligence claim because a bank generally owes a duty of care only to its customers and the Note Issuers were not Defendant's customers with respect to the Madison Accounts. Id. at 15-18.
Fourth, there is no evidentiary basis on which a reasonable jury could have found proximate causation because the Note Issuers issued the Notes that caused the Note Issuers' deepening insolvency and because the Individual Wrongdoers' looting of the proceeds of the note issuances was a superseding cause. Id. at 19-22.
Fifth, contrary to Florida law, the Court failed to enter judgment against each party based on each party's percentage of fault because the jury was not instructed to apportion negligence damages. Id. at 22-26.
Sixth, the damages award is improper to the extent it was premised on a theory of deepening insolvency and that the evidence was insufficient to find damages on that basis. Id. at 27-30. The damages award is also improper because Plaintiffs' damages are entirely consequential or indirect. Id. at 28-30.
Seventh, the in pari delicto doctrine bars the Negligence claim because the only basis on which the jury could have found the doctrine did not apply was inadmissible hearsay. Id. at 30-31.
On May 10, 2023, Plaintiffs filed their Motion, seeking an additional $38,019,727.00 for prejudgment interest, which would result in a total judgment of $133,019,727.00. Plaintiffs contend that they are entitled to prejudgment interest because the jury based their decision on the note issuances and the date of those issuances is ascertainable. See ECF No. [259] at 3. As those losses occurred over time, Plaintiffs contend the jury awarded the verdict on the value of the last Notes that are collectively worth approximately $95,000,000.00. Id. In Attachment A of their Motion, Plaintiffs rely on the “Detail of Note Issuances with Prejudgment Interest,” prepared by their damages expert Ian Ratner, which was introduced at trial to support their calculations. ECF No. [259-1].
The Court sets forth the jury instructions that are pertinent to the Defendant's Motion.
The Court provided the jury with the following instruction:
Banks owe a duty of ordinary care to their customers. However, custodian banks, such as Deutsche Bank AG, are not required to monitor, verify, or ensure the validity of transactions or to investigate transactions made by the customer's authorized agent unless specific facts or knowledge about a customer or transaction would lead an ordinarily careful bank to do so.
See ECF No. [287] at 131:15-21.[4]
The jury was instructed as follows on proximate and superseding causes:
Negligence is a legal cause of loss if it directly and in natural and continuous sequence produces or contributes substantially to producing such loss, so that it can reasonably be said that, but for the negligence, the loss would not have occurred. Negligence may be a legal cause of loss even though it operates in combination with some other cause if the negligence contributes substantially to producing such loss. Negligence may also be a legal cause of loss even though it operates in combination with some other cause occurring after the negligence occurs if such other cause was itself reasonably foreseeable and the negligence contributes substantially to producing such loss.
ECF No. [287] at 132.
Turning to damages, the Court stated that Id. at 137:11-15. The Court further explained: Id. at 137:16-22. Moreover, the Court stated that the jury should determine the amount of injury which “the greater weight of the evidence shows the note issuers sustained as a result of the injury.” Id. at 137:24-138:4.
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