Rose Hall, Ltd. v. Chase Manhattan Overseas Banking, Civ. A. No. 79-182.

• Court: United States District Courts. 3th Circuit. United States District Court (Delaware)
• Citation: 576 F. Supp. 107
• Docket Number: Civ. A. No. 79-182.
• Parties: ROSE HALL, LTD., Plaintiff, v. CHASE MANHATTAN OVERSEAS BANKING CORPORATION and Holiday Inns, Inc., Defendants.
• Decision Date: 06 September 1983

576 F. Supp. 107

ROSE HALL, LTD., Plaintiff, v. CHASE MANHATTAN OVERSEAS BANKING CORPORATION and Holiday Inns, Inc., Defendants.

Civ. A. No. 79-182.

United States District Court, D. Delaware.

August 19, 1983.

As Amended September 6, 1983.

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Andrew B. Kirkpatrick, Jr., Paul P. Welsh, Thomas Reed Hunt, Jr., Francis S. Babiarz, and Denison H. Hatch, Jr., Morris, Nichols, Arsht & Tunnell, Wilmington, Del., for plaintiff.

Charles S. Crompton, Jr., David B. Brown, and Gregory A. Inskip, Potter, Anderson & Corroon, Wilmington, Del., of counsel: Milbank, Tweed, Hadley & McCloy, New York City, for Chase Manhattan Overseas Banking Corp. Henry N. Herndon, Jr., Morris, James, Hitchens & Williams, Wilmington, Del., of counsel, Ronald L. Reid, and Peter Q. Bassett, of Alston, & Bird, Atlanta, Ga., for defendant Holiday Inns, Inc.

                                           TABLE OF CONTENTS
                                                                                                     Page
                Introduction                                                                          117
                I.     Background Facts                                                               118
                II.    Legal Standards Applicable to the Parties' Post-Judgment Motions               123
                       A. Motions for Judgment Notwithstanding the Verdict                            123
                       B. Motions for a New Trial                                                     124
                       C. Standards Under Fed. R. Civ. P. 63                                          125
                III.   Liability of CMOBC — Deception of the Jamaican Court                           126
                       A. Motion for Judgment Notwithstanding the Verdict                             126
                          1. Legal Sufficiency of the Special Verdict So as to Permit the
                             Separate Existence of CMOBC to Be Ignored                                126
                          2. The Existence of a Cause of Action for False Testimony in the
                             Jamaican Court                                                           126
                             a. Choice of Law                                                         127
                             b. Jamaican Law                                                          128
                             c. American Law                                                          131
                                (1) Deceit on the Jamaican Court as Pivotal                           132
                                (2) The American Rule of Witness Immunity as Precluding
                                    Suit                                                              133
                          3. Was a Fraud Established                                                  135
                          4. Did CMOBC Control the Fraud                                              137
                       B. CMOBC's Alternative Motion for New Trial                                    140
                          1. Prejudice to CMOBC From the Court's Grant of Plaintiff's Paragraph
                             54 "Fraud on the Court" Amendment                                        140
                          2. Admission of Justice Rowe's Notes                                        141
                          3. Admission of Evidence Relating to the Stay Proceedings                   142
                          4. The Purported Ambiguity in Special Interrogatory No. 4 and
                             Allegedly Erroneous Instructions                                         142
                          5. Jury Findings Against Clear Weight of Evidence as to CMOBC's
                             Control of the Fraud                                                     143
                IV.    Liability of CMOBC — Interference Claim                                        144
                       A. Motion for Judgment Notwithstanding the Verdict or New Trial                144
                          1. Chase Jamaica's Duty to Act in Good Faith When Foreclosing on
                             Collateral — Lawsuit Against Holiday Inns                                144
                          2. Res Judicata Effect of Certain Statement in Justice Rowe's
                             Opinion                                                                  145
                          3. Chase Jamaica's Legitimate Interest in Avoiding Litigation Between
                             Rose Hall (H.I.) and Holiday Inns                                        145
                          4. Consummation of the Proposed $13 Million Transaction                     146
                

                       B. Motion for New Trial
                          1. Evidentiary Rulings Concerning the Jamaican Cabinet's Approval
                             of the Proposed $13 Million Sale of the Hotel                            148
                          2. Jury Finding of $4,500,000 in Damages Resulting From Chase
                             Jamaica's Failure to Permit Interference Lawsuit                         148
                             a. The Jamaican Government Debentures                                    148
                             b. Consummation of the Proposed $13 Million Transaction                  149
                             c. Lawfulness of Holiday Inns' Conduct                                   149
                          3. New Trial Under Rule 63                                                  150
                          4. Jury Instructions on the Interference Claim                              150
                V.     Liability of Defendant — Cheap Sale                                            151
                       A. Motion for Judgment Notwithstanding the Verdict                             151
                          1. Competency of Evidence of Sale of Land by Lots                           151
                             a. Duty to Sell Land by Lots                                             151
                             b. Timing of Sale                                                        152
                             c. Financing of the Sale                                                 152
                             d. Sufficiency of the $1 Million that McDaniel's Plan Would
                                Have Produced                                                         153
                             e. Chase Jamaica Being Advised to Subdivide                              153
                         2.  Competency of Evidence on Sale of Land as a Block                        153
                         3.  Competency of Other Evidence on Best Available Price of the
                             Land                                                                     154
                      B. Motion for New Trial                                                         154
                         1. The Jury's Answers to Interrogatory Nos. 1(a) and 6(a) as
                            Against the Clear Weight of the Evidence                                  155
                         2. New Trial on Cheap Sale Under Fed. R. Civ. P. 63                          155
                         3. Evidentiary Rulings Relating to the Cheap Sale                            156
                            a. Evidence Regarding Land Value                                          156
                            b. Evidence Regarding the Prior Criminal Conviction of a Non-witness
                               Appraiser                                                              156
                            c. Prohibition of Question on Cross-examination Regarding the
                               Location of the Water System in Relation to the Boundaries
                               of the Property                                                        157
                            d. Evidence Regarding the Extent of White Sand Beach                      158
                         4. Jury Instruction as to the Value of the Land                              158
                         5. CMOBC's Miscellaneous Grounds for a New Trial                             159
                VI.    Rose Hall's Motion for Judgment Notwithstanding the Verdict, or, in the
                       Alternative, for New Trial                                                     160
                       A. Control as a Matter of Law: Rose Hall's Edge Act Theory                     161
                       B. The Presumption of Control Under the Edge Act                               166
                       C. Control Independent of the Edge Act                                         169
                VII.   Rose Hall's Conditional New Trial Issues                                       172
                       A. Rose Hall's Amendment to Allege Certain Jamaican Tort Claims
                          Against Holiday Inns                                                        172
                       B. Rose Hall's Dissatisfaction With the Jury Instruction Relating to
                          Damages for the Sale of the 3000 Acres of Land                              174
                VIII.  Costs                                                                          175
                IX.    Conclusion                                                                     176
                

OPINION

MURRAY M. SCHWARTZ, District Judge.

Introduction

After 81 jury trial days spanning over five months and generating over 15,500 pages of trial transcript followed by seven and one-half days of deliberations, the jury returned its special verdict, consisting of answers to six interrogatories. (Docket Item "Dkt." 756). Before judgment was entered on the special verdict, the presiding trial judge, the Honorable Edwin D. Steel, Jr., became seriously ill and unable to discharge his judicial duties. On May 5, 1983, pursuant to Fed.R.Civ.P. 63, the case was assigned to Judge Murray M. Schwartz. Thereafter, the Court heard argument on the parties' proposed forms of judgment. Because of scheduling constraints, the Court instructed the parties to begin briefing their post-judgment motions prior to the entry of judgment on the assumption that judgment would be entered adverse to each in all respects. Plaintiff, Rose Hall Ltd. ("Rose Hall" or "plaintiff"), and defendants, Chase Manhattan Overseas Banking Corporation ("CMOBC") and Holiday Inns, Inc. ("Holiday Inns"), filed their opening briefs on post-trial motions on June 6, 1983.¹ On June 10, 1983, the Court entered judgment on the verdict for plaintiff against CMOBC in the amount of six million dollars plus prejudgment interest, and for Holiday Inns against plaintiff. Rose Hall v. Chase Manhattan Overseas Banking Corp., 566 F.Supp. 1558 (D.Del. 1983) hereinafter cited as "Judgment Opinion" or "Dkt. 773". Briefing...