Stansel v. American Sec, Bank

• Citation: 547 A.2d 990
• Decision Date: 23 September 1988
• Docket Number: No. 87-263.,No. 87-262.,87-262.,87-263.
• Parties: Florence M. STANSEL and William A. Burleson, Appellants, v. AMERICAN SECURITY BANK, Appellee. AMERICAN SECURITY BANK, Appellant, v. Florence M. STANSEL and William A. Burleson, Appellees.
• Court: D.C. Court of Appeals

547 A.2d 990

Florence M. STANSEL and William A. Burleson, Appellants, v. AMERICAN SECURITY BANK, Appellee.

AMERICAN SECURITY BANK, Appellant, v. Florence M. STANSEL and William A. Burleson, Appellees.

No. 87-262.

No. 87-263.

District of Columbia Court of Appeals.

Argued June 2, 1988.

Decided September 23, 1988.

William A. Burleson, Washington, D.C., for appellants/cross-appellees Stansel and Burleson.

Dale A. Cooter, with whom Joseph M. Cahill and Donna S. Mangold, Washington, D.C., were on the brief, for appellee/cross-appellant American Sec. Bank.

Before TERRY, ROGERS and STEADMAN, Associate Judges.

TERRY, Associate Judge:

American Security Bank ("the Bank") brought this action against Florence Stansel and William Burleson, seeking to recover $20,000 on a promissory note, plus interest and attorney's fees. Stansel and Burleson denied the debt and filed counterclaims alleging fraud, breach of contract, and violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. §§ 1961-1968 (1982 & 1987 Supp.). The trial court granted directed verdicts for the Bank on the counterclaims, and the jury thereafter awarded the Bank $44,195.65, including interest, on its underlying claim on the promissory note. In two subsequent orders, the court granted the Bank $17,678.26 in attorney's fees but denied a motion by the Bank for monetary sanctions against appellees under Super.Ct.Civ.R. 11. Stansel and Burleson appeal, arguing that the trial court erred in granting the directed verdicts, in receiving testimony during Burleson's absence from the courtroom, and in allowing itself to be improperly influenced by the Bank's counsel at trial. They also maintain that the award of attorney's fees was excessive. The Bank, in its cross-appeal, challenges the award of fees as inadequate and asserts that the trial court erred in denying its request for Rule 11 sanctions.

We reject all of Stansel and Burleson's claims of error and affirm the judgment on the verdict. With respect to the two posttrial orders which are the subject of the Bank's cross-appeal, we are unable to determine from the record either the adequacy of the fee award or the correctness of the court's denial of the Rule 11 motion. We therefore vacate the post-trial orders and remand the case to the trial court for further proceedings with respect to those two matters.

I

The Bank filed this action against Stansel and Burleson in October 1980, seeking to recover on a promissory note for $20,000, with interest at the prime rate plus four percent (as specified in the note), plus attorney's fees. The note at issue, executed on March 12, 1979, represented the third renewal of another note executed a year earlier by Stansel, with Burleson as an accommodation signer, to obtain a $20,000 loan from the Bank for the down payment on a piece of real property. The note upon which the suit was based contained a provision allowing the Bank to recover from the makers "costs of collection, including a reasonable attorney's fee." From the time the original note was executed in March 1978 until the filing of the suit in October 1980, Stansel and Burleson had failed to repay any of the principal¹ and had ignored a succession of demand letters sent by the Bank.

Stansel and Burleson answered by denying the debt, claiming partial satisfaction, and alleging inter alia fraud, deceit, and illegality of the note. They also counterclaimed for breach of contract. After five years of litigation, the defendants added a new counterclaim under the RICO Act, alleging that the Bank had fraudulently charged them excessive interest rates and had engaged in an illegal kickback and tax fraud scheme which it attempted to cover up by forgery. Stansel and Burleson presented insufficient evidence at trial to support any of their counterclaims, and as to them the trial court granted directed verdicts for the Bank. The court, however, denied the Bank's motion for a directed verdict on its underlying claim on the note, allowing the jury to decide the meaning of "prime rate."

The jury returned a verdict against Stansel and Burleson in the amount of $44,195.65, the precise sum that the Bank had sought. After a post-trial hearing, the court, without explanation, awarded attorney's fees to the Bank in the amount of $17,678.26, exactly forty percent of the jury verdict and substantially less than the bank had requested. The Bank thereafter moved to amend the judgment under Super.Ct.Civ.R. 59(e) and for monetary sanctions under Super.Ct.Civ.R. 11, but the court denied both requests.

II

Stansel and Burleson contend that the trial court erred in allowing three of Stansel's witnesses to testify in the absence of Burleson, who had been co-counsel for both himself and Stansel before trial. On the third day of trial, as Stansel was completing her case, Burleson was absent from the courtroom because of illness. Upon request, the trial court granted a short continuance for Burleson but ordered Stansel first to complete her own case by presenting her last three witnesses. Burleson now maintains that this ruling prejudiced him, since he was an important witness and counsel in the case and had a right to be present during the other witnesses' testimony. We disagree. Burleson's presence was not so important or material at this particular point in the trial that his absence resulted in prejudice. See, e.g., Etty v. Middleton, 62 A.2d 371, 373 (D.C.1948); Cornwell v. Cornwell, 73 App. D.C. 233, 235-236, 118 F.2d 396, 398-399 (1941). The three witnesses who testified were part of Stansel's case, not Burleson's, and the trial court expressly allowed Burleson to recall one significant witness himself when he returned to trial and began his own case. Moreover, his request for a continuance was granted, and he eventually testified in support of his own claims against the Bank. Thus Burleson was not deprived of an opportunity to be heard or to present an effective defense to the Bank's claims against him. See Feaster v. Feaster, 359 A.2d 272, 273 (D.C.1976); Bernard's Fur Shop, Inc. v. DeWitt, 102 A.2d 462, 464 (D.C.1954); Keister v. McDavid, 76 A.2d 776, 778 (D.C.1950). Indeed, the trial court specifically allowed the witnesses' testimony to continue in Burleson's absence because it was worried about the detrimental effects of further delay on the jury's attitude toward Burleson. We find no reversible error.²

Stansel and Burleson also challenge the granting of directed verdicts on their counterclaims for breach of contract and violation of the RICO statute. As to their contract claim, they contend that they presented sufficient evidence to prove that the Bank breached an enforceable oral agreement, collateral to the underlying note, to provide additional loans to Stansel for renovation and permanent financing of the property she had purchased. They also assert that the note was not an integrated contract and so could be modified by additional financing conditions. As to their RICO claim, Stansel and Burleson maintain that they presented sufficient evidence to allow the jury to decide whether the Bank engaged in interstate racketeering activities by planning an unlawful scheme of kickbacks from the renovation financing and by charging fraudulent and excessive interest rates on its loan. Reviewing the evidence in the light most favorable to the defendants, see Vassiliades v. Garfinckel's, Brooks Brothers, Miller & Rhoades, Inc., 492 A.2d 580, 586 (D.C.1985), we affirm the directed verdicts.

Stansel and Burleson failed to adduce evidence sufficient to show that a separate oral agreement existed committing the Bank to provide funding for Stansel's renovation and permanent financing. They presented no proof that the Bank went beyond mere preliminary discussions and actually offered such funding. See RESTATEMENT (SECOND) OF CONTRACTS § 26 (1981). Neither defendant offered evidence of any specific terms of the alleged agreement, such as the exact amount of the loans, the interest rates, terms of payment, or manner of performance. Thus their claim of breach of contract fails for lack of certainty of the contract's terms. See Craig v. Acacia Mutual Life Insurance Co., 88 A.2d 184, 185 (D.C.1952); Maurice Electrical Supply Co. v. Anderson Safeway Guard Rail Corp., 632 F.Supp. 1082, 1087 (D.D.C.1986); RESTATEMENT, supra, § 33.³

The defendants also failed to make a prima facie showing under the RICO Act of either the alleged kickback scheme or the fraudulent interest scheme. See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985); Klapper v. Commonwealth Realty Trust, 657 F.Supp. 948, 953 (D.Del.1987); 18 U.S.C. §§ 1962(c), 1964(c). First, they did not establish that the Bank committed either of the federal crimes they alleged mail fraud⁴ and wire fraud.⁵ Their evidence consisted only of vague allegations and surmises, unsupported by specific proof that the Bank engaged in these activities or in any type of racketeering activity as defined in 18 U.S.C. § 1961(1). Furthermore, even assuming that their allegations were true, Stansel and Burleson made no showing whatever that the Bank's isolated actions constituted a pattern of racketeering. See Sedima, supra, 473 U.S. at 496 n. 14, 105 S.Ct. at 3285; Tellis v. United States Fidelity & Guaranty Co., 826 F.2d 477, 478-479 (7th Cir.1987); Torwest DBC, Inc. v. Dick, 810 F.2d 925, 928-929 (10th Cir.1987). Finally, Stansel and Burleson presented no evidence that any allegedly improper conduct by a bank employee implicated the Bank. This was a critical omission. That an employee violates the statute does not necessarily mean that his or her employer does so as well, absent proof of the employee's authority and the involvement of the employer. See United States v. Jannotti, 729 F.2d 213, 226 (3d Cir.), cert. denied, 469 U.S. 880, 105 S.Ct. 243, 83 L.Ed.2d 182 (1984); Banque Worms v. Luis A. Duque Pena Hijos, Ltda., 652 F.Supp....