Petition — DiRose v. PK Management Corp.

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Oifice- Supreme Court, U.S.

FILE D

Bo MAR 21 1983

Supreme Court of the Aunited States

October Term, 1982

J. RICHARD DiROSE,

Petitioner,

PK MANAGEMENT CORP.

and FRANK CICCARELLI,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Victor T. Fuzak

(Counsel of Record)

Allen H. Beroza

HODGSON, RUSS, ANDREWS,

WOODS & GOODYEAR

Altorneys for Petitioner

1800 One M & T Plaza

Buffalo, New York 14203

(716) 856-4000

QUESTIONS PRESENTED

1. What evidence may the Court of Appeals properly

consider in reviewing a judgment based upon a jury verdict and

the denial of a subsequent motion for judgment n.o.v.?

2. To what extent may the Court of Appeals make deter-

minations of the credibility of witnesses and evidence, make

findings of ultimate fact, and draw inferences from its view of

the evidence contrary to those found by the jury? |

LIST OF PARTIES

Petitioner was the plaintiff in the District Court, invoking

jurisdiction pursuant to the provisions of Section 27 of the

Securities and Exchange Act of 1934, as amended, and federal

diversity and pendent jurisdiction (see footnote 1 to Appendix

A), and he was the appellee in the Court below. The complaint

was dismissed in the District Court against Anthony Curatolo

and Jerome Dansker. No judgment was taken in the District

Court against Nicholas A. DeMare. The parties in the Court of

Appeals were J. Richard DiRose, PK Management Corp. and

Frank Ciccarelli.

TABLE OF CONTENTS

Page

STORED, de Vi Nk es cies sc Pun aon eehneen i

SEE i's 05,5 0 86 0 OWdpa ou aens bon 6m aeweee i

PORT PMID ccc kiscecrecvevectsseceewed iii

SN « do's. y sv chedirs.cc thn iek chaewe ee 1

aia bb b.v nb o'eec cau beu nts auth ines wn 2

Constitutional and Statutory Provisions Involved .... . a"

GTN ECHO GUND cccccccncnacecpecssesewewe 2

is REE Bic vier neinad cedvinves Oveseeee 3

B. The Decision of the Second Circuit............ 9

REASONS FOR GRANTING THE WRIT OF CER-

TIORARI

Certiorari should be granted to review the standard

imposed by the Second Circuit in a recent line of

cases, in conflict with the First and Third Circuits,

which permits the Appellate Court to make a de novo

determination of factual issues.................. 22

A. The Second Circuit’s Review of Jury Verdicts

Conflicts with the Principles Established by this Court

Affirming the Role of Juries and District Courts in

Determining Questions of Fact..............005. 25

B. The Second Circuit’s Review of all Evidence to

Determine whether Substantial Evidence Supports a

Jury Verdict Conflicts with Decisions of the First and

I Aen eye Cee ge 27

Se 4-205 os g0b cate baaete ens ss ekekeonln 30

iii

TABLE OF AUTHORITIES

Cases: Page

Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines,

EE, DOM EI SOD CPE sc cers crt reecebccrevess 30

Bigelow v. Agway, Inc., 506 F.2d 551 (2nd Cir, 1974) .. 24, 29

Boeing Co. v. Shipman, 411 F.2d 365 (Sth Cir. 1969). . . 28

Boutros v. Riggs National Bank, D.C., 655 F.2d 1257

IE Fo) pi da conenteaesspekbad@bss 28

Brady v. Southern Railway Co., 320 U.S. 476 (1943)... 28

Continental Ore Co. v. Union Carbide & Carbon Corp.,

jl SN ST ee re eee ee 27

County Asphalt, Inc. v. Lewis Welding & Engineering

Corp., 444 F.2d 372 (2nd Cir. 1971). .....0 eee eeee 29

Dehydrating Process Co. v. A.O. Smith Corp., 292 F.2d

SPOR BOOED cdo e cpt waccceecabeesecccecss 28

Epoch Producing Corp. v. Killiam Shows, Inc., 522

Pid TERR s CPVEN 6 eb es ve ere ede scenes 29

Fireman’s Fund Insurance Co. v. Videfreeze Corp., 540

ETE EIN Gls NOTER bby Peibeddcsedecccser 28

Gunning v. Cooley, 281 U.S. 90 (1930) «0... 6000 e ee 28

Hadcock v. Osmer, 153 N.Y. 604 (1897) .......00055 19

H.L. Moore Drug Exchange v. Eli Lilly & Co., 662 F.2d

Jas (ané. Cir. 1981), cert.

denied, U.S. » 51 US.L.W. 3258

NI, SUMED so nb. d visi hia cde bib einees éiblee 65:0 24

In re Marcus, 273 A.D. 725 (ist Dept. 1948) ......... 12

Inventive Music Ltd. v. Cohen, 617 F.2d 29 (3rd Cir.

TSS ba 0) 6d 0s HeKEEAIREEER SOD Soe end. Gee 28

Inwood Laboratories, Inc. v. Ives Laboratories, Inc.,

U.S. , 72 L.Ed 2nd 606 (1982)........... 2, 25

Lavender v. Kurn, 327 U.S. 645 (1946) «0.0.0... 00s 28

Layne v. Vinzant, 657 F.2d 468 (Ist Cir. 1981)........ 28

Matter of Endicott Johnson Corp. v. Bade, 37 N.Y .2d

EE Seated ceCn bm ae ere aes Rene hebene woe 11

Michelman v. Clark-Schwebel Fiber Glass Corp., 534

ay IES IIIS bs: o.e Wb Gav oon 06 crews hese 23, 30

Oreck Corp. v. Whirlpool Corp., 579 F.2d 126 (2nd Cir.

1978), cert. denied 439 U.S. 946 (1978); 639 F.2d 75

(2nd Cir. 1980), cert. denied, 102 S.Ct. 639(1981)... 23

Panter v. Marshall Field & Co., 646 F.2d 271 (7th Cir.

PRE Gea hb. 5 brdinck bieda. hie + A OW obo BA wee 888 28

Pullman-Standard, Division of Pullman, Inc. v. Swint,

U.S. , 72 L.Ed 2nd 66 (1982)... . 2, 25, 28

Schwimmer v. Sony Corp. of America, 677 F.2d 946

(2nd Cir. 1982), cert denied, U.S. .

51 U.S.L.W. 3362 (November 8, 1982)............ 24

Seaboard World Airlines v. Tiger International, Inc.,

Se a er 10, 11, 12

Simblest v. Maynard, 427 F.2d 1 (2nd Cir. 1970)...... 29

Skrine v. Staiman, 30 A.D.2d 707 (2nd Dept. 1968). ... 19

Tennant v. Peoria & Pekin Union Railway Co., 321 U.S.

ek cies bees ee ahaha Ron Nee nebo o.0.6 wee 27, 28

Terris v. Cummiskey, 11 A.D.2d 259 (3rd Dept. 1960). . 19

Unijax, Inc. v. Champion International, Inc., 683 F.2d

PEN RUE s ber ee Oks beWckocedcerecsen 24

Yazzie v. Sullivent, 561 F.2d 183 (10th Cir. 1977) ..... 28

Other Authorities:

9C. Wright & A. Miller, Federal Practice and Procedure

Seat ST TOE PUTED bcc ceeeesvacebadveoeaer 22, 28

Bagalay, Directed Verdicts and the Right to Trial by

Jury in Federal Courts, 42 Tex. L.Rev. 1053 (1964) .. 29

Cooper, Directions for Directed Verdicts: A Compass

Sor Federal Courts, 55 Minn. L. Rev. 903 (1971) .... 29

James, Sufficiency of the Evidence and Jury — Control

Devices Available Before Verdict, 47 Va. L. Rev. 218

In The

Supreme Court of the United States

October Teri, 1982

J. RICHARD DiROSE,

Petitioner,

PK MANAGEMENT CORP.

and FRANK CICCARELLI,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

OPINIONS BELOW

The following opinions of the Court of Appeals and the

District Court are set forth in the Appendices:

The opinion of the District Court denying defendants’

motions for judgment n.o.v. or, alternatively, for a new trial,

dated September 4, 1981 is set forth in Appendix A.

The opinion of the Court of Appeals for the Second Circuit,

691 F.2d 628, (No. 81-7669, October 25, 1982) is set forth in

Appendix B.

The order of the Court of Appeals for the Second Circuit

granting Petitioner’s motions of November 4, 1982 for eniarge-

ment of the time for the filing of a petition for rehearing is set

forth in Appendix C.

The order denying the petition for rehearing dated December

22, 1982 is set forth in Appendix D.

JURISDICTION

The judgment of the Court of Appeals for the Second Circuit

was entered on December 22, 1982. This court has jurisdiction

over this petition pursuant to 28 U.S.C. §1254 (1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Federal Constitutional and Statutory provisions in-

volved are Rule 50 of the Federal Rules of Civil Procedure, and

the Seventh Amendment to the United States Constitution.

They are set forth in Appendix E.

STATEMENT OF THE CASE

This case presents the Court with an opportunity to resolve

the conflict among the circuits concerning the proper standard

of review of jury verdicts and motions for judgment n.o.v. The

conflict centers on the scope of the evidence which the appellate

court may consider. The Courts of Appeals for the Second

Circuit, the Fifth Circuit and the District of Columbia Circuit

hold that they may review all the evidence before the trial court

and may overturn the jury verdict on the basis of any contra-

dictory testimony. In the instant case, the Court of Appeals for

the Second Circuit (‘‘Second Circuit’’) reversed a jury finding

that the defendants had defrauded the plaintiff. The Courts of

Appeals for the First and Third Circuits follow a more restric-

tive standard, limiting their review to the verdict winner’s

evidence and the uncontradicted and unimpeached evidence of

the party seeking to overturn it.

This Court recently defined the limits on appellate review of

judgments in bench trials.' In order to promote the consistent

administration of justice, it should review the standard applied

to appeals involving jury verdicts.

| {nwood Laboratories, Inc. v. Ives Laboratories, Inc., _.. U.S. ____, 72

L.Ed.2d 606 (1982); Pullman-Standard, Division of Pullman, Inc. v.

Swint, ___. U.S. ___, 72 L.Ed.2d 66 (1982).

A. Proof at Trial

J. Richard DiRose established a business in the Buffalo, New

York area known as ‘‘Pizza by DiRose’’ in 1959, when he

opened his first store selling take-out pizza and submarine

sandwiches (18-21).2 The business was a sole proprietorship

(24) solely managed by Mr. DiRose. The business prospered

and expanded from 1963 until 1975 (23-25). During the

calendar year 1974 the business had gross sales of

$1,342,412.00 (Defendants’ Exhibit 15, 2318). DiRose was

operating 18 stores by the summer of 1975, employing in excess

of 250 people (29-30).

In 1975, the rapid expansion of his business, coupled with a

change in policy by the company from which DiRose leased his

ovens and equipment, led to a temporary cash flow problem

(33-38). DiRose, who lacked knowledge or experience with

regard to such matters (31), decided to examine the possibilities

of selling some of his stores to alleviate the cash flow problem

or to sell his entire business to a larger company with manage-

ment expertise in the industry (39).

DiRose was introduced to Frank Ciccarelli by a real estate

broker in the Buffalo area in August, 1975 (42). Ciccarelli was

Executive Vice President of PK Management Corp. (‘‘PK’’),

which owned and operated a chain of ‘‘Pizza Kitchen’’ Italian

restaurants in the Rochester area and one in the Buffalo area.

He was a PK director, a member of the executive committee of

the Board of Directors, and PK’s principal financial officer.

(See, e.g. 51, 1385-1394). Over a period of months Ciccarelli

spent countless hours at the offices of Pizza by DiRose in

Clarence, New York, ingratiating himself with the DiRoses and

making himself intimately familiar with the operation of the

business and with all of its books and records (46-53, 493, 740-

755). Ciccarelli was in the DiRose offices at least three or four

times a week from September through December, 1975 and

2Unless otherwise indicated, parenthetical numerical references are to the

appendix on appeal.

when not there took to telephoning the office manager, Lyn

Stainsby, directly to obtain daily information about the

company’s finances and operations (753). At his request, a

telephone answering machine was installed so that Ciccarelli

could telephone in after office hours to obtain daily reports

concerning the operating results of the DiRose stores (746-747).

Ciccarelli impressed DiRose with tales of major accomplish-

ments as a financier and securities salesman (51); he became the

younger man’s mentor and advisor (63). Ciccarelli held himself

out to be an experienced and sophisticated businessman, with

expertise in finance (1501). DiRose came to rely on his expertise

and his promises.

As the months following August 1975 went by, DiRose’s

cash situation seadily deteriorated (64) while Ciccarelli, aware

of all of the details of the company’s position and of offers

from others to purchase some of the DiRose stores, continued

to hold PK out to DiRose as the answer to his temporary

problems and to his future (70-73, 94-99, Plaintiff’s Exhibits 2,

2A and 6, 2355, 2356 and 2366; 1552-57).

The initial proposal discussed by Cicarrelli with DiRose was

a sale by DiRose of the entire Pizza by DiRose operation to PK

and personal participation by him in the thus expanded PK

operation in management of the Buffalo locations (44-46,

Plaintiff’s Exhibit 35, 2383-2384). During subsequent conver-

sations, Ciccarelli gradually converted the proposal into an

arrangement by which PK would initially sublease the 8 premier

locations of the 18 leased locations operated by DiRose, with a

view to subleasing additional locations (112-113).

Acutely aware of DiRose’s increasing cash flow problems,

Ciccarelli made unequivocal commitments to DiRose on behalf

of PK at various times, including a dinner meeting at Cic-

carelli’s home which was attended by both Mr. & Mrs. DiRose

on January 10, 1976 (114-120, 499-508). At that meeting,

Ciccarelli explained that PK had prefabricated and preordered

equipment packages for use in the Pizza by DiRose units,

because the DiRose ‘‘leases were golden’’, that is, that the

DiRose leased locations had great and proven value (501). PK

would spend at least $80,000 to $100,000 dollars per unit for re-

decorations and improvements to the Pizza by DiRose

locations, starting with the Niagara Falls Boulevard location.

The funds for this undertaking would be generated by the then-

pending public offering of PK securities. DiRose would become

a stockholder and Vice President of PK, and would be General

Manager of the Buffalo area operations with an annual salary

of $25,000. PK would retain the DiRose office staff and key

supervisors and would undertake a variety of other payments

(116). Ciccarelli’s own notes made at the meeting confirmed the

testimony of the DiRoses as to these promises, representations

and inducements (Plaintiff’s Exhibit 7, 2367). Ciccarelli had

investigated their business and financial affairs in detail, he

told them, because of the extensive capital PK would be ex-

pending in converting the DiRose locations to Pizza Kitchen

restaurants (1558).

The evidence is conclusive that in order to entice and induce

Mr. DiRose to turn over his business to PK, Ciccarelli repeated

these representations, not only to the DiRoses but to others as

well. As Lyn Stainsby testified, Ciccarelli made these repre-

sentations of fact in late 1975 and early 1976 without

equivocation: ‘‘There were no if’s, and’s or but’s about it. Each

unit was going to be remodeled one by one. They [PK] were

deciding what order, but all were going to be remodeled’”’ (752).

Ciccarelli told her and the DiRoses that each of the DiRose

locations would be redone as part of the PK-DiRose trans-

action, including a stucco and wood decor, with booths, tables,

salad bars, new equipment and added carpeting (749-752, 755-

770). It was never done.

On January 23, 1976, Ciccarelli and DiRose met with Allen

Baun, then an Assistant Vice-President and Commercial Loan

Officer with Manufacturers Hanover Trust Company, the bank

wit) which DiRose was doing business and to which he had

substantial indebtedness. Ciccarelli told Baun that PK would

invest the necessary funds to renovate, redesign and sub-

stantially improve the appearance of the Pizza by DiRose

locations to conform with PK’s ‘‘Pizza Kitchen’’ Italian

restaurants, and that, in the event that PK determined it was

unable to operate the Pizza by DiRose locations profitably, the

improved locations would revert to Mr. DiRose and he would

be under no obligation to pay for the renovations and im-

provements that had been made by PK (477-484). In short, Mr.

DiRose had nothing to lose and everything to gain by turning

over his business to PK.

During the period August 1975 through March 1976, Cic-

carelli built a close personal and social relationship with the

DiRoses. Having advised them that the proceeds for the

$800,000 cost of renovation of the DiRose stores would come

from the sale of PK securities (121-123), Ciccarelli used the

DiRoses and their contacts in the Buffalo area in selling these

PK securities (see e.g., 124-130). He showed DiRose a sup-

plement which PK had issued to its prospectus in February and

March 1976 communicating the agreement with DiRose to

prospective PK bond purchasers which stated that the estimated

cost of $100,000 to convert each of the 11 Pizza by DiRose

locations was less than what it would cost PK to develop its

own units (140-142, Plaintiff’s Exhibit 5, 2365). As of February

4, 1976, more than $1,000,000 of the $3,000,000 offering of

October 1, 1975 remained unsold (1514). Following the

execution of agreements with PK in March 1976, DiRose’s

remaining locations which were not subleased by PK were

either taken over by someone else or absorbed by Buffalo

George Urban Corporation, a subsidiary of PK (169). Cic-

carelli continued to discuss the remodeling of the units with

DiRose (143).

The negotiations during 1975 and early 1976 took place

without DiRose having the benefit of any counsel. Ciccarelli

told DiRose during their discussions that there was no need to

bring attorneys into the picture, and that Ciccarelli would

advise DiRose if he needed counsel (451). Meanwhile, the PK

attorneys were preparing agreements. When it came time to

sign the documents dated February 4, 1976 and March 18, 1976

which had been drafted by the Woods, Oviatt law firm on

behalf of PK, Ciccarelli instructed DiRose to bring his friend,

Albert Pinsky, a Rochester attorney, to the closing (449, 451-

452). His sole role as fashioned by Ciccarelli and PK was

cosmetic: to appear at the closing. Pinsky had no participation

in the negotiation, preparation or drafting of any of the various

documents (451-452) nor did he receive any fee from DiRose

(452). Pursuant to Ciccarelli’s instructions DiRose simply had

Pinsky appear for the signing of fully completed and final

documents to give, as the jury found, the appearance of repre-

sentation.

Following the signing of the various documents DiRose

worked in Buffalo as an employee of Buffalo George Urban

Corporation, a subsidiary of PK, which handled the day-to-day

operations of the stores. He was never made a Vice President as

promised and represented. He was not given the promised

managerial position, serving instead as an administrative

functionary under the complete control and direction of

Ciccarelli and PK president Nicholas Demare, who made all

management and policy decisions with regard to advertising,

marketing, and all aspects of the operations »f the stores (440-

443). Ciccarelli continued to assure DiRose tt xt the restaurants

would be remodeled and renovated (143) while simultaneously

confirming the fraudulent nature of those promises and repre-

sentations to the PK board of directors (see, e.g., Plaintiff's

Exhibit 19A, 2371).

In October 1976, after PK had done nothing to remodel or

renovate the restaurants as promised, and after PK had run the

restaurants into the ground, Ciccarelli gave DiRose a sudden

ultimatum that DiRose either participate in the purchase of the

stock of Buffalo George Urban Corporation to which the

DiRose leases had been assigned by PK, or else he would be

“left out in the cold’’ (172-187). Ciccarelli promised DiRose

that Ciccarelli’s son-in-law, Anthony Curatolo, a securities

representative, would join Buffalo George Urban Corporation

and would raise approximately $200,000 in capital necessary to

the survival and operation of the company. Ciccarelli further

represented that Buffalo George Urban Corporation would

become the exclusive licensee for granting ‘‘Pizza Kitchen’’

franchises throughout the Western New York area. DiRose was

given 24 hours to make his decision. He was thus faced with an

ultimatum, sweetened by more promises from an artful and

experienced ‘‘financial wizard’’, which provided him with no

real alternative.? He could refuse to follow Ciccarelli’s direc-

tions and lose any chance of salvaging a business he had built

up over thirteen years as well as employment which had become

critical to his personal survival, or he could accept the

ultimatum and do as Ciccarelli and PK importuned him to do.

Ciccarelli engineered another sleight of hand manipulation of

counsel, retaining, ostensibly to represent DiRose, a Buffalo-

area attorney named Nicolas Konst who was a longtime friend

of Ciccarelli’s and who had represented Ciccarelli in numerous

business transactions (193, 1455-1472) to prepare the papers

regarding the transfer of Buffalo George Urban stock, in-

cluding the release relied upon by the defendants (460-461). In

order to obtain some signatures from DiRose, Konst had

DiRose sign the papers in Konst’s automobile in the parking lot

of a Buffalo restaurant. DiRose was not given any copies of the

documents (461). Konst did not appear at the trial to explain his

role in the continuing fraud being practiced on DiRose.

Curatolo did not raise the promised capital and in fact signed

over $24,000 out of the $83,000 he did raise to PK and himself

31n fact, as the jury learned, this ‘“‘wizard’’ had been found guilty by the

National Association of Securities Dealers of violating various rules of the

NASD and the SEC regarding, among other things, keeping books and

records and the handling of customer accounts while he was Chairman of

Cushing Capital, Inc., a securities firm (Defendants’ Exhibit 47, at 2353;

Plaintiff’s Exhibit 5, original prospectus at page 19). The type of con-

duct engaged in by defendants with respect to Mr. DiRose continued into

the trial itself (see for example the record of the extraordinary activities of

defendants and their counsel at 1368-1372, which is annexed hereto as

Appendix F).

at the signing of the Konst papers in December, 1976 (188-191).

The remainder of the money was used by DiRose in an un-

successful attempt to satisfy creditors of Buffalo George Urban

Corporation. Curatolo, who had not worked as promised to

restore the Buffalo George Urban Corporation to a stable

financial position but had continued his stock brokerage ac-

tivities then abruptly announced that he was ‘‘returning’’ to his

former stock brokerage, and did so. Without cash or the ability

to obtain credit, and unable to meet pre-existing major obliga-

tions to suppliers incurred during the PK operation, DiRose

was unable to remain in business and was forced simply to

surrender his locations or allow them to be taken over by people

who agreed to assume payments on his leases (198-201). He was

left with nothing (201).

As the jury found, after ten days of testimony and op-

portunity to assess the credibility and reliability of the parties

and their witnesses, PK and Ciccarelli perpetrated a monstrous

fraud on a trusting and unsophisticated young man which

resulted in the destruction of his entire business. With con-

summate artifice, with all the ‘‘legal’’ trimmings, PK and

Ciccarelli got the plaintiff to turn over his entire business to

them ‘‘for nothing’’ as their lawyer conceded, and, after they

had totally destroyed that business, got him to take back

nothing except obligations.

The case was ultimately considered and unanimously decided

by a seven person jury, six regular jurors and one alternate

(1900-1904, 2153). The jury verdict awarded DiRose $362,000

actual and $500,000 punitive damages against PK Management

Corp. and Frank Ciccarelli on his first cause of action, and

$30,282.33 against PK only on his second cause of action.

B. The Decision of the Second Circuit.

The Second Circuit reversed and remanded the case to the

United States District Court for the Western District of New

York, Rochester Division.‘ It selected for discussion some, but

not all of the evidence and concluded that the verdict was in

part ‘‘predicated on facts that were not in evidence’’. These

facts were never identified by the Court. The decision is

manifestly in error in holding that the jury verdict was not

amply supported by evidence considered by the jury, as

follows:

(1) Proof of Damages:

(a) The decision rejected plaintiff’s proof of damages on

the basis that it did not satisfy the Second Circuit’s view of

proof required to determine the value of dissenting share-

holders’ stock in a proceeding under Section 623 of the New

York Business Corporation Law (BCL 623). That specifically

designed and limited statutory provision is not controlling or

applicable with respect to the proof of the value of plaintiff’s

business before its destruction by defendants’ fraud. In this

respect, the decision overlooks and misconstrues unrebutted

testimiony, misconstrues the scope and applicability of Matter

of Endicott Johnson Corp. vs. Bade, 37 N.Y .2d 585 (1975), and

would publish a determination in direct conflict with governing

New York law and with the Second Circuit’s own decision in

Seaboard World Airlines vs. Tiger International, Inc., 600 F.2d

355 (2d Cir. 1979).

(b) By its own statement the Second Circuit improperly

premised its reversal of the jury’s verdict for compensatory

4The venue of the trial was, without objection by PK, in the Buffalo

Division where the plaintiff’s business has been located and the trans-

actions at issue occurred. PK at no time, either at trial or on appeal made

any request that the case be tried in or remanded to the Rochester Division.

Nevertheless, Judge Van Graafeiland ordered the case remanded to

Rochester stating that since PK was then involved in bankruptcy proceed-

ings there, such remand was appropriate. The fact of PK’s post-trial and

post-appeal bankruptcy was not part of the record of the case and ‘o

petitioner’s knowledge not communicated to the Court in any formal

fashion. This unilateral action of the Court on the basis of undisclosed

non-record information would impose substantial financial burdens on

petitioner and perhaps foreclose any retrial if the Second Circuit decision is

upheld.

damages on sheer and wholly unsupported and insupportable

speculation that the verdict was ‘‘predicated on facts that were

not in evidence’ and upon ‘‘a misguided understanding of the

applicable law’’ (Decision, 5459).

plaintiff’s business and improperly characterizes and rejects the

unrebutted testimony of plaintiff’s expert witness, Leonard A.

Dopkins.

(d) The decision creates a non-issue in an effort to

support its pre-determined conclusion rejecting plaintiff's

damage proof, that is, that the jury did not reduce or diminish

its compensatory damage award by the ‘‘value’’ of what the

plaintiff received as a result of the fraud. The Second Circuit's

criticisms and holdings in this respect are completely and

undeniably incorrect in view of the defendants’ own emphatic

position that plaintiff received ‘‘nothing of value’’ from the

fraudulent agreements.

* * *

(a) Erroneous Application of Law. The Second Circuit's

reliance on Matter of Endicott Johnson Corp. vs. Bade,

supra, is misplaced. The Endicott Johnson case involved

a special proceeding brought pursuant to Section 623

of New York’s Business Corporation Law which is explicitly

limited to procedures with respect to the determination of the

value of the shares of stock of minority stockholders dissenting

to proposed corporate action. The New York Court of Appeals

observed that there were important policy considerations that

related to the statutory appraisal proceeding for the protection

of dissenting minority shareholders (37 N.Y.2d at 589-90).

Obviously, these policy considerations which resulted in the

enactment of §623 have absolutely no application to the case at

bar, and there is no justification for the Second Circuit to apply

its perception of New York law under BCL 623 to an entirely

different situation not within the purview of that specifically

limited statutory provision.

Indeed, in a situation such as this not involving a proceeding

under BCL 623, the Second Circuit has itself previously spoken

in strong and approving terms of the dominating preference for

the use of market value of stock in valuing a corporation which

is publicly traded. The issue arose in a case involving alleged

Securities Act violations in Seaboard World Airlines, Inc. vs.

Tiger International, Inc., supra, where the Second Circuit

stated:

The Seventh Circuit recently observed that ‘‘when

market value (of stock) is available and reliable, other

factors should not be utilized in determining whether the

terms of a merger [are] fair’’. [Citations omitted].

Underlying such an approach is the ‘‘efficient market

theory’’, which, briefly stated, is that in a free and

actively traded market, absent compelling reasons to

believe otherwise, the market price is held to take ac-

count of asset value as well as the other economic,

political and financial factors that determine ‘‘value’’.

{Citations omitted]. State shareholder appraisal suits,

which present situations closely analogous to that at bar,

have long endorsed this theory. In Jn re Deutschmann,

281 A.D. 14, 22, 116 N.Y.S.2d 578, 584 [Ist Dept. 1952]

... the Court held that because the market price at

which the stock was traded . . . was a fair reflection of

the buying and selling public’s estimation of the stock's

value, reasonable men could not dispute the fairness of

the offered price. (600 F.2d at 361-2).

In that case, the Second Circuit also suggested very

specifically that where a reliable market for the shares exist, the

market price is the best way to establish the ‘‘going concern’’

value of a corporation. (Id. at 362). See also Jn re Marcus, 273

A.D. 725 (Ist Dept. 1948) cited approvingly by the Second

Circuit in Seaboard, an appraisal proceeding in which the

Appellate Division held that the appraisers might consider the

use of comparable securities, and specifically test the market

value of stock in the corporation operating Macy’s Department

Store by the market values of other companies in the depart-

ment store field.

Accordingly, the traded stock market value of the PK stock

as used by Mr. Dopkins was an entirely appropriate method,

under the Second Circuit’s own earlier decisions, to obtain a

value of the PK corporation for comparison purposes. The

decision’s proposed holding to the contrary involves an im-

proper application of an inapplicable statutory special

proceeding designed for and limited to an entirely inapposite

valuation issue and the publication of a determination which is

in direct conflict with established New York law and the Second

Circuit’s own decision in Seaboard World Airways.

(b) The Second Circuit involved itself in Sheer and In-

supportable Speculation Concerning the Basis for the Jury’s

Damage Verdict.

Defendants made no request for special questions to be

submitted to the jury which, therefore, rendered a general

verdict of liability, awarding compensatory and punitive

damages. The Second Circuit cannot claim the prescience

required for it to make pronouncements or findings as to what

the jury did or did not consider. Despite these facts, the Court

initiated its discussion of the verdict on damages with the

following extraordinary statement: ‘‘Because it is clear beyond

peradventure that the jury’s verdict on damages was predicated

on facts that were not in evidence and upon a misguided under-

standing of the applicable law, we will discuss that issue first’’.

(Decision, 5459)

That there is no conceivable basis for such an extraordinary

premise for its decision is confirmed by the Court’s failure

through inability to identify any of the alleged ‘‘facts that were

not in evidence’ upon which the Court speculated that the jury,

**beyond peradventure’’ predicated its decision. Any citizen or

attorney relying on the constitutional right to a fair jury trial of

factual issues, and indeed any Court apparently save Judge Van

Graafeiland’s Court, must be mystified and offended by that

Court’s claim of a prescience so remarkable that it can conjure

and publish the conclusion that the jury predicated its verdict

on unidentified and non-existent ‘‘facts that were not in

evidence’’. This statement — this approach — by the Second

Circuit with respect to review of jury determinations epitomizes

the vice which this petition seeks to reform. The Second Cir-

cuit, by decisions of this nature, is abrogating the critical fact-

finding function of the jury and is assuming the right to totally

disregard jury verdicts and factual determinations by itself

attempting to decide controlling issues of credibility and, when

the fancy strikes, by the simple expedient of engaging in the

most aggravated and injudicious speculation of what the jury

did or did not consider in arriving at its factual determinations.

Simply put, the stated premise of the Second Circuit’s decision,

that the jury verdict ‘‘was predicated on facts that were not in

evidence”’ is so patently outrageous as to offend any rational

view of the function of an appellate court reviewing a jury

determination.

Proof of Damages.

From the inception of the case, it has been plaintiff’s position

that his business was totally ruined and destroyed as a result of

the defendants’ continuous fraudulent conduct (see Amended

Complaint, 13A-24A). In addition to his own testimony,

plaintiff offered proof of damages through Leonard Dopkins,

a Certified Public Accountant with extensive experience in

work for ongoing restaurant chains (846-851).

Mr. Dopkins performed an analysis with respect to the value

in February, 1976, of the Pizza by DiRose business as a going

concern (856). He testified that the most commonly used

method for valuing businesses is the use of comparables (853),

and that this method of evaluating ongoing businesses is

generally accepted in accounting practice. The methodology

entails a search for other businesses engaged in similar lines of

activity whose value is then compared, with appropriate adjust-

ment, to the value of the subject business (853-854). The

witness considered the use of alternative methods of valuing the

business, and in the absence of current profits or income to

capitalize, elected to use gross sales as the best yardstick for

valuation in a situation dealing with a service intensive com-

pany (980-981). The ‘‘appraisal’’ of assets method was con-

sidered and rejected as inappropriate when valuing a non-

capital intensive business as to which gross sales provide the

accepted basis for valuation (854-855, 980). Since PK Manage-

ment was in the same type of business, also showing year end

losses, with gross sales of $1,434,000 compared with

$1,262,000 for DiRose, and since financial and other relevant

information on PK was readily available, that business was

properly selected as a ‘‘comparable’’.

The key factual point, wholly ignored by the decision, is

Dopkins’ unrebutted testimony that he considered the use of

other methods of valuing an ongoing business and, using his

experience and expert judgment, selected from among them the

use of a suitable comparable, given the facts and circumstances

of this particular case. He did not ‘‘simplistically’’ value Pizza

by DiRose by mechanically multiplying the number of shares of

PK traded on the open market times their value. Instead, he

selected the value of PK as expressed on the market as the most

suitable starting point for his valuation of Pizza by DiRose.

In his examination of the trading of PK’s stock this expert

noted that more than 3,000,000 shares were ouistanding

representing all of the ownership of the company, and that a

substantial range in the traded market price of the stock existed

over a three year period (968-972). He conservatively used the

lowest market value for fiscal 1974 since that was the year when

PK had a loss comparable to that experienced by Pizza by

DiRose (973). The resulting total market value of PK’s out-

standing stock was then discounted ten percent because Pizza

by DiRose was not a corporation publicly traded. That

discounted value was reduced an additional two-thirds in order

to reflect ‘‘Mr. DiRose’s different conditions’’ (963). These

highly conservative adjustments were explained in unrebutted

detail as being appropriate on the basis of Mr. Dopkins’

professional judgment and experience and in wiew of the

particular circumstances of plaintiff’s business (994-5; 992-

1003).

In formulating his expert opinion, Mr. Dopkins also con-

sulted data produced by the U.S. Department of Commerce as

well as published information on fast food retailing businesses

and operations (857, 861, 869, 989-990). In short, this expert

testimony provided a reasonable and accepted basis for the

valuation of the DiRose business. Significantly, the defendants

offered no proof whatsoever in rebuttal of the Dopkins

testimony.

Contrary to Judge Van Graafeiland’s incorrect charac-

terization of the Dopkins analysis and testimony — a

characterization made in the improper effort to apply BCL 623

to this case — Mr. Dopkins did not perform an ‘‘appraisal’’ of

the value of the PK assets. As established by the unrebutted

testimony no such ‘‘appraisal’’ was appropriate under the

circumstances and, on the contrary, the method employed by

Mr. Dopkins is established in the record — and by applicable

law — as the most appropriate valuation method available.

There is absolutely no basis for the substitution by the Second

Circuit of a judgment on this subject in direct conflict with the

unrebutted proof and applicable New York State law.

(d) The Non-Issue of ‘‘Benefits Received by DiRose’’ Not

Being Applied to Reduce the Jury Award.

The extent to which the decision ‘‘reaches’’ in an effort to

support its result is further illustrated by the assertion that the

charge to the jury erroneously precluded its taking into account

all the ‘‘rights or benefits’’ received by DiRose in calculating

the damages awarded. It is significant that this is a new matter,

never raised by the defendants at trial or on their appeal.

Despite the fact that no request was made by defendants, the

Trial Court in fact charged the jury several times that any

damages found would be reduced by ‘‘the value of what

[DiRose] received in return’’ or ‘‘the value of any property or

rights received in return’’ (2075-2076).

The record fact, which cannot be avoided but which the

Second Circuit curiously chose to ignore is that the defendants

themselves insisted and argued to the jury that DiRose had

received nothing of value from the Agreements (summation of

defendants’ counsel, trial transcript, original record volume X,

page 28). Of course, if Mr. DiRose received nothing of value —

no rights or benefits — from the defendants’ conduct, as the

defendants themselves explicitly conceded, there is nothing for

the jury (or the Court) to deduct from the damages found to

have been the result of defendants’ fraudulent conduct. It is,

again, inconceivable that the assertion should be made in Judge

Van Graafeiland’s decision that the charge to the jury was in

any respect in error or confusing as to this matter of diminution

of damages. When the defendants themselves admit that the

plaintiff received no value, that subject becomes a non-issue

and there is no conceivable way in which the jury could have

become confused or could have acted improperly in accepting

the defendants’ concession that no value was received by Mr.

DiRose which should or could be deducted as a diminishment

of the damages found.

The record also clearly establishes that the stores had no

value as of December 13, 1976. Without cash or the ability to

obtain credit, and unable to meet pre-existing major

obligations to suppliers incurred during the PK operation,

DiRose was unable to remain in business following December,

1976 and was forced simply to surrender his locations or allow

them to be taken over by people who agreed to assume

payments on his leases (198-201). He was left with nothing

(201).

(2) The Decision Overruling the Jury Determination of

Fraud Throughout the Entire Transaction Misapprehended the

Testimony, Misapprehended Applicable Law, Pre-empted the

Jury’s Determinations of Credibility, and Imposed an Im-

proper Burden of Proof on the Plaintiff.

The trial court repeatedly and appropriately charged the jury

on the requisite elements of fraud in New York, including

intent. (See e.g. 2063, 2066, 2069-72). The Second Circuit

focused on Ciccarelli’s ‘‘state of mind’’ in his dealings with

plaintiff as being the key to the entire case. The jury had, as the

Second Circuit did not, full opportunity to evaluate Ciccarelli

through his testimony and his demeanor, and had more than

sufficient cause to reject completely — as was its exclusive

prerogative — all of his testimony and to conclude that the man

was a master con-man who had bamboozled plaintiff from

start to finish and who had attempted as well to bamboozle the

jury itself. The jury had every right to conclude that the

eventual ‘‘review’’ of some preliminary plans with respect to

the promised reconstruction by the PK Board was simply a part

of the ongoing fraud and not, as the decision speculates —

again in preemption of the jury’s function — exculpatory

conduct.

The trial court charged that ‘‘the intention of a person to

carry Out a promise must be determined in light of all of the

circumstances in which it was made. Also, events occurring

after the promise was made may provide evidence to you of the

intent with which the promise was made. But the crucial time is

the time as of which the promise was made’’. This was certainly

no license to conclude that mere non-performance by the

defendants was enough to sustain plaintiff’s burden. On the

contrary, the charge on common law fraud closely followed the

pattern in both New York state and federal practice, and made

it clear to each juror that a finding of actionable fraud would

have to depend on more than a mere showing of non-

performance by the defendants in failing to refurbish the

restaurants as promised.

The trial court’s inclusion of the ‘‘recklessness’’ standard in

its charge was entirely appropriate in this case and fully sup-

ported by the record. The jury had the right to conclude that

Ciccarelli defrauded DiRose in promising that PK would

redecorate the restaurants when he knew they never would, or

in promising that PK had decided to redecorate when he had no

idea whether or not PK would ever decide to do so.

The Second Circuit stated that ‘‘Mr. Ciccarelli’s intent or

state of mind when he made the alleged promises obviously was

a matter concerning which he had knowledge’’ (at page 5463).

It is equally obvious that this would be the case for every person

who intentionally makes a statement of fact knowing that it is

false or knowing that he lacks knowledge whether or noi it is

true. If a statement is recklessly made without knowledge or

without genuine belief in its truth the statement is actionable as

fraud. Hadcock vs. Osmer, 153 N.Y. 604 (1897); Terris vs.

Cummiskey, 11 A.D.2d 259 (3d Dept. 1960). The sense of

scienter includes a ‘‘reckless indifference to error’’, a ‘‘pretense

of exact knowledge’’ and the ‘‘assertion of a false material

fact’’ susceptible of accurate knowledge but stated to be true on

the personal knowledge of the representer. Skrine vs. Staiman,

30A.D.2d 707 (2d Dept. 1968).

In this case, as in many other recent decisions, the Second

Circuit has improperly assumed unto itself the right to make

factual determinations concerning the credibility of testimony

given to and rejected by a jury. The essential import of Judge

Van Graafeiland’s decision in this case is that the Second

Circuit at least has the right to deprive a litigant of his Seventh

Amendment right to a trial by jury on the precept that it is that

Court and not the jury which decides on the credibility of

witnesses and decides the factual issues prosecuted. That

decision and that approach must not be allowed to stand if the

Seventh Amendment is to have any meaning.

(3) As to the Validity of the Release, the Second Circuit

Again Improperly Speculated as to the Basis for the Jury’s

Finding that the Release Was Illegally Obtained and Again

Substituted its Judgment for that of the Jury On Issues of Fact

and Credibility.

Among other things, the Second Circuit proceeded on the

inaccurate assumption that the only basis upon which the jury

could find the release to be not binding on plaintiff would be a

determination that plaintiff signed the release as a result of

coercion or duress. On the contrary however, there is proof in

the record that plaintiff not only felt that he was coerced into

signing the release by the circumstances created by defendants,

but also that his action in that respect was the result of

defendants’ continued fraud in making false promises of

assistance, and his continued subjugation by Ciccarelli (172-

178, 181-191, 198-9). The jury had the exclusive right to make

such determinations based on its assessment of all of the facts

and the credibility of the witnesses. There is no way that the

Second Circuit could speculate or surmise concerning what

proof in the record the jury relied upon in determining that the

release was fraudulently obtained.

Illustrative not only of the basis in the record for a jury

determination of fraudulent conduct by defendants in ob-

taining the release, but also of the impropriety of the Second

Circuit’s making factual determinations not made by the jury

and not supported by the record, is the Court’s reliance, as a

basis for its decision on the release, on its erroneous assertion

of ‘‘fact’’ that when the plaintiff signed the release he was

‘**represented by an attorney”’ (Decision, 5466). The testimony

and the evidence were conclusive that Ciccarelli retained at-

torney Konst to prepare the documents relating to the George

Urban transaction, including the release, that Konst and

Ciccarelli had a long-standing personal and professional

relationship, that DiRose never employed Konst, that DiRose

never paid Konst for any services, and that Konst had not given

DiRose any advice whatsoever with respect to the execution of

documents in October and December, 1976 (460-61, 1455-72).

The proof — which the Second Circuit ignored — establishes

that Konst was the agent of defendants. The Court’s finding —

essential to its decision on the release — that Konst was

plaintiff’s attorney was rejected by the jury, which, of course,

had the right to make such factual determinations.

The decision concludes ‘*. . . that the jury’s finding of duress

was against the great weight of the evidence. .’’ (5465). There

is, of course, no way of knowing whether the jury based its

decision to disregard the release on the basis of duress or on the

basis of the testified continuing fraudulent representations and

imposition of Ciccarelli and PK. Moreover, the Court does not

identify the evidence which purportedly establishes that a find-

ing of duress would be against ‘‘the great weight of the

evidence’. The absence of such an explication is further

confirmation of the absence of any evidence in support of the

Court’s factual surmise.

The Second Circuit ends its discussion of the release with the

following statement: ‘‘Unless appellee comes forward with a

compelling reason for his lengthy delay in repudiating the

release, the district court is directed to dismiss appellee’s claims

on the law.’’ No authority is of course provided for the at-

tempted application of a burden of proof that the appellee-

plaintiff must come forth with ‘ta compelling reason’’ for the

alleged delay in repudiating the release, for the simple reason

that there is no such authority. Again, the Second Circuit

sought to impose on this plaintiff a burden of proof beyond the

properly applicable fair preponderance of the evidence stand-

ard.

The Second Circuit also failed to take note that the con-

tinuing fraudulent conduct of the defendants was claimed to

vitiate the December, 1976 release as well as the previously

signed agreements (2093). This claim would void the release

and preclude a dismissal based upon the release even if the

defense of duress had been somehow waived by Mr. DiRose.

(4) Plaintiff has a Constitutional Right to a Trial by Jury

and not to Have the Jury’s Function and Prerogatives Sub-

verted by the Second Circuit.

The constitutionally guaranteed right to trial by jury is

subverted if the Second Circuit arrogates, as has been done

here, the right to make determinations of fact based upon

determinations of credibility or upon the selective ignoring of

testimony and evidence in the record. Careful review of the

decision in question confirms thai the Second Circuit im-

properly substituted its judgment from afar as to the credibility

of witnesses and the facts of this matter for that of the jury

which saw and heard 18 days of testimony. A review of the

testimony of Ciccarelli and of the PK president, Nicolas

DeMare, will demonstrate the obvious lack of credibility of

those witnesses and of defendants.

REASONS FOR GRANTING

THE WRIT OF CERTIORARI

Certiorari should be granted to review the standard imposed

by the Second Circuit in a recent line of cases, in conflict with

the First and Third Circuits, and the established prerogative of

the jury under the Seventh Amendment, which permits the

Appellate Court to make a de novo determination of factual

issues.

Petitioner urges this Court to review the decision of the

Second Circuit, not only to insure that that court applies the

proper standard of review in appeals involving jury verdicts,

but also to resolve the conflict among the circuits as to the

scope of evidence subject to appellate review. In such appeals,

the Second Circuit reviews all the evidence to determine

whether there is substantial evidence to support the jury’s find-

ings, a practice that ‘‘comes dangerously close to weighing the

evidence’ 9 C. Wright and A‘: Miller Federal Practice and

Procedure §2529 at 571 (West 1971). In effect, that standard

permits the court to draw inferences which it deems proper,

substituting its judgment for that of the jury.

The Second Circuit has accepted as reliable and credible the

testimony of interested witnesses on behalf of the parties

seeking to overturn the verdict despite the jury’s clear rejection

of that same testimony. It has drawn inferences based on such

interested testimony and has speculated on facts not in

evidence, despite the fact that, unlike the jury or the District

Judge who reviewed that verdict in the first instance, it could

not observe the demeanor or assess the credibility of the wit-

nesses.

This Court should review that practice for three reasons.

First, the standard applied by the Second Circuit is a radical

departure from established appellate practice, and ignores the

directions of this Court concerning the deference due to

determinations by triers of fact. Second, the Second Circuit’s

standard is in direct conflict with the clearly more appropriate

scope of review of the facts undertaken by the First and Third

Circuits. Third, that court’s practice essentially denies the

parties the right to trial by jury.

Each of these considerations goes to the core of the fact-find-

ing function of the federal judicial system and affects all

litigants. Review is warranted because the Second Circuit has

departed from the accepted and usual practice in judicial

proceedings, and its course will be righted only by the exercise

of this Court’s supervisory powers. In order to insure com-

pliance with the Seventh Amendment and that justice is ad-

ministered fairly and consistently, this Court should review the

decision below.

The facile reversal of the jury verdict following the lengthy

trial in this case does not stand alone in the Second Circuit.‘

SMichelman v. Clark-Schwebel Fiber Glass Corp., 534 F.2d 1036 (2d Cir.

1976) (The court reversed a jury verdict in the plaintiff’s favor, following a

four-week trial of the antitrust action, on the ground that there was insuffi-

cient evidence of concerted action); Oreck Corp. v. Whirlpool Corp., 579

F.2d 126 (2d Cir. 1978), cert. denied 439 U.S. 946 (1978) (The majority of

the court sitting en banc credited the testimony of the defendant’s officers

in holding that the plaintiff’s termination did not result from an unlawful

conspiracy. The Court affirmed a directed verdict for the defendant after

retrial on the ground that the plaintiff had failed to prove a conspiracy.

Oreck Corp. v. Whirlpool Corp., 639 F.2d 75 (2d Cir. 1980), cert. denied,

Footnote continued on next page—

In the case at bar, the Second Circuit simply accepted as true

the defendants’ testimony and ignored compelling testimony on

behalf of Petitioner. It reached conclusions relating, among

others, to Ciccarelli’s intent to deceive DiRose, DiRose’s access

to counsel, fraud and duress in securing the release from

DiRose — factual issues all — contrary to the proof in the

record on DiRose’s behalf. In some instances the Court

adopted inferences unfavorable to DiRose, substituting its

judgment for that of the jury on disputed facts. In other in-

stances the Court dismissed facts in the record from its con-

sideration and engagec in sheer speculation to manufacture a

basis for decision on a particular issue.

The conflicting results reached by the Second Circuit and the

District Judge result from the different standards applied by

each in reviewing the verdict. The Second Circuit usurped the

jury’s function, made decisions on credibility without which its

factual conclusions could not be reached, totally rejected the

jury’s determination of controlling factual issues, and engaged

in impossible speculation concerning what the jury did or did

not consider in arriving at its verdict. The District Judge was

eminently more circumspect, guided by the principle that the

non-moving party must be given the benefit of all reasonable

—Footnote continued from preceding page

102 S.Ct. 639 (1981); H.L. Moore Drug Exchange v. Eli Lilly & Co., 662

F.2d 935 (2d Cir. 1981), cert. denied, ___ U.S. ___., 51 U.S.L.W. 3258

(October 4, 1982) (The court, relying in part upon disputed and incon-

sistent testimony of the defendant’s witnesses, reversed the denial of the

defendant’s motion for judgment n.o.v.); Schwimmer v. Sony Corp. of

America, 677 F.2d 946, (2d Cir. 1982), cert. denied, __. U.S. ___., 51

U.S.L.W. 3362 (November 8, 1982) (The court again reviewed all the

evidence and accepted the defendant’s explanation of the plaintiff’s ter-

mination in holding the proof of conspiracy was insufficient. It even

determined an issue of credibility, refusing to credit the testimony, favor-

able to plaintiff’s position, of one of the defendant’s executives, because it

was not corroborated by other defense witnesses); Unijax, Inc. v.

Champion International, Inc., 683 F.2d 678, (2d Cir. 1982) (The court, in

affirming judgment for the defendant n.o.v. reviewed the evidence which it

deemed relevant, and concluded that the plaintiff had failed to prove a

tying arrangement in violation of §1 of the Sherman Act.)

inferences from the evidence, and that evidence unfavorable to

it may be considered only if that evidence stands un-

contradicted and unimpeached. (See e.g., Bigelow vs. Agway,

Inc., 506 F.2d 551, 554 (2d Cir. 1974)). His decision recognizes

the deference to be given the trier of fact. The Second Circuit’s

standard, in effect, makes if the fact finder. That standard

should be reviewed and disavowed.

A. The Second Circuit's Review of Jury Verdicts Conflicts

With The Principles Established By This Court Af-

firming The Role of Juries and District Courts in

Determining Questions of Fact.

In the past year, this Court has reaffirmed the deference due

factual findings by the District Court in bench trials. Inwood

Laboratories, Inc. v. Ives Laboratories, Inc., US. >

72 L.Ed.2d 606 (1982) (‘‘Inwood’’) and Pullman-Standard, a

Division of Pullman, Inc. v. Swint, U.S. »

L.Ed.2d 66 (1982) (“‘Pullman’’), both enunciate the principle

that those issues are best resolved at the trial level and such

determinations should not be overturned lightly on appeal. In

Inwood, this Court noted ‘‘the unique opportunity afforded

the trial court judge to evaluate the credibility of witnesses and

to weigh the evidence. (Citation omitted).’’ Id. at » ta

L.Ed.2d at 616.

This Court criticized the Second Circuit’s reversal:

By rejecting the District Court’s finding simply because

it would have given more weight to the evidence of

mislabelling than did the trial court, the Court of Ap-

peals clearly erred. Determining the weight and

credibility of the evidence is a special province of the

trier of fact. (Id. at , 72 L.Ed at 616-17, emphasis

supplied)®

6The District Judge in the instant case appropriately proceeded on the basis

that juries are best qualified to determine issues of credibility. This

comports with the principle later enunciated in Inwood and Pullman, but

rejected by the Second Circuit.

Elaborating on that basic and essential principle, this Court

further instructed the Second Circuit that:

An appellate court cannot substitute its interpretation of

the evidence for that of the trial court simply because the

reviewing court ‘‘might give the facts another con-

struction, resolve the ambiguities differently, and find a

more sinister cast to actions which the District Court

apparently deemed innocent.’’ United States v. Real

Estate Boards, 389 U.S. 485, 495 (1950). Id. at , 72

L.Ed.2d at 618.

The inferences drawn by the District Court were not

unreasonable, and the Second Circuit cited no evidence to

support its conclusion that they were. Id. at ,n. 16, 17, 72

L.Ed.2d at 616-17, n. 16, 17. It is apparent that the Second

Circuit has chosen to ignore this Court’s decisions and in-

structions in its determination to set itself up as the trier of fact.

Pullman reversed the Fifth Circuit’s conclusion which

‘strongly suggest[ed] that the outcome was a product of the

court’s independent consideration of the totality of the cir-

cumstances it found in the record.”’ Id. , 72 L.Ed.2d at 81.

This Court rejected such a de novo review of the evidence.

Just as the Second Circuit substituted its judgment for that of

the trial court in Jnwood, so it substituted its judgment for that

of the jury and indeed for that of the District Judge as well in

the present case. If a trial judge sitting as the sole trier of fact is

entitled to deference in his factual determinations, a fortiori the

unanimous decision of a seven person jury approved by the

trial judge’s denial of a motion for judgment n.o.v. is entitled,

at the very least, to the same deference. Both the trial judge and

the jury have the advantage of hearing all the evidence and

observing the character and demeanor of the witnesses. They

are, as the decisions of a myriad of courts have held for cen-

turies, in a far better position to determine the credibility of the

testimony given and the weight to be given to the evidence than

is an appellate court, reviewing a lifeless printed record.

Deference to the determinations of triers of fact is not limited

to bench trials. In Continental Ore Co. v. Union Carbide &

Carbon Corp., 370 U.S. 690 (1962), this Court considered the

standard to resolve conflicting inferences from the evidence

before a jury:

Undoubtedly, all of the evidence . . . does not point in

one direction and different inferences might reasonably

be drawn from it. There was, however, sufficient

evidence to go to the jury and it is the jury which

‘weighs the contradictory evidence and inferences’’ and

draws ‘‘the ultimate conclusion as to the facts.’’ Ten-

nant v. Peoria & P.U.R. Co., 321 U.S. 29, 35. Id. at

700-701.

It rejected the appellate court’s substitution of its own

judgment for that of the jury:

The evidence relied upon by the court can just as

reasonably be read in a manner favorable to Continental

and it appears that the court may have misapprehended

significant parts of the record. Jn any event, the in-

terpretation and significance of this evidence were for

the jury. (Id. at 701, emphasis supplied).

The credible evidence in the present case fully supports the

facts and inferences found by the jury in DiRose’s favor, and

the Second Circuit misapprehended or totally ignored

significant parts of the record.

It appears from its decision in this case and in numerous

others that the Second Circuit has simp! decided to disregard

this Court’s directions in Continental Ore, Inwood and

Pullman. This Court exercised its supervisory powers to correct

the erroneous standard applied by the Second Circuit in Jn-

wood. It should do no less here.

B. The Second Circuit’s Review of all Evidence to

Determine Whether Substantial Evidence Supports a

Jury Verdict Conflicts With Decisions of the First and

Third Circuits.

The Courts of Appeals, guided by the decisions of this

Court,’ are in general agreement that they may reverse a jury

verdict, or a denial of a motion for judgment n.o.v., only if

fair-minded men could reach but one conclusion from the

credible evidence. A conflict exists, however, as to the evidence

an appellate court may review in applying that broad standard.

The First Circuit has held that, in reviewing a directed verdict

for the defendant at the close of the evidence,® it should con-

sider only the non-movant’s evidence and uncontradicted and

unimpeached evidence introduced by the movant. Dehydrating

Process Co. v. A.O. Smith Corp., 292 F.2d 653 (ist Cir. 1961).

That court has expanded its ‘‘field of vision’’ to include

documentary evidence, the existence of which is undisputed.

Layne v. Vinzant, 657 F.2d 468 (ist Cir. 1981). The Court of

Appeals for the Third Circuit has adopted the same standard.

Inventive Music Ltd. v. Cohen, 617 F.2d 29, 33, (3d Cir. 1980);

Fireman’s Fund Insurance Co. v. Videfreeze Corp., 540 F.2d

1171, 1178 (3d Cir. 1976) (holding that inferences from con-

tradicted testimony must be left to the jury).

The Fifth Circuit has broadened its review to consider all the

evidence, not merely that supporting the non-movant. Boeing

Co. v. Shipman, 411 F.2d 365, 374-75 (Sth Cir. 1969). The

Court of Appeals for the District of Columbia applies the same

doctrine. Boutros v. Riggs National Bank, D.C., 655 F.2d 1257

(D.C. Cir. 1981). See also Panter v. Marshall Field & Co., 646

F.2d 271 (7th Cir. 1981).

The conflict among the Circuit Courts is real, not a question

of semantics. 9 C. Wright & A. Miller, Federal Practice and

Procedure §2529 (1971). That commentator argues that a rule

permitting consideration of all the evidence is too broad, urging

instead that only the movant’s uncontradicted evidence be

TLavender v. Kurn, 327 U.S. 645 (1946); Tennant v. Peoria & Pekin Union

Railway Co., 321 U.S. 29 (1944); Brady v. Southern Railway Co., 320 U.S.

476 (1943); and Gunning v. Cooley, 281 U.S. 90 (1930).

8The same standard of review applies to directed verdicts and motions for

judgment n.o.v. Yazzie v. Sullivent, 561 F.2d 183, 188 (10th Cir. 1977).

included with the non-movant’s evidence in the appellate court

review. Id.9

The Second Circuit has now joined those circuits involving

itself in review of all the evidence and in determinations of

credibility, although that was not always the case. In Bigelow v.

Agway, Inc., 506 F.2d 551 (2d Cir. 1974), the court reviewed

only the non-movant’s evidence and the movant’s un-

contradicted and unimpeached evidence in reversing a directed

verdict for the defendants. In County Asphalt, Inc. v. Lewis

Welding & Engineering Corp., 444 F.2d 372 (2d Cir. 1971), the

court held that the jury need not accept testimony merely

because it was uncontradicted and unimpeached. The jury was

to determine credibility, and was not bound to accept the

testimony of the plaintiff’s damages expert. ‘‘[W]hen it comes

to finding facts from the evidence, juries enjoy a near-total

independence.”’ Id. at 378.!°

Apparently, that is no longer true. In Epoch Producing

Corp. v. Killiam Shows, Inc., 522 F.2d 737 (2d Cir. 1975), the

court examined the entire record, rejected certain evidence

favoring the plaintiff, and concluded that there was insufficient

evidence to support the jury verdict. This practice has now

become the rule in the Second Circuit, and that Court routinely

substitutes its judgment on factual issues and credibility of

testimony for that of the trier of fact.

Definition of the proper role of the appellate court in

reviewing jury verdicts and determinations of credibility and

ultimate fact is critical to the assurance of the right to trial by

jury envisioned by and articulated by the Seventh Amendment.

The deference which this Court accords to the determinations

9Other commentators have also criticized the ‘‘no holds barred” apy roach

to review of factual determinations. Cooper, Directions for Directed

Verdicts: A Compass for Federal Courts, 55 Minn. L. Rev. 903, 948-53

(1971); Bagalay, Directed Verdicts and the Right to Trial by Jury in Federal

Courts, 42 Tex. L. Rev. 1053, 1062-63 (1964); James, Sufficiency of the

Evidence and Jury-Control Devices Available Before Verdict, 47 Va.

L. Rev. 218, 226 (1961).

10See also dicta in Simblest v. Maynard, 427 F.2d 1, 4 (2d Cir. 1970).

—_—-—-

of the trier of fact is clear. The conflict concerning the ap-

propriate scope of review of verdicts threatens the traditional

respect for those factual determinations. Certiorari is required

to resolve the conflict and to re-emphasize to all of the Circuit

Courts the scope of appellate review which this Court has

determined to be consistent with the Seventh Amendment.!!

CONCLUSION |

Based upon the foregoing, it is respectfully requested that

this petition for Writ of Certiorari be granted to review the

judgment and opinion of the Second Circuit since that decision

is in clear conflict with the decisions of this Court and Courts

of Appeals in other circuits and since the issue here presented

raises significant and recurring questions of federal law.

Dated: March 18, 1983

: Buffalo, New York

Respectfully submitted,

Victor T. Fuzak

(Counsel of Record)

Allen H. Beroza

HODGSON, RUSS, ANDREWS,

WOODS & GOODYEAR

Altorneys for Petitioner

1800 One M & T Plaza

Buffalo, New York 14203

(716) 856-4000

I1The Seventh Amendment to the United States Constitution prohibits the

Courts of Appeals and this Court from redetermining facts found by the

jury. Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S.

355, 359 (1962). In the past, the Second Circuit at least has paid lipservice

to the strictures thereby imposed on it. See Michelman v. Clark-Schwebel

Fiber Glass Corp., 534 F.2d 1036 (2d Cir. 1976). DiRose presented his

evidence and arguments to the jury. The jury heard the testimony and

observed the demeanor of all the witnesses. Nevertheless, the Second

Circuit conducted its own review of the evidence inferring that there was no

fraud nor proof of damages. In so doing, it effectively denied DiRose his

right to trial by jury.

APPENDIX A

DECISION AND ORDER DENYING DEFENDANTS’

MOTION

FOR JUDGMENT an.o.v. AND FOR A NEW TRIAL

(Pages 53A-60A).

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NEW YORK

J. RICHARD DiROSE,

Plaintiff,

-VS-

PK MANAGEMENT CORP., NICHOLAS A. DeMARE,

FRANK CICCARELLI, JOHN S. RUSSO, HARRY

KURSH, ANTHONY CURATOLO and JEROME

DANSKER,

Defendants.

CIV-78-334

MEMORANDUM and ORDER

This action arises out of plaintiff’s lease of certain pizza

stores or restaurants to PK Management Corp. (‘‘PK’’).

Plaintiff claims that PK and Frank Ciccarelli, a Director and

Executive Vice President of PK, committed fraud in connection

with said lease. Plaintiff also asserts a cause of action against

PK for goods had and received. A jury trial was commenced

June 8, 1981 and resulted in a verdict July Ist in favor of

plaintiff in the amount of $362,000 on his fraud claim and

$30,283.33 on his claim for goods had and received. In ad-

dition, the jury awarded $500,000 in punitive damages against

PK and Ciccarelli. PK and Ciccarelli have moved for judgment

notwithstanding the verdict or, in the alternative, for a new

trial.!

IThe Complaint asserts four causes of action against PK and various in-

dividual defendants. The individual defendants are DeMare (Director,

President and Treasurer of PK), Ciccarelli and Curatolo (a broker and

Footnote continued on next page—

A-2

Defendants’ motion for a judgment n.o.v. may succeed if

“*the evidence is such that without weighing the credibility of

the witness there can be but one reasonable conclusion as to the

verdict * * *.’’ Brady v. Southern Ry. Co., 320 U.S. 476, 479

(1943). This standard has been taken to mean that:

“*If the facts and inferences point so strongly and over-

whelmingly in favor of one party that the Court believes

that reasonable men couid not arrive at a contrary

verdict, granting of the motions is proper. On the other

hand, if there is substantial evidence opposed to the

motions, that is, evidence of such quality and weight

that reasonable and fair-minded men in the exercise of

impartial judgment might reach different conclusions,

the motions should be denied, and the case submitted to

the jury.’’ Gehrhardt v. General Motors Corp., 581 F.2d

7, 14 (2d Cir. 1978), quoting Boeing Company v.

Shipman, 411 F.2d 365, 374 (Sth Cir. 1969).

In ruling on defendants’ motion, I must examine the entire

record in the light most favorable to plaintiff. Cora Pub, Inc.

v. Continental Cas. Co., 619 F.2d 482, 484 (Sth Cir. 1980).

Ciccarelli and PK have raised a number of arguments in

support of their motion for judgment notwithstanding the

verdict. First, they contend that there is no evidence that any

fraud was committed in connection with the lease agreement.

Plaintiff claims, and the jury could reasonably have concluded,

that Ciccarelli, acting on behalf of PK, represented to plaintiff

—Footnote continued from preceding page

dealer in securities). The first cause of action claims damages of $300,000

against PK, Ciccarelli and DeMare for fraud in inducing the lease

agreement. The second cause of action asserts a claim against PK for goods

had and received. The third and fourth causes of action allege violations by

all defendants of section 10b of the Securities Exchange Act of 1934 and

section 352-C of New York’s General Business law. At the conclusion of

plaintiff’s case-in-chief, | granted DeMare’s motion to dismiss the

Complaint as to him. I also granted a motion by all of the defendants to

dismiss the third and fourth causes of action. However, I denied PK’s

motion to dismiss the second cause of action and motions by PK and

Ciccarelli to dismiss the first cause of action.

A-3

that PK would redecorate the leased restaurants but that PK

had no intention of doing so. Defendants contend that plaintiff

was not defrauded by such representations because Ciccarelli

told plaintiff that PK’s Board of Directors would not commit

itself in writing to redecorate the restaurants. Defendants also

contend that plaintiff was told that PK would redecorate only if

the sales warranted. The jury could reasonably have concluded

that Ciccarelli told plaintiff that a written agreement to

redecorate was not necessary and that PK would redecorate the

restaurants even though it would not formally commit itself in

writing. Moreover, the jury could reasonably have found that

PK did not intend to redecorate the leased restaurants, without

regard to whether sales were adequate. Therefore, defendants’

argument that plaintiff failed to demonstrate fraud is meritless.

Defendants have also suggested that plaintiff has failed to

prove any damages caused by their fraud. The testimony of

plaintiff’s expert witness, Leonard Dopkins, indicates that the

value of the restaurants which plaintiff leased to PK was

$362,000. To my mind, Dopkins’s testimony was weak and his

method of computing the value of the restaurants was suspect.

However, defendants failed to significantly undermine Dop-

kins’s testimony on cross-examination. More importantly,

defendants also failed to counter Dopkins’s testimony by

producing their own expert witness. Thus, although the jury

was not bound to accept Dopkins’s opinion concerning the

value of plaintiff’s restaurants, the jury’s reliance on such

opinion was not unreasonable.

A more difficult question, which defendants have not fully

pursued, concerns proof of the value of the restaurants in

December, 1976, at which time plaintiff, through the Buffalo

George Urban Corporation, re-acquired the restaurants.

Generally, the measure of damages for a claim based on fraud

is the difference between the value of the property given up by

the plaintiff and the value of the property received in return.

Holm v. Shilensky, 388 F.2d 54, 58 (2d Cir. 1968); Morris v.

A-4

Lewis, 427 N.Y.S.2d 858, 859 (2d Dep’t 1980). Thus, in the

present case, I instructed the jury that plaintiff’s damages were

to be measured by the value of the restaurants which he leased

to PK in March 1976 less the value of rights or property

received in return. I pointed out that the value of rights or

property which plaintiff received in return for the lease of the

restaurants was uncertain, and cautioned the jury not to

speculate or guess as to the extent of plaintiff’s damages.

The jury awarded damages of $362,000 on plaintiff’s claim

for fraud and therefore appears to have disregarded the value

of any rights or property returned to plaintiff. It was not

unreasonable for the jury to do so. The return of the

restaurants to plaintiff in December 1976, an event which

occurred only at defendants’ option, is a factor which mitigates

plaintiff’s damages. As such, the burden of proving the value

of the restaurants at the time they were returned to plaintiff was

placed upon defendants. See, Cornell v. T.V. Development

Corp., 17 N.Y.2d 69, 74, 268 N.Y.S.2d 29, 33 (1966); Beyer v.

Murray, 306 N.Y.S.2d 619, 623 (4th Dep’t 1970); Caiazzo v.

Volkswagenwerk, A.G., 468 F.Supp. 593, 599 (E.D.N.Y.

1979). See, also, Contemporary Mission, Inc. v. Famous Music

Corp., 557 F.2d 918, 926 (2d Cir. 1977). Certainly, defendants

were in a better position to prove the value of the restaurants in

December 1976 than was plaintiff. There was substantial

evidence that the decline in the value of the restaurants was

caused by defendants’ business practices. Because the defen-

dants failed to offer any evidence concerning the value of the

restaurants at the time they were returned to plaintiff, the

jury’s disregard of such value in assessing plaintiff’s damages

was proper. Uncertainty as to the amount of damages does not

bar recovery of damages measured by some practical means.

Mills Studio, Inc. v. Chenango Valley Corp., 221 N.Y.S.2d

684, 687-8 (3d Dep’t 1961).

Defendants have also relied on a release executed by plaintiff

in connection with his purchase of the stock of Buffalo George

A-5

Urban Corporation. Plaintiff claims that the release was

procured by defendants through economic duress. In order to

successfully rely on the release, defendants were required to

prove that the release was voluntarily executed by plaintiff.

Fleming v. Ponziani, 24 N.Y.2d 105, 110, 229 N.Y.S.2d 134,

139 (1969). The jury’s apparent conclusion that defendants

failed to prove a lack of duress was reasonable in light of all the

evidence in the case.

Defendants’ next contention is that punitive damages are not

available in the current case. Under New York law, punitive

damages may be awarded in an action based on fraud if the

defendant’s actions are morally culpable. Rosenberg v. GWV

Travel, Inc., 480 F.Supp. 95, 97 (S.D.N.Y. 1979); Chase

Manhattan Bank, N.A. v. Perla, 411 N.Y.S.2d 66, 69 (4th

Dep’t 1978). It is not necessary that the fraud be directed at the

public generally. Borkowski v. Borkowski, 39 N.Y .2d 982, 387

N.Y.S.2d 233 (1976); Greenspan v. Commercial Ins. Co., Etc.,

395 N.Y.S.2d 519, 520-1 (3rd Dep’t 1977). I instructed the jury

that punitive damages could be awarded if defendants had in

fact committee fraud and their conduct had been malicious,

wanton, or oppressive. The jury’s award of punitive damages is

supported by substantial evidence and cannot be said to be

unreasonable.

PK claims that it is entitled to judgment notwithstanding the

verdict with respect to plaintiff’s second cause of action

because plaintiff failed to prove that PK had agreed to pay for

inventories and supplies contained in the restaurants at the time

they were leased. A quasi-contractual obligation, such as an

obligation to pay for goods had and received, is not based on an

agreement between the parties, but is an obligation imposed by

law. Gulf Oil Trading Co. v. Creole Supply, 596 F.2d 515, 520

(2d Cir. 1979); Bradkin v. Leverton, 26 N.Y.2d 192, 196, 309

N.Y.S.2d 192, 195 (1970). Thus, plaintiff’s failure to prove the

existence of an express agreement to pay for the inventory and

supplies is not fatal to his second cause of action. The value of

A-6

inventories and supplies on hand at the time plaintiff re-

acquired the restaurants would mitigate plaintiff’s recovery on

his second cause of action. However, because PK did not offer

proof as to such value, the jury reasonably awarded what it

determined to be the reasonable value of goods delivered by

plaintiff to PK.

In support of their motion for a new trial, defendants

argue, inter alia, that the jury’s verdict is contrary to the weight

of the evidence. As I have previously indicated, however, the

verdict is supported by substantial evidence and cannot be

deemed unreasonable.

Defendants have also suggested that the amount of damages

is excessive. A jury’s award of damages may be set aside when

it would be unconscionable to let the award stand or when it

appears that the award is a result of passion or prejudice or

shocks the judicial conscience. Dagnello v. Long Island Rail

Road Company, 289 F.2d 797 (2d Cir. 1961); Guerrero v.

American President Lines, Ltd., 394 F.Supp. 333, 337

(S.D.N.Y. 1975). Although the amount of punitive damages

awarded by the jury is substantial, the amount cannot be said to

be unconscionable or shocking. Punitive damages are intended

to punish and to deter other parties from engaging in the same

or similar activity. In order to serve these purposes, the amount

of damages must be relatively substantial, particularly against

relatively affluent defendants. Finally, I see no reason to

believe that the jury’s award was the result of passion or

prejudice.

Therefore, defendants’ motions for judgment notwithstand-

ing the verdict or, alternatively, for a new trial are hereby

ORDERED denied.

Dated: Buffalo, N. Y.

September 4, 1981

JOHN T. ELFVIN,

U.S.D.J.

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Cal. No. 1170—August Term, 1981

(Argued May 21, 1982 Decided October 25, 1982)

Docket No. 81-7669

J. RicHArD DiROSE,

Plaintiff-Appellee,

—V—

PK MANAGEMENT Core, NICHOLAS A. DEMARE, FRANK

CICCARELLI, JOHN S. Russo, HARRY KURSH, AN-

THONY CURATOLO and JEROME DANSKER,

Defendants-Appellants.

Before:

TIMBERS, VAN GRAAFEILAND and KEARSE,

Circuit Judges.

Appeal from a judgment of the United States District

Court for the Western District of New York, Elfvin, J.,

5455

B-2

following a jury verdict awarding plaintiff $392,282.33

compensatory damages and $500,000 punitive damages.

Reversed and remanded with directions to grant a new

trial.

Percivat. Oviatt, Rochester, N.Y. (Woods,

Oviatt, Gilman, Sturman & Clarke, Ro-

chester, N.Y., on the brief), for Defen-

dants-Appellants

Victork FuzaAk, Buffalo, N.Y. (Hodgson,

Russ, Andrews, Woods & Goodyear, and

Allen H. Beroza, Buffalo, N.Y., on the

brief), for Plaintiff-Appellee

VAN GRAAFEILAND, Circuit Judge:

PK Management Corporation (PK) and Frank Cic-

carelli appeal from a judgment of the United States

District Court for the Western District of New York,

Elfvin, J., entered upon a jury verdict in favor of appellee

Richard DiRose in the amount of $892,282.33, and from

Judge Elfvin’s order denying appellants’ motion for judg-

ment n.o.v. or a new trial. For the reasons discussed

below, we hold that appellants’ motion for a new trial

should have been granted and reverse with directions to

grant a new trial.

In 1959, appellee opened a pizza and sandwich shop in

Buffalo, New York. By 1975, appellee’s pizza operation

had expanded to a chain of eighteen stores, operating in

5456

B-3

leased premises and employing 250 people. The rapid

expansion of appellee's enterprise created serious cash

flow problems, however, and in 1975 appellee had great

difficulty meeting his monthly obligations for rent and

operating costs, which totaled around $18,000, During

that year, he had a net loss of $109,871. For the first three

months of 1976, his loss was $47,403, He was also

seriously in debt. As a result of his financial difficulties,

appellee became interested in subleasing or selling all or

part of his business.

In August, 1975, a real estate broker introduced

DiRose to appellant Frank Ciccarelli, the executive vice-

president of PK, a public corporation which owned and

operated several “Pizza Kitchen” restaurants in the Roch-

ester, New York area. Ciccarelli undertook a thorough

study of the DiRose operation in order to determine

whether PK and DiRose could work out a business deal.

Over the next few months, the two men discussed several

proposals for PK’s acquisition of part of the DiRose

chain. Although DiRose and Ciccarelli originally consid-

ered a purchase and sale transaction, the plan: gradually

evolved into one under which PK would sublease several

of appellee's locations with the possibility of later taking

over additional stores.

On February 4, 1976, appellee and Ciccarelli signed an

agreement which, as amended on March 18, 1976, pro-

vided for the sublease of eleven of appellee's stores to

PK. The contract provided that the subleases would run

from March 1, 1976 to September 30, 1976, but PK

reserved the option to terminate any sublease on one

month's notice or to renew for additional six-month

periods on the same terms as the original sublease. In

addition, appellee appointed PK as his agent to renew the

prime leases if PK decided to exercise its option to renew.

$457

B-4

PK was obligated under the agreement to pay appellee the

amounts which he owed for store and equipment rental

and to pay for utilities and ordinary repairs.

As authorized by the terms of the sublease agreement,

PK assigned its interest in the stores to its wholly-owned

subsidiary, Buffalo George Urban Corporation, which

took over the operation of the stores on March 15, 1976,

Appellee was hired as manager of the operation at a

salary of $25,000 per year.

In August or September, 1976, PK decided not to renew

any of the subleases. Ciccarelli informed appellee of the

decision and indicated that appellee's employment would

be terminated when the leases reverted to appellee. Cic-

carelli suggested that appellee purchase the Buffalo

George stock so that he might issue shares and raise the

capital necessary to continue operating the restaurants.

Ciccarelli indicated that his son-in-law, Anthony Cura-

tolo, would be willing to become appellee's partner in the

purchase and assist in raising capital.

On October 9, 1976, appellee and Curatolo signed a

written agreement to purchase all the stock in Buffalo

George for $10,000. The sale was consummated on De-

cember 13, 1976. On that day, appellee executed a general

release of PK and its officers for all liability arising out of

the February agreement.

Things did not go well for appellee and Curatolo. In

January, 1977, Curatolo withdrew from the business and,

in July of that year, appellee disposed of the last of his

stores. In June, 1978, appellee brought this action, claim-

ing that he had been fraudulently induced to sign the

February 4, 1976, agreement by Ciccarelli’s oral promises

that the subleased premises would be redecorated. In

addition, appellee alleged that he was entitled to $30,000

for inventory that was in his stores when PK took them

5458

B-5

over, Other claims by appellee were dismissed in the court

below and are not a subject of this appeal,

After a trial before Judge Elfvin, the jury returned a

verdict for appellee in the amount of $362,000 compensa-

tory damages and $500,000 punitive damages on the

fraud claim and $30,282.33 on the inventory claim, Ap-

pellants’ motions for judgment n.o.v. or for a new trial

were denied by the district court and the matter is now

before us for review. For several reasons, which are

hereinafter discussed, we conclude that the judgment

must be vacated and the matter retried.

Discussion

Under New York law, a person who induces another to

enter into a contract by making a promise which he has

no intention of keeping may be held liable in damages for

fraud. Channel Master Corp. v. Aluminium Limited

Sales, Inc., 4 N.Y.2d 403, 406-09 (1958); Sabo v. Delman,

3 N.Y.2d 155, 160 (1957). The essential elements of the

injured party's cause of action are “representation of a

material existing fact, falsity, scienter, deception and in-

jury.” Channel Master Corp. v. Aluminium Limited

Sales, Inc., supra, 4 N.Y.2d at 407. Because it is clear

beyond peradventure that the jury's verdict on damages

was predicated on facts that were not in evidence and

upon a misguided understanding of the applicable law,

we will discuss that issue tirst.

Damages

The district judge instructed the jury that appellee's

damages on his fraud count should be measured by the

value of the rights he gave up less the value of the rights

5459

B-6

he received in return, Thereafter, the judge narrowed this

charge, telling the jury that what appellee lost was “the

difference between the value of his eleven units as of

March 18, 1976, and the value of the eleven or so which

Buffalo George Urban had December 13, 1976.” The

charge as first given was correct, Holm v, Shilensky, 388

F.2d 54, 58 (2d Cir, 1968). As amended, the charge was

faulty in that it did not take into account all the rights or

benefits received by appellee, such as the assumption by

appellants of appellee's $18,000 monthly indebtedness

and his salary as manager.

Moreover, appellee had produced no evidence as to the

value of the stores on December 13, 1976. The testimony

of appellee's expert witness, Leonard Dopkins, was that,

in February, 1976, appellee’s entire business was worth

$362,100. Dopkins was not asked to evaluate the eleven

subleased stores as of the time they were returned to

appellee in December, 1976, and he did not do so. The

jury's verdict on this claim was in the exact amount of the

February appraisal, $362,100.

In denying appellants’ motion for a new trial, the

district judge attempted to explain away the prejudicial

error which is obvious in this verdict, by stating that the

burden of proving the value of the restaurants at the time

they were returned was on the appellants. This was

contrary to what the judge had charged the jury and is

contrary to the law. Toho Bussan Kaisha, Lid. v. Ameri-

can President Lines, Lid., 265 F.2d 418, 422 (2d Cir.

1959).

Assuming for the argument only that appellee’s dam-

ages could have been measured solely by the value of his

entire business in February, 1976, Dopkins failed to make

a proper estimate of that value. Dopkins arrived at the

figure of $362,000 by comparing appellee's individual

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B-7

entrepreneurship with the appellant PK, an over-the-

counter, publicly held corporation. Dopkins assigned a

value to PRK, subtracted ten percent from that value

because appellee's company was not publicly owned, and

then discounted the remaining ninety percent another

two-thirds so as to be “reflective of Mr. DiRose’s dif-

ferent conditions”. Obviously, if Dopkins did not start

with a correct evaluation of PK, his entire appraisal was

flawed.

In evaluating PK, Dopkins simply picked a price at

which PK’s shares had sold in over-the-counter trans-

actions and multiplied this figure by the number of that

company’s outstanding shares. This simplistic method of

appraisal did not meet the requirements of New York law.

Appraisals under Section 623 of the New York Business

Corporation Law (McKinney 1963) must be based on

three factors: net asset value, investment (or earnings)

valuc, and market value. Matter of Endicott Johnson

Corp. v. Bade, 37 N.Y.2d 585, 587-90 (1975). All three

factors have to be considered. /d. Appraisals based solely

upon over-the-counter stock prices are not sufficient.

Matter of Silverman, 282 A.D. 252, 258-63 (1953); Matter

of Kaufmann, Alsberge & Co. v. H.L. Green Co., 30

Misc. 2d 1025, 1030-31, aff'd, 15 A.D.2d 468 (1961). The

district court should not have accepted such an appraisal

in this case.

We conclude also that Dopkins inadequately explained

and supported the substantial adjustments in value which

he made as between appellec’s company and PK. A

publicly held corporation worth three or four times a

privately held company is not an ideal comparable of the

latter. See Latham Holding Co. v. State, 16 N.Y.2d 41, 45

(1965). Because substantial adjustments have to be made,

the expert witness must explain the factors upon which he

5461

B-8

based his judgment. Matter of Taylor v. State, 39 A.D.2d

984, 985 (1972). Adjustments which rest upon conclusory

and subjective opinions will not suffice. Morio v. State,

34 A.D.2d 845, 846 (1970). They cannot be, as Dopkins

conceded they were in the instant case, “something that

{he] dreamed up.”

Appellee’s proof of damages on the fraud count was

also deficient in that Dopkins based his appraisal on

appellee's entire business, not simply the eleven stores

that PK subleased.

For all of the foreguing reasons, the damage award

must be vacated. Astles v. Quaker City Bus Co., 158 F.2d

979, 980 (2d Cir. 1947); Slater v. KFC Corp., 621 F.2d

932, 937-38 (8th Cir. 1980). It does not follow, however,

that appellee's complaint must be dismissed. In the exer-

cise of our discretion, we think it better that the matter be

remanded for a new trial so that appellee may have an

Opportunity to furnish the proof that is lacking. See

Slaughter v. Philadelphia National Bank, 417 F.2d 21, 33

(3d Cir. 1969). Because we are troubled in several respects

by the jury’s verdict on liability, we will not limit the

retrial to the issue of damages but will order that the

entire case be retried. /d. See also Caskey v. Village of

Wayland, 375 F.2d 1004, 1009-10 (2d Cir. 1967).

The Fraudulent Conduct

In determining whether appellants were guilty of fraud,

a fundamental question was Ciccarelli’s state of mind at

the time he allegedly promised to remodel appellee’s

store. Ciccarelli’s state of mind was a fact, concerning

which he might make a fraudulent representation. Deyo

v. Hudson, 225 N.Y. 602, 612 (1919). Appellee’s proof

that Ciccarelli had no intention of remodeling at the time

5462

B-9

he allegedly promised to do so was far from overwhelm.

ing. PK's corporate minutes show that its directors did

discuss the remodeling of three of the stores, and plans

that were prepared for the remodeling were introduced

into evidence. Mr. DeMare, PK's president, testified that

the remodeling did not take place because the sales

volume in the stores was not sufficient to justify it. One

explanation of why the jury reached the verdict it did may

be found in the court’s charge.

A well-accepted principle of law is that “(fraud in-

cludes the pretense of knowledge when knowledge there is

none.” Ultramares Corp. v. Touche, Niven & Co., 255

N.Y. 170, 179 (1931). This principle finds expression in

the charge often given that a defendant may be guilty of

fraudulent misrepresentation for making a false statement

without knowing it to be false, if he made it recklessly

with the pretense of knowledge that it was true when in

fact he knew that he had no such knowledge. See New

York Pattern Jury Instructions 682 (1968). To be guilty of

fraud in this manner, the speaker must know that he has

no knowledge on the subject concerning which he speaks.

37 C.J.S. Fraud § 21(b), at 258 (1943).

The district court instructed the jury that “[a] promise

is false if at the time it was made, the person making the

promise has [sic] no intention of performing or carrying it

out.” Mr. Ciccarelli’s intent or state of mind when he

made the alleged promise obviously was a matter con-

cerning which he had knowledge. Nevertheless, the dis-

trict Court went on fo instruct the jury that if Ciccarelli

“made the representations recklessly without knowledge

of whether they were true”, the jury’s finding would be

that there was an intent to deceive. This charge could only

have confused the jury and, in the setting of this case,

was improper.

5463

B-10

The court also charged that events occurring after the

promise was made might provide evidence to the jury of

the intent with which the promise was made. In the light

of the “recklessness” charge just discussed, this state-

ment, made without embellishment or reservation, was

prejudiciously erroneous. Under New York law, “any

inference drawn from the fact that the expectation did not

occur is not sufficient to sustain the plaintiff's burden of

showing that the defendant falsely stated his intentions.”

Lanzi v. Brooks, 54 A.D.2d 1057, 1058 (1976), aff'd, 43

N.Y.2d 778 (1977), quoted in Harris v. Camilleri, 77

A.D.2d 861, 863 (1980). As former Judge Smith of this

Court stated in his customary succinct fashion, “action-

able fraud depends on more than a showing of non-per-

formance.” Perma Research and Development Co. v.

Singer Co., 410 F.2d 572, 576 (2d Cir. 1969). The jury

should have been so instructed. The jury's license to

consider both recklessness and nonperformance as indica-

tive of Ciccarelli’s state of mind could only have resulted

in prejudice to the appellants.

The Release

On the fourth day of the trial, the district court

permitted appellee, over appellants’ objection, to amend

his complaint to add several additional charges of fraud,

includ ing an allegation that he was promised a job as

manager of the subleased stores at an annual salary of

$25,000. The sublease, it will be recalled, was for a

six-month, renewable term, which, in fact, was not re-

newed.

Buffalo George Urban Corporation, PK’s wholly-

owned subsidiary and its assignee under the sublease

agreement, hired appellee at the agreed salary. However,

5464

B-11

when the sublease terminated and appellee and Anthony

Curatolo became the owners of Buffalo George, appel-

lants’ obligation under the alleged oral hiring agreement

also terminated. Giving the alleged hiring agreement the

broadest possible interpretation, the parties could not

have intended that appellee’s employment as manager of

the subleased stores would extend beyond the expiration

of the sublease. More over, New York law is clear, that,

unless a definite period of time is specified in an employ-

ment contract, the hiring is at will. Watson v. Gugino,

204 N.Y. 535, 541 (1912); Walford v. British Caledonian

Airways, 52 A.D.2d 922 (1976).

Despite the foregoing, appellee argued successfully in

the court below that concern over the loss of his job and

the salvaging of his business induced him to sign the

release of the claims asserted herein and constituted

duress which avoided the release. We conclude, however,

that the jury’s finding of duress was against the great

weight of the evidence, and resulted, in part at least, from

inadequacies in the district court’s charge.

Appellants requested the district judge to instruct the

jury in accordance with the New York law on the termina-

bility of employment agreements, but the judge refused to

do so. Moreover, the judge failed to make it clear to the

jury that, under New York law, threats to enforce a

party’s legal rights do not constitute duress. Stewart M.

Muller Construction Co. v. New York Telephone Co., 40

N.Y.2d 955, 956 (1976); Avey v. Town of Brant, 263 N.Y.

320, 322 (1934). The jurors could not intelligently con-

sider appellee’s claim of duress without knowing what

appellants’ rights were. The district court's failure to tell

them was extremely prejudicial to appellants.

There is another facet to appellee’s claim of duress

which to this date has not been discussed or considered.

5465

B- 12

Appellee, who was represented by an attorney, signed the

contract to purchase Bulialo George on October 9, 1976,

and agreed therein to deliver a general release to appel-

lants on the closing date, which was delaved until appellee

could secure a liquor license. On December 13, 1976,

alter the liquor license had been secured, appellee exe-

cuted the release in the presence of his attorney. He

resumed possession and control of the subleased restau-

rants and made no complaint of duress until after he had

commenced this action on June 22, 1978.

A contract or release, the execution of which is induced

by duress, is voidable, not void, and the person claiming

duress must act promptly to repudiate the contract or

release or he will be deemed to have waived his right to do

so. Joseph I. Egan, Inc. v. Citv of New York, 17 N.Y.2d

90, 98 (1966); Leader v. Dinkler Management Corp., 26

A.D.2d 683 (1966), aff'd, 20 N. ¥.2d 393 (1967); Powell v.

Oman Construction Co., 25 A.D.2d 566 (1966); Feyh v.

Brandtjen & Kluge, Inc., | A.D.2d 1014 (1956), aff'd, 3

N.Y.2d 971 (1957); Port Chester Electrical Construction

Corp. v. Hastings Terraces, Inc., 284 A.D. 966, 967

(1954). Under the authority of the above cases, it would

appear that appellee waived his right to claim duress.

However, since this contention was not urged in the trial

court, we will not pass upon it here, but will permit the

district court to do so upon remand. Unless appellee

comes forward with a compelling reason for his lengthy

delay in repudiating the release, the district court is

directed to dismiss appellee's claims on the law.

The Inventory

The jury's award of $30,282.33 on appellee's claim of

damages for unreturned inventory must also be vacated.

5466

B-13

Putting aside the question whether appellee’s general

release covered this claim, there was a total absence of

proof as to what part of the inventory was kept and what

part was returned and the vaiue of each part. The district

court stated in its charge that there was “a great uncer-

tainty dearth evidence [sic] in that regard”, and that there

were “inadequacies of proof as to the value at the start

and the value at the end.” We agrce.

The Punitive Damage Award

Since we are directing that there be a trial de novo, we

vacate the award of punitive damages. In so doing, we

have given no consideration to the propriety per se of the

award.

Disposition

The judgment in favor of appellee and against appel-

lant PK Management Corporation and Frank Ciccarelli is

reversed in its entirety and the matter is remanded to the

district court with instructions to grant a new trial.

DiRose and Ciccarelli both reside in Florida and PK is

a Rochester corporation now proceeding in bankruptcy

before the Bankruptcy Court in Rochester. Under all the

circumstances we think it better that the case be trans-

ferred to Rochester for retrial before another district

judge. It is so ordered.

5467

Denker Nemo

3. KINO DCSE Plainti‘?!-Agpellee NOTICE OF MOTION

. ~we- . or el

PK RAGDET COMP. and FROK CICOARELLI

ee share ~F. e

MOTION BY: (ihewe and cnt. nn of emorncy tn charge! OPPOSING COUNSEL: (iene and tat, an. of mere)

Viewer. tT. Fuzak (716/856-4000) PERCIVAL D. OVIATT (716/454-5370)

Bes opposing coumedl conse’? =) To a= . (DMERGENCY MOTIONS. MOTIONS FOR STATS

Hae service ommn edected? ® Ye ’ & INUUNCTIONS PENOING APPEAL -

a Ove @ Nh es rereen ler rete’ bern mede below”

(Sammmace monens ony) _, (See 1 RAS. Rata 4) =.

yey ney Movenbar 9, 1962 sscreteaae 0 Ya"D Ne ~ i.

S .

spat ier ie 30 MI ake

f — hg & scene A Fone

» 1981 (ion. Jom T. Elfvin, eR ee

- of the time allowed for filing of a petition

for renearing an benalt of J. Richard Oiose to and °

Pesvices requests ev similar tliat aud dispositions None. -

Pe ne Oe ee

a se

ie tbe ee emer ee Oe compe ag Some *

APPENDIX D

UNITED STATES COURT OF APPEALS

SECOND CracurIT

AC @ stated cern of che United States Court of Appeals, ia

and for the Second Circuic, held at the Uniced Staces Court House,

im the City of Mew York, on the twenty-second day of Decerber + One

thousand sine hundred and eighty-cve.

J. RICHARD DiROSE,

Plaincitf-Appellee, ,

Vv.

PK MANACEMENT CORP., NICHOLAS A. DeMARE,

FRANK CICCARELLI, JOHN S$. RUSSO, MARRY No. 81-7669

KURSH, ANTHONY CURATOLO and JEROME DANSKER, *

Delendancts-Appellancs.

A petition fer rehearing Containing 4 suggestion that che action

be reheard in banc having oeen filed herein by counsel for the

Plainciff-appellee, J. Richard Dikose,

Upon consideration by che panel chat heard the appeal, ic is

Ordered that said petition for tehearing is DENIED.

Te is further noted chet the Suggestion for rehearing in banc hes

been transeitced to the judges of che court in regular active service

and te any other judge on the panel that heard the appeal and thac no

Such judge has requested that a vote be taken thereon.

A. Deamiel Fusarc, Clerk

by encis X. Gindharc,

Chief Depucy Clerk

EXEIBIT D

APPENDIX E

Rule 50. Motion for a Directed Verdict and for

en Notwithstanding the Ver-

(a) Motion for Directed Verdict: When Made;

Effect. A party who moves for a directed verdict

at the close of evidence offered by an opponent

may offer evidence in the event that the motion is

not granted, without having reserved the right so to

do and to the same extent as if the motion had not

been made. A motion for a directed verdict which

is not granted is not a waiver of trial by jury even

though all parties to the action have moved for

directed verdicts. A motion for a directed verdict

shall state the specific grounds therefor. The order

of the court granting a motion for a directed ver-

dict is effective without any assent of the jury.

(b) Motion for Judgment Notwithstanding the

Verdict. Whenever a motion for a directed verdict

made at the close of all the evidence is denied or for

any ‘reason is not granted, the court is deemed to

have submitted the action to the jury subject to a

later determination of the legal questions raised by

E-2

(1) If the motion for judgment notwithstanding

the verdict, provided for in subdivision (b) of this

rule, is nted, the court shall also rule on the

motion for a new trial, if any, by determining

whether it should be granted if the judgment is

thereafter vacated or reversed, and shall specify the

grounds for granting or denying the motion for the

new trial. If the motion for a new trial is thus

conditionally granted, the order thereon does not

affect the finality of the judgment. In case the

motion for a new trial has been conditionally grant-

ed and the judgment is reversed on appeal, the new

trial shall proceed unless the appellate court has

otherwise ordered. In case the motion for a new

trial has been conditionally denied, the appellee on

may assert error in that denial; and if the

ae is reversed on appeal, subsequent pro-

ings shall be in accordance with the order of

the appellate court.

(2) The whose verdict has been set aside on

motion for judgment notwithstanding the verdict

may serve a motion for a new trial pursuant to Rule

59 not later than 10 after entry of the judg-

ment notwithstanding the verdict.

(d) Same: Denial of Motion. If the motion for

judgment grt ay verdict is denied, the

rty who prevailed on that motion may, as appel-

a assert grounds entitling him to a new trial in

the event the late court concludes that the

trial court erred in denying the motion for judg-

ment notwithstanding the verdict. If the appellate

court reverses the judgment, nothing in rule

precludes it from determining that appellee is

entitled to a new trial, or from directing the trial

court to determine whether a new shall be

granted.

(As amended Jan, 21, 1963, eff. July 1, 1963.)

E-3

AMENDMENT VII—CIVIL TRIALS

In Suits at common law, where the value in controversy shall ex-

ceed twenty dollars, the right of trial by jury shall be preserved, and

no fact tried by a jury, shall be otherwise reexamined in any Court

of the United States, than according to the rules of the common law.

THE COURT?

MR. FUSAK:

THE COURT:

MR. FUSAK:

THE COURT:

MR? FUZAK:

THE COURT:

MR. OVIATT:

APPENDIX F

1968

have any ==

T think the propee exploration

is to ask the general question about

the representation of Mr. Cicearelli

by Mr. Const, and you can get him to

gay, you know, to express to voluntees

the full seope of that. And iff that

does not cover this particular procee

ing, then you may show him Plaintiff’

Exhibit 19B without saying what the

document is and ask him who the attor

was who represented him in connection

with that matter. And you can bring

out the date of it.

Without the indication «=

Without the indication of what

it was,

Or with respect to what body it

was before?

Right. Oc that it was anything

before anybody. It might be a contra

Well, I respectfully accept, if

your Honor please, to the ruling.

Me. Oviatt, where are you going?

Pardon me just a minute. TT will

Edna J. Pocsynshi

OFFICIAL REPORTER. U. 8. OLOTMET CouRT

weovean ecvmer or mew vous renIBIT F

hey

THE COURT:

MR. FUSAK:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

F-2

1369

be right back.

Bring Mr. Ciccarelli in, will

you,

Your Honor, IT don't know what's

going on outside, but L thought the

Witness was excused from the court

room so he would not be aprised of

what the discussion was.

Mr. Oviatt. Mr. Oviatt.

Mr. Ciccarelli come up here please.

Right here. What just went on?

I told him what the procedure

was that) «=

Why did you tell him?

Because he has a right to know,

your Honor.

Why did you think he was put

out of the court room?

I don't know, but ID --

You did not object to that.

No. T had no reason to object

to it.

S80 why did you then go out and

tell him what had happened?

Because he had a right to know

Edna J. Peceyushi

OFFICIAL REPORTER, VU. &. CreTMICT covRT

WESTERN OeTRICT OF NEW YORK

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

1370 118

what your Honor's ruling was.

Why didn't you object then when

I told him to go out of the court et i

The two have no connection,

your Honor.

They have very much of a

connection.

In my opinion they have not.

In my opinion they do and I thin

that's a gross transgression of your

duties as an officer of this Court,

Mr. Oviatt.

I don't think there was any --

I think so.

He is a defendant and he is

entitled to know what transpired in

this court.

He might have been entitled to

stay in the court room, but once he

went out, and you knew the rules of

the game, you violated the rules that

had been imposed by going out flatly

to acquaint him in the hall with what

had happened.

He is a defendant here and he

eS @ &

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

MR. OVIATT:

THE COURT:

F-4

1371 119

has a right to know what procecdings

have been taken.

He might -- he might have had

a right to stay in the court room, bu

that was not asserted.

He has a right to know the

proceedings that have: been taken.

No. You stand condemned. Take

the chair. I find that a very bad

practice, Mr. Oviatt.

Well, I respectfully accept to

your --

I find that a very bad practice,

Mr. Oviatt.

I don't know of any time --

(Jury Present)

Just a moment. Let me ask the

Jury to step into my hallway for a

moment. I just want you to step out

for one minute, ladies and gentlemen

(Jury escorted from the court

room at 1:49 P.M.)

Edna J. Paczynshi

THE COURT:

THE WITNESS:

THE COURT:

THE WITNESS:

THE COURT::

THE WITNESS:

THE COURT:

120

1372

Now, Mr. Ciccarelli, tell me

what Mr. Oviatt told you.

Mr. Oviatt, sir, told me that

you wouldn't be allowing any question

on the subject matter of the N.A.S.D.

And he also told me that I would be

asked some questions about Nicholas

Const.

And what did he tell you in that

regard?

That was it, sir.

That was the totality?

Yes, sir.

All right.

Bring them back.

(Jury Present)

That's one disadvantage of

operating without a Marshall in the

court room which I try to do to save

manpower. If I had him here, this

would not have happened I assure you

All right. Let's go ahead.

Have you any further examinatio

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.