Appendix — Ma v. Community Bank

( United States Court of Appeals

For the Seventh Circuit On

UNPUBLISHED OxDEr (ARGUED: aan = soe KE T&p

Fo? 70 BE crzp>

1 RIRGUIE BOLE 5 June 8, 19.82.

Hon. r

Hon. RICHARD D. CUNAHY, Circuit Judge

Hon. RICHARD A. POSNER, Circuit Juuge

* JACK MA, a subject of. the Republic ) Appeal from the United State:

of China, District Court for tne

Plaintiff-Appellant, ‘ Eastern District of Wiscon»>ir

No, 80-2606 vs. No. 73-C-427

THE COMMUNITY BANK, a Wisconsin 7 Robert W. Warren, Judge.

aye banking corporation,

Defendant-Appellee.

ORDER

At its inception, this diversity case involved a relatively

uncomplicated dispute. The plaintiff, Jack Ma, owned three

Savings Certificates of Deposit (*SCD's") in the amount of

$10,000.00 each, which were stolen from him on September 27,

1971. The defendant bank, issuer of the SCD's, refused to

issue new certificates to Ma unless he agreed to execute a Bond

of Indemnity, which would cost him $600.00. Ma refused to

purchase the bond, primarily because before he had purchased

any SCD’s from the bank, he had been assured by an officer of

the bank that if the certificates were ever lost or stolen, he

need only notify the bank and new certificates would be issued

to him immediately. Because Ma refused to buy the bond, the

bank refused to issue replacement certificates, refused to

release the principal, and withheld some (though not all)

interest on the principal. The result of this dispute is the

present lawsuit, which is now in its ninth year.

In March 1967, Ma came to the United States\/ to pursue an

education, enrolling at St. Norbert's College in DePere,

Wisconsin. He opened a passbook savings account at the

Gefendant bank, through Gerald Gerbers, then the head teller at

the bank. Ma asked Gerbers about time Geposits, and Gerbers

informed Ma that the bank offered SCD's, which carried higher

interest rates than passbook savings accounts, with penalties

for early withdrawal. Ma specifically ppb about the

“safety® of an SCD in the event his certificate was lost or

stolen. Gerbers assured him that the SCD was safe because it

was not negotiable, and that if his certificate were ever lost

or stolen he need ny notify the bank, and a replacement

certificate would be issued to him. Satisfied, Ma purchased ar

SCD in the amount of $4,000.00.

Ma stayed in De Pere for one and one-half years. During

that time he regularly transacted business at the bank, often

with Gerbers, making deposits into and withdrawals from his

savings account, and purchasing additional SCD's. In September

1968, Ma moved to California, but continued to do business with

the bank through the mail. He cashed SCD's when they matured,

purchased new ones, and received regular interest checks from

the bank. In September 1971, Ma moved to New York, where his

SCD certificates were stolen shortly after his move. Each SCD

was in the amount of $10,000.00, each was payable to Jack Ma,

and each stated it was non-negotiable.

Ma immediately notified the bank by telephone of the theft,

and later wrote to the bank, notifying it of his loss and his

new address, and requesting that his interest checks and new

certificates be sent to him. In response, the bank informed Ma

that it would send him replacement certificates and his

periodic interest checks only if he purchased an indemnity bond

in the amount of $50,000.00. Ma discovered, however, that no

bonding company in New York would sell him a bond because he

was @ foreign student without assets in this country. He so

informed the bank, and offered to travel to Wisconsin if

necessary to obtain new certificates. The bank made no

response to this offer. Instead, in February 1972, the bank

notified Ma that it had found a tere company in Wisconsin

willing to sell him the required bond for $600.00, and

persisted in its 8 jay that Ma purchase the bond. Unwilling

to ieee the bond, Ma sought advice from various people,

including a law professor at New York University Law School,

his former physics professor at St. Norbert's College in

7 Ha was at that time a citizen of the Republic of China. He

as since become a naturalized citizen of the United States.

a — oe

No. 80-2806 Page 3.

DePere, attorneys in Milwaukee and Green Bay, an Assistant

Regional Director of the FDIC, and numerous public officials.

He coe advised to take legal action against the

bank.

During this period, the bank sent Ma periodic interest

checks due on the SCD's even though Ma refused to purchase the

bond of indemnity. However, the bank withheld eighteen

interest checks until May 1973. When he received the checks,

he had difficulty depositing some or all of them into his New

York bank account because they were so out of date by the time

he received them.

Ma filed this lawsuit on August 10, 1973.3/ His amended

complaint recited his purchase and the subsequent theft of the

SCD’s, and alleged seven “causes of action": (1) The bank

refused to return the $30,000 to him or to re-issue the

certificates, despite his demand. (2) When the bank sent him

the withheld interest checks in May 1973, it refused to pay

compound rather than simple interest. (3) Ma was humiliated

and embarrassed because of the difficulties he experienced in

Gepositing the overdue interest checks. (4) As for the

interest checks that were sent to Ma in timely fashion, the

bank should have paid compound rather than simple interest

rates. (5) The bank knew Ma as one of its customers and had

told him that if his certificates were lost or stolen they

would be replaced inmediately, but later fraudulently

Genied knowing him and made unreasonable and unlawful demands

on him to prevent him from recovering his $30,000. (6) The

bank intentionally withheld Ma's money and refused to pay

proper interest on it, with the result that Ma was harmed in

his living style and suffered loss of business opportunities,

and the bank knew or should have known this result would follow

from its action. (7) The bank wrongfully converted Ma's

$30,000.00 to its own use.

Apparently, one of ine lawyers he contacted, who practiced

n Green Bay, entered intw negotiations with the bank and came

up with a solution whereby the bank would keep $750 in interest

due to Ma, use that money to pey for the bond, release the

Principal to Ma, and at some later date return $300, part of

the cost of the pond, to Ma. It is not clear why $750 was to

be retained though the bond cost only $600. In any event, Ma

found this solution unacceptable, and nothing more was done by

the Green Bay lawyer.

7 The case was oxtuioes ay assigned to Judge Myron L. Gordon.

nm January 1977, Ma moved fcr Judge Gordon's recusal,

contending the judge was biased against him. The case was then

assigned to Judge Robert W. Warren.

No. 80-2806 Page 4.

The bank's defense was, in essence, that its insistence on

an indemnity bond was proper because of an identification

problem. The bank contended it had no way of knowing that the

Jack Ma who had requested new certificates was the same Jack Ma

who owned the SCD's. The bank also maintained that because the

SCD's were automatically renewable if not cashed upon maturity,

the only interest due was that stated in the SCD's: simple

interest at 5% per year, payable quarterly.

On January 15 and 16, 1976, Ma was deposed by the bank's

attorneys and several bank employees were deposed by Ma's

attorney. One of the employees testified she recognized Ma as

@ customer of the bank. Nonetheless, the bank continued to

deny that it could be sure Ma was the owner of the SCD's. The

district court, finding the bank employee's recognition of Ma

dispositive, entered a~ order granting summary judgment in M.'s

favor on the issue of his entitlement to the $30,000.00. On

February 13, 1976, the court ordered the bank to turn over

$29,025.22 to Ma.4,

On October 21, 1977 (after numerous disputes. most of which

concerned discovery matters and are not pertinent here), the

Gistrict court entered an order disposing of four of Ma's

causes of action. With respect to the first cause of action,

although Ma's demand for return of the $30,000.00 was moot in

light of the summary judgment granted on February 13, 1976, the

court held that a claim was stated, in that if the bank had

agreed not to require a bond of indemnity when Ma bought the

SCD‘s, its later insistence on the bond would amount to a

breach of contract. The breach of contract claim was reserved

for trial. The court read the second cause of action as a

Claim for interest on the withheld interest checks and

concluded that if the checks were wrongfully withheld, the bank

should pay interest on them. Accordingly, this claim was also

reserved for trial. The court granted summary judgment for the

bank on Ma's third cause of action, his claim of humiliation

when he tried to deposit the untimely-paid interest checks.5/

The district court ocdered that $974.78 be withheld from

he $30,000.00 to pay Ma's original attorney in the lawsuit who

had obtained a judgment against Ma for attorneys’ fees and had

pe at garnishment proceedings against the bank to satisfy the

udgment.

Although the district court purported to dismiss this

Claim, we construe the dismissal as a grant of summary judgment

ge: ae court relied on deposition testimony. Fed. R. Civ.

P. c).

No. 80-2806 Page 5.

The court held, first, that the bank did not cause any

humiliation Ma may have suffered because Ma could see the dates

that appeared on them.6/ Moreover, the court found that Ma was

in fact permitted to deposit the checks into his New York

account, upon condition that he allow time for them to clear

before making withdrawals. The court found this arrangement

insufficiently humiliating to support a claim for damages. The

district court also granted summary judgment to the bank on

Ma's fourth cause of action, his claim that he should have been

paid compound interest on the wrongfully withheld $30,000.00.

The court held that because the SCD's provided for automatic

renewal at the same interest rate, no compound interest was

due. The court found that the fifth cause of action stated a

Claim that the bank fraudulentiy induced Ma to purchase the

SCD's by assuring him that if they were lost or stolen they

would be reissued immediately, without telling him a bond »ould

be required. This claim was accordingly reserved for trial.

The court regarded Ma‘s sixth and seventh causes of action as a

single charge of conversion, and dismissed them because the

claim of conversion was no different from the breach of

contract claim. Pinally, the court addressed Ma's demand for

punitive damages and for damages for lost business

opportunities, holding neither type of damages recoverable.

Punitive damages are not recoverable for mere breach of

contract, the court held. Moreover, while agreeing that a

breach of contract may amount to a tort, and that punitive

damages might be recoverable for some torts, the court found

that “*“(t)he facts of this case do not show the requisite

conduct necessary to sustain the award of punitive damages."

Regarding Ma‘s claim of lost business opportunities, the court

denied such damages because they were speculative, because they

were not within the contemplation of the parties, and because

Ma did not exercise ordinary diligence in minimizing his

losses.

Two other pretrial matters are pertinent to this appeal.

The first is Ma's request for trial by jury, filed on January

28, 1976. The district court refused to allow a jury trial

because the demand was not timely. Ma filed subsequent motions

requesting jury trial, and they were similarly denied.

Secondly, on July 14, 1976, the bank moved for an order

requiring Ma to retain local counsel, relying on the district

iY We take it from the lower court's memorandum that it felt

a knew or should have known he would have trouble negotiating

the checks because of their date and that he brought the

embarrassment upon himself in attempting to negotiate them

despite their date.

- or. - _————,

APPENDIX “A"

No. 80-2806 Page 6.

Court's Local Rule 2.04. The bank argued that local counse)

was necessary because of communication Gifficulties with Ma's

New York attorney. Ma opposed this motion, arguing that

communication problems had been Minimal and would not be

alleviated by his retention of local counsel because he

intended his New York attorney to continue to have full

responsibility for the case. Ma ur ed that the bank's motion

to force him to hire--and pay--local counsel amounted to

harassment and was an attempt to force Ma to Grop the suit by

making it too costly for him to continue. On July 29, 1976,

the district court, Stating that it had read the parties’

arguments and was “amply advised in the premises,” ordered Ma

to obtain local counsel. Ma's interlocutory appeal to this

court was dismissed in Ma v: eqraunity Bank, No. 76-1856

(November 8, 1976) (unpu shed order). a's local counsel

filed an appearence on September 22, 1976.

Trial on Ma's three remaining claims (breach of contract,

interest on interest, and fraudulent inducement) began on July

9, 1979 and was concluded on July 13, 1979. at the conclusion

of the trial it was agreed that the sarties would attempt to

stipulate to the amount of damages due in the event the bank

was found liable to Ma. In Pebruary 1980, Ma's New York and

local counsel withdrew from the case and Ma was permitted to

proceed pro se. On July 25, 1980, the district court filed its

memorandum and order holding the bank liable to Ma on all three

of his claims. Because the parties had not agreed on damages,

the court ordered that a damages hearing would be necessary.

This hearing was held November 5, 1980. On November 23, 1980,

the district court awarded Gamages of $84.29 to Ma. This

amount represented interest at 5% per year on the withheld

interest checks. The court held that Ma was not encitled to

any other damages.7/

Ma appealed to this court. in his appeal, he raises eight

issues for review. His Primary concern is the Gamages to which

he is entitled. We address the Gamages issues first.

I. Damages

The damages Ma sought were: (1) return of his $30,000.00;

(2) interest on the wrongfully withheld $30,000.00 and on the

eighteen interest checks that were wrongfully withheld between

October 1971 and May 1973; (3) attorneys’ fees and litigation

costs; (4) punitive damages; and (S) "consequential’ damages

for emotional distress, loss of business opportunities, injury

to reputation, injury to professional career, and loss of

living comfort and ease,

Ma was awarded the return of his $30,000.00. The bank had

paid interest to him, during the years it withheld the

77 The court did, however, award costs to Ma, a8 provided by

statute.

; ADEPT othe PPG :

LAE fae LAS OO eee

principal, at the rate of 5% per year, not compounded, and the

court refused to award interest on the Principal over and above

that amount. The court did award 5% per year simple interest,

however, on the eighteen interest payments the bank had

withheld. Ma introduced in evidence the attorneys’ fees and

litigation costs he had incurred, but he was not awarded these

damages. He ini roduced considerable evidence of the bank's bad

faith and unreasonableness in support of his quest for punitive

damages, but he was not awarded such damages either.

Finally, he was not permitted to introduce evidence of his

consequential damages and was not awarded such damages.

Ma objects to the damages award he received, contending,

firut, that he should have received more than 5% simple annual

interest both on the withheld principal and on the withheld

interest checks.9/ He also contends that he should have been

avarded attorneys’ fees, litigation expenses, and punitive

damages. Finally, he contends he should have been permitted to

demonstrate consequential harm (emotional distress, injury to

5 tegrated etc.) and should have been awarded Gamages for such

arn.

A. Interest

(1) ejudgment Interest. The district court held that Ma

was entitle © prejudgmen nterest on the money the bank

withheld from him. Under Wisconsin law, prejudgment interest

is due on a breach of contract claim where the amount claimed

by the plaintiff is a sum certain. -9., Murray v. Holida

Rarblery ine. 83 Wis. 24 406, 438 ( ). OY a

nteres 8 calculated at the *legal*® rate unless there is a

specific contractual rate, in which case the contract rate

applies. G. at 438-39. In this case, the interest rate

specified by the contract happens to be the same as the legal

rate: 5% per year, not compounded. .Wis. Stat. Ann. § 138.04

(1973). As noted above, the lower court found that the bank

owed no interest to Ma on the $30,000.00 principal because

87 AS & Sanction for failure to cooperate in discovery, the

court prohibited Ma from introducing expert testimony on the

reasonableness, as measured by banking industry practice, of

the bank's actions. See Fed. R. Civ. P. 37(b)(2)(B). Ma does

not argue that this sanction was unwarranted. Other evidence

of bad faith was admitted.

2/ The bank asserts thet with regard to interest Ma »eks only

@ higher rate on the withheld interest checks. A fair reading

of his brief, however, shows that he seeks a higher rate on

both the principal and the interest. See Brief of Appellant at

16-20. Cf. Haines v , 404 U.S. 519 (1972) (courts

should construe pro se gants’ pleadings liberally).

‘—_—- . me meme ———— _-

during the time the bank withheld the oboe gt ead it paid Ma 5%

simple interest on the principal. However, because some of the

interest | gpm were unjustifiably delayed, the court held

that the bank owed Ma interest at the contract rate of 5% not

compounded on the delayed interest payments.

If Ma simply claimed entitlement to prejudgment interest,

we would agree with the lower court's conclusion. However, Ma

Claims entitlement to a higher rate of interest, on the basis

of two other theories. Pirst, he claims interest as a measure

of the bank's unjust enrichment. Second, he claims interest as

@ measure of the consequential damages he suffered. We turn

now to these arguments.

(2)

In Wisconsin, ajn award Of camages for breach of contract

should compensate the injured party for losses necessarily

flowing from the breach.*

Savings & Loan Assoc., 49 rh ’ : ’ , $ ‘ ~ yl ait

eULIE accord, £4 Spor er v. Gonis, 68 Wis. 2 54, ’

229, N.W. 02 78). @ amount of such losses, however,

must be proved with reasonable certainty. Although

mathematical precision is not required, the plaintiff must

introduce evidence in the record that is “sufficient to enable

@ court or jury to make a fair and reasonable approximation” of

the losses sustained as a result of the defendant's breach.

M

example, in

Wis. 24 26, " 4 ), the court denied recovery

of approximated losses because available evidence, which would

have shown the amount of loss with greater precision, was not

introduced. Applying these pane iy 1 to the cores case,

Ma was entitied to recover a rate of interest higher than 5%

per year not compounded if: (1) he demonstrated that he was

prevented from realizing such higher rate as the result of the

bank's breach of contract, and (2) he demonstrated, with

reasonable certainty, the amount of interest he was prevented

from realizing. We hold that Ma succeeded in making both

demonstrations, and that the district court erred in failing to

award him a higher rate of interest.

—

Compare a v. Oakda ect

ve, s. " We recovery

Of approximated losses permitted where loss resulted from

damage to gone pe ag evidence of = yields from prior

years was a sufficient basis from which to estimate the loss,

and more precise proof of loss was impossible).

« eo entice + ——— mm, a

“. APPENDIX "A"

No. 80-2806 Page 9.

{ At trial, Ma introduced evidence, which the bank has not

? attempted to contradict, that on July 1, 1973, the bank began

( paying interest on SCD's at a rate of 5.5% per year, compounded

Gaily. To take advantage of this higher rate, customers of the

bank who held 5% SCD's were required to exchange their old

certificates for new ones reflecting the higher rate. Ma was

unable to exchange his certificates because they had been

stolen, and the bank refused to issue replacements. It is

established that the bank's refusal to issue replacement

certificates was in breach of contract. It cannot be disputed

that a direct result of the breach was that Ma was unable to

realize the higher interest rate paid 2 | the bank on SCD's

after July 1, 1973. And the amount of interest thus lost was

established with certainty by uncontradicted evidence.

The defendant appears to suggest that Ma is entitled to no

consequential damages because he failed to minimize them. We

Gisagree. It is true that “a plaintiff wusi do all that is

reasonable to minimize damages,* opeeceee v. Weston's Pats

HS! 78 Wis. 24d 26, 253 N.W. 2d ’ 7 ut e

2 *s apparent belief that Ma should have minimized his

Gamages by acquiescing in the bank's demand that he purchase

the or eet bond is erroneous. A similar argument was

rejected by the Wisconsin Supreme Court in O'Brien v. Isaacs,

17 Wis. 26 261, 116 N.W. 24 246 (1962). In en, plaintiff

was forced to leave his car in defendant's parking lot

overnight, through the fault of the defendant. The following

. Gay, defendant refused to release plaintiff's car unless

plaintiff paid him $1.00 for overnight parking. Plaintiff

cefused, and instead recovered the car by means of a replevin

action. He then sued the defendant for 341-00, the cost he

incurred in renting a car for three days until his own car was

replevied. The Wisconsin Supreme Court rejected defendant's

argument that plaintiff should have avoided this expense by

paying defendant the $1.00 parking fee. The Court stated:

Defendant does not contend that $41 is an

unreasonable amount for plaintiff's time loss,

and for the value of the use of the car over the

weekend. Defendant's contention, in essence, is

that plaintiff should have paid hima dollar to

prevent him from committing a tort. Although the

great mass of mankind may have chosen to pursue

this course in retrieving the automobile, we

cannot say that the law so requires. To so hold

would be to require submission to demands which

in some instances might be extortionary.

Id. at 267. In the present case, Ma took numerous steps to

retrieve his funds from the bank, including offering to travel

from New York to DePere to prove his identity. The bank chose

to ignore this offer, and steadfastly insisted, even after a

E

_— + ee . _-—- —— “* owe

APPENDIX "A"

No. 80-2806 Page 10.

bank employee identified Ma, that it could not release his

money because it could not adentify him. In light of O'Brien,

we cannot say that, in addition to Ma's other efforts to

recover his money, he was required to submit to the bank's

unfounde*? demand that he purchase an indemnity bond for the

bank's prote<c.ion before he could recover his funds.

Accordingly, we conclude that Ma is entitled to recover

interest on $30,000.00 at the rate of 5.5% per year, compounde

wetty for the period beginning July 1, 1973 and continuing

until the date the bank returned Ma's money to him.1)/

Naturally, this amount should be offset - the amount the bank

paid to Ma as interest on the principal after July 1, 1973.

? a 292

’ n Supreme Court recognized that interest

may he awarded as a measure of the wrongful benefit realized by

the defendant. But the court made clear that the amount of

such wrongful benefit must be proved. Jd. at 550. Ma contends

that he is entitled to recover whatever profit the bank

realized while it withheld his money.

We do not doubt that the bank realized a comfortable profit

Guring the tae it wrongfully retained Ma's money while paying

him 5% simple interest. But Ma introduced no evidence to

establish the amount of the bank's profit. The record does not

reveal, and Ma does not suggest, that he was prevented from

discovering such evidence or from introducing it at trial. We

conclude that because Ma failed to prove the amount of the

bank's “wrongful benefit,* the trial court's failure to award

interest on the basis of such benefit was not error.

B un ve Damages

Ma correctly argues that in appropriate cases punitive

damages may be awarded for fraudulent inducement to contract.

Sees fi. weffers v. Nysse, 98 Wis. 24 543 (1980), in which

the Wisconsin Supreme Court held that “punitive damages may be

awarded where a fraudulent representation is made and relied on

to induce a contract in willful, wanton, or reckless disregard

of the plaintiff's rights.* Id. at 553. This proposition is

17 However, the trial court's award of interest on the

@layed interest payments at the contract rate of 5% per year,

not compounded must remain standing. Ma may not receive the

higher rate of interest on the withheld interest checks because

the bank remitted the checks to him in May, 1973, before the

higher rate took effect.

—— — ———— ° —_—

ait eee

No. 80-2806 Page ll.

not disputed by the bank. Rather, the bank points out,

correctly, that under Wisconsin law, the factfinder's refusal

to award punitive damages is not reviewable by an appellate

court, even though such damages might be permissible. In

W nv. £ Co., 97 Wis. 24 260, (1980), for example,

e consin Supreme Court stated: "Even if the ury is

satisfied to a reasonable psp | by evidence that is clear,

satisfactory and convincing that the efendant's conduct was

‘outrageous,’ in Wisconsin, the jury need not award punitive

Gamages. . . . The jury's refusal to award punitive damages is

not reviewable.” Id. at 301-02 (citations omitted). Ye

Ma‘s response appears to be that the district court's

ruling on punitive damages is reviewable because the court did

not make the be aye after trial, in its capacity as factfinder,

but rather ruled, in its October 21, 1977 partial summary

judgment order, that Ma was not entitled to punitive damages as

@ matter of law.

As described above, the district court stated in its

October 21, 1977 order that *(t)he facts of this case do not

show the requisite conduct nae S| to sustain the 4sward of

punitive damages.” We agree that the district court erred in

king this premature finding of fact. The court's error,

however, was not reversible. at trial, Judge Warren repeatedly

allowed Ma's attorney to introduce evidence of the bank's

unreasonableness and arbitrariness for the express purpose of

Showing that punitive damages should be awarded. after

teviewing such evidence, the judge adhered to his previous

conclusion that he would not award punitive damages. In

Practical effect, the judge's final ruling on punitive damages

was made in his capacity as factfinder. The fculing is

therefore not reviewable.

+ Attorneys’ Fees and ation sts

Further, we hold that the district court did not abuse its

Giscretion in refusing to award attorneys’ fees and litigation

costs. This court has held that "(e)xcept when overriding

considerations of justice compel them, it is the licy of

federal and state courts to deny attorneys’ fees in the absence

of statutory authorization or agreement .* ore boratories

Inc. vs Pillsbury Co., 452 7.24 621, 628 (7 r. ° a

contends tha 8 18 &@ proper case for an award of attorneys'

fees and litigation costs because the bank's conduct was

or aaa unrezsonable. He relies on vaugnan v. ACAI ESO.

369 U.S. 527 (1962), a seaman's suit for ma ntenance and cure,

in which the United States Supreme Court held that attorneys’

fees should have been awarded as a matter of equity. The Court

stated;

—— Oe oe ~“—-—<--.

No. 80-2806 Page 12.

In the instant case respondents were callous

in their attitude, making no investigation of

libellant's claim and by their silence neither

admitting nor denying it. As a result of that

recalcitrance, libellant was forced to hire a

lawyer and go to court to get what was plainly

owed him under laws that are centuries old. The

default was willful and Gareoevenss It is

difficult to imagine a clearer case of damages

suffered for failure to pay maintenance than this

one.

Id. at 530-31. Certainly, if vau controlled this case, it

would support Ma's argument that a Orneys' fees and litigation

expenses are recoverable here. But this case is governed not

by federal admiralty law but by the law of Wisconsin, which

appears to take a much stricter view of the @llowability of

attorneys’ fees. In Baker v hwe

Co., 26 Wis. 24, 306 s the Wisconsin Supreme Court

reversed a jury's award of attorneys’ fees even though the

Court upheld the jury's determination “that the massive failure

of [the defendant insurance company] to carry out its duties

+ + « evidenced such a shocking min ny of its insured's

interests as to constitute ‘a suggestion of dishonesty’ or ‘a

species of fraud,' within the meaning of ‘bad faith.'* Id. at

315. In light of Baker, even if we were to agree with Ma that

the bank’s conduct Was utterly lacking in good faith and

reasonableness, we are constrained to conclude that he may not

recover attorneys’ fees or litigation costs in excess of the

amount permitted by statute,

onsequentia amages

We have discussed Ma's entitlement to interest as a measure

of consequential damages. Ma seeks, in addition, damages for

injury to his professional career, injury to his reputation,

loss of living comfort and ease, and emotional distress.

We agree with the district court that these damages are too

speculative to permit Ma's recovery. First, Ma's clain of

damage to his professional career is unavailing in light of

Bake t

hves ational Casualty fo. sper as in which

our e at 40st pro s of a company

to be formed in the future were too Speculative. Here Ma had

not yet embarked upon a professional career at the time of the

bank's breach, and therefore he has no prior earnings that can

be compared to his earnings Subsequent to the breach. we is

entitled to no recovery for this ore loss. serge M.

183 Wis. 491, 196 N.w. 43 )

ve,

No. 80-2606 Page 13.

Second, Ma's generalized claim that he suffered severe

emotional distress is insufficient to form a basis for recovery

of such damages. In Wisconsin, to recover for emotional

Gistress damages resulting from a fraud, the plaintiff must

plead and prove (1) that the defendant acted for the purpose of

causing the plaintiff emotional distress; (2) that the

defendant's conduct was extreme and outrageous; (3) that the

defendant's conduct was the cause-in-fact of the injury; and

(4) that the plaintiff suffered an extreme disabling emotional

response to the defendant's conduct. aH a ppgpateer v.

Cordes, 65 Wis. 24 303, 309, 222 N.W. °

ernatively, to recover emotional distress damages resulting

from a bad-faith breach of contract, the plaintiff must plead

and prove “substantial damages apart from the emotional

distress itself and the damages occasioned by the simple breach

Wie, 26 at 696. RETEST Sd Eo RATE a Ree eeenaeran ot eietttng

Wis. 24 at 696. @ failed to meet either standard of pleading

and proving emotional distress damages. Finally, with regard

to his claims of injury to his reputation and of loss of living

comfort and ease, Ma has never made specific factual

allegations or offered specific factual evidence in support of

such claims. In the absence of such evidence, it is impossible

© arrive at a “fair and reasonable approximation" of the

osses for which Ma now seeks recovery. See R.W. Construction,

Supra, 78 Wis. 2¢ at 469. !

Ma concedes that speculative damages are nct recovereble,

but argues that because the district court ruled in its summary

judgment order that he was not entitled to these damages, he

was improperly denied the opportunity to offer specific

evidence of his losses. We cannot agree. Throughout the

four-day liability trial, and at the damages hearing, the court

Gemonstrated considerable flexibility in pegs evidence

that was arguably precluded under its earlier rulings. We are

satisfied that had Ma sought to introduce specific evidence of

his losses, the court would have permitted it. But Ma made no

such offer of proof and does not, even now, assert facts to

support his claim of these losses. In light of Ma's failure to

introduce adequate evidence of consequential damages (other

than interest), we conclude that the district court's refusal

to award such damages was not error.

II. Dismissal of Tort Claims

Ma contends that the district court erred in dismissing his

tort claim of bad-faith breach of contract and in dismissing

his tort claim of conversion. These issues are moot in light

of our disposition of Ma's damage argumerts. Even if he had

proved both of these ciaims, his interest recovery would not

thereby be aftected. Such recovery is limited because Ma's

roof of actual loss was limited, not because he was prevented

rom demonstrating the bank's tort liability. Nor would Ma be

entitled to attorney's fees, litigation costs, or punitive

_———— ee ee eer a comm . ° mn ewe ee ee

No. 80-2806 Page 14.

Gamages. Such remedies depend on the nature of the wrongdoer's

( conduct, not on the classification of the underlying wrong as

( breach of contract or tort, W v 2+ 97

Wis. 24 260, 267 (1980). ond *2 att ot the epee ue was

fully aired at trial and, as discussed above, the district

court did not abuse its discretion in mt 7 be attorneys fees,

and @ may not review the denial of punitive damages. Finally,

had na proved his claims of bad faith and conversion, his

consequential damages would still have been limited because of

his failure to prove their amount.

We conclude that no reversible error resulted from the

Gistrict court's dismissal of Ma's claims of bad faith and

conversion.

III. Jury Demand

Ma's jury demand was untimely under Federal Rule of Civil

Procedure 38(b), which provides;

(b) DEMAND. Any party may demand a trial

» by jury of any. issue triable of right by a jury

by serving upon the other parties a demand

therefor in writing at any time after the

commencement of the action and not later than 10

Gays after the service of the last pleading

{ directed to such issue. Such demand may be

‘. indorsed upon a pleading of the party.

The “last pleading® was the bank's amended answer, filed May

21, 1975. Ma's jury demand was not filed until] January 28,

1976. Under Rule 39(b), the district court had discretion to

order trial by jury despite the untimely demand, upon Ma's

motion requesting it. He filed such a motion on March 29,

1976. The decision to grant or deny the motion was committed

to the sound discretion of the district court and will be

overturned only for abuse of discretion. 5 Moore's Federal

Practice ¢ 39.09, at 39-19 (24d ed. 1981). S a general rule,

mere inadvertence will not justify relief from a waiver of the

right to trial by jury; some other reason for relief must be

shown, at 39-30. Ma asserts that his delay in demanding

jury trial was caused by his perens attorneys and their law

firm, “due to their conflict of interest in simultaneously

representing Ma and the parent corporation of the Community

Bank... ."* Brief of Appellant at 23. But assuming such a

conflict existed, it does not explain why Ma's New York

counsel, who filed an amended complaint in April 1975 and could

have demanded a jury trial at any time within 10 days after May

21, 1975, failed to do so. The record does not support a

finding that tne district court abused its discretion in

denying Ma‘s motion for a jury trial.

——_—

.

ee 7 —_— oe aw . Came > +e

No. 80-2806 Page 15.

IV. Loca} Counsel

Ma argues that the district court erred in applying Rule

2.04 of the Rules of the District Court of the Eastern District

of Wisconsin and requiring him to obtain local counsel. 12/

Rule 2.04 provides:

At any time, upon its own motion, the Court may

require that a non-resident attorney obtain local

counsel) to assist in the conduct of the case.

Ma challenges the trial court's order on two grounds: (1)

that he has @ federal statutory right to appear Parsee and

cannot be compelled to retain any attorney et all, even local

counsel; and (2) that the imposition of the rule was

unnecessary and unduly burdensome.

Ma's first contention raises the question of whether the

Gistrict court exceeded its rulemaking authority when it

promulgated rule 2.04, in light of the statutory guarantee of

28 U.S.C. § 1654 that “in all courts of the United States

parties may plead and conduct their own cases personally or by

counsel... ." We conclude that Rule 2.04 does not unduly

infringe the rights of individual litigants to proceed pro se

Or to select counsel of their own choosing.

Ma sought our review of this question in 1976 by means of

an interlocutory appeal, At that time we declined to extend

the gonen collateral order rule to permit our review of the

terial court's order. Ma v. Communit Bank, No. 76-1856

(November 6, 1976) (unpublished Order). The issues raised in

the interlocutory appeal have now merged into the final

judgment and are appropriately raised for review.

No. 80-2806 Page 16.

The Federal Rules of Civil Procedure,13/ in accordance with

the Judicial Code,14/ clearly empower district courts to

promulgate housekeeping rules. See Hanna v Plumer, 380 U.S.

460, 475 (1965) (Harlan, J., concurring); seein vs sr lass. 363

163-64 (1973) (gederet rules shalt not modify “substantive

rights® or establish “basic procedura] innovations"); Sibbach

v. Wilso -* 312 U.S. 1(1941). f Roogers v

States Steel, 508 £.2d 152, 163-64 ( Cir.), ¢ enied, 423

5. 75) (local rule restricting communication among

utative class members held invalid); epies v. mais 560 F.2d

86, 189 (3d Cir. 1977) (district court's order res ricting

communication among putative class members held invalid). The

legislative history of section 2071 of the Judicial Code

illustrates that “broad rule-making power was intended.” H.R.

Rep. No. 308, 80th Cong., Ist Sess., at Al69 (1947), quoted in

7 Moore's Federal Practice 4 38.02, at 88-3 (24 ed. 1979); cf.

lveston Dry Dock & Construction co. v. Standard Dredain O.,

ocal ru

. , : t. -Han , . e n

admiralty). Rule 2.04 is designed to facilitate the filing and

service of papers with the court and to provide the court with

greater flexibility in scheduling status hearings. These goals

are clearly permissible regulation of the *procedure® by which

Claims are litigated. Nothing in Rule 2.04 requires that the

services of local counsel extend beyond this essentially

mechanical function. The litigant remains free to control his

own case and to be represented by counsel of his own choosing.

Thus, Rule 2.04 does not have any substantial adverse impact on

scene conferred on litigants by section 1654 of the Judicial

Code.

137 Rule 83 of the Federal Rules of Civil Procedure provides

Mh part:

Each district court by action of a majority of

judges may from time to time make and amend rules

governing its practice not inconsistent with these

rules. * * * In all cases not provided for by rule,

the district courts may regulate their Practice in any

manner not inconsistent with these rules.

24/ 286 U.S.C. § 2071 provides:

The Supreme Court and all courts established by

Act of Congress may from time to time prescribe rules

for the conduct of their business. Such rules shall

be consistent with Acts of Congress and rules of

practice and procedure prescribed by the Supreme Court.

No. 80-2806 Page 17.

Ma's second argument attacks the wisdom of Judge Gordon's

imposition of Rule 2.04 in this case.15/ First, Ma argues that

imposition of the rule was unnecessary because there were only

two incidents in which he failed timely to serve documents that

he had filed with the court. One of those documents, however,

was a petition for writ of mandamus, a requested form of relief

that urges expedited action by the district court. Pailure of

timely survice of such a paper, even if caused by “secretaria)

error,” a8 Ma alleges, is serious. Second, Ma ints out that

at the time the district court ordered him tc o tain local

counsel, he was already represented by a New York attorney who

was admitted to practice before the bar of the Eastern District

of Wisconsin, though not the Wisconsin state bar, and who was

quite able to continue adequately that representation. He

argues that imposition of Rule 2.04 was Oppressive because its

necessary intent and effect was to compel him to turn over the

control of his case to loca] counsel, to finance the education

of new counsel on the nature of the case, and to incur costs

and fees inevitably generated by local counsel.

Ma's objections to the requirement of local counsel are

based on a fundamental EP ti pap of the purpose of Rule

2.04. As noted above, Rule 2.04 is Gesigned to facilitate

mechanical service and not to Geprive a plaintiff of the right

to select any attorney, from whatever location he desires, to

represent his case.16/ In fact, Ma acknowledges that "local

counsel filed no motion papers, except her motion to withdraw,

no briefs nor other legal documents . . - « [S)he did

absolutely nothing in this case.* Reply brief at 7. In light

of these concessions, it is difficult to see how the

appointment of local counsel deprived Ma of the right to

control the course of his litigation. rt is equally difficult

to see, in light of local counsel's inactivity, how her

appointment could have generated unduly burdensome fees.

Pt a aiso raises two arguments related to whether the terms

Of Rule 2.04 were satisfied. He argues, first, that Rule 2.04

empowers district courts to order nonresident aptorners, but

not their clients, to obtain local counsel. Second, he

contends that Rule 2.04 contemplates district courts acting

only on their own motion and not upon the suggestion of another

party. These arguments have no merit. Whet er the cistrict

court's order to obtain local counsel is addressed directly to

the litigant or to the litigant through his nonresident

attorney is immaterial; and a district court cannot be deprived

of the power to correct abuses in service of process when a

party has alerted the court to the need for corrective action.

16/ Ma correctly recites that Wisconsin courts liberally

permit pr a vice appearances by out-of-state counsel.

Brief of Appellant at 28-29. This pr sition, however, is

inapposite to a district court's consise

2.04 ought to be applied.

red judgment that Rule

No. 80-2806 Page 18.

"We conclude that Judge Gordon did not abuse his discretion

in concluding that local counsel would assist in the

prosecution of the case without causing undue burdens to Ma.

as trict Judge

Ma's claim of bias on the part of Judge Warren is

unsupported in the record. Adverse rulings do not show bias

requiring disqualification of a trial judge. oT etey

es v Sh, 501 F.2d 1254, 1263 (7ch Cir. 1974). The

allege as anc prejudice to be disqualifying must stem from

an extrajudicial source and result in an opinion on the merits

on some basis other than what the judge learned from his

participation in the case.* ited

384 U.S. 563, 583 (1966), quote , Supra, at ‘

Ma complains that Judge Warren lived in De pere “for a while,*

and knew that bank attorney Morris had practiced law for a

considerable time. It cannot reasonably be concluded from

these bare facts that Judge Warren's disposition of the case

was based on something other than what he learned during the

course of the litigation.

Conclusion

Por the reasons stated above, the judgment of the district

court denying Ma @ recovery of interest in excess of the

statutory prejudgment interest rate is reversed. Ma is

entitled to recover interest on $30,000.00 at a rate of 5.5%

compounded daily, for the period from July 1, 1973 to the date

the bank relinquished his funds, less the interest already paid

by the bank on such principal Guring that period. The case is

remanded for the purpose of recalculating Ma's interest award.

a pee —— respects, the district court's judgment is

a rmed.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED.

es . _—— ~_— — —_ sie Metical

ee sF 4 us Ow. Or fet oe

xs Te oF hit

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7) ‘io Rulaw. rade

oy) on UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WISCONSIN e+e

« * or*

JACK MA,

Plaintiff,

vs. Case Wo. 73-C-427

THE COMMUNITY BANK,

Defendant.

MEMORANDUM AND ORDER

On November 5, 1980, the Court held the damage

portion of this trial. Previously, in an order dated July

25, 1980, the Court found the defendant The Community Bank

had breached its contract with the plaintiff Jack Ma and had

fraudulently induced the plaintiff to purchase a number of

savings certificates of deposit. The Court also held that

the defendant was not liable for it failure to negotiate a

settlement with the plaintiff. In addition, as it had

earlier stated in a previous summary judgment motian, the

Court ruled that on the facts of the case, the cinitive

damages were not awardable.

At the damage trial, the plaintiff, proceeding

pro se, first attempted to persuade the Court to reconsider

its decision regarding punitive damages. To that end, he

called Mr. William Morris, the bank's local attorney, as his

first witness. After some initial questioning of Mr. Norris,

and argument by the parties, the Court inforned the plaintiff

that it would not reconsider its decision and that any

questioning along those lines would not be permitted. The

witness was then excused and defense counsel moved for

payment of costs to the witness alleging that the subpoena

was vexatious. The Court took this motion under advisement.

Plaintiff then testified on his own behalf and

offered as Exhibit 1 in the damage trial a list of itemized

damages that he believed represented his compensatory damages.

The exhibit is a detailed statenent of all telephone calls,

travel expenses, attorneys’ fees, and other litigation costs

which the plaintiff has incurred since he instituted this

action in 1973, The Coort received the cxhibit over Gefendant's

objection, but with the understanding that the Court would

determine its relevancy later. The plaintifz did not offer

any other evidence, but the defendant 6id submit a computation

of interest owed on the interest checks withheld, which

amounted to $84.29. The issue the Court must now resolve is

what portion of plaintiff's listed expenses are recoverable

as damages.

The items of alleged damages listed by plaintiff

can be classified into two groups: attorneys’ fees and

other litigation expenses. The general rule in Wisconsin is

. that attorney's fees are not awardable as damages in an

action absent any statutory or contractual provisions for

them. Forest Laboratories, Inc. v. Pillsbury Co., 452 F.2d

621 (7th Cir. 1971); Hurray v. Holiday Rambler, Inc., 83

Wis.2d 406 (1978); Cedarburg L. & W. Com. v. Glen Falls

Insurance Co., 42 Wis,24 120, 124-25 (1969); Baker v. North-

western National Casualty Co., 26 Wis.2d 306 (1966).

One recognized exception to this rule arises when

a plaintiff incurrs attorney's fees in a litigation with a

third party if the defendant's breach of contract has caused

the third party to sue the plaintiff. The theory is premised

on the belief that the fees incurred by the plaintiff for

defending the third party litigation should be assessed

against the defendant because he caused it. Cedarburg L. & W.

Com. v. Glen Falls Insurance Co., 42 Wis.2d4 at 125.

Some of the plaintiff's claims for attorneys’ fees

were incurred in a malpractice suit against the plaintiff's

former counsel in this action. This litigation, however,

éid not arise as a result of defendant's breach of contract.

Consequently, the exception to the general rule on disallowance

of attorney's fees is not applicable. There being no other

basis, statutory or otherwise, for an award of attorneys’

fees, the Court finds the plaintiff is not entitled to any

award of fees.

Sinilarly, reviewing the other litigation expenses

incurred by the plaintiff, the Court finds that there is no

basis for an assessment of those expenses against the defendant.

As with attorney's fees, the general rule is that litigation

expenses (travel, hotel, telephone and photocopy expenses)

are not awardable as damages in an action between a plaintiff

and a defendant. 42 Wis.24 at 124-25. Plaintiff has advanced

no reason why the general rule should not apply and the

Court finds none. Therefore, the Court must conclude that

the plaintite is not entitled to any of the expenses listed

in his damage exhibit and the exhibit is consequently irrelevant.

. Despite the Court's finding that plaintiff is not

entitled to attorneys’ fees or other litigation expenses,

the Court does find that he is entitled to the interest on

the interest checks which were wrongfully withheld from him

by the bank.

As mentioned in the Court's previous decision, the

defendant had withheld the plaintiff's interest checks and

the three certificate of deposits (CD), each in the amount

of $10,000, because a question as to the plaintiff's identifi-

cation arose after the plaintiff reported the loss of the

CD's to the bank. Almost three years after the initiation

of this litigation, and pursuant to a court order, the

APPENDIX *B*

fe wane 4 te the 20°8

we ~

defendant turned over the principal amounts of the CD's. The

interest checks were also delivered to the plaintiff at

various times. There is no dispute as to the sum of money

plaintiff is entitled to regarding the interest on the

withheld interest checks. Therefore, the Court finds that

the plaintif’ is entitled to the sum of $84.29 from the

defendant as interest on the overdue interest checks,

Finally, the Court finds that, with respect to the

calling of Mr. Morris as a witness in this portion of the

case, the plaintiff's actions were indeed vexatious. The

Court, however, must view this action in perspective with

the whole case. Mr. Morris was the attorney who originally

advised the bank not to replace the stolen CD's because of

his concerns of negotiability and identity. At the liability

portion of the trial his testimony was very important. The

Court must also consider the plaintiff's status as a pro se

litigant who has expended an enormous amount of unrecoverable

time, effort, and money pursuing his case. Considering all

these factors, the Court will decline to award the defendant

or the witness any costs for his appearance at trial.

In summary, the Court finds that plaintiff Jack Ma

is entitled to an award of $84.29 as interest upon interest

checks which were wrongfully withheld from him by the defendant

The Community Bank.

The Court HEREBY ORDERS judgment to be entered in

favor of Mr. Ma and against defendant in the sum of $84.29

and that tir. Na be allowed all statutorily provided for

costs.

SO ORDERED this 28 day of November, 1980, at

Milwaukee, Wisconsin.

B.S. DIST. COURT C457. DIST. W.50,

—"FILED

UNITED STATES DISTRICT CouRT, OCT 2.11977

EASTERN DISTRICT OF WISCONSIN , d

; ot aictectt..__04

RUTH W. LA Fave, cuceK

JACK MA, .

Plaintiff,

ies | Case No. 73-C-427

THE COMMUNITY BANK,

Defendant.

MEMORANDUM AND ORDER

; i

Several separate motions are presently before this

- a Court. They will be reviewed seriatim.

The’ facts of this case can be summarized as follows.

Plaintife initially sought the return of thirty thousand dollars

($30,000) which he deposited with the defendant, Community Bank,

on April 9, 1971. The deposit consisted of three savings

eottitiontes of deposit issued by the defendant. These

certificates were stolen on September 28, 1971 and plaintiff

: promptly notified the defendant of the theft. Plaintiff

allegedly demanded that the defendant return the money or

reissue the certificates. Defendant stated that it would issue

duplicates of the savings certificates if the plaintiff

furnished to the defendant a satisfactory ‘indemnity bond. The

piaintite refused. ._

The ‘complaint sets forth seven causes of action and

seeks damages for fraud, ‘conversion, lost business opportunity,

for the ‘withholding of funds, damage to reputation, Physical .

and mental pain anda ‘suffering and compensatory danages.

f - sty Janvary 1976, ‘at his deposition, the plaintiff's

identification was established. Subsequently, under Federal

e District Judge Myron L. Gordon's order of February 13, 1976

the plaintiff received the funds represented by the savings

certificates. Prior to this time plaintité apparently had not

presented identification to the defendant when attempting to

eR. release the funds under these circumstances. Further facts

obtain the return of his funds. The defendant had refused to

are set forth in the following discussion of the individual

|

|

vag motions. , ; +“ ‘

MOTIONS FOR SUMMARY JUDGMENT

Both the plaintiff and the defendant have filed

‘motions for summary judgment pursuant to Rule 56 of the Federal

Rules of Civil Procedure. }

' A motion for summary judgment can only be entered

when the pleadings, depositions, affidavits, and admissions

filed in the case show that there is no genuine issue as to any

te : material fact and that the moving party is entitled to judgment -

as a matter of law. Poller v. Columbia Broadcasting System, Inc.,

368 U.S. 464 (1962). ‘The burden is on the moving party to

i. how the lack of any genvine factual issues. Id.

ae _ The plaintiff states that summary judgment should be

granted when no opposing affidavits are pepeiaeas This is not

a correct interpretation of Rule 56. Although an sdverse

party may not Fest upon the allegations or denials of his

? pleadings, the Court may look at depositions, answers to —

ti. interrogatories and. admissions of fact on file to determine if

( “surnary judgment is ‘sppropriate. %y

_ In this case, ‘pleintite has set forth seven causes

of action. In the first cause of oathene plaintiff alleges

@ breach of contract and seeks return of the $30,000 represented

by the’ savings certificates of deposit. Plaintiff has already

received the funds under Judge Gordon's order of February 13,

1976 and therefore the request for return of the funds is moot.

The fifth cause of action is closely related to the

issue of breach of contract. This cause of action alleges that

the defendant fraudulently induced the plaintiff to deposit

his monies by celling him that, if the certificates were lost,’

they would be immediately replaced by the bank. Plaintiff

states in his affidavit and in his deposition that he was never

told an indemnity bond would be required. Deposition of Jack

Ma, January 14, 1976, p.45-46; Ma Affidavit, April 20, 1977,

Brawed ns f

Defendant's Vice-President, Gerald Gerbers, states in

his affidavit that he at no time told the plaintiff that the

certificates could be reissued or that the principal amount

could be paid without furnishing a bond of indemnity. Gerbers

Affidavit, @ 11.

This Court believes that, absent a contractual agreement

not to require an indemnity bond, the defendant had a right to

sara an indemnity bond.

Plaintiff purchased these certificates on April 9,

1971. At that time his address, as reflected in the bank's

records was Los Angeles, California. Plaintiff stated he

called the bank on September 29, 1971 ‘to inform the bank of

the theft of the savings certificates of deposit. In a letter

to the bank dated October 20, 1971, @ person representing himself «

to be Jack Ma stated that the certificates had been stolen.

the address in that letter was New York City. The bank maiied .

a letter to the New York city address informing the person

.

: - | " oie flare ET ages tinal (ee Ree gy gy A ill ee een ino, Se mae es

The bank was not contacted again by this person

wntia January 25, 1972. At that time, the alleged Jack Ma

informed the bank that he was unable to obtain an indemnity

bond because he was a foreign student. The address given in

this letter was Astoria, New York.

The bank's attorneys were able to find a company

that would issue the bond and so informed the alleged Jack

‘Ma on February 23, 1972. This letter was sent to the New

York City address.

/ In a letter dated February 26, 1972, the person

purporting to be Jack Ma informed the bank that he had not

received his interest check for the period ending October 9,

1971, although he had received the interest check for the

‘subsequent period. In that letter, he also indicated that he

wished to close the account on the coming due date ox April 9,

1972. He offered to personally appear at the bank to close the

wccount if necessary. Gerbers Affidavit, 4 10.

The subsequent sequence of events are somewhat

unclear. It is clear that the alleged Jack Ma next wrote the

bank on August 21, 1973 requesting a particular form and asking

the bank to change his address from Los Angeles to his present

address of New Jersey. Three subsequent letters were received

by the bank. _

The plaintiff did not furnish the bank with any

identification or appear personally at the bank until January,

1976. At his deposition at that time, the alleged Jack Ma

produced punereus socerés including his passport and visa,

various cummunications between the bank and himself and other

bank records. Ma ‘Affidavit of February 28, 1977, #15.

The Gefendant bank was: still skeptical. But Judge

Gordon concluded that the plaintife was Jack Ma to whom the

$30,000 was due on the particular savings certificates and

ordered the funds given to jim on February 13, 1976. In

addition to the identifica\ion offered, Judge Gordon based his

Gecision on the fact that the bank had only one customer named

Jack Ma, and that a bank employee recognized the plaintifeé in

January, 1976 as a bank customer, although sha did not know

his name. Thus, the identity of the plaintiff was not clearly

established until that time.

Prior to this time, the bank was in a difficult

position. It only knew that the certificates were reportedly

stolen and that a person purporting to be Jack Ma, although

living in New York and not California as bank records initially

indicated, wanted the funds represented by the certificates

sent to hin. |

Absent a contractual agreement not to require an

indemnity bond, it was not unreasonable to require such a bond.

PT the purported Jack Ma in New York was not the Jack Ma who

owned the certificates, the bank would be doubly liable if it

paid the imposter. 1% Am.Jur., Banks, § 465. The favt that

interest checks were sent to the alleged’ Jack Ma does not mean

the bank was also required to send the principal amount to the

same address without requiring further assurances. ,

Section 403.804 of the Wisconsin Statutes provides

that “the court may require security indemnifying the defendant

against loss by reason of further claims on the instrument.”

The reasoning that allows the Court to require an indemnity

bond iso is applicable to the defendant bank in this case.

The ‘statute also does not specify that the amount of the bond

equal the amount due on the instrument.

This Court concludes that a genuine issue of material

fact exists as to whether or not there was a breach of the terms

APPENDIX “C*

of centracuual agreement as the first cause of action alleges

and ‘whether or not the defendant made fraudulent representations

‘aa the fifth cause of action cline. Thus, the motion for

summary judgment with respect to these two causes of action

must be denied. |

The defendant has also challenged the validity of

the remaining causes of action.

The second and fourth causes of action relate to

_ the payment of interest to the plaintiff on the certificates.

Plaintiff alleges that the defendant withheld interest payments

from plaintiff from October 9, 1971 to May 10, 1973 and refused

to pay compound interest. The plaintiff has admitted that he

received all the interest checks due him. Ma Affidavit,

January 31, 1977, 9 44-46; Deposition of Jack Ma, p.67.

The facts are unclear with respect to the second cause

of action. A letter from the plaintiff to the defendant on

January 25, °1972 states that the plaintiff received his interest

check for the quarter ending January 9, 1972 but not for the

priocs quarter ending October 9, 1971. This is contrary to the

allegations of, the complaint.

Fucther, it is unclear when the plaintiff ultimately

44d receive these interest checks. Beceuse plaintiff did

| receive the checks, the only issue remaining is whether or

not the plaintift is entitied to interést on the interest checks |

themselves if the defendant failed to mail said checks to the

plaintiff in a timely fashion. Therefore, this Court denies

defendant's motion for summary judgment with respect to the

plaintiff's second, cause of action. .’ ;

w . | Pladintd€f alec @lleges that the defendant failed t>

*

pay y Sompound “interest. “the certificates of deposit spect tically

ee : Be re

’

af * 6

" e . f

PS pl dd Nit, ee dad i a eth Fh be ik. ot ei) es eek a PF) eae es Bee on J . a

provided that interest was to be paid at the rate of 5% per.

annum and that the certificates were automatically ne

Gerbers Affidavit, 4 2.

Defendant had no obligation to pay compound interest

or any interest in excess of the contract rate of 5% per annua.

Section 403.413(1) of the Wisconsin Statutes provides that the

maker of an instrument “engages that he will pay the instrument

according to its tenor at the time of his engagement.*

Accordingly, the Court finds that the defendant's

motion for summary judgment must be granted with respect to

plaintiff's fourth cause of action.

Plaintiff's third cause of action essentially alleges

that plaintiff suffered emotional distress when he attempted to

deposit certain interest payments at the Oritani Savings & Loan

Association and that finaicial institution refused to accept

the checks because they were dated.

| The Court finds that this cavse of action must be

dismissed because it fails to state a claim against the defenéant.

The checks were admittedly dated and plaintiff could have

observed this before going to the savings and loan. Therefore,

the defendant's actions were not the cause in fact of any

emotional distress allegedly suffered by the plaintiff.

‘purther, plaintiff admits in his deposition that the

savings institution cashed the checks after he agreed to allow

the checks to cléar before withdrawing funds. Deposition of

Jack Ma, p.74. Any emotional distress suffered by plaintiff,

resulted not from the financial institution's failure to cash

the checks, but from having to make these specific arrangements.

Accordingly, plaintiff's third cause of action is dismissed. -.

Plaintiff's sixth cause of action alleges that the ts

defendant wrongfully withheld plaintiff's Sunde. The plainestersi

__ from committing acts against human dignity.”

seventh cause of action for conversion is essentially the same

as his allegation of the wrongful withholding of funds.

Conversion is defined in Blacks Law Dictionary as “any

unauthorized act which deprives an owner of his property

permanently or for ‘an indefinite time.”

Plaintiff has received his money. Any action he now

has arises from defendant's alleged failure to reissue the

certificates or return his funds on demand. This is not @

different cause of action but arises because of the alleged

breach of contract.

The Court finds that the sixth and seventh causes of

action do not state a separate claim against the defendant and

accordingly must be dismissed.

‘plaintiff claims punitive denages and damages for the

loss of business opportunities.

Punitive damages are not recoverable in Wisconsin

for a mere breach ef contract. White v- Benkowski, 38 Wis.24

285 (1967), nor for all torts or crimes. Rather, such damages

may be recoverable for those personal torts which are malicious,

outrageous or a wanton disregard of personal rights “which

require the added sanction of a punitive damage to deter others

Entzminger v. Ford

Motor co., 47 Wis.24 751, 758 (1970). |

The only contract cases in which the Wisconsin court

has atioves punitive damages for fraud in the inducement to

contract or for breach of contract have been actions for breach

of promise to marry. Midcontinent Refrigerator Co. v. Straka,

ar wis.24 739 (1970)5 be Luther Vv. Shaw, 157 Wis. ‘231 (1914).

* Ki though it is well recognized under Wisconsin law

that a breach of contract may also be a tort, White v. Benkowsxi,

supra: Enteminges v. Ford Motor Co., supra, it is also clear

me not all torts give rise to the eneneree ‘of punitive’ damages

Se. ered

This Court has found that punitive damages were eliminated in

gross negligence cases in Wisconsin but are recoverable in

certain cases involving intentional torts such as assault

and battery, slander, libel and seduction. Malbrun v. Berkel,

Civil No. 75-C-737, (B.D. Wis. December 15, 1976).

The facts of this case do not show the requisite

conduct necessary to sustain the award of punitive damages.

Plaintiff aise claims damages for lost business

opportunities. To recover for such loss, the law is clear

that the damages mest be proved with reasonable certainty.

Maslow Cooperage Corp. Vv. Weeks Pickle Co., 270 Wis. 179 (1955);

Hannond Vv. Sandwich Mfg. Co., 146 Wis. 485 (1911).

Restatement of Contracts, § 331 which is applicable

in Wisconsin states:

; (1) Damages are recoverable for losses

caused or for profits and other gains

** prevented by the breach only to the

extent that the evidence affords a

sufficient basis for estimating their

amount in money with reasonable

certainty.

Plaintiff's own testimony indicates that any business he lost

was highly speculative at best. Deposition of Jack Ma, pp.134-14

Special damages for lost profits caused by breach of

contract are recoverable only when it is clear they were fairly

within the contemplation of the parties. Hammond v. Sandwich .

Mfg. Co., supra. Plaintiff here admits he did not inform

the defendant of these lost opportunities.

ie Further, the party seeking to recover such damages

must have exercised ordinary diligence to minimize them. Id.

Clearly, the plaintife has failed to do so in ‘this case.

_On the basis of the foregoing analysis, the Court

‘finds: that the plaintité has not met his burden ‘of Ange in

geabipe enegy Jeeenent-

Sp TLR NE Sta Mere | el ae AF) A. YD e,!

In his motion, plaintiff also sought sanctions against

the defendant for alleged failure to obey orders of the Court

and for failure to permit alecovery: Plaintiff also sought.

an order prohibiting the defendant from introducing evidence and

an order striking defendant's pleadings and dismissing the

action. After examining the voluminous documents filed in this

case,, the Court declines to impose such sanctions. Plaintiff's

motion for summary judgment, accordingly, must be denied.

Defendant's motion for summary judgmént is denied

with respect to plaintiff's first, second, and fifth causes of

action and granted with respect to plaintiff's fourth cause

of action. In addition, the Court finds that plaintiff's third,

sixth and seventh causes of action must be dismissed for failure

to state a claim against the defendant.

PLAINTIFF'S MOTION REGARDING -

. REQUEST FOR | FOR OMISSIONS OF FACT

ee

In February, 1977, defendant: moved the Court for an

‘order that the facts set forth in items 2 through 14 of .

Defendant's Request for Admission of Facts be taken as admitted.

This Request for Admission was mailed to plaintiff's counsel

in New York on March 10, 1976. Plaintiff responded on April

a5 BRIGG |

Plaintiff’ s sespouspe to Requests No. 3 through 11

and 13 state that these requests deal with procedures arranged

between the parties’ counsel and that plaintiff therefore has

little knowledge of these matters except through examination of

the case. file and discussions with his counsel. A sinilar

response is’ given to Request No. 2. These responses are

inadequate under Rule 36 oF. the F Federal Rules of Civil Proceé=:re

“which provides: * |

Ce yi uci w cat Cn ON ee

++ +An answering party may not give lack

of information or knowledge as @ reason

for failure to admit or deny unless he

states that he has made reasonable inquiry

and that the information known or seeaily

obtainable by him is sucett toner to enable

him to admit or deny.

—

Plaintiff has denied Request No. 12 and has admitted

Request No. 14 as required. ‘with respect to Request No. 15,

the ‘defendant must be more specific as to what records and

files were made available to the plaintiff and his counsel.

Plaintiff will then have a basis for nae to this or

for admission.

This Court finds that plaintiff has failed to comply

with the requirements of Role 36 and the matters in Request No.

2 through 11 and 13 are admitted. As to Request No. 15, defendant

should specify within 10 days of this order which documents

and files were made anth

eee by them, if they wish a response to this request.

lable to plaintiff and his covnsel and

Plaintiff will then have 10 days to file his response.

DEFENDANT'S MOTION REGARDING PLAINTIFF'S

SE KWERS TO DEFENDANT'S INTERROGATORIES — F E

A.

néant has moved to dismiss plaintiff's answers

in the alter-

‘Defe

interrogatories of December 20, 1976 or,

native, for. sanctions because of plaintiff's failure to ansver —

to its

such interrogatories.

Defendant's cinta dibaneaietiie relate to the subject

matter of the tentenony of plaintif£

‘pilder and William G. i Hrindac, were listed

1976 to Judge Myron L. Gordo:

s motion, this Court

f's expert witnesses. These

experts, George u.

in plaintife's letter of March 21,

On “March, 4. 1977 puirsiant to defendant’

ordered the plaintifé ih beeen his answers to the interrogatories,

Such answers were made on March 24, 1977. Discovery was cut off

by this Court as of May 23, 1977.-.

: An examination of plaintiff's ansvers shows that they -

are generally evasive or incomplete. Rule 37(a)(3) provides

that “an evasive or incomplete answer is to be treated asa

failure to answer.”

. In his answers for example, plaintiff states that

the experts "are expected to testify about the various actions

of The Community Bank in this case.” Plaintiff's Answers to

Interrogatories, p. 1. Plaintiff further states he is unable

to provide the defendant with the opinions of the experts

because one expert has been out of the New York area for over

@ month. — ds

These answers are unacceptable. The interrogatories

were served in December, 1976. Plaintiff had ample time to

contact his expert and obtain this information. Plaintiff

‘also promised to supplement his answers to these interrogatories

but has failed to do so..

Plaintiff has presented no adequate justification for

failure to comply with the Court's order of March 4, 1977.

Accordingly, the defendant's motion for sanctions ds appropriete.

The defendant requests that the pleintire. ‘be prohibited

from introducing expert testimony at trial or that the action

be dismissed. The Court does not believe that the harsh sanction

of Gismissal is appropriate under these circumstances.

As the Court stated in Vac-Air, Inc. v. John Hohr &

Sons, Ine., 471 Pr. 24 231, 234 (7th Cir.” 1973), “the extreme

sanction of default or dismissal must be tempered by the careful

‘exercise ot judicial discretion to assure that its imposition

is nerited, and that where an alternative, less drastic,

: sanction ‘would be just as effective it should be utilizea.* |

Therefore, the Court holds that plaintiff shall be

precluded from producing expert testimony at trial. The

Court further orders that the plaintiff pay defendant's

reasonable costs. including attorney's fees, of this motion

relating to plaintiff's failure to answer defendant's

interrogatories. .

B..

In conjunction with the motion relating to answers

to interrogatories, the defendant has also filed a motion with

respect to its request for admission of fact dated January 6, 1977

Such request was neither admitted or denied by the

plaintiff as required by Rule 36 of the Federal Rules of Civil

Procedure.

This rule provides in part:

The answer shall specifically ‘ie the

matter or set forth in detail the reasons

why the answering party cannot truthfully

* admit or deny the matter. A denial shall

farily meet the substance of the requested

admission, and when good faith requires

that a party qualify his answer or deny

only a part of the matter of which an

admission is requested, he shall specify

so much of it as is true and qualify or

deny the remainder.

Plaintiff has failed to specify what parts of the

transcript are “a true and correct copy” of his testimony

and what parts are erroneous.

Therefore, this Court holds that the Request for

Admission of Fact dated January 6, 1977 is hereby admitted.

~*

.

PLAINTIFF'S MOTION TO

. * :

Plaintite has moved the ‘Court for an order uéspeninn

discovery to paidde the plaintite to eonduet four depositions

and to obtain certain documents.

APPENDIX *C*

— ——— +e eer

On February 23, 1977, at the pretrial conference,

this Court set 4 firm discovery deadline of May 23, 1977.

Plaintiff did not object to tnais deadline. Subsequently, after

the deadline had passed, plaintiff attempted to take the

deposition of Claude C. Philippe. The defendant objected.

The Court issued an order stating that discovery was

foreclosed and that leave of the Court would have to be sought

before any additional discovery was undertaken. Plaintiff then

filed this motion stating that there were good reasons for the

delay:

1. the plaintiff had previously been forced :

to expend meg sums of money to obtain

discovery from the defendant;

2. the plaintiff had hoped that this Court

would make a determination on his motion

for summary judgment, which has been

nding before this Court since January,

977, and thus obviate the need for

further discovery; and

_. 3. as the defendant is well aware, expert

witnesses are expensive, and plaintiff,

who is of limited means, may not be

able to afford to pay an expert witness

fee. Plaintiff's Reply Brief, September

19, 1977, p-2-

Plaintiff further alleges that certain documents were

not supplied by the defendant and that plaintiff's attorneys

only obtained .portions of these documents from the Federal

Deposit Fnhsurance Corporation (FDIC). in July, 1976. Plaintiff

now seeks to obtain these documents. —

"whe Court has carefully examined plaintiff's reasons

for requesting the reopening of discovery and finds them |

unpersuasive.

This case has been pending since 1973 and a trial

was originally set for mid-1976 in Judge Gordon's court. The

parties have had ample tome to complete discovery.

; plaintiffé alleges that certain documents were not

received until July, 1976, but this does not adequately explain i

why depositions were not noticed until fully twelve months |

later - two months after the discovery cutoff set by this

Court.

“The Court finds that no manifest injustice’ would

‘ occur if plaintiff's motion were Genied. Plaintiff has had

adequate discovery opportunities during: the past four years.

Therefore, the Court holds that ‘plaintife’s motion to conduct

depositions and obtain particular documents from these deponents

must be and is hereby denied.

PLAINTIFF'S MOTION FOR

——FRIAL BY JURY ~—

On July 25, 1977, plaintiff filed a motion for an

order granting a trial by jury pursuant to Rule 39(b) of the

Federal Rules of Civil Procedure, Plaintiff had previously

filed a similar motion which was denied by Federal District

Judge Myron L. Gordon on May 20, 1976.

Under Rule 38, there is an automatic waiver of the

right to trial by jury unless a timely demand for a jury trial

is made. McNabb v. Kansas City Life Ins. Co., 139 F.2d 591

(8th Cir. 1943). Under Rule 39(b), the Court in its discretion .

may order a trial by jury despite such waiver.

Plaintiff claims that the untimeliness of his demand

for trial by jury was due to a conflict of interest of plaintit£*:

prior attorneys in this action.

" A review of the history of this case shows that

‘plaintite was represented by the Milwaukee law firm of Brady,

Tyrrell, Cotter 6 cutier when the original complaint was filed

in August, 1973. nq demand for a jury trial was made at that |

time. X verified onended complaint signed by the plaintife |

APPENDIX "Cc".

was filed on April 25, 1975. In that complaint, plaintiff's

present Wew York attorneys were listed as counsel. Again,

no jury demand was made.

’ On Janvary 28, 1976, plaintiff's demand for @ jury

trial was filed. This was almost two and one-half years after

_ the original complaint was filed and nine months after the

verified amended complaint was filed. Plaintiff did not file

a motion for trial by ‘Jury until March 29, 1976.

Although plaintiff alleges a conflict of interest

involving his initial attorneys, the Court notes that the law

firm of Quarles & Brady did not come into existence under that

name until February of 1974 - after the plaintiff's initial

complaint was filed. r

Plaintiff indicates that his present attorneys first

received notice in July, 1976 that Quarles & Brady represented

First National Corporation, the parent company of the defendant,

Community Bank. Although notice was received in July, a motion

for a jury trial was not filed until some tvelve months later.

The Court finds plaintiff has failed to give adequate _

justification for his failure to make an earlier demand for’

a trial before a jury. Therefore, the Court declines to exercise

its discretion to grant a trial by jury in this case. Plaintiff’

motion for a trial before a jury must be and is hereby denied.

So ordered this 21 day of October, 1977 at

Milwaukee, Wisconsin.

«%.

;

’

‘

‘ . : aa

— oom e _: meme meme

UNITED OTATESR DISTRICT COURT

KAS'TERN DISTRICT OF WIIC'ONSIN

Ee Ee ee RE SE NS HT a orc a

JACK MA, :

Plaintiff,

v. No. 73-C-427

THE COMMUNITY BANK,

Defendant.

ORDER

The defendant has moved for an order requiring the plain-

tiff to appoint local counsel under local rule 2.04. The

plaintiff has opposda such motion and has moved to have

defendant's counsel disciplined by the court ond held in

contompt under Rules }1 and 56, Federal Rules of Civil Pro-

cedure. r

The court has examined the motiong and believes it is

j amply advised in the premises.

Therefore, IT IS ORDERED that the defendant's motion

is granted and the plaintiff's motion is denied. The ap-

pearance of local counsel on behalf of the plaintife should

be formally filed by August 24, 1976.

Dated at Milwavkee, Wisconsin, this 27 day of July,

1976.

Unpublished Per Curiam Order

JUDGMENT — ORAL ARGUMENT

( United States Court of Appeals i:

For the Seventh Circuit

Chicago, Illinos 60604

June 8 419. 82.

Before

Hon, _WILLTAM J. BAVER, Circuit Judge

RICHARD D. CUDAHY, Circuit Judge

RICHARD A. POSNER, Circuit Judge

Hon.

JACK MA, a subject of the Republic of

China,

Plaintiff-Appelliant,

5

Appeal from the United States

District Court for the Eastern

No, 90-2806 vs. » District of Wisconsin,

No. 73-C-427

THE COMMUNITY BANK, a Wisconsin

banking corporation, Judge Robert W. Warren

Defendant-Appellee. i

This cause was heard on the record from the United States District

Court for the Eastern District of _ Wisconsin

Division, and was argued by counsel.

On consideration whereof, IT IS ORDERED AND ADJUDGED by

this Court that the judgment of the said District Court in this cause appealed

from be, and the same is hereby, AFFIRMED IN PART, REVERSED IN PART,

and REMANDED with directions, in accordance with the order of

this Court entered this date. gach party is to bear its

own costs on appeal.

Ficen

Case No, 80-2806

Defendant-Appellee.

‘Circuit dated June 8, 1982,

‘a. The clerk will please prepare « transcript of the record in

‘this cause, for transmission to the Clerk of the Supreme Court of

‘the United States,

‘III. The following questions are presented by this appeal:

(1) Whether the Court was correct in reaching the issue of

entitlement té damages before examining the question of

liebility based on bad faith and fraud and conversion o°

of defendant-appellee.

to punitive damages is the same as the granting of zero

damages after a finding of entitlement to damages result

in precluding review on this issue pursuant to Wisconsin

lew.

(3) Whether the Court was correct in denying plaintiff legal

fees and litigation costs whore a defendant is found gui

ef fraud and bad faith and caused a case to become

ele

eT et) ke R Lal 4 : J

3 a sia ad? aiplll iaeS lllite. iol AIR SP

SOW 99,1934.

‘ UNITED STATES COURT OF APPEALS

, Conk: mmedi}

iis tae POR THE SEVENTH CLACUIT oy Tele Phome)

Oe a init ee 5a oem ret: - erwrrnrnre+e"--2-"-+=—

'

' JACK MA,

Plaintiff-Appellent,

NOTICE OF APPEAL TO THE

| -v8- SUPREME COURT OF THE

UNITED STATES

COMMUNITY BANK,

'y, Notice is hereby given that JACK MA, the pleintiff-appellant in,

he case, hereby appeals to the Supreme Court of the United states

jfroa the Order of the United States Court of Appeals for the Seventh

This appeal is taken pursuant to Title 28 U.S.C, Section at

‘ana (3).and Rule 10(2) of the Rules of the United States Supreme Court,

(2) Whether the finding that plaintiff-appellant 1s not entitl

|

‘

|

|

ng

\"

extraordinarily lengthy due to defendant's refusal to

cooperate with discovery.

(4) Whether the Court abridged plaintiff's rights to choice of

legal counsel in the absence of a shewing that plaintiff's

- nonresident counsel needed to obtain assistance of local

counsel and whether such an order was fvivelous in light of

the fact that the District Court did not order plaintiff to

’

replace local counsel after she withdrew, Whether the Cours

of Appeals erred in affirming the lewer court's application

of Local Rule 2,04 to plaintiff when the rule specifically

mm a a a le i a ee ee

———

applies to nonresident counsel,

(5) Whether exigent circumstances comprising of ineffective

} counsel by reason of a conflict of interest because of

: conspiracy with plaintiff's adversary is sufficient grounds

for granting pleintiff's request for a jury trial where

eaid request was not timely filed, especially where the

defendant would not be unduly prejudiced,

a

MN

a

a

: Plaintiff-Appellent,

4 Pre Se

/

}

‘Dated: July 19, 1962

P. 0. Address:

63-30 Dieterle Crescent

} Rego Park, New York 11374

"