Appendix — Rose Hall Ltd. v. Chase Manhattan Overseas Banking Corp.
Supreme Court brief1985
Ask Donna
What actually matters in this document.
Text
- | ne mt US |
i le aoe
No. - i ions
IN THE ——
SUPREME COURT
OF THE UNITED STATES OF AMERICA
October Term. 1984
ROSE HALL LIMITED.
Petitione)
..
CHASE MANHATTAN OVERSEAS
BANKING CORPORATION.
Respondent
On Writ of Certiorari to the United States
Court of Appeals for the Third Circuit
APPENDIX TO PETITION OF ROSE HALL
LIMITED FOR A WRIT OF CERTIORARI
Andrew B. Kirkpatrick. Jr
Paul P. Welsh (counsel of record
Thomas Reed Hunt. Jr
Denison H. Hatch. Jr
MORRIS. NICHOLS. ARSHI
& TUNNELL
Twelfth and Market Streets
P.O. Box 1347
Wilmington, DE 19899
302 ) 658-9200
Attorneys for Petitione
Rose Haii Limited
November 9. 1984
PACKARD PRESS LEGAL DIVISION 10th & SPRING GARDEN STREETS PHILA. PA 19123 (215) 236-2000
TABLE OF CONTENTS OF APPENDIX
Page
Rose Hall, Ltd. v. Chase Manhattan Banking Cor-
poration and Holiday Inns, Inc., Nos. 83-1845,
83-1865, and 83-1866 (Judgment Order dated
July 13, 1984 by United States Court of Appeals
er eis ies os Ws ee's.8 a 0 0 A-1
Rose Hall Ltd. v Chase Manhattan Banking Corpo-
ration, 576 F. Supp. 107 (D. Del. 1983)...... A-3
Unreported Opinion dated September 30, 1982 Re
Motion of Rose Hall To Add Paragraph 54 To the
EE ar ee A-131
Order dated September 30, 1982.............. A-138
Excerpts from January 27, 1977 Opinion Denying
Rose Hall An Interlocutory Injunction ..... A-139
Excerpts from February 12, 1981 Opinion Granting
bs ics cok occ rd cas 6b ks A-143
Se ass) ss) sive eeescatesarcceds A-153
I so i'55 56s vee bie ved d netee ees A-154
ee ee le iy eka eek anes kawees A-155
Regulation M, 12 C.F.R. §213.104 (1973-79)... A-159
Regulation K, 12 C.F.R. §211.7 (1980) ........ A-162
Section 106 of Jamaican Registration of Titles
ek os ce cia ok abe eh oe aE ee a eee A-165
Excerpts from Brief of Appellant Rose Hall Limited
Ae | A-166
Excerpts from Response Brief of Rose Hall Limited
I eect iceossusas A-177
Excerpts from Petition of Plaintiff-Appellant Rose
Hall Limited For Rehearing Under F.R.A.P. 40
And Rehearing En Banc Under F.R.A.P. 35
dated July 27, 1984...................05. A-191
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 83-1845, 83-1865 and 83-1866
ROSE HALL, LTD.
v.
CHASE MANHATTAN OVERSEAS
BANKING CORPORATION,
and HOLIDAY INNS, INC.
Rose Hall Limited,
Appellant in No. 83-1845,
Chase Manhattan Overseas Banking Corporation,
Appellant in No. 83-1865,
Holiday Inns, Inc.,
Appellant in No. 83-1866
ON APPEAL FROM THE UNITED STATES
DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
(D.C. Civil No. 79-182)
Argued July 10, 1984
Before: HIGGINBOTHAM and SLOVITER,
Circuit Judges
and GREEN, District Judge*
“Honorable Clifford Scott Green, United States District
Court for the Eastern District of Pennsylvania, sitting by
designation.
A-1
A-2,
JUDGMENT ORDER
After consideration of all contentions raised by the
appellants, for the reasons noted by Judge Schwartz in
his thoughtful opinion, Rose Hall, Ltd. v. Chase Man-
hattan Overseas Banking Corp., 576 F.Supp. 107 (D. Del.
1983), it is
ADJUDGED, ORDERED and DECREED that the
judgment of the district court be and is hereby affirmed.
Each party to bear its own costs.
BY THE COURT,
A. Leon Higginbotham, Jr.
Circuit Judge
DATED: July 13, 1984
A-3
ROSE HALL, LTD., PLAINTIFF,
v.
CHASE MANHATTAN OVERSEAS BANKING
CORPORATION
and Holiday Inns, Inc., Defendants.
Civ. A. No. 79-182.
United States District Court, D. Delaware
Aug. 19, 1983
As Amended Sept. 6, 1983.
OPINION
MURRAY M. SCHWARTZ, District Judge.
Introduction
After 81 jury trial days spanning over five months
and generating over 15,500 pages of trial transcript
followed by seven and one-half days of deliberations, the
jury returned its special verdict, consisting of answers to
six interrogatories. (Docket Item “Dkt.” 756). Before
judgment was entered on the special verdict, the presid-
ing trial judge, the Honorable Edwin D. Steel, Jr., be-
came seriously ill and unable to discharge his judicial
duties. On May 5, 1983, pursuant to Fed.R.Civ.P. 63, the
case was assigned to Judge Murray M. Schwartz. There-
after, the Court heard argument on the parties’ proposed
forms of judgment. Because of scheduling constraints,
the Court instructed the parties to begin briefing their
post-judgment motions prior to the entry of judgment on
the assumption that judgment would be entered adverse
to each in all respects. Plaintiff, Rose Hall Ltd. (“Rose
Hall” or “plaintiff’), and defendants, Chase Manhattan
Overseas Banking Corporation (“C'iOBC”) and Holiday
Inns, Inc. (“Holiday Inns”), filed their opening briefs on
post-trial motions on June 6, 1983.! On June 10, 1983,
1. Dkt. 770, 771, 772.
A-4
the Court entered judgment on the verdict for plaintiff
against CMOBC in the amount of six million dollars plus
prejudgment interest, and for Holiday Inns against plain-
tiff. Rose Hall v. Chase Manhattan Overseas Banking
Corp., 566 F.Supp. 1558 (D.Del 1983) [hereinafter cited
as “Judgment Opinion” or “Dkt. 773”]. Briefing on the
post-judgment motions as originally instructed by the
Court was completed on July 11, 1983, and hearing was
held on July 15, 1983.
As a result of the briefing of post-judgment motions
prior to entry of judgment, the Court is in the unusual
position of having before it motions from both plaintiff
and CMOBC for judgment notwithstanding the verdict
or, in the alternative, a new trial.2 On July 5, 1983, Rose
Hall amended its motion for judgment notwithstanding
the verdict or alternatively for a new trial to seek such
relief only if the Court grants CMOBC any of the relief
sought in its motion for judgment notwithstanding the
verdict or new trial. (Dkt. 869).
The Court first considers CMOBC’s post-judgment
motions. The Court has determined that CMOBC’s re-
quest for judgment notwithstanding the verdict on the
only issue upon which judgment was granted to plain-
tiff, deceit on the court, must be granted. Applying
Fed.R.Civ.P 50(c)(1), the Court is instructed to rule on
defendant’s new trial motion; that ruling forms the next
portion of the opinion. Plaintiffs motion for judgment
notwithstanding the verdict or in the alternative, a new
trial is addressed in the next portion of this opinion as if
it had been filed pursuant to Fed.R.Civ.P. 50(c)(2). The
Court concludes that plaintiffs motion for judgment
notwithstanding the verdict or, alternatively, new trial
should not be granted. Finally, the opinion addresses the
issue of costs deferred by the Judgment Opinion.
2. The plaintiff has also made a conditional motion that if the
Court grants a new trial of any other issue, it should grant a new trial
on the issue of Holiday Inns’ liability. Holiday Inns opposes this
motion. See Dkt. 771, 772, 866.
A-5
The Court has attempted to treat the significant
issues presented by the parties. Due to the enormity of
the post-judgment briefing, totaling over 550 pages not
including the incorporation by reference of several ear-
lier briefs and letters encompassing hundreds of pages,
the Court’s treatment of these issues has resulted in an
opinion of inordinate length. Any issue not specifically
addressed may be assumed to have been resolved against
the moving party.
The background facts have been set forth at length
in the Judgment Opinion. In order to clarify the complex
history of this case, a largely verbatim recitation of the
facts from the Judgment Opinion will be set forth. In
addition, relevant facts are stated in more detail as re-
quired in the various sections of the opinion.
I. Background Facts
Plaintiff, Rose Hall, is a Cayman Islands corporation
whose ultimate principal and controlling stockholder is
John W. Rollins, Sr. Rose Hall owned approximately
5500 acres of land on the north coast of Jamaica near
Montego Bay. In the late 1960’s, Rose Hall organized a
wholly owned subsidiary company named Rose Hall
(H.I.) Ltd. (“Rose Hall (H.I.)”) for the purpose of owning
a hotel in Jamaica to be known as the Rose Halli Holiday
Inn. The hotel property owned by Rose Hall (H.I.) con-
sisted of the hotel building and an 11 acre tract of land
cut out from the Rose Hall acreage. The hotel was
financed by a $6,250,000 loan from the Bank of Nova
Scotia (“BNS”) to Rose Hall (H.I.) and leased to a sub-
sidiary of Holiday Inns for a twenty year term but guar-
anteed by defendant Holiday Inns.
3. Since both Jamaican and United States currencies are rel-
evant to the transaction and underlying facts, Jamaican currency
will be referred to as “$J.” All other currency figures may be
assumed to be in United States currency.
A-6
Chase Merchant Bankers Jamaica, Ltd. (“Chase Ja-
maica’”’) is a wholly owned subsidiary of the only “Chase”
defendant in this action, Chase Manhattan Overseas
Banking Corporation, which in turn is a wholly owned
subsidiary of Chase Manhattan Bank, N.A. (“CMB”), a
wholly owned subsidiary of the Chase Manhattan Cor-
poration. Chase Manhattan Overseas Corporation
(“CMOC”) is another wholly owned subsidiary of the
Chase Manhattan Bank, N.A.
On June 3, 1974, Rose Hall borrowed $3,000,000
from Chase Jamaica. As security for the loan, Rose Hall
gave Chase Jamaica a first mortgage on approximately
3000 acres of Rose Hall’s land, lying largely in the
middle of the 5500 acre assemblage and a pledge of all
the shares of Rose Hall (H.I.) and caused Rose Hall
(H.I.) to give a second mortgage on the Rose Hall Holi-
day Inn.
Rose Hall quickly went into default on its loan from
Chase Jamaica. By mid-1975, Rose Hall (H.I.) had en-
tered into negotiations for the sale of the hotel to the
Urban Development Corporation (“U.D.C.”), a corpora-
tion owned by the Jamaican government. By May or
June 1976, those negotiations had crystallized into a
tentative arrangement with the Jamaican government.
The hotel and the 11 acres on which it was situated
would be sold to the U.D.C. for $13,000,000, payable in
$10,000,000 cash and $3,000,000 in long-term Jamai-
can government guaranteed debentures.
As the sale negotiations continued, Rose Hall fell
further behind in payments due under the Chase Ja-
maica loan. In early1976, Chase Jamaica, as pledgee of
the shares, registered the stock of Rose Hall (H.1.) in its
name and became involved in the saie negotiations.
Holiday Inns learned of the sale negotiations in
approximately April 1976, and, desiring to modify the
terms of the lease with Rose Hall (H.I.) which it consid-
ered oppressive, held discussions with John Rollins and
Jamaican government representatives. Plaintiff con-
A-7
tended that these discussions embodied: first, threats to
breach its lease unless it was granted concessions; sec-
ond, false and malicious statements that Rose Hall (H.I.)
had misrepresented its earnings to the government; and
third, assertion of a false claim that Rose Hall (H.I.)
owed Holiday Inns approximately $4 million previously
spent by the lessee for maintenance and repair of the
hotel. Without specifying which allegation formed the
basis for its finding, the jury implicitly concluded that
Holiday Inns wrongfully interfered with the Rollins ne-
gotiated proposed $13,000,000 sale to U.D.C. and
thereby caused Rose Hall $4,500,000 in damages.‘
In early August, 1976, Chase Jamaica informed Holi-
day Inns that the Rose Hall (H.I.) shares were in its
name and arranged a meeting for August 20, 1976 in
Miami, Florida. This meeting formed the basis of con-
spiracy claims by plaintiff against the defendant Holiday
Inns. Rose Hall alleged that Chase Jamaica and Holiday
Inns conspired to frustrate the consummation of the
$13,000,000 arrangement and replace it with a sale at a
drastically reduced price, thereby accomplishing objec-
tives beneficial to themselves without regard to Rose
Hall’s interests. The jury, however, found that there was
no such conspiracy.®
In late August, 1976, the U.D.C. formally notified
Rose Hall (H.I.) that it was no longer interested in
pursuing the $13,000,000 negotiations. On September
14, 1976, Chase Jamaica made a proposal far more
attractive to the U.D.C. Instead of $13 million for the
hotel only, Chase Jamaica offered to sell to the U.D.C. all
of the Rose Hall collateral for approximately $9.5 million,
consisting of $8.5 million for the shares of stock of Rose
Hall (H.I.) and $1 million for the 3000 acres of mort-
gaged land. The U.D.C. accepted the offer in late Sep-
tember or early October, 1976, with closing taking place
4. See Interrogatory Nos. 2 and 6, infra, p. 121.
5. See Interrogatory No. 5, infra p. 121.
A-8
on November 18, 1977. In this action, plaintiff alleged
and the jury found that this sale was unreasonably
“cheap”¢ and in violation of Chase Jamaica’s mortgagee
duties, determining that, as a result, plaintiff was dam-
aged in the amount of $1,500,000 for the cheap sale of
the land and $0 for the shares of Rose Hall (H.L.).’
On September 21, 1976, Rose Hall representatives
requested Chase Jamaica to permit Rose Hall (H.1.) to
bring a lawsuit in Georgia against Holiday Inns for
interference with the $13,000,000 arrangement. Rose
Hall representatives also requested that Chase Jamaica
withdraw its offer of sale to the U.D.C. In December,
1976, a lawyer for the Jamaican government requested
that Chase Jamaica sell the assets of Rose Hail (H.1.)
instead of its shares. Chase Jamaica refused these pro-
posed courses of action and subsequently consummated
its $9.5 million sale to the U.D.C. of Rose Hall (H.1.)
stock and 3000 acres of land. By selling stock rather than
the hotel asset, Chase Jamaica effectively made the
interference claim against Holiday Inns unavailable to
plaintiff. Rose Hall sued Holiday Inns in Georgia for
wrongful interference with the $13,000,000 sale nego-
tiations on September 30, 1976. The Georgia court held,
without determining the merits of the interference claim,
that such a suit could only be brought by Rose Hall
(H.L). Rose Hall, Ltd. v. Holiday Inns, Inc., C.A. No.
C227-30 (Ga.Super.Ct., Fulton Cty., filed Sept. 30,
1976), affd, 146 Ga App. 709, 247 S.E.2d 173, cert.
denied, No. 55491 (Ga. Oct. 3, 1978). In effect, the
Georgia court confirmed the unavailability of the inter-
ference claim. The jury found that Chase Jamaica wrong-
fully prevented Rose Hall from suing Holiday Inns in the
Georgia action, and as a result plaintiff suffered
6. Throughout the course of this litigation, the colloquialism
“c ” has been used to describe the sale of the land at less than
the best available price.
7. See Interrogatory Nos. | and 6, infra p. 121.
A-9
$4,500,000 in damages.*
On October 4, 1976, Rose Hall filed an action in the
Supreme Court of Judicature of Jamaica to enjoin the
sale of stock and land by Chase Jamaica to the U.D.C.
and, alternatively, for damages. The Jamaican court re-
fused to enjoin the sale on the ground that monetary
damages would be an adequate remedy if Rose Hall
succeeded in proving its case at trial. Rose Hall, Ltd., et
al. v. Chase Merchant Bankers Jamaica Ltd., et al., Suit
No. E-211 of 1976 (Sup.Ct. of Judicature of Jam., Jan.
17, 1977). (Plaintiff's Exhibit “PX” 140). In the instant
action, the plaintiff contended, and the jury found, that
the defeat of the injunction was caused by misrepresen-
tations to the Jamaican court made by representatives of
Chase Jamaica to the effect that it would be financially
able to meet any damage liability in view of the perma-
nence of its Jamaican operation and its affiliation with
the other Chase entities. There was evidence that at the
time these representations were being made, actual un-
disclosed plans to close down Chase Jamaica's operation
existed. By February 1978, Chase Jamaica's office
closed and ceased active business.
In mid-1980, the Jamaican court listed the Jamaican
action for trial in January, 1981. Rose Hall moved to stay
the Jamaican action pending resolution of the Delaware
action. CMOBC opposed the stay and offered to pay any
final judgment that might be entered against Chase
Jamaica to the extent of J$10,000,000, subject to certain
conditions. The Jamaican court, noting that CMOBC’s
offer was so conditional as to be “worthless,” granted the
stay of the proceedings. Rose Hall Ltd., et al. v. Chase
Merchant Bankers Jamaica Ltd., et al., Suit No. E-211 of
1976 (Sup.Ct. of Judicature of Jam., Feb. 12, 1981) (PX
141, p. 21). On Chase Jamaica's appeal, the Court of
Appeal of Jamaica affirmed the granting of the stay.
8. See Interrogatory Nos. 2 and 6, infra p. 121.
9. See Interrogatory No. 4, infra p. 121
A-10
Chase Merchant Bankers Jamaica Ltd., et al. v. Rose
Hall Ltd., et al., Sup.Ct. Civil Appeal No. 78/80, (Ct. of
Appeal, Jam., June 23, 1982) (PX 641). Chase Jamaica
then appealed the decision to the Privy Council in Lon-
don. This appeal has apparently been abandoned. (Dkt.
868, p. 77 n. *).
On April 11, 1979, Rose Hall filed the instant action
against CMOBC, the parent corporation of Chase Ja-
maica, and against Holiday Inns. One of the alternative
grounds advanced by plaintiff for imposing liability on
the parent, CMOBC, for Chase Jamaica’s wrongs is
embodied in Paragraph 54 which was added to the
Second Amended Complaint by amendment on Septem-
ber 30, 1982.'° After extensive discovery, a jury trial was
10. Paragraph 54 reads as follows:
54. In addition to its liability under the Federal Reserve Act,
referred to in paragraphs 2, 3 and 5 hereof, Chase Overseas
|{CMOBC| is liable for, and should be regarded in law and in fact
as a party to, all the wrongful acts and omissions of Chase
Jamaica or “Chase” alleged in this complaint, because Chase
Overseas’ power of control over Chase Jamaica and Chase
Jamaica's status as a purportedly separate entity, have been
used, to plaintiff's injury, to justify wrong and to perpetrate and
protect fraud, and to attempt further frauds. The fraud com-
menced in the early proceedings in the Supreme Court of
Judicature of Jamiaca in Rose Hall Limited, et al. v. Chase
Merchant Bankers Jamaica Limited, et al., Suit No. E-211 of
1976 (“The Jamaican action”). Rose Hall's attempt to enjoin the
reasonably |sic| cheap sale of the Rose Hall (H.1.) shares and
3,000 + acres of land was defeated by false representations to
the Jamaican Court that Chase Jamaica had substantial assets,
would continue to do business in Jamaica, and was and would
be in a position to pay whatever damages might be awarded to
Rose Hall. The Jamaican Court believed these misrepresenta-
tions and denied the injunction for those express reasons. When
these representations were made, Chase had already decided, as
alleged in paragraph 16, above, to close down its Jamaican
operation and liquidate as quickly as possible all of its loans in
Jamaica, and the plans had already been made whereby “we
should be out of Jamaica next year around the end of June” —
ie., by June, 1977, well before the Jamaican action would be
A-11
held from October 12, 1982 to March 8, 1983. The jury
returned the “Special Verdict Accompanied By Interroga-
tories to the Jury Under Rule 49(a)” on March 17, 1983.
It reads as follows:
SPECIAL VERDICT ACCOMPANIED BY
INTERROGATORIES TO THE JURY UNDER RULE
49a)
1. In selling (a) the 3,000 acres of land and (b) the shares of Rose
Hall (H.1.) Ltd. did Chase Jamaica breach its duty to act in good faith.
without reckless disregard for the interests of the mortgagor, taking rea-
sona'je precautions to obtain the best available price and to avoid an
unreasonable sale of excess collateral? Yes x No _
2. Did Chase Jamaica wrongfully prevent plaintiff from suing Holiday
Inns in Georgia for alleged interference with the US$13 million sale either
by Chase Jamaica selling to UDC shares instead of assets of Rose Hall (HL)
or by refusing to take other action which would have permitted Rose Hall
expected to reach trial. Chase thereafter carried these plans out
as promptly as it deemed prudent, completing them in approxi-
mately February, 1978. More recently, Chase Overseas manipu-
lated Chase Jamaica's defense of the Jamaican action, which
remained pending as a damage action against the emptied shell
of Chase Jamaica, seeking unfair litigation advantage to itself in
this case. By such manipulation, Chase Overseas attempted to
bring the Jamaican action to trial before this case, hoping to
render this action moot and to avoid a trial here “involving the
extensive pretrial discovery and trial practices attendant on the
Delaware action” (which were later to reveal important addi-
tional documents damaging to Chase). For these purposes.
Chase Overseas openly took part in the Jamaican action (in part
purportedly through Chase Jamaica) and even attempted to
bargain directly with the Jamaican court by offering, in the light
of Chase Jamaica's having been stripped of assets, Chase
Overseas’ undertaking to “pay any final judgment that may be
entered against Chase |Jamaica|] in |the Jamaican action) up to
the extent of |devalued| Jamaican dirs ten million” if the Jamai-
can court would rule in favor of Chase Jamaica on the disputed
issue whether an early trial of the Jamaican action should be
had.
A-12
(H.L.) to join in the Georgia lawsuit? Yes x No _
3. Did CMOBC control Chase Jamaica's major decisions and actions
relating to its actions under Question 1. or its actions under Question 2.?
As to Question 1.
(a) ? because of the Edge Act theory and/or Yes No x
(b) independently of the Edge Act Yes Nox
As to Question 2.
(a) because of the Edge Act theory and/or Yes Nox
(b) independently of the Edge Act Yes No x
4. Did Chase Jamaica, through its representations, as a result of its
control by CMOBC, deceive the Jamaican court into not enjoining the sale
of the collateral? Yes x No _
5. Did Holiday Inns wrongfully conspire with Chase Jamaica in (a)
selling the land, or (b) the shares under Question 1. or in taking its actions
under Question 2.?
A. As to the sale of the land—Question 1.(a) Yes Nox
B. As to the sale of the shares of Rose Hall (H.1L )—
Question 1.(b) Yes Nox
C. As to Question 2. Yes _ No x
6. If the answer to Question 1. is “Yes”. what damages. if any, did
plaintiff suffer as a result:
(a) for the land $1,500,000
(b) for the shares $ 0
If the answer to Question 2. is “Yes”, what damages, if any, did plaintiff
suffer as a result: $4,500,000
NOTE: Answer Questions 3., 4., 5., and 6. only if Question 1. or
Question 2. is answered “Yes.” Regardless of your answer to Question 3.. 4..
or 5., answer Question 6.
The Special Interrogatories were formulated so that
Interrogatory Nos. 1 and 2 posed the question of whether
Chase Jamaica, a nonparty to this action, committed any
wrong with respect to the sale of the land and Rose Hall
(H.1.) shares or wrongfully prevented plaintiff from su-
A-13
ing Holiday Inns in Georgia. Interrogatory Nos. 3, 4 and
5 sought to determine who was liable if Interrogatory
Nos. 1 and/or 2 were answered in the affirmative. Inter-
rogatory Nos. 3 and 4 inquired whether CMOBC was
liable. Interrogatory No. 3 centered on liability by reason
of control of Chase Jamaica under plaintiffs Edge Act
theory'! or independently of the Edge Act while Inter-
rogatory No. 4 sought to have the jury determine on an
alternative theory of liability whether Chase Jamaica
deceived the Jamaican court into not issuing an injunc-
tion and whether that deception resulted by reason of
control by CMOBC. Interrogatory No. 5 sought to deter-
mine whether Holiday Inns was liable to plaintiff for
wrongfully conspiring with Chase Jamaica. Finally, In-
terrogatory No. 6 sought to have the jury’s assessment of
damages if Chase Jamaica did commit any of the wrongs
set forth in Interrogatory Nos. 1 and 2. An assessment of
damages in answer to Interrogatory No. 6 does not
necessarily mean Rose Hall is entitled to judgment. The
jury was instructed to assess plaintiff's damages in In-
terrogatory No. 6 even if it found none of the named
defendants in the lawsuit responsible for the wrongs
committed by Chase Jamaica. This instruction by Judge
Steel to the jury on the special verdict sheet was done
over objection of CMOBC at the behest of plaintiff.
Pl- atiff consistently maintained before Judge Steel that
CMOBC is liable for Chase Jamaica’s breaches of duty
under the Edge Act as a matter of law. As a consequence,
plaintiff asserted prior to verdict, and continues to assert
that the jury’s answers to Interrogatory Nos. 3, 4 and 5
are irrelevant, i.e., who is liable and on what theory is
unimportant because CMOBC is liable as a matter of
11. The Edge Act, 12 U.S.C. §§611-632 (“Edge Act”), allows
banks to carry on foreign or international banking through the
agency, ownership, or control of branches or local institutions. For
a discussion of plaintiff's Edge Act theory see infra pp. 161-166 and
Rose Hall, Ltd. v. Chase Manhattan Overseas Banking Corp., 494
F.Supp. 1139, 1154-56 (D. Del. 1980).
A-14
law. While ruling against plaintiff on its theory under the
Edge Act, Judge Steel was obviously persuaded by plain-
tiff that if he were in error, a lengthy retrial could be
avoided by obtaining the jury’s assessment of plaintiff's
damages without regard to who was liable. !2
In answer to Interrogatory No. 1, the jury deter-
mined that Chase Jamaica, a nonparty in this action,
wrongfully failed to realize the best available price for the
land and shares of Rose Hall (H.1.) Ltd. in its sale to the
U.D.C. In answer to Interrogatory No. 6, the jury found
plaintiff was damaged in the amount of $1,500,000 for
the land and $0 for the shares. Therefore, the jury
necessarily concluded that at the time of the sale, the
Rose Hall (H.I.) shares were worth no more to the
U.D.C. than the $8,500,000 sale price it paid and the
3000 acres were worth $2,500,000, or $1,500,000 more
than the $1,000,000 sale price paid by the U.D.C.
By its affirmative answer to Interrogatory No. 2, the
jury determined that Chase Jamaica wrongfully pre-
vented Rose Hall from suing Holiday Inns for interfer-
ence in the $13,000,000 sale negotiations between John
Rollins and the U.D.C. In answer to Interrogatory No. 6,
the jury found that as a result plaintiff suffered damages
in the amount of $4,500,000. As indicated in the in-
structions, for the jury to arrive at this conclusion, it
12. Plaintiffs position was memorialized in a letter to Judge
Steel:
We respectfully request that the jury be asked to determine
the amount of plaintiff's damages, regardless of the answers to
questions 3, 4 and 5. Plaintiff claims that, as a matter of law,
CMOBC is liable for Chase Jamaica's breaches under the Edge
Act, regardless of what answers the jury might give to questions
3, 4, and 5. If plaintiff later prevails on that point, but no verdict
on the amount of damages had been rendered, a retrial would be
necessary. That risk can be avoided, simply by taking a verdict
on the amount of Rose Hall’s damages regardless of the answers
to questions 3, ©. «nd 5.
Letter from Paul P. Welsh, Esq. to Honorable Edwin D. Steel. Jr..
March 4, 1983.
A-15
must have determined that in fact Holiday Inns did
interfere, and that if Rose Hall had been able to sue
Holiday Inns, it would have been awarded $4,500,000 in
damages. !3
In this action, however, Holiday Inns could not be
sued directly for the interference since only Rose Hall
(H.I1.) was possessed of that chose in action; rather it was
sued oniy on a conspiracy theory of liability. In order to
impose liability on Holiday Inns, plaintiff was required to
prove Holiday Inns conspired with Chase Jamaica in
committing the wrongs described in Interrogatory No. 1
or Interrogatory No. 2. In answer to Interrogatory Nos.
5(A), (B) and (C), the jury found no conspiracy on the
part of Holiday Inns. Therefore, judgment was entered
in favor of Holiday Inns and against plaintiff on all
claims.
Several possible bases for imposing liability on
CMOBC for Chase Jamaica’s wrongs were submitted to
the jury in Interrogatory Nos. 3 and 4. The jury deter-
mined that CMOBC did not control Chase Jamaica’s
major policy decisions and actions relating to the events
described in Interrogatory Nos. 1 and 2.!4 In addition,
the jury found that CMOBC rebutted the presumption of
control under the Edge Act,!> established by Judge Steel
in Rose Hall Ltd. v. Chase Manhattan Overseas Banking
Corp., 494 F.Supp. at 1154-56. '«
13. The following figures illustrate the amount of damages:
BOLLINS’ DEAL CHASE JAMAICA'S SALE
$13,000,000 sale price for hotel $9,505,000 sale price for hotel
shares and land
_-6.250,.000 BNS first mortgage -6,250,000 BNS first mortgage
$ 6.750.000 equity in hotel 3,255,000
~L.0200,000 land price
$2,255,000 equity in hotel
$ 4.495.000 difference in equity in hotel
14. Interrogatczy Nos. 3(1)(b) and 3(2)(b), supra p. 121.
15. For a more complete discussion see infra pp. 166-172.
16. Interrogatory Nos. 3(1)(a) and 3(2)(a), supra p. 121.
A-16
The only basis found by the jury for holding defen-
dant CMOBC liable for the wrongs of its subsidiary,
Chase Jamaica, is embodied in Interrogatory No. 4. An
affirmative answer to that question constitutes a factual
finding by the jury that during the injunction proceed-
ing in Jamaica, Chase Jamaica made false representa-
tions to the Jamaican court which induced that court to
defeat Rose Hall’s attempts to enjoin the sale of collat-
eral. The jury found that the Jamaican court was de-
ceived by Chase Jamaica to believe there was no inten-
tion to close its operations and that it would remain in
Jamaica with access to sufficient funds to satisfy any
money judgment against it, when actual undisclosed
plans to the contrary existed. The jury also found that
this deception of the Jamaican court was controlled by
CMOBC.
Based on the jury’s answers to Special Interrogato-
ries, the Court entered judgment for Holiday Inns against
plaintiff on all claims and for plaintiff against CMOBC in
the amount of six million dollars plus prejudgment in-
terest. (Dkt. 773). Presently, the Court turns to the
resolution of the parties’ motions for judgment not-
withstanding the verdict, or, in the alternative, for a new
trial.
II. Legal Standards Applicable to the Parties’ Post-
Judgment Motions
A. Motions for Judgment Notwithstanding the
Verdict
This opinion addresses both plaintiff's and defend-
ant CMOBC’s motions for judgment notwithstanding
the verdict under Fed.R.Civ.P. 50(b).!7 Both parties
17. Fed.R.Civ.P. 50(b) provides in pertinent part:
(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
—— ee weenie cates 8 3
A-17
agree that “|t]he standards for granting a motion for
judgment n.o.v. . . . are the same as those governing the
direction of a verdict.” 5A J. Moore, Mocre’s Federal
Practice 950.07[2] (2d ed. 1981). A court should grant
the motion “if, without weighing the credibility of the
evidence, there can only be one conclusion as to the
proper judgment, and it is contrary to the verdict.” Kerry
Coal Co. v. United Mine Workers, 488 F.Supp. 1080,
1094-95 (W.D.Pa. 1980), affd, 637 F.2d 957 (3d Cir.
1981), cert. denied, 454 U.S. 823, 102 S.Ct. 109, 70
L.Ed.2d 95 (1981). The Court is not free to “weigh the
evidence, pass on the credibility of witnesses, or substi-
tute its own judgment of facts for that of the jury.” 488
F.Supp. at 1095 (citing 9 C. Wright & A. Miller, Federal
Practice and Procedure §2524 at 541-544 (1971)). The
Court may overturn a jury verdict only where the facts
and all inferences, drawn in the nonmoving party’s favor,
would not permit a reasonable man to come to the
conclusion the jury reached. Kerry Coal, 488 F.Supp. at
1095 (citations omitted).
B. Motions for a New Trial
Rose Hall and CMOBC have also moved for a new
trial on various grounds. Although Fed.R.Civ.P. 59 does
not enumerate the grounds for a new trial,!* the follow-
to a later determination of the legal questions raised by the
motion. Not later than 10 days after entry of judgment, a party
who has moved for a directed verdict may move to have the
verdict and any judgment entered thereon set aside and to have
judgment entered in accordance with his motion for a directed
verdict;. ... A motion for a new trial may be joined with this
motion, or a new trial may be prayed for in the alternative. If a
verdict was returned the court may allow the judgment to stand
or may reopen the judgment and either order a new trial or
direct the entry of judgment as if the requested verdict had
been directed... .
18. Fed.R.Civ.P. 59 provides in pertinent part:
(a) Grounds. A new trial may be granted to all or any of
the parties and on all or part of the issues (1) in an action in
A-18
ing have been recognized as general grounds for a new
trial: the verdict is against the clear weight of the evi-
dence; damages are excessive; the trial was unfair; and
that substantial errors were made in the admission or
rejection of evidence or the giving or refusal of instruc-
tions. 11 C. Wright & A. Miller, Federal Practice and
Procedure §2805 at 37-38 (1973). A new trial motion on
the ground that the verdict is against the weight of the
evidence is to be distinguished from a motion for a
directed verdict or for a judgment notwithstanding the
verdict which raises the legal sufficiency of the evidence.
In cases where a directed verdict or judgment not-
withstanding the verdict would not be justifed, the trial
court may set aside the verdict as contrary to the clear
weight of the evidence and grant a new trial. 6A J.
Moore, Moore’s Federal Practice, §59.08[5] (2d ed. 1983).
However, the Court should not set the verdict aside as
against the clear weight of the evidence solely because it
would have reached a different result as the trier of fact.
Id. The Third Circuit Court of Appeals enunciated the
test as follows:
[S]ince the credibility of witnesses is peculiarly for
the jury, it is an invasion of the jury’s province to
grant a new trial merely because the evidence was
sharply in conflict. The trial judge, exercising a
mature judicial discretion, should view the verdict in
the overall setting of the trial; consider the character
of the evidence and the complexity or simplicity of
the legal principles which the jury was bound to
apply to the facts, and abstain from interfering with
the verdict unless it is quite clear that the jury has
reached a seriously erroneous result. The judge’s
NOTES (Continued )
which there has been a trial by jury, for any of the reasons for
which new trials have heretofore been granted in actions at law
in the courts of the United States.
A-19
duty is essentially to see that there is no miscarriage
of justice. If convinced that there has been then it is
his duty to set the verdict aside; otherwise not.
Lind v. Schenley Industries, Inc., 278 F.2d 79, 89 (3d
Cir. 1960), cert. denied, 364 U.S. 835, 81 S.Ct. 58, 5
L.Ed.2d 60 (1960) (quoting 6 J. Moore, Moore’s Federal
Practice, (2d ed.) p. 3819).
The modern trend has been for courts to exercise a
more limited judicial discretion in determining whether
to set aside a verdict as against the clear weight of the
evidence. Schreffler v. Board of Education, 506 F.Supp.
1300, 1306 (D.Del. 1981). The Third Circuit appellate
court has distinguished new trials granted on this ground
from those granted because of claimed errors or defects
in the conduct of the trial, such as evidence improperly
admitted or prejudicial statements by counsel. New tri-
als granted because of the court’s finding that the verdict
was against the clear weight of the evidence will receive
closer scrutiny on review. Hourston v. Harvlan, Inc.,
457 F.2d 1105, 1107 (3d Cir. 1972) (citing Lind v.
Schenley Industries, Inc., 278 F.2d at 90); Schreffler v.
Board of Education, 506 F.Supp. at 1306.
C. Standards Under Fed.R.Civ.P. 63
Rule 63 provides for reassignment of a case upon the
disability of the presiding trial judge, and states that if
the successor judge “is satisfied that he cannot perform
[the] duties [to be performed by the court after a verdict
is returned] because he did not preside at the trial or for
any other reason, he may in his discretion grant a new
trial.” Fed.R.Civ.P. 63. If the trial judge is disabled after
the jury returns a verdict but before motions for judg-
ment notwithstanding the verdict or new trial are heard
or decided, the successor judge may pass on these mo-
tions. “The latter then becomes vested with the same
broad discretion to grant or deny such motions as was
the trial judge.” Miller v. Pennsylvania Railroad Co.,
A-20
161 F.Supp. 633, 636 (D.D.C. 1958), rev’d on other
grounds, 272 F.2d 545 (D.C.Cir. 1959).
The parties agree there is nv impediment to the
determination of their judgment notwithstanding the
verdict motions by the successor judge in this case.
Complications arise, however, when new trial motions
are based, as some of the present ones aie, on the ground
that the verdict is contrary to the clear weight of the
evidence. In this situation, the ceurt might itself have to
weigh the evidence. Although determination of the “cre-
dibility of witnesses is peculiarly for the jury,” 6A J.
Moore, Moore’s Federal Practice, §59.08[5] (2d ed. 1983),
a judge may be required to pass on the credibility of
witnesses in determining whether the verdict is against
the clear weight of the evidence. Ruggieri v. Beauregard,
110 R.1. 197, 291 A.2d 413, 414 (Sup.Ct.R.1.1972).19 “It
is difficult to perceive the propriety of an exercise of such
power where credibility is involved, the successor judge
having neither seen nor heard the witnesses as they
testified.” 291 A.2d at 414. In some instances, scrutiny of
the relevant transcript portions and documents may in-
dicate that no credibility determinations are involved.
Then, the successor judge can clearly rule on the new
trial motions. See e.g., Miller v. Pennsylvani« Railroad
Co., 161 F.Supp. 633, 642 (D.D.C.1958), rev’d on other
grounds, 272 F.2d 545 (D.C.Cir.1959). However, if the
successor judge finds that determining whether the
verdict is contrary to the clear weight of the evidence
involves questions of credibility which he should deter-
mine, he should, in his discretion, grant a new trial.
Ruggieri, 291 A.2d at 414-15.
Several cases requiring a new trial because of the
successor judge’s inability to make credibility determi-
nations involved bench trials where the presiding judge
became disabled before making findings of fact. See e.g.,
19. The Supreme Court of Rhode Island was applying a state
rule of civil procedure patterned after Rule 63.
Swe te een be OES a
A-21
Brennan v. Grisso, 198 F.2d 532 (D.C.Cir. 1952); Fed-
eral Deposit Insurance Corp. v. Siraco, 174 F.2d 360 (2d
Cir. 1949). These cases are distinguishable from the
present one in which the Court’s function is to review
the jury findings to determine if they are against the
clear weight of the evidence. Rule 63 cannot be read to
require a new trial in every case in which the presiding
trial judge becomes disabled before passing on post-judg-
ment motions and a non-prevailing litigant thereafter
urges that the existence of credibility issues fairly re-
solved by the jury nonetheless entitle it to a new trial.
Rather, it provides the successor judge with discretion to
grant a new trial if he feels it is necessary in light of the
entire record and nature of the credibility issue.
Finally, in considering the motions for judgment
notwithstanding the verdict and new trial, the parties
have urged the successor judge to revisit certain rulings
of Judge Steel. The general rule in this circuit and
elsewhere is that “judges of coordinate jurisdiction sit-
ting in the same court and in the same case should not
overrule the decisions of each other.” TCF Film Corp. v.
Gourley, 240 F.2d 711, 713 (3d Cir. 1957). This is
regarded as a “necessary rule of judicial comity to pre-
serve the orderly functioning of the judicial process.” Id.
at 714. This rule, however, “is not absolute and all-em-
bracing in its scope.” United States v. Mathies, 350 F.2d
963, 964 (3d Cir. 1965). There are “exceptional circum-
stances,” such as when the judge who made the original
decision is, by death, resignation or disability, not avail-
able to reconsider his decision. In such a case, the
successor judge is empowered to reconsider the previous
ruling and reverse it if necessary. TCF Film, 240 F.2d at
714; see also, Hayman Cash Register Co. v. Sarokin, 669
F.2d 162, 168-70 (3d Cir. 1982); United States Gypsum
Co. v. Schiavo Brothers Inc., 668 F.2d 172, 177 (3d Cir.
1981), cert. denied, 456 U.S 961, 102 S.Ct. 2038, 72
L.Ed.2d 485 (1982).
A-22
This Court will be guided by these general principles
in reviewing rulings made by Judge Steel. Such rulings
will not be disturbed unless this Court is satisfied that
they were erroneous and are material to the issues cur-
rently at hand.
Il. Liability of CMOBC—Deception of the Jamaican
Court
A. Motion for Judgment Notwithstanding the
Verdict
CMOBC has moved for judgment notwithstanding
the verdict on several grounds related to Interrogatory
No. 4. First, defendant urges that the only permissible
construction of the Special Verdict precludes a holding
that separate corporate entities should be disregarded.
Second, CMOBC contends that under Jamaican law, “no
civil theory of recovery may be predicated in whole or in
part upon allegedly false testimony in another judicial
proceeding.” Third, CMOBC claims that it cannot rea-
sonably be concluded from all the evidence that plaintiff
established fraud by clear and convincing proof. Fourth,
CMOBC contends that plaintiff's proof is insufficient as
a matter of law to support a finding that CMOBC con-
trolled the alleged fraud on the court. These issues will
be considered seriatim.
1. Legal Sufficiency of the Special Verdict So As to
Permit the Separate Existence of CMOBC to Be
Ignored
Defendant restates its argument that since the jury
found in Interrogatory No. 3 that CMOBC did not control
Chase Jamaica's wrongs referenced in Interrogatory Nos.
1 and 2, there can be no liability of CMOBC based on
these wrongs. In essence, CMOBC contends that the
jury's affirmative asnswer to Interrogatory No. 4 is in-
sufficient to justify disregarding the separate corporate
A-23
entities and to hold CMOBC liable for the six million
dollars in damages assessed by the jury.
This argument was treated in this Court's Judgment
Opinion. The Court concluded that an affirmative an-
swer to Interrogatory No. 4, encompassing as it does the
fact that a misrepresentation occurred that deceived the
Jamaican court into not issuing the injunction and that
CMOBC controlled the making of that misrepresenta-
tion requires disregard of the separate corporate entities.
Moreover, the Court held CMOBC would be liable for the
full amount of damages, regardless of the jury's finding
of no control in Interrogatory No. 3. CMOBC is not
entitled to judgment notwithstanding the verdict on this
ground. If the jury's findings in Interrogatory No. 4 are
supported in the record, there is no reason to upset that
determination. Conversely, if there has been a failure of
proof, the verdict cannot stand.
2. The Existence of a Cause of Action for False Tes-
timony in the Jamaican Court
CMOBC asserts that since under Jamaican law no
civil theory of recovery can be predicated upon allegedly
false testimony in another judicial proceeding, plaintiff's
paragraph 54 claim must fail. CMOBC did not raise this
issue in its September 13, 1982 Answering Brief in
Opposition to Plaintiff's Proposal to Amend the Second
Amended Complaint by Adding a New Paragraph 54
Thereto (Dkt. 524). As a result the question was not
treated by Judge Steel in the opinion allowing Rose
Hall’s amendment. (Dkt. 568, 9/30/82). Defendant first
raised the issue on October 5, 1982, in its Motion, to
Dismiss Paragraph 54 Pursuant to Rule 12(b)(6) on the
ground that it fails to state a claim upon which relief can
be granted. (Dkt. 602). Hearing was held on October 7,
1982, and Judge Steel orally ordered “that the hearing
|and| determination thereof be deferred until trial pur-
suant to Rule 12(d).” (Dkt. 663, p. 14). The ruling was
A-24
formalized in an order dated October 8, 1982 (Dkt. 654)
and trial commenced on October 12, 1982.
CMOBC again raised the issue in its November 30,
1982 Motion for a Directed Verdict and the accompany-
ing briefs. (Dkt. 693, 694, 696, 697). Judge Steel again
in effect deferred ruling on the issue by stating: “the
motions will not be granted, but I can assure the litigants
that when their motions for judgment N.O.V. [arise], if
that should ever be required, very serious consideration
will be given to those motions.” (Dkt. 809, Tr. 6442-43).
Presently, the Court undertakes the promised serious
consideration of CMOBC’s contention.
a. Choice of Law
Asa preliminary matter, it must be determined which
law governs the claim that Chase Jamaica, as a result of
its control by CMOBC, perpetrated a fraud upon the
Jamaican court. In a previous opinion in this case, Judge
Steel held that Jamaican law governs the question of
whether Chase Jamaica committed a fraud on the Ja-
maican court. (Dkt. 568, p. 7).
Plaintiff now asserts that the tort law of some un-
specified jurisdiction within the United States governs
the liability of CMOBC. Plaintiff relies upon Judge Steel's
statement that the liability of CMOBC, as a
stockholder, for the wrongs of its subsidiary is governed
by the laws of the United States. (Dkt. 568, p. 8). In
response, defendant correctly maintains that Judge Steel
concluded, in his previous opinion, that under the Re-
statement (Second) of Conflict of Laws §145 (1971) or
the Delaware common law choice of law rule Jamaican
law would govern the question of whether Chase Ja-
maica committed a fraud on the Jamaican court. Judge
Steel further held that whether CMOBC, as a parent
Edge Act corporation, should be liable for the wrongs of
Chase Jamaica would be governed by the laws of the
United States. (Dkt. 568, p. 7-8). This Court subscribes
A-25
to Judge Steel’s holdings and further finds that even if
plaintiff were attempting to hold CMOBC liable for the
fraud upon the Jamaican court as a tortfeasor and not as
the parent of Chase Jamaica, Jamaican law would gov-
ern
All of the events at issue with regard to the fraud
took place in Jamaica. Under section 145 of the Restate-
ment (Second), Jamaican law would clearly apply. The
injury and the conduct causing the injury occurred in
Jamaica. The relationship between Rose Hall and Chase
Jamaica centered in Jamaica and Rose Hall never had
any formal relationship with defendant CMOBC. The
contacts of the parties with jurisdictions other than
Jamaica are insufficient to warrant the application of
their laws.
Jamaican law would apply under the common law
rule in Delaware as well. In the case of intentional torts,
such as fraud, the lex loci delicti rule requires a court to
apply the substantive law of the state or, in this case,
country where the defendant’s wrongful conduct prima-
rily occurred. See Johnston Associates, Inc. v. Rohm and
Haas Co., 560 F.Supp. 916, 918 (D.Del. 1983). It is
beyond dispute that the fraud upon the Jamaican court
occurred primarily, if not exclusively, in Jamaica.
20. Section 145 provides:
(1) The rights and liabilities of the parties with respect to an
issue in tort are determined by the local law of the state which, with
respect to that issue, has the most significant relationship to the
occurrence and the parties under the principles stated in § 6.
(2) Contacts to be taken into account in applying the principles
of § 6 to determine the law applicable to an issue include:
(a) the place where the injury occurred,
(b) the place where the conduct causing the injury occurred,
(c) the domicil, residence, nationality, place of incorporation
and place of business of the parties, and
(d) the place where the relationship, if any, between the
parties is centered.
These contacts are to be evaluated according to their relative im-
portance with respect to the particular issue.
A-26
b. Jamaican Law
Having determined that Jamaican law governs the
plaintiff's claim of fraud upon the court, the issue then
becomes whether CMOBC can be held liable for the
alleged fraud. This issue involves two questions: first,
whether a cause of action against Edward C. Brown,
Managing Director of Chase Jamaica,?! Chase Jamaica
or CMOBC in tort for civil damages arising from the
perjured testimony is recognized under Jamaican law,
and, second, whether CMOBC could be liable, under a
disregard of corporate entity theory, for the wrongs of
Chase Jamaica. If the first question is answered in the
negative, one theoretically cannot reach the second ques-
tion.
CMOBC argues that under Jamaican law no civil
tort claim may be predicated in whole or in part upon
allegedly false testimony in a judicial proceeding. De-
fendant asserts that Jamaican law forecloses a cause of
action against a witness which is premised upon his
statements made in court. Jamaican law, defendant also
claims, forecloses holding anyone liable for the alleged
perjury of another. Defendant concludes that even if
Brown lied to the Jamaican court to the plaintiff's
prejudice, Jamaican law is clear that no civil tort liability
can be based thereon against Brown, Chase Jamaica or
CMOBC.
In response, plaintiff maintains, without citing any
authority, that “we doubt that [Jamaican law] goes as far
as CMOBC suggests.” (Dkt. 696, p. 16). In addition,
plaintiff argues that the non-final nature of the Jamaican
court’s denial of the plaintiff's motion to enjoin the sale
at issue precludes operation of Jamaican law prohibiting
civil suits for damages arising from perjury.
21. Brown, on cross-examination, made the critical represen-
tation to the Jamaican court which plaintiff contends constituted a
fraud or deception. See infra pp. 135-136.
ee ee
A-27
Upon review of the authorities cited by the defend-
ant and independent examination of English and Jamai-
can law, the Court holds that under Jamaican law the
plaintiff's claim against CMOBC for fraud upon the court
fails to state a valid cause of action. Under Jamaican law,
allegations of false testimony in a prior proceeding can-
not be made part of any cause of action against a witness,
a party, or a non-party, such as CMOBC.
The law in Jamaica and England?22 is that the testi-
mony of a witness in a judicial proceeding is absolutely
privileged from any subsequent civil action for damages.
A witness is protected from civil proceedings in
respect of the evidence which he gives in judicial
proceedings, and in respect of things said or done in
the course of preparing evidence for such proceed-
ings. The protection is against actions of any sort,
and is not limited to actions for libel and slander.
17 Halsbury’s Laws of England, Evidence, 4261 at 182
(4th ed. 1976) (footnotes omitted) (Dkt. 770A, Ex. N);
see Trapp v. Mackie, [1979] 1 All E.R. 489, 490-91, 497
(House of Lords) (Dkt. 694, Ex. K); Marrinan v. Vibart,
[1962] 1 All E.R. 869, 871 (Queen’s Bench), opinion
adopted and aff'd, |1962] 3 All E.R. 380 (Court of Ap-
peal) (Dkt. 694, Ex. G); Hargreaves v. Bretherton, {1958}
3 All E.R. 122, 123, 125 (Queen’s Bench) (Dkt. 694, Ex.
G); Watson v. McEwan, Watson v. Jones, |1905| AC 480,
486 (House of Lords) (Dkt. 694, Ex. L). Recently, the
Court of Appeal in Jamaica reaffirmed this fundamental
rule: ;
The rule of law is that what is said in the course of
the administration of the law is privileged; and the
reason of the rule covers counsel, judge, parties and
witnesses who in this respect are all equally pro-
tected.
22. Jamaican courts accord precedential weight to the deci-
sions of the English courts. See Judgment Opinion, p. 22 n. 37.
A-28
Bodden v. Brandon, {|1965] Gleaner Law Reports 199,
203 (citation omitted). (Dkt. 694, Ex. C).
One of the principal purposes of the rule is to pre-
vent disgruntled litigants from bringing vexatious suits
against witnesses. As one court stated:
The rule of law exists, not because the conduct of
those persons ought not of itself to be actionable, but
because if their conduct was actionable, actions
would be brought against judges and witnesses in
cases in which they had not spoken with malice, in
which they had not spoken with falsehood. It is not
a desire to prevent actions from being brought in
cases where they ought to be maintained that has
led to the adoption of the present rule of law; but it
is the fear that if the rule were otherwise, numerous
actions would be brought against persons who were
merely discharging their duty. It must always be
borne in mind that it is not intended to protect
malicious and untruthful persons, but that it is in-
tended to protect persons acting bona fide, who
under a different rule would not be liable, not per-
haps to verdicts and judgments against them, but to
the vexation of defending actions.
Marrinan v. Vibart, |1962] 3 All E.R. at 382 (quoting
Munster v. Lamb, [1883] 11 Q.B.D. 588, 607). The rule
also serves to avoid a multiplicity of actions in which the
value or truth of the evidence would be tried over again.
Trapp v. Mackie, |1979] 1 All E.R. at 497. Thus, it is
clear that under Jamaican law, a civil damage action for
perjury could not be brought against Brown.2?
23. In England, the absolute immunity of witnesses extends
not only to those who actually testify at trial but to those who méke
statements prior to the commencement of proceedings, if the state-
ments were made in the preparation of evidence for trial. See Evans
v. London Hospital Medical College |1981) 1 All E.R. 715, 719-20
(Queens Bench) (Dkt. 694, Ex. F); Marrinan v. Vibart |1962) 3 All
E.R. 380 at 383.
a ee
Ne
Pe
MEAD BD. we
A-29
This immunity would clearly extend to Brown’s em-
ployer, Chase Jamaica. Brown was not testifying in a
personal capacity but as a representative of Chase Ja-
maica. Interrogatory No. 4 asks whether Chase Jamaica,
not Brown, deceived the Jamaican court into not enjoin-
ing the sale of the collateral. A corporate entity can only
speak through a representative. To hold that a witness
testifying on behalf of a corporation is immune but that
the corporation he represents may be liable would render
the witness immunity rule meaningless in any case
involving an entity rather than an individual. As stated
above, one of the articulated current principal purposes
of the rule is to protect witnesses from the vexation of
defending actions brought by disappointed litigants. Any
corporation who sent a representative to testify at a
judicial proceeding would be subject to suit if the im-
munity of its witness-representative did not extend to the
corporation itself. See Evans v. London Hospital Medical
College, {1981} 1 All E.R. at 721 (Court found that
witnesses and their employer enjoyed absolute immu-
nity from suit in action for negligence and malicious
prosecution premised upon statements made in prepa-
ration for criminai prosecution).
Having held that a cause of action against Brown
and Chase Jamaica for perjury would not be valid under
Jamaican law, the question remains whether CMOBC
could be held liable for the alleged fraud on the court.
This question requires a determination of whether the
immunity enjoyed by an actual witness extends to third
parties who did not testify at trial but who are alleged to
have been involved in a scheme to perpetrate a fraud
upon a court by procuring the false testimony of a
witness. The parties have not cited nor has the Court
found a Jamaican or English case that directly addresses
this issue. An examination of the relevant authorities,
however, indicates that a cause of action for fraud upon
a court which is brought against a non-testifying third
party would not be recognized under Jamaican law.
A-30
In Marrinan v. Vibart, |1962] 1 All E.R. at 871, the
Court held that a plaintiff's claim for conspiracy to make
false and defamatory statements was invalid where the
claim was premised in part upon the statements made by
the defendants in preparation for and at trial. The de-
fendants were two police officers who were alleged to
have conspired with another person to injure the
plaintiffs reputation by making false and defamatory
statements which were incorporated in evidence intro-
duced at trial.
While the Court did not address the issue of the
liability of a non-witness, the reasoning of the Court
supports the conclusion that a cause of action against a
non-participant, such as CMOBC, could not be premised
upon a witness’s statements introduced at trial. The
Court found that the immunity rule could not be circum-
vented where the plaintiff's cause of action was premised
in part upon the witnesses’ allegedly perjured testimony.
The Court stated that:
The main contention on behalf of the plaintiff is
that the gist of this action is not the defamatory
statements made to the Director of Public Prosecu-
tions, nor their repetition in evidence, but the ante-
cedent combination or agreements to defame. It is
argued that there is no authority for extending any
immunity to such an agreement or combination. If,
contrary to my judgment, the contention were cor-
rect that the gist of the tort of conspiracy is the
conspiratorial agreement alone, it may be that the
plaintiff would be entitled to succeed on this pre-
liminary issue. In my view, however, this contention
is plainly wrong; the gist of the tort of conspiracy is
not the conspiratorial agreement alone, but that
agreement plus the overt act causing damage. It is
true that the crime of conspiracy is the very agree-
ment of two or more persons to effect an unlawful
purpose, and any overt acts done in pursuance of the
iii
A-31
agreement are merely evidence to prove the fact of
the agreement. The tort of conspiracy, however, is
complete only if the agreement is carried into effect
so as to damage the plaintiff. Accordingly, the acts
done in pursuance of the agreement are an integral
part of the tort: Crofter Hand Woven Harris Tweed
Co., Ltd. v. Veitch. It follows, therefore, that the
plaintiff relies for part of his cause of action on the
report of the defendants to the Director of Public
Prosecutions and the evidence which they subse-
quently gave. These matters, by reason of the prin-
ciples laid down in the authorities to which I have
referred, cannot properly be made part of any cause
j of action.
Id. at 871 (citation omitted).
In the instant case, plaintiff's cause of action against
CMOBC, set forth in Interrogatory No. 4, is based upon
Brown’s testimony given before the Jamaican court. The
wrong alleged in the plaintiff's cause of action could only
have been completed upon Brown’s testifying. Since the
plaintiff's cause of action set forth in Interrogatory No. 4
is premised on the fraud upon the court, it is unlikely
that a Jamaican court would permit such a claim even
though CMOBC was not a witness at trial.
The purposes underlying the rule warrant its appli-
cation to non-participants as well as to participants at
trial. If causes of action against non-participants were
recognized, then disgruntled litigants would merely sue
‘non-participants who had some relationship to the wit-
ness who allegedly testified falsely. Witnesses would be
faced with the prospect that their testimony would foim
the basis of vexatious litigation directed against parties
related to them who did not participate at the trial.
Moreover, the purpose of avoiding multiplicity of actions
in which the value or truth of evidence Would be tried
over again would be substantially diminished if the im-
munity rule could be circumvented merely by alleging
er, ORR AU SN ties
Oe a eee
Bila ec sacs.
A-32
that non-participants at trial were somehow involved in
the witness’s fraudulent conduct befor: 2 a court.
Finally, logic dictates that if a subsidiary cannot be
held liable for a fraud on a court, the parent similarly
cannot be liable. The inquiry must always turn on the
reason and facts for which the separate corporate entities
are sought to be ignored. If the underlying reason or
facts are not actionable against the subsidiary, they
likewise cannot be actionable against the parent through
the device of ignoring the existence of separate corporate
entities. Disregard of the corporate entity simply consti-
tutes a method to hold a parent liable for the acts of its
subsidiary. The theory does not, in and of itself, confer
any additional substantive rights upon a plaintiff.
c. American Law
Having held Jamaican law governs the issue as
presented to the jury in Interrogatory No. 424 and Ja-
maican law precludes liability by reason of immunized
testimony, the inquiry is theoretically at an end. How-
ever, plaintiff contends the question presented to the
jury in Interrogatory No. 4 was not an action based upon
perjured testimony but upon the question of whether the
corporate entities should be disregarded. Rose Hall
claims that this issue is controlled by United States law.
Specifically, Rose Hall asserts that defendant’s charac-
terization of plaintiff's theory is unduly restrictive. Plain-
tiff argues that its theory of alternative liability had its
genesis in paragraph 54 of the Second Amended Com-
plaint25 and is not based upon false testimony in the
Jamaican action, but rather simply established the false
testimony as a predicate for disregard of the corporate
entity. Plaintiff urges a “broad fraud” theory that:
24. See supra p. 121.
25. See supra note 10.
PES ae Se ee es A a
A-33
under all the circumstances, the defeat of Rose
Hall’s injunction by representations which (what-
ever the subjective intent with which they were
made) were false in fact, combined with the subse-
quent stripping of Chase Jamaica, and the attempt to
defeat Rose Hall’s claims for damages by asserting
Chase Jamaica’s purported separateness here, taken
together, constitute a fraud or injustice by means of
the corporate entity which equity will prevent by
disregarding the corporate entity.
(Dkt. 868, pp. 15-16) (emphasis in original).
Plaintiff's paragraph 54 “broad fraud” theory is com-
posed of the following five elements: first, Chase
Jamaica’s cheap sale of the land and shares (Inierroga-
tory No. 1) and refusal to cooperate in the lawsuit against
Holiday Inns for interference (Interrogatory No. 2); sec-
ond, false representations to the Jamaican court during
the injunction proceedings that Chase Jamaica had sub-
stantial assets, would continue to do business in Jamaica
and would be in a position to pay whatever damages
might be awarded to Rose Hail; third, the Jamaican
court’s reliance on these representations in denying the
plaintiff's petition to enjoin the sale; fourth, the closing
and “stripping” of Chase Jamaica pursuant to plans in
existence prior to the injunction hearings; fifth,
CMOBC’s manipulation of Chase Jamaica’s defense of
the Jamaican damage action in resisting plaintiff's at-
tempt to stay that action pending resolution of the Dela-
ware litigation. Rose Hall contends that these separate
events, when aggregated, constitute fraud or injustice by
means of purported separate corporate entities which |
equity will not allow.26
26. ‘The plaintiff went so far at oral argument as to assert that
even without any misrepresentation to the court by Chase Jamaica
and even assuming CMOBC stripped and emptied Chase Jamaica
innocently, there would be sufficient unfairness to plaintiff to re-
quire ignoring separate corporate entities to provide a remedy. ( Dkt.
A-34
Even if one started with Rose Hall’s statement of the
issue, plaintiff could not prevail for two independent
reasons: first, examination of the trial record demon-
strates unequivocally that plaintiffs characterization is
erroneous in that the deceit on the Jamaican court was
considered pivotal by all concerned; and second, given
the central and critical nature of the false testimony to
the Jamaican court, the American rule on witness im-
munity precludes this suit as presented.
(1) Deceit on the Jamaican Court as Pivotal
In allowing amendment of the complaint to add
paragraph 54 on September 30, 1982, Judge Steel char-
acterized the amendment as embodying plaintiff's “al-
ternative fraud theory.” (Dkt. 568, p. 2). As of the date of
amendment, the fraud on the Jamaican court had be-
come central. Judge Steel characterized plaintiff's posi-
tion as “plaintiff's theory that the relationship between
Chase Jamaica and its parent, [CMOBC], was such that
this fraud, if proven, was relevant when considered with
other evidence to render [CMOBC] liable. .. .” (Dkt. 568,
p.1). At the time of allowance of the amendment, less
than two weeks before trial commenced, it is fair to say
that Judge Steel and the parties were already proceeding
on the premise that plaintiff's alternative theory of liabil-
ity was not viable but for the deceit on the Jamaican
court.
This was confirmed by plaintiff during its day and a
half summation to the jury. Plaintiff, in addressing the
alternative theory of liability contained in Interrogatory
No. 4, argued the-decei he Jamaican court without
referencing other aspects of paragraph 54, much less the
theory now urged upon the Court. (Dkt. 853, Tr.
14,900-905; Dkt. 856, Tr. 15,388).
NOTES (Continued )
871, Tr. 53-54). Plaintiff's theory as applied finds no support in
reported c7ses.
A-35
Moreover, plaintiff's request for charge on Inter-
rogatory No. 4,27 adopted almost verbatim by Judge
Steel2® with the addition of a requirement of control by
CMOBC, trains exclusively upon the deception of the
Jamaican court. Finally, Interrogatory No. 4 inquired of
the jury: “4. Did Chase Jamaica, through its represen-
27. Plaintiff's request for charge on Interrogatory No. 4 reads:
Independently of the above inatters, Rose Hall contends
CMOBC can be held liable for wrongs of Chase Jamaica on
another ground. You have heard of the Jamaican action in
which Rose Hall attempted to stop the sale of the Rose Hall
(H.1.) shares and the land by an injunction. Chase Jamaica
defeated Rose Hall’s effort to ge. that injunction, on the basis
that, if the land and shares were sold and the court later
determined that the sale was wrongful, no ultimate harm would
be done because, in that case, Rose Hall could recover money
damages from Chase Jamaica. If you find that the Jamaican
court was misled to believe there was no intention to close
Chase Jamaica and that it would remain in Jamaica with
ongoing access to sufficient assets to satisfy a money judgment,
when actual undisclosed plans and intentions to the contrary
existed, then you should disregard the separate corporate entity
of Chase Jamaica and find that CMOBC is liable for the wrongs
of Chase Jamaica. It does not matter whether the Jamaican
court was misled deliberately, or only because those in actual
control of CMOBC had formed decisions or intentions un-
known to the lawyers and witnesses who spoke for Chase
Jamaica. In either case, it would accomplish a wrong or in-
equity which the law does not allow if, after the defeat of the
injunction on that basis, the corporate separateness of the no
longer financially substantial subsidiary could be used to defeat
Rose Hall’s claim.
(Dkt. 764, p. 49).
28. The jury instruction on Interrogatory No. 4 as given by
Judge Steel reads:
The fourth question reads as follows: ~
Did Chase Jamaica, through its representations, as a result
of its control by CMOBC, deceive the Jamaican Court into not
enjoining the sale of the collateral?
And you will answer yes or no to that question.
Independently of the above matters, Rose Hall contends
CMOBC can be held liable for wrongs of Chase Jamaica on
another ground. You have heard of the Jamaican action in
A-36
tations, as a result of its control by CMOBC, deceive the
Jamaican court into not enjoining the sale of the collat-
eral?” Supra p. 121. Since this interrogatory embodied
plaintiff's theory of liability contained in paragraph 54 as
presented to the jury, it is not surprising that plaintiff
never objected to the form of Interrogatory No. 4 other
than to the imposition of the control requirement. Accord-
ingly, given its request for instruction on Interrogatory
No. 4, there has been a waiver of the characterization of
the theory it now vehemently asserts. Cf. Reiner v.
Bankers Security Corp., 305 F.2d 189 (3d Cir. 1962);
Halprin v. Mora, 231 F.2d 197 (3d Cir. 1956).
Based upon the early characterization by Judge Steel,
plaintiff's request for charge, plaintiff's summation and
NOTES (Continued )
which Rose Hall attempted to stop the sale of the Rose Hall
(H.L) shares and the land by an injunction. Chase Jamaica
defeated Rose Hall's effort to get that injunction, on the basis
that, if the land and shares were sold and the Court later
determined that the sale was wrongful, no ultimate harm would
be done because, in that case, Rose Hall could recover money
damages from Chase Jamaica.
If you find that the Jamaican Court was deceived by Chase
Jamaica to believe there was no intention to close Chase Ja-
maica and that it would remain in Jamaica with ongoing access
to sufficient assets to satisfy a money judgment, when actual
undisclosed plans and intentions to the contrary existed, and if
you find that its action was controlled by CMOBC, then you
should disregard the separate corporate entity of Chase Jamaica
and find that CMOBC is liable for the wrongs of Chase Jamaica.
In such a case, it would accomplish a wrong, fraud, or
inequity which the law does not allow if, after the defeat of the
injunction because of the Court’s deception, the corporate
separateness of the no longer financially substantial subsidiary
could be used to defeat Rose Hall's claim.
Generally, plaintiff must prove its claims against the de-
fendants and each element of those claims by a preponderance
of the evidence. However, as to this claim by plaintiff that
Chase Jamaica committed a deception or fraud, plaintiff must
meet a higher standard and prove that claim by clear and
convincing evidence.
(Dkt. 858, Tr. 15, 538-40).
A-37
plaintiff's failure to object to the form of Interrogatory
No. 4, the Court concludes that defendant’s characteri-
zation of the issue as tried and presented to the jury is far
more accurate than that urged by plaintiff. Notwithstand-
ing plaintiff's protestations, it is inescapable that deceit
on the Jamaican court was pivotal to plaintiff's formula-
tion and ultimate jury presentation. Actionability of de-
ceit on the Jamaican court is controlled by Jamaican law,
supra pp. 127-128, and that law would preclude the
cause of action as tried to the jury and embodied in
Interrogatory No. 4, supra pp. 128-130.
Thus far, the Court has held Jamaican law controls
the existence of the cause of action embodied in Inter-
rogatory No. 4 and the competing characterizations of
the cause of action must be resolved in favor of defen-
dant. However, even if American law controlled, the
outcome would be the same because of plaintiffs inabil-
ity to surmount the American rule of witness immunity.
(2) The American Rule of Witness Immunity as Pre-
cluding Suit
2
The Supreme Court has very recently articulated its
recognition that “(t]he immunity of parties and wit-
nesses from subsequent damages liability for their tes-
timony in judicial proceedings was well established in
English common law.” Briscoe v. Lahue, ___ US.
___, 103 S.Ct. 1108, 1113, 75 L.Ed.2d 96 (1983) (foot-
note omitted). The Supreme Court held that this rule has
been imported into the American common law. Id. at
1113-15. Since the rationale for the American rule is
largely the same as that for the English rule,?9 the Court
assumes the American rule would be applicable to third
parties such as CMOBC.* Unlike their English counter-
part, some American jurisdictions have recognized an
29. See supra pp. 128-130; see generally Annot, 31 A.L.R. 1423
(1970); Annot. 54 A.L.R.2d 1298 (1957).
30. See supra pp. 130-131.
A-38
exception to the rule that perjury is non-actionable in a
subsequent suit for money damages.*! The exception to
the rule is where perjury is merely a means to the
accomplishment of a larger conspiracy or fraudulent
scheme. 2
31. Plaintiff's citation of Keystone Driller Co. v. General Exca-
vator Co., 290 U.S. 240, 54 S.Ct. 146, 78 L.Ed. 293 (1933); Mas v.
Coca Cola Co., 163 F.2d 505 (4th Cir. 1947); Rixon Inc. v. Racal-
Milgo, Inc., 551 F.Supp. 163 (D.Del. 1982); Kirkland v. Mannis, 55
Or. App. 613, 639 P.2d 671, rev. denied, 292 Or. 863, 648 P.2d 850
(1982); Pappas v. Pappas, 164 Conn. 242, 320 A.2d 809 (1973), to
demonstrate the non-existence of a hard and fast rule which CMOBC
never asserted (“the privilege must preclude judicial cognizance of
perjury in prior proceedings, broadly and without exception,” ) (Dkt.
868 p. 18) is not helpful. Those cases all involve plaintiffs in a
second proceeding who, notwithstanding their commission of some
type of perjury in a prior proceeding, sought affirmative relief in the
form of monetary damages or otherwise in a second proceeding
involving at least some of the same issues as the tainted first
proceeding. There is no relationship between barring a party seek-
ing affirmative relief in the form of monetary damages by reason of
unclean hands and determining whether false testimony can serve
as a predicate for a second lawsuit.
32. See Alberta Gas Chemicals, Ltd. v. Celanese Corporation,
497 F.Supp. 637 (S.D.N.Y. 1980), rev’d on other grounds, 650 F.2d
#9 (2d Cir. 1981) (not part of a larger fraudulent scheme); Woods
Exploration & Producing Co. v. Aluminum Company of America,
438 F.2d 1286 (5th Cir. 1971) (alleged perjury part of a broader
antitrust conspiracy), cert. denied, 404 U.S. 1047, 92 S.Ct. 701, 30
L.Ed.2d 736 (1972); Morgan v. Graham, 228 F.2d 625 (10th Cir.
1956) (alleged perjury by insurance company president claiming
non-existence of insurance policy caused judgment plaintiff to be
unable to recover on insurance policy); Robinson v. Missouri Pacific
Transp. Co., 85 F.Supp. 235 (D.Ark. 1949) (perjury merely part of
larger conspiracy between employer and union to get employee
plaintiff fired); Alexander v. Peekskill, 80 App. Div. 2d 626, 436 N_Y.
S.2d 327 (1981) (refusal to apply exception of broader fraudulent
scheme on facts); Newin Corp. v. Hartford Accident & Indemnity
Co., 37 N.Y.2d 211, 333 N.E.2d 163, 371 N.Y.S.2d $84 (1975) (part
of a larger fraudulent scheme); Burbrooke Manuf. Co. v. St. George
Textile Corp., 283 App. Div. 640, 129 N.Y.S.2d 588 (1954) (on facts
stated in complaint held not part of larger fraudulent scheme); see
A-39
Assuming without deciding that the minority excep-
tion to the American witness immunity rule would be
applicable, Rose Hall fails to come within the exception
because as pleaded and presented there was no larger
fraudulent scheme other than that factually asserted
before the Jamaican court. The “cheap” sale and a sig-
nificant portion of the interference claim were factually
presented to the Jamaican court in the injunction pro-
ceeding. (PX 140, pp. 4-6, 10-13). The false representa-
tion on cross-examination was made to the Jamaican
court during the injunction proceeding and the Jamai-
can court relied upon the same in denying the prelimi-
nary injunction. With regard to the alleged manipulation
of the stay proceeding in Jamaica, Judge Steel had pre-
viously ruled:
I do not find that the action which Chase Overseas
{(CMOBC] is alleged to have taken in the appellate
court in Jamaica constitutes fraud. It was nothing
more than [an] attempt to have the action tried in
Jamaica rather than in Delaware. Plaintiff has made
efforts in Delaware to have the action tried here
rather than Jamaica. I do not consider the actions by
either of the parties as to jurisdiction choice to be
fraudulent.
(Dkt. 652, p. 1). There has been no demonstration that
this ruling should be disturbed.
Only Rose Hall’s assertion that Chase Jamaica some-
how did something wrong when it sold its assets follow-
ing its closing remains. Plaintiff's inflammatory label of
“stripping the assets” obscures reality. Plaintiff does not
dispute that CMOBC did not in any way profit or receive
any assets from the “stripping” which in reality consisted
also Dixon v. Bowen, 85 Colo. 194, 274 P. 824 (1929); cf. Bethea v.
Reid, 445 F.2d 1163 (3d Cir. 1971) (conspiracy to violate civil and
constitutional rights by use of perjured testimony held actionable
without any discussion of witness immunity), cert. denied, 404 U.S.
1061, 92 S.Ct. 747, 30 L.Ed.2d 749 (1972).
A-40
of selling off Chase Jamaica’s loan portfolio and paying
off its non-contingent creditors, including other Chase
entities. There is nothing remotely approaching fraud in
a wholly owned subsidiary paying off creditors upon
closing its business even though there is outstanding a
contingent claim to be resolved at some future time via
the vagaries of tt,» litigation process.
Plaintiff has tailed to establish a larger fraudulent
scheme of which the perjury was only a part. Given the
jury’s answers to all other interrogatories, Rose Hall’s
tenuous claim to recovery from CMOBC rests entirely
upon the misrepresentation to the Jamaican court and
that court’s denial of the preliminary injunction based
upon that misrepresentaticn. Having failed to come
within the exception to the American witness immunity
rule, the Court concludes Rose Hall’s cause of action
embodied in Interrogatory No. 4 would be barred.
In summary, the Court concludes that the deception
found by the jury in its affirmative answer to Interroga-
tory No. 4 is not actionable. The gravamen underlying
Interrogatory No. 4 is properly characterized as seeking
monetary damages by reason of a false representation
made in a prior Jamaican judicial proceeding. Such a
misrepresentation cannot serve as a basis for a cause of
action under Jamaican, English or American law includ-
ing the exception to the American rule. As a conse-
quence, CMOBC is entitled to entry of judgment not-
withstanding the verdict. Nonetheless, the Court will
consider CMOBC’s other arguments for judgment not-
withstanding the verdict with respect to Interrogatory
No. 4.
3. Was a Fraud Established
Plaintiff alleges that the deception on the Court
included Brown’s false representation to the effect that
Chase Jamaica would be continuing in business as well
as statements by counsel for Chase Jamaica, Norman
_—
aA ES eH
A-41
Hill, to the effect that Chase Jamaica would be ready and
able to respond in damages to any subsequent finding of
liability resulting from the sale. Plaintiff, however, has
failed to present any authority for the proposition that
counsel’s arguments to the court can be considered
evidence on which to base a fraud on the court claim. In
addition, there is no evidence of record linking Hill’s
statements to the Jamaican court with CMOBC. There-
fore, the court’s examination of the fraud claim focuses
on Brown’s representation to the Jamaican court.
The evidence of the specific content of Brown’s
statement is surprisingly scarce and contradictory. The
parties agree that the statement was made in answer to
a single question on cross-examination of Brown by Dr.
Lloyd Barnett, Rose Hall’s counsel in the Jamaican pro-
ceeding. The issue then in essence is whether plaintiff
has proved deception of the Jamaican court, under either
the clear and convincing evidence standard or the pre-
ponderance of the evidence standard.33 Stated different-
ly, the issue is whether one answer, the precise content
of which is unknown, to one question on cross-exami-
nation where the precise formulation of the question is
unknown can constitute a misrepresentation to the Ja-
33. The Court instructed the jury that the plaintiff had the
burden of proving the falsity of the representation by clear and
convincing evidence. (Dkt. 858, Tr. 15,540). Plaintiff disputes this
higher burden of proof and contends that it is sufficient to prove
fraud by a preponderance of the evidence. To arrive at this conclu-
sion, plaintiff applies Delaware law by means of convoluted choice
of law analysis. See Dkt. 868, pp. 61-65. As this Court reaffirmed
above, the question of whether a fraud was committed on the
Jamaican court is governed by Jamaican law. See supra pp. 127-128.
The plaintiff does not dispute that under Jamaican law, the clear
and convincing standard of proof applies to this issue. See, IX
Wigmore Evidence §2498, p. 424 (Chadbourn Rev. 1981); Bater v.
Bater, {1950] 2 All E.R. 458, 459. However, this Court has exam-
ined the record under both standards and would arrive at the same
conclusion under either standard of proof.
A-42
maican court sufficient to “deceive the Jamaican court
into not enjoining the sale of the collateral.” (Interroga-
tory No. 4).
Dr. Barnett testified before this Court that he did not
recall the exact question he asked Brown six years be-
fore. “But I suggested to him that there was a danger of
Chase reducing its operations or closing its business in
Jamaica... . I don’t think I asked him if the decision had
been made [to close the Chase Jamaica operation]. |
don’t think I put it as precisely as that... .” (Dkt. 799, Tr.
4273-74). Brown, on the other hand, seemed to vividly
recall Barnett’s question and his own reply thereto: “I
was asked by Dr. Barnett, if, had Chase Jamaica made a
decision to close, and I said no.” (Dkt. 813, Tr. 7324).
Contemporaneous notes taken by presiding Justice
Rowe and Norman Hill, counsel for Chase Jamaica,
reveal different formulations of the exchange. Justice
Rowe, following the practice of presiding judges in Ja-
maica who do not usually have the benefit of the tran-
scription of proceedings by court reporters, took copious
notes of the injunction hearings. These notes of Brown’s
statement on cross-examination contain the notation:
“Chase has no intention of closing in Jamaica.” (PX 629,
p. 54).34 Norman Hill’s notes contain the phrase “not
closing down.” (Ct.Ex. 29; Dkt. 824, Tr. 9122).
On January 27, 1977, Justice Rowe issued his writ-
ten opinion denying the injunction requested by plain-
tiff. In support of his conclusion that “the first defendant
{Chase Jamaica] is in a position to pay whatever damages
might be awarded to the plairi.iffs in this action,” Justice
Rowe noted “|t|he first defendant stated that it proposes
to continue in business in Jamaica.” Rose Hall Ltd., et al.
v. Chase Merchant Bankers Jamaica Ltd., et al., Suit No.
E-211 of 1976 (Sup. Ct. of Judicature of Jam..Jan. 17,
34. CMOBC continues to press its objection to the admission of
Justice Rowe’s notes, and currently asserts this was prejudicial
error, requiring a new trial. (Dkt. 770, pp. 53-57). For treatment of
this issue, see infra p. 141.
ee ee ee eo
whe < = ee le tS ae) te
‘ ee ere:
A-43
1977). (PX 140 at 15). Brown reiterated this formulation
in a December 2, 1981 affidavit filed in the stay proceed-
ings in the Court of Appeal in Jamaica. He stated: “when
_ I gave evidence in the proceedings below, [ truthfully
represented that Chase Jamaica proposed to continue in
business in Jamaica.” (PX 638, 94(b)).
After Justice Rowe denied plaintiffs request for an
injunction from the bench on November 22, 1976 and
memorialized the same in his January 17, 1977 written
opinion, the sale of the Rose Hall (H.I.) shares and 3000
acres of land was closed on November 18, 1977. The
formal decision to close Chase Jamaica is noted in min-
utes of the Chase Jamaica board dated November 4,
1977 (PX 779) and the office was closed in February,
1978. (Dkt. 664, p. ITI-2).
Plaintiff contends that Brown’s representation con-
stituted a fraud on the Jamaican court because at the
time Brown allegedly knew or must have known there
was an intent to close Chase Jamaica. One of Brown’s
superiors, Francis Mason, Senior Vice President of CMB
and Director of CMOBC, testified before this Court that
“in late 1976 there was an intention to close Chase
Jamaica if the environment in Jamaica did not change
for the better.” (Dkt. 836, Tr. 11,597). Although there is
no evidence that Brown was privy to this intention,
Brown did testify that before the Jamaican hearings he
had known that the closing of Chase Jamaica “was one
of the possibilities” and therefore he asked Ulises
Giberga, a Chase Jamaica director and an officer of
CMOC, if any decision had been made in that regard.
Brown testified that Giberga assured him that no such
decision had been made. (Dkt. 816, Tr. 7815). In addi-
tion, Brown stated in his affidavit to the Jamaican Court
of Appeal that “[b]eginning several months prior to Oc-
tober 1976, the Directors of Chase Jamaica had under
consideration, in view of the deteriorating economy of
A-44
Jamaica, the question of the profitability, present and
projected, of Chase Jamaica’s operations.” (PX 638,
14(b)).
In the current posture of this case, the Court must
assume that the jury found Brown was asked whether
Chase Jamaica intended to remain in business as op-
posed to whether a decision had been made to close
Chase Jamaica. As recapitulated above there was ample
evidence from which the jury could conclude that the
question put to Brown was phrased in terms of “inten-
tion” rather than “decision” to close. Brown’s response
was just plain wrong as to Chase Jamaica’s intentions.
As noted, at the time Brown testified in Jamaica, the
evidence suggests at a minimum that Brown knew that
Chase Jamaica might close if the deteriorating situation
in Jamaica failed to improve. Moreover, the jury had
before it PX 151, written by a Chase Jamaica director
mere days after completion of the injunction proceed-
ings referencing “plans for the eventual closing” of Chase
Jamaica and establishing June of 1977 as the target date
by which it should be accomplished.35
Stripped of all its verbiage, the simple facts are: first,
Brown apparently testified that there was no intention to
close; second, Brown conceded that he was aware that
closing was one of the possibilities if conditions did not
improve; third, as early as one week later, a memoran-
dum was written referring to an intent to close; and
fourth, Chase Jamaica did in fact close. As such, a
reasonable juror had ample basis to conclude there was
clear and convincing proof, and, a fortiori, proof by a
preponderance of the evidence, that a misrepresentation
had occurred in the Jamaican proceedings.
There is one disquieting note, however. Assuming
an intent to defraud the court, presumably the strategy
before Justice Rowe would have been to affirmatively
proclaim Chase Jamaica’s intent to remain in operation.
35. See infra pp. 138-139.
ee ee ee ee ee eee
eee ee
ba Re tA OS i NAB
A-45
Rather than pursue such a course of action consistent
with an intent to deceive the court, Chase Jamaica did
not make such an affirmative representation. Chase Ja-
maica presented its balance sheets and then, in answer
to one question on cross-examination, Brown gave an
erroneous answer. Whether such a situation constitutes
a fraud or deception is a close legal question. The opera-
tive finding must be an intent on the part of someone,
whether Brown, Chase Jamaica, or Brown’s supervisor,
to deceive the court. Such a deception would be more
likely to appear in the guise of affirmative testimony on
direct examination or by affidavit rather than as an
answer to one question on cross-examination. If the
question had not been asked, the deception would never
have occurred. On the other hand, since the issue of
Chase Jamaica’s continued operation was central to the
necessity of preliminary injunctive relief, it was likely to
assume that this would be the subject of inquiry. Any
distinction between direct and cross-examination, there-
fore, is irrelevant in this context.
Since this Court has concluded that there is ample
support for the jury’s finding that Chase Jamaica com-
mitted a fraud, the Court now turns to the question of
whether the jury’s conclusion that CMOBC controlled
the fraud is supported by the evidence.
4. Did CMOBC Control the Fraud
In this section, the Court considers the evidence
relating to whether CMOBC controlled Brown’s repre-
sentation in the Jamaican court. Even though the Court
has determined that the evidence supports a finding that
Chase Jamaica deceived the Jamaican court,*6 no liabil-
ity can be imposed on CMOBC if the jury’s finding of
36. The Court engages in this inquiry even though it has
previously held that CMOBC is entitled to judgment noftwithstand-
ing the verdict because no cause of action can be based on the
deception of the Jamaican court.
A-46
control by CMOBC in this matter lacks support in the
record.
The plaintiff concedes that “there is no direct tes-
timony” linking CMOBC with the events occurring in
the Jamaican court. (Dkt. 868, p. 39). Plaintiff argues,
however, that “the circumstantial evidence powerfully
shows that the relevant aspect of Chase Jamaica’s de-
fense before Justice Rowe must have been ultimately
determined by Francis Mason, a CMOBC director.” Id.
To arrive at this conclusion, plaintiff begins by noting
that Brown testified before this Court that in preparing
the defense of the injunction suit, Chase Jamaica’s at-
torneys sought information about the bank’s future plans
for continuing in business. (Dkt. 816, Tr. 7815). In
response, Brown asked Giberga, Chairman of the Board
of Chase Jamaica and a Vice President of both CMOC
and CMB, a question to the effect of whether “any
decision had been made regarding the closing of [Chase
Jamaica].” Id. Brown claimed that Giberga “advised [him]
that no decision had been made.” /d.3’ Plaintiff next
points to the “hierarchical character of the ‘chain of
command’ from Mason to Giberga to Brown”’® (Dkt.
868, p. 43), and the centralized administrative control of
Chase Jamaica. This, together with Giberga’s testimony
that if a decision had been made by November 4, 1976 by
an officer of CMB that Chase Jamaica should be closed,
Giberga would have known about it (Dkt. 809, Tr. 6570),
leads plaintiff to the conclusion that Giberga must have
consulted with Mason before giving Brown his answer.
Plaintiff makes this purely speculative assumption, not
upon evidence of record, but because Mason was
Giberga’s boss and the ultimate decision-maker on the
closing of Chase Jamaica. Plaintiff asseris that the jury
“had the zight to infer that when Brown consulted
37. Giberga testified that he did not recall the conversation, but
had no reason to doubt that it occurred. (Dkt. 810, Tr. 6685).
38. See testimony of Warren Leonard, president of CMOBC at
Dkt. 794, Tr. 3325.
SS a aE ar
A-47
Giberga, he learned what Mason’s real position was [that
there was an intention to close Chase Jamaica if the
environment did not improve (Dkt. 836, Tr. 11,597)].. .
and that Mason and Giberga had consulted together and
decided what positions Brown and the lawyers should
take.” (Dkt. 868, p. 44).
The jury could not make such an inference, un-
supported by even a shred of evidence. The clear weight
of the evidence indicates that this consultation up the
ladder is pure speculation on plaintiffs part. In fact,
plaintiff never even argued this theory before the jury. In
addition, there is uncontradicted testimony by Mason
that he played no part whatsoever in the defense of the
Jamaican action (Dkt. 836, Tr. 11,544) and that he never
heard of the existence of the Jamaican lawsuit until
questioned about it on his deposition in this action in
1981. (Dkt. 836, Tr. 11,599). Therefore, any jury finding
of CMOBC’s control of the alleged deception in the
Jamaican court could not stand on this ground.
Rose Hall also contends that the jury finding of
control by CMOBC is supported by memoranda which
indicate that the closing of Chase Jam rica was planned
at the time Brown was assuring Justice Rowe of the
contrary. However, close scrutiny of these memoranda
indicates that although they do reveal an earlier intent to
close the bank, they fail to provide the crucial link
between CMOBC and the fraud on the court.
A memorandum by Augusto Sigarreta, director of
Chase Jamaica and vice president of CMOC, to John
Pershing, vice president of CMOC, written on December
3, 1976, just days after the completion of the injunction
proceedings, indicates that CMOC had “plans for the
eventual closing of the Merchant Bank in Jamaica.” (PX
151). It further provides: “As for the timing of the closing
is concerned, | feel that we should be out of Jamaica next
A-48
year around the end of June.” Id.3° This memorandum
fails to provide any support for a conclusion that CMOBC
was aware of this or had any such plans of its own. A
subsequent letter to Sigarreta from Mary Ellen Collins,
second vice president of CMB, dated April 20, 1977,
refers to plans to “liquidate the Merchant Bank.” (PX
220). Again, this memo, written months after the Jamai-
can proceeding, fails to implicate CMOBC in any way.
Warren Leonard, the current president of CMOBC,
testified that he received a January 24, 1978 memoran-
dum from David Whitaker, vice president of CMOC.
(Dkt. 794, Tr. 3178-80). The memorandum includes the
following information: “The main objective of Chase
Merchant Bankers Jamaica, Ltd. (CMBJ) for the last two
years has been to dispose of its assets without incurring
further losses.” (PX 182).4° Although the statement
would indicate that a decision to close the bank was
taken in early 1976, it does not serve as evidence that
CMOBC made the decision or was aware of it prior to the
injunction proceedings. Equally important, it fails to
show any control by CMOBC of the representations
made to the Jamaican court.
Finally, a January 5, 1978, CMOBC file memo by
James P. Hansen, second vice president of CMOBC,
recording a conversation with Dave Whitaker, vice presi-
dent of CMOC, notes: “Decision to close office was made
about a vear and a half ago.” (PX 177)*! This memoran-
dum could be read by the jury as indicating that the
decision to close the subsidiary was made around June of
1976, and that CMOBC, or at least CMOC, was aware of
it. However, it again fails to provide any evidence of the
essential element, that is, CMOBC’s involvement in or
control of the proceedings before the Jamaican court.
39. Contrary to CMOBC’s counsel's recollection at oral argu-
ment, this memorandum, as well as subsequent ones, was admitted
without objection on November 8, 1982. (Dkt. 794, Tr. 3196).
40. Id., Tr. 3178.
41. Id., Tr. 3190.
A-49
The jury could fairly conclude from these memo-
randa that CMOC had made a decision, or had knowl-
edge of a decision to close Chase Jamaica prior to the
Jamaican injunction proceedings. It could also conclude
that CMOC was involved in a deception on the Jamaican
court through Giberga who, it will be remembered, talked
to Brown. Therefore, the jury might have had a suffi-
cient basis for concluding that CMOC defrauded the
Jamaican court by misinforming Brown. However,
CMOBC, and not CMOC, is the defendant in this action.
The record does not provide a sufficient basis for a
finding that CMOBC was involved in the fraud.42 Plain-
tiff introduced no evidence of CMOBC’s direct control of
Chase Jamaica in this representation nor of indirect
control in this matter through CMOC.
The Court instructed the jury that for purposes of
finding control of CMOBC in Interrogatory No. 3,43 “it
would not matter whether CMOBC exercised control
over Chase Jamaica directly by CMOBC itself or in-
directly by Chase Manhattan Bank N.A. and/or CMOC.”
(Dkt. 858, Tr. 15,537). As evidence of this indirect con-
trol, plaintiff introduced two manuals, the Credit Policy
Guide (PX 323) and the Organization & Policy Guide (PX
42. The Court notes that Mason was on the boards of both
CMOBC and CMOC. (Dkt. 836, Tr. 11,524-25). Mason admits that
he knew of the possibility that Chase Jamaica would close. (Dkt.
836, Tr. 11,597). There is still, however, no link between CMOBC
and the proceedings in the Jamaican court. See supra p. 138.
43. Interrogatory No. 3 reads as follows:
Did CMOBC control Chase Jamaica’s major decisions and
actions relating to its actions under Question 1. or its actions under
Question 2.?
As to Question 1.
(a) because of the Edge Act theory You... Ne...
and/or
(b) independently of the Edge Act Yes_. No
As to Question 2.
(a) because of the Edge Act theory Yes__ No
and/or
(b) independently of the Edge Act Yes__ No__
A-50
324), and testimony of various officers from Chase
entities pertaining to these guides.44 These manuals
provide some evidence that would be relevant to the
question of general control of Chase Jamaica by CMOBC
through CMOC.* There are strong indications that the
jury considered general control with respect to question
3.46 However, the jury concluded that there was insuffi-
cient evidence to find that CMOBC, either directly or
through CMB and/or CMOC, controlled the specific Rose
Hall transactions at issue in Interrogatory No. 3.47
There is n arkedly less evidence in the record to
support a finding that CMOBC indirectly controlled the
fraud on the Jamaican court through CMOC. The policy
manuals, relating to loan policy and administration, offer
no guidance on control of testimony before a tribunal in
an injunction proceeding. They do not in any way sup-
port a finding that CMOBC delegated any control to
CMOC in this regard. Therefore, the jury could not have
reasonably concluded on the basis of the policy manuals
that CMOBC directly or indirectly controlled the alleged
deception of the Jamaican court.
44. This evidence is summarized in plaintiffs November 30,
1982 letter to the Court.
45. See discussion infra pp. 168-169.
46. During its deliberations the jury sent the following inquiry
to the Court:
Question 3:
Do you mean control of Chase Jamaica in the general (overall )
sense or do you mean control of the Rose Hall transaction only.
(Ct.Ex. 75).
The Court replied as follows:
Question 3. inquires about CMOBC’s control, if any, over
Chase Jamaica's major policy decisions and actions involved in
Question 1. and/or Question 2. of the interrogatories. In short,
the control inquired about in Question 3. is limited to the major
policy decisions and actions involved in Question 1. and/or
Question 2; however, control in the general (or overall) sense
may be, but is not necessarily, relevant to vour consideration of
Question 3. (Ct.Ex. 76).
47. See discussion infra pp. 170-172.
A-51
During the July 15, 1983 hearing on CMOBC’s
motion for judgment notwithstanding the verdict, Rose
Hall made additional arguments, which are not included
in its massive brief, to support ‘ie jury’s finding that
CMOBC controlled the alleged fraud on the court. Plain-
tiff claims that Brown himself embodied CMOBC’s pres-
ence in the Jamaican courtroom. In support, plaintiff
points to a line in Justice Rowe’s notes (PX 629, p. 45)
indicating that Brown testified he was sent to Jamaica by
CMOBC, and to a letter in evidence (PX 202) which
plaintiff claims shows that CMOBC paid Brown’s salary.
Plaintiff seems to be making a novel argument that
because Brown was sent to Jamaica by CMOBC and
CMOBC paid his salary, he was CMOBC’s agent in
Jamaica. Plaintiff never argued this theory to the jury.
Moreover, Brown testified in this Court that the line in
Justice Rowe’s notes was erroneous. He was sent to
Jamaica by Chase Manhattan Bank and recalls testifying
to that effect before the Jamaican court. (Dkt. 816, Tr.
7779). Brown also explained in great detail the complex
pay system referred to in PX 202. (Dkt. 816, Tr. 7780-89).
He stated in essence that although from PX 202 it
appeared that CMOBC was paying his salary, it actually
was not. The system was established to protect Chase
Jamaica employees against fluctuations in the rate of
currency exchange. ( %kt. 816, Tr. 7785). Even if the
jury disbelieved Brown's testimony explaining these ex-
hibits, there would not be sufficient record support for a
finding that CMOBC controlled the specific acts consti-
tuting a fraud on the Jamaican court. For all of these
reasons, the Court concludes that the jury could not
reasonably find that CMOBC controlled the fraud on the
Jamaican court. This lack of control would by itself
suffice to grant CMOBC’s motion for judgment not-
withstanding the verdict.
In summary, while rejecting some of defendant's
grounds for judgment notwithstanding the verdict, the
Court has found defendant is entitled to entry of judg-
A-52
ment on two separate independent grounds: first, under
the applicable Jamaican and American law, no independ-
ent cause of action against a third party can be based
upon perjury in a prior judicial proceeding; and second,
the record is completely devoid of any evidence that the
fraud on the Jamaican court was committed as a result of
control of Chase Jamaica by defendant CMOBC. There-
fore, plaintiff's paragraph 54 claim fails for these reasons
and CMOBC’s motion for judgment notwithstanding the
verdict is granted.
B. CMOBC’s Alternative Motion for New Trial
CMOBC asserts several grounds for a new trial as
alternative relief if the Court denies its motions for judg-
ment notwithstanding the verdict. Although the Court
has granted CMOBC’s judgment notwithstanding the
verdict motions, it must also rule on the new trial mo-
tions and determine “whether |they] should be granted if
the judgment is thereafter vacated or reversed, and...
specify the grounds for granting or denying the motion|s|
for new trial.” Fed.R.Civ.P. 50(c)(1).
1. Prejudice to CMOBC From the Court’s Grant of
Plaintiffs Paragraph 54 “Fraud on the Court”
Amendment
CMOBC urges that it is entitled to a new trial be-
cause it was severely prejudiced by the Court’s allow-
ance of plaintiffs amendment on the “eve of trial.” In
addition, CMOBC argues that allowance of the amend-
ment amounted to an abuse of discretion because of
plaintiff's inexcusable delay in asserting the new claim.
Defendant asserted identical arguments in its briefs in
opposition to the proposed amendment. (Dkt. 502, 524).
These arguments were fully considered by Judge Steel
and are treated in some detail in his September 30, 1982
opinion allowing the amendment. (Dkt. 568).
A-53
It is well established that the allowance of amend-
ments under Fed.R.Civ.P. 15(a) lies in the discretion of
the trial judge, and is not subject to review on appeal
except for abuse of discretion. 3 J. Moore, Moore’s Fed-
eral Practice 415.08[4] (2d ed. 1982). Under the terms of
the rule itself, the district court is to allow such amend-
ments “freely.” In making its determination, the Court is
to consider prejudice to the other party and undue delay
or bad faith on the part of the movant. Foman v. Davis,
371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed. 2d 222
(1962). The Supreme Court has forcefully stated:
the grant or denial of an opportunity to amend is
within the discretion of the District Court, but out-
right refusal to grant the ieave without any justifying
reason appearing for the denial is not an exercise of
discretion; it is merely abuse of that discretion and
inconsistent with the spirit of the Federal Rules.
Id.
Judge Steel was guided by these considerations in
his cpinion. (Dkt. 568). The Court does not find that
Judge Steel’s decision to allow the amendment amounts
to an abuse of discretion and therefore holds that CMOBC
would not be entitled to a new trial on this ground.
CMOBC further contends that the Court’s refusal to
grant a continuance requested in part for discovery on
the new claim (Dkt. 603, 636) was prejudicial error.
Judge Steel’s denial does not amount to an abuse of
discretion requiring a new trial. There are some indica-
tions that facts relevant to the fraud issue had been
pursued prior to the date of the amendment.** In addi-
tion, the Delaware action began on October 12, 1982 and
was tried four days a week. CMOBC was free to use the
48. CMOBC itself refers to the “full record plaintiff made before
|Jamaica’s Court of Appeal] of the claim that Chase Jamaica had
committed a fraud.” (Dkt. 770, p. 53 n.*). The appeal oi the stay
proceeding before that court took place in November and December
1981, and February, 1982.
A-54
remaining time to conduct any interviews or depositions
it deemed necessary. Other discovery was conducted
during the trial in that fashion.
2. Admission of Justice Rowe’s Notes
CMOBC contends that the admission of Justice
Rowe’s notes of the Jamaican injunction proceeding (PX
629)49 was prejudicial error, requiring a new trial. Plain-
tiff offered the notes in evidence primarily to prove the
content of Brown’s representation to the Jamaican court
about Chase Jamaica’s plans for continuing in business.
The critical phrase recording Brown’s testimony on cross-
examination reads: “Chase has no intention of closing in
Jamaica.” (PX 629, p. 54). This evidence constituted part
of plaintiffs proof of the alleged fraud on the Jamaican
court committed by Chase Jamaica through Brown.
CMOBC objected to the notes on grounds of inadmis-
sible hearsay and improper authentication under
Fed.R.Evid. 902(3). Judge Steel originally excluded the
notes from evidence (Dkt. 797, Tr. 3779-82), but after
hearing testimony from plaintiff's witness, Justice Robin-
son, admitted them provisionally subject to final certifi-
cation being obtained by plaintiff. (Dkt. 806, Tr.
5733-37). CMOBC’s motion to strike the notes from
evidence was subsequently denied. (Dkt. 715).
Other evidence was also introduced bearing on the
content of Brown’s testimony before the Jamaican court.
This included: contemporaneous notes taken by Chase
Jamaica’s counsel, Norman Hill (Ct.Ex. 29; Dkt. 824, Tr.
9122); Justice Rowe’s January 27, 1977 written opinion
denying the injunction (PX 140 at 15); Brown’s Decem-
ber 2, 1981 affidavii filed in the Court of Appeal in
Jamaica (PX 638, 94(b)): and testimony by Brown and
Dr. Barret, Rose Hall’s counsel who conducted the cross-
49. See supra p. 135.
A-55
examination. (Dkt. 799, Tr. 4273: Dkt. 813, Tr. 7234).5°
The memorialization was formul...ed differently in each
piece of evidence, but as CMOBC itself notes, “the
difference between the two (or more) versions of what
Brown said seven years ago is largely one of emphasis.”
(Dkt. 770, p. 54). Even if Justice Rowe’s notes had been
excluded from evidence, the record was replete with
sufficient evidence for the jury to conclude Brown rep-
resented to the Jamaican court that Chase Jamaica pro-
posed to continue in business. Therefore, CMOBC has
failed to show that if any error were made in the admis-
sion of PX 629, such error affected its “substantial rights.”
Fed.R.Civ.P. 61.51 CMOBC is not entitled to a new trial
on this ground.
3. Admission of Evidence Relating to the Stay
Proceedings
CMOBC asserts that the admission of Justice
Parnell’s opinion granting Rose Hall a stay of the Jamai-
can damage action pending resolution of the Delaware
action (PX 141) and the opinion of the Court of Appeals
affirming that decision (PX 641) was erroneous and
prejudicial, entitling CMOBC to a new trial. These opin-
ions contain material on the issue of CMOBC’s involve-
ment in the stay proceedings. Judge Steel had previously
ruled that the portions of paragraph 54 alleging that
50. For amore extensive discussion of the content of each item,
see supra pp. 135-136.
51. Fed.R.Civ.P. 61 provides:
Rule 61. Harmless Error
No error in either the admission or the exc!usion of evidence
and no error or defect in any ruling or order or :n anything done
or omitted by the court or by any of the parties is ground for
granting a new trial or for setting aside a verdict or for vacating,
modifying or otherwise disturbing a judgment or order, unless
refusal to take such action appears to the court inconsistent
with substantial justice. The court at every stage of the pro-
ceeding must disregard any error or defect in the proceeding
which does not affect the substantial rights of the parties.
A-56
CMOBC “manipulated Chase Jamaica’s defense of the
Jamaican action . .. seeking unfair litigation advantage
to itself in this case” 52 did not state a claim for fraud but
were relevant to the issue of whether CMOBC should be
held liable for Chase Jamaica’s wrongs. (Dkt. 652). It
was on this basis that Judge Steel admitted PX 141 and
pages 31-32 of PX 641. (Dkt. 779, Tr. 161; Dkt. 799, Tr.
4264-66). CMOBC did not make a Fed.R.Evid. 403
prejudice objection at trial nor has it made a convincing
argument that admission of these exhibits was errone-
ous. Moreover, defendant has again failed to meet its
burden of showing that if any error were made in the
admission of these opinions, it affected “substantial
rights” of the parties. Fed.R.Civ.P. 61. Therefore, the
order of a new trial on this ground is not warranted.
4. The Purported Ambiguity in Special Interroga-
tory No. 4 and Allegedly Erroneous Instructions
CMOBC argues that Special Interrogatory No. 4 was
ambiguously worded so that the issue of CMOBC’s con-
trol of Chase Jamaica was predetermined by the Court.
This Court treated this claim fully in its Judgment Opin-
ion and concluded that under all of the circumstances,
Interrogatory No. 4 was not ambiguous, and the issue of
control was determined by the jury. (566 F.Supp. at
1567-70). In the Judgment Opinion, this Court also
disposed of defendant’s contention that the cheap sale
and loss of interference claim damages, which the jury
found totaled six million dollars, did not flow from the
fraud on the Jamaican court. The Court’s reasoning and
finding that the damages did flow from the alleged fraud
are set out at pages 1570-74 of that opinion. Id. There is
no reason to disturb those rulings. Therefore, CMOBC
would not be entitled to a new trial on either of these
grounds.
52. For the full text of paragraph 54, see supra note 10.
A-57
CMOBC also asserts that the jury instructions on
this issue were erroneous, and that the Court’s refusal to
give a certain instruction proposed by CMOBC was error
entitling it to a new trial.53 Specifically, CMOBC points
out the contrast between the brief instruction on control
under Interrogatory No. 4 and the more lengthy one on
control under Interrogatory No. 3. Although the instruc-
tion under Interrogatory No. 4 was brief, it was obvious
that the definition of control which was read to the jury
with reference to Interrogatory No. 3 was to apply to
control in Interrogatory No. 4 as well. Such a reading is
consistent with the following instruction to the jury:
“You are not to single out one instruction alone as stating
the law, but must consider the instructions as a whole.”
(Dkt. 858, Tr.15,484). The jury was instructed in rela-
tion to Interrogatory No. 3, in pertinent part, as follows:
A parent corporation may be liable for the wrongs
of its subsidiary if it controls the subsidiary in the
commission of those wrongs or if it causes that
subsidiary to be controlled from outside itself, as to
major policy decisions and actions as to those
wrongs, and without regard to the subsidiary’s cor-
porate offices and structure.
This outside control must amount to complete
domination of the subsidiary’s major policy decisions
and actions so that the subsidiary at the time had no
separate mind, will, or existence of its own.
For purposes of this principle, it would not mat-
ter whether CMOBC exercised control over Chase
Jamaica directly by CMOBC itself, or indirectly by
Chase Manhattan Bank, N.A., and/or CMOC. In
53. CMOBC’s proposed instruction reads as follows: “I instruct
you that CMOBC cannot be held liable for any alleged fraud or other
alleged acts by Chase Jamaica unless that fraud was controlled or
commited by CMOBC itself, through the manipulation of the sepa-
rate existence of Chase Jamaica.” (Dkt. 751, p. 10).
A-58
either event, if you find that CMOBC controlled
Chase Jamaica in a way that disregarded the
subsidiary’s corporate offices and structure, and that
Chase Jamaica’s major policy decisions and actions
involved in this lawsuit were thus taken in disregard
of Chase Jamaica’s corporate offices and structure,
then you should find CMOBC liable for the wrongs
of Chase Jamaica.
(Dkt. 858, Tr. 15,536-37). It cannot be said that Judge
Steel committed clear error requiring a new trial because
he failed to repeat this explanation of the control concept
with reference to Interrogatory No. 4, a mere two pages
later. Neither CMOBC nor plaintiff requested repetition
of the definition of control instruction. Moreover, plain-
tiff offered no additional definition of control to be in-
cluded in the instructions on Interrogatory No. 4, while
the additional charge proposed by CMOBC not only
would not be correct or adequate, but also fails to define
control.
CMOBC also asserts a novel theory which it claims
justifies the grant of a new trial. Defendant clainas that
the “erroneous instruction under Special Interrogatory
No. 3 as to the presumption of control of Chase Jamaica
by CMOBC purportedly mandated by the Edge Act”
[Dkt. 858, Tr. 15,537-38] confused the jury and sug-
gested “that CMOBC presumably controlled Chase
Jamaica’s actions in the Jamaican injunction proceeding
(and that CMOBC had the burden to prove other-
wise). ...” (Dkt. 770, pp. 59-60).
The short answer to this new claim is that the Court
repeatedly charged the jury that plaintiff had the burden
of proving its claims by a preponderance of the evidence
unless otherwise specifically noted. (Dkt. 858, Tr.
15,501-02, 15,515, 15,540). The Edge Act presumption
was referenced only under part of Interrogatory No. 3.
Judge Steel was careful to differentiate between the two
theories of control. This control under the Edge Act was
A-59
inquired about in Interrogatory No. 3(a), and control
independent of the Edge Act was referenced in Inter-
rogatory No. 3(b). The jury was instructed as to each
theory separately. (Dkt. 858, Tr. 15,535-38). In addition,
CMOBC at no time objected to the instructions on the
ground that language excluding the Edge Act presump-
tion was needed in the Interrogatory No. 4 instruction.
For these reasons, no new trial is warranted on this
ground. )
5. Jury Findings Against Clear Weight of Evidence
as to CMOBC’s Control of the Fraud
Finally as to the fraud issue, CMOBC asserts that
the Court must order a new trial because the jury’s
conclusion that any false testimony was given is against
the clear weight of the evidence. Furthermore, defen-
dant claims that credibility issues are raised under the
fraud claim such that a successor judge must grant a
new trial under Fed.R.Civ.P. 63.
As one ground for granting judgment notwithstand-
ing the verdict for CMOBC on the fraud claim, the Court
determined that no reasonable person could conclude
that fraud was controlled by CMOBC.* If the grant of
judgment notwithstanding the verdict should be re-
versed on appeal, there would have to be a new trial
limited to the issue of CMOBC’s control of the fraud
presented by Interrogatory No. 4. The jury’s finding in
Interrogatory No. 4 is against the clear weight of the
evidence for the reasons discussed in holding that the
misrepresentation of Chase Jamaica was not controlled
by CMOBC.
54. See supra pp. 137-140.
A-60
IV. Liability of CMOBC—Interference Claim
A. Motion for Judgment Notwithstanding the Ver-
dict or New Trial
CMOBC attacks the jury’s finding that Chase Ja-
maica (and therefore CMOBC) is liable to plaintiff in the
amount of 4.5 million dollars for its refusal to cooperate
in the interference lawsuit against Holiday Inns. (Inter-
rogatory Nos. 2 and 6). Defendant asserts several
grounds which it claims justify judgment notwithstand-
ing the verdict in its favor or, alternatively, a new trial on
this issue. The Court has already determined that
CMOBC is entitled to judgment notwithstanding the
verdict on the deceit on the court claim and therefore
cannot be held responsibie for any of Chase Jamaica’s
wrongs found by the jury in Interrogatory Nos. 1 and 2.
Therefore, consideration of the interference issue is not
necessary to the present judgment. However, under
Fed.R.Civ.P. 50(c), the Court must rule on new trial
motions in the event that the judgment is vacated or
reversed on appeal.55 It would seem to be within the
spirit of this rule to also determine the remaining grounds
of defendant’s judgment notwithstanding the verdict
motion. Each ground will be addressed separately.
1. Chase Jamaica’s Duty to Act in Good Faith When
Foreclosing on Collateral—Lawsuit Against Holi-
day Inns
CMOBC contends that as a matter of law, Chase
Jamaica owed no duty to plaintiff to assist in a lawsuit
against Holiday Inns either by itself instituting suit, by
restructuring its sale to the U.D.C. to a sale of assets
rather than a sale of the shares of Rose Hall (H.I.), or by
assigning the claim to Rose Hall before transferring the
stock to the U.D.C. None of these actions, defendant
maintains, would be required of Chase Jamaica which,
55. See supra p. 140.
A-61
as pledgee of the shares, had the right to sell the collat-
eral upon plaintiff's default on the loan. Defendant points
to the share hypothecation agreement (PX 473E), which
provides that if plaintiff defaulted on the loan, Chase
Jamaica could “sell by public or private sale or otherwise
deal with the securities in such manner as it [saw] fit.”
(Id., 12).
As CMOBC notes, the applicable common law re-
quires the pledgee to dispose of the collateral in “good
faith.” The jury was instructed, “|i]n exercising its power
of sale, a bank owes a duty to its borrower to act in good
faith, and not in reckless disregard of the borrower's
interests, and to take reasonable precautions to obtain
the best available price for the collateral on the date of
sale.” (Dkt. 858, Tr. 15,519). The jury was further in-
structed: [i]f the bank’s interests, as it sees them, conflict
with those of the borrower, the bank is entitled to give
preference to its own interests provided it does so in good
faith.” (Dkt. 858, Tr. 15,521). Nothing has been prof-
fered to indicate this statement of Jamaican law was
incorrect. In light of these controlling principles of Ja-
maican law, Judge Steel properly left to the jury the
question of whether Chase Jamaica should have assisted
Rose Hall in the lawsuit against Holiday Inns. While
defendant is correct in asserting that a bank has no
absolute duty to aid a defaulting borrower in a lawsuit, it
does have a duty to act in good faith and not in reckless
disregard of its borrower’s interests in pursuing the
lawsuit if this would not have interfered with its attempt
to conclude a legitimate sale with the U.D.C. (Dkt. 858,
Tr. 15,525). The issue was properly submitted to the
jury. Accordingly, CMOBC is not entitled to judgment
notwithstanding the verdict on this issue.
A-82
2. Res Judicata Effect of Certain Statements in Justice
Rowe’s Opinion
CMOBC currently seeks to inject a new theory as a
ground for overturning the jury’s finding that Chase
Jamaica wrongfully prevented plaintiff from suing Holi-
day Inns for interference. See Interrogatory No. 2, supra
p. 9. Defendant points to the following language in
Justice Rowe’s written opinion denying the injunction:
Complaint is made by the plaintiffs that the [first]
defendant [Chase Jamaica] refused permission for
the plaintiffs to bring an action against Holiday Inns
in the name of the second defendant [Rose Hall
(H.1.)], for unlawful interference in the plaintiffs’
negotiations with the Urban Development Corpora-
tion. That refusal, taken by itself, or cumulatively
with the plaintiffs other complaints is in my view no
evidence of bad faith on the part of the defendants.
The defendants must perforce continue to do busi-
ness with Holiday Inns and it would be inimical to
the defendants interests to be engaged in a iawsuit
against Holiday Inns.
Rose Hall, Ltd., et al. v. Chase Merchant Bankers Ja-
maica Ltd., et al., Suit No. E-211 of 1976 (Sup.Ct. of
Judicature of Jam., Jan. 17, 1977) (PX 140, pp. 12-13).
Defendant claims that this statement by Justice Rowe
should be accorded res judicata effect so as to preclude
any claim by plaintiff that Chase Jamaica had a duty to
assist in a lawsuit against Holiday Inns.
This Court does not agree that this dictum in the
opinion denying the preliminary injunction should be
accorded res judicata effect. First, an expression of
opinion on a component of “probability of success” in a
preliminary injunction context is just that, i.e., a pre-
liminary determination subject to revision in the final
merits determination. Second, the primary issue re-
solved by Justice Rowe’s disposition of the case was
A-63
whether “the first defendant [was] in a position to pay
whatever damages might be awarded to the plaintiffs in
this action.” Id. at 15. Consequently, the question of
whether Chase Jamaica should have made the lawsuit
available to Rose Hall was properly submitted to the jury.
Defendant’s theory of res judicata cannot serve as a
basis for grant of judgment notwithstanding the verdict
or new trial.
3. Chase Jamaica’s Legitimate Interest in Avoid-
ing Litigation Between Rose Hall (H.1.) and Holi-
day Inns
The Court instructed the jury that Chase Jamaica
had no duty to make the interference claim against
Holiday Inns available to plaintiff if it “believed in good
faith that a lawsuit might interfere with its attempt to
conclude a legitimate sale with the UDC.” (Dkt. 858, Tr.
15,525). CMOBC contends that even if the claim were
correctly submitted to the jury, there was no evidence to
support the jury’s finding that Chase Jamaica “wrong-
fully” refused to aid in the lawsuit. (Interrogatory No. 2).
CMOBC points to the “uncontradicted testimony” of
Chns Brown, Douglas Judah (counsel for Chase Ja-
maica) and Moses Matalon (Chairman of the U.D.C. and
negotiator for the purchases) to the effect that Matalon
did not want to “purchase litigation.” This, defendant
claims, justified Chase Jamaica’s refusal to facilitate the
lawsuit. Claiming there is no evidence to suppori a
finding that Chase Jamaica acted in bad faith, CMOBC
requests judgment notwithstanding the verdict.
CMOBC ignores, however, the substantial evidence
presented by plaintiff from which the jury could and did
reasonably conclude that Chase Jamaica wrongfully re-
fused to cooperate in the lawsuit. The record contains
testimony by Matalon that the U.D.C. would not have
been concerned if the sale were structured so that Rol-
lins could retain control of claims that Rose Hall (H.L.)
A-64
had against Holiday Inns. (Dkt. 801, Tr. 4655). In addi-
tion, Douglas Judah testified that after Jonathan Golden,
an Atlanta lawyer representing Rose Hall, requested
Chase Jamaica's assistance in the interference suit,
Judah did not ask the government its reaction in this
regard. (Dkt. 827, Tr. 9721). In fact, Judah, on behalf of
Chase Jamaica, denied Golden’s request just two days
after it was made. (PX 132). There is also some evidence
that the U.D.C.’s counsel, Ilan Phillipson, later tried to
change the transaction from a share sale to an asset sale
(PX 154; PX 157), although CMOBC presented testi-
mony by Matalon that he disapproved of Phillipson’s
pursuit of the asset sale. (Dkt. 834, Tr. 11,186).
On the basis of this record, there was sufficient
evidence to support the jury's finding in Interrogatory
No. 2 and neither judgment notwithstanding the verdict
nor a new trial is warranted.
4. Consummation of the Proposed $13 Million
Transaction
The jury was instructed that in order to assess the
damages flowing to plaintiff from Chase Jamaica's
wrongfully preventing Rose Hall from suing Holiday
Inns for interference, it had to first determine the value
of the interference claim. (Dkt. 858, Tr. 15,526). The
critical element of this value was “whether Rose Hall
(H.L)’s proposed sale for $13 million would otherwise
have been consummated.” (Dkt. 858, Tr. 15,534).
CMOBC contends that Chase Jamaica's consent to
the proposed $13 million transaction was necessary be-
cause it held a second mortgage on the hotel and a
pledge of the Rose Hall (H.I.) shares. (PX 473(D), (E)).
Out of the sale price, plaintiff proposed to pay Chase
Jamaica $1,125,000 cash and to secure the balance of
the $3,255,000 loan by pledging to Chase Jamaica the $3
million in ten year debentures to be issued by the Ja-
maican government as part of the purchase price. Al-
ee
A-65
though Chase Jamaica agreed to the cash payment,
defendant contends that Chase Jamaica refused to ac-
cept the debentures as collateral if their term exceeded
three years. Since plaintiff was negotiating debentures
with a ten-year term, CMOBC argues that Chase Ja-
maica would not have consented to the debentures in the
form proposed. Since the debentures were for an un-
acceptably long term, CMOBC concludes the jury had
no basis for finding that the $13 million transaction
would have been consummated.
Plaintiff counters by pointing to abundant evidence
in the record supporting the implicit jury finding that
Chase Jamaica would have closed the sale notwithstand-
ing its preference for debentures with a shorter term.
Brown testified that although Chase Jamaica was not
“content about the debentures, ... [it] hadn’t rejected
them.” (Dkt. 817, Tr. 8027). Plaintiff also introduced
several memoranda indicating that Chase Jamaica was
urging prompt execution of the agreement of sale. (PX
53; PX 66; PX 524; PX 526; DXC 1082).
The jury had sufficient evidence before it from which
to conclude that the $13 million transaction would have
been consummated but for the interference. Therefore,
judgment notwithstanding the verdict and new trial, if
requested, would not be appropriate on this ground.
B. Motion for New Trial
1. Evidentiary Rulings Concerning the Jamaican
Cabinet's Approval of the Proposed $13 Million Sale
of the Hotel
Together with Chase Jamaica’s consent, discussed
supra p. 146, Jamaica cabinet approval of the proposed
$13 million sale of the Rose Hall Holiday Inn was re-
quired. This cabinet approval in the spring or summer of
1976 was a necessary predicate to the jury's tinding that
the $13 million sale would have been consummated, but
for Holiday Inns’ interference. (Interrogatory No. 2).
A-66
Rose Hall attempted to prove the Jamaican cabinet had
approved the deal by proffering the Milner certificate.
(PX 726). CMOBC unsuccessfully countered by seeking
to admit the Patterson affidavit (Ct.Ex. 60), and the
testimony, by deposition or at trial, of Patterson (id.), and
by seeking to strike the Milner certificate. Judge Steel
admitted the Milner certificate in evidence (Dkt. 806, Tr.
5733), refused to admit the Patterson affidavit or testi-
mony (Ct.Ex. 60), and refused to strike the Milner cer-
tificate. (Dkt. 747). CMOBC contends that these rulings
were erroneous and prejudicial, requiring a new trial.
On November 30, 1982, Rose Hall introduced the
certificate of Harold Milner, Deputy Financial Secretary
of the Jamaican Ministry of Finance and Planning, which
contained information about cabinet approval of the $13
million sale. Judge Steel admitted this certificate (PX
726) under Fed.R.Evid. 803(24) over defendants’ objec-
tions, stating “[{a]ll of the conditions specified in the Rule
as a prerequisite to a hearsay exception are satisfied. The
duration of the trial, at least another two or three weeks,
is sufficient for both defendants to have a fair opportu-
nity to meet the facts which are certified to by Milner.”
(Dkt. 806, Tr. 5733). Milner certified
that the acquisition of the Rose Hall Holiday Inn
Hotel by National Hotels and Properties Limited |a
subsidiary of the U.D.C.| at a cost of U.S. $13 million
was approved by the Government on the 26th of
April, 1976. The terms of the sale were subsequently
modified by the government on the 27th of Septem-
_ ber, 1976 and accordingly the cost of the stock of
Rose Hail H.I. Limited to Nationa! Hotels and Prop-
erties Limited was U.S. $3.25 million.
(PX 726).
Subsequently, on February 24, 1983, on the eve of
close of trial, not two or three weeks after plaintiff intro-
duced the Milner certificate, but rather nearly three
months later, CMOBC sought to admit the affidavit of
A-67
Percival J. Patterson, Minister of Tourism, Industry and
Foreign Trade, and a member of the Jamaican cabinet
from 1972 to 1976. Judge Steel denied the admission of
this affidavit or, in the alternative of Patterson’s deposi-
tion or live testimony, stating that it was too late for this
type of application. (Ct.Ex. 60). At the time CMOBC
made this application, its case had long been completed,
as had the case of defendant Holiday Inns and the
rebuttal case of plaintiff. Any favorable action by the
Court would have mandated the reopening of CMOBC’s
case, and further opportunity for plaintiff to rebut when
all concerned, including the jury, thought the chore of
taking evidence was almost completed. Given the totality
of circumstances, there was no error in refusing to
prolong the longest jury trial ever in the Delaware Dis-
trict. Moreover, the proffered Patterson affidavit did not
differ drastically from the Milner certificate which it
sought to counter. The Patterson affidavit stated, in
pertinent part:
The Cabinet’s approval of the acquisition of the Rose
Hall Holiday Inn by National Hotels and Properties
Limited for US $13 million ($10 million cash and $3
million notes) in April, 1976 was in principle only.
giving me authority as Minister to conclude the
agreement subject to certain conditions. These con-
ditions included finding the necessary funds and
especially the foreign exchange component.
(Ct.Ex. 60 95). There is nothing in the affidavit stating
that the referenced conditions would not be satisfied.
When the Court rejected defendant’s proffer of the
Patterson affidavit or testimony, CMOBC moved to admit
the affidavit of Horace Barber, Governor of the Bank of
Jamaica and former Financial Secretary in the Jamaican
Ministry of Finance and Planning. Plaintiff did not ob-
ject, and it was admitted on February 28, 1983. (Dkt.
748, p. 4 913). In the affidavit, Barber certified:
A-68
that the acquisition of the Rose Hall Holiday Inn
Hotel by National Hotels and Properties, Ltd. at a
cost of US $13 million was approved by the Govern-
ment on the 26th of April, 1976. The terms of the
sale were subsequently modified by the Government
on the 27th of September, 1976 and the government
approved the purchase from Chase Merchant Bank-
ers Jamaica Ltd. of the stock of Rose Hall (H.I.) Ltd.
for US $2.255 million and the purchase of approxi-
mately 3,000 acres of land for US $1 million.
‘DXC 2099). CMOBC offered this affidavit to correct a
mistake in the Milner certificate (PX 726) relating to the
purchase price for the Rose Hall (H.I.) stock. In all other
respects, the Barber affidavit is virtually identical to
plaintiff's exhibit, the Milner certificate.
In introducing this affidavit, CMOBC necessarily
waived any objection to the identical evidence contained
in the Milner certificate confirming that cabinet approval
had been obtained. Although this conclusion appears
harsh and unfair at first glance, upon closer examination
it becomes evident that CMOBC cannot now object to
evidence which is identical to evidence it introduced.
Even if the Court were to conclude that the Milner
certificate was improperly admitted, this would consti-
tute harmless error under Fed.R.Civ.P. 61 in light of the
Barber affidavit which is identical in all material re-
spects.
CMOBC admittedly found itself in a difficult position
when the Court correctly refused to admit its proffered
Patterson affidavit and testimony. CMOBC felt the need
to correct the mistake in Milner’s certificate relating to
the purchase price. However, plaintiff's counsel, Andrew
Kirkpatrick, Esq., represented in a February 26, 1983
letter to Judge Steel: “This dispute is of no consequence
to us, and we are willing to agree not to argue or assert
for any purpose this particular statement in the Milner
certificate. We are willing to formalize this undertaking
—~
RT Ne PO Dee wn, rit Ay aboot
ahi a
A-69
in any reasonable way if the Court would find it helpful.”
It appears certain that CMOBC could have cleared up
the error by means other than introducing the Barber
affidavit, such as by stipulation or by an affidavit which
did not confirm the approval of the cabinet. By making
the tactical decision to proceed in the manner in which
it did, CMOBC waived any right to object to the Milner
certificate. CMOBC is not entitled to a new trial on this
ground.
2. Jury Finding of $4,500,000 in Damages Resulting
From Chase Jamaica’s Failure to Permit Interfer-
ence Lawsuit .
By its affirmative answer to Interrogatory No. 2 and
its assessment of $4.5 million in damages in Interroga-
tory No. 6,5% the jury made several implicit findings of
fact which CMOBC contends are contrary to the clear
weight of the evidence. As a consequence, CMOBC
urges that a new trial be granted. The Court will con-
sider these challenged implicit findings of fact seriatim.
a. The Jamaican Government Debentures
The $13 million arrangement which Rollins was
negotiating with the U.D.C. for the sale of the hotel was
to be payable in $10,000,000 cash and $3,000,000 in
long-term Jamaican government guaranteed deben-
tures. By finding damages of $4.5 million (the difference
between $13 million and $8.5 million, the actual sale
price of the shares including the $6.25 million first
mortgage),5’ the jury effectively concluded that the Ja-
maican government would have issued the proposed $3
million in debentures and that they would have been
worth their face value.5* CMOBC challenges both of
56. See supra p. 121.
57. See supra note 13.
58. The jury was instructed on this point: “you should deter-
mine whether that [$13 million] price should be adjusted upwards,
A-70
these findings as against the clear weight of the evi-
dence.
_ Both Rose Hall and CMOBC presented substantial
testimony about the value of the debentures and the
likelihood of their issuance. CMOBC presented the tes-
timony of two expert witnesses with excellent qualifica-
tions, G. Arthur Brown and Tony Lloyd. The substance
of their testimony was that the Jamaican government
would not have issued the bonds as proposed, primarily
because of their terms providing the holder with a hedge
against devaluation and allowing unrestricted transfer-
ability. In addition, Lloyd opined that even assuming the
government issued the bonds, they would have traded
only at a discount from par.
Plaintiff, on the other hand, presented testimony by
Rollins, Eugene Weaver, a Rose Hall director and finan-
cial officer, Hugh Hart, Rose Hall’s Jamaican counsel,
and Eric Bell, a Jamaican attorney who held several
impressive government posts. These witnesses high-
lighted the advantages of the proposed debentures which
would increase their value, and also opined on the prob-
ability of their issuance by the government.
The testimony on the value of the debentures and
the likelihood of issuance was conflicting and complex.
However, Rose Hall presented substantial evidence from
which the jury could have reasonably concluded, by a
preponderance of the evidence, that the Jamaican gov-
ernment would have issued the debentures and that they
would have been worth their $3 million face value.
Therefore, this finding is not against the clear weight of
the evidence and does not warrant a new trial.
NOTES (Continued )
downwards, or at all by reason of testimony you have heard about
the value of the $3 million in proposed debentures which were to be
part of that price.” (Dkt. 858, Tr. 15,534).
ee bi he aCe
esas... Aviansie to cnet ieneds
A-71
b. Consummation of the Proposed
$13 MillionTransaction
CMOBC urges that if the Court finds, as it did, that
defendant is not entitled to judgment notwithstanding
the verdict on the issue that the proposed $13 million
transaction would not have been consummated because
of Chase Jamaica’s “veto power,” then CMOBC is en-
titled to a new trial because the jury’s finding was
contrary to the clear weight of the evidence. As CMOBC
itself notes, plaintiff introduced substantial evidence that
the transaction had cabinet approval (PX 726); that it
had been announced at a press conference (Dkt. 780, Tr.
477); that drafts of the sale documents had been ex-
changed with U.D.C.’s lawyers (Dkt. 790, Tr. 2397-2404;
PX 630A-F); and that plaintiff expected the deal to close
in the summer of 1976 (Dkt. 780, Tr. 443; Dkt. 782, Tr.
869-70). CMOBC contends, however, that the clear
weight of the evidence indicated that the sale would not
have closed at that price, regardless of Holiday Inns’
alleged interference.
As examples of this evidence, CMOBC points to
evidence that the government would only acquire the
hotel if its revenues supported its operation, which was
questionable for the Rose Hall Holiday Inn. In addition,
CMOBC again refers to the testimony concerning the
debentures which has been treated above. See supra pp.
148-149. Again the Court concludes that there was sub-
stantial evidence in the record from which the jury
reasonably concluded that the $13 million sale would
have been closed but for the interference. A new trial is
not warranted.
c. Lawfulness of Holiday Inns’ Conduct
In a conclusory fashion, CMOBC contends that a
new trial is required because the jury’s finding that
Holiday Inns unlawfully interfered with plaintiff's $13
million transaction was contrary to the clear weight of
A-72
the evidence. By its affirmative answer to Interrogatory
No. 2, the jury necessarily concluded that Holiday Inns’
conduct in meetings with Rollins, Golden azid Matalon
in June and July of 1976 amounted to intimidation,
injurious falsehood or both. There was conflicting testi-
mony on this issue presented by Rollins, Golden, Mat-
alon, Brown, Lapwing (an agent of Holiday Inns), Feld-
man and Rose (executives of Holiday Inns). In addition,
the record contains several documents relevant to this
matter. See e.g., PX 51, PX 179. The evidence was in
conflict, but the jury could have reasonably reached the
conclusion that Holiday Inns committed unlawful inter-
ference. Consequently, a new trial is not warranted.
3. New Trial Under Rule 63
CMOBC claims that since all of the issues compos-
ing the question of whether Chase Jamaica wrongfully
prevented plaintiff from suing Holiday Inns involved
credibility determinations, a successor judge must, un-
der Fed.R.Civ.P. 63, grant a new trial on the matters
referenced in Interrogatory No. 2. This is so, argues
CMOBC, because a successor judge who did not preside
at the trial cannot determine whether the verdict was
against the clear weight of the evidence when this would
involve assessment of witnesses’ credibility.
As noted in the previous sections, the record con-
tains sharply conflicting testimony on each of these
issues. The Court has determined, as to each disputed
issue, that there is sufficient basis to support the jury’s
finding. in reaching its conclusions, the jury necessarily
made credibility determinations in evaluating the con-
flicting testimony. The Third Circuit Court of Appeals
has stated “since the credibility of witnesses is peculiarly
for the jury, it is an invasion of the jury’s province to
grant a new trial merely because the evidence was
sharply in conflict.” Lind v. Schenley Industries, Inc.,
278 F.2d 79, 89 (3d Cir.1960), cert. denied, 364 U.S.
A-73
835, 81 S.Ct. 58, 5 L.Ed.2d 60 (1960) (quoting 6 J.
Moore, Moore’s Federal Practice (2d ed.) p. 3819). Al-
though the appellate court was referring to a situation
where the presiding trial judge was deciding the new
trial motions, there is no reason why this principle should
not equally apply to a successor judge. The jury has
made the credibility determinations required and has
reached conclusions which this Court finds are amply
supported by the testimony and documents in the record.
When this is the state of the record, there is no more
reason for a successor judge to disturb the verdict than
for the presiding trial judge. It is only in cases where
there is something in the record which causes the suc-
cessor judge to question whether he would be as able to
decide the motion in the same manner as the presiding
judge who saw and heard the witnesses that he should
grant a new trial under Rule 63. It is not possible to
conclude that the jury decided the matter was against
the clear weight of the evidence or in a manner which
yielded a seriously erroneous result.
The interpretation of Fed.R.Civ.P. 63 urged by
CMOBC would require a successor judge to grant a new
trial in every instance in which a party claims the verdict
is against the clear weight of the evidence and credibility
of witnesses is involved. The Court cannot agree with
such a reading of a rule which empowers a successor
judge to perform the duties required after a verdict is
returned and provides as the sole limitation that “if such
other judge is satisfied that he cannot perform those
duties ... he may in his discretion grant a new trial.”
Fed.R.Civ.P. 63.
4. Jury Instructions on the Interference Claim
CMOBC contends that since Chase Jamaica had no
duty to bring or assign a lawsuit against Holiday Inns, or
sell Rose Hall (H.I.) assets instead of shares, the instruc-
tions to the contrary (Dkt. 858, Tr. 15,525-26) were
A-74
erroneous and prejudicial. The Court has determined
that this issue was properly submitted to the jury as part
of Chase Jamaica’s duty of exercising good faith in the
sale of its collateral. See supra pp. 144-145. Therefore,
the instructions were correct and the jury’s findings will
not be disturbed.
Additionally, CMOBC urges that a new trial is re-
quired because the instructions were incomplete with
regard to the underlying torts of intimidation and mali-
cious falsehood alleged against Holiday Inns. In particu-
lar, CMOBC objects to the omission of certain of its
proposed instructions and the inclusion of plaintiffs
allegations. The instructions as given were well balanced
and entirely sufficient on the interference claim. (Dkt.
858, Tr. 15,524-34). The instructions included defend-
ant’s arguments, opposing plaintifi’s allegations, as well
as repeated statements that plaintiff had the burden of
proving its allegations by a preponderance of the evi-
dence. Therefore, no new trial is warranted.
V. Liability of Defendant—Cheap Sale
CMOBC contends that there is no evidence in the
record to support the jury’s conclusion that Chase Ja-
maica obtained $1.5 million less than the best available
price for the 3000 acres of land at issue. (Interrogatory
Nos. 1 and 6(a)). On this basis, CMOBC seeks judgment
notwithstanding the verdict or, alternatively, a new trial.
The Court will consider CMOBC’s various contentions
relating to this issue seriatim.
Plaintiff's main evidence as to the damages it suf-
fered on the sale of the land was presented by the
testimony of its expert Mr. R.O.P. (“Pat”) McDaniel,
chairman and managing director of the Jamaican real
estate firm, C.D. Alexander & Co. McDaniel gave his
opinion on the value of the land in a sale by either a
subdivision of part of the land and sale by lots or a sale of
the entire 3000 acres as a block. CMOBC argues there is
A-75
an insufficiency of proof by attacking McDaniel’s testi-
mony as incompetent evidence of the best available
price.
A. Motion for Judgment Notwithstanding the Verdict
1. Competency of Evidence of Sale of Land by Lots
McDaniel testified that if, in September, 1976, he
were advising the owner of the 3000 acres of land on how
to raise $1 million, the amount for which Chase Jamaica
sold the mortgaged Rose Hall land to U.D.C., he would
have advised not to sell the whole as a block in the then
existing depressed market; rather, he would have sug-
gested subdividing and selling the most saleable land in
lots for agricultural and residential use. (Dkt. 802, Tr.
5021-22). If this advice were followed, McDaniel testi-
fied that the balance of the land could be developed and
sold in the future in accordance with Rollins’ land use
plan. (PX 252). However, in order to accomplish the
subdivision lot sale, McDaniel testified that 18 months to
two years would be required. (Dkt. 802, Tr. 5021-22).
a. Duty to Sell Land by Lots
CMOBC contends that as a matter of law Chase
Jamaica had no duty to subdivide the land and sell it in
lots; rather, it had the absolute right to sell the entire
collateral, provided it obtained the best available price. In
support, defendant cites the Jamaican Registration of
Titles Act, section 106,59 the common law, the mortgage
59. Section 106 provides, in pertinent part:
If such default in payment, or in performance or observ-
ance of covenants, shall continue for one month after the
service of such notice, or for such other period as may in such
mortgage or charge be for that purpose fixed, the mortgage or
annuitant, or his transferees, may sell the land mortgaged or
charged, or any part thereof, either altogether or in lots, by
public auction or by private contract, and either at one or at
several times and subject to such terms and conditions as may
A-76
instrument (PX 473(D)), and the general policy against
requiring subdivision.
After requesting memoranda from the parties (Dkts.
711, 720, 735), Judge Steel formulated the following
jury instruction:
A bank exercising its power of sale may offer the
mortgaged property for sale either altogether or in
lots, but in determining which method to use, the
bank must make that decision in good faith, without
reckless disregard for the interests of the mortgagor,
and in taking reasonable precautions, for the pur-
pose of obtainir:g the best available price and avoid-
ing unreasonabl? sale of excess collateral.
(Dkt. 858, Tr. 15,5%'2-23). This instruction correctly
made it the jury’s province to decide whether it would
have been reasonable for Chase Jamaica to have pursued
a lot sale scheme. This Court sees no reason to upset that
determination. Therefore, any testimony given by
McDaniel relating to a program of subdivision and lot
sale went to the issue oi Chase Jamaica’s good faith in
deciding not to pursue such a plan. As such, it was
competent evidence.
NOTES (Continued )
be deemed fit, and may buy in or vary or rescind any contract
for sale, and resell in manner aforesaid, without being liable to
the mortgagor or grartor for any loss occasioned thereby, and
may make and sign such transfers and do such acts and things
as shall be necessary for effectuating any such sale, and no
purchaser shall be found to see or inquire whether such default
as aforesaid shall have been made or have happened, or have
continued, or whether such notice as aforesaid shall have been
served, or otherwise into the propriety of regularity of anv such
sale; and the Registrar upon production of a transfer made in
professed exercise of the power of sale conferred by this Act or
by the mortgage or charge shall not be concerned or required to
make any of the inquiries aforesaid; and any persons damnified
by an unauthorized or improper or irregular exercise of the
power shall have his remedy only in damages against the
person exercising the power
A a A ih Al ho eh y
Pt then acast ins? NN
SR a PEPER on ma hail
wie a
A-77
b. Timing of Sale
To further attack McDaniel’s testimony which val-
ued the land according to a long term development plan,
CMOBC contends that Chase Jamaica had the unquali-
fied right to sell the land on the date it chose. On this
issue, the jury was instructed as follows:
When the borrower is in default, the bank, unless it
makes an agreement to the contrary, is free to ex-
ercise its power of sale for its own purposes when-
ever it chooses.
Specifically, the bank has no duty to delay the
sale to await an improvement in the market; it may
choose the time of sale in its own interests, despite
the possibility, or even the likelihood, that the mar-
ket will later improve.
However, in conducting the sale, the bank must
take such time and make such arrangements as the
circumstances may require, to sell in a way reason-
ably calculated to obtain the best available price for
the collateral. That is, while the bank need not wait
for improvement in the market, it must not by un-
reasonable haste omit to take reasonable precautions
to obtain the best available price, but must take such
time and make such arrangements as are reasonably
necessary, in light of the nature of the collateral and
the surrounding circumstances, to obtain the best
available price.
(Dkt. 858, Tr. 15,520-21). This instruction was consist-
ent with the earlier findings on mortgagee duties under
Jamaican law made by this Court:
If Rose Hall is suggesting that where there is a
complex transaction a mortgagee cannot choose the
date when he will exercise his power of sale, I do not
agree. On the other hand, if Rose Hall is suggesting
that in a situation where a complex agreement of
A-78
sale is worked out by the mortgagee over a period of
time, the term “date of sale” should not have refer-
ence to one single day, then I agree that the term
“date of sale” would not necessarily refer to a single
calendar date.
Dkt. 559, p.8 (Magistrate’s Sept. 24, 1982 Opinion),
adopted, Dkt. 631 (Judge Steel's October 7, 1982 Opin-
ion).
Under these controlling principles of Jamaican law,
the jury was to consider McDaniel’s testimony in decid-
ing what type of sale Chase Jamaica had to conduct in
order to fulfill its mortgagee duties. CMOBC’s argument
that McDaniel’s 18-month scheme was unreasonable as
opposed to Chase Jamaica's own sale which did not close
for 14 months was properly left for jury determination. It
is obvious McDaniel’s testimony on this point was rel-
evant and competent. At any rate, defendant's argument
is an insufficient basis upon which to grant judgment
notwithstanding the verdict.
c. Financing of the Sale
CMOBC contends that a “fatal defect” in McDaniel’s
expert opinion was the erroneous assumption that Chase
Jamaica would have provided or arranged financing for
the sale of lots. This assumption, defendant urges, is
contrary to the instruction stating “{a] bank has no duty
to provide financing of the sale of collateral.” (Dkt. 858,
Tr. 15,522). Therefore, CMOBC concludes that
McDaniel's testimony was irrelevant and incompetent to
support the verdict.
McDaniel testified before the jury about the various
assumptions on which his land values were based. He
opined that financing was available (Dkt. 802, Tr.
5052-53) and that deposits available to Chase Jamaica
would have been generated during the sales period.
(Dkt. 802, Tr. 5022). He did not limit the source of
financing to Chase Jamaica. The jury was left with the
A-79
task of evaluating his testimony in light of the reasonable-
ness of his assumptions. Since the jury placed a total
value of $2.5 million on the land, a figure considerably
below McDaniel’s lot sale valuations, which totaled
slightly over $20 million (PX 718A-C; PX 719A-O), it
apparently discounted McDaniel’s testimony. The Court
finds no reason to disturb the verdict on this basis urged
by defendant.
d. Sufficiency of the $1 Million that
McDaniel’s Plan Would
Have Produced
CMOBC contends that since Chase Jamaica was
entitled to receive the entire amount of its debt,
$3,255,000, McDaniel’s lot sale plan which would have
produced $1 million was insufficient to justify the jury's
verdict. The short answer to this claim is that the jury
could have concluded from all the evidence that Chase
Jamaica could have raised the remainder of funds re-
quired to pay off its loan through the sale of the hotel, as
it in fact did.
e. Chase Jamaica Being Advised
to Subdivide
CMOBC appears to argue that advice given to Chase
Jamaica by its attorneys and real estate appraisers in
April and May of 1976 to the effect that it should sell part
of the collateral in lots (PX 32, PX 222) would no longer
be operative in September of 1976 because of various
events in Jamaica during the summer of 1976. CMOBC
had a chance to explain or contradict these exhibits at
trial, and the jury weighed all the evidence in reaching
its conclusion. In light of the relatively low value the jury
placed on the land, it is apparent that the jury discounted
McDaniel's lot sale valuations to a great extent. There is
no reason, however, for the Court to conclude that
McDaniel’s testimony on lot sales was irrelevant or in-
A-80
competent, or, when considered together with other land
value evidence presented by plaintiff, insufficient to sup-
port the jury verdict.
2. Competency of Evidence on Sale of Land as a
Block
McDaniel also gave his expert opinion on the value
of the 3000 acres of land sold as a block. CMOBC
contends that this testimony was also incompetent and
irrelevant as a matter of law.
McDaniel testified that the “forced sale” or “ready
market” value of the 3000 acres as a block in September
1976 was between $6.1 and $6.6 million.” (Dkt. 802, Tr.
5003, 5019-20). CMOBC contends that since McDaniel
assumed 18 months would be required to complete the
sale (Dkt. 802, Tr. 5017-20), this was not an indication
of the best available price for the land in September
1976. The Court has previously treated and dismissed
this claim. See supra p. 152.
In addition, CMOBC attacks McDaniel’s valuation of
the land as a block as being based on three assumptions
which were no longer valid in September, 1976. The
assumptions actually appeared in the 1973 appraisal by
C.D. Alexander which placed an $86 million figure on
the entire 5500 acres of Rose Hall land.®' (Dkt. 802, Tr.
4940-70). McDaniel testified that because of the changed
circumstances in 1976 which rendered the 1973 ap-
praisal inapplicable, he discounted that valuation con-
siderably to arrive at a $20 million “fair market value,”
and a $6.1 million to $6.6 million “forced sale value.”
60. CMOBC now apparently contends that forced sale value is
somehow different from the best available price standard enunci-
ated by this Court. CMOBC did not ask McDaniel if he made such
a distinction, and defendant's own land experts testified that the two
terms were analogous. (Dkt. 838, Tr. 11,992, Dorchester; Dkt. 830,
Tr. 10,279-80, Langford).
61. See supra p. 118.
A-81
This Court concludes that McDaniel’s testimony
was competent and relevant evidence on the best avail-
able price of the land.
3. Competency of Other Evidence on Best Available
Price of the Land.
In meeting its burden of proving that Chase Jamaica
failed to get the best available price for the collateral,
plaintiff introduced evidence tending to show that Mat-
alon made an unsolicited proposal to place a price of $4
million before the cabinet for approval. Matalon wanted
the “extra $1 million” to be paid to Rose Hall Ltd. Chase
Jamaica, however, rejected this proposal almost imme-
diately. Brown’s memo to file recording the meeting with
Matalon where this issue arose reads, in pertinent part,
as follows:
The Sale Agreement that he |Matalon] would like to
place before the Government would be that they buy
the shares in Rose Hall (H.I.) Limited and the land
over which we have a first charge for $4 Million. The
Extra $1 Million would be paid to Rose Hall Limited.
We informed him that this was not acceptable to us
_... We feel that we should, in any event, write to
Urban Development Corp. offering jointly to sell the
shares and land for $3 Million. Along with this letter
from the Merchant Bank will be an offer to finance
from the Chase Manhattan Bank.
For a total of $9.2 Million, without any cash outlay,
the Government are acquiring the Holiday Inn (origi-
nal selling price of the Holiday Inn alone was $14
Million) and 3,500 acres of prime real estate. It is our
opinion that this in itself is a very good deal for the
Government and we should not include any offer of
finance for paying Rose Hall Limited or development
cost.
(PX 111).
A-82
CMOBC contends that Matalon’s offer to place an
offer of the extra $1 million before the cabinet is not
legally competent evidence of the best available price for
the land. One reason for this is that this extra amount
would have to have been financed, presumably by Chase
Jamaica or Chase Manhattan Bank (Dkt. 817, Tr.
7964-65), and as a mortgagee, Chase Jamaica had no
obligation to provide or arrange financing. (Dkt. 858, Tr.
15, 522). However, CMOBC does not dispute that Chase
Jamaica never explored the possibility of obtaining the
additional financing from the Bank of Nova Scotia or by
having the government simply give Rose Hall a note for
the additional $1 million thereby making Rose Hall itself
the lender. (Dkt. 817, Tr. 7966-84).
Chase Jamaica further attacks this evidence as in-
competent by stating that Matalon could not assure
Chase Jamaica that the cabinet would approve the higher
price. Defendant contends that therefore it would have
been too risky and speculative to submit the higher price
to the cabinet. This issue, as well as the
This text is long and has been trimmed here. Open the source document for the complete record.
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.